Maximizing DOD's Potential to Achieve Greater Efficiencies and Improve Business Operations
Gao ID: GAO-11-799CG June 29, 2011This is a Comptroller General Presentation delivered at the DOD Performance Symposium, in Lansdowne, VA on June 29, 2011. Major topics of this presentation include: (1) Long term fiscal projectionss, (2) Government Performance and Results Act modernization goals, (3) Overlap, fragmentation, and duplication, and (4) GAO's High-Risk List -- An Update.
GAO-11-799CG, Maximizing DOD's Potential to Achieve Greater Efficiencies and Improve Business Operations
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GAO-11-799CG:
Maximizing DOD's Potential to Achieve Greater Efficiencies and Improve
Business Operations:
DOD Performance Symposium:
Lansdowne, VA:
June 29, 2011:
Gene L. Dodaro:
Comptroller General of the United States:
U.S. Government Accountability Office:
Overview:
* Long Term Fiscal Projections:
* GPRA Modernization Act Goals:
* Overlap, Fragmentation, and Duplication
* GAO's High-Risk List: An Update.
Long Term Fiscal Projections:
Figure: Federal Budget Trends under Different Fiscal Policy
Simulations:
[Refer to PDF for image: multiple line graph]
Percentage of GDP:
Year: 2000;
Baseline extended: 2.405%;
Alternative: 2.405%.
Year: 2001;
Baseline extended: 1.254%;
Alternative: 1.254%.
Year: 2002;
Baseline extended: -1.497%;
Alternative: -1.497%.
Year: 2003;
Baseline extended: -3.439%;
Alternative: -3.439%.
Year: 2004;
Baseline extended: -3.532%;
Alternative: -3.532%.
Year: 2005;
Baseline extended: -2.558%;
Alternative: -2.558%.
Year: 2006;
Baseline extended: -1.877%;
Alternative: -1.877%.
Year: 2007;
Baseline extended: -1.157%;
Alternative: -1.157%.
Year: 2008;
Baseline extended: -3.186%;
Alternative: -3.186%.
Year: 2009;
Baseline extended: -10.021%;
Alternative: -10.021%.
Year: 2010;
Baseline extended: -8.917%;
Alternative: -8.917%.
Year: 2011;
Baseline extended: -9.843%;
Alternative: -9.843%.
Year: 2012;
Baseline extended: -7.008%;
Alternative: -7.14%.
Year: 2013;
Baseline extended: -4.294%;
Alternative: -6.41%.
Year: 2014;
Baseline extended: -3.091%;
Alternative: -6.421%.
Year: 2015;
Baseline extended: -3.027%;
Alternative: -6.806%.
Year: 2016;
Baseline extended: -3.441%;
Alternative: -7.523%.
Year: 2017;
Baseline extended: -3.078%;
Alternative: -7.492%.
Year: 2018;
Baseline extended: -2.915%;
Alternative: -7.666%.
Year: 2019;
Baseline extended: -3.182%;
Alternative: -8.232%.
Year: 2020;
Baseline extended: -3.237%;
Alternative: -8.635%.
Year: 2021;
Baseline extended: -3.206%;
Alternative: -8.954%.
Year: 2022;
Baseline extended: -3.537%;
Alternative: -9.63%.
Year: 2023;
Baseline extended: -3.702%;
Alternative: -10.357%.
Year: 2024;
Baseline extended: -3.977%;
Alternative: -11.115%.
Year: 2025;
Baseline extended: -4.375%;
Alternative: -11.911%.
Year: 2026;
Baseline extended: -4.553%;
Alternative: -12.513%.
Year: 2027;
Baseline extended: -4.837%;
Alternative: -13.125%.
Year: 2028;
Baseline extended: -5.231%;
Alternative: -13.851%.
Year: 2029;
Baseline extended: -5.527%;
Alternative: -14.491%.
Year: 2030;
Baseline extended: -5.816%;
Alternative: -15.131%.
Year: 2031;
Baseline extended: -6.103%;
Alternative: -15.775%.
Year: 2032;
Baseline extended: -6.504%;
Alternative: -16.422%.
Year: 2033;
Baseline extended: -6.677%;
Alternative: -17.075%.
Year: 2034;
Baseline extended: -6.958%;
Alternative: -17.735%.
Year: 2035;
Baseline extended: -7.234%;
Alternative: -18.396%.
Year: 2036;
Baseline extended: -7.509%;
Alternative: -19.063
Year: 2037;
Baseline extended: -7.9%;
Alternative: -19.849%.
Year: 2038;
Baseline extended: -8.159%.
Year: 2039;
Baseline extended: -8.413%.
Year: 2040;
Baseline extended: -8.661%.
Year: 2041;
Baseline extended: -8.908%.
Year: 2042;
Baseline extended: -9.153%.
Year: 2043;
Baseline extended: -9.398%.
Year: 2044;
Baseline extended: -9.645%.
Year: 2045;
Baseline extended: -9.897%.
Year: 2046;
Baseline extended: -10.286%.
Year: 2047;
Baseline extended: -10.547%.
Year: 2048;
Baseline extended: -10.806%.
Year: 2049;
Baseline extended: -11.064%.
Year: 2050;
Baseline extended: -11.192%.
Year: 2051;
Baseline extended: -11.597%.
Year: 2052;
Baseline extended: -11.876%.
Year: 2053;
Baseline extended: -12.159%.
Year: 2054;
Baseline extended: -12.45%.
Year: 2055;
Baseline extended: -12.752%.
Year: 2056;
Baseline extended: -13.061%.
Year: 2057;
Baseline extended: -13.229%.
Year: 2058;
Baseline extended: -13.679%.
Year: 2059;
Baseline extended: -13.993%.
Year: 2060;
Baseline extended: -14.166%.
Source: GAO.
Note: Data are from GAO's January 2011 simulations based on the
Trustees' assumptions for Social Security and the Trustees' and the
CMS Actuary's assumptions for Medicare.
[End of figure]
Figure: Debt Held by the Public Under Two Fiscal Policy Simulations:
[Refer to PDF for image: multiple line graph]
Percent of GDP:
Historical high: 109 percent in 1946.
Fiscal year: 2000;
Baseline extended: 34.7%;
Alternative: 34.7%.
Fiscal year: 2001;
Baseline extended: 32.5%;
Alternative: 32.5%.
Fiscal year: 2002;
Baseline extended: 33.6%;
Alternative: 33.6%.
Fiscal year: 2003;
Baseline extended: 35.6%;
Alternative: 35.6%.
Fiscal year: 2004;
Baseline extended: 36.8%;
Alternative: 36.8%.
Fiscal year: 2005;
Baseline extended: 36.9%;
Alternative: 36.9%.
Fiscal year: 2006;
Baseline extended: 36.5%;
Alternative: 36.5%.
Fiscal year: 2007;
Baseline extended: 36.2%;
Alternative: 36.2%.
Fiscal year: 2008;
Baseline extended: 40.2%;
Alternative: 40.2%.
Fiscal year: 2009;
Baseline extended: 53.52%;
Alternative: 53.52%.
Fiscal year: 2010;
Baseline extended: 62.14%;
Alternative: 62.14%.
Fiscal year: 2011;
Baseline extended: 69.38%;
Alternative: 69.38%.
Fiscal year: 2012;
Baseline extended: 73.90%;
Alternative: 74.04%.
Fiscal year: 2013;
Baseline extended: 75.52%;
Alternative: 77.77%.
Fiscal year: 2014;
Baseline extended: 75.30%;
Alternative: 80.77%.
Fiscal year: 2015;
Baseline extended: 74.88%;
Alternative: 83.84%.
Fiscal year: 2016;
Baseline extended: 75.01%;
Alternative: 87.61%.
Fiscal year: 2017;
Baseline extended: 75.20%;
Alternative: 91.65%.
Fiscal year: 2018;
Baseline extended: 75.31%;
Alternative: 95.81%.
Fiscal year: 2019;
Baseline extended: 75.75%;
Alternative: 100.43%.
Fiscal year: 2020;
Baseline extended: 76.22%;
Alternative: 105.26%.
Fiscal year: 2021;
Baseline extended: 76.66%;
Alternative: 110.24%.
Fiscal year: 2022;
Baseline extended: 77.45%;
Alternative: 115.73%.
Fiscal year: 2023;
Baseline extended: 78.1%;
Alternative: 121.48%.
Fiscal year: 2024;
Baseline extended: 79.19%;
Alternative: 127.72%.
Fiscal year: 2025;
Baseline extended: 80.59%;
Alternative: 134.58%.
Fiscal year: 2026;
Baseline extended: 82.15%;
Alternative: 141.82%.
Fiscal year: 2027;
Baseline extended: 83.91%;
Alternative: 149.33%.
Fiscal year: 2028;
Baseline extended: 86.00%;
Alternative: 157.28%.
Fiscal year: 2029;
Baseline extended: 88.39%;
Alternative: 165.64%.
Fiscal year: 2030;
Baseline extended: 90.96%;
Alternative: 174.36%.
Fiscal year: 2031;
Baseline extended: 93.70%;
Alternative: 183.32%.
Fiscal year: 2032;
Baseline extended: 96.74%;
Alternative: 192.57%.
Fiscal year: 2033;
Baseline extended: 99.84%.
Fiscal year: 2034;
Baseline extended: 103.11%.
Fiscal year: 2035;
Baseline extended: 106.5%.
Fiscal year: 2036;
Baseline extended: 110.12%.
Fiscal year: 2037;
Baseline extended: 113.95%.
Fiscal year: 2038;
Baseline extended: 117.85%.
Fiscal year: 2039;
Baseline extended: 121.90%.
Fiscal year: 2040;
Baseline extended: 126.05%.
Fiscal year: 2041;
Baseline extended: 130.30%.
Fiscal year: 2042;
Baseline extended: 134.63%.
Fiscal year: 2043;
Baseline extended: 139.05%.
Fiscal year: 2044;
Baseline extended: 143.54%.
Fiscal year: 2045;
Baseline extended: 148.12%.
Fiscal year: 2046;
Baseline extended: 152.91%.
Fiscal year: 2047;
Baseline extended: 157.78%.
Fiscal year: 2048;
Baseline extended: 162.72%.
Fiscal year: 2049;
Baseline extended: 167.73%.
Fiscal year: 2050;
Baseline extended: 172.76%.
Fiscal year: 2051;
Baseline extended: 178.04%.
Fiscal year: 2052;
Baseline extended: 183.39%.
Fiscal year: 2053;
Baseline extended: 188.83%.
Fiscal year: 2054;
Baseline extended: 194.36%.
Fiscal year: 2055;
Baseline extended: 199.97%.
Source: GAO.
Note: Data are from GAO's January 2011 simulations based on the Social
Security Trustees' assumptions for Social Security and the Medicare
Trustees' and the Centers for Medicare & Medicaid Services Office of
the Actuary's assumptions for Medicare.
[End of figure]
Figure: Potential Fiscal Outcomes: Revenues and Composition of
Spending under Baseline Extended Simulation:
[Refer to PDF for image: combined stacked vertical bar and line graph]
Percentage of GDP:
Fiscal year: 2010;
Net interest: 1.4%;
Social Security: 4.8%;
Medicare & Medicaid[A]: 5%;
All other spending: 12.6%;
Revenue: 14.9%.
Fiscal year: 2020;
Net interest: 3.3%;
Social Security: 5.2%;
Medicare & Medicaid[A]: 6.3%;
All other spending: 9.1%;
Revenue: 20.7%.
Fiscal year: 2030;
Net interest: 4.2%;
Social Security: 6%;
Medicare & Medicaid[A]: 7.6%;
All other spending: 8.9%;
Revenue: 20.8%.
Fiscal year: 2040;
Net interest: 5.7%;
Social Security: 6.2%;
Medicare & Medicaid[A]: 8.7%;
All other spending: 8.9%;
Revenue: 20.8%.
Note: Data are from GAO's January 2011 simulations based on the
Trustees' assumptions for Social Security and Medicare.
[A] This also includes spending for insurance exchange subsidies and
CHIP.
Source: GAO.
[End of figure]
Figure: Potential Fiscal Outcomes: Revenues and Composition of
Spending under Alternative Simulation:
[Refer to PDF for image: combined stacked vertical bar and line graph]
Percentage of GDP:
Fiscal year: 2010;
Net interest: 1.4%;
Social Security: 4.8%;
Medicare & Medicaid[A]: 5%;
All other spending: 12.6%;
Revenue: 14.9%.
Fiscal year: 2020;
Net interest: 4.4%;
Social Security: 5.2%;
Medicare & Medicaid[A]: 6.7%;
All other spending: 10.7%;
Revenue: 18.3%.
Fiscal year: 2030;
Net interest: 7.8%;
Social Security: 6%;
Medicare & Medicaid[A]: 8.6%;
All other spending: 10.8%;
Revenue: 18%.
Fiscal year: 2040;
Net interest: 12.5%;
Social Security: 6.2%;
Medicare & Medicaid[A]: 10.4%;
All other spending: 10.8%;
Revenue: 18%.
Source: GAO.
Note: Data are from GAO's January 2011 simulations based on the
Trustees' assumptions for Social Security and the CMS Actuary's
assumptions for Medicare.
[A] This also includes spending for insurance exchange subsidies and
CHIP.
[End of figure]
Figure: DOD Budget Authority FY 2001-2011 (Excluding Contingency
Operations):
DOD‘s Budget Authority for Fiscal Years 2001–2010
(Excluding Contingency Operations):
[Refer to PDF for image: combined vertical bar and line graph]
Fiscal year: 2001;
Nominal dollars: $289.9 billion;
Constant FY 2010 dollars: $355.3 billion.
Fiscal year: 2002;
Nominal dollars: $331.1 billion;
Constant FY 2010 dollars: $399.2 billion.
Fiscal year: 2003;
Nominal dollars: $368.5 billion;
Constant FY 2010 dollars: $435.2 billion.
Fiscal year: 2004;
Nominal dollars: $376.6 billion;
Constant FY 2010 dollars: $433.6 billion.
Fiscal year: 2005;
Nominal dollars: $400.9 billion;
Constant FY 2010 dollars: $447.0 billion.
Fiscal year: 2006;
Nominal dollars: $418.5 billion;
Constant FY 2010 dollars: $451.2 billion.
Fiscal year: 2007;
Nominal dollars: $431.9 billion;
Constant FY 2010 dollars: $452.5 billion.
Fiscal year: 2008;
Nominal dollars: $450.5 billion;
Constant FY 2010 dollars: $461.3 billion.
Fiscal year: 2009;
Nominal dollars: $513.3 billion;
Constant FY 2010 dollars: $517.9 billion.
Fiscal year: 2010;
Nominal dollars: $534.0 billion;
Constant FY 2010 dollars: $534 billion.
Fiscal year: 2011;
Nominal dollars: $526.1 billion;
Constant FY 2010 dollars: $526.1 billion.
Source: Department of Defense.
[End of figure]
DOD's Fiscal Situation:
DOD faces fiscal pressures as it attempts to balance competing 9
demands from within. For example:
* While overall costs are declining as forces redeploy from Iraq,
ongoing operations will still continue to require substantial amounts
of resources.
* Extended military operations have taken a toll on readiness, and
rebuilding our force will entail significant costs.
* Personnel and health care costs are increasing.
* Growth in cost to acquire and operate weapon systems remains a
significant problem.
Building on DOD‘s Ongoing Efforts to Identify Efficiencies:
DOD is becoming more focused on identifying efficiencies and potential
cost savings.
* In May 2010, Secretary Gates directed DOD to undertake a
departmentwide initiative to assess how it is staffed, organized, and
operated with the overarching goal of significantly reducing excess
overhead costs and reinvesting these savings in sustaining the current
force structure and modernizing its weapons portfolio.
* In January 2011, the Secretary announced the results --- projected
savings of about $154 billion over 5 years that will be integrated
into DOD‘s budget beginning in fiscal year 2012.
* Also, as part of its fiscal year 2012 budget request, DOD identified
$78 billion in savings that could be reduced from its topline over a 5
year period beginning in fiscal year 2012. Of this amount, DOD stated
about $54 billion came from the Secretary‘s efficiency initiative.
In April 2011, President Obama set a goal of cutting $400 billion from
national security spending over the next 12 years.
To support this goal and build on the Secretary‘s initiative, it will
require DOD to:
* reexamine the need for programs and activities, including making
tough choices to adjust or terminate those that are outmoded or not
performing;
* set priorities and allocate resources accordingly;
* adopt sound business practices; and;
* eliminate inefficient ways of doing business, particularly in core
functions and processes.
GPRA Modernization Act Goals:
GPRA Modernization Act Goals:
* Adopting a more coordinated and crosscutting approach to achieving
common goals,
* Addressing weaknesses in major management functions.
* Ensuring performance information is both useful and used in decision
making.
* Instilling sustained leadership commitment and accountability for
achieving results.
* Engaging Congress in identifying management and performance issues
to address.
Coordinated and Crosscutting Approaches to Achieve Common Goals:
The act requires OMB, in coordination with 13 agencies, to:
* Develop long-term, outcome-oriented goals for a limited number of
crosscutting policy areas.
* Provide information annually on how these crosscutting goals will be
achieved.
Effective implementation of these requirements could help inform
reexamination or restructuring efforts.
Addressing Weaknesses in Major Management Functions:
Agencies need more effective management capabilities to better
implement programs and policies.
The act requires OMB to develop goals to improve management functions
across the government, including in the following areas:
* Financial management.
* Human capital.
* Information technology.
* Procurement and acquisition.
* Real property.
Ensuring Performance Information is Useful and Used:
To ensure performance information will be both useful 15 and used, it
must meet various users' needs for completeness, accuracy, validity,
timeliness, and ease of use.
The act has several requirements that could help meet these needs:
* Agencies to disclose more information on the accuracy and validity
of their performance data, such as data sources.
* Quarterly, rather than annual, reporting for priority goals.
* Information to be posted on a governmentwide website.
To ensure that federal officials have the knowledge and 16 skills
necessary to use the information they are gathering, the act requires
OPM to:
* Identify key skills and competencies needed to carry out performance
management activities.
* Incorporate those skills and competencies into relevant position
classifications and agency training.
Sustained Leadership Commitment and Accountability for Results:
The act creates several new leadership structures and 17
responsibilities aimed at sustaining attention on improvement efforts:
* At the agency level, a Chief Operating Officer and Performance
Improvement Officer at each agency.
* A governmentwide Performance Improvement Council to assist in
carrying out the governmentwide performance and reporting requirements
of the act.
* Quarterly reviews for the governmentwide and agency priority goals
that involve top leadership.
Engaging Congress:
The act significantly enhances requirements for agencies to consult
with Congress when establishing or adjusting governmentwide and agency
goals.
* OMB and agencies are to consult with relevant committees, obtaining
majority and minority views, about proposed goals at least once every
2 years.
* In addition, OMB and agencies are to describe how they incorporated
congressional input into their goals.
GAO's Role in Evaluating Implementation of the GPRA Modernization Act:
The act includes provisions requiring GAO to evaluate implementation
over time:
* By June 2013, GAO is to report on implementation of the act's
planning and reporting requirements at both the governmentwide and
agency levels.
* By September 2015 and 2017, GAO is to evaluate how performance
management is being used by federal agencies to improve their results.
* Also by September 2015 and 2017--and every 4 years thereafter”-GAO
is to evaluate implementation of the federal government priority goals
and performance plans, and related reporting requirements.
Overlap, Fragmentation and Duplication:
GAO Reporting on Overlap, Fragmentation and Duplication in Federal
Programs:
Section 21 of P.L. 111-139, enacted in February 2010, required that 21
the Comptroller General:
* conduct routine investigations to identify programs, agencies,
offices, and initiatives with duplicative goals and activities within
Departments and government-wide, and;
* report annually to Congress on the findings, including the cost of
such duplication and with recommendations for consolidation and
elimination to reduce duplication.
Methodology for 2011 report (GAO-11-318SP):
GAO drew on a variety of sources to identify potential areas of focus.
GAO:
* Over 200 reports that highlight the potential for duplication,
overlap, or fragmentation.
* Major cost saving opportunities identified on GAO Web site.
* GAO High-Risk series.
* Previous GAO work on government restructuring and reorganization.
External Sources:
* OMB's Program Assessment Rating Tool (PART).
* President's Budget Terminations, Reductions, and Savings list.
* CBO Budget Options.
* Academia, public policy organizations, think tanks.
Summary of 2011 report (GAO-11-318SP):
* 34 areas where agencies, offices, or initiatives have similar or
overlapping objectives or provide similar services to the same
populations; or where government missions are fragmented across
multiple agencies or programs.
* 47 additional areas describing other opportunities for agencies or
Congress to consider taking action that could either reduce the cost
of government operations or enhance revenue collections for the
Treasury.
* Depending on the extent of actions taken, these savings and revenues
could collectively result in tens of billions of dollars in annual
savings.
Examples of DOD-Related Duplication and Cost Savings or Revenue
Enhancement Issues:
Duplication, Overlap, or Fragmentation:
* Military medical command structures;
* Counter-IED Efforts;
* Intelligence, Surveillance, and Reconnaissance Capabilities;
* Warfighter Urgent Needs Processes;
* Tactical Wheeled Vehicles Purchases;
* Prepositioning Programs;
* Business System Modernization Efforts.
Cost Savings or Revenue Enhancement:
* Assessing Costs and Benefits of Overseas Military Presence Options;
* Developing a Total Compensation Approach to Manage Growth in
Military Personnel Costs;
* Opportunities to Better Manage DOD's Spare Parts Inventory and
Weapons Systems Acquisition;
* Improving the Cost-Effectiveness of Sustaining Weapon Systems;
* Improving Corrosion Prevention and Control Practices.
GAO High Risk List-An Update:
2011 High-Risk Update (GAO-11-278):
2011 List ” 30 areas total
* One DOD-specific area removed:
- Personnel Security Clearances.
* Seven DOD-specific areas related to business operations:
- Management Approach to Business Transformation;
- Business Systems Modernization;
- Support Infrastructure Management (Narrowed in Scope);
- Financial Management;
- Supply Chain Management;
- Weapon Systems Acquisition;
- Contract Management.
Removing High-Risk Designations:
Five criteria for determining whether a high-risk area can be removed:
* Demonstrated top leadership commitment to addressing the problems.
* Capacity (people and resources).
* Corrective action plan.
* Demonstrated progress that is sustainable.
* A program to monitor corrective measures.
Closing Thoughts:
The nation is facing the daunting challenges of recovering from a 28
serious recession while facing serious long-term fiscal challenges
that simulations show ”absent significant policy changes” growing
deficits accumulating to an unsustainable increase in debt.
In this fiscal environment, DOD cannot afford to miss opportunities to
address inefficiencies in its key business areas as well as across the
Department.
In many areas, some of which I have outlined today, DOD can achieve
tangible and sustainable outcomes that will ultimately provide better
support to the warfighter and free up resources for higher priority
needs.
To do so, it will take strong leadership, sound plans, valid
performance metrics and reliable data to measure progress, and tough
choices to alter course if programs aren't performing.
On the Web:
Web site: [hyperlink, http://www.gao.gov/].
Contact:
Chuck Young, Managing Director, Public Affairs, youngc@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
Copyright:
This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be
reproduced and distributed in its entirety without further permission
from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary
if you wish to reproduce this material separately.
