What GAO Found
The Department of Defense (DOD) is not effectively using portfolio management to optimize its weapon system investments, as evidenced by affordability challenges in areas such as shipbuilding and potential duplication among some of its programs. Best practices recommend assessing investments collectively from an enterprise-wide perspective and integrating requirements, acquisition, and budget information, but several factors inhibit DOD's ability to do so.
Fragmented governance: DOD has numerous processes, organizations, and decision makers to oversee weapon system investments that operate in stove-pipes, not as an integrated whole. The requirements and acquisition processes also focus on individual programs rather than assessing investments collectively, as best practices recommend.
Lack of sustained leadership and policy: DOD stopped implementing its portfolio management efforts and policy, in part due to changes in leadership. DOD's policy is also dated, does not fully reflect best practices, and does not identify an office with sufficient authority to implement it.
Perceived lack of decision-making authority: Enterprise-level involvement is key to optimizing investments across DOD because the military services prioritize needs and optimize investments within their services rather than across the military. Title 10, which gives the services responsibility over equipping the force, does not preclude enterprise-level influence over service investment decisions, but some DOD officials said it limits their influence.
DOD's enterprise-level requirements, acquisition, and budgeting communities, meaning those at the at the Office of the Secretary of Defense, Joint Chiefs of Staff, and Joint Staff level, are not consistently conducting portfolio reviews or collaborating to integrate key information. As a result, DOD may be missing opportunities to better leverage its resources and identify investment priorities that best reflect DOD-wide needs. Best practices and portfolio management standards state that organizations should conduct regular reviews to adjust to strategic changes, among other reasons. The Joint Staff, which is responsible for validating warfighting needs, has taken the most concrete actions to conduct portfolio reviews, but even these efforts did not integrate key requirements, acquisition, and budget information. Requirements and acquisition officials said they lacked the resources, readily accessible data, and analytical tools to effectively conduct reviews. For example, the Joint Staff lacks a database that pulls together current information to help it manage its portfolios and has to rely on repeated data calls, which are inefficient and time consuming.
The military services have conducted reviews more consistently than the enterprise level and their experiences at the service level may offer lessons for DOD. They have used the reviews to reduce redundancies, plan for budget uncertainty, and realign resources. Nevertheless, their reviews lack some of the key information needed to provide an integrated assessment of needs, investments, and resources and are limited to the services' own programs. A more integrated approach to portfolio reviews at both the enterprise and military-service levels would better position DOD to conduct sound investment planning.
Why GAO Did This Study
DOD's weapon system acquisition programs have a total estimated acquisition cost of over $1.4 trillion. Portfolio management is an approach used by organizations to evaluate, select, prioritize, and allocate resources to projects that best accomplish strategic or organizational goals. In March 2007, GAO recommended that DOD implement a department-wide portfolio management approach for weapon system investments.
Senate Report 113-44 accompanying the National Defense Authorization Act for Fiscal Year 2014 included a provision that GAO review DOD processes for identifying duplicative and inefficient acquisitions. This report assesses the extent to which (1) DOD uses portfolio management to optimize weapon system investments; (2) DOD conducts integrated portfolio reviews; and (3) the military services conduct portfolio reviews. GAO compared DOD and military service policies and portfolio reviews with best practices and standards for portfolio management.
GAO recommends that DOD update its portfolio management policy, designate a senior official responsible for its implementation; conduct annual portfolio reviews that integrate key information from the requirements, acquisition, and budget processes; and invest in analytical tools to support its portfolio management efforts. DOD partially concurred with the recommendations. However, as discussed in the report, DOD's planned actions will not fully address the issues GAO identified.
Recommendations for Executive Action
|Department of Defense||1. To improve DOD's use of portfolio management for its weapon system investments and ensure that its investment plans are affordable, strategy-driven, balance near- and long-term needs, and leverage efforts across the military services, as well as to provide a solid foundation for future portfolio management efforts at the enterprise-level, the Secretary of Defense should revise DOD Directive 7045.2 on Capability Portfolio Management in accordance with best practices and promote the development of better tools to enable more integrated portfolio reviews and analyses of weapon system investments. Key elements of this recommendation would include (1) designating the Deputy Secretary of Defense or some appropriate delegate responsibility for implementing the policy and overseeing portfolio management in DOD; (2) requiring annual enterprise-level portfolio reviews that incorporate key portfolio review elements, including information from the requirements, acquisition, and budget processes; (3) directing the Joint Staff, AT&L, and CAPE to collaborate on their data needs and develop a formal implementation plan for meeting those needs either by building on the database the Joint Staff is developing for its analysis or investing in new analytical tools; and (4) incorporating lessons learned from military service portfolio reviews and portfolio management activities, such as using multiple risk and funding scenarios to assess needs and re-evaluate priorities.|
|Department of Defense||2. To improve DOD's use of portfolio management for its weapon system investments and ensure that its investment plans are affordable, strategy-driven, balance near- and long-term needs, and leverage efforts across the military services, and to help ensure the military services' portfolio reviews are conducted regularly and effectively integrate information from the requirements, acquisition, and budget communities, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force to update or develop policies that require them to conduct annual portfolio reviews that incorporate key portfolio review elements, including information from the requirements, acquisition, and budget processes.|