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Updated May 22, 2024
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) 2022, DOD obligated more money on
maintenance; and providing a surge capability to quickly
federal contracts ($415 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.
Contractors can also compromise the credibility and
When this occurs, these companies are referred to as
effectiveness of the U.S. military and undermine operations,
subprimes. For FY2022, top recipients of DOD contract
as some analysts believe occurred during operations in Iraq
funding also included Pfizer Inc., with which DOD has
and Afghanistan.
contracts to obtain antiviral oral therapeutics and mRNA
vaccines used to treat and prevent Coronavirus Disease
How Many Contractors Does DOD Employ?
2019 (COVID-19). Some of these contracts were executed
DOD’s Inventory of Contracted Services (ICS, see 10
in partnership with the Department of Health and Human
U.S.C. §4505(c)) is a required annual report to Congress
Services (HHS) as part of the national emergency response
that provides information on certain categories of contractor
to COVID-19.
hiring by individual DOD components (e.g., the military
Table 1. Six Largest DOD Contractors by Obligations,
departments and defense agencies). Under 10 U.S.C. §4505,
FY2021
DOD is required to collect and report data to Congress for
in bil ions of current dol ars
each purchase of services in excess of $3 million within
four service acquisition portfolio groups: logistics
Company
Obligations
management services, equipment related services,
Lockheed Martin Corporation
$46.2
knowledge-based services, and electronics and
Raytheon Technologies Corporation
$26.1
communications services. Contracts valued at or below the
General Dynamics Corporation
$21.6
simplified acquisition threshold (generally $250,000) or for
commercially available off-the-shelf items are exempt from
Pfizer Inc.
$16.7
this requirement.
The Boeing Company
$14.8
Northrop Grumman Corporation
$13.8
These reports combine contract data routinely entered into
the Federal Procurement Data System (FPDS) by DOD
Source: SAM.gov Top 100 Contractors Report, FY2022.
contracting officials with contractor-reported information
Note: Fifty percent of the Bell-Boeing Joint Project Office is
reported to SAM.gov on an annual basis. Contractor-
attributed to The Boeing Company. Raytheon is now known as RTX
supplied information includes the total number of direct
Corporation.
labor hours expended on services performed under contract,
as well as the number of employees associated with these
In FY2022, 49% of total DOD contract obligations were for
services. The report historically has not included a total
services and 51% of DOD contract obligations were for
number of individual contractors—instead, it has provided
goods, or products.
an estimate of contractor full-time equivalents (FTEs) for
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direct labor, a measure referring to the estimated numbers
servicemembers, both in terms of the number of contractors
of labor hours contracted.
and the type of work being performed. During U.S. military
operations in Iraq and Afghanistan between 2001 and 2020,
According to the FY2022 ICS report, DOD contracted
contractors frequently accounted for 50% or more of the
about 369,030 prime and subprime contractor FTEs within
total DOD presence in country.
the four defined service portfolios during that year (see
Table 2). Of that number, the Department of the Army
Since 2008, U.S. Central Command (USCENTCOM) has
contracted about 36%, the Department of the Navy about
published quarterly contractor census reports providing
24%, and the Department of the Air Force about 21%.
aggregated data on contractors employed through DOD-
funded contracts who are physically located within the
Table 2. Estimated FY2022 DOD Contractor FTEs
USCENTCOM area of responsibility, which includes
Prime Contractors and Subcontractors for Contracts
Afghanistan, Syria, and Iraq. Prior to August 2021, these
Required to be Reported Under 10 U.S.C. §4505, by DOD
reports included data associated with DOD-funded
Component
contractor personnel in Afghanistan. Following the August
2021 withdrawal of U.S. military forces from Afghanistan
Reported
and the Taliban takeover of the country, USCENTCOM
DOD Component
FTEs
reports that no DOD-funded contractor personnel remain in
Afghanistan.
Department of the Army
906,307
During the second quarter of FY2024, USCENTCOM
Department of the Navy
60,669
reported approximately 21,000 contractor personnel
Department of the Air Force
53,470
working for DOD within its area of responsibility, with a
reported 5,455 contractor personnel located in Iraq and
Defense Advanced Research Projects Agency
557
Syria. As of the second quarter of FY2024, about 48% of
(DARPA)
DOD’s reported individual contractors in the CENTCOM
Defense Information Systems Agency (DISA)
7,139
AOR were U.S. citizens. Approximately 47% were third-
country nationals, and roughly 1% were local/host-country
Defense Counterintelligence and Security Agency
2,944
nationals.
(DCSA)
In Iraq, armed and unarmed security contractors have been
U.S. Special Operations Command (USSOCOM)
5,044 employed to provide services such as protecting fixed
locations; guarding traveling convoys; providing security
Defense Health Agency (DHA)
3,895
escorts; and training police and military personnel. The
Office of the Secretary of Defense (OSD)
4,368
number of security contractor employees working for DOD
in Iraq and Syria has fluctuated significantly over time,
Missile Defense Agency (MDA)
2,810
depending on various factors.
Source: CRS analysis of DOD FY2022 Inventory of Contracted
Relevant Statutes
Services.
10 U.S.C. Part V to Subtitle A: Acquisition.
Notes: Some DOD components, such as DIA, which may provide
classified contractor FTEs, are not included in these FTE estimates.
CRS Products
Value of ICS Report
CRS Report R43074, Department of Defense’s Use of
In establishing the statutory requirement for the ICS report,
Contractors to Support Military Operations: Background, Analysis,
Congress sought in part to gain more oversight of certain
and Issues for Congress.
types of service contracts—particularly staff augmentation
CRS Report R44116, Department of Defense Contractor and
services and services that are closely associated with
Troop Levels in Afghanistan and Iraq: 2007-2020.
inherently governmental functions—and the associated
labor. Some observers have questioned the value of the ICS
Other Resources
report in facilitating congressional oversight. A 2017
RAND Corporation study described the ICS report as
Defense Pricing and Contracting, Inventory of Services Contracts,
including data that are “unprocessed, retrospective, and can
https://www.acq.osd.mil/asda/dpc/cp/policy/service-contract-
largely be found elsewhere,” potentially limiting the utility
inventory.html.
of the report to Congress and DOD. Other experts, such as
Office of the Assistant Secretary of Defense for Sustainment,
the Section 809 Advisory Panel, have recommended
CENTCOM Quarterly Contractor Census Reports,
repealing or modifying the underlying statutory requirement
https://www.acq.osd.mil/log/LOG_CSD/CENTCOM_reports.
to obtain more relevant data and analysis suitable for use by
html.
policymakers in Congress and DOD.
What Role Do Contractors Play In Overseas DOD
Operations?
Alexandra G. Neenan, Analyst in U.S. Defense
Operations over the past 30 years have highlighted the
Infrastructure Policy
central role that contractors play in supporting U.S.
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Defense Primer: Department of Defense Contractors
Disclaimer
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congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
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