DOD Financial Management: Action Needed to Enhance Workforce Planning
Fast Facts
The Department of Defense continues to work toward its goal of improving its financial management. To help, DOD can use workforce planning strategies to determine its financial management staffing needs, and fill any gaps it finds.
Although DOD has some information on its federal financial management workforce, it doesn't know how many contractors it has, or what they do. This makes it harder to identify workforce needs and plan effectively.
We also found that DOD doesn't have succession plans for this workforce, which can make it hard to quickly fill key positions that become vacant.
Our recommendations address these issues.
Highlights
What GAO Found
Strategic workforce planning focuses on using long-term strategies to acquire, develop, and retain an organization's total workforce to meet the needs of the future. When done effectively, strategic workforce planning can help the Department of Defense (DOD) determine its financial management needs, deploy strategies to address skill gaps, and contribute to results.
Extent to Which the Department of Defense (DOD) Is Consistent with Key Principles for Strategic Workforce Planning
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Strategic workforce planning key principle |
Evaluation |
|---|---|
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Involve top management, employees, and stakeholders in workforce planning |
● |
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Determine needed critical skills |
◒ |
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Develop strategies to address gaps in critical skills |
◒ |
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Support workforce planning strategies that use existing human capital flexibilities |
● |
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Monitor and evaluate progress toward human capital and programmatic goals |
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Legend: Generally consistent = ●; Partially consistent = ◒; Not consistent = ●
Source: GAO analysis of DOD documents and interviews. | GAO-25-105286
DOD's financial management workforce planning policies and associated processes, practices, and activities were generally consistent with three of the five principles: (1) involving top management, staff members, and other stakeholders in developing, communicating, and implementing the strategic workforce plan; (2) supporting workforce planning strategies that use existing human capital flexibilities; and (3) monitoring and evaluating progress toward human capital goals. For example, to support workforce planning strategies, DOD uses incentives, recruitment initiatives, hiring flexibilities, and a financial management certification program.
DOD was partially consistent with principles on determining critical skills needed and developing strategies to address skill gaps.
- DOD has policies and procedures in place to identify the competencies needed for its civilian and military financial management workforce. For example, DOD has about 43,000 civilian employees within the Office of Personnel Management's Accounting, Auditing, and Budget Group, 0500, as of fiscal year 2021. By contrast, DOD does not know how many financial management contractor staff it has or what functions they collectively perform. This presents a major challenge in determining workforce needs.
- DOD has developed a wide range of hiring and training strategies for its financial management staff. However, DOD has not developed and implemented documented succession policies and plans. As a result, DOD increases the risk that it will be unable to quickly fill expected gaps in positions.
Why GAO Did This Study
DOD financial management has been on GAO's High Risk List since 1995. Achieving a clean audit opinion on its department-wide financial statements remains a goal that DOD has not yet attained. DOD's audit readiness depends on ensuring that its financial management workforce has the needed skills.
In connection with the Government Management Reform Act of 1994 provision for us to audit the U.S. government's consolidated financial statements, GAO compared DOD's financial management workforce planning activities to five principles for effective strategic workforce planning. GAO's work was performed at the key DOD components responsible for financial management: Office of the Under Secretary of Defense (Comptroller), military departments, and Defense Finance and Accounting Service. GAO also interviewed DOD officials and analyzed workforce data.
Recommendations
GAO is making two recommendations to DOD to (1) develop a strategy to identify functions performed by contractors to help identify workforce needs and to help inform competency and capability assessments and (2) develop procedures requiring documented succession plans. DOD did not concur with the contractor workforce recommendation, stating that specific skillsets are determined by contractors. GAO maintains that to conduct effective department-wide financial management workforce planning, DOD needs to identify functions performed by contractors. DOD concurred with GAO's succession planning recommendation.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to coordinate with the Under Secretary of Defense for Acquisition and Sustainment, Secretaries of the military departments (Army, Air Force, and Navy) and the Director of DFAS to develop a strategy for identifying the specific functions performed by contractors supporting the financial management workforce to help identify workforce needs and to help inform future competency and capability assessments. (Recommendation 1) |
In its comments on our draft report, DOD initially disagreed with our recommendation and stated the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) does not dictate nor require a specific number of full-time equivalent contract personnel, with specific skillsets, for each separate contract. That determination is made by the respective contractor and based off the desired outcome the requirement owner is seeking within the scope of the contract. Subsequently in an April 2025 correspondence, DOD stated it now concurs with the recommendation. DOD provided its corrective action plan which outlined a series of steps DOD plans to take to address this recommendation. Specifically, DOD plans to develop a strategy to identify functions performed by contractors supporting financial management and stated that this will involve subject matter experts from across DOD. Due to complexity, USD(C) plans to stand up a Financial Management Skills Assessment Integrated Product Team to provide a repeatable process for timely reporting on financial management functions performed by contractors across DOD. The estimated time of completion is June 2026. We will continue to monitor DOD's actions to address this recommendation.
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| Department of Defense | The Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness to coordinate with the Director of Defense Civilian Personnel Advisory Service (DCPAS) and the Secretaries of the military departments and develop written procedures for succession planning for their financial management workforce. (Recommendation 2) |
The Department of Defense (DOD) agreed with our recommendation and, in April 2025, released the "Department of Defense Financial Management Community Succession Planning Guide." The guide mandates that, in consultation with the Office of Personnel Management, each agency head must create a comprehensive succession program to fill supervisory and managerial positions, based on the agency's workforce succession plans. These programs must include employee training and development. The program's focus is to develop managers, strengthen organizational capabilities, and ensure a sufficient pool of qualified candidates for leadership roles. In addition to facilitating smooth leadership transitions, the goal is to minimize staffing disruptions and maintain stability when critical positions become vacant. The guide also specifies that the Office of the Under Secretary of Defense (Comptroller) will establish a methodology for measuring succession planning effectiveness, provide regular updates to the guide, and coordinate changes with the DOD Components. Additionally, it notes that DOD Components should form a dedicated committee of senior leaders and Human Resources representatives to oversee the succession planning process and evaluation, utilizing Defense Civilian Personnel Advisory Service (DCPAS) tools to support their efforts. These actions address our recommendation.
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