Today's Article
It appears that U.S.
officials have no way
to verify how much
money the Pentagon
has agreed to pay its
contractors.
The American Spark
Pentagon Spends Much On Contractors, But Often Doesn’t Know
Where Money Goes

By Cliff Montgomery - May 20th, 2017

The Department Of Defense (DOD) hires a lot of contractors to perform the people’s business. And that adds
up to a lot of taxpayer dollars.

For instance, “in FY[Fiscal Year]2015, DOD obligated more money on federal contracts ($274 billion in current
dollars, or $283 billion in inflation-adjusted FY2017 dollars) than all other federal government agencies
combined,”
declared a little-noticed Congressional Research Service (CRS) study on the subject released in
December 2016.

But though “the federal government tracks money obligated on federal contracts through a database called
the Federal Procurement Data System-Next Generation (referred to as FPDS),” the report advised that
“decision-makers should be cautious when using obligation data from FPDS to develop policy or otherwise
draw conclusions.”

And why should decision-makers question this information?

“In some cases, the data itself may not be reliable,” continued the CRS study, which added that, “in some
instances, a query for particular data may return differing results, depending on the parameters and timing.”

So it seems that U.S. officials have no way to verify how much money the Pentagon has agreed to pay its
contractors.

Below, the
American Spark reprints the summary from the December CRS report:


The Department of Defense (DOD) has long relied on contractors to provide the U.S. military with a wide
range of goods and services, including weapons, vehicles, food, uniforms, and operational support.

“Without contractor support, the United States would be currently unable to arm and field an effective fighting
force.

“Costs and trends associated with contractor support provides Congress more information upon which to
make budget decisions and weigh the relative costs and benefits of different military operations—including
contingency operations and maintaining bases around the world.

Total DOD Contract Obligations

“Obligations occur when agencies enter into contracts, employ personnel, or otherwise commit to spending
money. The federal government tracks money obligated on federal contracts through a database called the
Federal Procurement Data System-Next Generation (referred to as FPDS).

“There is no public database that tracks DOD contract outlays (money expended from the Treasury) as
comprehensively as FPDS tracks obligations.

“In FY2015, DOD obligated more money on federal contracts ($274 billion in current dollars, or $283 billion in
inflation-adjusted FY2017 dollars) than all other federal government agencies combined.

“DOD’s contract obligations were equal to 7% of all mandatory and discretionary federal spending. Services
accounted for 44% of total DOD contract obligations, goods for 47%, and research and development (R&D)
for 9%.

“This distribution is in contrast to the rest of the federal government, which obligated a larger portion of
contracting dollars on services (53%), than on goods (38%) and research and development (9%) combined.

“According to FPDS data, from FY2000 to FY2015, DOD contract obligations increased from $187 billion to
$283 billion (FY2017 dollars).

“The increase in spending, however, has not been steady. DOD contract obligations were marked by an
annualized increase of 14.8% in current dollars between FY2000 and FY2008, followed by an annualized
decrease of 5.0% from FY2008 to FY2015.

“The rise and fall of DOD contract spending may make budgeting more difficult than in the rest of the federal
government, which has had more gradual increases and less drastic cuts.

“For almost 20 years, DOD has dedicated an ever-smaller share of its contracting dollars to R&D, with such
contracts dropping from 18% of total contract obligations in FY1998 to 9% in FY2015.

Understanding the Limitation of FPDS Data

“Decision-makers should be cautious when using obligation data from FPDS to develop policy or otherwise
draw conclusions. In some cases, the data itself may not be reliable. In some instances, a query for particular
data may return differing results, depending on the parameters and timing.

“All data have imperfections and limitations. FPDS data can be used to identify broad trends and produce
rough estimates, or to gather information about specific contracts. Some observers say that despite its
shortcomings, FPDS data are substantially more comprehensive than what is available in most other coun-
tries in the world.

“Understanding the limitations of data—knowing when, how, and to what extent to rely on data—helps
policymakers incorporate FPDS data more effectively into their decision-making process.

“The General Services Administration (GSA) is undertaking a multi-year effort to improve the reliability,
precision, retrieval, and utility of the information contained in FPDS and other federal government information
systems.

“This effort, if successful, could significantly improve DOD’s ability to engage in evidence- and data-based
decision-making.”



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