Defense Headquarters:

DOD Needs to Reevaluate Its Approach for Managing Resources Devoted to the Functional Combatant Commands

GAO-14-439: Published: Jun 26, 2014. Publicly Released: Jun 26, 2014.

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What GAO Found

GAO analysis of the resources devoted to the Department of Defense's (DOD) functional combatant commands shows substantial increases in authorized positions and costs to support headquarters operations. Specifically, the number of authorized positions across the commands grew from 5,731 in fiscal year 2004 to 10,515 in fiscal year 2013. According to DOD officials, recent and emerging missions have driven up demands at all three functional combatant commands and driven the growth in authorized personnel. In addition, costs to support headquarters operations also increased substantially at the functional combatant commands. Data, in constant fiscal year 2013 dollars, show that the combined costs to support headquarters operations for the commands increased from about $296 million in fiscal year 2001 to more than $1.236 billion in fiscal year 2013. Authorized positions and costs to support headquarters operations at the service component commands supporting the functional combatant commands also increased. Specifically, authorized positions grew from about 6,675 in fiscal year 2002 to about 7,815 in fiscal year 2013, and costs to support headquarters operations increased from about $614 million in fiscal year 2008 to about $657 million in fiscal year 2013.

DOD's directed reductions to headquarters do not include all resources at the commands, which may affect DOD's ability to achieve significant savings in headquarters operations. In 2013, DOD directed reductions to management headquarters resources in an effort to streamline the department's management. However, GAO found that the department did not have a clear or accurate accounting of the resources being devoted to management headquarters to use as a starting point to track reductions. Officials noted that DOD relied on data self-reported by the commands, and GAO found that these data were potentially inconsistent and did not include the totality of headquarters resources. Specifically, GAO found that less than a quarter of the positions at the functional combatant commands are considered to be management headquarters even though many positions appear to be performing management headquarters functions such as planning, budgeting, and developing policies. As such, more than three quarters of the headquarters positions at the functional combatant commands are potentially excluded from DOD's directed reductions. However, the department does not have any plans to reevaluate the baseline on which the reductions are based, in part because it does not have an alternative source for complete and reliable data. GAO has also concluded that restructuring efforts must be focused on clear goals and consolidation initiatives grounded in accurate and reliable data. Section 904 of the National Defense Authorization Act for Fiscal Year 2014 requires that DOD develop and submit a plan for streamlining management headquarters by June 2014. Unless DOD reevaluates its decision to focus reductions to management headquarters and establishes a clearly defined and consistently applied starting point on which to base reductions, the department will be unable to track and reliably report its headquarters reductions and ultimately may not realize significant savings.

Why GAO Did This Study

DOD operates three functional combatant commands, which provide special operations, strategic forces, and transportation. GAO was mandated to review personnel and resources of these commands in light of plans announced by DOD to reduce headquarters. This report (1) identifies the trends in resources devoted to the functional combatant commands and their service component commands and (2) evaluates the extent to which DOD's reductions to headquarters could result in cost savings.

GAO analyzed data for fiscal years 2001 through 2013 on authorized positions and costs to support headquarters operations for the functional combatant commands and their service component commands. GAO also obtained documentation such as guidance and budget documents and interviewed officials regarding the commands' approach for implementing reductions to headquarters.

What GAO Recommends

GAO recommends that DOD (1) reevaluate the decision to focus reductions on management headquarters to ensure meaningful savings, (2) set a clearly defined and consistently applied starting point as a baseline for the reductions, and (3) track reductions against the baselines in order to provide reliable accounting of savings and reporting to Congress. DOD partially concurred with the first recommendation, questioning, in part, the recommendation's scope, and concurred with the second and third recommendations. GAO continues to believe the first recommendation is valid, as discussed in the report.

For more information, contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: DOD partially concurred with our recommendation, stating that this department-wide recommendation would garner greater savings but did not provide plans on how it planned to implement the recommendation. As of March 2017, DOD was more broadly defining management headquarters and applying headquarters reductions to a wider range of organizations, but the department has not fully taken steps to re-evaluate the decision to focus reductions on management headquarters, as GAO recommended in June 2014. In an August 2015 memorandum, the Deputy Secretary of Defense noted that a comprehensive definition of major headquarters activities had been established, and he directed DOD to update the department's guiding instruction on management headquarters and databases in an effort to more broadly account for headquarters resources. The memorandum also directed a 25 percent reduction across all appropriations funding from fiscal years 2017 through 2020 for these headquarters activities in lieu of the 20 percent requirement previously established by the department. As of September 2016, a DOD official stated the department had not completed efforts to rebaseline all of its components according to the comprehensive definition of major headquarters activities, which is needed to determine what elements of the components are considered headquarters so the department can apply relevant reductions to its budget submission. In addition, Section 346 of the National Defense Authorization Act for Fiscal Year 2016 requires that the Secretary of Defense implement a plan to ensure the department achieves not less than $10 billion in cost savings from the headquarters, administrative, and support activities of the department by fiscal year 2019. The legislation also directed the Secretary of Defense to modify DOD's headquarters reduction plans to ensure that it achieves savings in total funding for major headquarters activities of not less than 25 percent of the baseline amount in fiscal year 2016 by fiscal year 2020. In a March 2016 letter to the Armed Services Committee, DOD stated that it is focusing on broad efficiency initiatives beyond reductions in management headquarters. While DOD has taken some steps to achieve greater savings by applying additional headquarters reductions to more organizations, an official stated DOD will not document these actions until it submits its budget request for fiscal year 2018 in the spring of 2017. Until DOD documents the reductions based on its broader efficiency initiatives, GAO cannot determine if DOD has fully implemented this action. We will continue to monitor actions DOD takes in response to this recommendation and will provide updated information as appropriate.

    Recommendation: In order to improve the management of DOD's headquarters-reduction efforts, the Secretary of Defense should reevaluate the decision to focus reductions on management headquarters to ensure the department's efforts ultimately result in meaningful savings.

    Agency Affected: Department of Defense

  2. Status: Open

    Priority recommendation

    Comments: The Department of Defense concurred with our recommendation to set clearly defined and consistently applied starting point as a baseline for the reductions. As of March 2017, DOD had taken some steps to set a clearly defined and consistently applied starting point as a baseline for headquarters reductions, but its efforts are not yet complete. In its response to GAO's recommendation, DOD recommended the use of the Future Years Defense Program data to set the baseline going forward. It stated that it was enhancing the data elements within DOD's Resource Data Warehouse to better identify management headquarters resources to facilitate tracking and reporting across the department. A December 2014 Resource Management Decision directed DOD components to identify and correct inconsistencies in major headquarters activities in authoritative DOD systems, and reflect those changes in the fiscal year 2017 program objective memorandums or submit them into the manpower management system. As of November 2016, a DOD official stated that the department had taken steps to use this definition as a baseline for headquarters reductions. However, according to this official, the department will not identify the baseline until it submits its budget request for fiscal year 2018 in the spring of 2017. Until DOD completes its efforts, savings to management headquarters will likely be difficult to track, and the department may not be assured that the reductions are achieved as intended. We will continue to monitor actions DOD takes in response to this recommendation and will provide updated information as appropriate.

    Recommendation: In order to improve the management of DOD's headquarters-reduction efforts, the Secretary of Defense should set a clearly defined and consistently applied starting point as a baseline for the reductions.

    Agency Affected: Department of Defense

  3. Status: Open

    Comments: The Department of Defense concurred with our recommendation to set clearly defined and consistently applied starting point as a baseline for the reductions. As of March 2017, DOD had taken steps to track its headquarters reductions efforts, but it continues to rely on self-reported baselines to account for headquarters savings and report to Congress. In its response to GAO's June 2014 report, DOD noted that by using the Future Years Defense Program data to set the baseline, it would be able to track and report changes to Congress. DOD further stated that it was enhancing data elements within DOD's Resource Data Warehouse to better identify management headquarters resources across the department. GAO agreed that these enhancements to data elements would increase DOD's capability to track and report management headquarters across the department, and thus, the Future Years Defense Program could be used to set baselines and track future reductions. In a December 2014 Resource Management Decision, DOD components were directed to identify and correct inconsistencies in major headquarters activities in authoritative DOD systems, to include the Future Years Defense Program and related databases, and reflect those changes when programming their fiscal year 2017-2021 resource allocations. In an August 2015 memorandum, the Deputy Secretary of Defense noted that a comprehensive definition of major headquarters activities had been established. As of November 2016, a DOD official stated that the department had taken steps to use this definition as a baseline for headquarters reductions. However, according to this official, the department will not identify the baseline until it submits its budget request for fiscal year 2018 in the spring of 2017. Until DOD completes its efforts, savings to management headquarters will likely be difficult to track, and the department may not be assured that the reductions are achieved as intended. We will continue to monitor actions DOD takes in response to this recommendation and will provide updated information as appropriate.

    Recommendation: In order to improve the management of DOD's headquarters-reduction efforts, the Secretary of Defense should track reductions against the baselines in order to provide reliable accounting of savings and reporting to Congress.

    Agency Affected: Department of Defense

 

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