Defense Business Transformation
Status of Department of Defense Efforts to Develop a Management Approach to Guide Business Transformation Gao ID: GAO-09-272R January 9, 2009This letter formally transmits GAO's findings on the status of the Department of Defense's efforts to develop a management approach to guide business transformation. This work was performed under the authority of the Comptroller General to conduct evaluations on his own initiative and as part of our work for GAO's High Risk Series, January 2009 Update.
GAO-09-272R, Defense Business Transformation: Status of Department of Defense Efforts to Develop a Management Approach to Guide Business Transformation
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GAO-09-272R:
January 9, 2009:
Congressional Committees:
Subject: Defense Business Transformation: Status of Department of
Defense Efforts to Develop a Management Approach to Guide Business
Transformation:
This letter formally transmits the attached briefing on work performed
under the authority of the Comptroller General to conduct evaluations
on his own initiative and as part of our work for GAO's High-Risk
Series, January 2009 update.
We are sending copies of this letter and briefing slides to the
appropriate congressional committees. We are also sending copies to the
Secretary of Defense and the Under Secretary of Defense for
Acquisition, Technology, and Logistics, and the Secretaries of the
Army, Air Force, and Navy. This letter and briefing will also be
available on our Web site at [hyperlink, http://www.gao.gov]. Should
you or your staff have any questions concerning this product, please
contact me at (202) 512-9619 or pickups@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of the briefing slides.
Signed by:
Sharon L. Pickup:
Director, Defense Capabilities and Management:
Enclosures:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Thad Cochran:
Ranking Member:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable John M. McHugh:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Edolphus Towns:
Chairman:
The Honorable Darrell Issa:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Daniel K. Akaka:
Chairman:
The Honorable George V. Voinovich:
Ranking Member:
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
[End of section]
Enclosure I: Status of Department of Defense Efforts to Develop a
Management Approach to Guide Business Transformation:
Briefing for Congressional Committees:
January 9, 2009:
Overview:
* Background:
* Objectives:
* Scope and Methodology:
* Preliminary Observations:
- The Department of Defense‘s (DOD) progress in developing a
comprehensive management framework for business transformation;
- DOD's progress in establishing a strategic management plan for
business operations;
* Appendix I:
[End of Overview]
Background:
DOD spends billions of dollars to maintain key business operations that
support the warfighter.
We have reported on weaknesses in DOD‘s business operations that result
in billions of dollars being wasted annually, reduced efficiencies,
ineffective performance, inadequate accountability, and a lack of
transparency.
* Currently, DOD has sole responsibility for 8, and shares
responsibility for another 7, of the federal government‘s 27 programs
or activities we have identified as being at high risk for fraud,
waste, abuse, and mismanagement.
* In 2005, we added DOD‘s management approach to business
transformation to our high-risk list because:
1) DOD‘s improvement efforts were fragmented,
2) DOD lacked an integrated and enterprisewide transformation plan and
investment strategy, and,
3) DOD had not designated a senior management official at an
appropriate level with the authority to be responsible and accountable
for enterprisewide business transformation.
In prior reports and testimonies, we recommended the following:
* Congress consider enacting legislation to establish a separate, full-
time chief management officer (CMO) position with the authority and
experience and a sufficient term to provide focused and sustained
leadership over DOD‘s business transformation efforts.
* DOD institutionalize in directives the roles, responsibilities, and
relationships among the various business-related entities and
committees that comprise its management framework and expand that
framework beyond business systems modernization to all business
transformation efforts.
* DOD develop a comprehensive strategic planning process for business
transformation that results in a comprehensive, integrated, and
enterprisewide plan or set of plans that covers all key business areas
and provides a clear strategic direction, prioritizes initiatives, and
monitors progress across the department.
The National Defense Authorization Act (NDAA) for Fiscal Year 2008
[Footnote 1] designated the Deputy Secretary of Defense as the CMO for
DOD and created a Deputy CMO (DCMO) position to assist the CMO. The act
also required the Secretaries of the military departments to designate
the department Under Secretaries as CMOs with primary responsibility
for business operations. Additionally, the act required the Secretary of
Defense, acting through the DOD CMO, to develop a strategic management
plan that contains certain elements including:
* performance goals and measures,
* key initiatives to achieve performance goals together with resource
needs,
* procedures to monitor progress in meeting performance goals and
measures,
* procedures to review and approve plans and budgets for changes in
business operations, and,
* procedures to oversee the development, review, and approval of all
budget requests for defense business systems.
The Duncan Hunter NDAA for Fiscal Year 2009[Footnote 2] requires the
Secretary of each military department to establish a business
transformation office no later than 180 days after enactment of the act
and, acting through the department CMOs, to develop comprehensive
business transformation plans.
Objectives:
1. To what extent has DOD made progress in developing a comprehensive
management framework for business transformation?
2. To what extent does DOD‘s initial Strategic Management Plan (SMP)
contain key elements of a strategic plan, including goals, objectives,
and performance measures?
Scope and Methodology:
We reviewed DOD‘s progress in transforming its business operations
under the authority of the Comptroller General to conduct evaluations
on his own initiative.
We reviewed the SMP and various other DOD documents related to business
transformation, and interviewed DOD officials from the Office of the
Deputy Chief Management Officer, the Business Transformation Agency
(BTA), and the military departments. We compared DOD‘s actions in
developing its CMO management framework to key strategies identified
for implementing CMO positions in our previous work. We also reviewed
DOD‘s SMP to identify key elements of a strategic plan as identified by
our previous work and by the Government Performance and Results Act of
1993[Footnote 3] (see app. I for a detailed methodology).
We conducted this performance audit from August 2008 through December
2008, in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our assessment based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our assessment
based on our audit objectives.
Objective 1: Management Framework for Business Transformation:
DOD has made some progress in further developing its management
framework for business transformation; however, implementation is not
complete because key aspects have yet to be defined.
Prior to NDAA for Fiscal Year 2008, DOD:
* Designated Deputy Secretary of Defense as CMO.
* Issued a directive[Footnote 4] broadly defining the responsibilities
of the CMO, which are to:
- develop and maintain a departmentwide strategic plan for business
reform,
- ensure business missions are aligned to support warfighter mission,
- establish performance goals and measures for improving and evaluating
overall economy, efficiency, and effectiveness and monitor and measure
the progress of the department, and,
- ensure departmentwide capability to carry out the DOD strategic plan
in support of national security objectives.
* Established entities such as the Defense Business Systems Management
Committee (DBSMC) and BTA.
After NDAA for Fiscal Year 2008, DOD:
* Established an office of the DCMO, designated an Assistant DCMO, and
issued a directive[Footnote 5] broadly defining the responsibilities of
the DCMO, including to:
- recommend to the CMO methodologies and measurement criteria to better
synchronize, integrate, and coordinate the business operations to
ensure alignment in support of the warfighting mission,
- develop and maintain the SMP, through the DBSMC, and,
- advise the Secretary of Defense on performance goals and measures and
assessing progress against those goals.
* Designated governance bodies (the Deputy‘s Advisory Working Group,
Senior Leader Review Group, and Defense Senior Leadership Conference)
to assist in the alignment of business operations to strategic goals.
* Named CMOs or acting CMOs in the military departments, and DCMOs in
the Departments of the Air Force and Navy.
Figure 1 shows DOD‘s management framework and the relationships among
senior-level leadership positions and bodies.
Figure 1: Management Framework for Business Transformation:
[Refer to PDF for image]
This figure depicts DOD‘s management framework and the relationships
among senior-level leadership positions and bodies, as follows:
Secretary of Defense:
Deputy Secretary of Defense CMO: Direct reporting relationship from:
* DBSMC; Chair-CMO; Vice-Chair: DCMO;
* Under Secretary of Defense (Acquisition, Technology and Logistics);
* Under Secretary of Defense (Comptroller);
* Under Secretary of Defense (Intelligence);
* Under Secretary of Defense Personnel and Readiness);
* DCMO; direct reporting relationship from:
- Director BTA;
- BTA;
* Secretary of Army;
- Under Secretary of Army CMO;
* Secretary of Navy;
- Under Secretary of Navy CMO;
* Secretary of Air Force;
- Under Secretary of Air Force CMO.
The relationships between the DCMO and the military departments' CMOs
have yet to be fully defined.
Source: GAO, DOD data.
[End of figure]
DOD has not yet completed implementation of its management framework.
* Key strategies for successful implementation of a CMO management
framework include defining roles, responsibilities, authority,
structures, and processes, etc.[Footnote 6]
* Authority, roles, and relationships for some positions and entities
have not been clearly defined, including:
- clearly defined decision-making authority for the DCMO,
- a clearly defined relationship between DOD‘s DCMO and the CMOs of the
military departments, and,
- clearly defined unique and shared responsibilities of various
governance entities, such as the Deputy‘s Advisory Working Group and
the DBSMC.
Table 1 compares DOD‘s actions in developing its management framework to
key strategies for implementing a CMO position and provides a summary
of our observations.
Table 1:
Selected key strategies for implementing CMO positions[A]: Ensure a
high level of authority and clearly delineated reporting relationships;
DOD‘s actions: DOD has designated the Deputy Secretary of Defense as
the CMO to act for the Secretary of Defense, who has clear authority to
make and enforce decisions. Although the CMO can choose to delegate
some authority to the DCMO, the DCMO position does not have decision-
making authority inherent to the position. The DCMO reports to the CMO
and the BTA Director reports to the DCMO. The DCMO is an executive
level III position, similar to most Under Secretaries of Defense.
Summary of observations: The CMO has comprehensive decision-making
authority, but is not a separate, full-time position. The DCMO position
provides assistance to the CMO and is full-time; however, the DCMO
position appears to be advisory and does not appear to have clear
decision-making authority. It is unclear how the creation of the
position changes the existing structure of DOD‘s senior leadership
since all decision-making authority remains with the CMO. Furthermore,
it is unclear how the DCMO position will work with other senior leaders
that are at the same level or higher within the department, such as the
Under Secretaries of Defense and the military department CMOs.
Selected key strategies for implementing CMO positions[A]: Define
specific roles and responsibilities;
DOD‘s actions: DOD defined the general roles and responsibilities for
its CMO and DCMO positions. The CMO is, for example, to develop and
maintain a departmentwide strategic plan for business reform. The DCMO
is, for example, to assist the Deputy Secretary in his capacity as CMO
and advise the Secretary of Defense on performance goals and measures
and assessing progress against those goals.
Summary of observations: DOD broadly defined the roles of the CMO and
DCMO. However, the directive that established the DCMO position stated
that the creation of the position does not subsume, realign, or replace
the functions, responsibilities, or authorities of other senior leaders
as prescribed by law for certain key business management functions,
such as fiduciary, acquisition, and procurement activities. As stated
above, it is unclear how the DCMO will work with these senior leaders.
Selected key strategies for implementing CMO positions[A]: Establish
integration and transformation structures and processes;
DOD‘s actions: DOD established structures, such as the BTA, DBSMC,
Deputy‘s Advisory Working Group, Senior Leader Review Group, and
Defense Senior Leadership Conference. Currently, DOD is revising the
roles and responsibilities of the DBSMC.
Summary of observations: DOD has not clearly defined the unique and
shared roles and responsibilities of various entities, such as
identifying how they would manage and integrate business transformation
efforts. Since DOD has not developed a strategic plan supported by a
planning process, it is unclear how governance structures will
prioritize their agendas and make informed decisions.
Selected key strategies for implementing CMO positions[A]: Promote
accountability and performance based on job qualifications and
performance management;
DOD‘s actions: The Deputy Secretary of Defense has stated that
appointment by the President and confirmation by the Senate provides
assurance that experienced executives are put into leadership positions.
Summary of observations: DOD has not established a performance
agreement for its CMO or DCMO. While DOD broadly defined the
responsibilities of the positions in directives, a performance
agreement that includes measurable goals for the CMO and DCMO would
establish a means for measuring accountability and progress. Individual
goals and performance measures have yet to be defined.
Selected key strategies for implementing CMO positions[A]: Provide for
continuity of leadership;
DOD‘s actions: DOD issued a directive to guide its overall transition
to a new administration, and named an Assistant DCMO to lead the
establishment of the DCMO office.
Summary of observations: There may not be continuity of leadership
across administrations because the CMO and DCMO positions are appointed
with undefined terms of office. Furthermore, although the DBSMC is a
senior governance body in the business transformation area established
by law, many leadership positions and members of this and other
governance bodies are appointee positions that may change with
administrations.
Source: GAO analysis.
[A] See GAO-08-34 for criteria.
Note: The criteria for fostering effective working relationships were
not added because it is too early to determine the effectiveness of the
working relationships.
[End of table]
The military departments have also taken steps to establish a management
framework for business transformation.
* The NDAA for Fiscal Year 2008 required the Secretaries of the military
departments to designate their Under Secretaries as CMOs with
responsibility for business operations. The military departments have
identified a CMO or acting CMO and have taken different actions to
establish DCMO positions.
- The Air Force named an acting CMO due to a vacant Under Secretary
position and has named a DCMO.
- The Under Secretary for the Department of the Army is the department‘s
CMO; the Army has not named a DCMO.
- The Navy named an acting CMO due to a vacant Under Secretary position
and has named a DCMO.
* The Duncan Hunter NDAA for Fiscal Year 2009 requires the military
departments to develop comprehensive business transformation plans
acting through their CMOs, and to establish business transformation
offices to assist their CMOs.
* The military departments are in the early stages of responding to
these legislative requirements.
The new administration needs to move quickly to nominate and fill key
leadership positions, including the Deputy Secretary of Defense (now
statutorily designated as the CMO), the DCMO, the Under Secretaries of
Defense, and the military department CMOs.
In light of the transition, it will be important for senior leaders in
the next administration to further define and clarify these roles,
responsibilities, and relationships among the various positions and
governance entities within DOD‘s management framework for business
transformation in order to sustain and further DOD‘s progress.
DOD has taken some positive steps towards developing a management
framework. Because of the complexity and long-term nature of DOD‘s
business transformation efforts, we have reported on the need for a CMO
as a separate, full-time position with significant authority,
experience, and a term to provide sustained leadership. We recognize
that DOD plans to take additional actions and remain open to the
possibility that these efforts will have a positive impact. At this
point, however, it remains unclear how DOD's actions to date and its
future plans will provide the long-term sustained leadership needed to
address the significant challenges facing DOD in its business
operations.
Objective 2: Strategic Planning:
Agencies that are successful in achieving business management
transformation undertake strategic planning and strive to establish a
plan that contains key elements such as goals and measures that align
at all levels of the agency. A strategic plan should:
* align goals and measures with departmentwide goals and cascade goals
and measures to lower organizational levels,
* assign accountability for achieving results,
* demonstrate results,
* provide a comprehensive view of performance, and,
* link resource needs to performance.
For DOD‘s business transformation, our prior work has shown that a plan
should be supported by a strategic planning process and should set
strategic direction for overall business transformation efforts and all
key business functions; prioritize initiatives and resources; establish
investment priorities and guide the department‘s key resource
decisions; and monitor progress through the establishment of
performance goals and objectives.[Footnote 7]
DOD characterizes the inaugural, or initial, SMP as:
* a first step towards providing the Congress with the comprehensive
plan required by law, and;
* a primer for incoming officials that describes newly established
institutional and governance reforms, and the existing structures and
processes within DOD to be used by the CMO for delivering effective and
efficient support to the warfighter.
Purpose of SMP:
* Focus Secretary of Defense‘s senior leadership team on key
priorities.
* Ensure DOD‘s governance processes allow senior leaders to make
informed decisions on the steps that must be taken to achieve those
priorities.
* Provide transparency needed to measure whether priorities are met”and
if not”to provide the information needed to quickly improve
performance.
Expected use of SMP:
* By senior civilian and military managers to align business operations
with performance priorities.
* By military departments, defense agencies, and combatant commanders to
assess whether the results achieved support performance goals.
In its current form, the initial SMP lacks key information and
elements.
* It does not identify any strategic goals, objectives, and performance
measures.
* While it states a purpose, the plan does not provide detailed
information about business operations.
* Without strategic goals and objectives, the SMP:
- cannot be linked to the Quadrennial Defense Review, DOD‘s overall
strategic plan, which defines reshaping the defense enterprise as a key
priority,
- cannot be linked to other existing plans and tools for individual
business areas, such as the Enterprise Transition Plan and the
Financial Improvement and Audit Readiness Plan, which are focused
largely on business systems modernization and financial management,
respectively,[Footnote 8] and,
- cannot be used to provide direction to the efforts of the military
departments to develop compatible, lower-level business transformation
plans and ensure linkage.
The SMP does not identify accountability for achieving desired results,
such as the roles of the CMO, the DCMO, the CMOs for the military
departments, and other senior leaders in monitoring implementation and
execution of the SMP.
The SMP does not demonstrate results, provide a comprehensive view of
performance for business operations, or link resource needs to
performance.
* DOD has yet to define performance measures for approving and
evaluating the efficiency and effectiveness of business operations and
key initiatives to be undertaken in meeting performance goals and
measures.
* The SMP contains discussions about existing processes for resource
decision making, such as the Planning, Programming, Budgeting, and
Execution System and the Defense Acquisition System, but it does not
address how these processes will be used to formulate investment
priorities and decisions for business operations.
DOD plans to update the SMP in July 2009 and every 2 years thereafter as
required in the NDAA for Fiscal Year 2008; however, it has not yet
developed a strategic planning process to guide future updates of the
SMP. DOD indicated in the SMP that:
* The plan did not address two legislative requirements:
1) Performance goals and measures for business operations, and;
2) Key initiatives to meet performance goals and measures.
* DOD expects the incoming administration to address these remaining
requirements in the July 2009 update.
Without a strategic plan with clearly defined and aligned goals,
objectives, and performance measures that is supported by a
comprehensive, strategic planning process,
* DOD will continue to face challenges in developing an integrated
approach to manage and transform its business operations.
* It is unclear how:
- DOD will measure progress, establish investment priorities, and link
resource needs to performance.
- Military departments and other DOD entities will develop plans for
their programs and activities for business operations in the absence of
departmentwide direction from the SMP.
Agency Comments:
DOD provided written comments on a draft of this briefing product. Our
summary and evaluation of DOD‘s comments are included in enclosure II,
and DOD‘s written comments are reprinted in their entirety in enclosure
III. DOD also provided technical comments on a draft of this product,
which we incorporated.
GAO Contact:
Should you or your staff have any questions on the matters discussed in
this briefing, please contact Sharon L. Pickup at (202) 512-9619 or
pickups@gao.gov.
In addition to the contact listed above, key contributors to this
product were Deborah Yarborough, Assistant Director; Grace Coleman, K.
Nicole Harms, Suzanne Perkins, Terry Richardson, Joseph Watkins, and
Angela Watson.
Appendix I: Scope and Methodology:
To determine the extent of progress the Department of Defense (DOD) has
made in developing a comprehensive management framework for business
transformation, we:
* reviewed documentation related to the establishment and
implementation of business transformation entities, such as DOD's July
2008 Strategic Management Plan (SMP), July 2008 Section 904
Implementation Report, directives on DOD senior governance councils and
the establishment of the Chief Management Officer (CMO) and Deputy
Chief Management Officer (DCMO) positions, and military departments‘
documents such as strategic plans,
* interviewed DOD officials from the Office of the Deputy Chief
Management Officer, the Business Transformation Agency (BTA), and the
Departments of the Army, Air Force, and Navy about actions taken by DOD
to establish its CMO and DCMO positions and expand and institutionalize
its management framework for business transformation, such as the
creation of the CMO and DCMO positions and the role of senior
governance bodies, and,
• compared actions taken by DOD in establishing and implementing its CMO
and DCMO management framework to key strategies identified in a prior
GAO report for implementing CMO positions.
To determine to what extent DOD‘s inaugural SMP contains key elements
of a strategic plan, we:
* reviewed the SMP for evidence of inclusion of strategic goals,
objectives, and performance measures, which are key elements for
strategic plans identified in our previous work and by the Government
Performance and Results Act of 1993,
* reviewed business-related goals, objectives, and measures included in
the Quadrennial Defense Review and functional plans, such as the
Enterprise Transition Plan, to determine the degree of alignment with
the SMP,
* reviewed DOD‘s July 2008 Section 904 Implementation Report and the
legislative requirements in the National Defense Authorization Act for
Fiscal Year 2008,
* interviewed DOD officials from the Office of the Deputy Chief
Management Officer and the Office of the Director of Administration and
Management about the process they used to develop the SMP, such as
aligning the SMP with other plans, and,
* interviewed officials from the BTA and Departments of the Army, Air
Force, and Navy to get their perspectives about the purpose and use of
the SMP.
We conducted this performance audit from August 2008 through December
2008, in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our assessment based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our assessment
based on our audit objectives.
Related GAO Products:
DOD Business Transformation: Air Force‘s Current Approach Increases
Risk That Asset Visibility Goals and Transformation Priorities Will Not
Be Achieved. GAO-08-866, Washington, D.C.: August 8, 2008.
DOD Business Systems Modernization: Progress in Establishing Corporate
Management Controls Needs to Be Replicated within Military Departments.
GAO-08-705. Washington, D.C.: May 15, 2008.
Defense Business Transformation: Sustaining Progress Requires
Continuity of Leadership and an Integrated Approach. GAO-08-462T.
Washington, D.C.: February 7, 2008.
Organizational Transformation: Implementing Chief Operating
Officer/Chief Management Officer Positions in Federal Agencies. GAO-08-
322T. Washington, D.C.: December 13, 2007.
Organizational Transformation: Implementing Chief Operating
Officer/Chief Management Officer Positions in Federal Agencies. GAO-08-
34. Washington, D.C.: November 1, 2007.
Achieving Success Requires a Chief Management Officer to Provide Focus
and Sustained Leadership. GAO-07-1072. Washington, D.C.: September 5,
2007.
DOD Business Transformation: Lack of an Integrated Strategy Puts the
Army‘s Asset Visibility System Investments At Risk. GAO-07-860.
Washington, D.C.: July 27, 2007.
High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 31,
2007.
[End of enclosure]
Enclosure II: Agency Comments and Our Evaluation:
We provided our draft briefing to the Department of Defense (DOD). In
response to this draft, we received written comments from DOD (see
enclosure III) which we summarize below. DOD also provided technical
comments which we incorporated as appropriate.
DOD concurred with our observations but expressed concern that we have
not given full consideration to the structures that the department has
in place or the actions that have been taken to date. DOD noted we
recognized the directives that DOD has issued to institutionalize the
broad responsibilities of the Chief Management Officer (CMO) and Deputy
Chief Management Officer (DCMO), but that we had also observed that the
DCMO has not been invested with decision-making authority and that it
is unclear how the DCMO will work with the Under Secretaries of Defense
and the CMOs of the military departments. DOD emphasized it was
deliberate in defining the responsibilities and authorities of the DCMO
to be consistent with the charters of the other Under Secretaries of
Defense. Further, DOD stated that many responsibilities of these senior
leaders are statutorily mandated and each of these officials and
organizations is accountable to the Deputy Secretary of Defense, acting
as the CMO, for the execution and improvement of the business
operations within their areas of responsibility. Lastly, DOD stated
that it believes that it is important that the DCMO act as an advisor
to synchronize, integrate, and align business operations and management
structures from an enterprise perspective.
We recognize that several DOD senior leaders have statutorily defined
responsibilities for certain business operations, and, as stated in our
briefing, that the existence of the DCMO does not subsume, realign, or
replace the functions, responsibilities, or authorities of other senior
leaders as prescribed by law for certain key business management
functions, such as fiduciary, acquisition, and procurement activities.
However, by designating the DCMO as an advisor without clear decision-
making authority or accountability for results, it is unclear how the
DCMO will be able to provide effective leadership and ultimately effect
change. Further, DOD has not clearly defined how the DCMO will work
with other senior leaders that are at the same level or higher within
the department, such as the Under Secretaries of Defense and the
military department CMOs. If the DCMO is to have a role in
synchronizing, integrating, and aligning business operations and
management structures across the department, the DCMO will need to work
closely with others. Therefore, in light of the transition, it will be
important for DOD senior leaders in the next administration to further
define and clarify these roles, responsibilities, and relationships
among the various positions and governance entities within DOD's
management framework for business transformation to sustain and further
DOD's progress.
In response to our observation that there may not be continuity of
leadership across administrations because the CMO and DCMO positions
are appointed with undefined terms in office, DOD emphasized it had
acted in accordance with the National Defense Authorization Act for
Fiscal Year 2008 while codifying the duties of the CMO and establishing
the Office of the DCMO, and has taken a number of steps to ensure that
career senior executive service members are positioned in both the
Office of the Secretary of Defense and the military departments to
ensure continued execution of business operations and focus on long-
standing challenges. DOD also stated that it continues to maintain
focus on business improvement and transformation issues as it strives
to make the department more efficient, effective, and responsive. We
recognize that DOD has taken a number of steps to further develop its
management framework for business transformation. In the briefing, we
specifically describe actions such as issuing directives related to the
CMO and DCMO, establishing an office of the DCMO, naming an Assistant
DCMO, and designating acting CMOs, as appropriate, for the military
departments. Because of the complexity and long-term nature of DOD's
business transformation efforts, we have reported the need for the CMO
to be a separate position with significant authority, experience, and a
term. As DOD continues to develop its management approach for business
transformation, we remain open to the possibility of further progress.
However, because of the roles and responsibilities currently assigned
to key positions, it is still unclear that DOD will be able to provide
the long-term sustained leadership needed to address significant
challenges in its business operations.
[End of enclosure]
Enclosure III: Comments from the Department of Defense:
Office Of The Deputy Secretary Of Defense:
1010 Defense Pentagon:
Washington, DC 20301-1010:
December 31, 2008:
Memorandum For Director, Report Followup & Gao Liaison, Office Of The
Inspector General, Department Of Defense
Subject: GAO Preliminary Observations, "Status of Department of Defense
(DoD) Efforts to Develop a Management Approach to Guide Business
Transformation," dated December 2008 (GAO Code 351262):
Attached is DoD's proposed response to the GAO's Preliminary
Observations. My point of contact is Michael Metzger,
michael.metzger@osd.mil, 703-695-9715.
Signed by:
Elizabeth A. McGrath:
Assistant Deputy Chief Management Officer:
Attachment: As stated:
Office Of The Deputy Secretary Of Defense:
1010 Defense Pentagon:
Washington, DC 20301-1010:
December 31, 2008:
Ms. Sharon L. Pickup:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Ms. Pickup:
This is the Department of Defense (DoD) response to the GAO's
preliminary observations, "Status of Department of Defense (DoD)
Efforts to Develop a Management Approach to Guide Business
Transformation," dated December 2008 (GAO Code 351262).
The Department appreciates the GAO's interest in the progress of
Defense Business Transformation and the opportunity to respond to these
preliminary observations. The Department generally concurs with the
GAO's observations; however, we are concerned that the GAO has not
given full consideration to the structures that the Department has in
place or the actions that have been taken to date.
While the GAO recognizes the issuances that the Department has
promulgated institutionalizing the broad responsibilities of the CMO
and DCMO, they stated that the DCMO has not been invested with decision-
making authority and that it is unclear how the DCMO will work with the
Under Secretaries of Defense and the CMOs of the Military Departments.
The Department was deliberate in defining the responsibilities and
authorities that it imparted to the DCMO consistent with the charters
of the other Under Secretaries of Defense. Many of the responsibilities
of the Under Secretaries of Defense and the Military Departments are
statutorily mandated and each of these officials and organizations is
accountable to the Deputy Secretary of Defense, acting as the CMO, for
the execution and improvement of the business operations within their
areas of responsibility. The Department believes that it is important
that the DCMO act as an advisor to synchronize, integrate, and align
business operations and management structures from an enterprise
perspective.
The GAO also stated that "there may not be continuity of leadership
across administrations because the CMO and DCMO positions are appointed
with undefined terms of office." The Department has acted in accordance
with the 2008 National Defense Authorization Act while codifying the
duties of the CMO and establishing the Office of the DCMO. The
Department has also taken a number of steps to ensure that career
senior executive service members are positioned both in OSD and the
Military Departments to ensure continued execution of existing business
operations improvement initiatives and focus on long-standing
challenges.
The Department continues to maintain focus on business improvement and
transformation issues as we strive to make the Department more
efficient, effective, and responsive.
Signed by:
Elizabeth A. McGrath:
Assistant Deputy Chief Management Officer:
[End of enclosure]
Footnotes:
[1] Pub. L. No. 110-181 §904 (2008).
[2] Pub. L. No. 110-417 §908 (2008).
[3] Pub. L. No. 103-62 (1993).
[4] Department of Defense Directive 5105.02, Deputy Secretary of
Defense (Sept. 18, 2007).
[5] Department of Defense Directive 5105.82, Deputy Chief Management
Officer (DCMO) of the Department of Defense (Oct. 17, 2008).
[6] For key strategies for establishing and implementing CMO or chief
operating officer positions, see GAO, Organizational Transformation:
Implementing Chief Operating Officer/Chief Management Officer Positions
in Federal Agencies, [hyperlink, http://www.gao.gov/products/GAO-08-34]
(Washington, D.C.: Nov. 1, 2007).
[7] See GAO, Defense Business Transformation: Achieving Success
Requires a Chief Management Officer to Provide Focus and Sustained
Leadership, [hyperlink, http://www.gao.gov/products/GAO-07-1072]
(Washington, D.C.: Sept. 5, 2007).
[8] Some DOD business-related plans, such as the Enterprise Transition
Plan, contain performance goals and measures that are used to track and
monitor progress in an individual business area.
[End of section]
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