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Wednesday, March 6, 2013

Department of Defense Trends in Overseas Contract Obligations

Moshe Schwartz
Specialist in Defense Acquisition

Wendy Ginsberg
Analyst in American National Government

The Department of Defense (DOD) has long relied on contractors to support military operations. Contractors provide the U.S. military with weapons, food, uniforms, and logistic services. Without contractor support, the U.S. would currently be unable to arm and field an effective fighting force. DOD spends more on federal contracts than all other federal agencies combined.

Understanding the costs associated with contractor support of overseas military operations could provide Congress more information upon which to weigh the relative costs and benefits of different military operations—including contingency operations and maintaining bases around the world.

The federal government tracks contract obligations through a database called the Federal Procurement Data System-Next Generation (FPDS-NG). Obligations occur when agencies enter into contracts, employ personnel, or otherwise commit to spending money. This report examines DOD overseas contract obligations within the context of U.S. government and DOD contract spending. 

Total DOD Contract Obligations 

From FY1999 to FY2012, DOD contract obligations increased from $170 billion to $360 billion (in FY2012 dollars). However, over the last five fiscal years, adjusted for inflation, contract obligations dropped from a high of $420 billion in FY2008 to $360 billion in FY2012. DOD’s contract obligations in FY2012 were equal to 10% of the entire federal budget. 

DOD Contract Obligations Performed Overseas 

DOD obligated $44 billion (12% of total contract obligations) for contracts performed overseas in FY2012. Although much of these funds were to support operations in Afghanistan and Iraq, $18 billion (40%) was spent to support operations in other parts of the world.

DOD contract obligations for work performed overseas occurred primarily in the area under the jurisdiction of U.S. Central Command (59% of total), which includes the Iraq and Afghanistan areas of operation. DOD contractors working abroad performed their remaining work in the geographic regions that fall under U.S. European Command (25%), U.S. Pacific Command (11%), U.S. Northern Command (2%), U.S. Southern Command (1%), and U.S. African Command (1%). 

Comparison of DOD, State, and USAID Overseas Contract Obligations 

Some analysts argue that to achieve its foreign policy objectives, the United States must bring together the resources of, among others, DOD, the Department of State, U.S. Agency for International Development (USAID)—and government contractors. DOD’s share of federal government obligations for contracts performed abroad has declined from a high of 87% in FY1999 to 73% in FY2010. Over the same period, combined Department of State and USAID contract obligations increased from 5% to 16% of all overseas obligations.

Date of Report: March 1, 2013
Number of Pages: 18
Order Number: R41820
Price: $29.95

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