Service Support Contractors: One of the FY 2012 Budget Efficiencies

Report
Service Support Contractors
One of the FY 2012 Budget Efficiencies
American Society of Military Comptrollers
October, 2011
1
Department of Defense Topline
FY 2001 – FY 2016
Real Growth
(Base Budget)
(Current Dollars in Billions)
$750
667
3
3
688
691
667
535
$500
437
72
345
316
$250
479
91
76
6
297
328
365
377
400
FY01
FY02
FY03
FY04
FY05
636
3.0%
0.5%
648
661
159
118
50
50
50
50
1
7
3
8
3
17
13
187
162
146
166
116
671
621
601
468
FY11-12
FY11-16(Avg/yr)
411
432
FY06
FY07
528
529
553
571
586
598
611
480
513
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY 16
$0
Numbers may not add due to rounding
Base Budget
Notes:
OCO Funding
Non-War Supplemental
Base Budget Position
● FY 2012 – FY 2016 reflects levels included in the President’s FY 2012 Budget Request; FY 2009 Non-War Supplemental was appropriated
through the American Recovery and Reinvestment Act of 2009
● FY 2011 reflects the addition of the annualized 2011 Continuing Resolution and an adjustment to the Presidents FY2012 Budget Request
Source:
Department of Defense Appropriation Acts FY 2001 – FY 2010, FY2011 Continuing Resolution, FY 2011-FY2012 President’s Budget
documents
2
Achieving $78 Billion for Topline Reductions in
FY 2012 – FY 2016
•
•
•
•
•
Civilian workforce freeze (limited exceptions)
Two-year federal civilian pay freeze
Healthcare reform
Defense Agency/OSD Staff Baseline Review
Disestablished Joint Forces Command/BTA
• Reduce staff augmentee contracts
•
•
•
•
•
•
Restructure the Joint Strike Fighter program
Reduce the size of ground forces in FY 2015/FY 2016
Decrease reports, studies, boards and commissions
Reduce senior leadership positions
Lower economic assumptions
Many smaller efforts across the enterprise
$13 billion
$12 billion
$8 billion
$11 billion
$2.3 billion
$6 billion
$4 billion
$6 billion
$1 billion
$0.1 billion
$4 billion
$11 billion
3
Context for the Efficiency
• Congressional interest in workforce management
• Applicable laws
• Related initiatives
• Inventory of Contracts for Services
• Budget Justification Requirement
• In-sourcing
• Civilian Workforce Freeze
• Service Support Contractor Reduction
• Reporting
4
Congressional Interest
Laws
• Section 2330a of Title 10
Requirements
• Service Contract Inventory
– The FY 2011 NDAA added greater
responsibility for USD(P&R) and
USD(C)
• Section 235 of Title 10
• Specification of Contract
Services in Budget
Justification Materials
– Funding
– FTE
• Section 8108 of the FY
2011 Appropriation Act
• Requires Navy and Air
Force to leverage Army’s
Reporting System
– Requires a D-W Plan
These laws require the collaboration across the Contracting, Manpower and
Budget Communities.
5
Total Force – The Cost Component FY01-10
$600
$550
Active Duty
Military
1,387,076
1,405,600
1%
Year
FY01
FY10
% Change
$500
$450
Civilians
704,783
764,400
8%
FY10 Reduction for In-sourcing
$900M
Contracts for
Services ($K)
$
104,820,780
$
248,207,148
137%
.
Total Increase from FY09 = $6B
$400
$350
The savings are here. This is Total Force Manpower, but its growth has been
unchallenged and often we don’t even know what is in the base.
$300
$250
$200
$248B
CONTRACTED SERVICES
Per Capita Costs will not go down. We must reduce the inventory by challenging
military essentiality of the growing support tail – covert to CIV or eliminate.
$150
$100
$150B
MILPERS
$50
$B
CIVPERS
$0
FY01
FY02
Default target for “savings” – but pressure here often creates unintended
fiscal “consequences” in other areas
FY03
FY04
FY05
FY06
FY07
FY08
National Defense Budget Estimates for FY2011 (“Current Dollars”) – BASE and OCO $$
OUSD(P&R) – Requirements and Program and Budget Coordination Directorate
$72B
FY09
FY10
6
Inventory of Contracts for Services
• The first inventory was submitted for FY 2007
• The FY 2009 inventory of contracts for services was
submitted to Congress on July 20, 2010
• Submitted for Defense Components with contracting
authority (20 out of 65 with manpower requirements)
• Reported 767 thousand FTEs and $155 billion obligated
dollars covering all appropriations
• The 2010 inventory preparation underway
• AT&L following the process they used for the 2009 inventory
• Within 90 days of submitting the inventory, review of
contracts in the inventory for appropriateness
• Future concern for collecting and reviewing
contractor direct labor hours
7
Budget Justification Requirement
• SEC 803 of the FY 2010 NDAA modified Title 10 SEC
235 to require the Department to submit with the
annual budget justification
• The amount of funding requested for the procurement of
contract services
• The associated estimate of contractor full-time equivalents
• Changes made for the FY 2012 President’s Budget
• Expanded OP 32 requirement to all accounts
• Aligned OP 32 lines to object class and sub object class
• Required reporting of contractor FTEs in the O&M OP 5
• A summary exhibit of this data was included in the
O&M overview book
8
Contract Services Reported
O&M ($ Billions)
FY 2011
25.1 Advisory and Assistance
FY 2012
Change
5.8
5.5
-0.3
25.2 Other Services
16.4
12.5
-3.9
25.4 Facilities
11.2
12.0
0.8
0.5
0.7
0.2
25.6 Medical Care
15.5
16.2
0.7
25.7 Equipment Maintenance
19.8
23.6
3.8
25.8 Subsistance of Persons
0.1
0.1
0.0
Total
69.3
70.5
1.2
Full Time Equivalents
(thousands)
291
294
3
25.5 Research and Development
Numbers may not add due to rounding
9
Status of In-sourcing
• Original April 2009 initiative established goal of insourcing 33,254 contractor positions by FY 2014
• 17,000 new positions were created in FY 2010, 50% of
these were considered inherently governmental or
otherwise exempt
• The Civilian workforce freeze will slow in-sourcing
• Components must ensure compliance with sourcing
inherently governmental work
• Work must be prioritized within established cap by shifting
manpower from lower priorities
• Prohibition on converting work currently performed
by civilians to private sector without first conducting
a public-private competition
• Moratorium on conducting public-private competitions
10
Civilian Workforce Freeze
• The original guidance for a civilian workforce freeze
was to the OSD staff and Defense Agencies
• The guidance was expanded to the Military Services
during the FY 2012 budget review
• Some exceptions were given
•
•
•
•
Acquisition workforce
Joint Basing
Intel increases
Navy depot maintenance
• Overall direction to reduce civilian and contractor
staffing
This does not mean work can be out-sourced
11
Service Support Contractor Reduction
• Original perception was the contractor workforce
should have declined with the in-sourcing initiative
but appeared to have grown
• The Secretary directed a reduction in service support
contractors of 10 percent per year over the next 3
years from the reported FY 2010 level
• Defined service support contractors as contract personnel
who provide support as staff augmentation
• This definition did not align to a specific object class so a
survey was completed to gather the universe of these
contracts
• The reduction was applied to a base of 26 thousand
FTEs and $4.3 billion
• Annual savings of over $400 million and $6 billion over the
FYDP
12
Service Support Contractor Reduction
All Appropriations ($ Millions)
FY 2011
FY 2012
Army
101
198
Navy
57
111
Air Force
63
127
Defense Wide
197
370
Total
418
806
Numbers may not add due to rounding
13
Service Support Contractor Reporting
• OUSD(C) and CAPE memo signed May 6
• The original survey will be updated to identify what
contracts have been eliminated, reduced or added
• The revised survey will be used to report the status of this
efficiency initiative to the OUSD(C) and DCMO
• Future initiatives will examine aligning service
support contractors to specific object classes with
the intent of removing manual data calls
14
Contract Services Future Direction
• The pressure to account for how the Department
prioritizes and resources functions and activities will
not diminish
• The goal is to have the right balance of military,
civilian and contractor workforce
• There will be continuing interest in what services the
Department is contracting for
• Continue to improve the inventory of service contracts
• Continue to improve the budget justification material to
clearly identify the funding and FTEs for contractor services
• Ensure the reporting mechanisms for the inventory and
budget are integrated
• Improvements will necessitate coordination across
the manpower, contracting and budget communities
15
President’s Speech on Deficit Reduction
(April 13, 2011)
• Secretary Gates has shown over the last 2 years that there is
substantial waste and duplication in our security budget that we can
and should eliminate – proposing savings of $400 billion in current
and future defense spending.
• The framework sets a goal of holding the growth in base security
spending below inflation while ensuring our capacity to meet our
national security responsibilities, which would save $400 billion by
2023
• The President will make decisions on specific cuts after working
with Secretary Gates and the Joint Chiefs on the Comprehensive
Review
16

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