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Testimony: 

Before the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT: 
Thursday, March 13, 2008: 

Defense Management: 

Overarching Organizational Framework Could Improve DOD's Management of 
Energy Reduction Efforts for Military Operations: 

Statement of William M. Solis, Director: Defense Capabilities and 
Management: 

GAO-08-523T: 

GAO Highlights: 

Highlights of GAO-08-523T, a testimony before the Subcommittee on 
Readiness, Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

The Department of Defense (DOD) is the single largest U.S. energy 
consumer. About three-fourths of its total consumption consists of 
mobility energyóthe energy required for moving and sustaining its 
forces and weapons platforms for military operations. 

GAO was asked to discuss DODís efforts to manage and reduce its 
mobility energy demand. This testimony addresses (1) energy issues that 
are likely to affect DOD in the future, (2) key departmental and 
military service efforts to reduce demand for mobility energy, and (3) 
DODís management approach to guide and oversee these efforts. This 
testimony is based primarily on work conducted for a report that GAO 
issued today (GAO-08-426) on DODís management of mobility energy. 

What GAO Found: 

Several issues, such as rising fuel costs, worldwide energy demand, and 
the high fuel burden during operations, underscore the importance of 
energy to DOD. Fuel costs for DOD are substantial and the volatility of 
world oil prices will likely continue to affect the departmentówhich 
may require DOD to make difficult trade-offs such as redirecting funds 
from ongoing programs to pay for needed fuel. Other energy issues that 
are likely to affect DOD in the future are the increased U.S. 
dependence on foreign oil, projected increases in the worldwide demand 
for oil, and uncertainties about world oil supplies. Furthermore, DODís 
high fuel requirements on the battlefield can place a significant 
logistics burden on military forces, limit the range and pace of 
operations, and add to mission risks, including exposing supply convoys 
to attack. Given these issues, DOD must be well positioned to 
effectively manage energy demands for military operations. 

DOD has initiatives under way to reduce mobility energy demand. At the 
department level, OSD created a task force to address energy security 
concerns. In addition, the Deputy Secretary of Defense included energy 
in DODís list of the top 25 transformational priorities for the 
department as part of its initiative to pursue targeted acquisition 
reforms. Each of the military services also has its own initiatives 
under way. The Army is addressing fuel consumption at forward-deployed 
locations by developing foam-insulated tents and temporary dome 
structures that are more efficient to heat and cool, reducing the 
demand for fuel-powered generators. The Navy has established an energy 
conservation program to encourage ships to reduce energy consumption. 
The Air Force has developed an energy strategy and undertaken 
initiatives to determine fuel-efficient flight routes, reduce the 
weight on aircraft, optimize air refueling, and improve the efficiency 
of ground operations. The Marine Corps has initiated research and 
development efforts to develop alternative power sources, such as 
hybrid power, and improve fuel management. 

While these and other mobility energy reduction efforts are under way, 
DOD lacks elements of an overarching organizational framework to guide 
and oversee these efforts. Specifically, GAO found that DODís current 
approach to mobility energy lacks (1) a single executive-level OSD 
official who is accountable for mobility energy matters, (2) a 
comprehensive strategic plan for mobility energy, and (3) an effective 
mechanism to provide for communication and coordination of mobility 
energy efforts among OSD and the military services as well as 
leadership and accountability over each military serviceís efforts. GAO 
also found that DOD has made limited progress in incorporating fuel 
efficiency as a consideration in key business processesówhich include 
developing requirements for and acquiring new weapons systems. With a 
mobility energy overarching organizational framework in place, DOD 
would be better positioned to reduce its significant reliance on 
petroleum-based fuel and to address the energy challenges of the 21st 
century. 

What GAO Recommends: 

In the report GAO issued today, GAO recommended that DOD establish an 
overarching organizational framework to improve the departmentís 
ability to address mobility energy challenges. The framework should 
include an executive-level Office of the Secretary of Defense (OSD) 
official accountable for mobility energy matters, a comprehensive 
strategic plan, and improvements to DODís business processes. The 
military services should designate executive-level focal points to 
establish effective communication and coordination among OSD and the 
military services. DOD partially concurred with the recommendations. 

To view the full product, click on [hyperlink, http://www.GAO-08-523T]. 
For more information, contact William M. Solis at (202) 512-8365 or 
solisw@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Department of Defense's 
(DOD) efforts to manage and reduce its demand for mobility energy--that 
is, the energy required for moving and sustaining its forces and 
weapons platforms for military operations. Mobility energy accounts for 
about three-fourths of DOD's total energy consumption.[Footnote 1] U.S. 
military forces, for example, require vast quantities of fuel to 
operate combat and support vehicles; generate power at forward-deployed 
locations; and move troops, equipment, and supplies. As the single 
largest energy consumer in the United States, DOD incurs billions of 
dollars each year in fuel costs, and these costs have been rising in 
recent years as oil prices have increased. DOD recognizes that its high 
energy demand presents significant risks to its military forces. 
Moreover, a February 2008 Defense Science Board report concluded that 
DOD's high fuel demand compromises operational capability and mission 
success, requires an excessive logistics infrastructure, creates more 
risk for support operations than necessary, and increases life cycle 
operations and support costs.[Footnote 2] In addition, the report notes 
that changing a culture that considers energy cheap and abundant is one 
of the most difficult challenges facing the department and the nation. 

Today I would like to provide our perspectives on (1) energy issues 
that are likely to affect DOD in the future, (2) key departmental and 
military service efforts to reduce demand for mobility energy, and (3) 
DOD's management approach to guide and oversee these efforts. This 
statement is based primarily on the work we conducted for a report that 
we issued today that addresses DOD's management of energy reduction 
efforts for military operations.[Footnote 3] As part of this work, we 
reviewed several DOD-sponsored studies that have recommended actions 
DOD could take to better manage its mobility energy 
challenges.[Footnote 4] We have also had an opportunity to review the 
February 2008 Defense Science Board report. We conducted this 
performance audit from September 2007 through March 2008 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

Summary: 

Several issues, such as rising fuel costs, worldwide energy demand, and 
the high fuel burden during operations, underscore the importance of 
energy to DOD. Fuel costs for DOD are substantial and the volatility of 
world oil prices will likely continue to affect the department--which 
may require DOD to make difficult trade-offs, such as redirecting funds 
from ongoing programs to pay for needed fuel. In addition, both the 
Army and Marine Corps have plans to grow their forces over the next 
several years, which will inevitably require larger amounts of fuel to 
sustain these forces and their weapons systems. Other energy issues 
that are likely to affect DOD in the future are the increased U.S. 
dependence on foreign oil, projected increases in the worldwide demand 
for oil, and uncertainties about world oil supplies. Furthermore, DOD's 
high fuel requirements on the battlefield can place a significant 
logistics burden on military forces; limit the range and pace of 
operations; and add to mission risks, including exposing supply convoys 
to attack. Given these issues, DOD must be well positioned to 
effectively manage energy demands for military operations. 

DOD and the military services have several initiatives under way to 
reduce demand for mobility energy. At the department level, the Office 
of the Secretary of Defense (OSD) created a task force in 2006 to 
address energy security concerns. Moreover, in 2007, the Deputy 
Secretary of Defense included energy in DOD's list of the top 25 
transformational priorities for the department as part of its 
initiative to pursue targeted acquisition reforms. Each of the military 
services also has its own initiatives under way to reduce mobility 
energy demand. The Army is addressing fuel consumption at forward- 
deployed locations by developing foam-insulated tents and temporary 
dome structures that are more efficient to heat and cool, reducing the 
demand for fuel-powered generators. The Navy has established an energy 
conservation program to encourage ships to reduce energy consumption. 
The Air Force has developed an energy strategy and undertaken 
initiatives to determine fuel-efficient flight routes, reduce the 
weight on aircraft, optimize air refueling, and improve the efficiency 
of ground operations. The Marine Corps has initiated research and 
development efforts to develop alternative power sources, such as 
hybrid power, and improve fuel management. 

While these and other individual efforts are under way to reduce 
mobility energy demand, we found that DOD does not have an overarching 
organizational framework to guide and oversee these efforts. Our prior 
work has shown that an overarching organizational framework is critical 
to successful transformation in both public and private organizations. 
Key elements of such a framework include (1) top-level leadership and 
an implementation team with dedicated resources and funding; (2) a 
comprehensive strategic plan that includes goals, objectives, methods, 
timelines, and outcome-oriented performance metrics; and (3) a 
communication strategy that provides shared expectations and reports 
related progress. We found that DOD's current approach to mobility 
energy lacks these elements. For example, while DOD has begun to 
increase management attention on energy issues, it has not designated a 
single executive-level OSD official--supported by an implementation 
team--who is accountable for mobility energy matters across the 
department, who participates in top policy-making decisions as an 
advocate for reducing mobility energy demand, and who serves as a 
stakeholder in interagency discussions about national energy concerns. 
Currently, DOD's approach to mobility energy is decentralized, with 
fuel oversight and management responsibilities diffused among several 
OSD and military service offices as well as working groups. In 
addition, until DOD fully develops and implements a comprehensive 
strategic plan for mobility energy, it cannot be certain that mobility 
energy reduction efforts align with the department's energy mission or 
strategic goals to ensure that they are appropriately prioritized or to 
know whether critical gaps or duplication of efforts exist. Finally, 
without an effective mechanism to facilitate communication of mobility 
energy reduction efforts among OSD and the military services, DOD 
cannot be assured that these efforts are consistent with DOD's energy 
priorities and goals. We also found that DOD has made limited progress 
in incorporating fuel efficiency as a consideration in key business 
processes--which include developing requirements for and acquiring new 
weapons systems--and in implementing recommendations from department- 
sponsored studies on fuel reduction. With a mobility energy overarching 
organizational framework in place, DOD would be better positioned to 
reduce its significant reliance on petroleum-based fuel and to address 
the energy challenges of the 21st century. 

Several Issues Underscore Importance of Energy to DOD: 

Several issues, such as rising fuel costs, worldwide energy demand, and 
the high fuel burden during operations, underscore the importance of 
energy to DOD. Fuel costs for DOD are substantial and the volatility of 
world oil prices will likely continue to affect the department. For 
example, in fiscal year 2007, DOD reported that it consumed almost 4.8 
billion gallons of mobility fuel and spent $9.5 billion. Although fuel 
costs represent less than 3 percent of the total DOD budget, they have 
a significant impact on the department's operating costs. DOD has 
estimated that for every $10 increase in the price of a barrel of oil, 
DOD's operating costs increase by approximately $1.3 billion. 
Furthermore, during a 2007 military energy security forum, DOD 
officials discussed the possibility of oil prices rising to as much as 
$200 a barrel if a major disruption were to occur. Rising fuel costs 
may require DOD to make difficult trade-offs, such as redirecting funds 
from ongoing programs to pay for needed fuel. In addition, both the 
Army and Marine Corps have plans to grow their forces over the next 
several years, which will inevitably require larger amounts of fuel to 
sustain these forces and their weapons systems. 

Other energy issues that are likely to affect DOD in the future are the 
increased U.S. dependence on foreign oil, projected increases in the 
worldwide demand for oil, and uncertainties about world oil supplies. 
In 2007, about 67 percent of the oil consumed in the United States was 
imported, and the increased energy dependence on other countries raises 
concern about instability in the Middle East and elsewhere.[Footnote 5] 
In addition, the Department of Energy projects that worldwide oil 
demand will continue to grow, reaching 118 million barrels per day in 
2030, up from 84 million barrels per day in 2005. Although countries 
such as China and India will generate much of this increased demand, 
the United States will remain the world's largest oil consumer. 
Moreover, more than 60 percent of world oil reserves are in countries 
where relatively unstable political conditions could constrain oil 
exploration and production. Furthermore, worldwide supplies of oil from 
conventional sources remain uncertain. U.S. oil production peaked 
around 1970, and worldwide production could peak and begin to decline. 
Although there is great uncertainty about when this might happen, most 
studies estimate that oil production will peak sometime between now and 
2040.[Footnote 6] These issues, as well as the increasing threat of 
climate change, may lead to global instabilities that could require DOD 
to conduct operations in some of these regions and protect oil supply 
routes and critical infrastructure--all of which would ultimately lead 
to increased fuel requirements for the department. 

In addition, DOD's high fuel requirements on the battlefield can place 
a significant logistics burden on military forces, limit the range and 
pace of operations, and add to mission risks. For example, for current 
operations, the fuel logistics infrastructure requires, among other 
things, long truck convoys that move fuel to forward-deployed locations 
while being exposed to potential enemy attacks. Combatant commanders 
may also face additional risks related to fuel disruptions in 
operations. For instance, according to a U.S. Central Command official, 
changes in customs procedures, truck driver strikes, refinery 
maintenance, road construction, and holiday periods may close border 
crossings for long periods of time, possibly resulting in the 
interruption of fuel supplies to forward-deployed locations. Moreover, 
a 2007 LMI report stated that the department's increasing fuel demand 
limits its ability to establish a more mobile and agile force. 

DOD and the Military Services Have Made Efforts to Reduce Mobility 
Energy Demand: 

DOD and the military services have made efforts to reduce mobility 
energy demand for their forces and in their weapons systems. At the 
department level, OSD created the DOD Energy Security Task Force in 
2006--consisting of an integrated product team, several working groups, 
and a senior steering group--to address long-term energy security 
concerns. Among other activities, the task force is monitoring the 
progress of selected military service-led research and development 
projects (see table 1) that have the potential for reducing mobility 
energy demand. 

Table 1: Selected Energy-Related Research and Development Projects 
Being Monitored by DOD's Energy Security Task Force: 

Category: Air platforms; 
Project name: Highly Efficient Embedded Turbine Engine; 
Description: Develop a variable core engine to reduce fuel consumption 
in unmanned aerial vehicles, transport aircraft, and other aircraft. 

Category: Air platforms; 
Project name: Small Heavy Fueled Engine; 
Description: Extend the duration of unmanned aerial vehicle engines 
from 3-4 to 6-8 hours to increase fuel efficiency and reduce the 
logistics tail by using a single battlefield fuel; plan to apply to 
mobile ground power generators. 

Category: Air platforms; 
Project name: Long-Range Unmanned Aerial Vehicles; 
Description: Extend flight time of unmanned aerial vehicles for up to 6-
7 days for increased fuel efficiency and savings over conventional 
surveillance and reconnaissance platforms. 

Category: Ground vehicles; 
Project name: Fuel-Efficient Ground Vehicle Demonstrator; 
Description: Identify opportunities in fuel-efficient technologies to 
build a virtual vehicle that will demonstrate decreased fuel 
consumption in a tactical vehicle without decreasing performance or 
capability. 

Category: Power systems; 
Project name: Fuel Cell Research; 
Description: Develop and demonstrate compact and mobile fuel cell 
systems to provide onboard power generation for increasing power 
demands and to reduce battery weight. 

Category: Power systems; 
Project name: Transportable Hybrid Electric Power Supply; 
Description: Provide hybrid electric power generators to reduce diesel 
fuel usage and resupply requirements. 

Category: Power systems; 
Project name: Hybrid Intelligent Power; 
Description: Automate generators on the battlefield to turn on and off 
as needed to minimize fuel use and reduce maintenance needs, personnel 
requirements, and power interruptions. 

Source: DOD. 

[End of table] 

In addition to focusing on research and development initiatives, DOD 
has recognized a need to factor energy efficiency considerations into 
its acquisition process. In 2007, the Deputy Secretary of Defense 
included energy in DOD's list of the top 25 transformational priorities 
for the department as part of its initiative to pursue targeted 
acquisition reforms. Also in 2007, the Office of the Under Secretary of 
Defense for Acquisition, Technology, and Logistics established a DOD 
policy to include the fully burdened cost of fuel--that is, the total 
ownership cost of buying, moving, and protecting fuel in systems during 
combat--for the acquisition of all tactical systems that create a 
demand for energy.[Footnote 7] To incorporate the fully burdened cost 
of energy into acquisition decisions, OSD initiated a pilot program 
that includes three systems: the Army and Marine Corps' Joint Light 
Tactical Vehicle, the Navy's new CG(X) cruiser, and the Air Force's 
Next-Generation Long-Range Strike aircraft. 

In another initiative, the Joint Staff added language to its guidance 
in May 2007 requiring that an energy efficiency key performance 
parameter be selectively considered in the development of capability 
needs for new systems.[Footnote 8] The guidance defines a key 
performance parameter as an attribute or characteristic of a system 
that is considered critical or essential to the development of an 
effective military capability. 

In addition, each of the military services has its own initiatives 
under way to reduce mobility energy demand. The following highlights 
several key efforts and is not intended to be a comprehensive listing 
of all fuel reduction efforts. 

Army: The Army is addressing fuel consumption at forward-deployed 
locations by developing foam-insulated tents and temporary dome 
structures that are more efficient to heat and cool and therefore could 
reduce the demand for fuel-powered generators at these locations. 
Another initiative is the development of a transportable hybrid 
electric power station, which uses wind, solar energy, a diesel 
generator, and storage batteries to provide reliable power with fewer 
fuel requirements. 

Navy: The Navy has established an energy conservation program aimed at 
encouraging ships to reduce energy consumption. The energy conservation 
program provides training materials, such as a shipboard energy 
conservation manual and a pocket guide to assist commanders with energy-
saving activities. The program also gives quarterly awards to ships 
that use less than the Navy's established baseline amount of fuel. The 
Navy has also made ship design alterations to reduce fuel demand. 

Air Force: The Air Force has identified and begun to implement 
initiatives aimed at reducing mobility energy demand and increasing 
fuel efficiency, aligning these initiatives with its energy strategy. 
These initiatives include determining fuel-efficient flight routes, 
reducing the weight on aircraft, optimizing air refueling, and 
improving the efficiency of ground operations. In addition, it is 
testing synthetic fuels in its aircraft that could partly displace the 
use of petroleum-based fuel. 

Marine Corps: The Marine Corps has initiated efforts to develop 
alternative power sources and improve fuel management. For example, it 
is testing the use of hybrid power--by combining solar panel, 
generator, and battery energy sources--at remote sites to lessen its 
fuel transportation demands to forward-deployed locations. In addition, 
the Office of Naval Research is leading efforts for the Marine Corps to 
develop decision support tools that process and analyze data and 
improve fuel management in combat. 

DOD Has Not Established an Overarching Organizational Framework to 
Guide and Oversee Mobility Energy Reduction Efforts: 

While DOD and the military services have several efforts under way to 
reduce mobility energy demand, DOD has not established an overarching 
organizational framework to guide and oversee these efforts. In the 
absence of a framework for mobility energy, we also found that DOD has 
made limited progress in incorporating fuel efficiency considerations 
into its key business processes and in implementing recommendations 
from department-sponsored studies on fuel reduction. In the report that 
we issued today, we made recommendations that DOD establish an 
overarching organizational framework for mobility energy. Without such 
a framework, DOD cannot be assured that its current mobility energy 
reduction efforts will be fully implemented and will significantly 
reduce its reliance on petroleum-based fuel. 

DOD Lacks Key Elements of an Overarching Organizational Framework: 

Our prior work has shown that an overarching organizational framework 
is critical to successful transformation in both public and private 
organizations. The key elements of such a framework include (1) top- 
level leadership and an implementation team with dedicated resources 
and funding; (2) a comprehensive strategic plan, including goals and 
objectives, methods and timelines for evaluating progress, and outcome- 
oriented performance metrics; and (3) a communication strategy that 
involves creating shared expectations and reporting related 
progress.[Footnote 9] We found that DOD's current approach to mobility 
energy lacks these elements. 

Top-Level Leadership and Implementation Team: 

While DOD has begun to increase management attention and has identified 
energy as a transformational priority, it has not designated a single 
executive-level OSD official whose primary focus is on mobility energy 
and who is accountable for these matters across the department. Our 
prior work has stated that leadership must set the direction, pace, and 
tone and provide a clear, consistent rationale that brings everyone 
together behind a single mission.[Footnote 10] Currently, DOD's 
approach to mobility energy is decentralized, with fuel oversight and 
management responsibilities diffused among several OSD and military 
service offices as well as working groups. DOD directives designate the 
Under Secretary of Defense for Acquisition, Technology, and Logistics 
as the department's senior energy official, with responsibility for 
establishing policies, granting waivers, and approving changes in the 
management of energy commodities, including petroleum.[Footnote 11] 
However, it is unclear the extent to which the Under Secretary or any 
official from this office provides comprehensive guidance and oversight 
and sets a direction for mobility energy reduction efforts across the 
department. In addition, the Under Secretary has a broad range of other 
responsibilities that include, among other things, matters relating to 
the DOD acquisition system, research and development, systems 
engineering, logistics, installation management, and business 
management modernization. Therefore, the Under Secretary's primary 
focus has not been on the management of mobility energy. 

In addition, DOD's Energy Security Task Force was formed to address 
long-term energy security concerns, such as DOD's reliance on fossil 
fuels, but we found that the task force has been unable to develop 
policy or provide guidance and oversight of mobility energy issues 
across the department. As indicated in its charter, the task force is 
required to develop a comprehensive DOD energy strategy and an 
implementation plan. Among other deliverables, the charter also 
requires it to define DOD's energy challenge, create a compendium of 
energy-related works, and perform a strategic assessment of energy. 
While the task force has taken steps to identify and monitor the 
progress of selected mobility energy reduction projects across the 
department, it has not yet completed an energy strategy or 
implementation plan, as well as other responsibilities. Furthermore, 
OSD officials told us that while the task force has briefed the Deputy 
Secretary of Defense's advisory group on its recommended projects, it 
does not have a "seat at the table" in departmental discussions at the 
Deputy Secretary of Defense level or at other executive levels, such as 
the Joint Requirements Oversight Council, the Defense Acquisition 
Boards, or the 3-Star Group within DOD's Planning, Programming, 
Budgeting, and Execution process, as an advocate for reducing mobility 
energy demand.[Footnote 12] 

DOD also does not have an implementation team in place, with dedicated 
resources and funding, to address mobility energy issues. For example, 
the officials who lead DOD's Energy Security Task Force's integrated 
product team do so as an extra responsibility outside of their normal 
work duties. Other DOD officials said that the task force provides a 
good forum for sharing energy ideas across the department but lacks 
adequate staff to carry out specific actions. Furthermore, a task force 
participant told us that it can be difficult to find time to attend 
meetings while balancing other duties. The task force also does not 
receive any dedicated funding to pursue department-level energy 
priorities. Without a long-term funding mechanism, DOD may not be able 
to ensure that mobility energy reduction efforts receive sustained 
funding over a period of years. 

Moreover, DOD may not be well positioned to serve as a focal point on 
mobility energy within the department, with Congress, and with the 
Department of Energy or other interagency partners. During a military 
energy security forum held at the National Defense University in 
November 2007, representatives from various DOD offices presented 
energy as an area that is significant to a breadth of issues ranging 
from force protection to global stability to the security of DOD's 
critical infrastructure. They also noted that DOD has the potential to 
play multiple roles with respect to energy, including consumer, market 
leader, educator/motivator, oil infrastructure protector, and 
warfighter supporter. These concerns, coupled with an increased 
national and congressional interest in reducing fossil fuel dependence 
and exploring alternative energies, will likely necessitate an 
increased leadership focus on long-term energy issues, both within DOD 
and in its role as a stakeholder in interagency and national dialogues. 

Comprehensive Strategic Plan: 

DOD has not yet developed a comprehensive strategic plan for mobility 
energy, although it has taken some steps to lay the foundation for 
mobility energy strategic planning. According to OSD officials, DOD has 
begun to incorporate mobility energy issues into its Guidance on the 
Development of the Force, a department-level strategic planning 
document. In addition, the Office of the Deputy Assistant Secretary of 
Defense for Policy Planning, within the Office of the Under Secretary 
of Defense for Policy, is analyzing future energy concerns for the 
United States and the international security environment and 
highlighting their implications for the department. DOD officials said 
that the analysis is expected to provide information for consideration 
in the development of future strategic planning documents. We also 
observed that the DOD Energy Security Task Force has begun efforts to 
define goals that eventually may be incorporated into a DOD energy 
security strategic plan. OSD officials told us that the task force's 
intent is to complete this strategic plan by May 2008. However, current 
DOD strategic planning documents, such as the National Military 
Strategy and the most recent Quadrennial Defense Review, do not address 
mobility energy reduction.[Footnote 13] Furthermore, until DOD fully 
develops and implements a comprehensive strategic plan for mobility 
energy, it cannot be certain that mobility energy reduction efforts 
align with the department's energy mission or strategic goals, ensure 
that they are appropriately prioritized, or know whether critical gaps 
or duplication of efforts exist. 

Communication Strategy: 

DOD does not have an effective mechanism to facilitate communication 
and coordination of mobility energy reduction efforts among OSD and the 
military services. In addition, we found a lack of cross-service 
coordination concerning mobility energy reduction initiatives. While 
DOD's Energy Security Task Force aims to identify key players within 
the energy field, its current structure does not ensure departmentwide 
communication of fuel reduction efforts, particularly among the 
military services, which are responsible for most of these efforts. 
More specifically, during our observation of a task force monthly 
meeting, we found that although this venue provides for some sharing of 
information, the generally less than 2 hours allotted for each monthly 
meeting does not allow for effective coverage of the spectrum of DOD's 
mobility energy issues. Moreover, we noted in our report that although 
the task force's senior steering group includes, among others, the 
service under secretaries and assistant secretaries; the Director, 
Defense Research and Engineering; and several principal deputy under 
secretaries of defense, it only meets two to three times a year. 
Additionally, with the exception of the Air Force, none of the other 
military service members on the senior steering group have primary 
responsibility for mobility energy efforts within their services. 
Without executive-level focal points, the military services may not be 
well positioned to effectively coordinate on mobility energy efforts 
across the department or provide leadership or accountability for 
efforts within their services. Furthermore, DOD cannot be assured that 
energy reduction efforts are consistent with DOD's energy priorities 
and goals. 

DOD Has Made Limited Progress in Incorporating Fuel Efficiency into Key 
Business Processes and in Implementing Recommendations from Department- 
Sponsored Studies: 

In the absence of an overarching organizational framework, DOD has made 
limited progress in incorporating fuel efficiency as a consideration in 
key business processes--which include developing requirements for and 
acquiring new weapons systems--and in implementing recommendations made 
in department-sponsored studies on fuel reduction. 

DOD Has Not Yet Fully Incorporated Fuel Efficiency Considerations into 
Its Key Business Processes: 

While DOD has recently begun to take some steps to integrate fuel 
considerations into its key departmental business processes, such as 
its requirements development and acquisition processes for new weapons 
platforms and other mobile defense systems, these considerations are 
not factored in a systematic manner and cannot be fully applied. For 
example, DOD's requirements development process does not systematically 
include energy efficiency considerations, and the capability gap 
assessments associated with the process do not include fuel-related 
logistics, thus leaving these types of issues to be resolved after 
systems are fielded. In May 2007, the Joint Staff established an energy 
efficiency key performance parameter that would require fuel 
considerations during capabilities development. However, because DOD 
has not developed a methodology to determine how best to employ the 
energy efficiency key performance parameter, its implementation remains 
uncertain. 

DOD has also taken steps to inform its acquisition process with its 
pilot program to determine the fully burdened cost of fuel for three 
mobile defense systems. While the pilot program represents a step 
toward providing visibility over the total logistics costs associated 
with delivered fuel and DOD has set a fall 2008 deadline to issue 
guidance for applying the fully burdened cost of fuel in acquisition 
programs, DOD has not yet developed an approach for determining how it 
would incorporate this information into its acquisition decision-making 
process. Until the pilot program is completed and the results are 
assessed, DOD is not in a position to apply a fully burdened cost 
analysis to its acquisition process. Thus, the department is unable to 
promote greater visibility over its acquisition decisions or more fully 
consider the operational and cost consequences of the fuel burden on 
the logistics infrastructure. 

Other key DOD business processes, such as those that address repair, 
recapitalization, and replacement of mobile defense systems, also 
present opportunities to incorporate fuel efficiency measures during 
system upgrades. However, OSD officials told us that the department 
generally makes decisions about system upgrades without regard to fuel 
efficiency, including the fully burdened cost of fuel, in part because 
such decisions require greater up-front costs. Although DOD recognizes 
that by reducing energy demand it can provide its forces greater 
flexibility and reduce their dependency on the logistics 
infrastructure, some OSD officials told us that DOD's budget process 
promotes a short-term outlook and does not encourage the purchase of 
fuel-efficient systems or upgrades that may initially cost more but 
could reduce life cycle and logistics costs over the long term. 
Moreover, the 2008 Defense Science Board report noted that DOD's lack 
of tools to assess the operational and economic benefits of fuel 
efficiency technologies is a major reason why DOD under invests in the 
development and deployment of these technologies. 

DOD Has Been Slow to Implement Recommendations from Department- 
Sponsored Studies on Fuel Reduction: 

In the absence of an overarching organizational framework, DOD has made 
limited progress in implementing recommendations from department- 
sponsored studies by organizations such as the Defense Science Board, 
The JASONs, and LMI that have urged an expansion of efforts to reduce 
dependency on petroleum-based fuel. These studies confirmed that for 
many reasons, continued heavy reliance on petroleum-based fuel poses a 
significant problem for DOD. For example, LMI reported that DOD's 
increasing fuel demand furthers the nation's reliance on foreign energy 
sources and, as we mentioned previously, limits the department's 
ability to establish a more mobile and agile force. The studies found a 
need to focus more DOD management attention on mobility energy matters 
and recommended actions aimed at, among other things, improving the 
fuel efficiency of weapons platforms, eliminating institutional 
barriers that bear upon the department's decisions regarding fuel 
efficiency, and developing a long-term mobility energy strategy that 
would lead to reduced consumption of petroleum-based fuel. 

DOD has not taken a formal position on these recommendations, and 
implementation, in some cases, would require significant changes 
throughout the department that could generate institutional resistance. 
One study, for example, called for creating a unified energy governance 
structure in order to alter DOD's "energy culture." During our review, 
we found that DOD had taken some steps toward implementing some of the 
recommendations, such as initiating a pilot program for determining the 
fully burdened cost of delivered fuel and adding a requirement for a 
fuel efficiency key performance parameter in its Joint Staff policy 
manual. However, other recommendations, such as establishing a 
governance structure for mobility energy, have not been implemented. 
Furthermore, the 2008 Defense Science Board report noted that the 
recommendations made by the 2001 Defense Science Board report are still 
open and remain viable. Our report, which was issued today, presented 
the recommendations from these department-sponsored studies and actions 
DOD has taken in more detail. We also concluded that an overarching 
organizational framework could better position DOD to address these and 
other fuel reduction recommendations in a more timely and effective 
manner. 

Overarching Organizational Framework Needed to Better Position DOD to 
Address Mobility Energy Challenges: 

In the report we issued today, we recommended that DOD establish an 
overarching organizational framework for mobility energy to improve the 
department's ability to guide and oversee mobility energy reduction 
efforts.[Footnote 14] To establish such a framework, DOD should 
designate an executive-level OSD official who is accountable for 
mobility energy matters; develop a comprehensive, departmentwide 
strategic plan; and improve DOD's business processes to incorporate 
energy efficiency considerations. In addition, we recommended that the 
military services designate executive-level focal points to establish 
effective communication and coordination among OSD and the military 
services on departmentwide mobility energy reduction efforts as well as 
to provide leadership and accountability over their own efforts. With a 
mobility energy overarching organizational framework in place, DOD 
would be better positioned to reduce its significant reliance on 
petroleum-based fuel and to address the energy challenges of the 21st 
century. In commenting on a draft of our report, DOD partially 
concurred with our recommendations. 

Mr. Chairman and Members of the Subcommittee, this concludes my 
prepared statement. I would be happy to answer any questions that you 
may have at this time. 

Contact and Acknowledgments: 

For further information regarding this testimony, please contact 
William Solis at (202) 512-8365 or solisw@gao.gov. In addition, contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this statement. Individuals who made 
key contributions to this testimony are Thomas Gosling, Assistant 
Director; Karyn Angulo; Alissa Czyz; and Marie Mak. 

[End of section] 

Footnotes: 

[1] Energy consumed at fixed installations, referred to as facility 
energy, accounts for most of DOD's remaining energy use. 

[2] Defense Science Board Task Force on DOD Energy Strategy, More 
Fight--Less Fuel (February 2008). 

[3] GAO, Defense Management: Overarching Organizational Framework 
Needed to Guide and Oversee Energy Reduction Efforts for Military 
Operations, GAO-08-426 (Washington, D.C.: Mar. 13, 2008). 

[4] Defense Science Board Task Force on Improving Fuel Efficiency of 
Weapons Platforms, More Capable Warfighting Through Reduced Fuel Burden 
(January 2001). The JASONs, Reducing DOD Fossil-Fuel Dependence, JSR- 
06-135 (September 2006). LMI, Transforming the Way DOD Looks at Energy: 
An Approach to Establishing an Energy Strategy, Report FT602T1 (April 
2007). 

[5] GAO, Department of Energy: Oil and Natural Gas Research and 
Development Activities, GAO-08-190R (Washington, D.C.: Nov. 6, 2007). 

[6] For a discussion of issues surrounding peak oil production, see 
GAO, Crude Oil: Uncertainty about Future Oil Supply Makes It Important 
to Develop a Strategy for Addressing a Peak and Decline in Oil 
Production, GAO-07-283 (Washington, D.C.: Feb. 28, 2007). 

[7] Office of the Under Secretary of Defense for Acquisition, 
Technology, and Logistics Memorandum, "Fully Burdened Cost of Fuel 
Pilot Program," April 10, 2007. 

[8] Joint Chiefs of Staff Instruction 3170.01F, Joint Capabilities 
Integration and Development System (May 1, 2007) and Joint Chiefs of 
Staff Manual 3170.01C, Operation of the Joint Capabilities Integration 
and Development System (May 1, 2007). 

[9] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, GAO-03-669 (Washington, 
D.C.: July 2, 2003), and Agencies' Strategic Plans Under GPRA: Key 
Questions to Facilitate Congressional Review, GAO/GGD-l0.l.16 
(Washington, D.C.: May 1997). 

[10] GAO-03-669. 

[11] DOD Directive 4140.25, DOD Management Policy for Energy 
Commodities and Related Services (Apr. 12, 2004), and DOD Directive 
5134.01, Under Secretary of Defense for Acquisition, Technology, and 
Logistics (Dec. 9, 2005). 

[12] The 3-Star Group within DOD's Planning, Programming, Budgeting, 
and Execution process includes members from OSD's Director of Program 
Analysis and Evaluation; OSD's under secretaries of defense; the Joint 
Staff Director for Structure, Resources, and Assessment; and the 
military services' 3-Star programmers. This group addresses major 
issues and presents decision options to the Secretary of Defense. 

[13] The National Military Strategy, signed by the Chairman of the 
Joint Chiefs of Staff, is guided by the goals and objectives contained 
in the present National Security Strategy and serves to implement the 
Secretary of Defense's National Defense Strategy. The Quadrennial 
Defense Review, prepared by the Secretary of Defense every 4 years, 
assesses the nature and magnitude of the political, strategic, and 
military risks associated with executing the missions called for under 
the National Defense Strategy. 

[14] GAO-08-426. 

[End of section] 

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