Recommendation: The Secretary of Defense should ensure that the DOD Chief Management Officer direct the task force, in consultation with the resale organizations, to reassess its methodology for estimating IT costs of consolidation, and make any necessary adjustments to its range of IT cost estimates and provide that updated information to Congress. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation. In August 2020, DOD stated that it had intended to convene an IT working group to reassess the methodology and begin detailed IT consolidation planning, but the COVID-19 pandemic delayed this plan. DOD also said that the working group will form as soon as conditions allow and estimated that the working group will complete its work by October 31, 2020. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should ensure that the DOD Chief Management Officer provide additional written information to Congress on the comments and concerns from the military departments and resale organizations on the task force's November 2018 business case analysis, as well as the task force's response to those comments and concerns. (Recommendation 4)

Agency: Department of Defense
Status: Open

Comments: DOD did not concur with this recommendation. In its written comments on our report, DOD stated that all the submitted comments were considered in the department's decision-making process; that all of the military department secretariats agreed with above-store consolidation, despite their comments on the business case analysis; and that the military department comments regarding the business case analysis were shared with congressional committee professional staff, even though the comments were not included in DOD's report to Congress so as to protect the department's deliberative process. In an August 2020 memorandum to GAO, DOD provided similar comments, stating that it considered all comments in its decision-making process and did not attach the comments to its report to Congress in order to protect DOD's internal deliberations. If DOD takes action to respond to this recommendation, we will provide updated information.

Recommendation: To improve operational efficiencies and reduce costs related to product management and services that support commissary operations, the Secretary of Defense should direct the Chief Executive Officer of DeCA to conduct comprehensive cost-benefit analyses to guide decisions on implementing the most cost-effective option as stocking and custodial services contracts are renewed, and on choosing product distribution options.

Agency: Department of Defense
Status: Open

Comments: The Defense Commissary Agency (DeCA) agreed with GAO's March 2017 recommendation that it conduct comprehensive cost-benefit analyses to guide decisions on implementing the most cost-effective option as stocking and custodial services contracts are renewed, and on choosing product distribution options. For example, according to Department of Defense (DOD) officials, DeCA conducted a cost-benefit analysis as part of renewing an agreement with one of the Navy Exchanges in May 2018 and will provide service on a reimbursable basis instead of using the commercial vendor. DeCA officials stated that they will also review product distribution options during commercial negotiations, including taking into account product sales and shipment requirements, among other things. As of January 2020, DOD has not provided documentation to confirm completed actions to implement our recommendations. When we confirm what actions DOD has taken, we will provide updated information.

Recommendation: In order to help ensure that DOD and the military departments are providing timely and consistent information on privately financed construction projects to Congress under DOD Instruction 7700.18, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness--in collaboration with any other relevant DOD stakeholders--to identify the categories of privately financed construction projects, including gifts of major construction, that should be reported through the process outlined in DOD Instruction 7700.18; revise DOD Instruction 7700.18 and any other related policies, as appropriate, to clarify which project types are to be included in and excluded from this reporting process; and require that the military departments update their relevant policies to incorporate the revised policy.

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation, and stated that it will make clarifications in the next revision of DOD Instruction 7700.18 to clarify the types of privately financed major construction projects that should be reported through the process outlined in the instruction. In July 2020 an official from the Office of the Deputy Assistant Secretary of Defense (Military Community and Family Policy) said that DOD had completed a draft update of the instruction that included language implementing GAO's recommendation. The official also stated that DOD Instruction 7700.18 is interrelated with other DOD guidance which is also being updated. DOD plans to complete the updates to all the relevant policies by June 2021.

Recommendation: In order to ensure that Congress receives all desired information on all gifts of major construction in a timely manner, the Secretary of Defense--in collaboration with any other relevant DOD stakeholders--should identify the lead organization(s) within DOD that will be responsible for developing DOD-wide policy for reporting gifts of major construction that are not reported through the process outlined in DOD Instruction 7700.18, as appropriate.

Agency: Department of Defense
Status: Open

Comments: DOD did not concur with this recommendation, stating that there was already an official, the Under Secretary of Defense for Acquisition, Technology, and Logistics, responsible for developing policies related to gifts of real property, including major construction. However, DOD has not formally assigned responsibility to the Under Secretary (now the Under Secretary for Acquisition and Sustainment) for developing DOD-wide policy on reporting gifts of major construction not covered by the process outlined in DOD Instruction 7700.18. As of July 2020, the department had not taken action to address this recommendation, according to a representative of the Office of the Under Secretary of Defense for Acquisition and Sustainment.

Recommendation: In order to ensure that Congress receives all desired information on all gifts of major construction in a timely manner, the Secretary of Defense--in collaboration with any other relevant DOD stakeholders--should establish DOD-wide policy, as appropriate, on congressional notification of gifts of major construction to cover all such gifts that are not to be reported to Congress through the process outlined in DOD Instruction 7700.18, and require that the military departments update their gift acceptance policies--and any other relevant policies--to incorporate procedures to support DOD's notification requirements.

Agency: Department of Defense
Status: Open

Comments: DOD did not concur with this recommendation, stating that Congress has provided a statutory framework for the department to accept gifts, including gifts of construction, without stipulating any reporting requirements. However, this is inconsistent with DOD Instruction 7700.18, which states that construction projects funded by donations are subject to reporting to Congress. The military departments have been accepting gifts of major construction and reporting some of them to Congress while not reporting others. If DOD does not take action to clarify its policy on reporting such gifts, Congress is likely to continue receiving inconsistent and incomplete information, and to lack an explanation of the scope of the information it is receiving. This in turn may impair Congressional oversight over such projects and their potential effects on future maintenance funding requirements since some projects will not be brought to Congress' attention. As of July 2020, the department had not taken action to address this recommendation, according to a representative of the Office of the Under Secretary of Defense for Acquisition and Sustainment.

Recommendation: As DOD assesses potential cost savings under the Defense Resale Business Optimization Board or through other cost savings initiatives identified, the Secretary of Defense, with assistance as necessary from the Director and Chief Executive Officer of the Defense Commissary Agency, the Director and Chief Executive Officer of the Army and Air Force Exchange Service, the Chief Executive Officer of the Navy Exchange Service Command, and the Marine Corps Exchange, should provide information to Congress that includes data, assumptions, and methodology supporting DOD's conclusion for not achieving budget neutrality.

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation. As of October 2019, DOD has not completed actions to implement our recommendations. When we confirm what actions DOD has taken, we will provide updated information.

Recommendation: As DOD assesses potential cost savings under the Defense Resale Business Optimization Board or through other cost savings initiatives identified, the Secretary of Defense, with assistance as necessary from the Director and Chief Executive Officer of the Defense Commissary Agency, the Director and Chief Executive Officer of the Army and Air Force Exchange Service, the Chief Executive Officer of the Navy Exchange Service Command, and the Marine Corps Exchange, should develop a plan with assumptions, a methodology, cost estimates, and specific time frames for achieving alternative reductions to appropriations, to support DOD's efforts to ensure that DOD's cost savings target is feasible and accurate.

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation. As of October 2019, DOD has not completed actions to implement our recommendations. When we confirm what actions DOD has taken, we will provide updated information. In 2017, DOD officials told us that they would include information about assumptions, a methodology, cost estimates, and timelines for achieving alternative reductions, but they were unable to provide any documentation of progress made.

Recommendation: As DOD conducts pilot programs, the Secretary of Defense, with assistance as necessary from the Director and Chief Executive Officer of the Defense Commissary Agency, the Director and Chief Executive Officer of the Army and Air Force Exchange Service, the Chief Executive Officer of the Navy Exchange Service Command, and the Marine Corps Exchange, should identify specific metrics to determine whether DOD has fulfilled the mandated requirement to maintain high levels of customer satisfaction, the provision of high-quality products, and the sustainment of patron savings.

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation. As of October 2019, DOD has not completed actions to implement our recommendations. When we confirm what actions DOD has taken, we will provide updated information.