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1 [1] (February 6, 2026)

handle is hein.crs/govethn0001 and id is 1 raw text is: Informing th Ieg s1at1ve dabate sne 1914 Up Defense Primer: Department of Defense Contractors Throughout its history, the Department of Defense (DOD), which is using a secondary Department of War designation, under Executive Order 14347 dated September 5, 2025, has relied on contractors to support a wide range of military operations. Within the defense policy community, the term contractor is commonly used in two different contexts. The word can describe the private companies, academic institutions, and other entities with which DOD contracts to provide supplies, construction services, or other types of services. It can also describe individuals hired by DOD-usually through private companies, which are also considered contractors in the previous context-to perform specific tasks. The term contractor does not refer to military servicemembers, civilian DOD career employees, or civilian political appointees. Congress has exercised its legislative powers in the past to establish certain reporting requirements regarding DOD contractors, and exercised oversight of DOD contractor activities. Contractors as Enttis- In Fiscal Year (FY) 2024, DOD obligated more money on defense contracts ($445 billion) than all other government agencies combined ($310 billion). While DOD contracts with many entities, five companies (Lockheed Martin, RTX Corporation, the Boeing Company, Northrup Grumman Corporation, and General Dynamics Corporation) received 30% of departmental contract obligations (see Table 1). These companies frequently serve as prime contractors, or primes (i.e., a company that maintains a direct contractual relationship with the government). Primes in turn subcontract to other companies that serve as subprime contractors, or subprimes. Table I. Five Largest DOD Contractors by Obligations, FY2024 In Billions of Current Dollars Company Lockheed Martin Corporation RTX Corporation The Boeing Company Northrup Grumman Corporation General Dynamics Corporation Other DOD Contractors Total DOD Contractors Obligations $50.7 $24.8 $23.2 $18.6 $15.6 $312.2 $445.1 % of Obligations 1 1 6 5 4 4 70 100 Source: CRS analysis of SAM.gov Top 100 Contractors Report, FY2024. According to the Government Accountability Office (GAO), in FY2024, 54% of total DOD contract obligations were for services and 46% of DOD contract obligations were for goods, or products. dated February 6, 2026 Contractors as -nd vdua s Individual DOD contractors fulfill a wide variety of organizational roles and functions, from logistics and transportation to intelligence analysis and private security. Reasons for DOD Using Individual Contractors After the Cold War, the U.S. military-in line with a government-wide trend-embraced outsourcing and increasingly used private contractors instead of military servicemembers or government civilians to perform certain tasks. Proponents of this trend note that effective use of contractors in specialized fields, such as linguistics or weapons maintenance, helps DOD by freeing up uniformed personnel to focus on inherently governmental activities. Contractors can also meet surge demands and provide critical support functions tailored to specific military needs that is more cost-effective on a long-term basis than by adding permanent, federal government or uniformed staff. Critics of the trend counter that ineffective management and oversight of contractors can lead to wasteful spending of taxpayer dollars and impede operational outcomes. Some critics point out that contractors can also compromise the credibility and effectiveness of the U.S. military and undermine operations, pointing to certain operations in Iraq and Afghanistan. Tracking Numbers of Certain Contractors DOD Employs Per Title 10 U.S.C. §4505(c), DOD publishes an annual Inventory of Contracted Services (ICS) that provides information on certain categories of contractor hiring by individual DOD components (e.g., the military departments and defense agencies). Under 10 U.S.C. §4505, DOD is required to collect and report data to Congress for each purchase of services in excess of $3 million within four service acquisition portfolio groups: logistics management -services, equipment related services, knowledge-based services, and electronics and communications services. The -statute specifies that these data are to be collected in a manner that is comparable to the manpower data elements used in inventories of similar DOD civilian employee functions. After the data have been collected, relevant DOD agencies are to provide a review that includes ensuring that the contracting activities in the report do not include any governmental functions, and identify potential contracting activity that could be converted to civilian employee performance. The ICS reports combine contract data that DOD contracting officials routinely enter into the Federal Procurement Data System (FPDS) with contract data that vendors report annually to the government. Contractor- supplied data include the total number of direct labor hours expended on services performed under contract, as well as the number of employees associated with these services.