Outsourcing the Pentagon

Introduction

The starting point and primary source material for this project was a collection of the Defense Department’s annual Contract Action Data Files from fiscal years 1998-2003. These databases, totaling a combined 2.2 million records, document all activities concerning contracts with values exceeding $25,000. Each record includes a wealth of detail, based on the Pentagon’s DD Form 350, which must be filled out every time a contract action takes place.

All the data refers only to contracts authorized to the prime contractor. Subcontractor information is not publicly released.

All references to “contracts” throughout the report refer to the dollar amount of the contracts, rather than the number of contracts. For instance, a statement that a particular company got two-thirds of its contracts through sole-source bidding would mean two thirds of the contract dollars were won through sole-source bidding.

The Defense Department has been compiling this data since 1966, and all the databases are available for downloading on the web at www.dior.whs.mil/PEIDHOME/guide/procoper.htm.

Among the data include in those records are the prime contractor’s name, address, Dun & Bradstreet ID number, corporate parent ID (unfortunately, not always accurate), the contracting office, the dollar amount of the new or amended contract, the location where the work was performed, a description of the product or service provided, and detailed information about the type of contract, whether it was competitively bid or not, whether it went to a small or large business—even how many bidders responded.

Databases from earlier years, as far back as fiscal 1984, were also used to track long-term shifts in the goods and services the Pentagon bought.

Our primary goal was to identify and profile the Pentagon’s top overall contractors during this six year period, a span that included two administrations and periods both of peace and war. While the Pentagon publishes annual lists of the 100 biggest contractors, we wanted to dig more deeply and profile every contractor that won $100 million or more in Defense Department contracts between 1998 and 2003. By the time we were done, some 737 contractors met that threshold and their profiles appear elsewhere in this report.

Companies that merged or were bought by other companies during the period of this study are listed on their own if they collected $100 million or more in contracts while they were still independent. After the merger or acquisition, their contracts are included in the totals of the new company. For instance, Exxon Corp. is profiled for the contracts it received between 1998 and 1999. The profile for its successor, Exxon Mobil, begins in 2000.

Once we’d determined the universe of contractors, we researched their campaign contribution records from the Federal Election Commission and lobbying reports filed with the U.S. Senate’s Office of Public Records.

By far, the most difficult and time-consuming part of the project was standardizing and verifying the names of companies that met the $100 million threshold. We discovered very early that the DoD database was rife with errors – that literally thousands of records had incorrect or outdated IDs for the contractor’s ultimate parent. Because of that, we examined contract data for many companies well below the $100 million threshold, to ensure that a company would not be kept off the list due to miscoding of their ID by the Pentagon.

To clean the data, we spent months combing corporate websites, annual reports, filings with the Securities and Exchange Commission, news articles, and the online business directory Hoovers.com. This job would have taken years instead of months—if it could have been done at all—were it not for the internet and particularly the extraordinary search capacities of Google.com, which time after time helped us locate thousands of obscure facts culled from around the World Wide Web.

Given all the inaccuracies the Defense Department’s database, it is always possible that other errors remain to be discovered. If and when they are, the Center’s rankings, profiles and reports will be updated accordingly.

A large measure of gratitude is also due to Ray Morris, the recently-retired civilian employee of the Defense Department’s Directorate for Information Operations and Reports, whose job it was to compile these annual databases since 1966, and who over the years helped countless journalists and researchers in locating and interpreting the data.