DoD Inventory of Contracts for Services Compliance

111TH CONGRESS
"
1st Session

HOUSE OF REPRESENTATIVES

!

REPORT
111–166

NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 2010

R E P O R T
OF THE

COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ON

H.R. 2647
together with
ADDITIONAL AND SUPPLEMENTAL VIEWS
[Including cost estimate of the Congressional Budget Office]

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JUNE 18, 2009.—Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed

349
termining the appropriate total workforce mix of military, civilian,
and contractor personnel.

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Service Contractor Inventory
Section 807 of the National Defense Authorization Act for Fiscal
Year 2008 (Public Law 110–181) requires an annual inventory of
the Department of Defense’s contracts for services. The committee
understands that the Under Secretary of Defense for Acquisition,
Technology and Logistics has been tasked with the responsibility
for developing this service contracting inventory. The committee
notes, however, that the inventory mandated by section 807 is intended to be of a much broader scope than simply capturing data
from the Federal Procurement Data System. The committee encourages the Under Secretary to also consider the data requirements needed by the personnel, manpower, cost assessment and
program evaluation, and comptroller communities in order to ensure that the inventory may be used to facilitate the military services’ ability to conduct total workforce planning that is fully integrated into the programming and budget processes, and to fulfill
the Secretary of Defense’s plans to reduce the number of service
support contractors and replace them with full-time government
employees.
While the committee recognizes that development of a comprehensive inventory takes time, the committee is concerned because almost two years after enactment of section 807, no information has been provided and no methodology has been developed to
conduct the inventory, except by the Department of the Army
which began its effort as early as 2002. The committee is aware
that the Department of the Navy and Department of the Air Force
intend to provide a prototype inventory by the third quarter of the
current fiscal year. From initial reports of what these inventories
will cover, the committee is concerned that the prototypes will provide only sampling projections and not the robust and qualitative
information required by section 807. The committee notes that the
Department of the Army inventory captures data not only on contracting organizations, but the components administering the contract as well as the funding source for the contract and the number
of full time contractor equivalent employees. The committee recommends that the Army methodology be used by the other military
departments. Alternatively, should the military departments develop their own methodology, they should provide the same level of
detail and completeness as that provided by the Army in order to
ensure accurate comparisons of the inventories.
The committee directs the Secretary of Defense to submit a report describing the methodology and data sources selected by the
military departments to gather and analyze the information to
complete the required annual inventory, an explanation, if the
Army methodology is not used, of the rationale for developing a different method, and a timeframe for submission of a complete inventory by each of the military departments. Such report shall be provided to the congressional defense committees by September 1,
2009. In addition, the Secretary is directed to submit a copy of the
report on the data collection methodology to the Comptroller General concurrent with submission to the defense committees. The
committee directs the Comptroller General to provide an assess-

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350
ment of the methodology to the congressional defense committees
within 60 days after receiving the Secretary’s report. Since this report is intended to assist the review of the inventories, the committee stresses that it should not delay the scheduled provision of
the initial inventories by the military departments.

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Strategic Materials
Section 843 of the John Warner National Defense Authorization
Act for Fiscal Year 2007 (Public Law 109–364) established the
Strategic Materials Protection Board within the Department of Defense to: 1) determine the need to provide a long-term domestic
supply of materials designated as critical to national security; 2)
analyze the risk associated with each material designated as critical to national security and the effect on national defense that the
non-availability of such material from a domestic source would
have; and 3) recommend a strategy to the President to ensure the
domestic availability of materials designated as critical to national
security.
The committee is concerned that the December 2008 report of the
Department of Defense’s Strategic Materials Protection Board falls
short of these objectives, particularly by revising the definition of
the term ‘‘strategic material critical to national security’’ in a way
which undermines the Board’s purpose. Under the revised definition, a material would be deemed critical to national security only
if: the Department dominates the market for the material; the Department actively shapes the strategic direction of the market; and
there is a significant and unacceptable risk of supply disruption.
This definition limits the purview of the Board to only those materials for which the determinations the Board is tasked to make are
presupposed in the definition of the materials themselves. Furthermore, such a definition fails to include a range of materials that
Congress has designated as critical to national security and, as
such, has provided significant protection or domestic preference in
DOD policy and in statute. For example, Congress has determined
that reliance on foreign sources of supply for materials such as titanium, specialty steel, and high performance magnets, poses a
heightened risk. The Board’s narrowing of the definition of materials critical to national security renders the Board unable to provide perspective on the adequacy, suitability, or effectiveness of
those policies. Moreover, it limits the ability of the Board to consider any course of action, however minor, in relation to a material
until the point at which potential damage to national security is
imminent and severe. It also creates the perverse situation that a
material could be critical to every element of the industrial base
upon which the Department depends, but not considered critical to
the Department itself if the material is also used significantly in
commercial items. As an indication of the inadequacy of this definition for the Board’s functioning, the Board currently identifies only
one material as meeting the definition for consideration as a strategic material critical to national security. The committee does not
find this conclusion to be plausible and expects that the Board will
swiftly revisit this definition to ensure that it is able to identify
gaps in our domestic defense supply chain and provide the President, the Secretary of Defense, and Congress with information,

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