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Updated December 19, 2018
Defense Primer: Department of Defense Contractors
Throughout its history, the Department of Defense (DOD)
In FY2017, 41% of total DOD contract obligations were for
has relied on contractors to support a wide range of military
services, 51% for goods, and 8% for research and
operations. A defense contractor, as defined by the Code of
development (R&D).
Federal Regulations, is “any individual, firm, corporation,
partnership, association, or other legal non-Federal entity
Contractors as Individuals
that enters into a contract directly with the DOD to furnish
Individual DOD contractors fulfill a wide variety of
services, supplies, or construction” (see 32 C.F.R. 158.3,
organizational roles and functions, spanning from
“Definitions”).
supporting intelligence analysis or software development to
performing landscaping or janitorial services.
Within the defense policy community, the term contractor
is commonly used in two different contexts. The word can
Why Does DOD Use Individual Contractors?
describe the private companies with which DOD contracts
Following the conclusion of the Cold War, the U.S.
to provide goods and services. It can also describe
military—in line with a government-wide trend—embraced
individuals hired by DOD—usually through private
privatization, increasing reliance on contractors rather than
companies, which are also considered contractors in the
in-house personnel to provide many services.
previous context—to perform specific tasks. The term
“contractor” does not refer to military servicemembers,
Analysts have highlighted the benefits of using contractors,
civilian DOD career employees, or civilian political
such as freeing up uniformed personnel to focus on duties
appointees.
only uniformed personnel can perform; providing expertise
Operations over the past 30 years have highlighted the
in specialized fields, such as linguistics or weapon systems
central role that contractors play in supporting U.S. troops,
maintenance; and providing a surge capability to quickly
both in terms of the number of contractors and the type of
deliver critical support capabilities tailored to specific
work being performed. During recent U.S. military
military needs. Because a contractor can be hired when a
operations in Iraq and Afghanistan, contractors frequently
particular need arises and released when his or her services
averaged 50% or more of the total DOD presence in-
are no longer needed, some have argued that meeting
country.
immediate personnel needs through surges in the use of
Contractors as Companies
contractors by the federal government is more cost effective
on a long-term basis.
In FY2017, DOD obligated more money on federal
contracts ($320 billion in current dollars) than all other
Just as the effective use of contractors can augment military
government agencies combined. While DOD contracts with
capabilities, the ineffective use of contractors can prevent
many companies for all kinds of goods and services, its
troops from receiving what they need, when they need it,
contract activities are dominated by five companies:
and can lead to wasteful spending. Contractors can also
Lockheed Martin, Boeing, Raytheon, General Dynamics,
compromise the credibility and effectiveness of the U.S.
and Northrop Grumman (see Table 1). In FY2017, these
military and undermine operations, as many analysts
companies together received 33% of all of DOD’s contract
believe occurred during recent operations in Iraq and
obligations for the year. These five companies are often
Afghanistan.
referred to as the primes, signifying their role as prime
contractors who in turn subcontract to other companies.
How Many Contractors Does DOD Employ?
Table 1. Five Largest DOD Contractors by
DOD’s Inventory of Contracted Services (ICS, see 10
Obligations, FY2017
U.S.C. §2330a(c)) is a required annual report to Congress
in billions of current dollars
that provides information on certain categories of contractor
hiring by individual DOD components (e.g., the military
Contracted
departments and defense agencies).
Company
Dollars
Under 10 U.S.C. §2330a, DOD is required to collect and
Lockheed Martin Corporation
$48.1
report data for each purchase of services in excess of $3
The Boeing Company
$21.3
million within four service acquisition portfolio groups:
Raytheon Company
$14.0
logistics management services, equipment related services,
General Dynamics Corporation
$14.0
knowledge-based services, and electronics and
Northrop Grumman Corporation
$10.0
communications services.
Source: FPDS Top 100 Contractors Report, FY2017.
The annual ICS report does not include a total number of
Note: Fifty percent of the Bell-Boeing Joint Project Office is
contractors, but instead provides an estimate of contractor
attributed to the Boeing Company.
full-time equivalents (FTEs), a measure referring to the
estimated numbers of man-hours contracted.
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Defense Primer: Department of Defense Contractors
According to the FY2016 ICS Report to Congress, DOD
Figure 1. Contractors in Iraq, Syria, and Afghanistan,
contracted about 210,000 FTEs within the four defined
by Mission Category in October 2018
service portfolios during that year. Of that total number of
FTEs, the Department of the Air Force contracted about
32%, the Department of the Army about 31%, and the
Department of the Navy about 22%.
Table 2. Estimated FY2016 Contractor FTEs, by DOD
Component
DOD Component
Reported FTEs
Department of the Air Force
66,772
Department of the Army
65,095
Department of the Navy
45,270
U.S. Special Operations Command
10,058
(SOCOM)
Source: CENTCOM Quarterly Contractor Census Reports.
Defense Health Affairs (DHA)
3,400
In Iraq and Afghanistan, armed and unarmed private
Defense Information Systems Agency
3,208
security contractors have been employed to provide
(DISA)
services such as protecting fixed locations; guarding
Missile Defense Agency (MDA)
3,156
traveling convoys; providing security escorts; and training
police and military personnel. The number of private
Defense Threat Reduction Agency (DTRA) 2,731
security contractor employees working for DOD in Iraq and
Afghanistan has fluctuated significantly over time,
Deputy Chief Management Office (DCMO) 2,109
depending on various factors. As of October 2018, DOD
All other reported FTEs
7,747
reported 4,172 private security contractors in Afghanistan,
Source: DOD FY2016 Inventory of Contracted Services.
with 2,397 categorized as armed private security
Notes: DIA and NSA provide their contractor FTE totals in a
contractors. DOD reported 418 security contractor
classified annex; these estimates are not included in summary totals.
personnel in Iraq and Syria during the same period, none of
DOD also indicated that a number of components did not report
whom were identified as armed private security contractors.
FTE estimates for FY2016 (such as DODEA and DTRMC), and
further indicated that other components submitted incomplete
Relevant Statutes
reports (DLA).
10 U.S.C. Part IV: Service, Supply, and Procurement.
What Role Do Contractors Play In Overseas DOD
Operations?
CRS Products
Overseas contingency operations in recent decades have
CRS Report R43074, Department of Defense’s Use of
highlighted the role that contractors play in supporting the
Contractors to Support Military Operations: Background, Analysis,
U.S. military, both in terms of the number of contractor
and Issues for Congress, by Moshe Schwartz.
personnel and the type of work being performed by these
individuals. Since 2008, U.S. Central Command
CRS Report R44116, Department of Defense Contractor and
(USCENTCOM) has published quarterly contractor census
Troop Levels in Iraq and Afghanistan: 2007-2017, coordinated by
reports, which provide aggregated data – including
Heidi M. Peters
elements such as mission category and nationality – on
contractors employed through DOD-funded contracts who
Other Resources
are physically located within the USCENTCOM area of
Office of the Under Secretary of Defense for Acquisition,
responsibility.
Technology, and Logistics, DoD Inventory of Contracted Services,
As of October 2018, USCENTCOM reported
https://prhome.defense.gov/M-RA/Inside-M-RA/TFM/Reports/.
approximately 50,000 contractor personnel working for
Office of the Assistant Secretary of Defense for Logistics and
DOD within its area of responsibility, which includes
Materiel Readiness, CENTCOM Quarterly Contractor Census
Afghanistan, Syria, and Iraq. A reported 25,239 contractor
Reports, http://www.acq.osd.mil/log/ps/centcom_reports.html.
personnel were located in Afghanistan, while a reported
6,318 contractor personnel were located in Iraq and Syria.
In Afghanistan as of October 2018, about 44% of DOD’s
Heidi M. Peters, Analyst in U.S. Defense Acquisition
25,239 reported individual contractors were U.S. citizens.
Policy
Approximately 42% were third-country nationals and
Moshe Schwartz, Specialist in Defense Acquisition
roughly 14% were local/host-country nationals. In Iraq and
Syria, about 49% of the reported 6,318 DOD contractors
IF10600
were U.S. citizens, with 38% third-country nationals and
13% local/host-country nationals.
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Defense Primer: Department of Defense Contractors
Disclaimer
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