Summary: GAO undertook an examination of the Department of Defense (DOD) use of consultant service contracts. In fiscal year 1979, DOD spent about $2.6 billion for all types of management support service contracts. These services ranged from relatively simple studies to aid in management decisions to contracts involving complex engineering support for major weapon systems. GAO selected consulting services, management and professional services, and special studies and analysis, research, development, test and evaluation management, and support services for review. GAO found serious problems relating to the DOD use of contractor management support services. These problems included the lack of in-house capability, the frequency of unsolicited proposals, the heavy involvement of former DOD employees in contracts, the continuous nature of the support services, the questionable need for some of the services, and the poor contracting practices highlighted by the almost exclusive use of sole-source contracts. The problem is serious enough in DOD to warrant legislative action. GAO has recommended that Congress, as an interim measure, consider legislation which would minimize the funding of sole-source contracts for management support services and the funding of such contracts resulting from unsolicited proposals. The Director of the Office of Management and Budget should extend the management controls outlined in OMB Circular A-120 to other categories of management support services, assure that agencies identify all requested funds to be used for management support services, and provide this information to Congress. The Secretary of Defense should take the following actions: (1) require DOD activities to establish an independent review board to assure the highest level review of proposed contract awards and modifications over $100,000 for management support services; (2) identify functions being performed by contractors which are governmental in nature and determine personnel needs and develop ways to meet those needs; and (3) identify management support services which are not governmental in nature and which are required on a continuing basis.
