Summary
The Department of Defense (DOD) is simultaneously conducting costly military operations and transforming its forces and business practices while it is also competing for resources in an increasingly constrained fiscal environment. As a result, GAO has advocated that DOD adopt a comprehensive threat or risk management approach as a framework for decision making. In its 2001 strategic plan, the Quadrennial Defense Review (QDR), DOD stated its intent to establish an approach--the risk management framework--to balance priorities against risk over time and monitor results against its strategic goals. GAO was asked to (1) assess the extent to which DOD has implemented the framework, including using it to make investment decisions, and (2) identify the most significant challenges DOD faces in implementing the framework, or a similar approach.
DOD has taken some positive steps to implement the framework, but additional actions are needed before DOD can show real and sustainable progress in using a risk-based and results-oriented approach to strategically allocate resources across the spectrum of its investment priorities. For example, DOD defined four risk areas, and developed performance goals and department-level measures, but it needs to, among other things, further develop and refine the measures so that they clearly demonstrate results and provide a well-rounded depiction of departmental performance. DOD's current strategic plan and goals also are not clearly linked to the framework's performance goals and measures, and linkages between the framework and budget are also unclear. While DOD officials stated that risk was considered during the fiscal year 2006 budget cycle, DOD's budget submission does not specifically discuss how DOD identified or assessed risks to establish DOD-wide investment priorities. Without better measures, clear linkages, and greater transparency, DOD will be unable to fully measure progress in achieving strategic goals or demonstrate to Congress and others how it considered risks, and made trade-off decisions, balancing needs and costs for weapon programs and other investment priorities. DOD faces four challenges that have affected the implementation of the framework. First, DOD's organizational culture resists department-level approaches to priority setting and investment decisions. Second, sustained leadership, adequate transparency, and appropriate accountability are lacking. Further, no one individual or office has been assigned overall responsibility or sufficient authority for the framework's implementation. DOD also has not developed implementation goals or timelines with which to establish accountability, or measure progress. Finally, integrating the risk management framework with decision support processes and related reform initiatives into a coherent, unified management approach for the department is a challenge that DOD plans to address during the 2005 QDR. However, GAO has concerns about DOD's ability to follow through on this integration, because of its limited success in implementing other management reforms. Unless DOD successfully addresses these challenges and effectively implements the framework, or a similar approach, it will likely continue to experience (1) a mismatch between programs and budgets, and (2) a proportional, rather than strategic, allocation of resources to the services.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
Sharon L. Pickup
Government Accountability Office: Defense Capabilities and Management
(202) 512-9619
Recommendations for Executive Action
Recommendation: To address the challenges associated with implementing the risk management framework, or a similar risk-based management approach, the Secretary of Defense should develop or refine department-level performance measures so that they clearly demonstrate performance results and cascade those measures down throughout the department.
Agency Affected: Department of Defense
Status: Open
Comments: DOD stated that it has worked continuously to refine both its performance measures and the risk management framework, which was introduced in the 2001 Quadrennial Defense Review, DOD's strategic plan. However, GAO's subsequent work (GAO-07-709) found that DOD did not fully apply DOD's risk management framework to demonstrate how risks associated with its proposed force structure were evaluated for the 2006 Quadrennial Defense Review.
Recommendation: To address the challenges associated with implementing the risk management framework, or a similar risk-based management approach, the Secretary of Defense should assign clear leadership with accountability and authority to implement and sustain the risk management framework.
Agency Affected: Department of Defense
Status: Open
Comments: In the Fiscal Year 2008 National Defense Authorization Act, Congress required DOD to establish a chief management officer and to develop a strategic management plan. These requirements, if implemented, could provide the clear leadership with accountability and authority to implement and sustain a risk management approach; thus meeting the intent of our recommendation.
Recommendation: To address the challenges associated with implementing the risk management framework, or a similar risk-based management approach, the Secretary of Defense should develop implementation goals and timelines.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To address the challenges associated with implementing the risk management framework, or a similar risk-based management approach, the Secretary of Defense should demonstrate the integration of the risk management framework with DOD's decision support processes and related reform initiatives to improve investment decision making and manage performance results.
Agency Affected: Department of Defense
Status: Open
Comments: The Department is currently studying ways to further integrate a risk management framework approach with other decisions support processes. Several options for improvement were framed during the 2006 Quadrennial Defense Review process, but DOD determined that other overarching governance issues needed to be addressed before deciding on a course of action. According to the department, DOD is attempting to establish a common, authoritative decision framework and supporting information sources that will facilitate strategic decision making and link the decision process transparently to the execution of decisions. DOD also stated that the legislative requirement for a chief management officer (CMO) will impact this initiative. For example, as DOD finalizes an implementation plan for a deputy CMO to support the CMO/Deputy Secretary of Defense and the strategic management plan, the next implementation steps will be to assure the decision framework initiative supports and aligns with the department's management goals and direction.
