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Updated January 31, 2020
Defense Primer: Department of Defense Contractors
Throughout its history, the Department of Defense (DOD)
In FY2018, 52% of total DOD contract obligations were for
has relied on contractors to support a wide range of military
services, 40% 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 from logistics and
“Definitions”). Within the defense policy community, the
transportation to intelligence analysis and private security.
term contractor is commonly used in two different
contexts. The word can describe the private companies with
Why Does DOD Use Individual Contractors?
which DOD contracts to provide goods and services. It can
Following the conclusion of the Cold War, the U.S.
also describe individuals hired by DOD—usually through
military—in line with a government-wide trend—embraced
private companies, which are also considered contractors in
privatization, increasing reliance on contractors instead of
the previous context—to perform specific tasks. The term
using military servicemembers or government civilians to
“contractor” does not refer to military servicemembers,
perform certain tasks.
civilian DOD career employees, or civilian political
appointees.
Analysts have highlighted numerous benefits of using
contractors. Some of these benefits include freeing up
Operations over the past 30 years have highlighted the
uniformed personnel to focus on military specific activities;
central role that contractors play in supporting U.S. troops,
providing supplemental expertise in specialized fields, such
both in terms of the number of contractors and the type of
as linguistics or weapon systems maintenance; and
work being performed. During recent U.S. military
providing a surge capability to quickly deliver critical
operations in Iraq and Afghanistan, contractors frequently
support capabilities tailored to specific military needs.
accounted for 50% or more of the total DOD presence in-
Because a contractor can be hired when a particular need
country.
arises and released when his or her services are no longer
Contractors as Companies
needed, some have argued that meeting immediate
In Fiscal Year (FY) 2018, DOD obligated more money on
personnel needs through surges in the use of contractors by
federal contracts ($360 billion in current dollars) than all
the federal government is more cost effective on a long-
other government agencies combined. While DOD
term basis. Just as the effective use of contractors can
contracts with many companies for all kinds of goods and
augment military capabilities, the ineffective use of
services, its contract activities are dominated by five
contractors can prevent troops from receiving what they
companies: Lockheed Martin, Boeing, Raytheon, General
need, when they need it, and can lead to wasteful spending.
Dynamics, and Northrop Grumman (see Table 1). In
Contractors can also compromise the credibility and
FY2018, these companies together received 30% of all of
effectiveness of the U.S. military and undermine operations,
DOD’s contract obligations for the year. These five
as many analysts believe occurred during operations in Iraq
companies are often referred to as the primes, signifying
and Afghanistan.
their frequent role as prime contractors who in turn
subcontract to other companies.
How Many Contractors Does DOD Employ?
DOD’s Inventory of Contracted Services (ICS, see 10
Table 1. Five Largest DOD Contractors by
U.S.C. §2330a(c)) report is a required annual report to
Obligations, FY2018
Congress that provides information on certain categories of
in bil ions of current dol ars
contractor hiring by individual DOD components (e.g., the
Contracted
military departments and defense agencies).
Company
Dollars
Under 10 U.S.C. §2330a, DOD is required to collect and
Lockheed Martin Corporation
$39.0
report data for each purchase of services in excess of $3
The Boeing Company
$27.4
million within four service acquisition portfolio groups:
Raytheon Company
$18.1
logistics management services, equipment related services,
knowledge-based services, and electronics and
General Dynamics Corporation
$14.3
communications services. In the report, DOD must also
Northrop Grumman Corporation
$10.8
provide the number of contractor employees associated
Source: FPDS Top 100 Contractors Report, FY2018.
with these services. The report does not include a total
Note: Fifty percent of the Bell-Boeing Joint Project Office is
number of individual contractors—instead, it provides an
attributed to the Boeing Company.
estimate of contractor full-time equivalents (FTEs) for
direct labor, a measure referring to the estimated numbers
of man-hours contracted. According to the FY2017 ICS
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Defense Primer: Department of Defense Contractors
report, DOD contracted about 464,500 FTEs within the four
individuals. Since 2008, U.S. Central Command
defined service portfolios during that year. Of that number,
(CENTCOM) has published quarterly contractor census
the Department of the Army contracted about 37%, the
reports, which provide aggregated data – including
Department of the Air Force about 28%, and the
elements such as mission category and nationality – on
Department of the Navy about 22%.
contractors employed through DOD-funded contracts who
are physically located within the CENTCOM area of
Table 2. Estimated FY2017 Contractor FTEs, by DOD
responsibility.
Component
During the first quarter of FY2020, CENTCOM reported
DOD Component
Reported FTEs
approximately 50,000 contractor personnel working for
Department of the Army
172,303
DOD within its area of responsibility, which includes
Afghanistan, Syria, and Iraq. A reported 26,545 contractor
Department of the Air Force
131,132
personnel were located in Afghanistan, while a reported
Department of the Navy
102,181
6,586 contractor personnel were located in Iraq and Syria.
U.S. Special Operations Command
9,656
In Afghanistan as of the first quarter of FY2020, about 40%
of DOD’s 26,545 reported individual contractors were U.S.
Missile Defense Agency
7,609
citizens. Approximately 39% were third-country nationals
Defense Logistics Agency
6,829
and roughly 22% were local/host-country nationals. In Iraq
and Syria, about 44% of the reported 6,586 DOD
Defense Information Systems Agency
6,470
contractors were U.S. citizens, with 38% third-country
Office of the Secretary of Defense
5,964
nationals and 18% local/host-country nationals.
Defense Health Affairs
5,696
In Iraq and Afghanistan, armed and unarmed private
U.S. Strategic Command
2,888
security contractors have been employed to provide
services such as protecting fixed locations; guarding
All other reported FTEs
13,728
traveling convoys; providing security escorts; and training
Source: DOD FY2017 Inventory of Contracted Services.
police and military personnel. The number of private
Notes: Some components (such as DIA) provided classified
security contractor employees working for DOD in Iraq and
contractor FTE; these estimates are not included in summary totals.
Afghanistan has fluctuated significantly over time,
Other components (such as DCMA) did not report FTE estimates.
depending on various factors. As of the first quarter of
FY2020, DOD reported 4,924 private security contractors
Value of ICS Report
in Afghanistan, with 3,017 categorized as armed private
In establishing the statutory requirement for the ICS report,
security contractors. DOD reported 244 private security
Congress sought in part to gain more oversight of certain
contractor personnel in Iraq and Syria during the same
types of service contracts – particularly staff augmentation
period, none of whom were identified as armed private
services and services that are closely associated with
security contractors.
inherently governmental functions – and the associated
labor. However, some observers have questioned the value
Relevant Statutes
of the ICS report in facilitating congressional oversight. A
2017 RAND study described the ICS report as including
10 U.S.C. Part IV: Service, Supply, and Procurement.
data that are “unprocessed, retrospective, and can largely be
found elsewhere,” potentially limiting the utility of the
CRS Products
report to Congress and DOD. Other experts, such as the
CRS Report R43074, Department of Defense’s Use of
Section 809 Advisory Panel, have recommended repealing
Contractors to Support Military Operations: Background, Analysis,
or modifying the underlying statutory requirement to obtain
and Issues for Congress.
more relevant data and analysis suitable for use by
policymakers in Congress and DOD.
CRS Report R44116, Department of Defense Contractor and
Troop Levels in Afghanistan and Iraq: 2007-2018.
In its FY2018 ICS Report to Congress, DOD noted that it
was transitioning its system for gathering data on contractor
Other Resources
FTEs from a DOD-unique system to the federal
Defense Pricing and Contracting, Inventory of Services Contracts,
government-wide System for Award Management (SAM).
https://go.usa.gov/xd43S.
DOD indicated that it would not be able to provide FTE
Office of the Assistant Secretary of Defense for Sustainment,
estimates during this process, but anticipated the transition
CENTCOM Quarterly Contractor Census Reports,
would be complete in time to submit the FY2020 ICS
https://go.usa.gov/xd43h.
report.
What Role Do Contractors Play In Overseas DOD
Operations?
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Overseas contingency operations in recent decades have
Policy
highlighted the role that contractors play in supporting the
U.S. military, both in terms of the number of contractor
IF10600
personnel and the type of work being performed by these
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Defense Primer: Department of Defense Contractors
Disclaimer
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