Major Management Challenges and Program Risks

This publication is part of GAO's performance and accountability series which provides a comprehensive assessment of government management, particularly the management challenges and program risks confronting federal agencies. Using a "performance-based management" approach, this landmark set of reports focuses on the results of government programs--how they affect the American taxpayer--rather than on the processes of government. This approach integrates thinking about organization, product and service delivery, use of technology, and human capital practices into every decision about the results that the government hopes to achieve. The series includes an overview volume discussing governmentwide management issues and 20 individual reports on the challenges facing specific cabinet departments and independent agencies. The reports take advantage of the wealth of new information made possible by management reform legislation, including audited financial statements for major federal agencies, mandated by the Chief Financial Officers Act, and strategic and performance plans required by the Government Performance and Results Act. In a companion volume to this series, GAO also updates its high-risk list of government operations and programs that are particularly vulnerable to waste, fraud, abuse, and mismanagement.

GAO noted that: (1) DOD continues to struggle to overcome the many problems brought about by decades of neglect and to fully institute sound financial management practices; (2) these problems range from being unable to properly account for billions of dollars in assets to being unable to produce reliable and timely information needed to make sound resource decisions; (3) information management and technology issues are key DOD management challenges; (4) a primary short-term concern centers on the implementation of the year 2000 conversions of date-sensitive information on DOD's computer systems; (5) also, information security for computer systems poses concerns, since malicious attacks on these systems are an increasing threat to the nation's security; (6) effectively managing the weapon systems acquisition process continues to be a concern for DOD; (7) although DOD has increased its procurement budget, it consistently pays more and takes longer than planned to develop systems that do not perform as anticipated; (8) DOD spends over $100 billion a year contracting for goods and services; (9) over the last few years, DOD has made several broad-based changes to its acquisition and contracting processes to improve DOD-contractor relationships and rules; (10) DOD has given attention to acquisition reform initiatives, but GAO continues to identify risks in DOD's contracting activity, including areas such as erroneous, fraudulent, and improper payments to contractors, payment of higher prices for commercial spare parts than necessary, and the award and administration of DOD health care contracts; (11) although DOD has substantially downsized its force structure over the past 7 to 10 years, it has not reduced operations and support costs commensurately because the services are reluctant to consolidate activities that span service lines and reduce capacity as necessary; (12) DOD's inventory management practices continue to be ineffective and inefficient and are not well-suited to meet DOD's new missions and warfighting strategies; (13) DOD's personnel programs to recruit, train, and retain a high-quality active-duty enlisted workforce have not received the management attention needed to ensure their successful operation; (14) to address the management and performance problems GAO has cited, DOD has taken actions in the high risk and other areas and has made progress in improving some of them; and (15) DOD has had some success in addressing its inventory management problems, is working to reform its weapon systems acquisition process, and has recognized the need for infrastructure reductions.