Recommendation: The Secretary of Defense should ensure that the Office of the Under Secretary of Defense for Policy (OUSD (Policy)), the Joint Staff, and the Office of the Director, Cost Assessment and Program Evaluation—in consultation with the services—determine the analytic products needed and the level of detail that is sufficient to serve as a common starting point but flexible to allow for variation of analysis to support senior leader decisions, and update these products to reflect current strategy and intelligence estimates, as well as the anticipated operational approaches needed to address future threats. (Recommendation 1)

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD concurred with this recommendation and, as of January 2020, has taken some steps to address it. Specifically, in May 2019, DOD sent a follow up letter to our final report that said that the Department's position on the report has not substantially changed and that the actions identified in the Department's initial response remain underway. DOD also noted that the FY 2021-2025 Defense Planning Guidance (DPG) signed in April 2019 directly addresses many of the report's recommendations and that the Joint Staff is leading an aggressive effort on joint force innovation and experimentation, with Tri-Chair oversight. In September 2019, we reviewed the DPG and found that it partially addressed our recommendation. In the DPG, DOD identified analytic products that would serve as the department's starting point for analysis in fiscal years 2021-2025. DOD has also begun developing some of these analytic products, including several defense planning scenarios that it developed in December 2018 to reflect some of the threats outlined in the National Defense Strategy. To fully implement this recommendation, DOD will need to develop the additional products it needs for the remaining key threats identified in the National Defense Strategy. Additionally, keeping these products updated will require sustained attention by the department, but the direction provided by DOD was limited to budget guidance for fiscal years 2021-2025. The direction would more closely adhere to the intent of our recommendation if it were provided in an enduring guidance or policy document. We will continue to monitor DOD actions in response to this recommendation.

Recommendation: The Secretary of Defense should ensure that OUSD (Policy) provide specific guidance requiring the services to explore a range of innovative force structure approaches relevant to the key threats identified in the National Defense Strategy, including identifying key assumptions on which the services must conduct sensitivity analyses. (Recommendation 2)

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD concurred with this recommendation and, as of January 2020, has taken some steps to address it. Specifically, in May 2019, DOD sent a follow up letter to our final report that said that the Department's position on the report has not substantially changed and that the actions identified in the Department's initial response remain underway. DOD also noted that the FY 2021-2025 Defense Planning Guidance (DPG) signed in April 2019 directly addresses many of the report's recommendations and that the Joint Staff is leading an aggressive effort on joint force innovation and experimentation, with Tri-Chair oversight. In September 2019, we reviewed the DPG and found that it directed some actions relevant to our recommendation regarding the need to explore a range of innovative force structure approaches. However, it did not directly address the need to require the services to conduct sensitivity analysis on key assumptions. The defense planning scenarios that DOD developed in December 2018 identify critical parameters for analytical exploration and encourage DOD components to conduct excursions and sensitivity analysis of assumptions, which we found has not been sufficient to spur this type of analysis in the past. To fully implement this recommendation, DOD needs to require the services to conduct this analysis. We will continue to monitor DOD actions in response to this recommendation.

Recommendation: The Secretary of Defense should establish an approach for comparing competing analyses and conducting joint analyses for force structure to support senior leaders as they seek to implement the National Defense Strategy. This could include establishing a separate body with these capabilities and/or specifying the organizational responsibilities and processes for conducting these comparisons and analyses. (Recommendation 3)

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD concurred with this recommendation and, as of January 2020, has taken some steps to address it. Specifically, in May 2019, DOD sent a follow up letter to our final report that said that the Department's position on the report has not substantially changed and that the actions identified in the Department's initial response remain underway. DOD also noted that the FY 2021-2025 Defense Planning Guidance (DPG) signed in April 2019 directly addresses many of the report's recommendations and that the Joint Staff is leading an aggressive effort on joint force innovation and experimentation, with Tri-Chair oversight. In September 2019, we reviewed the DPG and found that it included steps that could lay the groundwork for DOD to compare competing analyses and conduct joint force structure analyses. To fully implement this recommendation, DOD needs to establish an approach for doing so, which could include establishing a body or process for conducting comparisons or joint analyses. We will continue to monitor DOE actions in response to this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA takes steps to work with Defense Finance and Accounting Service (DFAS)--DSCA's financial service provider--and other DOD components, as appropriate, to improve the reliability of the data the DSCA obtains on all DOD components' use of FMS administrative funds, including actual execution data, at an appropriate level of detail, such as by object class. (Recommendation 1)

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: In February and May 2019, DSCA informed us that it had taken some steps to implement this recommendation, including establishing an automatic interface with certain DOD components' accounting systems to provide DSCA with daily information and data on those components' actual spending of FMS administrative funds. DSCA noted that it is working toward establishing automatic interfaces for the other components that receive these funds. In October 2019, DSCA informed us that implementation is ongoing. As of August 2020, we continue to monitor DOD's ongoing actions to implement this recommendation .

Recommendation: The Secretary of Defense should ensure that the Director of DSCA works with DFAS to conduct regular reconciliations of the data that DSCA collects on DOD components' use of administrative funds, to help ensure that the data are reliable. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: In May 2019, DSCA noted that it is undertaking an initiative to incorporate reconciliation capabilities into its oversight of components' use of FMS administrative funds. In October 2019, DSCA informed us that efforts to implement this recommendation are ongoing. As of August 2020, we continue to monitor DOD's actions to implement this recommendation .

Recommendation: The Director of DSCA should follow its requirement to conduct at least two annual reviews of military department business processes for administrative funds. (Recommendation 3)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In October 2019, DSCA informed us that it had conducted two business process reviews for military departments in 2019. As of August 2020, we continue to monitor DSCA's ongoing actions to implement this recommendation.

Recommendation: The Director of DSCA should conduct periodic (e.g., annual or biennial) reviews of other DOD components' (e.g., other than military departments) business processes for administrative funds, based on a risk-based approach. Such an approach could include consideration of whether an entity has received a prior review or representative sampling over time, as well as consideration of factors such as the results of prior audits or other identified risks. (Recommendation 4)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In October 2019, DSCA informed us that it planned to conduct one review for another DOD component (e.g., other than a military department) in fall 2019. In January 2019, it collaborated with other DOD components that receive FMS administrative funds to develop risk-based criteria for selecting components for periodic business process reviews . DSCA also provided updated policies and procedures for these reviews, which state that DSCA will conduct at least one review for another DOD component annually. As of August 2020, we continue to monitor DSCA's ongoing actions to implement this recommendation.

Recommendation: The Director of DSCA should create and maintain a complete list of military department organizations or offices that receive administrative funds and are subject to DSCA's business process reviews. (Recommendation 5)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In May 2019, DSCA provided supporting documentation to show that, as part of its annual budget review cycle, it had required DOD components to provide a list of sub-components/organizations that receive FMS administrative funds. In October 2019, DSCA provided a list of sub-components/organizations that DSCA obtained as part of the 2019 annual budget cycle. As of August 2020, we continue to monitor DSCA's actions to implement this recommendation.

Recommendation: The Director of DSCA should update DSCA's policy for selecting military department organizations for reviews of their business processes for administrative funds, to better ensure that it reflects a risk-based approach. (Recommendation 6)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In May 2019, DSCA provided updated standard operating procedures for selecting military department organizations for reviews of their business processes for administrative funds. As of August 2020, we are reviewing the documentation provided and following up with DSCA to determine the extent to which the new procedures reflect a risk-based approach.

Recommendation: The Director of DSCA should clarify guidance to ensure that the DSCA officials conducting reviews of business processes for administrative funds periodically track action items until they are completed. (Recommendation 7)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In February 2019, DSCA noted that it had updated its policies and procedures to reflect that it will track action items from business process reviews every 30 days, until the action items area completed. DSCA needs to providing supporting documentation for its efforts to track action items. As of August 2020, we continue to monitor DSCA's ongoing actions to implement this recommendation .

Recommendation: The Director of DSCA should develop a process for conducting periodic (e.g., quarterly or annual), targeted reviews of DOD components' use of administrative funds, including transactions testing, to verify that actual costs incurred are allowable and approved. (Recommendation 8)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In February 2019, DSCA noted that it was in the process of conducting "mock" audits of DOD components' use of FMS administrative funds, and that it was undergoing efforts to ensure that a process is in place for the financial review of components' actual spending of these funds. DSCA noted that these efforts were ongoing in October 2019. As of August 2020, we continue to monitor DSCA's ongoing efforts to implement this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA takes steps to work with DFAS and other DOD components, as appropriate, to improve the reliability of the data that DSCA obtains on all DOD components' use of CAS funds, including actual execution data, at an appropriate level of detail, such as by object class. (Recommendation 9)

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: In February and May 2019, DSCA informed us that it had taken some steps to implement this recommendation, including establishing an automatic interface with certain DOD components' accounting systems to provide DSCA with daily information and data on those components' actual spending of FMS CAS funds. DSCA noted that it is working toward establishing automatic interfaces for the other components that receive these funds. In October 2019, DSCA informed us that implementation is ongoing. As of August 2020, we continue to monitor DOD's ongoing actions to implement this recommendation.

Recommendation: The Secretary of Defense should ensure that the Director of DSCA works with DFAS to conduct regular reconciliations of the data that DSCA collects on DOD components' use of CAS funds, to help ensure that the data are reliable. (Recommendation 10)

Agency: Department of Defense
Status: Open

Comments: In May 2019, DSCA noted that it is undertaking an initiative to incorporate reconciliation capabilities into its oversight of components' use of FMS CAS funds. In October 2019, DSCA informed us that efforts to implement this recommendation are ongoing. As of August 2020, we continue to monitor DOD's actions to implement this recommendation

Recommendation: The Director of DSCA should develop a process for conducting periodic (e.g., quarterly or annual), targeted reviews of DOD components' use of CAS funds, including transactions testing, to verify that actual costs incurred are allowable and approved. (Recommendation 11)

Agency: Department of Defense: Defense Security Cooperation Agency
Status: Open

Comments: In February 2019, DSCA noted that it was in the process of conducting "mock" audits of DOD components' use of FMS CAS funds, and that it was undergoing efforts to ensure that a process is in place for the financial review of components' actual spending of these funds. As of October 2019, DSCA noted that these efforts were ongoing. As of August 2020, we continue to monitor DSCA's ongoing efforts to implement this recommendation.