Defense Business Transformation:

DOD Should Improve Its Planning with and Performance Monitoring of the Military Departments

GAO-17-9: Published: Dec 7, 2016. Publicly Released: Dec 7, 2016.

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Zina D. Merritt
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What GAO Found

The Department of Defense (DOD) and the military departments have established roles and responsibilities for senior business transformation positions, such as Chief Management Officers (CMOs) and Deputy CMOs (DCMOs), who are responsible for business transformation efforts—actions to increase the efficiency of or to decrease the costs associated with DOD's business functions, such as acquisitions and logistics. However, DOD has had challenges retaining individuals in some positions, as shown in the figure.

Turnover in Chief Management Officer (CMO) and Deputy CMO (DCMO) Positions since 2010

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DOD and the military departments have issued strategic or business transformation plans, but DOD has not coordinated with the military departments to align their strategic planning efforts for business transformation with those of the department. For example, the military department CMOs or DCMOs do not have a defined role in DOD's strategic planning process to develop department-wide business transformation goals and objectives. Further, DOD has not aligned the military departments' goals and objectives to those of the department in DOD's Agency Strategic Plan. Leading practices for results-oriented management state that goals should align throughout an organization. In doing so, DOD would be better positioned to ensure that the military departments' strategic planning—as well as goals and objectives—directly contribute to those of the department.

The DOD DCMO has used DOD's principal business governance forum—the Defense Business Council—to monitor some department-wide business transformation efforts, but has not effectively monitored the military departments' performance on business transformation efforts. For example, defense business systems certification and approval initiatives were the most frequently discussed forum items since October 2015, while military department performance on business transformation efforts were not discussed. The DOD DCMO instead relied on the military departments to conduct their own performance monitoring. GAO found that the Council's charter does not specifically outline its responsibility for monitoring the military departments' performance. Without improved department-wide monitoring, DOD may not be well-positioned to assess the overall impact of its efforts to achieve business transformation.

Why GAO Did This Study

While DOD maintains military forces with unparalleled capabilities, it continues to confront management weaknesses related to its business functions that support these forces. GAO designated DOD's approach to business transformation as high risk in 2005 because DOD had not taken steps to achieve business reform on a strategic, department-wide basis.

This report (1) describes the roles and responsibilities established by DOD and the military departments for overseeing business transformation and the continuity of leadership in senior business transformation positions, (2) assesses the extent to which DOD has coordinated with the military departments to align strategic planning efforts for business transformation, and (3) evaluates the extent to which the DOD DCMO has used the Defense Business Council to effectively monitor department-wide performance. GAO reviewed documentation, including summaries from Defense Business Council meetings, and interviewed cognizant officials.

What GAO Recommends

GAO recommends that DOD define a role for the military department CMOs or DCMOs in DOD's strategic planning process, and align DOD's and the military departments' goals and objectives for business transformation in its Agency Strategic Plan. GAO also recommends that DOD take action to improve its monitoring of the military departments' performance. DOD concurs with GAO's recommendations.

For more information, contact Zina D. Merritt at (202) 512-5257, or merrittz@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. In response to an Office of Management and Budget (OMB) memorandum requiring agencies to develop a reform plan to improve their efficiency, effectiveness, and accountability, the Deputy Chief Management Officer issued a memorandum requiring each DOD component--including the military departments--to conduct a thorough review of business operations and to propose reform initiatives to improve the efficiency, effectiveness, and accountability within their respective organizations. For those initiatives selected for implementation, components were required to provide additional information on their initiatives, to include performance goals and measures. DOD submitted its agency reform plan to OMB in September 2017, which included the military department-level reform initiatives. The National Defense Business Operations Plan for Fiscal Years 2018-2022--issued in May 2018 and signed by the Chief Management Officer (CMO)--states that DOD integrated the reform initiatives from the agency reform plan as performance goals, measures, and milestones. In addition, DOD established the Reform Management Group (RMG) to, among other things, identify opportunities for reform and foster ongoing working relationships, aligning all stakeholders involved in reform efforts. The CMO and the Director of Cost Assessment and Program Evaluation lead the RMG, and according to Office of the CMO officials, members of the RMG include the Under Secretaries of the Army, Navy, and Air Force, who also serve as the CMOs of their respective military departments. As a result, we have closed this recommendation as implemented.

    Recommendation: The Deputy Secretary of Defense, in his capacity as the CMO and as part of DOD's strategic planning process, should define a role for the military department CMOs or DCMOs in developing department-wide goals and objectives for business transformation.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. In response to an Office of Management and Budget (OMB) memorandum requiring agencies to develop a reform plan to improve their efficiency, effectiveness, and accountability, the Deputy Chief Management Officer issued a memorandum requiring each DOD component--including the military departments--to conduct a thorough review of business operations and to propose reform initiatives to improve the efficiency, effectiveness, and accountability within their respective organizations. For those initiatives selected for implementation, components were required to provide additional information on their initiatives, to include performance goals and measures. DOD submitted its agency reform plan to OMB in September 2017, which included the military department-level reform initiatives. The reform initiatives align with the department-wide goal for reforming the department's business practices, which is included in the National Defense Business Operations Plan for Fiscal Years 2018-2022 that also serves as DOD's agency strategic plan. In addition, DOD established the Reform Management Group (RMG) to, among other things, identify opportunities for reform and foster ongoing working relationships, aligning all stakeholders involved in reform efforts. The CMO and the Director of Cost Assessment and Program Evaluation lead the RMG, and according to Office of the CMO officials, members of the RMG include the Under Secretaries of the Army, Navy, and Air Force, who also serve as the CMOs of their respective military departments. As a result, we have closed this recommendation as implemented.

    Recommendation: The Deputy Secretary of Defense, in his capacity as the CMO and as part of DOD's strategic planning process, should coordinate with the military department CMOs or DCMOs to align the military departments' goals and objectives for business transformation with department-wide goals and objectives, including in DOD's Agency Strategic Plan.

    Agency Affected: Department of Defense

  3. Status: Open

    Comments: DOD concurred with this recommendation. In response to an Office of Management and Budget (OMB) memorandum requiring agencies to develop a reform plan to improve the efficiency, effectiveness, and accountability, the Deputy Chief Management Officer issued a memorandum requiring each DOD component--including the military departments--to conduct a thorough review of business operations and to propose reform initiatives to improve the efficiency, effectiveness, and accountability within their respective organizations. For those initiatives selected for implementation, components were required to provide additional information on their initiatives, to include performance goals and measures. DOD submitted its agency reform plan to OMB in September 2017, which included military department-level reform initiatives. According to an Office of the Chief Management Officer (OCMO) official, as of August 2018, OCMO is in the process of incorporating the military department-level reform initiatives into weekly updates to the Deputy Secretary of Defense and monthly reports to the Secretary of Defense. Once the military department-level reform initiatives are incorporated into these regular reporting mechanisms, we believe DOD's efforts will meet the intent of our recommendation.

    Recommendation: The Deputy Secretary of Defense, in his capacity as the CMO and in coordination with the DOD DCMO, should take action, as appropriate and necessary, to improve the monitoring of the military departments' performance on business transformation efforts. This could be done by revising the Defense Business Council's charter to make the council responsible for monitoring such performance to reflect the responsibilities of the DOD DCMO to monitor performance across the entire department.

    Agency Affected: Department of Defense

 

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