Defense Pilot Programs
DOD Needs to Improve Implementation Process for Pilot Programs Gao ID: GAO-03-861 July 28, 2003In fiscal years 1999, 2000, and 2003, the Congress authorized pilot programs to help the Department of Defense (DOD) laboratories and test centers explore innovative business partnerships and human capital strategies. Congressional concerns about DOD's implementation of the pilot programs have been growing. The Congress mandated that GAO review pilot program implementation. GAO (1) identified the pilot initiatives proposed and their current status, (2) examined factors that affected implementation, and (3) assessed implementation challenges the 2003 pilot program faces.
The 1999 and 2000 pilot programs have not worked as intended. Since their inception, 178 initiatives have been proposed by the participating laboratories and test centers but only 4--or 2 percent--were implemented under the pilot programs. Participants proposed initiatives covering a variety of areas, including business-like practices, partnerships, and human capital innovations. The pilot programs were not effective because DOD lacked an effective implementation process and proposed human capital initiatives were not consistent with statutory provisions. First, DOD did not provide standardized guidance on proposal requirements, coordinate proposals, or clarify decision-making authority for proposal review and approval. Furthermore, DOD did not designate a strong focal point to provide assistance and advice to participants and advocate process improvements. The lack of a strong focal point exacerbated other process gaps. Second, DOD attorneys advised that the pilot programs did not provide authority to make most of the proposed human capital changes. Implementation of the new 2003 pilot program faces several challenges. First, DOD has not addressed implementation problems. For example, clear guidance is still lacking and decision-making authority is still unclear. Second, the 2003 pilot program provides no change in authority concerning human capital initiatives. Finally, laboratories and test centers may be reluctant to participate. Many participants in the earlier pilots told us they were discouraged by their experience and consequently unwilling to repeat it.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-861, Defense Pilot Programs: DOD Needs to Improve Implementation Process for Pilot Programs
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Report to the Committee on Armed Services, U.S. Senate:
United States General Accounting Office:
GAO:
July 2003:
Defense Pilot Programs:
DOD Needs to Improve Implementation Process for Pilot Programs:
GAO-03-861:
GAO Highlights:
Highlights of GAO-03-861, a report to the Committee on Armed Services,
U.S. Senate
Why GAO Did This Study:
In fiscal years 1999, 2000, and 2003, the Congress authorized pilot
programs to help the Department of Defense (DOD) laboratories and test
centers explore innovative business partnerships and human capital
strategies. Congressional concerns about DOD‘s implementation of the
pilot programs have been growing. The Congress mandated that GAO
review pilot program implementation. GAO (1) identified the pilot
initiatives proposed and their current status, (2) examined factors
that affected implementation, and (3) assessed implementation
challenges the 2003 pilot program faces.
What GAO Found:
The 1999 and 2000 pilot programs have not worked as intended. Since
their inception, 178 initiatives have been proposed by the
participating laboratories and test centers but only 4”or 2 percent”
were implemented under the pilot programs, as shown below.
Participants proposed initiatives covering a variety of areas,
including business-like practices, partnerships, and human capital
innovations.
The pilot programs were not effective because DOD lacked an effective
implementation process and proposed human capital initiatives were not
consistent with statutory provisions. First, DOD did not provide
standardized guidance on proposal requirements, coordinate proposals,
or clarify decision-making authority for proposal review and approval.
Furthermore, DOD did not designate a strong focal point to provide
assistance and advice to participants and advocate process
improvements. The lack of a strong focal point exacerbated other
process gaps. Second, DOD attorneys advised that the pilot programs
did not provide authority to make most of the proposed human capital
changes.
Implementation of the new 2003 pilot program faces several challenges.
First, DOD has not addressed implementation problems. For example,
clear guidance is still lacking and decision-making authority is still
unclear. Second, the 2003 pilot program provides no change in
authority concerning human capital initiatives. Finally, laboratories
and test centers may be reluctant to participate. Many participants
in the earlier pilots told us they were discouraged by their
experience and consequently unwilling to repeat it.
[End of section]
what GAO Recommends:
GAO recommends that by March 31, 2004, the Secretary of Defense (1)
inform the Congress of DOD‘s objectives regarding human capital and
business operations in the laboratories and test centers; (2) develop
a process for proposing, evaluating, and implementing human capital
and business operations initiatives, regardless whether by the pilot
authority or by some other vehicle; and (3) designate a strong focal
point to coordinate and facilitate this process. DOD did not concur
with GAO‘s recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-861.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Catherine Baltzell at
(202) 512-8001 or baltzelld@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Many Initiatives Were Proposed but Few Were Implemented under Pilot
Programs:
The Pilot Programs Were Not Effective for Two Primary Reasons:
The 2003 Pilot Program Faces Implementation Challenges:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendix I: Fiscal Year 1999 and 2000 Pilot Program Participants:
Appendix II: Comments from the Department of Defense:
Table:
Table 1: Laboratory and Test Center Pilot Program Proposals:
Figure:
Figure 1: Status of Proposed Initiatives:
Abbreviations:
DOD: Department of Defense:
DDR&E: Directorate of Defense Research and Engineering:
NSPS: National Security Personnel System:
OSD: Office of the Secretary of Defense:
P&R: Personnel and Readiness:
United States General Accounting Office:
Washington, DC 20548:
July 28, 2003:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:
Over the last decade a number of studies have raised concerns that
dwindling budgets and an aging workforce have contributed to serious
shortfalls in the infrastructure and capabilities of Department of
Defense (DOD) laboratories and test centers. In fiscal years 1999 and
2000, the Congress enacted legislation aimed at helping DOD
laboratories and test centers address problems by undertaking pilot
programs to explore innovative partnerships and human capital
strategies.[Footnote 1] In fiscal year 2003, the Congress extended the
1999 and 2000 pilot programs until 2005 and enacted a new pilot program
that runs until 2006. However, congressional concerns about pilot
program implementation have been growing. Consequently, the Senate
Committee on Armed Services directed us to review the implementation of
the 1999 and 2000 pilot programs.[Footnote 2] In response, this report
(1) identifies initiatives proposed to date and determines their
current status, (2) examines factors that affected implementation of
proposed initiatives, and (3) assesses implementation challenges the
new 2003 pilot program faces.
Results in Brief:
The 1999 and 2000 pilot programs have not worked as intended. Since
their inception, 178 initiatives have been proposed by the
participating laboratories and test centers but only 4--or 2 percent--
have been implemented using the pilot program authorities. Twelve times
as many--24 percent--were implemented using other authorities than
those provided by the pilot programs. Participating laboratories and
test centers proposed initiatives covering a variety of areas,
including business-like practices, partnerships with industry and
academia, and human capital innovations. In general, laboratories
tended to propose initiatives dealing with human capital innovations
and test centers focused on business-like practices and partnerships.
The pilot programs were not effective because DOD lacked an effective
implementation process and proposed human capital initiatives were
not consistent with statutory provisions. First, DOD did not provide
standardized guidance on proposal requirements, coordinate proposals,
or clarify decision-making authority for proposal review and approval.
Furthermore, DOD did not designate a strong focal point to provide
assistance and advice to participants and advocate process
improvements. The lack of a strong focal point exacerbated other
process gaps. Second, DOD attorneys advised participants that the 1999
and 2000 pilot programs did not provide authority to make most of the
proposed human capital changes.
Implementation of the new 2003 pilot program faces several challenges.
First, DOD has not addressed implementation problems. For example,
clear guidance is still lacking and decision-making authority has not
been clarified. Second, the 2003 pilot program provides no change in
authority concerning human capital initiatives. DOD officials believe
that the human capital management legislation the department recently
proposed to the Congress will provide flexibility throughout DOD to
make necessary human capital changes, thereby eliminating the need for
the pilot programs in this area.[Footnote 3] However, this legislation,
if enacted, would still require an implementation process. Finally,
laboratories and test centers may be reluctant to participate in the
new pilot program. Many participants in the earlier pilots told us they
were discouraged by their experience and consequently unwilling to
repeat it.
We are making recommendations aimed at clarifying how DOD plans to
address concerns about the laboratories and test centers and improving
the implementation of initiatives proposed for that purpose. In written
comments on a draft of this report, DOD stated that it did not concur
with our recommendations.
Background:
The United States has a long history of military research and
development. To help conduct and manage this research, DOD has a
diverse network of 80 in-house laboratories and 26 test centers. Their
missions range from basic scientific research to direct technical
support to operational commands. The management, operations, and
funding for these disparate laboratories and test centers also vary
among the services.
Over the past decade, several organizations, panels, and commissions
have identified significant personnel and resource problems facing the
laboratories and test centers. For example, several studies found that
the laboratories needed more flexibility in personnel rules governing
the scientific workforce in order to attract and retain staff.[Footnote
4] Similarly, several recent studies identified problems with declines
in investment and infrastructure, resulting in outdated facilities and
technical equipment.[Footnote 5]
To help the laboratories and test centers with these problems, the
Congress enacted legislation in fiscal years 1999 and 2000 establishing
pilot programs for laboratories and test centers to propose innovative
partnerships, business-like practices, and human capital
initiatives.[Footnote 6] The 1999 pilot program focused on partnerships
and business-like practices, while the 2000 program focused more on
human capital initiatives. Together, the two pilot programs authorized
the Secretary of Defense to provide one laboratory and one test center
in each service the authority to:
* explore innovative methods for partnering with universities and
private sector entities to conduct defense research and development;
* attract a workforce balance between permanent and temporary personnel
and with an appropriate skill and experience level;
* develop or expand innovative methods of operation that provide more
defense research for the dollar; and:
* waive any restrictions on these methods that are not required by law.
A total of 10 laboratories and test centers from all 3 services
participated in the pilot programs. They are listed in appendix I.
Both programs were authorized for 3 years. The 1999 pilot expired in
March 2002; the 2000 pilot, in March 2003. For both programs, DOD
was required to submit preliminary and final reports to the Congress
on program activities. The preliminary report for the 1999 program was
submitted in July 1999. However, as of the date of this report, the
three other reports have not been submitted.
In fiscal year 2003, the Congress authorized another 3-year pilot
program and extended the 1999 and 2000 pilot programs until
2005.[Footnote 7] Under the new 2003 pilot program, the Secretary of
Defense is to provide one laboratory and one test center in each
service the authority to:
* use innovative personnel management methods to ensure that the
participants can employ and retain an appropriately balanced workforce,
and effectively shape the workforce to fulfill the organization
mission;
* develop or expand innovative methods of using cooperative agreements
with private sector and educational organizations to promote the
technological industrial base for critical defense technologies and
facilitate the training of a future scientific and technical workforce;
and:
* waive any restrictions not required by law.
As of May 2003, DOD had not identified any participants for the 2003
pilot program.
The 2003 legislation also requires DOD to issue three reports,
including a January 2003 report on its experience with the 1999 and
2000 pilot programs, barriers to implementation of these programs, and
proposed solutions to overcome these barriers.[Footnote 8] According to
DOD officials, this report has been drafted, but as of May 2003, it had
not been submitted to the Congress.
Many Initiatives Were Proposed but Few Were Implemented under Pilot
Programs:
Since the inception of the pilot programs in 1999, 178 initiatives have
been proposed, but only 4--or 2 percent--have been implemented
under the pilot programs. Participating laboratories and test centers
proposed initiatives covering a variety of areas, including business-
like practices, partnerships with industry and academia, and human
capital innovations. We found that laboratories focused many of their
proposals on human capital innovations, while test centers tended to
concentrate on business-like practices and partnerships.
Range and Volume of Proposed Initiatives:
Over the course of the 1999 and 2000 pilot programs, the laboratories
and test centers proposed 178 human capital, business, and partnership
initiatives. As shown in table 1, slightly over half of the initiatives
dealt with human capital and the remainder dealt with business-like
practices and partnerships.
Table 1: Laboratory and Test Center Pilot Program Proposals:
Laboratories; Business/partnerships: Number: 49; Business/
partnerships: Percent: 33; Human capital: Number: 98; Human capital:
Percent: 67; Total: Number: 147; Total: Percent: 100.
Test centers; Business/partnerships: Number: 27; Business/
partnerships: Percent: 87; Human capital: Number: 4; Human capital:
Percent: 13; Total: Number: 31; Total: Percent: 100.
Total; Business/partnerships: Number: 76; Business/partnerships:
Percent: 43; Human capital: Number: 102; Human capital: Percent: 57;
Total: Number: 178; Total: Percent: 100.
Source: GAO.
[End of table]
Overall, the laboratories proposed substantially more initiatives than
did the test centers. Furthermore, the laboratories and test centers
focused on different types of initiatives. The laboratories more often
proposed human capital initiatives, while the test centers
overwhelmingly focused on business and partnership initiatives.
Laboratory officials told us that they are especially concerned about
attracting top-quality scientists to replace a retiring workforce. Test
center officials told us that they are focused on modernizing their
infrastructure and developing new methods of sharing the cost of
operations.
Proposals for business-like practices included many initiatives to
streamline or improve local operations. Some initiatives focused on
expanding the use of innovative techniques such as other transactions
or cooperative agreements.[Footnote 9] Several other proposals sought
the authority to reinvest fees or revenues into facilities
revitalization. For example, one Navy laboratory proposed imposing a
surcharge for its services and using that revenue to fund capital
investments, and an Air Force laboratory proposed using facility
construction as a valid in-kind contribution under cooperative
agreements.
Partnership proposals included initiatives such as collaborative
research agreements with Arnold Engineering Development Center and the
University of Tennessee Space Institute to create a formal business
bond to pursue research in laser-induced surface improvement technology
and university flight research.
The Army's Aberdeen Test Center proposed a limited liability company.
Under this concept, industry, academia, and government would form a
profit-making company to conduct research and testing at the
installation. The test center proposed using its share of the profits
to reinvest in the infrastructure at Aberdeen.
Several human capital initiatives focused on recruiting and retention
flexibilities as well as additional voluntary separation incentives.
These proposals included initiatives to streamline hiring of experts
and consultants; accelerate promotions for scientists and engineers;
provide retention bonuses for key scientists; and hire students
directly after graduation. Several participants submitted proposals for
direct hire authority to allow faster hiring of scientists, and several
submitted proposals for voluntary retirement incentives as a mechanism
for reshaping the workforce.
Few Proposals Were Implemented under Pilot Program Authorities:
Almost none of the 178 proposed initiatives were approved and
implemented using the pilot programs' authorities. As figure 1 shows,
only 2 percent--or 4 proposals--were implemented under the pilot
programs. In contrast, 74 percent were blocked or dropped during the
review process or remain on hold awaiting resolution.
Figure 1: Status of Proposed Initiatives:
[See PDF for image]
[End of figure]
The four implemented initiatives were:
* donating laboratory equipment directly to local schools,
* waiving top-level certification of certain service agreements with
private industry,
* streamlining cooperative agreements to facilitate collaborative work
agreements with outside activities,[Footnote 10] and:
* granting temporary relief from some mandatory personnel placement
reviews.[Footnote 11]
Officials at the laboratories that proposed these initiatives told us
that they were considered minor changes with little impact on the
larger problems facing the laboratories.
Twelve times as many initiatives--24 percent--were implemented
using different authorities than the pilot programs. For example,
several laboratories requested the authority to appoint retired
military members to civilian positions without having to wait the
required 180 days. This requirement was waived using a different
authority than the pilot programs. Another human capital initiative--to
appoint senior scientists from private industry--was authorized by
subsequent legislation.[Footnote 12] In the business/partnership
category, the 46th Test Group at Holloman Air Force Base used other
authorities to negotiate a complex leasing arrangement with industry to
install a radar test facility at White Sands Missile Range. This effort
took several years and overcame many contractual and regulatory
barriers. In addition, a Navy laboratory streamlined foreign license
applications using another authority.[Footnote 13]
The Pilot Programs Were Not Effective for Two Primary Reasons:
The low level of implementation of the proposed initiatives occurred
for two primary reasons. First, DOD did not develop an effective
process for implementing the pilot programs. Second, DOD determined
that proposed human capital initiatives--for example, requests for the
authority to hire directly or offer voluntary retirement incentives--
were in conflict with statutory provisions.
Lack of an Effective Implementation Process:
DOD did not provide standardized guidance on proposal requirements
or feedback for improving proposals; coordinate or prioritize
proposals; or clarify decision-making authority for proposal review and
approval. DOD also did not designate a strong focal point to coordinate
the pilot programs, advocate process improvements, and provide
assistance and advice to participants. The lack of a strong focal point
exacerbated other process gaps.
Lack of Guidance and Coordination:
According to officials at DOD laboratories, test centers, and
headquarters, DOD did not provide standardized guidance on proposal
requirements or feedback for improving proposals (or, in many cases,
information on the status of proposals submitted for approval).
Proposals often lacked specificity and detail. Many were broadly
conceptual or generic in nature and lacked a detailed business case
that linked their contribution to overall objectives for the pilot
programs. For example, a proposal to permit scientists to serve in a
leadership role in professional societies failed to include details of
the problems encountered, and the potential to improve operations.
Similarly, several proposals for direct hire authority failed to
include a business case to explain what specific needs this authority
would address or how it would address them. Lack of specificity and
business case detail led to the failure of many initiatives to win
approval. DOD attorneys told us that many proposals were so vague that
it was impossible to determine whether or not the proposed initiatives
could meet legal requirements.
At a department level, DOD also did not coordinate or prioritize
proposals, thereby precluding decisions on how best to pursue common
interests and issues such as direct hiring authority or forming
partnerships with universities. Instead, each participant submitted
proposals individually, and thus multiple independent proposals were
often submitted for the same or similar issues. DOD attorneys pointed
out that it would have been more effective to group proposals by common
theme and prioritize them. They believed a unified approach and
prioritized proposals with clearly written, specific plans for solving
well-defined problems would have enabled them to more effectively
assist participants with resolving legal issues.
Unclear Decision-Making Authority:
DOD did not clarify decision-making authority for proposal review and
approval. Many organizations and individuals were stakeholders in
proposal review and approval, and they often had differing management
structures, concerns, and interests. Stakeholders included military and
civilian leaders, attorneys, and human capital and personnel staff at
several levels: the local installation where participating laboratories
and test centers were housed; the individual service; and OSD. The
roles and decision-making authority of the various stakeholders were
never negotiated and clarified. As a result, many players at multiple
organizational levels had--and took--an opportunity to say "no" to a
particular proposal, but it remained unclear who had the authority to
say "yes.":
For example, some participants believed that the pilot program
legislation gave the director of a participating laboratory or test
center the authority to approve a proposed initiative. OSD officials,
however, believed that the proposed initiatives had to be approved at
higher levels. The role of the services was also unclear. Some
laboratory and test center directors initially sent proposals directly
to OSD's Directorate of Defense Research and Engineering (DDR&E),
bypassing their service headquarters. Others sent proposals to their
service headquarters for approval before submitting the proposals to
DDR&E. Eventually, however, each of the service headquarters decided to
become more heavily involved in the approval process and provide
service-level responses to proposals. These service-level responses
often came into play after proposals had been sent directly to DDR&E
for approval, further complicating the approval process.
Within OSD, both DDR&E and Personnel and Readiness (P&R) had
substantial stakes in the human capital proposals--DDR&E because it
is charged with oversight and management of defense laboratories and
P&R because it has the authority within DOD for human capital
issues.[Footnote 14] However, DDR&E and P&R never agreed on a process
for approving proposals. In addition, for the past year P&R's attention
has been focused primarily on developing DOD's proposed new civilian
human capital management system, the National Security Personnel System
(NSPS), which the Secretary of Defense recently submitted to the
Congress. DOD officials believe that, if enacted, NSPS will provide
flexibility to make necessary human capital changes.[Footnote 15] The
Undersecretary of Defense P&R directed that implementation of new
personnel initiatives be placed on hold during the development of NSPS
so that the existing system could be studied to identify needs and best
practices. Consequently, P&R officials believed it would be premature
for DOD to implement new personnel initiatives during this time.
No Strong Focal Point:
DOD did not designate a strong focal point to coordinate the pilot
programs, advocate process improvements, and provide assistance and
advice to participants. This exacerbated the other process gaps.
Without such a focal point, participants found their own individual
ways to develop proposals and get them reviewed. Several officials
agreed that a strong focal point would be helpful. For example, DOD
attorneys stated that the laboratories or someone acting as their focal
point needed to define the issues they wanted to resolve. The attorneys
noted that a focal point could have more successfully drawn upon their
expertise and experience with addressing legal challenges in other
innovative programs (e.g., demonstration projects). Some pilot program
participants also agreed a strong focal point was needed, but they had
some concerns regarding the amount of influence and authority he or she
should have.
Human Capital Proposals Were in Conflict with Existing Statutory
Provisions:
According to officials at DOD laboratories, test centers, and
headquarters, human capital initiatives were generally in conflict with
title 5 of the United States Code. Title 5 provides the framework for
standard and equitable personnel practices across the federal
government and is the current foundation for management of the DOD
civilian workforce. Over time, the Office of Personnel Management has
added implementing rules and regulations to the framework. Proposed
human capital initiatives often sought relief from these provisions,
for example, requests for the authority to hire directly or offer
voluntary retirement incentives.
However, after reviewing the legislation, the DOD Office of General
Counsel advised that the 1999 and 2000 legislation did not provide the
authority to waive personnel rules based on title 5 provisions. Rather,
the office advised that the pilot programs' authorities allow only for
changes that could already be accomplished under existing DOD
regulations. In other words, the pilot programs did not provide any new
or additional authority to waive existing personnel rules and
regulations grounded in title 5. Consequently, absent statutory
authority beyond that provided by the pilot programs, human capital
proposals in conflict with title 5 and its implementing rules and
regulations could not be implemented.[Footnote 16] Many initiatives
fell into this category.
The 2003 Pilot Program Faces Implementation Challenges:
The 2003 pilot program faces several implementation challenges. First,
as of May 2003, DOD had not addressed implementation problems. Thus,
proposals made via the 2003 pilot program will face the same obstacles
as previous proposals.
Second, human capital initiatives will continue to face title 5
challenges. Like the earlier legislation, the 2003 legislation does not
provide DOD any new authority. Hence, initiatives proposed under the
2003 pilot program will encounter the same statutory restrictions as
previous initiatives. P&R officials believe that, if implemented, NSPS
will provide the flexibility to make necessary human capital changes,
thereby eliminating the need for the pilot programs in this area.
However, NSPS has not yet been enacted, and if enacted, it will still
require an implementation process.
Finally, laboratories and test centers may be reluctant to participate
in the new pilot program. Many participants in the earlier pilots told
us they were discouraged by their experience and consequently unwilling
to repeat it. Some expressed frustration with the lack of guidance and
feedback on their proposals; others questioned whether management was
really committed to the pilot program. Even those few participants that
had proposals approved were wary of expending additional resources on
another pilot program.
Conclusions:
While DOD appears to recognize a need to address human capital and
business operations issues specific to laboratories and test centers,
it has not effectively managed the pilot programs. If DOD intends to
use the pilot programs to address laboratory and test center issues, it
will have to address the factors--both process and statutory--that
blunted previous proposals made through the pilot programs. The small
volume of approved proposals, coupled with DOD's not providing status
reports required by the Congress, has left the Congress uninformed
about what objectives DOD would like to achieve with the laboratories
and test centers, how it plans to achieve those objectives, and what
vehicles it plans to use. This information will be important to the
success of any future actions.
Recommendations for Executive Action:
We recommend that by March 31, 2004, the Secretary of Defense inform
the Congress of DOD's objectives regarding human capital and business
operations in the laboratories and test centers, how it plans to meet
these objectives, and what vehicles it will use to meet them.
We also recommend that by March 31, 2004, the Secretary of Defense
develop a process for proposing, evaluating, and implementing human
capital, business, and partnership initiatives for the laboratories and
test centers, regardless whether by the pilot authority or by some
other vehicle. Such a process should include:
* clear decision-making authority,
* instructions for proposal requirements such as linking to overall
goals and measurable objectives and the need for a business case, and:
* specification of procedures for proposal submission and review and
providing feedback on proposal quality and scope.
Finally, we recommend that the Secretary of Defense designate a strong
focal point to:
* receive, evaluate, and prioritize all proposals and:
* work with laboratory and test center directors, legal counsel,
personnel and other specialists to develop sound and well-developed
business cases and strategies to obtain needed changes.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD states that it does
not concur with our recommendations because it has already taken
actions that in effect implement them.[Footnote 17] While the actions
DOD cites that it has taken are important to implementing our
recommendations, they are not sufficiently specific to address the
problems identified in our report. DOD's written comments are contained
in appendix II.
Regarding our first recommendation--that DOD inform the Congress of its
human capital and business objectives for the laboratories and test
centers and the strategies it will employ to meet them--DOD did not
concur. DOD discusses various high-level, agencywide initiatives it has
taken to address human capital and business issues in general and
stated that the Congress has been made aware of these initiatives,
obviating the need for additional reporting. We continue to believe
that additional reporting is necessary. We recognize that the general
initiatives DOD discusses may provide ways of helping the laboratories
and test centers; however, to be effective, they must be made specific,
that is, developed into targeted strategies and plans that address the
particular problems the laboratories and test centers face. DOD has not
provided the Congress sufficient details on how the general initiatives
will be used to address laboratories' and test centers' objectives and
problems.
Regarding our second recommendation--that DOD develop a process for
proposing, evaluating, and implementing human capital and business-like
practices initiatives for the laboratories and test centers--DOD did
not concur. DOD states that it has already introduced new agencywide
management processes--the Business Initiative Council and the
submission of the NSPS proposal to the Congress--to address human
capital and business issues in general. However, DOD has not detailed
how these general initiatives will apply to the laboratories and test
centers or address our process concerns. For example, while the
Business Initiative Council may have an effective process for
proposing, evaluating, and implementing laboratory and test center
business-like practices initiatives, DOD has not provided sufficient
information for us to make such a determination. We also recognize that
NSPS may address some of the human capital problems faced by the
laboratories and test centers, but this system is still under
consideration by the Congress. Until it becomes law, we believe it is
premature to cite it as an effective management tool.
With regard to our third recommendation--that DOD designate a strong
focal point to work with the laboratories and test centers to develop,
evaluate, prioritize, and coordinate proposed initiatives--DOD did not
concur. DOD states that the recently created position of Undersecretary
for Laboratories and Basic Sciences has oversight responsibility for
all laboratory initiatives and that it is establishing a new Defense
Test Resources Management Center that will oversee the test
centers.[Footnote 18] DOD asserts that these two organizations will
perform as focal points. However, DOD has not detailed how these
organizations will fulfill this role and work with the laboratories and
test centers to overcome the many barriers noted in our report.
Scope and Methodology:
During our review, we met with officials from the following
organizations in the Office of the Secretary of Defense: the Director,
Defense Research and Engineering; the Director, Operational Test and
Evaluation; the General Counsel, and the Deputy Undersecretary of
Defense for Personnel and Readiness. We also met with officials from
the Army Research Laboratory, Aberdeen Test Center, Army Medical
Research and Materiel Command, Naval Research Laboratory, Naval
Undersea Warfare Center, Air Force Research Laboratory, Air Force
Research Laboratory's Space Vehicles Directorate, and 46th Test Wing.
We also discussed pilot program issues with each participating
laboratory or center.
To determine the initiatives proposed to date and their status, we
obtained records from OSD and service officials. From these records and
from discussions with each participant, we compiled a listing of
initiatives proposed by each participating laboratory and test center.
We verified the listing and the current status of each initiative with
cognizant service officials.
To determine what obstacles inhibited DOD's implementation of the pilot
programs, we obtained documentation and data from pilot program
participants as well as from OSD officials. We also discussed statutory
obstacles with the officials from DOD's Office of General Counsel and
Undersecretary of Defense for Personnel and Readiness. We discussed
management and procedural obstacles with officials from the Director,
Operational Test and Evaluation and Defense Research and Engineering.
In addition, we discussed all obstacles with the participating
laboratories and test centers.
The problems facing the laboratories and test centers have been
documented by many organizations, panels, and commissions. We did
not independently verify these problems or the findings and conclusions
of these entities. We conducted our review from July 2002 to April 2003
in accordance with generally accepted government auditing standards.
We are sending copies of this report to the Secretary of Defense; the
Secretaries of the Army, Navy, and Air Force; and interested
congressional committees. We will also make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
Major contributors to this report were Catherine Baltzell, Arthur Cobb,
Christopher Durbin, Rae Ann Sapp, Sylvia Schatz, and Katrina Taylor.
If you have any questions regarding this report, please call me at
(202) 512-4841.
Paul L. Francis
Director
Acquisition and Sourcing Management:
Signed by Paul L. Francis:
[End of section]
Appendix I: Fiscal Year 1999 and 2000 Pilot Program Participants:
Laboratory/test center: Army Research Laboratory; 1999 pilot: No;
2000 pilot: Yes.
Laboratory/test center: Army Medical Research and Materiel Command;
1999 pilot: Yes; 2000 pilot: No.
Laboratory/test center: Aberdeen Test Center; 1999 pilot: Yes; 2000
pilot: Yes.
Laboratory/test center: Naval Research Laboratory; 1999 pilot: Yes; 2000
pilot: No.
Laboratory/test center: Naval Undersea Warfare Center; 1999 pilot:
No; 2000 pilot: Yes.
Laboratory/test center: Naval Air Warfare Center-Aircraft and Weapons
Divisions; 1999 pilot: Yes; 2000 pilot: Yes.
Laboratory/test center: Air Force Research Laboratory-Information
Directorate; 1999 pilot: No; 2000 pilot: Yes.
Laboratory/test center: Air Force Research Laboratory-Space Vehicles
Directorate; 1999 pilot: Yes; 2000 pilot: No.
Laboratory/test center: Air Armament Center, 46th Test Wing; 1999
pilot: No; 2000 pilot: Yes.
Laboratory/test center: Arnold Engineering Development Center; 1999
pilot: Yes; 2000 pilot: No.
Source: DOD.
[End of table]
[End of section]
Appendix II: Comments from the Department of Defense:
OFFICE OF THE DIRECTOR OF DEFENSE RESEARCH AND ENGINEERING:
3040 DEFENSE PENTAGON WASHINGTON, D.C. 20301-3040:
2003:
Mr. Paul Francis:
Director, Acquisition and Sourcing Management U.S. General Accounting
Office:
441 G Street, N.W. Washington, D.C. 20548:
Dear Mr. Francis:
This is the Department of Defense (DoD) response to the GAO draft
report, "DEFENSE PILOT PROGRAMS: DoD Needs to Improve Procedures for
Implementation," dated June 9, 2003 (GAO Code 120159/GAO-03-861).
The Department non-concurs with the recommendations of the report
because the Department has already taken strong management actions that
essentially implement the recommendations or, in many cases, go beyond
the recommendations in the report. Please see detailed comments in the
enclosure.
We appreciate the opportunity to comment on the draft report. My action
officer for this effort is Dr. William Berry at (703) 696-0363.
Sincerely,
John H. Hopps Jr.
Deputy Director and Deputy Under Secretary of
Defense (Laboratories and Basic Sciences):
Signed by John H. Hopps Jr.:
Enclosure: As Stated:
GAO DRAFT REPORT - DATED JUNE 9, 2003 GAO CODE 120159/GAO-03-861:
"DEFENSE PILOT PROGRAMS: DoD Needs to Improve Procedures for
Implementation":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that by March 31, 2004, the
Secretary of Defense inform the Congress of DoD's objectives regarding
human capital and business operations in the laboratories and test
centers, how it plans to meet these objectives, and what vehicles it
will use to meet them. (p. 12/GAO Draft Report):
DOD RESPONSE: Non-Concur with recommendation 1 as written. The
Department agrees with the objective of striving for improved
management of human capital and business operations in the laboratories
and test centers. Beginning in 2001, the Department took significant
steps in implementation of the 1999 and 2000 demonstration projects.
The resulting Departmental management processes provide a fully
adequate vehicle to pursue initiatives and innovative processes.
In July 2001 a DoD Business Initiative Council was established with the
mission to improve efficiency of DoD business operations by identifying
and implementing business reform actions which allow savings to be
reallocated to higher priority efforts (i.e., people, readiness,
modernization, and transformation).
In November 2001 the Department created and filled the position of
Deputy Under Secretary for Laboratories and Basic Sciences. This
position serves as the advocate for laboratory quality, and is
concerned with issues of personnel as well as business practices.
The Congress has been made aware of each of these new management
processes. An additional report to Congress about either is
unnecessary.
From the standpoint of human capital, DoD currently has a Human
Resources (HR) Strategic Plan that addresses the workforce's capability
of responding rapidly, efficiently, and effectively to mission
requirements. A report to Congress is unnecessary to explore options
already offered by new authorities and flexibilities in the proposed
National Security Personnel System (NSPS).
The Department has been testing personnel flexibilities for over two
decades in our personnel demonstration projects and went through a
year-long study of the best practices of those projects. We are
implementing the best practices in the laboratories now and will extend
the flexibilities to the rest of the workforce under NSPS. The draft
report states that, "this legislation has not yet been enacted, and if
enacted would still require an
implementation process" (page 2). However, this description does not
fully depict the current situation. Congress is now actively
considering NSPS. Additionally, even before NSPS implementation, the
Department is currently taking steps to ensure that top scientific and
engineering talent is recruited through such innovative hiring
flexibilities as on-the-spot hiring and scholastic achievement
appointment authority.
The importance of human capital strategic planning was clearly
recognized in the Quadrennial Defense Review. It is the first item on
the President's Management Agenda and is a top priority for the
Department. In early 2003, the Department published its FY 2003 Year of
Execution Plan as an Annex to the integrated DoD Civilian Human
Resources (HR) Strategic Plan. The Department Component strategic plans
will link to the DoD corporate goals and objectives and include actions
needed to help ensure viability of DoD's white-collar civilian
workforce.
In addition to the DoD Human Resources Strategic Plan, the Department
has spent the last year developing demonstration project best practices
which allows for the sharing of information and development of a single
set of personnel flexibilities for the entire laboratory community.
Learning from past practices and improving on the process is what best
practices is all about.
RECOMMENDATION 2: The GAO recommended that by March 31, 2004, the
Secretary of Defense develop a process for proposing, evaluating, and
implementing human capital and business-like practices initiatives for
the laboratories and test centers, regardless whether by the pilot
authority or by some other vehicle. Such a process should include:
* Clear decision-making authority;
* Instructions for proposal requirements such as linking to overall
goals and measurable objectives and the need for a business case; and:
* Specification of procedures for proposal submission and review and
providing feedback on proposal quality and scope. (p. 12/GAO Draft
Report):
DOD RESPONSE: : Non-concur with recommendation 2 as described. New
management processes have been introduced within the Department since
the implementation of the 1999 and 2000 demonstration programs. The new
processes have focused considerable effort on the management of the DoD
workforce.
Legislative proposals have been prepared and submitted with regularity.
The recently submitted National Security Personnel System is an
example. In July 2001 a DoD Business Initiative Council was established
with the mission to improve efficiency of DoD business operations by
identifying and implementing business reform actions which allow
savings to be reallocated to higher priority efforts (i.e., people,
readiness, modernization, and transformation). The Service Secretaries
and the Under Secretary of Defense (Acquisition, Technology &
Logistics) sit on the council. It is doubtful that an additional
process will have sufficient value to justify their implementation.
RECOMMENDATION 3: The GAO recommended that the Secretary of Defense
designate a strong focal point to:
* Receive, evaluate, and prioritize all proposals; and:
* Work with laboratory and test center directors, legal counsel,
personnel and other specialists to develop sound and well-developed
business cases and strategies to obtain needed changes.
DOD RESPONSE: Non-concur with this recommendation as written as it is
already accomplished. Since implementing the 1999 and 2000
demonstration programs, the Department has designated strong focal
points for the laboratories and for the test centers. In November 2001
the Department created a new position Deputy Undersecretary for
Laboratories and Basic Sciences. The incumbent of this position also
serves as the, Deputy Director, Defense Research and Engineering. Among
other responsibilities, the position is responsible for all laboratory
initiatives including those dealing with personnel and business
operations. The Department is establishing a Defense Test Resources
Management Center to oversee the T&E ranges and centers. These two
organizational elements provide the functions sought by the GAO. DoD
laboratories and centers can pursue initiatives through this new and
existing management chain.
[End of section]
FOOTNOTES
[1] Public Law 105-261, Strom Thurmond National Defense Authorization
Act for Fiscal Year 1999, section 246. Public Law 106-65, National
Defense Authorization Act for Fiscal Year 2000, section 245.
[2] Senate Report 107-151.
[3] Defense Transformation for the 21st Century Act of 2003, as
transmitted by letter, dated April 10, 2003, from the DOD General
Counsel to the Speaker of the House and the President of the Senate.
[4] Blue Ribbon Panel on Management Options for Air Force Laboratories,
January 1994; Improving Federal Laboratories to Meet the Challenges of
the 21st Century, National Science and Technology Council, July 1999;
Science and Technology Community in Crisis, Naval Research Advisory
Committee, May 2002.
[5] Defense Science and Technology Base for the 21st Century, Defense
Science Board, June 1998; House Report 105-532, House National Security
Committee, May 1998; Science and Technology Community in Crisis, Naval
Research Advisory Committee, May 2002.
[6] Public Law 105-261, Strom Thurmond National Defense Authorization
Act for Fiscal Year 1999, section 246; Public Law 106-65, National
Defense Authorization Act for Fiscal Year 2000, section 245.
[7] Public Law 107-314, Bob Stump National Defense Authorization Act
for Fiscal Year 2003, section 241.
[8] The other two reports are a September 2003 report on all three
pilot programs and a final report on the 2003 pilot at its conclusion.
[9] "Other transactions" is a term commonly used to refer to 10 U.S.C.
2371 authority to enter into agreements that are not generally covered
by federal laws and regulations applicable to standard procurement
contracts. Consequently, the arrangements include broader latitude to
negotiate terms and conditions than standard procurement contracts
under the Federal Acquisition Regulations.
[10] This initiative included several closely related but separate
waivers that were grouped together by the service of the laboratories
that proposed them.
[11] This waiver expired in August 2002. It was extended until February
2003 as part of a separate pilot program sponsored by the DOD Business
Initiative Council.
[12] Public Law 106-398, National Defense Authorization Act for Fiscal
Year 2001, section 1113.
[13] The Office of the Secretary of Defense (OSD) and the Navy disagree
on what authority was used to implement this proposal. OSD believes
that it was implemented using pilot program authority.
[14] Unlike the laboratories, the test centers are not overseen
centrally but by the individual service to which they belong.
[15] The Comptroller General recently testified on NSPS. U. S. General
Accounting Office. Human Capital: DOD's Civilian Personnel Strategic
Management and the Proposed National Security Personnel System. GAO-03-
493T (Washington, D.C.; May 12, 2003). Defense Transformation: DOD's
Proposed Civilian Personnel System and Governmentwide Human Capital
Reform. GAO-03-741T (Washington, D.C.; May 1, 2003).
[16] Our attorneys reviewed the pilot program legislation and concurred
with the DOD General Counsel's view.
[17] In its letter, DOD refers to the "1999 and 2000 demonstration
programs." We confirmed with DDR&E that these demonstration programs
were indeed the 1999 and 2000 pilot programs as described in this
report.
[18] This new center is not yet operational.
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