Defense Headquarters:

Total Personnel and Costs Are Significantly Higher Than Reported to Congress

NSIAD-98-25: Published: Oct 30, 1997. Publicly Released: Oct 30, 1997.

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Norman J. Rabkin
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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) program to account for its management headquarters and headquarters support activities, focusing on: (1) the accuracy and reliability of DOD's reported data on management headquarters and headquarters support personnel and costs; (2) reasons that data on personnel and costs could be inaccurate; and (3) DOD's plans to reduce the size of its management headquarters and headquarters support activities.

GAO noted that: (1) DOD's annual budget exhibits to Congress on management headquarters and headquarters support are unreliable because the number of personnel and costs are significantly higher than reported; (2) neither DOD nor Congress can determine trends in headquarters personnel and costs to help them make informed decisions about the appropriate size of headquarters; (3) during fiscal years (FY) 1985-86, DOD reported steady decreases in its management headquarters and headquarters support personnel, however, these data did not include personnel at most of DOD's noncombat organizations that are subordinate to management headquarters; (4) in a review of selected subordinate organizations, GAO found that almost three-fourths were primarily performing management or headquarters support functions and should have been reported to Congress by DOD; (5) DOD's headquarters costs are also significantly higher than reported to Congress; (6) DOD's data indicate that management headquarters and headquarters support costs decreased from $5.3 billion to $4.3 billion in constant 1997 dollars during FY 1985-86, however, DOD's reported data did not include all costs; (7) DOD's reported headquarters personnel and cost data are understated for several reasons: (a) sustained criticism from Congress about the size of DOD's headquarters has been a disincentive; (b) many DOD officials believe that they are required to report only personnel that make policy, allocate resources, or plan for the future; (c) the criteria for determining whether organizations should be included in management headquarters are complicated; and (d) oversight has been limited; (8) DOD faces challenges in reducing the size of its headquarters; (9) DOD has not determined the scope of future reductions or developed a detailed plan for making the reductions; (10) DOD is examining the effects of a possible 15-percent reduction in management headquarters and support personnel during FY 1998-2003; (11) a Defense Reform Task Force is assessing the missions, functions, and size of the Office of the Secretary of Defense and other headquarters; (12) determining whether and how much to reduce management headquarters is difficult because DOD has no generally accepted staffing standards; and (13) DOD officials have a range of views on whether and how to reduce management headquarters, some advocating reduction while others have no plans for reduction.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD issued a new directive on management headquarters on May 13,1999. The directive clearly states that personnel assigned to field activities, direct reporting units and other similar organizations be reported as management headquarters personnel. In addition, the new directive identifies common sense exemptions such as component-wide payroll services and military bands that should not be reported as management headquarters organizations.

    Recommendation: To generate accurate information needed by Congress and the Secretary of Defense to carry out their oversight and management responsibilities, the Secretary of Defense should revise DOD Directive 5100.73 to expand its coverage and simplify its criteria. The revised directive should require the inclusion of all personnel assigned to all noncombat organizations that are subordinate to DOD management headquarters, including those at the major command level, such as field operating activities, direct reporting units, and other similar organizations that support their parent headquarters. The revised definition should permit common sense exemptions, such as the students and faculty of military academies and componentwide operating-type services, such as payroll services.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: USD (C) revised the reporting requirements for PB-22, Management Headquarters Exhibit, to improve its clarity, eliminate inconsistencies in data reporting, and provide standardization of data across DOD components. However, the total cost is not reported in one document.

    Recommendation: To provide Congress with a cost summary, the Secretary of Defense should direct the Under Secretary of Defense (USD) (Comptroller) to report the total cost, including all appropriations, of DOD's management headquarters and headquarters support in one document.

    Agency Affected: Department of Defense


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