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GAO-08-830R: 

United States Government Accountability Office: 
Washington, DC 20548: 

May 30, 2008: 

Congressional Committees: 

Subject: Defense Management: Assessment of the Reorganization of the 
Office of the Under Secretary of Defense for Policy: 

This letter formally transmits the attached briefing in response to 
section 957(a) of the National Defense Authorization Act for Fiscal 
Year 2008 and the accompanying conference report. The act required the 
Comptroller General to conduct an assessment of the most recent 
reorganization of the Office of the Under Secretary of Defense for 
Policy. 

We are sending copies of this report to the appropriate congressional 
committees. We are also sending copies to the Secretary of Defense and 
the Under Secretary of Defense for Policy. This report will also be 
available at no charge on our Web site at [hyperlink, 
http://www.gao.gov]. Should you or your staff have any questions 
concerning this report, please contact me at (202) 512-3489 or 
pendletonj@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. Key contributors to this report were Margaret Morgan, Assistant 
Director; Renee Brown, Natalie Chaney, Elizabeth Curda, Julia Matta, 
Kathia Niewiadomski, Sarah Veale, Elizabeth Wood, and Deborah 
Yarborough. 

John H. Pendleton: 
Director, Defense Capabilities and Management: 

List of Congressional Committees: 

The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate: 

The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations: 
United States Senate: 

The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives: 

The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives: 

[End of correspondence] 

Briefing: 

Assessment of the Reorganization of the Office of the Under Secretary 
of Defense for Policy: 

Briefing for Congressional Defense Committees: 

May 30, 2008: 

Introduction: 

In September 2006, the Department of Defense (DOD) announced a 
reorganization of the Office of the Under Secretary of Defense (OUSD) 
for Policy. 

The reorganization was intended to provide more comprehensive policy 
oversight for the nation's security challenges by realigning the 
organization to reflect current security priorities. 

Concerned about the basis for these changes and their potential effect 
on policy oversight for critical national security concerns, Congress 
required in the National Defense Authorization Act for Fiscal Year 2008 
that GAO evaluate the overall approach and implementation of OUSD 
Policy’s reorganization and provide its assessment. [Footnote 1] 

The conference report accompanying the 2008 defense authorization bill 
directed that GAO also assess several human capital management issues 
related to the reorganization. [Footnote 2] 

Key Objectives: 

1. What were the goals for OUSD Policy’s reorganization and what is the 
status of implementation? 

2. To what extent did OUSD Policy employ key practices of successful 
transformation in its reorganization? 

3. What challenges, if any, remain for OUSD Policy after the 
reorganization? 

Appendix I contains our summary of the specific OUSD Policy 
reorganization issues that were identified in the National Defense 
Authorization Act for Fiscal Year 2008 and the accompanying conference 
report, for example: 

* broadening the portfolios of certain assistant secretaries, and; 

* assigning staff under the new organization. 

Methodology: 

* Examined documentation related to the development and implementation 
of the reorganization. 

* Compared OUSD Policy reorganization plans to key practices in 
organizational transformation and strategic human capital management 
identified in previous GAO work. 

* Discussed perspectives about the reorganization process, 
implementation, benefits, and challenges with DOD officials and 
internal and external stakeholders, such as U.S. Northern Command, U.S. 
Special Operations Command, and the Department of State. 

* Conducted reviews of OUSD Policy documents and interviewed key OUSD 
Policy officials to gather detailed information about the specific 
reorganization issues identified in the National Defense Authorization 
Act for Fiscal Year 2008 and the accompanying conference report. 

* We performed our review from October 2007 through May 2008 in 
accordance with generally accepted government auditing standards. 

Summary: 

* The Secretary of Defense announced the reorganization in September 
2006 and established several key goals; OUSD Policy completed the 
reorganization in August 2007. 

* OUSD Policy’s development and implementation of its reorganization 
addressed key practices associated with successful organizational 
transformations. 

* OUSD Policy continues to reexamine and refine the organization; 
however, it faces several challenges related to the overall 
effectiveness and efficiency of the office, such as: 
-Developing performance measures to assess progress in achieving goals. 
-Balancing workforce needs to support the organization’s missions. 

Objective 1: Goals for OUSD Policy’s Reorganization: 

Key goals for the reorganization were to: 

1. Realign OUSD Policy with current security priorities, including 
fighting the Global War on Terrorism. 

2. Create more adaptability to provide policy oversight for emerging 
threats to national security. 

3. Balance the responsibilities of the Assistant Secretaries of Defense 
(ASDs). 

4. Establish a focal point in OUSD Policy for each Combatant Commander. 

Objective 1: Implementation Status: 

Status: The Secretary of Defense announced the reorganization in 
September 2006 and OUSD Policy completed the reorganization in August 
2007. 

Key changes: 

* Broadened the responsibilities of the ASD for Special Operations/Low 
Intensity Conflict by adding policy oversight for strategic 
capabilities and general purpose forces. 

* Balanced regional responsibilities across three ASDs to manage the 
development, coordination, and implementation of DOD security policy. 

* Created a new ASD for Global Security Affairs to provide oversight 
for crosscutting issues such as building long-term relationships with 
new strategic partners. 

Figure 1 and appendix II contain detailed information about OUSD 
Policy’s organizational structure. 

Figure 1: OUSD Policy Legacy and Current Organizations: 

[See PDF for image] 

This figure contains two organizational charts, as follows: 

Legacy Organization: 

Under Secretary of Defense (Policy): 
* Principal Deputy Under Secretary of Defense (Policy): 
- ASD International Security Affairs; 
- ASD International Security Policy; 
- ASD Special Operations/Low Intensity Conflict (SO/LIC); 
- ASD Homeland Defense. 

Current Organization: 
Under Secretary of Defense (Policy): 
* Principal Deputy Under Secretary of Defense (Policy): 
- ASD International Security Affairs; 
- ASD Asian and Pacific Security Affairs; 
- ASD Homeland Defense and Americas' Security Affairs; 
- ASD Global Security Affairs; 
- ASD SO/LIC and Interdependent Capabilities. 

[End of figure] 

Objective 2: Key Practices for Successful Organizational 
Transformation: 

OUSD Policy’s reorganization efforts addressed the key practices GAO 
previously identified for successful transformation. [Footnote 3] These 
key practices support building a world-class organization. 

1. Ensure top leadership involvement in the transformation-Top 
leadership defined compelling reasons for change and remained highly 
involved during implementation. 

2. Establish a coherent mission and integrated strategic goals-OUSD 
Policy’s draft strategic management plan included mission, vision, and 
goals that were used to guide the reorganization. 

3. Focus on a key set of principles and priorities-Senior leadership 
identified detailed priorities intended to guide the reorganization and 
revitalize the workforce culture. 

4. Set implementation goals and a timeline to show progress-OUSD Policy 
established high-level implementation goals and a three-phase timeline 
for the reorganization. 

5. Dedicate an implementation team to manage the transformation 
process -OUSD Policy’s implementation team managed the day-to-day 
operations during the reorganization and engaged DOD and external 
stakeholders to discuss plans. 

6. Use the performance management system to define responsibility and 
assure accountability-OUSD Policy identified the skills and 
competencies for its action officers and aligned employee performance 
objectives with organizational goals. 

7. Establish a communication strategy to share information-OUSD Policy 
communicated change to internal and external stakeholders through a 
strategy of varied, customized activities such as sending e-mails from 
top-level leaders, conducting town hall meetings, and launching an 
intranet site for the reorganization. 

8. Involve employees to obtain their ideas-OUSD Policy incorporated 
employee feedback into new policies and procedures, such as having 
support staff coordinate visits with OUSD Policy and foreign officials. 

Objective 3: Challenges: 

OUSD Policy continues to reexamine and refine the organization through 
quarterly meetings with senior leaders, such as the Deputy Assistant 
Secretaries of Defense (DASDs); however, it faces several challenges 
related to the overall effectiveness and efficiency of the office. 
These challenges include: 

* Defining clear metrics to evaluate progress toward goals: 

- Before and after the reorganization OUSD Policy developed some 
organizational performance measures such as external (the Secretary of 
Defense) and internal (action officers) customer satisfaction. 

- OUSD Policy established the Organizational Performance Measurement 
Board to develop performance measures and to assess progress in 
achieving goals. 

- OUSD Policy is developing performance measures in the absence of a 
strategic plan that identifies missions and goals. 

* Developing workload measures to assess staffing needs in each office 
so that workloads are balanced among offices and individuals and 
resources are dedicated to highest priorities: 

- OUSD Policy did not use workload measures to assign the number of 
action officers to each DASD in the legacy and current organizations, 
although it operates under a limitation for the number of civilian and 
military personnel employed in the Office of the Secretary of Defense. 

- To stay within the limitation, OUSD Policy supplements its workforce 
through contractors and several types of governmental employees. 

- According to several OUSD Policy officials, more staff are needed in 
some of the organization’s offices to perform required tasks. 

Agency Views: 

We obtained oral comments on a draft of this briefing, and the agency 
agreed with the facts presented. On the basis of the comments, we made 
technical changes as appropriate. 

GAO Contact: 

Should you or your staff have any questions on the matters discussed in 
this briefing, please contact John Pendleton at (202) 512-3489 or 
pendletonj@gao.gov. 

[End of section] 

Appendix I: Issues in the National Defense Authorization Act for Fiscal 
Year2008 and accompanying conference report and summary of 
observations. 

Authorization Act and conference report issues: 
The manner in which the reorganization of the office furthers, or will 
further, its stated purposes in the short-term and long-term, including 
the manner in which the reorganization enhances, or will enhance, the 
ability of the DOD—(A) to address current security priorities, 
including on-going military operations in Iraq, Afghanistan, and 
elsewhere; (B) to manage geopolitical defense relationships; and (C) to 
anticipate future strategic shifts in those relationships. 
Summary of Observations: 
(A) OUSD Policy established the DASD Coalition Affairs, whose 
responsibilities include equipping and training needs for U.S. 
coalition partners for ongoing operations in Iraq and Afghanistan. 
(B) The current organizational structure rebalanced regional 
responsibilities to redistribute workload and increase understanding of 
emerging regional issues. 
(C) OUSD Policy established the DASD Partnership Strategy to, among 
other things, anticipate changes in the capabilities of current 
international partners and generate workable strategies to increase 
U.S. partnerships. 

Authorization Act and conference report issues: 
The impact of the large increase in responsibilities for the ASD 
Special Operations/Low Intensity Conflict (SO/LIC) & Interdependent 
Capabilities under the reorganization on the ability of the Assistant 
Secretary to carry out the principal duties of the Assistant Secretary 
under the law. The possible decrease in attention given to special 
operations issues resulting from the increase in responsibilities for 
the ASD SO/LIC & Interdependent Capabilities, including responsibility 
under the reorganization for each of the following: (A) strategic 
capabilities, (B) forces transformation, and (C) major budget programs. 
Summary of Observations: 
IOUSD Policy changed the missions within the portfolio of the 
ASDSO/LIC, such as removing counternarcotics missions and moving them 
to the ASD Global Security Affairs’portfolio, and added strategic 
capabilities and forces transformation. OUSD Policy also added 
Interdependent Capabilities to the ASD’s title. Several OUSD Policy 
officials stated that the current mission set of the ASD SO/LIC & 
Interdependent Capabilities provides a comprehensive OUSD Policy view 
of the total force, allowing the ASD to link strategies and 
capabilities. Although oversight responsibilities have broadened, the 
duties specified under law, such as overall supervision of special 
operations activities, remain within the portfolio of the ASD SO/LIC & 
Interdependent Capabilities. Further, the Combatant Commander Special 
Operations Command stated that the reorganization had not changed how 
the ASD provides oversight for special operations. In the current 
organization OUSD Policy has dedicated staff to oversee Major Force 
Program 11, the special operations budget, although the total number of 
staff providing oversight for special operations programs is fewer than 
the number of personnel in the legacy organization. However, OUSD 
Policy lacks performance measures to determine the effect of changes 
made to the ASD portfolio as a result of the reorganization. 

Authorization Act and conference report issues: 
The unique placement under the reorganization of both functional and 
regional issue responsibilities under the ASD Homeland Defense and 
Americas’Security Affairs (HD&ASA). 
Summary of Observations: 
The ASD HD&ASA is responsible for regional and functional issues, 
including countries in the Western Hemisphere and homeland defense 
activities. OUSD Policy officials stated that grouping regional and 
functional issues provides a more comprehensive view of issues common 
to the region, such as border security, and increases the visibility of 
Western Hemisphere countries within OUSD Policy. 

Authorization Act and conference report issues: 
The possible diffusion of attention from counternarcotics, 
counterproliferation, and global threat issues resulting from the 
merging of those responsibilities under a single DASD for 
Counternarcotics, Counterproliferation, and Global Threats. The impact 
of the reorganization on counternarcotics program execution. 
Summary of Observations: 
OUSD Policy lacks performance measures to determine the effect of 
changes made to ASD or DASD portfolios as a result of the 
reorganization. However, several OUSD Policy officials stated that 
networks associated with counternarcotics, counterproliferation, and 
global threats typically exploit the same vulnerabilities, such as 
unprotected borders, and present similar operational challenges. By 
placing counternarcotics, counterproliferation, and global threats in 
one DASD, OUSD Policy officials plan to share information and develop 
similar approaches to more efficiently counter these illegal 
activities. Additionally, the reorganization did not affect the 
management or execution of the Central Transfer Account, which is used 
for DOD’s counternarcotics program or the Cooperative Threat Reduction 
account, which is used for DOD’s counterproliferation program. The 
accounts continue to be managed separately. 

Authorization Act and conference report issues: 
The differentiation between the responsibilities of the DASD for 
Partnership Strategy and the DASD for Coalition Affairs and the 
relationship between such officials. 
Summary of Observations: 
DASD Partnership Strategy has responsibility for developing long-term 
strategic policies involving partner nations, such as coordinating the 
Global Defense Posture, while Coalition Affairs has responsibility for 
developing policies related to near-term needs for operational 
requirements, such as providing policy oversight for training and 
equipping coalition troops. 

Authorization Act and conference report issues: 
The impact of the process, as conducted in November 2006 and 
implemented in early 2007, whereby career civil servants “bid”on 
positions within OUSD Policy, on overall levels of personnel morale, 
expertise, and effectiveness. 
Summary of Observations: 
OUSD Policy used a process which allowed foreign affairs specialists to 
submit their staffing assignment preferences and allowed DASDs to bid 
for employees. Through this process, OUSD Policy filled first 
preferences for 77 percent of the action officers. A leadership team 
evaluated all action officer staffing assignments to ensure that 
consideration was given to certain organizational priorities, such as 
retaining expertise in specific offices. However, OUSD Policy did not 
develop measures to determine the effect of the staffing process on 
morale and effectiveness, and the impact of the staffing process is 
unclear. 

Authorization Act and conference report issues: 
The fact that foreign affairs specialists from those field agencies and 
offices associated with OUSD Policy were not included in the personnel 
assignment bidding system, even though they are eligible to apply for 
vacancies in OUSD Policy. 
Summary of Observations: 
Foreign affairs specialists in the DOD agency and field activities 
within OUSD Policy were not included in the action officer staffing 
process for two reasons. First, the agency and field activities have 
separate manpower counts within DOD. Second, the total size of OUSD 
Policy did not increase from the legacy to the current organization, 
thus OUSD Policy placed all legacy action officers in the current 
organization before opening vacancies to other DOD employees. 

Authorization Act and conference report issues: 
Possible absence of a dissent channel within DOD and, in particular, 
OUSD Policy that personnel may use to present alternative views, 
analyses, and policy recommendations at variance with those in place or 
being submitted to senior leadership for consideration. 
Summary of Observations: 
During implementation of the reorganization, OUSD Policy took several 
steps to obtain employee opinions, including establishing an officewide 
e-mail address for comments and conducting forums for employees to 
express concerns or suggest improvements. In the current organization, 
OUSD Policy has taken several steps to manage employees’ concerns such 
as creating the Action Officer Committee, which provides opportunities 
for employees to express their perspectives. Further, employees may 
express their alternative opinions about DOD's views, analyses, and 
policy recommendations through OUSD Policy's management structure. 

Authorization Act and conference report issues: 
The manner in which DOD plans to evaluate progress in achieving the 
stated goals of the reorganization and what measurements, if any, the 
department has established to assess the results of the reorganization. 
Summary of Observations: 
OUSD Policy established the Organizational Performance Measurement 
Board to assist in the development of performance measures and has 
begun collecting data for a number of performance measures such as 
external (the Secretary of Defense) and internal (action officer) 
customer satisfaction. However, OUSD Policy has not defined a 
comprehensive set of measures to evaluate progress toward goals. 

Authorization Act and conference report issues: 
The extent to which DOD has worked to mitigate congressional concerns 
and address other challenges that have arisen since the reorganization 
was announced. 
Summary of Observations: 
OUSD Policy issued a report to explain the key aspects of the 
reorganization and drafted a series of memos to provide clarification 
about the current organizational structure. In addition, OUSD Policy 
officials testified and provided briefings to members of Congress about 
the reorganization and other emerging issues. 

[End of Appendix I] 

Appendix II: Detailed OUSD Policy Organization: 

[See PDF for image] 

This figure is a detailed OUSD Policy Organizational chart, as follows: 

Under Secretary of Defense (Policy): 
Enterprise Services; 
Policy Planning; 
Support for Public Diplomacy; 
Principal Deputy Under Secretary of Defense (Policy): 
* ASD International Security Affairs; 
- Middle East; 
- Africa; 
- Europe and North Atlantic Treaty organization; 
* ASD Asian and Pacific Security Affairs; 
- East Asia; 
- South and Southeast Asia; 
- Central Asia; 
* ASD Homeland Defense and Americas' Security Affairs; 
- Homeland Security Integration; 
- Homeland Defense; 
- Crisis Management and Defense Support to Civil Authorities; 
- Western Hemisphere Affairs; 
* ASD Global Security Affairs; 
- Partnership Strategy; 
- Coalition Affairs; 
- Counternarcotics, Counterproliferation and Global Threats; 
- Detainee Affairs; 
- Prisoner of War/Missing Personnel Affairs; 
- Defense Prisoner of War/Missing Personnel Office; 
- Defense Security Cooperation Agency; 
- Technology Security Policy; 
- Defense Technology Security Administration; 
* ASD SO/LIC and Interdependent Capabilities; 
- Special Operations Capabilities; 
- Strategic Capabilities; 
- Stability Operations Capabilities; 
- Forces Transformation and Resources. 

Source: GAO analysis of DOD information. 

[End of figure] 

[End of Appendix II] 

Footnotes: 

[1] Pub. L. No. 110-181, § 957 (2008). 

[2] H.R. Rep. No. 110-477, at 979 (2007) (Conf. Rep.) 

[3] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, GAO-03-669(Washington, 
D.C.: July 2, 2003). 

[End of section] 

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