Defense Management:

Actions Needed to Sustain Reform Initiatives and Achieve Greater Results

NSIAD-00-72: Published: Jul 25, 2000. Publicly Released: Jul 25, 2000.

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Pursuant to a congressional request, GAO reviewed information on the actions needed to sustain reform initiatives and achieve greater results in the Department of Defense (DOD), focusing on the: (1) effectiveness of the Department's management emphasis and oversight structure in providing sustained direction and emphasis to the program; (2) status of individual reform initiatives and the barriers that could limit their success; and (3) extent to which the Reform Initiative resulted in savings enabling DOD to shift operation and maintenance funds to support weapons modernization.

GAO noted that: (1) the support of the Secretary and Deputy Secretary of Defense and the management oversight structure they created to help implement the Reform Initiative have provided the impetus to get the initiative off to a good start; (2) however, opportunities exist to make the Reform Initiative more effective; (3) for example, an important element of DOD's management oversight structure has been the Defense Management Council; (4) this council, which was created by the Secretary to be his Reform Initiative board of directors, could be more effective in advising the Secretary and helping sustain the emphasis on reform; (5) the Department initially agreed with but subsequently did not take action to implement GAO's recommendations to develop an integrated strategy, investment plan, and funding targets for reforming its major business processes; (6) consequently, it does not have a clear road map to ensure that the interrelationships between its major reform initiatives are understood and addressed and that it is investing in its highest priority requirements; (7) a number of barriers have kept the Department from meeting its specific timeframes and goals; (8) the most notable barrier is the difficulty in overcoming institutional resistance to change in an organization as large and complex as DOD, particularly in such areas as acquisition, financial management, and logistic, which transcend most of the Department's functional organizations and have been long-standing management concerns; (9) initially, Defense officials expected that savings from the Reform Initiative would help DOD increase funding for weapons modernization from $42 billion in fiscal year 1998 to $60 billion in fiscal year 2001; (10) however, widespread savings have not been achieved, primarily because most individual initiatives are long-term efforts that require significant up-front investments to implement; (11) it could take a number of years before these investments are offset and net savings begin to accrue; (12) however, various initiatives are likely to produce signigicant savings once up-front costs are recovered; and (13) the Department expects that the initiatives will eventually result in enough savings to sustain an increased modernization budget in the future.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Senate Armed Services Committee and others in the Congress are concerned about DOD's management and infrastructure reform efforts and have elicited commitments from Secretary Rumsfeld to place high priorities on them during his tenure in office. Financial management reform and base closures, in particular, were key topics during confirmation hearings for the Secretary and the Service Secretaries as well as during DOD's authorization and appropriation hearings. Whether the Congress will require DOD to fully identify investing funding requirements for its major reform efforts that it undertakes under the new administration will not be known until the Defense Authorization and Appropriations Bills are completed and the Committee Reports are published. Therefore, GAO is leaving this recommendation open for the time being.

    Matter: Because DOD decided not to implement GAO's prior recommendations to: (1) undertake a comprehensive approach in reforming its major business and support activities; and (2) develop an investment plan to better ensure that it is undertaking the most cost-effective and important reform, and because of the importance of sustaining the initiatives into future administrations, Congress may wish to consider requiring the Department to more fully identify investment funding requirements for the major reform initiatives and Department-wide funding requirements for the Reform Initiative and communicate them to Congress during the annual budget process.

  2. Status: Closed - Not Implemented

    Comments: The Senate Armed Services Committee and others in the Congress are concerned about DOD's management and infrastructure reform efforts and have elicited commitments from Secretary Rumsfeld to place high priorities on them during his tenure in office. Financial management reform and base closures, in particular, were key topics during confirmation hearings for the Secretary and the Service Secretaries as well as during DOD's authorization and appropriation hearings. However, the exact requirements placed on DOD by the Congress to reform its business processes and close additional bases will not be known until the Defense Authorization and Appropriations Bills are completed and the Committee Reports are published. Therefore, GAO is leaving this recommendation open for the time being.

    Matter: Because DOD decided not to implement GAO's prior recommendations to: (1) undertake a comprehensive approach in reforming its major business and support activities; and (2) develop an investment plan to better ensure that it is undertaking the most cost-effective and important reform, and because of the importance of sustaining the initiatives into future administrations, Congress may wish to consider requiring the Department to follow the framework provided by the Government Performance and Results Act to establish a more comprehensive, integrated strategy and action plan for reforming the Department's major business processes and support activities, particularly in the areas of acquisition, financial management, and logistics reform.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Secretary of Defense eliminated the Defense Management Council and formed two new internal management committees that will recommend ways for the Department to improve business practices. The newly established groups will be comprised of a small cadre of officials at the top of the Department--the Secretary of Defense, Deputy Secretary, Under Secretary (AT&L) and the Service secretaries. Collectively, officials on these newly formed groups are at a higher-level within the Department and have greater authority than the Defense Management Council.

    Recommendation: To build on the effectiveness of the current management framework of the Defense Reform Initiative and to help achieve desired results, the Secretary of Defense should strengthen the role and effectiveness of the Defense Management Council. These actions should include efforts to strengthen the Council's decision-making role, authority, and accountability, particularly with respect to the key Department-wide acquisition, financial management, and logistic reforms.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: This recommendation has been partially implemented. The Secretary of Defense formed two new internal management committees that, in effect, succeed the Defense Management Council with respect to recommending ways for the Department to improve business practices. The first committee, known as the Senior Executive Committee, is to function as a business board of directors for the Department. It is comprised of the Secretary, Deputy Secretary, Under Secretary (AT&L), and the Service secretaries. The second committee, the Business Initiative Council, is comprised of the Service secretaries and the Under Secretary (AT&L). The Council is responsible for recommending and implementing good business practices. The Secretary of Defense has set an expectation that the committee members will work together to make sure recommendations are implemented. These two committees, however, have just been formed and have not established their priorities. Nevertheless, their creation satisfies the intent of the recommendation to strengthen the role and effectiveness of the Defense Management Council in that the Committees' membership includes the most senior managers in the Department.

    Recommendation: To build on the effectiveness of the current management framework of the Defense Reform Initiative and to help achieve desired results, the Secretary of Defense should strengthen the role and effectiveness of the Defense Management Council. These actions should include efforts to focus on the Council's attention on the key reform initiatives that, if addressed in an integrated fashion could produce the greatest results.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: The Secretary of Defense has formed two new internal management committees that will recommend ways for the Department to improve business practices and transform the military into a 21st Century fighting force. Since these committees have just been formed, they have not had an opportunity to set priorities and recommend new initiatives for implementation.

    Recommendation: To build on the effectiveness of the current management framework of the Defense Reform Initiative and to help achieve desired results, the Secretary of Defense should strengthen the role and effectiveness of the Defense Management Council. These actions should include efforts to provide the Council with current and accurate information on the status of key reform initiatives so it can better gauge progress and identify and address implementation problems.

    Agency Affected: Department of Defense

 

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