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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

June 2014: 

Sequestration: 

Comprehensive and Updated Cost Savings Would Better Inform DOD 
Decision Makers If Future Civilian Furloughs Occur: 

GAO-14-529: 

GAO Highlights: 

Highlights of GAO-14-529, a report to congressional committees. 

Why GAO Did This Study: 

In March 2013, DOD's discretionary budget was reduced by $37 billion 
as a result of sequestration-—across-the-board spending reductions to 
enforce certain budget policy goals. In response, the Secretary of 
Defense implemented an administrative furlough, among other things by 
placing most of DOD's civilian personnel in a temporary nonduty, 
nonpay status. An administrative furlough is a planned event by an 
agency to absorb reductions due to budget situations other than a 
lapse in appropriations. 

GAO was mandated to review DOD's implementation of its administrative 
furlough. This report (1) examined how DOD implemented its furloughs 
and any reported cost savings, (2) examined the extent to which DOD 
utilized up-to-date cost-savings information in the planning and 
implementation of furloughs, and (3) identified any reported examples 
of impacts that resulted from the furloughs. GAO reviewed DOD furlough 
guidance, interviewed officials, and conducted visits at selected 
sites that were selected to represent different categories of furlough 
exceptions and potential sequestration impacts, among other things. 

What GAO Found: 

In January 2013, the Department of Defense (DOD) instructed components 
to plan for the possibility of up to a 22-day administrative furlough 
of civilian personnel. On May 14, 2013, the Secretary of Defense 
issued a memorandum directing up to an 11-day furlough of most of 
DOD's civilians, and on August 6, 2013, reduced the number of furlough 
days to 6, resulting in a cost savings of about $1 billion from 
civilian pay, excluding implementation costs. DOD officials stated the 
decision to reduce the number of furlough days was due to DOD gaining 
greater flexibility from fund transfers and reprogrammings that 
occurred towards the end of the fiscal year. DOD identified categories 
of furlough exceptions for personnel including those assigned to a 
combat zone and those necessary to protect safety of life and 
property. Clarifying guidance was issued to help ensure that borrowed 
military personnel were not used to compensate for work resulting from 
the furlough, and to prohibit contracted support from being assigned 
or permitted to perform additional work or duties to compensate for 
workload or productivity loss resulting from the furlough. Ultimately, 
DOD furloughed 624,404 civilians and excepted 142,602 civilians for 6 
days. 

DOD developed its initial estimated cost savings for the furlough 
without excluding pay for those excepted from the furlough and did not 
update its estimate throughout the furlough period as more information 
became available, such as real-time cost savings and when subsequent 
decisions were made to reduce the number of furlough days. The initial 
estimated cost savings were calculated at $300 per person per furlough 
day, totaling about $2.1 billion for 11 furlough days. When DOD 
reduced the furlough from 11 to 6 days, the estimated cost savings 
were reduced by about $900 million. However, the estimated savings per 
person per day was not updated to reflect actual payroll reductions, 
in part because, according to DOD officials, there was only 1 week's 
worth of payroll data available at the time the decision was made. 
While officials stated that the estimated savings per person per day 
was not updated because they thought it was sufficient for their 
purposes and that the decision to reduce the number of furlough days 
was primarily based on funding received from transfers and 
reprogramming actions, the determination of exceptions was made 3 
months earlier. If this initial estimate had been updated it may have 
provided more-comprehensive information for DOD officials to consider 
regarding the length of the furlough and DOD's cost-savings estimate. 
As DOD continues to face budgetary uncertainty, and in the event of a 
future furlough, having comprehensive and updated cost information may 
help better inform decision makers. 

Officials at selected sites GAO visited noted a number of actions 
taken to prepare for the furlough and described impacts of the 
furlough, such as decline in morale, mission delays, and 
inconsistencies and clarification issues with the furlough guidance. 
However, attributing these impacts directly to the furlough is 
difficult given other factors, such as a civilian hiring freeze and 
pay freeze that may also have contributed to declining morale. For 
example, satisfaction with the organization had declined from 63 
percent in 2010 to 55 percent in 2013. Furthermore, a longer term 
impact may result from DOD civilians filing over 32,000 appeals 
related to the administrative furlough in 2013, most of which have not 
yet been resolved. 

What GAO Recommends: 

GAO recommends that DOD update and utilize its furlough cost-savings 
information as it becomes available in the event that it decides to 
implement another administrative furlough in the future. DOD partially 
concurred. GAO continues to believe the findings and recommendation 
are valid, as discussed in the report. 

View [hyperlink, http://www.gao.gov/products/GAO-14-529]. For more 
information, contact Brenda S. Farrell at (202) 512-3604 or 
farrellb@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DOD Implemented a 6-Day Administrative Furlough of Its Civilian 
Personnel and Reported Approximately $1 Billion in Savings: 

DOD Did Not Use Comprehensive and Updated Information on Estimated 
Cost Savings to Inform Its Decisions: 

Wide Range of Impacts Reported from the Implementation of the 
Administrative Furlough: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope and Methodology: 

Appendix II: Department of Defense (DOD) Exceptions Granted to the 
Civilian Workforce in a May 14, 2013 Memorandum: 

Appendix III: Analysis of Department of Defense (DOD) Civilian 
Personnel Attrition Rates: 

Appendix IV: Comments from the Department of Defense: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Number of Civilians DOD Reported Were Furloughed and Excepted 
from Furlough in Fiscal Year 2013, by DOD Component: 

Table 2: Actions Related to DOD's Sequestration and Administrative 
Furlough Implementation in Fiscal Year 2013: 

Figures: 

Figure 1: Appeals Process and Status of DOD Civilian Appeals to the 
Merit Systems Protection Board: 

Figure 2: Army Medical Command Attrition Rates from Fiscal Year 2009 
to Fiscal Year 2013: 

Figure 3: DOD Component Attrition Rate from Fiscal Year 2009 to Fiscal 
Year 2013: 

Abbreviations: 

DOD: Department of Defense: 

EHRI: Enterprise Human Resources Integration: 

FMR: Financial Management Regulation: 

OPM: Office of Personnel and Management: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

June 17, 2014: 

Congressional Committees: 

The Department of Defense (DOD) is one of the largest and most complex 
organizations in the federal government, with a total workforce 
consisting of civilians, military personnel,[Footnote 1] and 
contracted support. DOD's civilian personnel are critical to achieving 
the department's missions by performing a wide variety of duties 
including, among other things, providing care for active-duty 
personnel and their dependents and wounded servicemembers, gathering 
intelligence, managing financial accounting systems, and providing 
mission-essential combat-support functions that traditionally have 
been performed by military personnel, such as logistics support and 
maintenance. 

Through most of fiscal year 2013, federal agencies faced uncertainty 
about funding levels associated with the automatic, across-the-board 
cancellation of budgetary resources, known as sequestration.[Footnote 
2] In March 2013, the President ordered the sequestration of budgetary 
resources, which resulted in approximately $80.5 billion in reductions 
across federal government accounts. DOD's discretionary budget was 
ultimately reduced by $37 billion. As part of its effort to reduce its 
budget in the last 7 months of fiscal year 2013, the Secretary of 
Defense decided to implement an administrative furlough (throughout 
the remainder of the report we use the term furlough to refer to 
administrative furlough, unless otherwise noted) by placing most of 
its civilian personnel in a temporary nonduty, nonpay status. The 
other two major components of the total workforce, military personnel 
and contracted support, were not subject to the furlough. 
Specifically, DOD's military personnel accounts were exempted from 
sequestration, and for that reason military personnel were not 
included in the scope of the furlough. In addition, while DOD 
continued to use contracted support under existing contracts, and 
those employees were not subject to the furlough, according to DOD 
officials DOD took actions, such as adjustments to the scope of 
contracts or delays in letting new contracts, as part of its efforts 
to achieve sequestration reductions. 

Recently, we reported on DOD's approach to sequestration and, as a 
part of that review, we provided a brief overview of DOD's 
implementation of the furlough of its civilian personnel.[Footnote 3] 
Specifically, we reported that DOD spending reductions under 
sequestration affected DOD's civilian workforce and many programs and 
functions, which required DOD to accept some risk in maintaining the 
readiness of military forces. 

We conducted this review in response to House Report 113-102 of the 
House Armed Services Committee, accompanying the bill for the National 
Defense Authorization Act for Fiscal Year 2014, which mandated that we 
assess how DOD planned for, implemented, and monitored furloughs of 
its civilian workforce to include what challenges the department faced 
in its implementation and cost savings realized. This report (1) 
examines how DOD implemented its civilian workforce furloughs and any 
reported cost savings, (2) examines the extent to which DOD utilized 
up-to-date cost-savings information in the planning and implementation 
of civilian workforce furloughs, and (3) identifies any reported 
examples of impacts that resulted from the DOD civilian workforce 
furloughs. 

To address how DOD implemented its civilian workforce furlough, we 
obtained and analyzed information and interviewed knowledgeable 
officials from the Under Secretary of Defense (Comptroller) (hereafter 
referred to as Office of the Comptroller), the Under Secretary of 
Defense for Personnel and Readiness, and the Departments of the Army, 
Navy, and Air Force. We obtained and analyzed guidance and policy 
documents outlining the furlough decisions. To understand how the 
civilian workforce furlough was implemented at a local level, we 
conducted site visits of a selected shipyard, medical facility 
providing 24-hour support, and air operations center. Specifically, we 
visited Norfolk Naval Shipyard, Brooke Army Medical Center at Fort Sam 
Houston, and Air Mobility Command at Scott Air Force Base. These sites 
were selected on the basis of DOD's memo outlining categories of 
personnel for exceptions to the furlough, DOD statements about 
potential sequestration impacts, and mission-critical occupations as 
outlined in DOD's Strategic Workforce Plan. Information from these 
site visits is not generalizable, but provides examples of how the 
furlough was implemented at these locations. To examine any reported 
cost savings that resulted from the DOD civilian workforce furloughs, 
we obtained and analyzed information and interviewed officials from 
the Office of the Comptroller regarding DOD's calculations of the 
actual cost savings as a result of the administrative civilian 
workforce furlough. We assessed DOD's methods for calculating actual 
cost savings for the furlough; however, we did not independently 
verify these calculations. The cost savings were calculated from the 
civilian pay from those who were furloughed and did not account for 
other costs from implementing the furlough, such as administrative 
costs. 

To determine the extent to which DOD utilized up-to-date cost-savings 
information in the planning and implementation of civilian workforce 
furloughs, we obtained and analyzed information and interviewed 
officials from the Office of the Comptroller regarding how the 
department calculated the estimated cost savings for the furlough of 
civilian personnel in fiscal year 2013. We examined DOD's methods for 
calculating estimated cost savings for the furlough; however, we did 
not independently verify the accuracy of these calculations. 

To identify any reported examples of impacts that resulted from the 
DOD civilian workforce furloughs, we obtained and analyzed information 
and interviewed knowledgeable officials at the three selected sites--
Norfolk Naval Shipyard, Brooke Army Medical Center at Fort Sam 
Houston, and Air Mobility Command at Scott Air Force Base. Further, we 
interviewed officials and obtained information from the Merit Systems 
Protection Board providing the status of appeals filed by DOD 
civilians regarding the furlough in fiscal year 2013. 

We conducted this performance audit from July 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. For further 
details, please see appendix I. 

Background: 

The Office of Personnel Management (OPM) has identified two different 
kinds of furloughs--an administrative furlough, which is a planned 
event by an agency designed to absorb reductions necessitated by 
downsizing, reduced funding, lack of work, or other budget situation 
other than a lapse in appropriations, and a shutdown furlough, which 
results from a lapse in appropriations.[Footnote 4] DOD had not 
implemented a department-wide administrative furlough prior to 2013, 
according to officials within the Office of the Under Secretary of 
Defense for Personnel and Readiness; however, DOD has implemented 
shutdown furloughs--once in 1995 and again in 2013. Since 1980, DOD 
has conducted furloughs based on gaps in appropriation during November 
14-17, 1995, and during October 1-17, 2013.[Footnote 5] 

DOD's total workforce has grown since the events of September 2001. 
The civilian workforce has grown from about 687,000 full-time 
equivalents in fiscal year 2001 to about 782,000 full-time equivalents 
projected in fiscal year 2015.[Footnote 6] DOD's active and reserve 
military workforce grew between fiscal year 2001 and fiscal year 2011 
from about 2.25 million to about 2.27 million, with a budgeted request 
for a military workforce of about 2.13 million for fiscal year 2015. 
Further, DOD has increasingly relied on contracted support both 
overseas and in the United States to perform many of the same 
functions as civilian employees, including management support, 
communication services, and intelligence. DOD's total obligations for 
contracted services grew from about $96 billion in fiscal year 2001 to 
about $174 billion for an estimated contracted services workforce of 
about 670,000 full-time equivalents in fiscal year 2012.[Footnote 7] 
However, with the drawdown in operations in Iraq and Afghanistan, as 
well as changing priorities and missions, most military services 
project a decrease in their military and civilian workforce through 
fiscal year 2017. 

For over a decade, strategic human capital management for all federal 
civilians--including those at DOD--has been on our High-Risk list 
because of the long-standing lack of leadership in this area. We have 
conducted assessments of DOD's strategic workforce plans since 2008, 
and our body of work has found that DOD's efforts to address mandated 
strategic workforce planning requirements have been mixed. In our most 
recent report in September 2012 on the department's overall civilian 
strategic workforce plan, we recommended that DOD take a number of 
actions, including to provide guidance for developing future strategic 
workforce plans that clearly directs the functional 
communities[Footnote 8] to collect information that identifies not 
only the number or percentage of personnel in its military, civilian, 
and contractor workforces but also the capabilities of the appropriate 
mix of those three workforces. DOD either concurred or partially 
concurred with our recommendations, stating that, among other things, 
the department was deliberate in applying lessons learned from 
previous workforce plans and identifying specific challenges and the 
actions being taken to address those challenges to meet statutory 
planning requirements by 2015. 

DOD's civilian workforce has been affected by a changing operational 
and fiscal environment for a number of years. For example, DOD 
civilians underwent a 3-year pay freeze between 2011 and 2013 along 
with the rest of the federal civilian workforce. DOD was also affected 
by a Continuing Resolution that held funding at fiscal year 2012 
levels through March 27, 2013, even though DOD had requested funding 
increases in most areas of operations for fiscal year 2013. In 
addition, in January 2013, DOD reduced its spending to prepare for a 
potential sequestration, a process of automatic, largely across-the-
board spending reductions under which budgetary resources are 
permanently canceled to enforce certain budget policy goals.[Footnote 
9] DOD took several actions to prepare for a potential sequestration, 
such as authorizing components in January 2013 to initiate a hiring 
freeze as needed,[Footnote 10] releasing term and temporary employees, 
and instructing components to draft plans to include the possibility 
of furloughs of up to 22 workdays. On February 20, 2013, DOD provided 
Congress with notice of its intent to furlough. 

We reported in November 2013 that DOD's efforts to address 
sequestration--a reduction of $37 billion in DOD's discretionary 
budget--was a short-term response focused on addressing the immediate 
funding reductions for fiscal year 2013.[Footnote 11] As a result of 
sequestration and increased Overseas Contingency Operations 
requirements, on March 13, 2013, DOD issued guidance for components to 
plan for a furlough of its civilian personnel for up to 22 workdays. 
[Footnote 12] On March 28, 2013, DOD reduced the number of planned 
furlough days from 22 to 14, in response to the enactment of a defense 
appropriations act [Footnote 13]for the remainder of fiscal year 2013. 
The Secretary of Defense also decided to apply the furlough across the 
department to allow for a reallocation of resources throughout the 
department to address national security priorities. DOD also took 
other actions across the department to reduce its budget in response 
to the sequestration, such as curtailing training for certain units 
and postponing planned maintenance. 

The size and complexity of DOD's worldwide operations--involving a 
requested base budget of approximately $495.6 billion in fiscal year 
2015[Footnote 14]--and the need to reduce its budget in an ongoing 
fiscally constrained environment, require that DOD have accurate, 
complete, and timely financial information available to make 
management decisions. We have placed DOD on our High-Risk List for 
financial management beginning in 1995 because of financial management 
weaknesses that affect its ability to control costs; ensure 
accountability; anticipate future costs and claims on the budget; 
detect fraud, waste, and abuse; and prepare auditable financial 
statements. DOD is one of the few federal entities that cannot 
accurately account for its spending or assets.[Footnote 15] We have 
reported that while DOD has made efforts to improve financial 
management, it still has much work to do if it is to meet its long-
term goals of improving financial management and achieving full 
financial statement auditability.[Footnote 16] 

DOD Implemented a 6-Day Administrative Furlough of Its Civilian 
Personnel and Reported Approximately $1 Billion in Savings: 

DOD Issued Guidance Directing the Implementation of an Administrative 
Furlough of Its Civilian Personnel: 

On May 14, 2013, the Secretary of Defense, in an effort to minimize 
adverse affects on military readiness, issued a memorandum that 
directed a furlough of most of its civilian personnel in response to 
major budgetary shortfalls from the sequestration.[Footnote 17] The 
memorandum required most civilians to be furloughed for up to 11 days 
beginning on July 8, 2013, typically for 1 day per week until 
September 30, 2013. The Secretary of Defense also directed all 
components to monitor funding closely for the remainder of fiscal year 
2013 so that, if the budget situation permitted, DOD could shorten the 
length of the furloughs. The memorandum listed categories of 
exceptions to the furlough, including personnel assigned to a combat 
zone, those necessary to protect the safety of life and property, and 
Navy shipyard employees.[Footnote 18] See appendix II for a complete 
list of exceptions granted.[Footnote 19] 

Additionally, the Secretary of Defense's May 14, 2013, memorandum 
included an associated schedule for issuance of furlough proposal 
notices at least 30 days in advance of the furlough, allowing at least 
7 days for response by the employee. The memorandum also identified 
the following key dates: 

* May 28-June 5: Furlough proposal notices were to be served to 
individual employees subject to furlough. 

* June 4-June 12: Individual employee reply periods--time allotted for 
employees to acknowledge receipt of the furlough proposal notice, 
among other things--ended 7 calendar days from when the proposal was 
received, unless component procedures allowed for a different reply 
period. 

* June 5-July 5: Furlough decision letters were to be served to 
individual employees subject to furloughs, depending on when the 
proposal was received and prior to the first day of furlough. 

* July 8: Furlough period was to begin no earlier than this date. 

An attachment to the memorandum noted that defense agencies and 
military services should designate a Deciding Official who would be 
accountable for making final decisions on furloughs for individual 
employees after carefully considering the employee's reply, if any, 
and the needs of the department.[Footnote 20] 

The Assistant Secretary of Defense for Readiness and Force Management 
issued clarifying guidance throughout the planning and implementation 
of the furlough that, among other things, provided standard templates 
for the proposal and decision notice letters to prepare and issue to 
civilian employees.[Footnote 21] In addition, guidance was issued to 
provide clarification on the use of leave without pay during the time 
of the furlough; to help ensure that borrowed military personnel were not 
used to compensate for work resulting from the furlough;[Footnote 22] 
and to prohibit contracted support from being assigned or permitted to 
perform additional work or duties to compensate for workload or 
productivity loss resulting from the furlough.[Footnote 23] 

Based on the Secretary of Defense's May 14, 2013, memorandum, managers 
were given the authority to develop specific furlough procedures in 
order to minimize adverse mission effects and limit the harm to morale 
and productivity. The memorandum also noted that bargaining with 
unions may be required.[Footnote 24] As a result, military departments 
developed implementing guidance based on the Secretary of Defense's 
memorandum requiring the furlough. For example, the Army issued a 
memorandum on command reporting requirements for the furlough to 
capture information on the issuance of furlough proposal notices and 
decision letters.[Footnote 25] Also, the Navy issued supplemental 
guidance on the scheduling of furloughs that included details on 
commander authorities to make decisions on the scheduling of furlough 
days for each employee, subject to union negotiation, as appropriate. 
[Footnote 26] In addition, the Air Force excluded from furlough those 
civilian employees whose homes were destroyed or rendered 
uninhabitable by the Oklahoma tornadoes in 2013. 

On August 6, 2013, the Secretary of Defense issued a memorandum 
reducing the number of furlough days from 11 to 6 days for most 
civilians. This action also canceled furloughs for Department of 
Defense Education Activity instructional and support staff on 10-month 
contracts, and required new hires whose furlough period began after 
July 8, 2013, to take 2 furlough days per pay period between their 
furlough start date and August 17, 2013.[Footnote 27] As discussed in 
greater detail later in the report, the department was able to reduce 
the number of furlough days after completing several transfer and 
reprogramming actions, which gave the department additional 
flexibility and resulted in substantial realignment of funds--about 
$8.6 billion.[Footnote 28] Additional guidance was issued after the 
reduction in furlough days to address those who took more than 6 days 
of furlough, by allowing them to substitute any excess furlough days 
for leave. In the event an employee did not have sufficient leave 
accrued, or the employee elected not to substitute leave, excess 
furlough time remained as unpaid time.[Footnote 29] Ultimately, DOD 
reported that it furloughed 624,404 civilians and excepted 142,602 
from furlough. Specifically, of the DOD civilians furloughed, the Army 
furloughed about 221,000; the Navy furloughed about 153,000; the Air 
Force furloughed about 157,000; and the other DOD agencies furloughed 
about 93,000 (see table 1 below). 

Table 1: Number of Civilians DOD Reported Were Furloughed and Excepted 
from Furlough in Fiscal Year 2013, by DOD Component: 

Department of Defense (DOD) component: Army; 
Total number of furloughed civilians: 221,322; 
Total number of civilians excepted from furlough: 45,469. 

Department of Defense (DOD) component: Navy; 
Total number of furloughed civilians: 152,890; 
Total number of civilians excepted from furlough: 53,646. 

Department of Defense (DOD) component: Air Force; 
Total number of furloughed civilians: 157,468; 
Total number of civilians excepted from furlough: 23,080. 

Department of Defense (DOD) component: DOD Agencies; 
Total number of furloughed civilians: 92,724; 
Total number of civilians excepted from furlough: 20,407. 

Department of Defense (DOD) component: Total; 
Total number of furloughed civilians: 624,404; 
Total number of civilians excepted from furlough: 142,602. 

Source: DOD. GAO-14-529. 

Note: The total number of civilians furloughed and excepted from 
furlough as reported by the Office of the Under Secretary of Defense 
for Personnel and Readiness does not include those paid with 
nonappropriated funds or by foreign military sales, nor those not paid 
directly by DOD funds. 

[End of table] 

Managers Were Responsible for Implementing the Administrative Furlough: 

Based on the Secretary of Defense's May 14, 2013, memorandum 
initiating the furlough, managers carried out the planning and 
implementation of the furlough for their respective offices. 
Specifically, in addition to the Office of the Secretary of Defense's 
efforts to notify its 10 unions with national consultation rights 
about the decision to furlough, managers carried out negotiations with 
over 1,500 local bargaining units on the implementation of the 
furlough of civilians, which included issues such as who would be 
furloughed, who would be excepted from furlough, and the scheduled 
furlough days. Officials at Brooke Army Medical Center, Norfolk Naval 
Shipyard, and Air Mobility Command described the following actions 
they took to implement the furlough at their sites: 

* Notification letter process: Officials at these sites described 
their process for designating a Deciding Official and the 
distribution, receipt, and tracking of furlough notification letters. 
For example, at Brooke Army Medical Center, the Deciding Official hand-
signed each furlough notification letter for over 2,700 civilians that 
were then distributed to the medical departments to be handed out by 
the civilians' supervisors. If the supervisor was unable to hand-
deliver the notification letter, the letter was mailed to the civilian 
via regular and certified mail. The supervisors then followed up with 
the civilians who received the letters to obtain their signature or 
acknowledgment of receipt of the notification and provided copies to 
the civilians and copies to the human resources office to be placed in 
the official personnel files. 

* Work schedules: Civilian personnel were assigned varying schedules 
for the furlough, depending on negotiations with unions and 
consideration of mission requirements. For example, officials at these 
sites said that some offices implemented Friday as civilian furlough 
day, while other offices spread out the furlough days of their 
civilians across the work week. In addition, some civilians took their 
furlough days in clusters rather than just 1 day a week. 

* Tracking of furlough days: Officials at these sites explained that 
they monitored the timecards of civilians who were furloughed to 
ensure that they were taking the required number of furlough days and 
in order to know when the furlough would end for each civilian based 
on their individual schedule or circumstance. For example, officials 
at Air Mobility Command explained that their office of financial 
management generated reports on the number of furlough hours taken 
based on timecard reporting, and when the number of furlough days was 
reduced to 6 days, officials audited the timecard system to ensure 
civilians under their purview had taken the correct number of furlough 
days. 

* Exceptions process: The exceptions determination process varied at 
these sites, and additional exceptions to the furlough were sought and 
granted as the department clarified the personnel covered under 
categorical exceptions and as commands granted individual exceptions. 
For example, officials at Brooke Army Medical Center set up a team 
early on to identify and prioritize department needs within the 
hospital to ensure they were able to meet the mission of providing 
adequate staff and high-quality care to patients. This allowed Brooke 
Army Medical Center to identify civilian personnel to except from the 
furlough based upon prioritized needs, such as evening shift 
supervisors within its nursing department. Also, the Public Works 
office at Norfolk Naval Shipyard requested exceptions for some of its 
mechanics and utilities staff to provide 24-hour support. 

DOD Reported Cost Savings of Approximately $1 Billion from the 
Administrative Furlough: 

As a result of DOD furloughing 624,404 civilians, the Office of the 
Comptroller reported that the department saved approximately $1 
billion from the furlough. These cost savings were calculated using 
Defense Finance and Accounting Service-reported payroll data by 
summing the result of each employee's hourly pay rate multiplied by 
the number of furlough hours recorded in his or her time card. Office 
of the Comptroller officials reported they provided DOD components 
with Defense Finance and Accounting Service payroll data reports for 
their respective civilian employees and requested that they validate 
the data to ensure that all employees who were required to be 
furloughed correctly recorded their furlough days in the timekeeping 
systems. The cost savings calculation did not include the last week of 
the fiscal year because the last pay period of the fiscal year--which 
ran from September 22-October 5, 2013--overlapped with the first week 
of fiscal year 2014 and included leave without pay recorded for the 
government shutdown.[Footnote 30] Office of the Comptroller officials 
stated that the savings amount from the final pay period in the fiscal 
year was expected to be minimal as the majority of the furlough 
savings were realized by August 24, 2013, when most furloughed 
civilians would have taken their required 6 furlough days. 

DOD's reported cost savings of $1 billion does not account for other 
costs the department incurred while implementing the furlough, such as 
administrative costs from processing furlough notification letters or 
developing furlough guidance, as well as costs from the loss of 
productivity due to civilians being furloughed. For example, officials 
we interviewed at Brooke Army Medical Center stated that many hours 
were spent on administrative tasks to prepare for and implement the 
furlough. In addition, officials from Army Medical Command explained 
that there was a loss of productivity, as staff set aside their 
primary tasks to concentrate on implementing the furlough. Further, 
Marine Corps officials stated that they spent a majority of their time 
dealing with the furlough rather than focusing on day-to-day business, 
such as developing critical skills training. 

DOD Did Not Use Comprehensive and Updated Information on Estimated 
Cost Savings to Inform Its Decisions: 

DOD developed an estimated cost-savings for the furlough to assist in 
planning efforts to meet sequestration cost-reduction targets; 
however, DOD did not exclude pay for those excepted from the furlough 
and did not update its estimate throughout the furlough period as more 
information became available, such as real-time cost savings and when 
subsequent decisions were made to reduce the number of furlough days. 
As noted earlier, the Secretary of Defense directed a furlough of most 
of the department's civilian personnel in response to major budgetary 
shortfalls from the sequestration. The Office of the Comptroller 
developed an average estimated cost savings per person per furlough 
day of approximately $300.[Footnote 31] Officials within the Office of 
the Comptroller stated that the estimate was developed in order to 
provide senior leaders within DOD with information in a short time 
frame to consider how much could be saved through a furlough as part 
of an effort to meet sequestration cost-reduction targets. The average 
estimated cost-savings per person per day was developed prior to the 
identification of exceptions to the furlough and used aggregated 
payroll data from Defense Finance and Accounting Service and civilian 
personnel data from the Defense Civilian Personnel Data System. Upon 
directing a furlough of 11 days for most civilian personnel in May 
2013, the Office of the Comptroller estimated a cost savings of 
approximately $2.1 billion. The Office of the Comptroller developed 
the $2.1 billion estimate by multiplying the estimated average savings 
of $300 per person per day by the estimated total number of civilians 
being furloughed. In the same memorandum directing the 11 day 
furlough, the Secretary of Defense included categories of exceptions 
to the furlough. When the Office of the Comptroller developed the $2.1 
billion estimated savings it accounted for exceptions in their 
estimated total number of civilians being furloughed, but not in its 
average estimated cost-savings per person per day. 

DOD's total estimated cost savings was not as accurate as it could 
have been because it did not account for excepted employees in its 
average per person per day estimated cost-savings. As stated above, 
DOD excepted142,602 civilian employees, or approximately 18 percent of 
the civilian workforce from the furlough. The civilians who were 
excepted may have had higher salaries or lower salaries; thus, these 
exceptions may have affected the average per day savings. Further the 
per person per day cost savings effects the total estimated savings. 
For example, assuming the same number of civilians DOD used to 
calculate its estimated cost savings were furloughed for 11 days, a 
$10 difference in estimated average savings per person per day changes 
the total estimated savings by approximately $72 million. 

On August 6, 2013, the Secretary of Defense announced a reduction in 
the number of furlough days from 11 to 6 days, and the Office of the 
Comptroller adjusted the estimated cost savings to about $1.2 billion 
using the original estimated cost savings of $300 per person per day. 
Officials within the Office of the Comptroller stated that the 
decision to reduce the number of furlough days was based on fund 
transfers and reprogrammings[Footnote 32] that occurred towards the 
end of the fiscal year. In September 2013, DOD stated that the 
relevant congressional committees had approved about $8.6 billion of 
DOD's total transfer and reprogramming requests. These reprogrammings 
and fund transfers allowed DOD the flexibility to reverse some actions 
taken to achieve spending reductions to address sequestration. Among 
actions taken, DOD reduced the number of furlough days from 11 days to 
6 days. Table 2 shows the actions related to DOD's implementation of 
sequestration and the furlough. 

Table 2: Actions Related to DOD's Sequestration and Administrative 
Furlough Implementation in Fiscal Year 2013: 

Date: January 10, 2013; 
Action: The Secretary of Defense instructed 
components to draft plans to include the possibility of furloughs of up 
to 22 workdays. 

Date: February 20, 2013; 
Action: The Department of Defense (DOD) provided Congress with notice 
of its intent to furlough. 

Date: February 2013; 
Action: The DOD Office of the Comptroller began calculating cost 
estimates for a potential furlough of civilian personnel based on 
various scenarios. 

Date: March 1, 2013; 
Action: The President issued the sequestration order. 

Date: March 26, 2013; 
Action: The 2013 full-year appropriations act provided DOD with $7.5 
billion in broad transfer authority.[A]. 

Date: May 14, 2013; 
Action: The Secretary of Defense announced an administrative furlough 
of 11 days for most of DOD's civilian personnel and identified broad 
categories of exceptions to the furlough. 

Date: May 17, 2013; 
Action: DOD submitted two requests to Congress totaling $9.4 billion 
to transfer and reprogram funds that had been appropriated for fiscal 
year 2013[B]. 

Date: July 8, 2013; 
Action: DOD began to furlough most of its civilian personnel. 

Date: July 19, 2013; 
Action: DOD submitted two additional requests to Congress for transfer 
and reprogramming of funds totaling about $1.5 billion[C]. 

Date: August 6, 2013; 
Action: The Secretary of Defense announced a reduction in the number 
of furlough days from 11 to 6 days for civilian personnel and canceled 
the furlough for certain positions. 

Source: GAO analysis of DOD information and congressional actions. GAO-
14-529. 

[A] The Consolidated and Further Continuing Appropriations Act, 2013, 
Pub. L. No. 113-6 (2013). Of this amount, $3.5 billion was special 
transfer authority for purposes related to Overseas Contingency 
Operations and $4 billion was general transfer authority. These 
amounts were generally consistent with the amounts of broad transfer 
authority that Congress provided to DOD in fiscal years 2011 and 2012. 

[B] These requests proposed to transfer about $7.3 billion between 
accounts using DOD's broad transfer authorities, and, according to DOD 
officials, the remaining $2.1 billion represented large reprogrammings 
within budget accounts and transfers from DOD's foreign currency 
fluctuations account. 

[C] These requests identified replacement sources for the transfer or 
reprogramming requests originally submitted on May 17, 2013, but 
disapproved at that time by the congressional defense committees, as 
well as new requests to transfer and reprogram fiscal year 2013 funds. 

[End of table] 

According to GAO's Standards for Internal Control in the Federal 
Government,[Footnote 33] pertinent information should be identified, 
captured, and distributed to the right people in sufficient detail, in 
the right form, and at the appropriate time to maintain its relevance 
and value to management in controlling operations and making decisions 
efficiently and effectively. As part of planning initiated in January 
2013 for the components to prepare for furloughs up to 22 days, the 
Office of the Comptroller began developing a cost-savings estimate. 
Between the time that the Office of the Comptroller produced the 
initial cost-savings estimate of $2.1 billion in May 2013 and when the 
department carried out the furloughs beginning July 8, 2013, the 
Office of the Comptroller did not update the average estimated cost-
savings per person per day to exclude from the cost savings the pay of 
those civilians excepted from the furlough--142,602. Further, the 
Office of the Comptroller did not update its cost-savings estimate 
based on reported payroll data showing real-time furlough cost savings 
between July 8, 2013, and the time that the furlough days were reduced 
in August 6, 2013, even though the estimate was used in continuing 
discussions. Officials within the Office of the Comptroller stated 
that they did not update the estimate because the actual payroll data 
were not available until July 23, 2013. While officials within the 
Office of the Comptroller stated that the decision to furlough was 
just one action in response to DOD's effort to meet sequestration cost-
reduction targets, they also pointed out that the military services 
used the cost-savings estimate in meetings with DOD leadership that 
contributed to the reduction in furlough days. 

Office of the Comptroller officials stated that they did not update 
the estimate because they decided to wait until the actual cost 
savings were achieved once all furloughed personnel had taken the 
required number of furlough days by the end of the fiscal year. In 
addition, officials within the Office of the Comptroller explained 
that DOD did not track the cost savings from the furlough in real time 
because the Defense Finance and Accounting Service reports payroll 
data on a biweekly basis and there was only 1 week's worth of payroll 
data available from the July 8 pay period at the time that the 
decision was made to reduce the number of furlough days on August 6, 
2013. However, the determination of exceptions was made 3 months 
earlier and was not considered in the initial $300 estimated average 
cost-savings per person per day nor was the estimated average cost-
saving per person per day ever updated. Officials reiterated that the 
decision to reduce the number of furlough days was primarily based on 
additional funding flexibility resulting from transfer and 
reprogramming actions, as well as reduced Overseas Contingency 
Operations funding requirements. While it is unknown whether DOD 
officials' decisions would have been affected had they received 
comprehensive and updated cost-savings estimates, incorporating such 
comprehensive and updated information in its cost savings estimates in 
the future, in the event that a furlough is again necessary, may help 
better inform decision makers. 

Wide Range of Impacts Reported from the Implementation of the 
Administrative Furlough: 

Officials from selected sites discussed examples of impacts that 
resulted from the furlough. Specifically, some officials we 
interviewed at selected sites discussed actions taken to prepare for 
or mitigate potential impacts resulting from the furlough such as 
proactive planning efforts, identified efficiencies, and use of cost 
savings to offset unfunded requirements. Officials we interviewed also 
described specific impacts that they believe can be attributed to the 
furlough, such as decline in civilian morale, attrition, mission 
delays, inconsistencies and clarification issues with the furlough 
guidance, and impacts on servicemembers' morale. However, measuring 
the direct impact of the furlough is difficult since it was a part of 
a broader set of sequestration actions that included a civilian hiring 
freeze, limits on overtime, and termination of temporary and term 
hires, as well as other non-sequestration-related personnel actions, 
such as a 3-year pay freeze between 2011 and 2013. Further, DOD 
civilians filed over 32,000 appeals to the Merit Systems Protection 
Board related to the furlough in 2013. 

The following are examples of actions taken to prepare for or mitigate 
potential impacts reported by officials at the locations we visited 
from the implementation of the furlough: 

* Proactive Planning and Furlough Tracking--Some officials described 
proactive planning efforts that took place at their sites to prepare 
for the furlough. For example, Brooke Army Medical Center officials 
reported setting up a team in February 2013 to conduct worst-case 
scenario planning and determine mission priorities for adequate 
staffing to help ensure high quality of patient care for a potential 
furlough. This team was then able to identify individuals for 
exception to the furlough based on their planning efforts once they 
received the furlough guidance designating 11 furlough days and 
categories of exceptions. Some officials from all three sites also 
described efforts to capture potential and realized impacts from the 
furlough through various reporting mechanisms, such as a furlough 
impact log. 

* Identification of Efficiencies--Some officials provided examples of 
individual command efforts to identify and implement efficiencies 
during the furlough. For example, some officials at all three sites 
noted that because of the limitations placed on overtime during 
sequestration and the added impact of the furlough on civilian staff, 
approval of overtime was scrutinized at a higher level than before. As 
a result, officials at these sites gained a better awareness of the 
appropriate use of overtime and reported reductions in the use of 
overtime. In addition, officials from Brooke Army Medical Center's 
Emergency Medicine Department stated that they were able to defer the 
size of their routine supply purchases after prioritizing spending on 
mission-essential needs during the furlough. 

* Use of Cost Savings to Offset Unfunded Requirements--Some officials 
at Norfolk Naval Shipyard and Air Mobility Command described using the 
cost savings realized from the reductions in civilian pay due to the 
furlough to apply towards other unfunded requirements. Officials from 
the Department of the Navy stated that the individual commands were 
allowed to use the money saved from the furloughs based on individual 
priorities. Brooke Army Medical Center reported an estimated return of 
about $3.4 million as furlough days were reduced from the initially 
planned 22 days to 6 days. Army Medical Command initially withheld 
civilian pay from the medical facility to account for the estimated 
cost of furloughing staff for 22 days and later returned the funds to 
Brooke Army Medical Center as the length of the furlough was reduced. 

The following are examples of impacts reported by officials at the 
locations we visited that they believe can be linked to the 
implementation of the furlough: 

* Decline in Morale--Officials at all three sites stated that civilian 
morale declined due to the civilian workforce furlough that resulted 
in a 20 percent reduction in pay per week for 6 weeks. This was 
further exacerbated as some civilians were excepted from furlough 
while other civilian colleagues were not, contracted support staff 
continued working, and some civilians who were historically deemed 
"mission essential" and required to report to the office for events, 
such as snow days, were now furloughed. For example, officials at 
Norfolk Naval Shipyard reported civilians furloughed within the 
supporting commands experienced frustration and a decline in morale as 
their civilian colleagues working in the shipyard were not only 
excepted but were also working overtime during the furlough period. 
Officials at Brooke Army Medical Center described a decline in morale 
within the Army inpatient nursing staff because the Air Force excepted 
its inpatient nursing staff from furlough while the Army did 
not.[Footnote 34] Further, some officials at Brooke Army Medical 
Center indicated that the furlough affected some patients who tried to 
get refills on their medication prior to the furlough out of fear that 
they would not have access to care during the furlough period. In 
addition, officials at Air Mobility Command described a decline in 
morale among civilian staff who had to take a pay cut while contracted 
support staff did not. Further, officials at Air Mobility Command 
described instances where some civilians historically considered 
"mission essential," such as air traffic controllers and firefighters, 
were now furloughed. 

Officials at the sites we visited stated that they followed the 
Secretary of Defense's guidance and did not use borrowed military 
personnel to compensate for work that would have been conducted by 
furloughed civilians. Some officials stated that servicemembers 
experienced a decline in morale as they worked longer hours to 
complete their missions in the absence of civilians who were 
furloughed. For example, at Brooke Army Medical Center, officials 
stated that they relied on their military medical staff to work during 
the furlough. Officials stated that their use of military personnel 
only extended to those personnel who were assigned to their unit and 
that they did not borrow personnel from other units. While the term 
"borrowed military personnel" is not defined in Assistant Secretary of 
Defense for Readiness and Force Management's June 2013 memorandum, the 
Army's definition of "borrowed military personnel" only includes 
certain uses of military personnel outside of the unit to which they 
are assigned.[Footnote 35] 

In December 2013, DOD reported to Congress that the results of OPM's 
recent annual Federal Employee Viewpoint Survey showed its civilian 
workforce morale had continued to decline, and that DOD expected the 
furloughs to affect employee recruiting and retention in the future. 
[Footnote 36] Of note, the survey showed a decline in satisfaction 
among DOD respondents to questions that dealt with job satisfaction 
(decline from 71 percent in 2010 to 64 percent in 2013), pay (decline 
from 65 percent in 2010 to 53 percent in 2013), and satisfaction with 
the organization (decline from 63 percent in 2010 to 55 percent in 
2013).[Footnote 37] DOD identified several examples of efforts it was 
taking to minimize any negative impact on the morale of the civilian 
workforce and long-term consequences on recruiting and retention of 
the civilian workforce. Most of these actions were high-level, such as 
continuing to focus on the Strategic Workforce Plan and conducting 
leadership development programs for entry, mid-, and senior-level 
personnel. Other examples of actions DOD noted it was taking to 
address morale included initiating an enterprise strategic recruitment 
effort and the development of a new performance appraisal system. 
However, the letter does not provide specifics about these actions. 
For example, it does not address how the Strategic Workforce Plan 
would minimize the negative impact on morale of the civilian 
workforce. The letter also does not provide time frames for when these 
actions will be completed. 

* Attrition as a Result of the Furlough: Officials at Brooke Army 
Medical Center and Norfolk Naval Shipyard stated a number of examples 
where employees left as a result of the furlough. For example, some 
officials at Brooke Army Medical Center we interviewed stated that 
they knew of colleagues who left the hospital to work at the 
Department of Veterans Affairs since it did not furlough its staff. In 
August 2013, the Army Surgeon General made a statement that, during 
2013, 2,700 Army civilian medical doctors, nurses, and other health 
workers left their jobs for work elsewhere due to the furlough, many 
transferring to the Department of Veterans Affairs. We examined the 
attrition rate of civilian personnel at Army Medical Command and DOD 
between fiscal years 2009 and 2013. Specifically, for the Army Medical 
Command, we found that attrition rates for on-board civilian medical 
officers and nurses peaked at 22 percent in fiscal year 2011. For more 
information on Army Medical Command and DOD component attrition rates, 
see appendix III. 

* Mission Delays--While none of the selected sites we visited 
indicated mission failure as a result of the furlough, some officials 
described increased challenges in meeting their missions. 

- Defense Logistics Agency, Maritime support command, officials from 
the Norfolk Naval Shipyard stated that, during the furloughs, they 
experienced an increased backlog in providing goods and services in 
support of shipyard operations. Specifically, the Defense Logistics 
Agency, Maritime support command, reported that the backlog of 
requests to provide goods and services nearly doubled during the 
furlough period, from 330 outstanding requests on July 3, 2013, to a 
peak of 614 outstanding requests on July 29, 2013, before dropping 
down to 465 outstanding requests by August 13, 2013, as the furlough 
drew to an end for most civilians. 

- Norfolk Navy Shipyard officials stated that a building had a fire 
alarm malfunction on a Friday during the furlough period and, because 
civilian staff were furloughed, no one was able to fix it until the 
following Tuesday, so the building had to establish a 24-hour watch 
over the weekend to ensure a potential fire could be reported. 

- Air Mobility Command officials described delays in permanent changes 
of station because the furlough occurred in summer--the peak season 
for such moves. These officials explained that delays in permanent 
changes of station can impact a military servicemember's ability to 
report to his or her next installation on time. 

* Guidance Challenges--Some officials stated that they were confused 
by the guidance that was provided on implementing the furlough, while 
others expressed frustration at the volume of updates to the guidance. 
For example, at Brooke Army Medical Center, the Air Force had not yet 
transitioned its civilians to Army control through the Base 
Realignment and Closure process,[Footnote 38] and therefore Army and 
Air Force civilians were operating under separate guidance during the 
furlough. This added to the administrative burden of management at 
Brooke Army Medical Center and confusion among staff who work side-by-
side. Specifically, Air Force staff decided to except all of their in-
patient nurses from furlough, while the Army furloughed its in-patient 
nurses. Further, officials at Brooke Army Medical Center and Air 
Mobility Command stated that they received numerous updates to the 
furlough guidance, often on a daily basis and from multiple sources. 
Officials expressed confusion and sought clarification over the terms 
used in the furlough guidance, such as "borrowed military personnel," 
"mission essential," and "24-hour emergency care." For example, the 
term "borrowed military personnel" was not defined in the Assistant 
Secretary of Defense for Readiness and Force Management's June 2013 
memorandum regarding the use of borrowed military personnel during the 
furlough.[Footnote 39] 

* Longer Term Impact from DOD Civilian Appeals Filed to Merit Systems 
Protection Board--DOD federal civilians filed 32,259 appeals regarding 
the administrative furlough to the Merit Systems Protection Board. 
Once DOD began implementing the furlough on July 8, 2013, DOD 
civilians were then eligible to file appeals of the furlough action to 
the Merit Systems Protection Board. Figure 1 illustrates the process 
for filing and adjudicating appeals with the Merit Systems Protection 
Board and the status of the DOD civilians' appeals to the 
administrative furlough as of March 31, 2014. 

Figure 1: Appeals Process and Status of DOD Civilian Appeals to the 
Merit Systems Protection Board: 

[Refer to PDF for image: process illustration with 4 pie-charts] 

Department of Defense (DOD) furlough appeals were filed with Merit 
Systems Protection Board (MSPB): 32,259. 

Appeals process: 

1. DOD civilians file furlough appeals with the board either 
electronically or by mail or fax. 

DOD appeals status as of March 31, 2014[A]: 
Army: 28% (8,936); 
Navy: 38% (12,399); 
Air Force: 16% (5,282); 
Marine Corps: 3% (1,081); 
DOD agencies: 14% (4,561). 

2. Appeals are filed at the regional or field office with geographic 
jurisdiction over the location at which the appellant works. 

Appeals pending: 95% (30,574 ; 
Appeals resolved: 5% (1,685). 

3. Pending appeals may be consolidated when several cases are suitable 
for joint resolution. Appeals that are not consolidated are resolved 
on a case-by-case basis. Appeals that are currently not consolidated 
are subject to consolidation if the Administration Judge finds it 
appropriate. 

Consolidated: 64%; (20,650) into 744 cases, ranging in size from 2 to 
274 appeals in each case; 
Not consolidated: 36% (11,609). 

4. Appeals are resolved by the board or a court: 
* Dismissed or Withdrawn: Appeals can be dismissed without review due 
to a variety of jurisdictional or procedural factors; 
* Settled: Prior to adjudication, the parties may reach a settlement, 
which is a mutual agreement concerning the resolution of the case; 
* Adjudicated: Cases that are not dismissed, withdrawn, or settled, 
are eventually adjudicated by an Administrative Judge. 

Dismissed or withdrawn: 34% (577); 
Settled: Less than 1% (7); 
Adjudicated: 65% (1,101). 

Source: GAO analysis of information provided by the Merit Systems 
Protection Board. GAO-14-529. 

[A] Numbers in figure may not add due to rounding. 

[End of figure] 

All of the 1,101 cases that have been adjudicated to date have been 
decided in DOD's favor, though the Merit Systems Protection Board has 
received 8 petitions for review from DOD civilians who have chosen to 
appeal the Administrative Judge's decision in their case. According to 
the Merit Systems Protection Board, their current workload is 
unprecedented, as they received over 32,000 furlough appeals from DOD 
employees alone in 2013--approximately 5 times the number of personnel 
appeals they typically receive in 1 year. As a result, the Merit 
Systems Protection Board is unable to predict how long it will take to 
adjudicate all of the DOD furlough appeals, but the Merit Systems 
Protection Board has committed to issuing initial decisions in all 
furlough appeals by the end of fiscal year 2015. 

Conclusions: 

In light of ongoing fiscal uncertainty, and given the toll that 
furlough actions can have on mission needs and employee morale, among 
other things, it is important that DOD accurately estimate financial 
actions that affect its personnel and update these estimates to ensure 
the most timely and reliable information is available for effective 
planning. This includes taking actions aligned with Standards for 
Internal Control in the Federal Government, such as identifying, 
capturing, and distributing information to the right people in 
sufficient detail and at the appropriate time to maintain its 
relevance and value to management in controlling operations and making 
effective and efficient decisions. DOD's approach to furloughing did 
not adjust to accommodate decisions made to except certain civilian 
employees from furlough. Further, because DOD only had 1 week's worth 
of civilian payroll data at the time it reduced the number of furlough 
days, it did not track cost savings in real time. Such information 
could be considered during any future administrative furlough 
deliberations to enable DOD leadership to make informed decisions by 
having reliable and accurate cost-savings information as it becomes 
available. In light of the current fiscal environment, it is even more 
critical for DOD to accurately identify its current and future total 
workforce priorities and associated costs. While DOD was able to 
mitigate the furlough as a result of transfer and reprogramming 
actions, DOD may face future furloughs where it may be limited in how 
much funding is available to transfer and reprogram and the length of 
a potential furlough period may be longer, thus having comprehensive, 
up-to-date information for decision makers would be important. 

Recommendation for Executive Action: 

To help ensure that DOD is better informed in its decision-making 
processes, we recommend that the Secretary of Defense direct the Under 
Secretary of Defense (Comptroller) and the Under Secretary of Defense 
for Personnel and Readiness to utilize comprehensive and up-to-date 
furlough cost-savings information as it becomes available in the event 
that DOD decides to implement another administrative furlough in the 
future. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD for review and comment. In 
its written comments, DOD partially concurred with the recommendation 
to utilize comprehensive and up-to-date furlough cost-savings 
information as it becomes available in the event that DOD decides to 
implement another administrative furlough in the future. DOD's 
comments are summarized below and reprinted in appendix IV. 

In its written comments, DOD did not elaborate on why it partially 
concurred with the recommendation. DOD stated that it had several 
concerns with the findings in the report. The department stated that 
important contextual information regarding the size of the total force 
was not included in the draft report and elaborated on reasons for 
growth in the civilian workforce after the events of September 11, 
2001. DOD stated that without context, readers may believe that the 
DOD civilian workforce is not thoughtfully and purposefully sized. 
However, we disagree with DOD's characterization of the draft report. 
The draft report states that DOD's civilian personnel are critical to 
achieving the department's missions by performing a wide variety of 
duties, and the report acknowledges that civilians have expanded their 
responsibilities. Further, the focus of this report was not on DOD's 
total workforce management but how DOD planned for, implemented, and 
monitored furloughs of its civilian workforce to include any 
challenges the department faced in its implementation and cost savings 
realized. Nonetheless, we have conducted assessments of DOD's 
strategic workforce plans since 2008, and our body of work has found 
that DOD's efforts to address strategic workforce planning 
requirements, including assessing the appropriate mix of civilians, 
military and contractor personnel, have been mixed. For example, in 
our most recent report in September 2012, on the department's overall 
civilian strategic workforce plan, we recommended that DOD take a 
number of actions, including providing guidance for developing future 
strategic workforce plans that clearly directs the functional 
communities to collect information that identifies not only the number 
or percentage of personnel in its military, civilian, and contractor 
workforces, but also the capabilities of the appropriate mix of those 
three workforces. DOD either concurred or partially concurred with our 
recommendations, stating that, among other things, the department was 
deliberate in applying lessons learned from previous workforce plans 
and identifying specific challenges and the actions being taken to 
address those challenges to meet statutory planning requirements by 
2015. Our review on DOD's latest strategic workforce plan will be 
issued in July 2014. 

Although DOD did not specifically state in its letter why it partially 
concurred with the recommendation, DOD provided comments related to 
the recommendation, and we have addressed them throughout the report 
as appropriate. However, we disagree with two of DOD's specific 
comments as discussed below: 

* DOD commented that we should delete the report's discussion 
regarding DOD being placed on our High Risk List because of financial 
management weaknesses that affect its ability to control costs; ensure 
accountability; anticipate future costs and claims on the budget; 
detect fraud, waste, and abuse; and prepare auditable financial 
statements. DOD stated in its comments that this paragraph "is 
unrelated to this report on administrative furloughs." 

We disagree. We believe that having accurate financial information is 
not only related but very important to the report on administrative 
furloughs. Specifically, DOD made the determination to furlough 
civilians in response to budgetary shortfalls, which was part of a 
larger effort to achieve specific funding reductions resulting from 
sequestration. This decision affected its approximately 770,000 
civilian workers - which included 642,404 civilians being furloughed 
for 6 days and 142,602 civilians being excepted. We believe that when 
making decisions with the goal of reaching a financial target that 
negatively affects so many people--including a 20 percent reduction in 
pay for 6 weeks--DOD's ability to accurately account for spending or 
assets is an important factor related to this report. Further, in 
DOD's comments, it states that it could not track cost savings in real 
time due to system and process limitations. We believe that this 
further illustrates the relevance of having accurate, complete, and 
timely financial information available to make management decisions. 

* DOD commented that we misrepresented information regarding DOD's 
cost savings estimates and recommended alternative language for the 
report. Specifically, DOD stated that it excluded employees 
categorized as exempt from the cost savings estimate of $2.1 billion 
provided to Congress as well as the known exceptions as part of the 
per day cost projection developed using March payroll data. Similarly, 
DOD commented that the report misrepresented information provided 
during various meetings. We disagree. 

We disagree with DOD's characterization of our report. Our report 
accurately reflects information included in DOD's documents related to 
how it calculated its estimated furlough savings and associated 
documentation it provided to Congress. As we stated in the report, DOD 
calculated a cost estimated savings of $300 per person per day and 
used this estimate in discussions including the initial decision to 
furlough until it decided to reduce the number of furlough days from 
11 to 6 days even though additional information was available 
regarding which civilians DOD excepted, as the exceptions decision was 
made 3 months earlier. However, DOD did not initially include or 
update the estimated savings per person per day of $300 to account for 
the 142,602 civilians that were excepted from the furlough. These 
civilians excepted from the furlough represent approximately 18 
percent of the total civilian workforce.[Footnote 40]To calculate the 
estimated cost savings as a result of the civilian workforce furlough, 
DOD multiplied the estimated number of civilians to be furloughed by 
the estimated savings of $300 per person per day. While DOD did adjust 
the numbers of civilians it included in its calculated cost savings, 
it never adjusted the per person per day estimate of $300 to account 
for the 18 percent of the civilian workforce excepted from the 
furlough. Further, as we state in the report, should DOD need to 
furlough civilians in the future, the incorporation of information as 
it becomes available would better inform decision makers because 
actions taken regarding DOD's civilian workforce affects approximately 
770,000 civilians. 

We are sending copies of this report to other interested congressional 
parties; the Secretary of Defense; the Secretaries of the U.S. Army, 
the U.S. Navy, and the U.S. Air Force; and, the Commandant of the U.S. 
Marine Corps. In addition, this report will be available at no charge 
on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3604 or at farrellb@gao.gov. Contact points 
for our Office of Congressional Relations and Public Affairs may be 
found on the last page of this report. Key contributors to this report 
are listed in appendix V. 

Signed by: 

Brenda S. Farrell: 
Director: 
Defense Capabilities and Management: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable James Inhofe: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Howard P. "Buck" McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope and Methodology: 

This report: (1) examines how the Department of Defense (DOD) 
implemented its civilian workforce furloughs and any reported cost 
savings, (2) examines the extent to which DOD utilized up-to-date cost-
savings information in the planning and implementation of civilian 
workforce furloughs, and (3) identifies any reported examples of 
impacts that resulted from the DOD civilian workforce furloughs. 

To address how DOD implemented its civilian workforce furlough, we 
obtained and analyzed information and interviewed knowledgeable 
officials from the Under Secretary of Defense (Comptroller) (hereafter 
referred to as Office of the Comptroller), the Under Secretary of 
Defense for Personnel and Readiness, and the Departments of the Army, 
Navy, and Air Force. We obtained and analyzed guidance and policy 
documents outlining the furlough decision and subsequent reduction in 
the number of administrative furlough days. The guidance and policy 
documentation included the numbers of civilians furloughed, the 
categorical exceptions granted, and the numbers of civilians provided 
exceptions. In addition, we examined guidance outlining the decisions 
directly related to the decision to implement a furlough as well as 
guidance imposing limitations on utilizing other personnel within the 
department to augment the civilian workforce during the furlough. We 
also reviewed the Office of Personnel and Management's (OPM) Guidance 
for Administrative Furloughs, June 10, 2013,[Footnote 41] and prior 
GAO reports on sequestration and furloughs within the federal 
government, including GAO's reports on the 2013 sequestration and 
DOD's implementation of the sequestration.[Footnote 42] 

To understand how the civilian workforce furlough was implemented at a 
local level, we conducted site visits of a selected shipyard, a 
medical facility providing 24-hour support, and an air operations 
center. Specifically, we visited Norfolk Naval Shipyard, Brooke Army 
Medical Center at Fort Sam Houston, and Air Mobility Command at Scott 
Air Force Base. These sites were selected on the basis of the 
Secretary of Defense memorandum outlining categories of exceptions to 
the furlough, DOD statements about potential sequestration impacts, 
and mission-critical occupations as outlined in DOD's Strategic 
Workforce Plan. We developed a standard set of interview questions to 
use in discussions with officials at selected sites regarding what 
policy and guidance was generated and how the furlough was 
implemented, such as information about employee furlough notification 
and scheduling of furlough days, among other things. Information from 
these sites is not generalizable, but provides examples of how the 
furlough was implemented at these locations. 

To examine any reported cost savings that resulted from the DOD 
civilian workforce furloughs, we obtained and analyzed information and 
interviewed officials from the Office of the Comptroller regarding 
DOD's calculations of the actual cost savings as a result of the 
administrative civilian workforce furlough. We assessed DOD's methods 
for calculating actual cost savings for the furlough; however, we did 
not independently verify these calculations. The cost savings were 
calculated from the civilian pay from those who were furloughed and 
did not account for other costs from implementing the furlough, such 
as administrative costs. 

To determine the extent to which DOD utilized up-to-date cost savings 
information in the planning and implementation of civilian workforce 
furloughs, we obtained and analyzed information and interviewed 
officials from the Office of the Comptroller regarding how the 
department calculated the estimated cost savings for the furlough of 
civilian personnel in fiscal year 2013. We examined DOD's methods for 
calculating estimated cost savings for the furlough; however, we did 
not independently verify the accuracy of these calculations. We also 
reviewed Standards for Internal Control in the Federal Government for 
best practices on using information in decision-making processes. 

To identify any reported examples of impacts that resulted from the 
DOD civilian workforce furloughs, we obtained and analyzed information 
and interviewed knowledgeable officials at each of these sites--
Norfolk Naval Shipyard, Brooke Army Medical Center at Fort Sam 
Houston, and Air Mobility Command at Scott Air Force Base. We 
developed a standard set of interview questions to use in discussions 
with selected site officials regarding any impacts from the furlough 
in areas such as morale, guidance, communication, and mission, among 
other things. Information from these sites is not generalizable, but 
provides examples of impacts of the furlough reported at these 
locations. We also reviewed the results of OPM's 2013 Federal Employee 
Viewpoint Survey for DOD. While not specifically addressing 
sequestration, the survey captures employees' general perceptions in 
areas including their work experiences and their agency that could be 
affected by sequestration. To assess the reliability of the survey 
data, we reviewed reports and other descriptions of the survey 
methodology available on the OPM website: [hyperlink, 
http://www.fedview.opm.gov/2013/]. 

To analyze workforce and turnover trends from fiscal year 2009 through 
2013, we used OPM's Enterprise Human Resources Integration Statistical 
Data Mart (EHRI-SDM), which contains personnel action and on-board 
data for most federal civilian employees. We analyzed agency-level 
EHRI-SDM data for all DOD departments (Army, Navy, Air Force, and 
other DOD agencies). We focused on career permanent employees in our 
analysis of on-board and separation trends because these employees 
represent the long-term employee population and constitute most of the 
workforce. To calculate attrition rates, we added the number of career 
permanent employees with personnel actions indicating they had 
separated from one of the DOD departments (for example, transfers, 
resignations, retirements, terminations, and deaths) and divided that 
by the 2-year on-board average. We assessed the reliability of the 
EHRI data through electronic testing to identify logical 
inconsistencies, and followed up with DOD, where necessary, to 
understand these issues. We also reviewed our prior work assessing the 
reliability of these data. On the basis of this assessment, we believe 
the EHRI data we used are sufficiently reliable for the purpose of 
this report. Further, we interviewed officials and obtained 
information from the Merit Systems Protection Board on the appeals 
adjudication process and the status of appeals filed by DOD civilians 
regarding the furlough in fiscal year 2013.[Footnote 43] 

We conducted this performance audit from July 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Department of Defense (DOD) Exceptions Granted to the 
Civilian Workforce in a May 14, 2013 Memorandum: 

In order to minimize adverse effects on mission, the Secretary of 
Defense memorandum issued on May 14, 2013,[Footnote 44] granted 
exceptions to the furlough. Below are the categories of exceptions 
outlined in the Secretary's memorandum: 

* Combat Zone: All employees deployed (in a Temporary Duty status) or 
temporarily assigned (to include Temporary Change of Station) to a 
combat zone.[Footnote 45] 

* Safety of Life and Property: Those employees necessary to protect 
safety of life and property, including selected medical personnel. The 
exceptions were to be granted with the understanding that these were 
the minimum exceptions needed to maintain operations and provide 
security on a 24/7 basis. Similarly, the exceptions for the medical 
category were to be approved with the understanding these exceptions 
preserve the minimum level of personnel needed to maintain quality of 
care in 24/7 emergency rooms and other critical care areas such as 
behavioral health, wounded warrior support, and disability evaluation. 

* Shipyards: Employees in Navy shipyards. All other depot employees, 
whether mission-funded or working capital fund employees, were subject 
to furlough.[Footnote 46] 

* Intelligence: Furloughs for employees funded with National 
lntelligence Program funds were determined by the Director of National 
Intelligence.[Footnote 47] Employees funded with Military Intelligence 
Program funds were subject to furlough. 

* Foreign Military Sales: Foreign Military Sales employees whose 
positions were exclusively funded from Foreign Military Sales 
Administrative case funds, Foreign Military Sales case funds, and from 
Foreign Military Financing accounts. In addition, the Foreign Military 
Sales case-funded positions funded in whole or part by DOD 
appropriations (to include "pseudo-Foreign Military Sales" cases) were 
subject to furlough. 

* All individuals appointed by the President, with Senate 
confirmation, who were not covered by the leave system in title 5, 
U.S. Code, chapter 63, or an equivalent formal leave system. 

* All employees funded by nonappropriated funds (regardless of source 
of nonappropriated funding).[Footnote 48] 

* All outside-the-contiguous United States foreign national employees. 

* Any employees who were not paid directly by accounts included in the 
Department of Defense-Military budget, such as employees funded by the 
Arlington National Cemetery and DOD Civil Works programs. 

* The exception for Child Development Centers was granted with the 
understanding that this was the minimum level needed to maintain 
accreditation and maintain high-quality care for children in military 
families. Some Department of Defense Education Activity employees, 
while not excepted from furlough, may have only been furloughed when 
they were in a pay status. Therefore, they were only subject to 
furlough for up to 5 days at the beginning of the 2013 school year. 
[Footnote 49] 

* The Secretaries of the military departments and the Principal Staff 
Assistants for the defense agencies and field activities, may have 
approved up to 50 additional individual, mission-based, exceptions as 
needed. 

[End of section] 

Appendix III: Analysis of Department of Defense (DOD) Civilian 
Personnel Attrition Rates: 

In examining the attrition rate for on-board civilian medical officers 
and nurses at Army Medical Command between fiscal years 2009 and 2013, 
we found that the attrition rate of on-board civilian nurses and 
medical officers at Army Medical Command peaked in fiscal year 2011 at 
22 percent and rose again in fiscal year 2013 to 14 percent after 
declining in 2012, compared to a 10 to 11 percent attrition rate in 
fiscal year 2009 (see fig. 2 below). Many factors can affect attrition 
which may be unrelated to job satisfaction and events such as the 
furlough. For example, according to Army Medical Command officials, 
the command was affected by the 2005 Base Realignment and Closure 
process, the deadline for completion of which was in September of 
fiscal year 2011. The Base Realignment and Closure Commission's 
recommendations included transferring personnel from Walter Reed Army 
Medical Center and Belvoir Army Community Hospital to the purview of 
what is now Defense Health Agency's National Capital Region Medical 
Directorate. 

Figure 2: Army Medical Command Attrition Rates from Fiscal Year 2009 
to Fiscal Year 2013: 

[Refer to PDF for image: line graph] 

Fiscal year: 2009; Army Medical Command lost 10 to 11 percent of on-
board medical officers and nurses; 
Medical officer: 11%; 
Nurse: 10%. 

Fiscal year: 2010; 
Medical officer: 10%; 
Nurse: 11%. 

Fiscal year: 2011; 
Medical officer: 22%; 
Nurse: 22%. 

Fiscal year: 2012; 
Medical officer: 11%; 
Nurse: 11%. 

Fiscal year: 2013; Army Medical Command lost 14 percent of on-board 
medical officers and nurses; 
Medical officer: 14%; 
Nurse: 14%. 

Career permanent employees separated from 2009-2013: 
Medical Officer: 766;
Nurse: 3,629. 

Source: GAO analysis of Office of Personnel Management data. GAO-14-
529. 

Note: Information is based on the 2-year, on-board average of career 
permanent, civilian medical officers and nurses in Army Medical Command 
with any type of separation. This information does not include 
transfers within a department; however, it does include transfers from 
one department to another. Therefore, such interdepartment transfers 
would not result in a loss to the Department of Defense (DOD) as a 
whole, though they do count as attrition as the actions are recorded as 
separation actions within the Office of Personnel Management's 
Enterprise Human Resources Integration data. Percentages have been 
rounded to the nearest whole number. 

[End of figure] 

In further examining attrition rates across the DOD components between 
fiscal years 2009 and 2013, we found the Army overall experienced a 
similar peak in attrition rates in 2011, at 11 percent. In addition, 
the Air Force's attrition rates peaked in fiscal year 2012 (9 
percent), with the Navy's attrition rates increasing between fiscal 
years 2010 and 2011 (from 6 to 7 percent). Overall, during fiscal year 
2013, DOD components had an attrition rate between 7 percent and 9 
percent of on-board civilian employees, compared to an attrition rate 
between 6 percent and 8 percent in 2009; see figure 3 below. 

Figure 3: DOD Component Attrition Rate from Fiscal Year 2009 to Fiscal 
Year 2013: 

[Refer to PDF for image: line graph] 

Fiscal year: 2009; Components lost between 6 to 8 percent of on-board 
staff; 
Air Force: 7%; 
Army: 7%; 
Navy: 6%; 
DOD agencies: 8%. 

Fiscal year: 2010; 
Air Force: 6%; 
Army: 7%; 
Navy: 6%; 
DOD agencies: 9%. 

Fiscal year: 2011; 
Air Force: 7%; 
Army: 11%; 
Navy: 7%; 
DOD agencies: 9%. 

Fiscal year: 2012; 
Air Force: 9%; 
Army: 9%; 
Navy: 7%; 
DOD agencies: 9%. 

Fiscal year: 2013; Components lost between 7 and 9 percent of on-board 
staff; 
Air Force: 7%; 
Army: 9%; 
Navy: 7%; 
DOD agencies: 9%. 

Career permanent employees separated from 2009-2013: 
Army: 110,907; 
Air Force: 58,482; 
Navy: 62,935; 
DOD agencies: 38,742. 

Source: GAO analysis of Office of Personnel Management data. GAO-14-
529. 

Note: Information is based on the 2-year, on-board average of career 
permanent, DOD civilian employees with any type of separation from the 
Army, Navy, Air Force, or DOD agency. This information does not 
include transfers within a department; however, it does include 
transfers from one department to another. Therefore, such inter-
department transfers would not result in a loss to the Department of 
Defense (DOD) as a whole, though they do count as attrition as the 
actions are recorded as separation actions within the Office of 
Personnel Management's Enterprise Human Resources Integration data. 
Percentages have been rounded to the nearest whole number. 

[End of figure] 

[End of section] 

Appendix IV: Comments from the Department of Defense: 

Assistant Secretary of Defense: 
Readiness And Force Management:
4000 Defense Pentagon: 
Washington, D.C. 20301-4000: 

May 28, 2014: 

Ms. Brenda Farrell: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Ms. Farrell, 

This is the Department of Defense (DoD) response to the GAO Draft 
Report, GAO-14-529, "Sequestration: Comprehensive and Updated Cost 
Savings Would Better Inform DOD Decision makers if Future Civilian 
Furloughs Occur" dated May 6, 2014 (GAO Code 351837). The Department 
appreciates the opportunity to review and comment on this draft 
report, and has several concerns with the findings. 

First, important information regarding the size of the total force 
that now appears on page 5 of the draft report is not included. 
Without context, we are concerned that readers are likely to 
perpetuate the common misconception of some that the Department's 
workforce is not thoughtfully and purposefully sized. We would 
recommend the below in whole or part to add context: 

The Department's mission/workload has grown since September 11, 2011, 
with a commensurate growth in the workforce. An increase to the number 
of government civilians freed up military personnel for post 9111 
duty - this was a then Secretary of Defense Rumsfeld led effort 
related to "relieving stress on the force." From 2001 to 2011, active 
military grew from 1,451,000 to 1,501,000 (50 thousand) and civilians 
grew from 687,000 to 807,000 (120 thousand.) More than 40% (50 
thousand) of the growth in civilians supported the war requirements by 
converting functions from military to civilian performance. This 
conversion refocused the military force on military essential 
operational roles and civilians on supporting functions and was more 
cost effective than continued military performance. Without this
conversion, the growth in military would have been twice the actual 
amount (7%) while civilian growth would have been lower (10%). 

During this period two additional initiatives drove increases in the 
civilian workforce. Under then Secretary of Defense Gates, about 
20,000 civilians were added to the acquisition workforce, supporting 
specific efforts to improve the Department's acquisition performance and
create the Defense Acquisition Workforce Development Fund (DAWDF). The 
DA WDF was established by the FY 2008 National Defense Authorization 
Act to recruit, train and retain the highest quality acquisition 
personnel. The Congress and the acquisition community have supported 
this increase because the resulting acquisition savings far outweigh 
the increase in personnel costs. The second initiative involved in-
sourcing, a major initiative under the Obama Administration, using DoD 
civilians to perform functions then being done by contractors. In-
sourcing added 17,000 civilians to cut costs and minimize the chances 
that contractors were performing inherently governmental tasks. In 
addition to these three larger initiatives, the Department added 
civilians in certain functional areas to support the warfighter and meet
strategic requirements. Two of the larger growth areas included 
medical support (7,000) and cyber protection (8,000). 

With regard to the recommendation offered by the GAO, the Department 
provides the following: 

Recommendation: To help ensure DOD is better informed in its decision 
making processes, we recommend that the Secretary of Defense direct 
the Under Secretary of Defense (Comptroller) and the Under Secretary 
of Defense for Personnel and Readiness to utilize comprehensive and up-
to-date furlough cost savings information as it becomes. available in 
the event that DOD decides to implement another administrative 
furlough in the future. 

DoD Response; The Department partially concurs with this 
recommendation. However, significant changes are needed to accurately 
reflect the information provided to the GAO regarding this 
recommendation: 

a. Page 3, last sentence of the first paragraph. Insert "actual" 
before civilian pay. 

b. Page 7. first paragraph. The paragraph should be deleted since it 
is unrelated to this report on administrative furlough. 

c. Page 11. Table 1 should be appropriately labeled as "Number of 
Civilians DOD Reported Were Furloughed and Excepted from Furlough in 
Fiscal Year 2013, by DOD Component, as of September 30,2013." 

d. Page 14: last paragraph, first sentence. This is a 
misrepresentation of the facts. DoD excluded employees categorized as 
exempt from the cost savings estimate of $2.1 billion provided to 
Congress in May 2013, as well as the known exemptions of 27,792 as 
part of the per day cost projection developed using the March payroll 
data. 

e. Page 15. first paragraph, first full sentence. The estimate 
provided in May 2013 excluded the known exemptions as well as the 
March 2013 estimate. Rewrite the sentence as "The estimate was 
developed using aggregated payroll data from Defense Finance and
Accounting Service and civilian personnel data from the Defense 
Civilian Personnel Data System." 

f. Page 17-18. Beginning on page 17. paragraphs one and two misrepresent
information provided to GAO during various meetings and the exit 
conference. 
Recommended rewrite of both paragraphs is attached. 

g. Page 26, Conclusions section, third sentence. Based on the comments 
provided in this response and item 2.e. above, GAO should strike the 
third sentence entirely. 

h. Page 26, Conclusions section. fourth sentence. Replace section of 
the sentence "did not track cost savings in real time" with "could not 
track cost savings in real time due to system and process limitations." 

Should you have any questions, please contact my primary action 
officer Mr. Bill Mann, Chief, StaffIng and Civilian Transition 
Programs Division, Defense Civilian Personnel Advisory Service, at 571-
372-1714, or at william.mann@cpms.osd.mii. 

Sincerely, 

Signed by: 

F.E. Vollrath: 

Attachments: As stated. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Lori Atkinson, Assistant 
Director; Arkelga Braxton; Tim Carr; Grace Coleman; Cynthia Grant; 
Amber Lopez Roberts; Rebecca Shea; Norris "Traye" Smith; Amie Steele; 
John Van Schaik; and Michael Willems made key contributions to this 
report. 

[End of section] 

Related GAO Products: 

2013 Sequestration: Agencies Reduced Some Services and Investments, 
While Taking Certain Actions to Mitigate Effects. [hyperlink, 
http://www.gao.gov/products/GAO-14-244]. Washington, D.C.: March 6, 
2014. 

Sequestration: Observations on the Department of Defense's Approach in 
Fiscal Year 2013. [hyperlink, 
http://www.gao.gov/products/GAO-14-177R]. Washington, D.C.: November 
7, 2013. 

Financial and Performance Management: More Reliable and Complete 
Information Needed to Address Federal Management and Fiscal 
Challenges. [hyperlink, http://www.gao.gov/products/GAO-13-752T]. 
Washington, D.C.: July 10, 2013. 

Human Capital: Additional Steps Needed to Help Determine the Right 
Size and Composition of DOD's Total Workforce. [hyperlink, 
http://www.gao.gov/products/GAO-13-470]. Washington, D.C.: May 29, 
2013. 

[End of section] 

Footnotes: 

[1] Military personnel include active, reserve, and guard forces. 

[2] Sequestration--the process of presidentially directed, largely 
across-the-board spending reductions under which budget authority is 
reduced to enforce certain budget policy goals--was a result of the 
Budget Control Act of 2011 (Pub. L. No. 112-25 (2011), as amended). 
The Budget Control Act of 2011, as implemented by the Office of 
Management and Budget, required spending cuts of $37 billion from 
DOD's budget in fiscal year 2013 through across-the-board, 
proportional reductions in funding provided in the appropriations acts 
for most defense accounts, including accounts related to DOD's 
civilian workforce and contracted services. 

[3] GAO, Sequestration: Observations on the Department of Defense's 
Approach in Fiscal Year 2013, [hyperlink, 
http://www.gao.gov/products/GAO-14-177R] (Washington, D.C.: Nov. 7, 
2013). We also issued a report examining the government-wide 
implementation of sequestration, see GAO, 2013 Sequestration: Agencies 
Reduced Some Services and Investments, While Taking Certain Actions to 
Mitigate Effects, [hyperlink, http://www.gao.gov/products/GAO-14-244] 
(Washington, D.C: Mar. 6, 2014). 

[4] Office of Personnel Management, Guidance for Administrative 
Furloughs (June 10, 2013). 

[5] A total of 399,539 DOD employees were furloughed beginning October 
1, 2013, and 391,318 were recalled on October 7, 2013. DOD was able to 
recall staff from furlough based on its interpretation of the 
provisions of the Pay Our Military Act that provided appropriations, 
among other things, for civilian personnel and contracted support who 
provided support to members of the armed forces performing active 
service during that period. Pub. L. No. 113-39 (Sept. 30, 2013). No 
military personnel were furloughed. 

[6] A full-time equivalent is a standard measure of labor that equates 
to 1 year of full-time work. Civilian personnel include foreign 
nationals, who can be hired directly by DOD or indirectly hired under 
agreement or contract with foreign governments to provide personnel 
services to the U.S. government. 

[7] Comparable historical data on the contracted support component of 
DOD's total workforce are not available from fiscal year 2001 to 
fiscal year 2007, in part because DOD was not required to compile 
contracted support full-time equivalent estimates until 2008. Fiscal 
year 2013 contracted support data were not available at the time we 
conducted this review. DOD is required to compile annually an 
inventory of contracted services, pursuant to 10 U.S.C. § 2330a, to 
include, among other data, the functions performed, the number of 
contractor full-time equivalents performing the function, and the 
total dollar amount of the services purchased. However, we have 
previously reported issues with the accuracy and completeness of the 
inventory data. See, for example, GAO, Defense Acquisitions: Continued 
Management Attention Needed to Enhance Use and Review of DOD's 
Inventory of Contracted Services, [hyperlink, 
http://www.gao.gov/products/GAO-13-491] (Washington, D.C.: May 23, 
2013). 

[8] DOD defines a functional community as employees who perform 
similar functions; functional communities are discussed further in the 
background section of this report. 

[9] Sequestration was first established by the Balanced Budget and 
Emergency Deficit Control Act of 1985 to enforce discretionary 
spending limits and control the deficit. See 2 U.S.C. § 900, et seq. 
This budgetary enforcement mechanism was recently revived by the 
Budget Control Act of 2011, which provided the legal basis for the 
fiscal year 2013 sequestration. Pub. L. No. 112-25 (2011). 

[10] Deputy Secretary of Defense, Memorandum, Handling Budgetary 
Uncertainty in Fiscal Year 2013 (Jan. 10, 2013). 

[11] [hyperlink, http://www.gao.gov/products/GAO-14-177R]. 

[12] OPM regulations provide that furloughs of longer than 30 
consecutive calendar days or 22 workdays if done on a discontinuous 
basis are covered by the Reduction in Force procedures of 5 C.F.R. 
part 351. See 5 C.F.R. § 351.203. 

[13] The Consolidated and Further Continuing Appropriations Act, 2013, 
Pub. L. No. 113-6 (2013). 

[14] The President's budget request for DOD in fiscal year 2015, 
released on March 4, 2014, notes that the administration plans to 
submit details of the DOD Overseas Contingency Operations supplemental 
budget request as a budget amendment after making a determination on 
enduring force levels in Afghanistan. 

[15] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

[16] GAO, Financial Audit: U.S. Government's Fiscal Years 2012 and 
2011 Consolidated Financial Statements, [hyperlink, 
http://www.gao.gov/products/GAO-13-271R] (Washington, D.C.: Jan. 17, 
2013); Financial and Performance Management: More Reliable and 
Complete Information Needed to Address Federal Management and Fiscal 
Challenges, [hyperlink, http://www.gao.gov/products/GAO-13-752T] 
(Washington, D.C.: July 10, 2013). 

[17] Secretary of Defense Memorandum, Furloughs (May 14, 2013). 

[18] OPM's Guidance for Administrative Furloughs (June 10, 2013) 
explains that agencies are responsible for identifying the employees 
affected by administrative furloughs based on budget conditions, 
funding sources, mission priorities, and other mission-related factors. 

[19] DOD did not furlough non-appropriated-fund civilians as they are 
not funded from appropriations, and furloughing them would not have 
reduced DOD's direct spending. In addition, DOD did not furlough 
civilian foreign nationals outside of the contiguous United States due 
in part to special agreements with host governments. 

[20] According to Secretary of Defense Memorandum, Furloughs, the 
designated Deciding Official would be no lower than a local 
Installation commander, senior civilian, or equivalent who would be in 
the best position to determine the fair and equitable application of 
the furlough and would have the authority to execute the full range of 
options with respect to providing relief in individual employee cases. 
This authority included, but was not limited to, reducing the number 
of days/hours an individual employee was furloughed or granting the 
individual employee an exception from the furlough altogether. 

[21] Assistant Secretary of Defense for Readiness and Force Management 
Memorandum, Guidance for the Administrative Furlough Process (Mar. 13, 
2013); Assistant Secretary of Defense for Readiness and Force 
Management Memorandum, Updated Guidance and Templates for Fiscal Year 
2013 Furlough (May 3, 2013). 

[22] We have an ongoing review to examine DOD's use of borrowed 
military personnel to determine whether it is having an effect on 
readiness. 

[23] Assistant Secretary of Defense for Readiness and Force Management 
Memorandum, Supplemental Guidance on Leave Without Pay Status for the 
Department of Defense Civilian Employees during an Administrative 
Furlough (May 21, 2013); Assistant Secretary of Defense for Readiness 
and Force Management Memorandum, Civilian Furloughs and Total Force 
Management (June 28, 2013). 

[24] DOD civilian employees generally have the right to respond to or 
rebut a furlough proposal to their command, grieve a furlough decision 
to their union, or appeal a furlough decision to the Merit Systems 
Protection Board. 

[25] Department of the Army, Office of the Deputy Chief of Staff for 
Personnel, Memorandum, Fiscal Year (FY) 2013 Administrative Furlough 
Reporting Requirements (May 30, 2013). 

[26] Department of the Navy, Office of the Assistant Secretary 
(Manpower and Reserve Affairs), Memorandum, Department of the Navy 
Supplemental Guidance on the Scheduling of Furloughs (May 21, 2013). 

[27] Secretary of Defense Memorandum, Reducing Furlough Days, (Aug. 6, 
2013). 

[28] Transfer of funds is shifting of all or part of the budget 
authority in one appropriation or fund account to another, and 
requires specific statutory authority. [hyperlink, 
http://www.gao.gov/products/GAO-05-734SP] Budget Glossary. 
Reprogramming, by contrast, is the shifting of funds within an 
appropriation account for purposes other than those contemplated at 
the time of appropriation. [hyperlink, 
http://www.gao.gov/products/GAO-05-734SP]. While GAO's definitions of 
transfer and reprogramming are mutually exclusive, the DOD Financial 
Management Regulation (FMR) takes a broader view of reprogramming, 
defining it as "realignment of budget authority from the purpose for 
which appropriated to finance another (usually emergent, unfunded) 
requirement." DODFMR 7000.14-R, Glossary (December 2008). In keeping 
with this broader view, the DODFMR requires that all transfers of 
funds not directed by Congress be accompanied by a reprogramming 
action. DODFMR 7000.14-R, Volume 3, Chapter 3, § 030404 (January 2011). 

[29] Assistant Secretary of Defense for Readiness and Force Management 
Memorandum, Furlough--Treatment of Excess Furlough Hours (Sept. 19, 
2013). Any furlough hours that exceed the 6-day (48 hour) requirement 
could be replaced, upon an employee's request, by annual leave, 
military leave, home leave, compensatory time-off, credit hours, or 
time-off awards, provided the employee had sufficient leave in the 
category requested at the time of the furlough occurrence. Any leave 
substitution for furlough hours will be calculated at the same rate of 
pay the employee would have received had he or she used the leave 
category at the time. 

[30] Leave without pay, regardless of whether it is for a furlough or 
other event, is recorded in federal agency timekeeping systems with 
the same code. Therefore, the administrative furlough and the furlough 
resulting from the government shutdown in 2013 was recorded with the 
same leave without pay code. 

[31] In developing its cost estimate, DOD did not consider other 
potential costs beyond payroll, such as those described above. 

[32] Subject to law and DOD financial management regulation, DOD has 
the authority to transfer funds between appropriation accounts and to 
reprogram funds within an appropriation account. DOD guidance requires 
that it seek approval from the congressional defense committees to 
reprogram funds above certain thresholds. This guidance also specifies 
circumstances where the department can reprogram funds without prior 
congressional approval if the cumulative increase or decrease of funds 
is within established thresholds. 

[33] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Nov. 1, 
1999); and Internal Control Management and Evaluation Tool, 
[hyperlink, http://www.gao.gov/products/GAO-01-1008G] (Aug. 1, 2001). 

[34] According to officials at Brooke Army Medical Center, the Air 
Force transitioned its in-patient staff from Wilford Hall to Brooke 
Army Medical Center as part of the Base Realignment and Closure 
process, but consolidation of the management of the two workforces had 
not been completed at the time of the furlough. For information about 
the Base Realignment and Closure process see our report GAO, Military 
Bases: DOD Has Processes to Comply with Statutory Requirements for 
Closing or Realigning Installations, [hyperlink, 
http://www.gao.gov/products/GAO-13-645] (Washington, D.C.: June 27, 
2013). 

[35] Assistant Secretary of Defense for Readiness and Force Management 
Memorandum, Civilian Furloughs and Total Force Management; and Army 
Regulation 570-4, Manpower and Equipment Control: Manpower Management 
(Feb. 8, 2006). The Assistant Secretary of Defense for Readiness and 
Force Management's memorandum and Army Regulation refer to "borrowed 
military manpower" which we refer to as borrowed military personnel. 

[36] On December 20, 2013, the Under Secretary of Defense for 
Personnel and Readiness responded to congressional direction in the 
House Report accompanying the National Defense Authorization Act for 
Fiscal Year 2014 to submit a report to the congressional defense 
committees on the steps that the department is taking to minimize any 
negative impact on the morale of the civilian workforce and long-term 
consequences on recruiting and retention of the civilian workforce. 

[37] Office of Personnel Management, 2013 Federal Employee Viewpoint 
Survey Results: Department of Defense Agency Management Report. The 
survey was administered from April 23, 2013, to June 14, 2013, and had 
a response rate of 38 percent with 65,007 out of 172,632 employees 
responding to the survey. Of note, declines in satisfaction to the 
questions noted could be due to a number of factors beyond the 
furlough, such as the sequestration, 3 years of pay freezes, and 
limited hiring. Statisticians weighted survey data to adjust for 
differences between characteristics of the respondents and the 
population of employees surveyed. All estimates have a margin of error 
of less than +/-1 percentage point. 

[38] According to officials at Brooke Army Medical Center, the Air 
Force transitioned its in-patient staff from Wilford Hall Ambulatory 
Surgical Center to Brooke Army Medical Center as part of the Base 
Realignment and Closure process, but consolidation of the management 
of the two workforces had not completed at the time of the furlough. 
For information about the Base Realignment and Closure process see 
[hyperlink, http://www.gao.gov/products/GAO-13-645]. 

[39] Assistant Secretary of Defense for Readiness and Force Management 
Memorandum, Civilian Furloughs and Total Force Management. The 
guidance refers to "borrowed military manpower" which we refer to as 
borrowed military personnel. 

[40] Appropriated funds workforce 

[41] Office of Personnel Management, Guidance for Administrative 
Furloughs (June 10, 2013). 

[42] GAO, 2013 Sequestration: Agencies Reduced Some Services and 
Investments, While Taking Certain Actions to Mitigate Effects, 
[hyperlink, http://www.gao.gov/products/GAO-14-244] (Washington, D.C: 
Mar. 6, 2014). and GAO, Sequestration: Observations on the Department 
of Defense's Approach in Fiscal Year 2013, [hyperlink, 
http://www.gao.gov/products/GAO-14-177R] (Washington, D.C.: Nov. 7, 
2013). 

[43] We previously reported that government-wide data from CPDF were 
96 percent or more accurate. See GAO, OPM's Central Personnel Data 
File: Data Appear Sufficiently Reliable to Meet Most Customer Needs, 
[hyperlink, http://www.gao.gov/products/GAO/GGD-98-199] (Washington, 
D.C.: Sept. 30, 1998). Also, in a document dated February 28, 2008, an 
OPM official confirmed that OPM continues to follow the Central 
Personnel Data File data-quality standards and procedures contained in 
our 1998 report. 

[44] Secretary of Defense Memorandum, Furloughs (May 14, 2013). 

[45] Combat zone is defined as those locations listed as combat zones 
in Executive Orders 12744, 13119, or 13239, and locations where 
military personnel are eligible for combat-zone tax benefits under law 
or because DOD has certified that they are providing direct support to 
military operations. 

[46] In response to congressional inquiry regarding the furlough of 
working capital fund employees, the Under Secretary of Defense 
(Comptroller), in a letter dated July 5, 2013, addressed to 
Congressman Derek Kilmer, responded that working capital fund 
employees were furloughed based on reduced funding and reduced 
maintenance workloads resulting from reductions in funding. According 
to DOD's letter, furloughing indirectly funded government employees 
was expected to result in a significant reduction of personnel costs 
to help offset sequestration reductions. 

[47] On May 15, 2013, the Director of National Intelligence issued a 
statement announcing that civilians funded with National Intelligence 
Program funds were not subject to furlough. 

[48] Non-appropriated-fund employees are not covered by the 
requirements and procedures applicable to furloughs of appropriated-
fund employees under fiscal year 2013 sequestration. However, non-
appropriated-fund employees may be furloughed under DOD non-
appropriated-fund and component policies and procedures for business-
based reasons. 

[49] On August 6, 2013, the Secretary of Defense issued a memorandum 
entitled Reducing Furlough Days, which reduced the number of furlough 
days from 11 to 6 days for most civilians. This action also canceled 
furloughs for Department of Defense Education Activity instructional 
and support staff on 10-month contracts, and required new hires whose 
furlough period began after July 8, 2013, to take 2 furlough days per 
pay period between their furlough start date and August 17, 2013. 

[End of section] 

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