Department of Defense: Status of Achieving Outcomes and Addressing Major Management Challenges (25-JUN-01, GAO-01-783)
This report reviews the Department of Defense's (DOD) fiscal year
2000 performance report required by the Government Performance
and Results Act of 1993 and assesses the Department's progress in
achieving selected outcomes that were identified as important
mission areas for DOD. GAO found that shortfalls in DOD's current
strategies and measures for several outcomes have led to
difficulties in assessing performance in areas such as combat
readiness, support infrastructure reduction, force structure
needs, and the matching of resources to program spending plans.
DOD's fiscal year 2002 performance plan, which has yet to be
issued, provides DOD with the opportunity to address these
shortfalls. On the basis of last year's analysis of DOD's fiscal
year 1999 performance report and fiscal year 2001 performance
plan, GAO recommended that the Department include more
qualitative and quantitative goals and measures in its annual
performance plan and report to gauge progress toward achieving
mission outcomes. DOD has not as yet fully implemented this
recommendation. GAO continues to believe that the Secretary of
Defense should adopt this recommendation as it updates its
strategic plan and prepares its next annual performance plan. By
doing so, DOD can ensure that it has strategies that are tied to
desired mission outcomes and are well thought-out for resolving
ongoing problems, achieving its goals and objectives, and
becoming more cost and results oriented.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-783
ACCNO: A01449
TITLE: Department of Defense: Status of Achieving Outcomes and
Addressing Major Management Challenges
DATE: 06/25/2001
SUBJECT: Combat readiness
Defense capabilities
Performance measures
Personnel management
Program evaluation
Reporting requirements
Strategic planning
DOD En Route Basing System
GPRA
Government Performance and Results Act
DOD Quadrennial Defense Review
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GAO-01-783
Report to the Ranking Minority Member, Committee on Governmental Affairs, U.
S. Senate
United States General Accounting Office
GAO
June 2001 DEPARTMENT OF DEFENSE Status of Achieving Outcomes and Addressing
Major Management Challenges
GAO- 01- 783
Page 1 GAO- 01- 783 DOD?s Status of Achieving Outcomes
June 25, 2001 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate
Dear Senator Thompson: As you requested, we reviewed the Department of
Defense?s (DOD) fiscal year 2000 performance report required by the
Government Performance and Results Act of 1993 (GPRA) to assess the
Department?s progress in achieving selected outcomes that you identified as
important mission areas for DOD. 1 We did not review DOD?s fiscal year 2002
performance plan because it had not been issued. DOD is uncertain if the
plan will be issued in this fiscal year because the Department is undergoing
a major review of its national defense strategies and business operations,
which may result in changes to the way DOD reports performance information.
Thus, we are unable, at this time, to discuss DOD?s fiscal year 2002 goals
and strategies to achieve the selected outcomes. Also, we could not compare
DOD?s fiscal year 2002 performance plan with its fiscal year 2001
performance plan for the selected outcomes. These are the same outcomes we
addressed in our June 2000 review of DOD?s fiscal year 1999 performance
report and fiscal year 2001 performance plan to provide a baseline by which
to measure DOD?s performance from year to year. 2 These selected outcomes
are:
The U. S. maintains technological superiority in key war- fighting
capabilities. U. S. military forces are adequate in number, well
qualified, and highly
motivated. Combat readiness is maintained at desired levels.
Infrastructure and operating procedures are more efficient and
costeffective.
Reduced availability and/ or use of illegal drugs. 1 This report is one of
a series of reports on the 24 Chief Financial Officers (CFO) Act agencies?
FY 2000 performance reports and FY 2002 performance plans. 2 Observations on
the Department of Defense?s Fiscal Year 1999 Performance Report and Fiscal
Year 2001 Performance Plan (GAO/ NSIAD- 00- 188R, June 30, 2000).
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Fewer erroneous payments to contractors. As agreed, using the selected
outcomes for DOD as a framework, we (1) assessed the progress DOD has made
in achieving these outcomes and the strategies DOD has in place to achieve
unmet performance goals and (2) compared DOD?s fiscal year 2000 performance
report with the Department?s prior year performance report for these
outcomes to identify improvements made. Additionally, we agreed to analyze
how DOD addressed its major management challenges, including the
governmentwide high- risk areas of strategic human capital management and
information security that we and the DOD Inspector General had identified.
Appendix I provides detailed information on how DOD addressed these
challenges. Appendix II contains DOD?s comments on a draft of our report.
DOD?s progress in achieving the selected outcomes is unclear. One of the
reasons for the lack of clarity is that most of the selected program
outcomes DOD is striving to achieve are complex and interrelated and may
require a number of years to accomplish. Another, as we reported last year,
is that DOD did not provide a full assessment of its performance. We also
identified weaknesses in DOD?s strategies for achieving unmet performance
goals in the future. 3
Planned outcome: The U. S. maintains technological superiority in key
warfighting capabilities
The extent to which the Department has made progress toward the outcome of
maintaining U. S. technological superiority in key warfighting capabilities
is unclear. As we reported last year, some of the performance goal?s
underlying measures- such as procurement spending and defense technology
objectives- do not provide a direct link toward meeting the goal, thus
making it difficult to assess progress. DOD?s performance report does not
reflect concerns raised within the Department about the adequacy of its
strategy and the timely introduction of new technologies to operational
forces.
3 Annual performance goals establish a measurable path to incremental
achievement of larger strategic goals and outcomes. Performance goals are
supported and evaluated by quantifiable and/ or qualitative output, which is
assessed using performance measures or indicators. Results in Brief
Page 3 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Planned outcome: U. S. forces are adequate in number, well qualified, and
highly motivated
DOD?s performance measures do not adequately indicate its progress toward
achieving the outcome of ensuring that U. S. military forces are adequate in
number, well qualified, and highly motivated. DOD?s performance measures
still do not fully measure how well DOD has progressed in developing
military personnel or the extent to which U. S. military forces are highly
motivated. With the exception of the enlisted recruiting area, DOD does not
identify specific planned actions that it or the services will take to
assist them in meeting unmet performance targets in the future. Also, DOD?s
performance report discusses generally the difficulties of the current
retention environment, but the report contains little clear articulation of
specific actions or strategies being taken to improve future retention.
Planned outcome: Combat readiness is maintained at desired levels The
level of progress that DOD has made toward the outcome of maintaining combat
readiness at desired levels is unclear. Although DOD met some performance
measure targets, others had been lowered, were incomplete, or were not met,
thus making an accurate assessment of progress difficult. Because DOD
reported that it had met its force- level targets, it plans no significant
changes or strategies in force structure for fiscal year 2001. However, we
believe that forcelevel performance measures could be more complete and
meaningful if they included measures for associated support forces with the
measures for existing combat unit force levels.
Planned outcome: Infrastructure and operating procedures are more
efficient and cost- effective
The extent to which DOD has made progress toward the outcome of ensuring
that infrastructure and operating procedures are more efficient and cost-
effective is still unclear. DOD reported that it met many of its performance
targets, such as disposing of property, reducing logistics response time,
and streamlining the acquisition workforce. However, as we reported last
year, the targets do not always hold up to scrutiny; and some targets that
DOD reported as met had been lowered or were not met. For those measures
that were not met, or that were lowered, DOD?s performance report does not
provide clear strategies for achieving them in the future.
Page 4 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Planned outcome: Reduced availability and/ or use of illegal drugs DOD?s
fiscal year 2000 performance report did not include performance goals or
measures related to the outcome of reducing the availability and/ or use of
illegal drugs. Therefore, we had no basis to assess DOD?s progress in
achieving this outcome. DOD does, however, support U. S. and foreign law
enforcement agencies in their efforts to reduce the availability and use of
illegal drugs. It has lead responsibility for aerial and maritime detection
and monitoring of illegal drug shipments to the United States. It also
provides assistance and training to foreign governments to combat drug-
trafficking activities. DOD?s fiscal year 2000 performance report recognized
counternarcotics as a crosscutting function and outlined DOD?s
responsibilities in this area. DOD has developed a set of performance
results to determine the effectiveness of its counterdrug operations and
make better use of limited resources.
Planned outcome: Fewer erroneous payments to contractors We had no basis
to assess DOD?s progress toward achieving this outcome because DOD had no
performance goals directly related to achieving the outcome. However, this
issue represents a significant problem for DOD. Under its broader goal of
improving the efficiency of its acquisition processes, DOD has developed
performance measures related to initiatives that may reduce the number of
erroneous payments made to contractors. For example, DOD?s performance
report contains goals and measures for increasing the use of paperless
transactions. While these measures reflect quantifiable assessments of the
levels of usage for the contracting methods, they may not directly address
whether the number of erroneous payments has been reduced. On a related
issue, we reported in February of this year that overpayments continue to be
a problem. We recommended actions DOD could take to reduce the overpayment
problem and assure more timely repayment when overpayments do occur. 4
In comparing DOD?s fiscal year 2000 and 1999 performance reports, we noted
that DOD has made several improvements. For example, it added more
discussion on the importance of human resources in achieving
4 Contract Management: Excess Payments and Underpayments Continue to Be a
Problem at DOD (GAO- 01- 309, Feb. 22, 2001).
Page 5 GAO- 01- 783 DOD?s Status of Achieving Outcomes
DOD?s performance objectives and summarized how DOD?s performance metrics
responded to each of the eight major management challenges. Further, in
terms of data verification, presentation, and content, DOD?s fiscal year
2000 report has an effective format that is understandable to a nondefense
reader. However, the fiscal year 2000 report did not address several
weaknesses that we had identified in the fiscal year 1999 report. For
example, nine measures and indicators, which DOD reported to make
infrastructure and operating procedures more efficient and cost- effective,
are insufficient to assess whether DOD is making progress in streamlining
its infrastructure. Since DOD has not changed or supplemented these and
other measures, we continue to believe that DOD will have problems
determining the effectiveness of its infrastructure reduction efforts.
DOD?s fiscal year 2000 performance report also addresses major management
challenges we identified, including the governmentwide highrisk areas of
strategic human capital management and information security. Regarding
strategic human capital management, the report includes discussions of
initiatives DOD has taken or planned to (1) improve the quality of life for
military members, such as improving and refining selected bonus programs,
and (2) shape its future civilian workforce. Regarding information security,
DOD?s performance report did not provide any data showing measurable
progress on this issue but did cite several actions to improve security,
such as a new web security initiative to scrutinize information posted to
DOD web sites. In addition, DOD?s performance report discussed DOD?s
progress in resolving all but one of the other major management challenges
that we had identified. DOD did not discuss its progress in resolving the
following challenge: ?Developing strategic plans that lead to desired
mission outcomes.? As noted in several other key challenges, sound plans
linked to DOD?s overall strategic goals are critical to achieving needed
reforms. Inefficiencies in the planning process have led to difficulties in
assessing performance in such areas as combat readiness and support
infrastructure reduction. In addition, some of these management challenges-
such as financial management- are crosscutting and may adversely affect
DOD?s ability to measure progress.
DOD is in the process of updating its strategic plan through the conduct of
its Quadrennial Defense Review, which sets forth its mission, vision, and
strategic goals. The review provides DOD another opportunity to include
qualitative and quantitative information that could contribute to providing
a clearer picture of DOD?s performance. On the basis of last year?s analysis
of DOD?s fiscal year 1999 performance report and fiscal year 2001
performance plan, we recommended that the Department include more
Page 6 GAO- 01- 783 DOD?s Status of Achieving Outcomes
qualitative and quantitative goals and measures in its annual performance
plan and report to gauge progress toward achieving mission outcomes. DOD has
not as yet fully implemented this recommendation. We continue to believe
that the Secretary of Defense should adopt this recommendation as DOD
updates its strategic plan through the review and prepares its next annual
performance plan. By doing so, DOD can ensure that it has strategies that
are tied to desired mission outcomes and are well thoughtout for resolving
ongoing problems, achieving its goals and objectives, and becoming more cost
and results oriented.
In providing written comments on a draft of this report, DOD indicated that
its annual GPRA report provides the Congress and the public an executive-
level summary of key performance results over the past budget year. DOD
pointed out that future GPRA submissions will refine its performance metrics
to reflect priorities of the new defense strategy, but stressed that,
although it does not want to mask deficiencies in how DOD manages
performance, it does not want to emphasize shortfalls at the expense of true
achievements. DOD stated that it would be helpful if we could provide a
clearer definition of what standards of sufficiency will be applied in
evaluating future submissions. As we reported in last year?s assessment, we
agree that the answer is not to simply measure more things in more detail.
However, in many instances, for the outcomes identified by the Committee,
DOD?s report does not discuss strategies for achieving unmet goals and does
not fully assess its performance. We believe that the best test of
reasonableness or sufficiency to evaluate DOD?s future progress resides in
the requirements of GPRA itself, which requires, among other things,
agencies to explain and describe, in cases where a performance goal has not
been met, why the goal was not met. The requirement to submit a fiscal year
2002 performance plan, which DOD has yet to issue, also provides DOD with
the opportunity to address these shortfalls. In that regard, we have issued
guidance that outlines approaches agencies should use in developing
performance plans. 5 These actions would place DOD in a position of
continuously striving for improvement.
GPRA is intended to shift the focus of government decisionmaking,
management, and accountability from activities and processes to the
5 The Results Act: An Evaluator?s Guide to Assessing Agency Annual
Performance Plans (GAO/ GGD- 10. 1. 20, Version 1, Apr. 1998); Executive
Guide: Effectively Implementing the Government Performance and Results Act
(GAO/ GGD- 96- 118, June 1996). Background
Page 7 GAO- 01- 783 DOD?s Status of Achieving Outcomes
results and outcomes achieved by federal programs. New and valuable
information on the plans, goals, and strategies of federal agencies has been
provided since federal agencies began implementing GPRA. Under GPRA, annual
performance plans are to clearly inform the Congress and the public of (1)
the annual performance goals for agencies? major programs and activities,
(2) the measures that will be used to gauge performance, (3) the strategies
and resources required to achieve the performance goals, and (4) the
procedures that will be used to verify and validate performance information.
These annual plans, issued soon after transmittal of the President?s budget,
provide a direct linkage between an agency?s longer- term goals and mission
and day- to- day activities. 6 Annual performance reports are to
subsequently report on the degree to which performance goals were met. The
issuance of the agencies? performance reports, due by March 31, represents a
new and potentially more substantive phase in the implementation of GPRA-
the opportunity to assess federal agencies? actual performance for the prior
fiscal year and to consider what steps are needed to improve performance and
reduce costs in the future. 7
The mission of the Department of Defense is to support and defend the
Constitution of the United States; provide for the common defense of the
nation, its citizens, and its allies; and protect and advance U. S.
interests around the world. Defense operations involve over $1 trillion in
assets, budget authority of about $310 billion annually, and about 3 million
military and civilian employees. Directing these operations represents one
of the largest management challenges within the federal government.
6 The fiscal year 2002 performance plan is the fourth of these annual plans
under GPRA. 7 The fiscal year 2000 performance report is the second of these
annual reports under GPRA.
Page 8 GAO- 01- 783 DOD?s Status of Achieving Outcomes
This section discusses our analysis of DOD?s progress in achieving outcomes
and the strategies that DOD has in place, particularly human capital 8 and
information technology, for accomplishing these outcomes. In discussing
these outcomes, we have also provided information drawn from our prior work
on the extent to which DOD provided assurance that the performance
information it is reporting is credible.
In general, the extent to which DOD has made progress in achieving the six
outcomes is unclear. In our opinion, one of the reasons for the lack of
clarity is that most of the selected program outcomes DOD is striving to
achieve are complex and interrelated and may require a number of years to
accomplish. This condition is similar to what we reported last year on our
analysis of DOD?s fiscal year 1999 performance report and fiscal year 2001
performance plan. Further, with the new administration, DOD is undergoing a
major review of its military strategy and business operations, which may
result in changes to the way DOD reports performance information.
The extent to which the Department has made progress toward the outcome of
maintaining U. S. technological superiority in key war- fighting
capabilities is difficult to assess. DOD?s performance goal for this outcome
is to transform U. S. military forces for the future. As we reported last
year, some of the performance goal?s underlying measures- such as
procurement spending and defense technology objectives- do not provide a
direct link toward meeting the goal, thus making it difficult to assess
progress.
DOD?s performance report does not reflect concerns raised within the
Department about the adequacy of its strategy and institutional processes
for transforming forces. We noted in a prior report that a transformation
strategy is presented in the former Secretary of Defense?s 2001 Annual
Report to the President and the Congress. 9 However, the strategy does not
clearly identify priorities or include an implementation plan and
outcomerelated metrics that can be used to effectively guide the
transformation of
8 Key elements of modern human capital management include strategic human
capital planning and organizational alignment; leadership continuity and
succession planning; acquiring and developing staffs whose size, skills, and
deployment meet agency needs; and creating results- oriented organizational
cultures. 9 GAO/ NSIAD- 00- 188R, June 30, 2000. Assessment of the
Department of Defense?s Progress and Strategies in Achieving Selected
Outcomes
Technological Superiority in Key War- fighting Capabilities
Page 9 GAO- 01- 783 DOD?s Status of Achieving Outcomes
U. S. forces and assess progress. This topic is currently being reviewed by
the new administration. As we reported, a 1999 Defense Science Board study
had recognized the need and called for such an explicit strategy, or master
plan; a roadmap; and outcome- related metrics to assess progress. Also, a
joint military service working group identified a need for a comprehensive
strategy as an issue that the 2001 Quadrennial Defense Review must address.
Further, the Defense Science Board, Joint Staff and unified command
officials, joint military service working group, and others raised concerns
about the ability of DOD?s current institutional processes to turn the
results of transformation initiatives into fielded capabilities in a timely
manner. These processes- which include DOD?s planning, programming, and
budgeting system and weapons acquisition system- focus on near- or mid- term
requirements and do not foster the timely introduction of new technologies
to operational forces.
For each of the supporting performance measures, DOD?s report describes data
collection and verification measures. However, our work in this area has not
addressed the reliability of DOD?s data. Thus, we are unable to comment on
the extent to which the reported performance information is accurate.
DOD?s performance measures do not adequately indicate its progress toward
achieving the outcome of ensuring that U. S. military forces are adequate in
number, well qualified, and highly motivated. Therefore, we cannot judge the
level of progress DOD has made in this area. DOD?s performance goal for this
outcome is to recruit, retain, and develop personnel to maintain a highly
skilled and motivated force capable of meeting tomorrow?s challenges. DOD?s
performance measures still do not fully measure how well DOD has progressed
in developing military personnel or the extent to which U. S. military
forces are highly motivated. Although DOD?s report identifies specific goals
for recruiting and retention, the Department does not include human capital
goals and measures aimed specifically at tracking the motivation or
development of its personnel.
The level of progress toward meeting specific targets in the areas of
enlisted recruiting and retention is mixed. The Air Force failed to meet its
targets for first- or second- term retention, and the Navy did not meet its
target for first- term retention. While most reserve components met or came
in under their targets for enlisted attrition, the Army Reserve did not stay
within its attrition target. On the positive side, the services met or
exceeded their targets for enlisted recruiting and recruit quality. However,
Developing and Motivating
U. S. Military Forces
Page 10 GAO- 01- 783 DOD?s Status of Achieving Outcomes
DOD?s report showed that the target for active enlisted recruiting was
revised downward, enabling DOD to meet a goal it might otherwise have been
unable to achieve. If such adjustments become commonplace, the same kind of
force shaping problems that resulted from the intentional restriction of new
accessions during the 1990s drawdown could result. Still other targets, such
as for enlisted retention, are set at such aggregate levels that they could
mask variations in retention by occupational area and skill levels, which
would limit achieving the outcome of ensuring that U. S. military forces are
adequate in number, well qualified, and highly motivated. As such, the
enlisted retention goal provides only a partial measure of the military?s
ability to retain adequate numbers of personnel.
DOD?s performance report realistically identified the likelihood of
continued challenges in recruiting for the military services and in
retention for the Navy and the Air Force. But it did not devote significant
attention to identifying specific reasons why DOD missed certain targets.
Likewise, with the exception of the enlisted recruiting area, the report did
not identify specific planned actions that DOD or the services will take to
assist them in meeting future performance targets. For enlisted recruiting,
however, the services identified several actions to help them cope with this
challenge. For example, the Army and the Navy have increased funding for
recruiting and plan to offer enlistment bonuses of up to $20,000. They also
plan to continue allowing recruits to choose a combination of college fund
and enlistment bonuses. The Army plans to experiment with innovative ways to
expand the market for new recruits through programs like College First and
GED Plus. And, the Air Force has instituted a college loan repayment
program, increased enlistment bonuses to $12, 000, and added more
recruiters.
With regard to retention, the Department?s performance report discusses
generally the difficulties of the current retention environment and the
fiscal year 2000 enlisted retention challenges. However, the report contains
little clear articulation of specific actions or strategies being taken to
improve future retention. For example, the report noted that the Navy has
established a Center for Career Development that is chartered to focus on
retention, providing the fleet the necessary tools to retain Navy personnel.
However, the performance report does not elaborate on what those tools are
or how they are being enhanced. Similarly, the Air Force indicated that it
held two retention summits in fiscal year 2000 and that initiatives
resulting from those summits will facilitate achievement of fiscal year 2001
retention targets. However, the report does not cite specific initiatives
that would be taken or when they would be put into place. DOD expects that
fiscal year 2001 will continue to present retention
Page 11 GAO- 01- 783 DOD?s Status of Achieving Outcomes
challenges for the services? reserve components. The report, however, did
not identify any specific actions or initiatives that would be taken to help
address the challenge.
Finally, for each of its performance measures, DOD?s report describes the
data flow used to produce DOD?s assessment. The procedures used to collect,
verify, and validate the data cited in the report provide reasonable
assurance that the information is accurate and reliable.
The level of progress that DOD has made toward the outcome of maintaining
combat readiness at desired levels is unclear. DOD?s performance goals for
this outcome are to maintain trained and ready forces and have strategic
mobility. 10 Although DOD has met some performance measure targets for both
goals, other targets are incomplete, have been lowered, or have not been
met, thus making an accurate assessment of progress difficult. For example,
DOD reported meeting its force- level targets for the performance goal of
maintaining trained and ready forces. However, the targets do not provide a
complete picture of the forces needed to respond to a full spectrum of
crises, to include fighting and winning two major theater wars nearly
simultaneously. 11 DOD?s metric includes only combat forces for each
service, and not the necessary support forces. In the Army?s case, this
means that DOD?s metric captures only 239, 000 of the 725,000 forces the
Army projects it would deploy to two wars. The targets also do not capture
other important attributes beyond the size of the force, such as the extent
to which DOD has made the best possible use of its available resources. For
example, DOD?s plan does not set results- oriented goals for integrating the
capabilities of the active, National Guard, and Reserve forces- even though
each of these components is essential for mission effectiveness. 12
As another example, DOD still has not been able to achieve its tank- mile
training target of 800 miles of training per tank, conducted at various home
stations, in Kuwait, and in Bosnia. Although DOD came closer to meeting the
target in fiscal year 2000 than it did in fiscal year 1999- 101 (17
10 The Strategic Mobility performance goal is supported by three metrics:
airlift capacity, sealift capacity, and equipment prepositioning. Our work
enables us to comment on only airlift capacity. 11 This assumption may
change with the Secretary?s defense review.
12 Force Structure: Army Is Integrating Active and Reserve Combat Forces,
but Challenges Remain (GAO/ NSIAD- 00- 162, July 18, 2000). Maintaining
Combat
Readiness
Page 12 GAO- 01- 783 DOD?s Status of Achieving Outcomes
percent) more tank miles- it still fell short by nearly 100 training miles
per tank. DOD reported that it failed to meet the targets because units were
not available for training, units used training simulators instead of actual
training, and resources were diverted from field exercises to other high
priority needs such as upgrades and maintenance of key training ranges.
While our recent work shows this to be true, we reported that the movement
of training funds for other purposes had not resulted in the delay or
cancellation of planned training events in recent years. 13
Further, data are not as reliable as they could be. DOD and the Army define
the 800 tank- mile measure differently. DOD?s definition includes tank-
training miles conducted in Kuwait and Bosnia, while the Army?s home station
training measure excludes those miles. 14 Using the Army?s home station
training measure, it conducted 655 miles of training in fiscal year 2000,
which is 145 miles or 18 percent short of its budgeted home station training
goal. Figure 1 compares budgeted and actual Army home station tank training
miles from fiscal year 1997 to fiscal year 2000.
13 Defense Budget: Need to Better Inform Congress on Funding for Army
Division Training (GAO- 01- 902), expected to be released in summer 2001. 14
The Army includes Bosnia miles in home station training, but the amount is
minor- 4 miles in fiscal year 2000.
Page 13 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Figure 1: Average Number of Home Station Tank Training Miles Budgeted and
Achieved, Fiscal Years 1997- 2000
Source: GAO.
For strategic mobility, DOD reported that it met targets for two of three
underlying measures: airlift capacity, and land- and sea- based
prepositioning. However, in the area of airlift capacity, DOD revised the
performance targets downward from those that had been set in prior
performance plans and last year?s performance report. DOD reported that it
revised the new targets to reflect updates to the planning factors for C- 5
aircraft wartime performance. While it is appropriate for DOD to revise
targets, as necessary, we reported that the new targets are significantly
less than goals established in a 1995 Mobility Requirements Study BottomUp
Review Update and even lower than a newly established total airlift capacity
requirement of 54.5 million- ton miles per day established in DOD?s Mobility
Requirements Study 2005, issued in January 2001. 15 DOD?s performance report
contains targets of a total airlift capacity of 45. 4 million- ton miles per
day for military aircraft and the Civil Reserve Air
15 Military Readiness: Air Transport Capability Falls Short of Requirements
(GAO/ NSIAD- 00- 135, June 22, 2000).
Page 14 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Fleet, with 24.9 million- ton miles per day coming from military aircraft.
By comparison, DOD?s airlift capacity requirements are about 50 million- ton
miles per day for total airlift capacity, with nearly 30 million- ton miles
per day coming from the military. DOD?s performance report does not explain
how these new targets were set or how they differed from prior years?
targets. It is also unclear whether or how DOD intends to meet the higher
requirement of 54. 5 million- ton miles per day.
Because DOD reported that it had met its force- level targets, it plans no
significant changes or strategies in force structure for fiscal year 2001.
However, we believe that force- level targets could be more complete and
meaningful if they included associated support forces with existing combat
unit force levels. For example, the lack of any target setting for Army
support forces masks the Army?s historic problem in fully resourcing its
support force requirements, as well as more recent steps the Army has taken
to reduce its shortfall level.
With respect to tank training strategies, in response to our recent
recommendation, DOD agreed to develop consistent tank training performance
targets and reports to provide the Congress with a clearer understanding of
tank training. 16 Also, DOD has initiated a strategy to more clearly portray
the number of tank training miles driven, and the Department is moving
toward becoming more consistent with the Army?s 800- tank mile measure.
However, as stated above, DOD continues to include tank- training miles
conducted in Kuwait in its definition of the measure, while the Army
excludes those miles. DOD reports that the problems encountered in meeting
fiscal year 2000 tank training objectives are not, for the most part,
expected to recur in fiscal year 2001. However, the problems DOD describes
are not unique to fiscal year 2000. Army units are now in their sixth year
of deployments to the Balkans, which, as DOD stated, affects its training
availability. Further, in at least 6 of the past 8 fiscal years (1993
through 2000), DOD has moved funds from division training for other
purposes. For the most recent of those years- the 4- year period from fiscal
years 1997 through 2000- DOD moved a total of almost $1 billion of the funds
the Congress had provided for training. DOD reports that an Army management
initiative implemented in fiscal year 2001 will limit the reallocation of
funds. However, at the time of our work, it was too early in the fiscal year
to assess the initiative?s success.
16 GAO- 01- 902, expected to be released summer 2001.
Page 15 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Further, DOD has identified strategies for strategic airlift improvement,
such as including a C- 17 aircraft procurement program to provide additional
airlift capacity and upgrading of C- 5 aircraft components. We recently
reported that the C- 5 upgrades, however, were fiscal year 2000 proposals
that are waiting to be funded in the 2001- 2012 timeframe. 17 Thus, in the
near term, this strategy would not likely result in significant increases in
capacity.
For each of its performance measures, DOD?s fiscal year 2000 performance
report discussed the source and review process for the performance
information. With one exception involving DOD?s En Route System of 13
overseas airfields, DOD?s data appear to be reasonably accurate. The En
Route System is a critical part of DOD?s ability to quickly move the large
amounts of personnel and equipment needed to win two nearly simultaneous
major theater wars, as required by the National Military Strategy. However,
DOD?s performance report excludes data on En Route System limitations from
the measures it uses to assess performance in strategic mobility, resulting
in an incomplete picture of its capabilities. Rapid mobilization of U. S.
forces for major theater wars requires a global system of integrated airlift
and sealift resources, as well as equipment already stored overseas. The
airlift resources include contracted civilian and military cargo aircraft
and the 13 En Route System airfields in Europe and the Pacific where these
aircraft can land and be serviced on their way to or while in the expected
war zones in the Middle East and Korea. We learned during a recent review of
the En Route System that DOD includes measures of its performance in meeting
goals for aircraft, sealift, and prepositioned equipment capacities in its
measures of strategic mobility capability. 18 However, it does not include
data on shortfalls in En Route System capacity, which are a major limiting
factor on airlift capacity and overall performance in strategic mobility.
Officials from the Office of the Secretary of Defense told us that they do
not include data on En Route System shortfalls because airfield capacity has
not been considered a primary criterion for measuring performance in
strategic mobility. However, DOD has reported that the chief limiting factor
on deployment operations is not usually the number of available
17 Military Readiness: Air Transport Capability Falls Short of Requirements
(GAO/ NSIAD- 00- 135, June 22, 2000). 18 Military Readiness: More Management
Forces Needed on Airfields for Overseas Deployments (GAO- 01- 566, June 22,
2001).
Page 16 GAO- 01- 783 DOD?s Status of Achieving Outcomes
aircraft but the capability of en- route or destination infrastructure to
handle the ground operations needed by the aircraft. In a recently issued
report, we recommended that DOD begin to include information on En Route
System limitations and their effects on strategic mobility in its
performance reports. 19
DOD?s progress toward achieving the outcome of ensuring that infrastructure
and operating procedures are more efficient and costeffective remains
unclear. The performance goals for this outcome are to streamline
infrastructure through business practice reform and improve the acquisition
process. DOD reported that it met many of its performance targets, such as
disposing of property, reducing logistics response time and streamlining the
acquisition workforce. However, as we reported last year, the targets did
not always hold up to scrutiny; and some targets that DOD reported as met
had been lowered or were not met.
For example, while DOD has reported meeting its targets for publicprivate
competitions, we have found that delays have been encountered in initiating
and completing planned studies that have the potential for reducing savings
expected to be realized in the near- term. Additionally, changes have been
made in overall study goals, creating some uncertainties about future
program direction. For example, the Department recently reduced its plan to
study 203,000 positions under Office of Management and Budget (OMB) Circular
A- 76 to about 160, 000 positions while supplementing it with a plan to
study 120, 000 positions under a broader approach known as strategic
sourcing. 20 Similarly, DOD reported that it had met its 99- month target
cycle time for average major defense acquisition programs. However, compared
to fiscal year 1999 results, the average cycle time actually increased by 2
months. We have reported numerous examples of questionable defense program
schedules, such as with Army Comanche helicopter program delays. In this
regard, our work has shown that DOD could benefit from the application of
commercial best practices to ensure that (1) key technologies are mature
before they are included in weapon system development programs, (2)
19 GAO- 01- 566, June 22, 2001. 20 Strategic sourcing, as we use the term,
involves functional or organizational assessments regarding the potential
for consolidation, restructuring, reengineering, privatization, etc., of
functions, activities, and services, but initially does not involve
competition between the public and private sectors. Streamlining
Infrastructure
and Operating Procedures
Page 17 GAO- 01- 783 DOD?s Status of Achieving Outcomes
limits are set for program development cycle times, and (3) decisions are
made using a knowledge- based approach. 21
As another example, DOD reported that it did not meet its cost growth
measure. On average, reported costs rose in major defense acquisition
programs by 2.9 percent during fiscal year 2000 compared to the goal of 1.0
percent. DOD explains the causes for the excessive cost growth but not the
strategies to solve the problem. We have reported pervasive problems
regarding, among other things, unrealistic cost, schedule, and performance
estimates; unreliable data on actual costs; and questionable program
affordability. Also, we have recommended that DOD leadership improve the
acquisition of weapon systems by using more realistic assumptions in
developing system cost, schedule, and performance requirements and approving
only those programs that can be fully executed within reasonable
expectations of future funding. 22
DOD?s fiscal year 2000 performance report sufficiently explains why a number
of performance measures were not met but does not provide clear plans,
actions, and time frames for achieving them. For example, DOD reported that
no systemic problems would hinder it from meeting working capital fund and
defense transportation documentation targets in the future. However, DOD
believes it may have difficulty meeting supply inventory goals due to
continuing concerns about the impact of inventory reductions on readiness.
In the report, DOD acknowledges that it may have problems meeting some
targets because it must balance its infrastructure reduction initiatives
with efforts to enhance quality of life, improve recruiting and retention,
and transform the military to meet the challenges of the 21st century.
For each of its performance measures, DOD?s report discusses the source and
review process for the performance information. The data appear to be
credible, with some exceptions. For example, we previously reported that
unreliable cost and budget information related to DOD?s measure for the
percentage of the budget spent on infrastructure negatively affects the
Department?s ability to effectively measure performance and reduce costs. 23
We also reported that significant problems exist with the
21 Major Management Challenges and Program Risks: Department of Defense
(GAO- 01- 244, Jan. 2001). 22 High Risk Series: An Update (GAO- 01- 263,
Jan. 2001).
23 GAO/ NSIAD- 00- 188R, June 30, 2000.
Page 18 GAO- 01- 783 DOD?s Status of Achieving Outcomes
timeliness and accuracy of the underlying data for the measure related to
inventory visibility and accessibility.
We could not assess DOD?s progress in achieving performance goals or
measures because DOD?s fiscal year 2000 performance report did not include
performance goals or measures for this outcome. DOD does, however, assist U.
S. and foreign law enforcement agencies in their efforts to reduce the
availability and use of illegal drugs. It has lead responsibility for aerial
and maritime detection and monitoring of illegal drug shipments to the
United States. It also provides assistance and training to foreign
governments to combat drug- trafficking activities. DOD?s 2000 performance
report recognized counternarcotics as a crosscutting function and outlined
DOD?s responsibilities in this area.
In a December 1999 report on DOD?s drug control program, we recommended that
DOD develop performance measures to determine the effectiveness of its
counterdrug activities and make better use of limited resources. 24 In
response to our recommendation, DOD developed a set of
?performance results? that are compiled on a quarterly basis. These
performance results are intended to (1) provide a useful picture of the
performance results of individual projects, (2) facilitate the
identification of projects that are not demonstrating adequate results, (3)
allow an overall assessment of DOD?s counterdrug program?s results, and (4)
describe those DOD accomplishments that directly support the performance
goals delineated in the National Drug Control Strategy?s Performance
Measures of Effectiveness Plan. DOD is currently refining the performance
results in an effort to improve its ability to measure the success or
failure of counterdrug activities.
We had no basis to assess DOD?s progress in achieving the outcome of making
fewer erroneous payments to contractors because DOD had no performance goals
directly related to the outcome. However, this issue represents a
significant problem for DOD. Under its broader goal of improving the
efficiency of its acquisition processes, DOD has developed performance
measures that address related contracting issues. Specifically, the 2000
performance report contains goals and measures for increasing the use of
paperless transactions. However, these measures do not directly address the
outcome of fewer erroneous payments. While they
24 Drug Control: Assets DOD Contributes to Reducing the Illegal Drug Supply
Have Declined (GAO/ NSIAD- 00- 9, Dec. 21, 1999). Reduced Availability
and/ or Use of Illegal Drugs Fewer Erroneous Payments to Contractors
Page 19 GAO- 01- 783 DOD?s Status of Achieving Outcomes
do reflect quantifiable measures of the levels of usage for these
contracting processes, they may not directly address whether the number of
erroneous payments has been reduced.
On a related issue, we have reported over the last several years that DOD
annually overpaid its contractors by hundreds of millions of dollars,
constituting a significant problem. In February of this year, we reported
that DOD contractors repaid $901 million in overpayments in fiscal year 2000
to a major DOD contract payment center. 25 This represents a substantial
amount of cash in the hands of contractors beyond what is intended to
finance and pay for the goods and services DOD bought. For example,
contractors returned $351 million in overpayments in fiscal year 1999 to
this DOD payment center. Contractor data indicate that 77 percent of that
amount resulted from contract administration actions (see fig. 2).
25 GAO- 01- 309, Feb. 22, 2001.
Page 20 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Figure 2: Sources of Excess Payments
Percent of dollar value for excess payment repaid in FY 1999 Source: GAO.
However, DOD does not review available data on why this major category of
overpayments occurs. Such a review is necessary if excess payments are to be
reduced. Therefore, in our February 2001 report, we recommended that DOD
routinely analyze data on the reasons for excess payments, investigate
problem areas, and implement necessary actions to reduce excess payments. In
responding to our recommendation, DOD stated that it would conduct an
initial review of excess payment data and determine whether routine receipt
and analysis of this data would be meaningful.
Page 21 GAO- 01- 783 DOD?s Status of Achieving Outcomes
In comparing DOD?s fiscal year 2000 performance report with its prior year
report, we noted that DOD has made several improvements. For example, it
added more discussion on the importance of human resources in achieving its
performance objectives; summarized how its performance metrics responded to
each of eight major management challenges it faces; and included a more in-
depth explanation of each cross- cutting activity it is involved with,
rather than just a listing of the responsible agencies. The eight major
management challenges facing the Department are:
Developing strategic plans that lead to desired mission outcomes.
Hiring, supporting, and retaining military and civilian personnel with the
skills to meet mission needs.
Establishing financial management operations that provide reliable
information and foster accountability.
Effectively managing information technology investments.
Reforming acquisition processes while meeting military needs.
Improving processes and controls to reduce contract risk.
Creating an efficient and responsive support infrastructure.
Providing logistics support that is economical and responsive. In terms of
data verification, presentation, and content, DOD?s fiscal year 2000
performance report has an effective format that is understandable to a
nondefense reader. DOD also clarified some of its terminology. For example,
it changed the term ?performance goal? to ?performance target? to remove
confusion about what the annual performance goals are.
The fiscal year 2000 report, however, did not address several weaknesses
that we identified in the fiscal year 1999 report. For example, DOD reported
nine measures and indicators to make infrastructure and operating procedures
more efficient and cost- effective. We believe that these measures are
insufficient to assess whether DOD is actually making progress toward
streamlining its infrastructure. Some measures, such as the number of
positions subject to OMB Circular A- 76 or strategic sourcing reviews,
generally reflect status information rather than the impact that programs
are having on the efficiency and cost- effectiveness of operations. Since
DOD has not changed or supplemented these measures, we continue to believe
that DOD will have problems determining how effective its infrastructure
reduction efforts have been. Also, we have testified that DOD has undergone
a significant downsizing of its civilian workforce. In part due to the
staffing reductions already made, imbalances appear to be Comparison of
DOD?s
Fiscal Year 2000 Performance Report With the Prior Year Report for Selected
Outcomes
Page 22 GAO- 01- 783 DOD?s Status of Achieving Outcomes
developing in the age distribution of DOD civilian staff. 26 The average age
of this staff has been increasing, while the proportion of younger staff,
who are the pipeline of future agency talent and leadership, has been
dropping.
As another example, DOD?s performance report has no outcome- oriented
measures for working capital fund activities. The idea behind working
capital funds is for activities to break even over time. Thus, if an
activity has a positive net operating result one year, it will budget for a
negative net operating result the next year. The measure DOD currently uses
to assess its working capital fund operations is net operating results. This
particular measure, however, is of little value for determining the outputs
achieved for goals and services provided through the working capital fund
activities. We believe that additional measures are needed to help determine
operational effectiveness, particularly because these activities report
about $75 billion in annual revenues associated with their operations. For
example, a good measure to determine the effectiveness of the supply
management activity group could be the percentage of aircraft that are not
mission capable due to supply problems.
GAO has identified two governmentwide high- risk areas: strategic human
capital management and information security. Regarding strategic human
capital management, we found that DOD?s performance report did not explain
DOD?s progress in resolving human capital challenges. However, the report
included a description on the importance of human resources, such as the
importance of total force integration and quality of life and personnel.
With respect to information security, we found that DOD?s performance report
did not explain its progress in resolving its information security
challenges. However, it states that specific goals, objectives, and
strategies for improving DOD?s management of information can be found in the
Information Management Strategic Plan (http:// www. c3i. osd. mil) discussed
in appendix J of DOD?s 2001 Annual Report to the President and the Congress.
In addition, GAO has identified eight major management challenges facing
DOD. Some of these challenges are crosscutting issues. For example,
improving DOD?s financial management operations so that it can produce
useful, reliable and timely cost information is essential if DOD is to
26 Human Capital: Strategic Approach Should Guide DOD Civilian Workforce
Management (GAO/ T- GGD/ NSIAD- 00- 120, Mar. 9, 2000). DOD?s Efforts to
Address Major Management Challenges Identified by GAO
Page 23 GAO- 01- 783 DOD?s Status of Achieving Outcomes
effectively measure its progress toward achieving outcomes and goals across
virtually the entire spectrum of DOD?s business operations.
Although DOD?s performance report discussed the agency?s progress in
resolving many of its challenges, it did not discuss the agency?s progress
in resolving the following challenge: ?Developing strategic plans that lead
to desired mission outcomes.? As we reported in March 2001, sound strategic
planning is needed to guide improvements to the Department?s operations. 27
Without it, decisionmakers and stakeholders may not have the information
they need to ensure that DOD has strategies that are well thought- out to
resolve ongoing problems, achieve its goals and objectives, and become more
results oriented. While DOD has improved its strategic planning process, its
current strategic plan is not tied to desired mission outcomes. As noted in
several of the other key challenges, sound plans linked to DOD?s overall
strategic goals are critical to achieving needed reforms. Inefficiencies in
the planning process have led to difficulties in assessing performance in
areas such as combat readiness; support infrastructure reduction; force
structure needs; and matching resources to program spending plans. Appendix
I provides detailed information on how well DOD addressed these challenges
and high- risk areas as identified by both GAO and the DOD Inspector
General.
Shortfalls in DOD?s current strategies and measures for several outcomes
have led to difficulties in assessing performance in areas such as combat
readiness, support infrastructure reduction, force structure needs, and the
matching of resources to program spending plans. DOD?s fiscal year 2002
performance plan, which has yet to be issued, provides DOD with the
opportunity to address these shortfalls. DOD is also in the process of
updating its strategic plan through the conduct of its Quadrennial Defense
Review, which sets forth its mission, vision, and strategic goals. The
review provides DOD with another opportunity to include qualitative and
quantitative information that could contribute to providing a clearer
picture of DOD?s performance.
On the basis of last year?s analysis of DOD?s fiscal year 1999 performance
report and fiscal year 2001 performance plan, we recommended that the
Department include more qualitative and quantitative goals and measures in
its annual performance plan and report to gauge progress toward
27 Major Management Challenges and Program Risks: Departments of Defense,
State, and Veterans Affairs (GAO- 01- 492T, Mar. 7, 2001). Conclusions
Page 24 GAO- 01- 783 DOD?s Status of Achieving Outcomes
achieving mission outcomes. DOD has not as yet fully implemented this
recommendation.
We continue to believe that the Secretary of Defense should adopt this
recommendation as it updates its strategic plan through the Quadrennial
Defense Review and prepares its next annual performance plan. By doing so,
DOD can ensure that it has strategies that are tied to desired mission
outcomes and are well thought- out for resolving ongoing problems, achieving
its goals and objectives, and becoming more cost and results oriented.
As agreed, our evaluation was generally based on the requirements of GPRA;
the Reports Consolidation Act of 2000; guidance to agencies from OMB for
developing performance plans and reports (OMB Circular A- 11, Part 2);
previous reports and evaluations by us and others; our knowledge of DOD?s
operations and programs; our identification of best practices concerning
performance planning and reporting; and our observations on DOD?s other
GPRA- related efforts. We also discussed our review with agency officials in
DOD?s Office of Program Analysis and Evaluation and with the DOD Office of
Inspector General. The agency outcomes that were used as the basis for our
review were identified by the Ranking Minority Member, Senate Governmental
Affairs Committee as important mission areas for the agency and do not
reflect the outcomes for all of DOD?s programs or activities. Both GAO, in
our January 2001 performance and accountability series and high risk update,
and DOD?s Inspector General in December 2000 identified the major management
challenges confronting DOD, including the governmentwide high- risk areas of
strategic human capital management and information security. We did not
independently verify the information contained in the performance report,
although we did draw from other GAO work in assessing the validity,
reliability, and timeliness of DOD?s performance data. We conducted our
review from April 2001 through June 2001 in accordance with generally
accepted government auditing standards.
In a letter dated June 14, 2001, the DOD Director for Program Analysis and
Evaluation provided written comments on a draft of this report. DOD
indicated that its annual GPRA report provides the Congress and the public
an executive- level summary of key performance results over the past budget
year. DOD stated that, together, the metrics presented in its report
demonstrate how DOD?s existing management practices enable it to recruit,
train, equip, and field the most effective military force in the world. DOD
said that we overlooked this fact in our draft report. However, DOD pointed
out that future GPRA submissions will refine its performance Scope and
Methodology Agency Comments and Our Evaluation
Page 25 GAO- 01- 783 DOD?s Status of Achieving Outcomes
metrics to reflect priorities of the new defense strategy, but it sees
little value in adding large amounts of new measures auditors and others
have proposed over the past 18 months. DOD reiterated that GPRA is not the
sole venue for reporting performance results- it submits more than 900
reports annually to the Congress alone, many of which address issues
highlighted in our draft report. DOD stressed that a key goal of the GPRA
legislation is to increase public confidence in government and, although it
does not want to mask deficiencies in how DOD manages performance, it does
not want to emphasize shortfalls at the expense of true achievements. DOD
stated that it would be helpful if we could provide a clearer definition of
what standards of sufficiency will be applied in evaluating future
submissions.
Notwithstanding DOD?s statement that the metrics DOD presented in its
performance report can enable it to have an effective military force, we
continue to believe, for the reasons cited in our report, that DOD?s
progress in achieving the selected outcomes is still unclear. As we have
recently recognized in our report on major performance and accountability
challenges facing DOD, 28 our nation begins the new millennium as the
world?s sole superpower with military forces second to none, as evidenced by
experiences in the Persian Gulf, Bosnia, and Kosovo. We also stated that the
same level of excellence is not evident in many of the business processes
that are critical to achieving DOD?s mission in a reasonably economical,
efficient, and effective manner. A major part of DOD?s performance report
focuses on outcomes related to these processes, the results of which are
critical to DOD?s ability to maintain its military capability.
As we reported in last year?s assessment, we agree that the answer is not to
simply measure more things in more detail. However, in many instances, for
the outcomes identified by the Committee, DOD?s report does not discuss
strategies for achieving unmet goals and does not fully assess its
performance. We believe that the best test of reasonableness or sufficiency
to evaluate DOD?s future progress resides in the requirements of GPRA
itself, which requires, among other things, agencies to explain and
describe, in cases where a performance goal has not been met, why the goal
was not met. The requirement to submit a fiscal year 2002 performance plan,
which DOD has yet to issue, also provides DOD with the opportunity to
address these shortfalls. In that regard, we have issued
28 GAO- 01- 244, Jan. 2001.
Page 26 GAO- 01- 783 DOD?s Status of Achieving Outcomes
guidance that outlines approaches agencies should use in developing
performance plans. 29 These actions would place DOD in a position of
continuously striving for improvement. Appendix II contains DOD?s comments.
As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Secretary of Defense; and the Director, Office
of Management and Budget. Copies will also be made available to others on
request.
If you or your staff have any questions, please call me at (202) 512- 4300.
Key contributors to this report were Charles I. Patton, Jr.; Kenneth R.
Knouse, Jr.; Elizabeth G. Mead; Cary B. Russell; and Brian G. Hackett.
Sincerely yours, Henry L. Hinton, Jr., Managing Director Defense
Capabilities and Management
29 GAO/ GGD- 10. 1. 20, Version 1, Apr. 1998; GAO/ GGD- 96- 118, June 1996.
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 27 GAO- 01- 783 DOD?s Status of Achieving Outcomes
The following table identifies the major management challenges confronting
the Department of Defense (DOD), which include the governmentwide high- risk
areas of strategic human capital management and information security. The
first column of the table lists the management challenges that we and/ or
DOD?s Inspector General (IG) have identified. The second column discusses
what progress, as discussed in its fiscal year 2000 performance report, DOD
made in resolving its challenges along with our assessment. We found that
DOD?s performance report discussed the agency?s progress in resolving many
of its challenges but that it did not discuss the agency?s progress in
resolving the following challenges: Strategic Planning, Other Security
Concerns, and Health Care. Appendix I: Observations on the Department
of Defense?s Efforts to Address Its Major Management Challenges
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 28 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Table 1: Major Management Challenges Major management challenge Progress in
resolving major management challenge as
discussed in the fiscal year 2000 performance report GAO- designated
governmentwide high risk
Strategic Human Capital Management GAO has designated strategic human
capital management as a high- risk area across the government.
In a series of reports and recent testimonies, we identified a number of
human capital challenges regarding DOD?s workforce. a These include problems
with recruiting and retaining qualified military personnel and significant
downsizing of the civilian workforce without adequate workforce planning.
(In addition, DOD?s IG also cited several military and civilian human
capital issues that need to be addressed and has recently included human
capital as 1 of 10 significant management challenges facing DOD.)
Progress toward resolving recruiting and retention challenges for military
personnel are discussed in the outcomes section of this report. DOD?s 2000
performance report identifies several initiatives that the services intend
to implement to address recruiting challenges. These initiatives include
increasing funding for recruiting, increasing enlistment bonuses, continuing
to allow recruits to choose a combination of college fund and enlistment
bonuses, instituting a college loan repayment program and other initiatives
aimed at attracting more of the college- bound population, and adding more
recruiters.
DOD did not have any performance measures/ indicators regarding its overall
civilian workforce. It briefly addressed its civilian workforce requirements
as a ?related issue? toward the end of its report, and made reference to
chapter 10 of the 2001 Annual Report to the President and the Congress for
details. In the annual report, DOD cited a four- part strategy to deal with
its civilian workforce challenges: research into what is happening; planned
recruitment and accession management; development and retention; and careful
transition management. Information Security
Our January 2001 high- risk update noted that the agencies? and
governmentwide efforts to strengthen information security have gained
momentum and expanded. Nevertheless, recent audits continue to show federal
computer systems are riddled with weaknesses that make them highly
vulnerable to computer- based attacks and place a broad range of critical
operations and assets at risk of fraud, misuse, and disruption.
(The DOD IG has also identified this area as a significant management
challenge.)
DOD did not provide any data showing measurable progress for this issue in
fiscal year 2000. However, DOD?s report did provide information indicating
that DOD had taken actions to improve information security such as (1)
implementing a new web security initiative to scrutinize information posted
to DOD web sites; (2) updating the DOD public key infrastructure policy; and
(3) undertaking several new initiatives to respond to cyber attacks.
A number of these actions are discussed in DOD?s 2001 Annual Report to the
President and the Congress. However, DOD information security officials
acknowledge that DOD systems and networks are more vulnerable than DOD would
like; and, as we have reported, b the DOD information assurance program has
made progress, but problems have kept the program from meeting its goals.
For example, planning and coordination of security management technologies
and operations are not consistent throughout DOD.
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 29 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Major management challenge Progress in resolving major management challenges
as discussed in the fiscal year 2000 performance report
GAO- designated major management challenge
Strategic Planning Shortfalls While DOD has improved its strategic planning
process, its strategic plan is not tied to desired mission outcomes. Sound
plans linked to DOD?s overall strategic goals are critical to achieving
needed reforms. Inefficiencies in the planning process have led to
difficulties in assessing performance in such areas as combat readiness,
support infrastructure reduction, force structure needs, and the matching of
resources to program spending plans.
This challenge is not addressed in the 2000 performance report.
GAO- and IG- designated major management challenges
Contract Management Reform DOD spends over $130 billion a year contracting
for goods and services. We and the DOD IG (under its acquisition management
challenge) continue to identify risks in contracting. DOD continues to
experience significant challenges relating to contract management, including
(1) maintaining a skilled acquisition workforce, (2) ensuring competition in
the acquisition of services, (3) preventing erroneous and improper payments
being made to its contractors, (4) implementing commercial practices for
contract pricing, and (5) managing health care contracts.
DOD has attempted to measure selected changes to its contracting processes
by establishing key metrics, including (1) the percentage of purchases made
by purchase card, (2) the percentage of paperless contracting and payment
transactions, and (3) the percentage of reduction in acquisition workforce
personnel.
According to DOD officials, DOD plans to meet its contract performance goals
for 2001. However, these metrics do not measure many of the significant
challenges to improve processes and controls for reducing contract risk. For
example, the metric on personnel reductions does not consider the impact of
these reductions in contract surveillance, assess the mix of skills
maintained, or assess the level and quality of training provided to DOD
personnel.
More information concerning erroneous payments to contractors is discussed
in the outcomes section of this report. Financial Operations Reforms
The results of DOD?s fiscal year 2000 financial audit demonstrate that DOD
continues to confront serious and pervasive weaknesses in its financial
management systems, operations, and controls. These weaknesses, taken
together, continue to represent the largest single obstacle to achieving an
unqualified opinion on the U. S. government?s consolidated financial
statements. None of the military services or major DOD components has yet
passed the test of an independent financial audit. Further, these long-
standing weaknesses hamper DOD?s ability to produce useful, reliable, and
timely information for day- to- day management and decisionmaking, including
its ability to effectively measure performance, reduce costs, and maintain
adequate funds control.
DOD?s Fiscal Year 2000 Performance Report reflects a revision to its
previous financial performance metrics related to the performance goal,
?Improve Financial and Information Management.? Specifically, while
retaining measures relating to compliant finance and accounting systems and
achieving unqualified financial audit opinions, DOD?s FY 2000 report added a
measure to track how quickly noncompliant feeder systems are replaced with
compliant systems. Expanding DOD?s performance reporting focus to include
tracking feeder systems is an important and appropriate addition. DOD
reported meeting or exceeding its 2000 goals for the existing performance
measures on compliant finance and accounting systems and achieving
unqualified financial audit opinions. DOD did not establish 2000 goals for
the new performance measure on compliant feeder systems. According to this
year?s DOD Financial Management Improvement Plan, this year was used to
establish a ?baseline? for monitoring systems? compliance with requirements.
While the current finance, accounting, and feeder system- by- system
compliance orientation may well result in improved financial
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 30 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Major management challenge Progress in resolving major management challenges
as discussed in the fiscal year 2000 performance report
management operations and systems, fundamental reform is unlikely unless it
is also undertaken as part of a broader reform goal. DOD?s financial
management improvement efforts should be measured against an overall goal of
effectively supporting DOD?s basic business processes, including
appropriately considering related business process systems
interrelationships. Successful reengineering- a comprehensive, integrated
reform of all DOD business support operations (including its financial,
acquisition, logistics and other business support functions)- will be
essential if DOD is to effectively address a deep- rooted organizational
emphasis on maintaining ?business as usual? across the Department.
In addition, we are also concerned that DOD?s fiscal year 2000 performance
metric concerning obtaining unqualified audit opinions may impede putting
meaningful, sustainable improvements in place. We have reported our concern
that substantial efforts to work around DOD?s serious system and control
weaknesses to derive year- end balances for the purpose of obtaining clean
audit opinions will not produce reliable and timely financial and
performance information needed to manage DOD?s everyday operations. c
Information Technology Challenges
Effective management of information technology is key to implementing many
of DOD?s planned management reforms. However, significant management
weaknesses in both systems modernization and systems security place the
ultimate success of many reform initiatives at risk. Weaknesses in
information technology management could seriously jeopardize operations and
compromise the confidentiality, integrity, or availability of sensitive
information.
We have reported that fundamental management controls, such as integrated
enterprise architectures, disciplined management practices, and mature
system development processes, are still not being implemented on a systemic
basis within the Department. a Also, DOD?s systems modernization efforts
remain on GAO?s high- risk list. In addition, the DOD IG has reported that
the Department?s five- year record in implementing the Clinger- Cohen Act is
?somewhat disappointing? and has also reported information technology (IT)
management as a principal management challenge.
Although DOD?s fiscal year 2000 performance report does not provide a
quantitative measurement of progress towards addressing this challenge, the
report does indicate that the Department is taking some action toward this
objective. For example, in fiscal year 2001 DOD intends to issue a policy
that delineates the roles and responsibilities of DOD?s Chief Information
Officer in implementing information resource management reforms, and that
defines the relationship of these officers to other key DOD managers. The
performance report includes a qualitative measure of the DOD?s progress in
implementing Goal 3 of its information management strategic plan: reform DOD
IT management processes to increase efficiency and mission contribution. d
This goal is intended to improve IT management. However, as currently
specified, the performance indicator is neither an outcome- oriented nor
quantifiable metric that allows DOD to establish targets and measure its
success in meeting these goals. Until DOD defines such a metric, measuring
its progress in improving IT management will be difficult.
Acquisition Reform The weapons systems acquisition process continues to be a
high- risk area. Notwithstanding ongoing reform, the process is still too
slow and costly. Pervasive problems persist regarding the process to acquire
weapons; cost, schedule, and performance estimates; program affordability;
and the use of high- risk acquisition strategies such as acquiring weapons
based on optimistic assumptions about the maturity and availability of
enabling technologies.
This challenge is discussed in the outcomes section of this report.
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 31 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Major management challenge Progress in resolving major management challenges
as discussed in the fiscal year 2000 performance report
In addition, the DOD IG considers the overall acquisition process for goods
and services to be a significant management challenge given the fact that
DOD has initiated an unprecedented number of major improvement efforts,
including at least 40 significant acquisition reform initiatives. The IG
reported concerns related to the proper oversight and feedback on new
processes. Support Infrastructure Inefficiencies
Since the Cold War, DOD has reduced its forces by 25 percent and closed many
bases to reduce its operations and support infrastructure. While these
efforts resulted in savings, the percentage of DOD?s budget spent on its
infrastructure has remained relatively constant between fiscal year 1996 and
fiscal year 2001 at around 60 percent.
DOD has introduced a number of initiatives aimed at (1) making its
operations and support infrastructure smaller, more efficient, and more
responsive to warfighter needs and (2) creating savings for other needs like
weapons modernization. However, because of continued inefficiencies in its
support infrastructure, this continues as a high- risk area for DOD.
This challenge is discussed in the outcomes section of this report.
Logistics Support Inefficiencies While the current logistics system gets the
job done, it is often described as a brute force process that is
uneconomical and inefficient. Although DOD has progressed in improving
logistics support, especially through the application of best inventory
management practices, serious weaknesses persist throughout its logistics
activities; and it is unclear to what extent its ongoing management
improvement initiatives will overcome these weaknesses. A key area of the
logistics process that remains high risk is inventory management. DOD
continues to spend more than is necessary to procure and manage inventory,
yet at the same time items are not available when needed.
DOD used the following three measures in its fiscal year 2000 performance
report to assess progress towards makings its logistics support functions
more efficient:
logistics response time,
visibility and accessibility of DOD material assets, and
disposal of excess National Defense Stockpile inventory and reduction of
supply inventory.
According to the report, DOD is currently developing a measure for customer
wait time.
DOD reports that it exceeded its goals in each of these areas, with the
exception of reducing its supply inventory. DOD expects to have problems
meeting goals for this measure in the future due to concerns about the
impact of inventory reductions on readiness.
We believe these measures are appropriate for gauging progress. However, we
are concerned with the overall management of the logistics reform efforts.
Currently, the services and defense agencies have about 400 ongoing
individual initiatives to improve logistics support. Yet, DOD has not
developed an overarching plan that integrates individual service efforts
into a single, DOD- wide implementation strategy. According to DOD
officials, DOD?s planned new logistics architecture will provide this
integration. If done properly, we believe this architecture will help guide
and control DOD?s reform efforts.
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 32 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Major management challenge Progress in resolving major management challenges
as discussed in the fiscal year 2000 performance report
IG- designated major management challenges
Other Security Concerns In addition to the threats posed by unauthorized
intrusions into DOD information systems, a wide range of other threats
confront DOD. These include terrorism against U. S. personnel and facilities
and the disclosure or theft of sensitive military technology. Recent work by
the DOD IG highlighted continuing problems with DOD?s security clearance
program and export control policies. Additionally, the IG noted that more
attention is needed for other issues, including properly demilitarizing
equipment before disposal, ensuring computers being sold or transferred
outside of DOD contain no classified material, and controlling the access of
contractors and visitors to technical information at military engineering
organizations and laboratories.
This challenge is not directly addressed in the 2000 performance report.
However, the report does describe the more general issue of terrorism and
weapons of mass destruction in domestic incidents as a crosscutting activity
and states that the Federal Emergency Management Agency serves as the lead
federal agency. According to the performance report, during peacetime, DOD
coordinates all of its consequence management activities through the
Assistant to the Secretary of Defense for Civil Support, who plans and
coordinates with 26 other federal agencies and the Federal Emergency
Management Agency.
Health Care The DOD health care system reportedly costs over $16 billion
annually and serves approximately 8.2 million eligible beneficiaries through
its health care delivery program, TRICARE. The DOD IG reported three major
challenges for this area: cost containment, data integrity, and
transitioning to managed care. Cost containment is challenged by the
continued lack of good cost information combined with significant levels of
health care fraud. Data integrity in management information systems has been
a persistent problem that affects health care program effectiveness and
efficiency. The transition to managed care is challenged by incomplete,
incorrect information being provided to Service members and by older
beneficiaries being without accessibility to health care resources because
of DOD downsizing.
This challenge is not addressed in the 2000 performance report. Readiness
The DOD IG reported that there is fairly broad consensus that readiness
shortfalls exist, although the extent of impairment to mission capability is
unclear. Indicators of readiness problems include spare parts shortages;
significant backlogs for depot maintenance and real property maintenance;
concerns related to recruiting, retention and morale; disproportionately
numerous deployments for some units; unanticipated high operating tempos;
and equipment availability problems.
This challenge is discussed in the outcomes section of the report.
Appendix I: Observations on the Department of Defense?s Efforts to Address
Its Major Management Challenges
Page 33 GAO- 01- 783 DOD?s Status of Achieving Outcomes
a Major Management Challenges and Program Risks: Department of Defense (GAO-
01- 244, Jan. 2001); Human Capital: Strategic Approach Should Guide DOD
Civilian Workforce Management
(GAO/ T- GGD/ NSIAD- 00- 120, Mar. 9, 2000); Major Management Challenges and
Program Risks: Departments of Defense, State, and Veterans Affairs (GAO- 01-
492T, Mar. 7, 2001); and Human Capital: Major Human Capital Challenges at
the Departments of Defense and State (GAO- 01- 565T, Mar. 29, 2001). b
Information Security: Progress and Challenges to an Effective Defense- wide
Information Assurance Program (GAO- 01- 307, Mar. 30, 2001). c GAO- 01- 263,
Jan. 2001.
d The Department of Defense Information Management Strategic Plan, Oct. 19,
1999.
Appendix II: Comments From the Department of Defense
Page 34 GAO- 01- 783 DOD?s Status of Achieving Outcomes
Appendix II: Comments From the Department of Defense
(350063)
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