April 29, 2022

ICYMI: At Hearing, Warren Presses Pentagon on Wasteful Service Contracting Spending, Does Not Get Answers

Department of Defense Unable to Answer Warren’s Questions About Total Number of Contractors and Five-Year Expected Costs

Warren: “We have a defense industry where these contractors have a long history of lining their pockets at taxpayer expense. And if we’re not collecting the data and making smart decisions, then we’re going to just continue to see runaway spending without more effectiveness in making our military work.”

Video of Hearing

Washington, D.C. – In case you missed it, at a hearing of the Senate Armed Services Committee, U.S. Senator Elizabeth Warren (D-Mass.) questioned Under Secretary of Defense for Personnel and Readiness Gil Cisneros about the risks of wasteful service contracting spending. When Senator Warren asked Under Secretary Cisneros about the total number of contractors who work for the Department of Defense (DoD) and the five-year expected costs for service contracts, he was unable to answer her questions. 

Last year DoD spent $214 billion on services. Studies have shown that outsourcing costs the Pentagon double or triple what a federal employee would be paid – the Defense Business Board recommended cutting these contracts as part of a plan for DoD to save $125 billion over five years. Since 2016,  the Government Accountability Office has been recommending that DoD collect this information.

Senator Warren reiterated to Under Secretary Cisneros that the law explicitly requires his office to develop guidance to track this information, and stated that she would follow up with DoD to get answers to her questions. 

Transcript: To receive testimony on military and civilian personnel programs in the Department of Defense in review of the Defense Authorization Request for Fiscal Year 2023 and the Future Years Defense Program
Senate Armed Services Committee

April 27, 2022

Senator Elizabeth Warren: We’re here to discuss the Pentagon’s budget request for personnel costs. In other words, the part of the budget that pays for the people who make our military run. And some of those people are federal employees, but some of those people are contractors. 

Now, studies have shown that outsourcing can result in the Pentagon paying double or even triple what we’d pay for federal employees to do the same job. The Defense Business Board recommended cutting those contracts to help the Department save $125 billion.

Now, contractors are always going to be part of our defense workforce. But making good decisions about when to outsource requires good data.

Secretary Cisneros, your office is required by federal law to help track data on the cost of contractors used by the Pentagon. So let me just start with the basics. How many contractors work for the Department of Defense?

Gil Cisneros, Under Secretary of Defense for Personnel and Readiness: Senator, thank you for that, but regrettably, I do not have that information with me, but I can take that for the record, on the number of contractors that we–

Senator Warren: Is it a publicly available piece of information? 

Under Secretary Cisneros: That I am not sure of, ma’am. I would have to get back to you on that. 

Senator Warren: Let me put it this way. I can’t find it. 

Under Secretary Cisneros: Yeah. 

Senator Warren: And I look hard. On your website, I call people, I try to figure this out. And I think that’s the problem. 

The law explicitly requires your office to develop guidance to track this information. And I don’t know how we can justify the kind of spending the Pentagon asks for if we don’t even know basic things, like how many people we have on contract, and make that number publicly available to all of us. There’s no doubt that you’re required to collect it, I’d just like to see it and see it reported. 

Now, we also know that it can be incredibly expensive when the Department outsources its work for services like administrative support, for food services for deployed troops, for weapons maintenance, or even for management consulting. And the costs for these have grown enormously over the past 20 years, so that last year, the Department spent $214 billion on service contracting. 

One of the big ways that the Department estimates future costs is through five-year spending plans that lay out expectations for how much different parts of the Pentagon are going to need in various areas.  

So, Secretary Cisneros, how much does the Department expect to spend on service contracts over the next five years?

Under Secretary Cisneros: Senator, it’s my understanding that we don’t project contractor costs the way that we do with our military and civilian workforce, the requirements, however, we must take, I believe you’re right, total force approach and kind of look at contracted services. And I can commit that I’ll take this concern back to the Comptroller and the CAPE, to make sure that it’s addressed. 

Senator Warren: Well, I  appreciate your doing that. You know, it shouldn’t take somebody asking these questions, it should just be part of the planning that’s already baked in. 

We can’t have good planning if we’re not looking at long-term costs. And I’ve got to say, five years doesn’t seem like hugely long-term. But at least a start in the right direction. I think that taxpayers and those of us who do oversight should know how much money the Pentagon expects to spend on costly areas of the budget – and I think this committee should know that. And I’m going to be following up on requests for information. I appreciate your willingness to bring this forward. 

Look, we have a defense industry where these contractors have a long history of lining their pockets at taxpayer expense. And if we’re not collecting the data and making smart decisions, then we’re going to just continue to see runaway spending without more effectiveness in making our military work. 

So, thank you very much.