DOD Approach to Business Transformation

Why It's High Risk

The Department of Defense (DOD) spends billions of dollars on its key business operations intended to support the warfighter, including the systems and processes related to the management of contracts, finances, the supply chain, support infrastructure, and weapons systems acquisition. Weaknesses in these areas adversely affect DOD’s efficiency and effectiveness, and hinder its ability to free up resources for higher priority needs.

GAO designated DOD's approach to business transformation as a high-risk area in 2005 because

• DOD had not established clear and specific management responsibility, accountability and control over business transformation-related activities and applicable resources, and
• DOD lacked a clear strategic and integrated plan for business transformation with specific goals, measures and accountability mechanisms to monitor progress.

GAO has designated many of DOD’s key business areas as high risk due to their vulnerability to waste, fraud, abuse, and mismanagement.

Because of the complexity and long term nature of DOD’s transformation efforts, GAO has reported the need for a chief management officer (CMO) position and a comprehensive, enterprisewide business transformation plan.

• In May 2007, DOD designated the Deputy Secretary of Defense as the CMO.
• The National Defense Authorization Acts for Fiscal Years 2008 and 2009 contained provisions that codified the CMO and deputy CMO (DCMO) positions, required DOD to develop a strategic management plan and required the Secretaries of the military departments to designate their Undersecretaries as CMOs and develop business transformation plans.

^ Back to topWhat We Found

DOD’s senior leadership has shown commitment to transforming business operations and has made progress in establishing management oversight and developing a strategic plan to guide transformation efforts. For example, DOD has

• filled key positions, such as the DCMO and military department CMOs
• outlined broad roles and responsibilities of the CMO and DCMO in directives
• established governance entities, such as the Defense Business Systems Management Committee—intended to be the primary transformation oversight mechanism
• issued an initial strategic management plan in July 2008, with updates in July 2009 and December 2010.

Also, in 2010, the Secretary of Defense initiated a departmentwide effort to find greater efficiencies and reduce costs, including in key business areas.

Additional actions are needed to further define management roles and responsibilities and to strengthen strategic planning. For example,

• the CMO and DCMO have responsibilities, under statutes and DOD guidance related to improving the efficiency and effectiveness of business operations, but have not been assigned specific roles and responsibilities for the Secretary’s ongoing efficiency initiative.
• DOD has not clearly defined the relationship between the DCMO and military department CMOs or the responsibilities of governance entities.
• DOD’s 2009 strategic management plan identified top-level priorities for business operations which was an improvement over prior plans, but it did not have a complete set of measurable goals, funding priorities or resources needed to achieve the stated goals. We plan to evaluate DOD’s updated December 2010 plan to assess whether it contains key elements, such as measurable goals, funding priorities, and resource needs.
• DOD has not set up internal mechanisms, such as procedures and milestones, to reach consensus on business priorities, synchronize the development of plans with each other and the budget process and guide efforts to monitor progress and take corrective action.

^ Back to topWhat Needs to Be Done

DOD needs to take additional actions to

• more clearly define roles and responsibilities, as well as relationships among key positions and governance entities, including assigning specific roles and responsibilities to the CMO and DCMO for integrating the Secretary’s efficiency initiative with ongoing reform efforts, overseeing its implementation, and otherwise institutionalizing the effort in the long term,
• further refine strategic goals, performance measures and other elements of its strategic management plan, and
• to clearly define a strategic planning process including mechanisms to guide and synchronize its efforts to develop strategic plans, monitor the implementation of reform initiatives, and report progress, on a periodic basis, towards achieving established goals.

Highlights of GAO-11-181R (PDF),   Highlights of GAO-09-272R (PDF),   Highlights of GAO-09-271 (PDF),   Highlights of GAO-07-1072 (PDF),  

^ Back to topKey Reports

Organizational Transformation

Organizational Transformation

High-Risk Series

DOD Business Transformation

Department of Defense

Defense Business Transformation

Defense Business Transformation

Defense Business Transformation

Defense Business Transformation

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