Testimony on Approaches to Reducing the Department of Defense’s Compensation Costs

Some components of DoD’s compensation budget are clear, including the military personnel accounts, health care costs for active-duty and retired military personnel, and compensation for DoD’s civilian workforce. But other components are less clear, including some smaller noncash elements of military compensation and, in particular, the size and cost of DoD’s workforce of service contractors.

In biennial reports and other studies requested by the Congress, the Congressional Budget Office regularly analyzes and presents a range of policy options that would reduce spending across the federal government. Among those options are some that address DoD’s compensation costs. CBO has examined several ways that DoD could reduce those costs by changing the size of military forces while still meeting the goals of national security strategy. CBO has also reported on ways to lower such costs without changing the size of military forces.

None of those options address the size or cost of DoD’s service contractor workforce. Although CBO has done preliminary analysis of the costs associated with service contractors, a full analysis is not possible using the incomplete data that DoD provides to the Congress. Comprehensive data from DoD would allow CBO to supply the Congress with information about the scope and cost of the department’s large workforce of service contractors—which could prove to nearly rival the size of DoD’s federal civilian workforce. Such data could also help DoD manage its total workforce.