link to page 1 
Updated January 17, 2023
Defense Primer: Department of Defense Contractors
Throughout its history, the Department of Defense (DOD)
Contractors as Individuals
has relied on contractors to support a wide range of military
Individual DOD contractors fulfill a wide variety of
operations. Within the defense policy community, the term
organizational roles and functions from logistics and
contractor is commonly used in two different contexts. The
transportation to intelligence analysis and private security.
word can describe the private companies, academic
institutions, and other entities with which DOD contracts to
Why Does DOD Use Individual Contractors?
provide supplies, construction services, or other types of
Following the conclusion of the Cold War, the U.S.
services. It can also describe individuals hired by DOD—
military—in line with a government-wide trend—embraced
usually through private companies, which are also
outsourcing, increasing reliance on contractors instead of
considered contractors in the previous context—to perform
using military servicemembers or government civilians to
specific tasks. The term “contractor” does not refer to
perform certain tasks. Some analysts have highlighted
military servicemembers, civilian DOD career employees,
numerous benefits of using contractors. These benefits
or civilian political appointees.
include freeing up uniformed personnel to focus on military
Contractors as Entities
specific activities; providing supplemental expertise in
specialized fields, such as linguistics or weapon systems
In Fiscal Year (FY) 2021, DOD obligated more money on
maintenance; and providing a surge capability to quickly
federal contracts ($397 billion in current dollars) than the
deliver critical support functions tailored to specific
contract spending of all other government agencies
military needs. Some have accordingly argued that meeting
combined. While DOD contracts with many entities, five
immediate personnel needs through surges in contractor use
companies (Lockheed Martin, Boeing, Raytheon, General
by the federal government is more cost-effective on a long-
Dynamics, and Northrop Grumman) typically received a
term basis. Just as the effective use of contractors can
majority of departmental contract obligations each fiscal
augment military capabilities, ineffective management and
year (see Table 1). These five companies are often referred
oversight of contractors can lead to wasteful spending of
to as the primes, signifying their frequent role as prime
taxpayer dollars and impeded operational outcomes.
contractors who in turn subcontract to other companies. For
Contractors can also compromise the credibility and
FY2021, top recipients of DOD contract funding also
effectiveness of the U.S. military and undermine operations,
included Pfizer Inc., with which DOD has contracts to
as some analysts believe occurred during operations in Iraq
obtain antiviral oral therapeutics and mRNA vaccines used
and Afghanistan.
to treat and prevent Coronavirus Disease 2019 (COVID-
19). Some of these contracts were executed in partnership
How Many Contractors Does DOD Employ?
with the Department of Health and Human Services (HHS)
DOD’s Inventory of Contracted Services (ICS, see 10
as part of the national emergency response to COVID-19.
U.S.C. §4505(c)) is a required annual report to Congress
Table 1. Six Largest DOD Contractors by Obligations,
that provides information on certain categories of contractor
FY2021
hiring by individual DOD components (e.g., the military
in bil ions of current dol ars
departments and defense agencies). Under 10 U.S.C. §4505,
DOD is required to collect and report data to Congress for
Company
Obligations
each purchase of services in excess of $3 million within
Lockheed Martin Corporation
$40.3
four service acquisition portfolio groups: logistics
The Boeing Company
$22.1
management services, equipment related services,
Raytheon Technologies Corporation
$20.6
knowledge-based services, and electronics and
communications services. Contracts valued at or below the
General Dynamics Corporation
$17.3
simplified acquisition threshold (generally $250,000) or for
Pfizer Inc.
$13.3
commercially available off-the-shelf items are exempt from
Northrop Grumman Corporation
$12.7
this requirement.
Source: SAM.gov Top 100 Contractors Report, FY2021.
These reports combine contract data routinely entered into
Note: Fifty percent of the Bell-Boeing Joint Project Office is
the Federal Procurement Data System (FPDS) by DOD
attributed to The Boeing Company.
contracting officials with contractor-reported information
reported to SAM.gov on an annual basis. Contractor-
In FY2021, 49% of total DOD contract obligations were for
supplied information includes the total number of direct
goods, 42% were for services (inclusive of IT services), and
labor hours expended on services performed under contract,
9% were for research and development (R&D).
as well as the number of employees associated with these
services. The report historically has not included a total
number of individual contractors—instead, it has provided
an estimate of contractor full-time equivalents (FTEs) for
https://crsreports.congress.gov
link to page 2 Defense Primer: Department of Defense Contractors
direct labor, a measure referring to the estimated numbers
operations in Iraq and Afghanistan between 2001 and 2020,
of labor hours contracted.
contractors frequently accounted for 50% or more of the
total DOD presence in country.
According to the FY2021 ICS report, DOD contracted
about 251,000 FTEs within the four defined service
Since 2008, U.S. Central Command (USCENTCOM) has
portfolios during that year (see Table 2). Of that number,
published quarterly contractor census reports providing
the Department of the Army contracted about 36%, the
aggregated data on contractors employed through DOD-
Department of the Navy about 24%, and the Department of
funded contracts who are physically located within the
the Air Force about 21%.
USCENTCOM area of responsibility, which includes
Afghanistan, Syria, and Iraq. Prior to August 2021, these
Table 2. Estimated FY2021 DOD Contractor FTEs
reports included data associated with DOD-funded
Prime Contractors and Subcontractors for Contracts
contractor personnel in Afghanistan. Following the August
Required to be Reported Under 10 U.S.C. §4505, by DOD
2021withdrawal of U.S. military forces from Afghanistan
Component
and the Taliban takeover of the country, USCENTCOM
Reported
reports that no DOD-funded contractor personnel remain in
DOD Component
FTEs
Afghanistan.
Department of the Army
90,975 During the fourth quarter of FY2022, USCENTCOM
reported approximately 22,000 contractor personnel
Department of the Navy
60,534 working for DOD within its area of responsibility, with a
Department of the Air Force
52,987 reported 7,908 contractor personnel located in Iraq and
Syria. As of the fourth quarter of FY2022, about 34% of
Defense Advanced Research Projects Agency
10,062 DOD’s reported individual contractors in Iraq and Syria
(DARPA)
were U.S. citizens. Approximately 38% were third-country
Defense Information Systems Agency (DISA)
6,568 nationals, and roughly 27% were local/host-country
nationals.
Defense Counterintelligence and Security Agency
5,938
(DCSA)
In Iraq, armed and unarmed security contractors have been
employed to provide services such as protecting fixed
U.S. Special Operations Command (USSOCOM)
5,713 locations; guarding traveling convoys; providing security
Defense Health Agency (DHA)
4,283 escorts; and training police and military personnel. The
number of security contractor employees working for DOD
Office of the Secretary of Defense (OSD)
4,018 in Iraq and Syria has fluctuated significantly over time,
Missile Defense Agency (MDA)
3,217 depending on various factors. As of the fourth quarter of
FY2022, DOD reported 941 security contractor personnel
All other reported FTEs
46,762
in Iraq and Syria, none of whom were identified as armed
Source: CRS analysis of DOD FY2021 Inventory of Contracted
security contractors.
Services.
Notes: Some DOD components, such as DIA, which may provide
Relevant Statutes
classified contractor FTEs, are not included in these FTE estimates.
10 U.S.C. Part V to Subtitle A: Acquisition.
Value of ICS Report
In establishing the statutory requirement for the ICS report,
CRS Products
Congress sought in part to gain more oversight of certain
CRS Report R43074, Department of Defense’s Use of
types of service contracts—particularly staff augmentation
Contractors to Support Military Operations: Background, Analysis,
services and services that are closely associated with
and Issues for Congress.
inherently governmental functions—and the associated
CRS Report R44116, Department of Defense Contractor and
labor. However, some observers have questioned the value
Troop Levels in Afghanistan and Iraq: 2007-2020.
of the ICS report in facilitating congressional oversight. A
2017 RAND Corporation study described the ICS report as
including data that are “unprocessed, retrospective, and can
Other Resources
largely be found elsewhere,” potentially limiting the utility
Defense Pricing and Contracting, Inventory of Services Contracts,
of the report to Congress and DOD. Other experts, such as
https://www.acq.osd.mil/asda/dpc/cp/policy/service-contract-
the Section 809 Advisory Panel, have recommended
inventory.html.
repealing or modifying the underlying statutory requirement
Office of the Assistant Secretary of Defense for Sustainment,
to obtain more relevant data and analysis suitable for use by
CENTCOM Quarterly Contractor Census Reports,
policymakers in Congress and DOD.
https://www.acq.osd.mil/log/LOG_CSD/CENTCOM_reports.
html.
What Role Do Contractors Play In Overseas DOD
Operations?
Operations over the past 30 years have highlighted the
central role that contractors play in supporting U.S.
Heidi M. Peters, Analyst in U.S. Defense Acquisition
servicemembers, both in terms of the number of contractors
Policy
and the type of work being performed. During U.S. military
IF10600
https://crsreports.congress.gov
Defense Primer: Department of Defense Contractors
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10600 · VERSION 11 · UPDATED