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Defense > 34. Defense Headquarters

The Department of Defense should review and identify further opportunities for consolidating or reducing the size of headquarters organizations.

Why This Area Is Important


In 2010, the Secretary of Defense expressed concerns about the dramatic growth in Department of Defense’s (DOD) headquarters and support organizations that had occurred since 2001, including increases in spending, staff, numbers of senior executives, and proliferation of management layers. DOD has multiple layers of headquarters management with complex, overlapping relationships. Such layers include, but are not limited to, the Office of the Secretary of Defense, the Joint Staff, and portions of the military departments, defense agencies, and DOD field activities. In DOD Instruction 5100.73, DOD defines those headquarters whose primary mission is to manage or command the programs and operations of DOD and its components, and their major military units, organizations, or agencies as major DOD headquarters activities.[1] Since the mid-1980s, Congress has enacted statutory limits on the number of major DOD headquarters activity personnel, to include the Office of the Secretary of Defense; the headquarters of the combatant commands; the Office of the Secretary of the Army and the Army Staff; the Office of the Secretary of the Air Force and the Air Staff; the Office of the Secretary of the Navy, the Office of the Chief of Naval Operations, and the Headquarters, Marine Corps; and the headquarters of the defense agencies and DOD field activities.[2] In addition, Congress has enacted various reporting requirements related to major DOD headquarters activity personnel.

In 2010, the Secretary of Defense directed DOD to undertake a departmentwide initiative to assess how the department is staffed, organized, and operated, with the goal of reducing excess overhead costs and reinvesting these savings toward sustainment of DOD’s current force structure and modernizing its weapons portfolio. This effort identified efficiency initiatives totaling about $178 billion in projected savings across the military departments and other DOD components from fiscal year 2012 through fiscal year 2016, about $24.1 billion of which is estimated to be achieved in fiscal year 2012. DOD’s efficiency initiatives included a broad range of efforts, such as holding the civilian workforce at fiscal year 2010 levels; reducing the numbers of senior leaders, both officer and civilian; and reducing reliance on service support contractors. Some headquarters were planned to be closed and their missions and functions absorbed into other organizations, while others were reorganized. More recently, in January 2012, the administration released strategic guidance to guide defense priorities and spending over the coming decade. It lays out several principles to guide the development of DOD’s force structure, such as reducing DOD’s cost of doing business by finding further efficiencies in headquarters and other overhead.

[1]Department of Defense Instruction 5100.73, Major DOD Headquarters Activities (Dec. 1, 2007).

[2]Applicable limits to major DOD headquarters personnel are included in sections 143, 194, 3014, 5014, and 8014 of Title 10 of the U.S. Code. In some circumstances, statutory waivers, exceptions, exemptions and authorities to adjust those limits may apply. For example, acquisition personnel hired under an expedited hiring authority are exempt from the baseline personnel limitations, established under the previously mentioned sections of Title 10.

What GAO Found


Based on ongoing work for a report that GAO plans to issue in 2012, GAO found that DOD has taken some steps to examine its headquarters resources for efficiencies, but additional opportunities for cost savings may exist. For purposes of the Secretary of Defense’s efficiency initiative, DOD components, including the military departments, were asked to focus, in particular, on headquarters and administrative functions, support activities, and other overhead in their portfolios. DOD’s fiscal year 2012 budget request included several initiatives related to headquarters organizations or personnel. Two organizations, the Joint Forces Command and Business Transformation Agency, were disestablished and some of their functions were absorbed into other organizations. DOD estimated that closing these two organizations would save approximately $2.2 billion through fiscal year 2016.

Other headquarters-related efficiency initiatives that GAO reviewed generally fell into two categories: (1) consolidating or eliminating organizations based on geographic proximity or span of control, and (2) centralizing overlapping functions and services.[1] For example, the Navy merged the staff of the U.S. Fleet Forces Command and the U.S. 2nd Fleet. The missions of the two organizations were found to have converged over time, and the Navy decided that an integrated staff could better adapt to changing missions than two separate staffs and doing so would have the added benefit of eliminating redundant personnel. The result was the elimination of 344 military personnel for an expected cumulative savings of $100.8 million by fiscal year 2016. In another example, the Air Force is centralizing installation support functions, such as civil engineering, environmental quality and planning programs, real property programs, and family support services, among others, at field operating agencies or Air Force headquarters, eliminating 354 positions for an expected cumulative savings of $148.1 million by fiscal year 2016.

The DOD efficiencies that GAO reviewed to reduce headquarters resources are expected by DOD to save about $2.9 billion through fiscal year 2016, less than 2 percent of the $178 billion in savings DOD projected departmentwide. In January 2012, DOD announced it had found about $60 billion in additional efficiencies and overhead savings over fiscal years 2013 to 2017, but did not indicate what portion of these savings were specific to headquarters. GAO’s work indicates that DOD may be able to find additional efficiencies by further examining opportunities to consolidate organizations or centralize functions at headquarters. DOD may not have identified all areas where reductions in headquarters personnel and operating costs could be achieved because, according to DOD officials, the department was working quickly to identify savings in the fiscal year 2012 budget. To accomplish this quickly, DOD used a top-down approach that identified several targets of opportunity to reduce costs, to include headquarters organizations, but left limited time for a detailed data-driven analysis.

One key factor inhibiting DOD from conducting systematic analyses of headquarters is the lack of complete and reliable data about the resources being devoted to such headquarters. According to GAO internal control standards, an agency must have relevant, reliable, and timely information in order to run and control its operations. Moreover, accurate, timely, and useful financial information is essential for sound management analysis, decision making, and reporting within DOD. The department has had long-standing challenges in identifying and tracking personnel and other resources devoted to headquarters; in the late 1990s, GAO reported that the number of personnel and costs associated with major DOD headquarters activities were significantly higher than DOD reported to Congress due to inconsistencies in how DOD tracked headquarters data.

GAO’s ongoing work has found that these problems are unresolved and the data on major DOD headquarters activities are still incomplete and unreliable for decision making. As the department did not have reliable major DOD headquarters activity data, DOD gathered information from multiple sources to compile headquarters-related information for the Secretary of Defense’s 2010 efficiency initiative. According to DOD officials, the ever-changing statutory reporting requirements have contributed to DOD’s failure to report to Congress about the numbers of headquarters personnel. DOD is required to report major DOD headquarters activities annually in the Defense Manpower Requirements Report, which is to be submitted to Congress no later than 45 days after the President’s budget.[2] Specifically, DOD is to report the number of military and civilian personnel assigned to major DOD headquarters activities in the preceding fiscal year and estimates of such numbers for the current and subsequent fiscal year. It must also include a summary of the replacement of contract workyears providing support to major DOD headquarters activities with military or civilian personnel during the preceding fiscal year, including an estimate of the number of contract workyears associated with the replacement of contracts performing inherently governmental or exempt functions. DOD must also report on the plan for continued review of contract personnel supporting major DOD headquarters activities for possible conversion to military or civilian positions in accordance with other legal requirements. Additionally, DOD must report the amount of any adjustment in personnel limits made by the Secretary of Defense or the secretary of a military department, and for each adjustment made pursuant to section 1111(b)(2) of the fiscal year 2009 National Defense Authorization Act, the purpose of the adjustment.[3] DOD officials are aware of the reporting requirements and expect to report some of the major DOD headquarters activity data to Congress in the fiscal year 2012 Defense Manpower Requirements Report; however, it is unclear what information will be included in the report.

Furthermore, DOD Instruction 5100.73, which guides the compilation of data on major DOD headquarters activities, is outdated and does not identify all organizations that should be included, such as the component command headquarters of the Departments of Navy and Air Force at U.S. Africa Command and certain Marine Corps components; this potentially omits hundreds of personnel and associated operating costs from being counted as part of headquarters. Second, the Instruction does not explicitly address how and to what extent the thousands of contractors that work at headquarters around DOD should be included as part of its major headquarters activity data. DOD has increasingly relied on contractors to provide a range of services at headquarters, such as management and administrative support, information technology, and base operations support. Some of the services and functions performed by contractors could be considered as major DOD headquarters activities.

GAO’s work over the past decade on DOD’s contracting activities has noted the need for DOD to obtain better data on its contracted services and personnel to enable it to make more informed management decisions, ensure departmentwide goals and objectives are achieved, and to have the resources to achieve desired outcomes, which could include reducing overhead. GAO reported in January 2011 that further action was needed by DOD to better implement its requirements for conducting an inventory of its service contractor activities and made two recommendations, to include that DOD develop a plan of action to collect manpower data from contractors. In response to GAO’s report, DOD has outlined its approach for collecting these data, but does not anticipate complete reporting until 2016.

In light of changes in DOD’s strategic priorities, complete and reliable headquarters information will be even more important to support a systematic examination of DOD’s future structure. Without such information, efforts to re-examine its headquarters resources on a more comprehensive basis to identify additional efficiencies will be hampered, and DOD may miss opportunities to further shift resources from overhead to forces.

[1]Span of control refers to the number of subordinates or activities under the control of a single commander.

[2]National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, §1109 (2009), codified at 10 U.S.C. §115a. The Defense Manpower Requirements Report is an annual report to Congress that displays DOD’s manpower requirements, to include military and civilians, as reflected in the President’s budget request for the current fiscal year.

[3]Section 1111 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 110-417 (2008), allows for the adjustment of statutory personnel limits to fill a gap in DOD’s civilian workforce, identified by the Secretary of Defense in a strategic human capital plan submitted to Congress, or to accommodate increases in workload or modify the type of personnel required to accomplish work for purposes specified in section 1111(c) of the Act.

Actions Needed


In the report that GAO anticipates issuing in March 2012, GAO expects to recommend several actions to facilitate reliable reporting on headquarters staffing and improve information available for decision making. Specifically, DOD should

  • revise its Instruction on tracking of headquarters resources to include all major DOD headquarters activity organizations;


  • specify how contractors performing headquarters functions will be identified and included in headquarters reporting;
  • clarify how components are to compile the major DOD headquarters activities information needed to respond to the reporting requirements in section 1109 of the fiscal year 2010 National Defense Authorization Act; and
  • establish time frames for implementing the actions above to improve tracking and reporting headquarters resources.



In addition, to further DOD’s ability to find efficiencies in headquarters and other overhead, GAO expects to recommend in the March 2012 report that DOD should


  • continue to examine opportunities to consolidate or eliminate defense headquarters organizations that are geographically close or have similar missions, as well as seek further opportunities to centralize administrative and command support services, functions, or programs.


GAO is unable to quantify the potential for further financial benefits because reliable headquarters data are unavailable. Although GAO cannot quantify the potential for additional financial benefits, further efforts by DOD to examine its headquarters resources and improve its headquarters data could present opportunities for additional cost savings.


How GAO Conducted Its Work


The information in this draft is based on findings from the reports listed in the related GAO products section as well as additional work GAO conducted to be published as a separate product in 2012. GAO selected and assessed DOD efficiency initiatives related to headquarters based on GAO’s analysis of information included in DOD’s fiscal year 2012 budget request and the Secretary of Defense’s Track Four Efficiency Initiatives Decisions memo. GAO then obtained and analyzed documentary and testimonial evidence on these selected headquarters-related efficiency initiatives, including the analysis conducted to identify headquarters-related resources and the approach taken to develop selected headquarters-related efficiency initiatives. GAO also obtained and analyzed documentary and testimonial evidence from DOD components detailing the policies and procedures, as well as roles and responsibilities, for tracking and reporting headquarters personnel and operating costs, such as DOD Instruction 5100.73 Major DOD Headquarters Activities.[1]

[1]Department of Defense Instruction 5100.73,Major DOD Headquarters Activities (Dec. 1, 2007).

Agency Comments & GAO Contact


GAO provided a draft of this report section to DOD for review and comment. DOD provided technical comments, which were incorporated as appropriate. DOD officials generally agreed with the actions needed identified by GAO. Specifically, DOD officials told GAO that the department focused on broader reductions for purposes of the Secretary of Defense’s 2010 efficiency initiative, not merely those activities identified as major DOD headquarters activities. GAO recognizes that major DOD headquarters activities are a subset of what DOD considered for its efficiency initiatives. However, given the Secretary’s focus on finding efficiencies in headquarters, both as part of his overall efficiency initiative, as well as DOD’s recent 2012 strategic guidance, GAO believes complete and reliable headquarters-specific data is even more important in guiding an examination of DOD resources. Without this data on headquarters personnel and operating costs, DOD will not have the information it needs, which could impact its efforts to direct resources toward its main priorities.


For additional information about this area, contact John Pendleton at (404) 679-1816 or

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