DoD Seal

Report on - Reinventing the Department of Defense, September 1996


National Performance Review

Report on
Reinventing the Department of Defense
September 1996

Introduction and Executive Summery



INTRODUCTION

A Strong Commitment to Reinvention

The commitment by the Department of Defense to reinvention is strong, growing, and enthusiastic. This report demonstrates that commitment by presenting a broad range of recent accomplishments which fall under the banner of successful management improvements, which have made the Department work better and cost less. All of these accomplishments are supportive of the goals of the National Performance Review (NPR).

DoD continues to find ways to reduce its administrative overhead and reengineer its support functions, not only because these changes help in the search for more resources for the priorities of readiness and weapons modernization, but also because these changes are right and necessary for efficient management.

This report, with its scores of success stories, is organized around the four major NPR themes:

  • Putting customers first
  • Cutting red tape
  • Empowering employees to get results
  • Getting back to basics

This report contains a variety of successful initiatives that demonstrate how DoD employees and their organizations have accomplished major changes all across DoD's major programs, functional areas, and organizational units. Not only are there dramatic innovations in procurement, financial management, and personnel; but also in such areas as privatization and logistics. The individual success stories come from OSD organizations, the Military Departments and Defense Agencies. Virtually everybody in the Department is participating in positive change.

Major Reform Initiatives

In addition to accounts of reinvention and reengineering initiatives by specific DoD components, there are several DoD-wide projects that are currently in progress that require special mention. Some of these continuing efforts have already had a significant impact on DoD component organizations, and they continue to make additional progress. One such major initiative is acquisition reform. One component of this effort includes establishment of a simplified acquisition threshold of $100,000. This means that all purchases involving $100,000 or less can be accomplished with less regulatory bureaucracy, and, in the long run, less cost to the government. Further, there is a major change in the use of military specifications and standards. Efforts over the past two years to scrap unnecessary military specifications from DoD acquisitions have saved the Department nearly $2 billion. Program offices have scrubbed solicitations of unneeded military specifications and standards and replaced them with performance specifications and commercial standards instead. For example, in the Joint Direct Attack Munition program, all military specifications and standards were eliminated from the solicitation, data requirements were reduced from 243 to 29 items, and the statement of work went from 167 pages to 2 pages. Nearly 2,700 military specifications and standards have been canceled since this reform began in 1994.

Another work in progress, of which DoD is especially proud, is its civilian streamlining effort which leads the Federal government in both the magnitude of the reductions and in the minimal number of involuntary separations. From the end of FY 1993 through FY 1995, DoD has reduced its civilian workforce by about 110,000 or 12 percent. DoD plans to reduce the DoD infrastructure by another 100,000 civilians by FY 1999. The chart at the end of the introduction not only highlights these plans and accomplishments, but also points to major reductions in occupational groups and in management headquarters.

Outsourcing or privatization of key support functions, with the strong prospect of lowering costs and improving performance, is under way under the leadership of the Deputy Secretary of Defense. To evaluate possible programs for outsourcing, he established a comprehensive, ongoing, and DoD-wide review of candidate programs. To date, the Department has focused on six areas: material management, base commercial activities, depot maintenance, finance and accounting, education and training, and data centers. For example, in finance and accounting, DoD has initiated a robust campaign to increase the use of the IMPAC purchasing card. Greater use of this credit card will dramatically reduce acquisition cycle time and paperwork associated with procurement actions. Also, in finance and accounting privatization, the Department initiated A-76 cost comparisons in facilities, logistics, and administrative support at Defense Finance and Accounting Service Centers; bill paying for the Defense Commissary Agency, and will launch several more studies in FY 1997. In addition, the Department has also started to build an entirely new travel system using the best commercial practices. This system will streamline and improve the efficiency of the travel process through greater reliance on the private sector and commercial automation technologies.

In addition to finance and accounting initiatives related to privatization, DoD has embarked on the most comprehensive financial management reforms in its history. One key area in this initiative involves the consolidation of finance and accounting systems. For example, by 1997, the Defense Civilian Payroll System will be fully implemented, replacing 27 payroll systems. DoD has already gone from 91 general fund accounting systems in 1991 to 77 in 1995; and a further reduction to 53 systems by 1998 is anticipated. Another key theme is eliminating problem disbursements. By June 1993, when it accelerated its efforts to solve this problem, the Department had accumulated a total of $51.1 billion in problem disbursements. By November 1995, the backlog had been reduced to $22.0 billion. This dramatic decline is expected to continue.

Logistics reform represents a major initiative in DoD. Some of the initiatives in this major functional effort include: improved customer support, successful business practices, improved asset management, improved logistics response time and modernizing logistics business systems. Regarding improved asset management, the Department has exceeded it inventory reduction goals. Since 1990, the Department reduced its inventory from $104 billion to approximately $76 billion through FY 1994 in constant FY 1995 dollars. Further reductions will leave an inventory of $55 billion by 2001 in constant FY 1995 dollars.

Hammer Awards in DoD

These success stories provide the evidence that top management in DoD as well as individuals in field units are committed to both specific management improvements as well as continuous process improvements. DoD's record in achieving recognition by the NPR through the Hammer Awards, which NPR makes to organizations and groups for exemplary improvements, demonstrates this diversified commitment. DoD has earned approximately 100 Hammer Awards. Some recent examples of winners include

  • Defense Printing Service, Document Automation Center, St. Louis. When the Defense Printing Office in St. Louis was informed that the Defense Finance and Accounting Service was planning to move millions of paper documents from five locations to St. Louis, key personnel offered an alternative consisting of digitizing and indexing the data at the original locations and moving the files electronically to St. Louis.
  • Navy Department Aircraft Carrier Anti-submarine Warfare Module Team. This group cut red tape in numerous ways. For example, during design, many time consuming design requirements were avoided by utilizing proven technology and commercially available products. Also, design work was accomplished using computer aided design.
  • Defense Contract Audit Agency Headquarters Policy and Plans Directorate. A team initiated a direct submission program that allows contractors, that maintain adequate policy and procedures for the preparation of vouchers, to bypass the interim approval process and submit vouchers directly to government paying offices.

Quality Awards in DoD

DoD's record as recipient of the Presidential Quality Awards and in the Quality Improvement Prototype Awards also shows the high level of DoD commitment to change and excellence. From 1993 through 1995, DoD has received 10 of these prestigious awards for its commitment to quality and quality improvements. In 1995 alone, a Presidential Quality Award for work at the Army Tank-Automotive Research, Development, and Engineering Center was given; and two Army centers also won Quality Improvement Prototype Awards. From 1988 through 1995, of five Presidential Quality Awards presented to Federal agencies, four have gone to DoD. Also, during this time period, of 30 winners of Quality Improvement Prototype Awards, 16 have gone to DoD.

In 1996, DoD was awarded the only Presidential Quality Award in the Federal government for the Army's Armament Research, Development and Engineering Center. This center, located in Picatinny Arsenal, New Jersey, designed the world's most lethal tank-fired munition, reduced training costs, reduced energy expenditures, reduced hazardous waste storage and reduced internal overhead costs.

DoD won seven of nine Quality Improvement Prototype Awards in 1996 as well. Winners included the Defense Mapping Agency which reduced the number of management layers between the cartographer and the customer from 11 to 3; the Navy Naval Station Mayport decreased the number of check-in stops for new military personnel from 24 to 8; and Army's Communications-Electronics Command Logistics and Readiness Center reduced acquisition lead times by 25% and backorder reductions by nearly 50 percent.

Reinvention Laboratories in DoD

DoD's reinvention laboratories provide still more evidence of the DoD commitment to NPR goals. There are more than 90 active reinvention laboratories throughout the Department ranging from organizations as small as a single office or activity to organizations encompassing many thousands of employees such as a major military command (Army's Forces Command) or a Defense Agency. What they all have in common is the desire and the ability to look beyond the way business is done today, and to find new, more effective ways to accomplish their business and better ways to serve their customers, whether these customers are within the Defense establishment or the American public.

The Department of Defense has gone to great lengths to help these laboratories succeed by allowing them to waive regulations and eliminate restrictions which, in the past, have resulted in inefficiencies. Moreover, the Department has begun to document the good, productive new ideas and methods and publish them so that they can be shared with or transferred to other activities doing the same work. For example, in the Air Force, each Air Logistics Center will serve as a lead center for reengineering a specific process. The new process will then be used throughout the Air Force. The Army Management Engineering College, formerly funded with appropriated funds, is now a reinvention laboratory, and transitioning has begun to an operation that will be completely fee for service. The Naval Postgraduate School, too, is a reinvention laboratory actively engaged in tailoring graduate education to meet unique customer needs. Throughout the Department, more and more activities are becoming reinvention laboratories and the enthusiasm and improved performance are evident.

Performance Based Organizations: A DoD First

Further, DoD's commitment to reinvention is also demonstrated through its determination to establish one of the first Performance Based Organizations (PBOs) in the Federal government. The Defense Commissary Agency (DeCA) will "stand up" as a PBO in October 1996 and will seek legislative changes to enhance its effectiveness over the next fiscal year. Establishing the Defense Commissary Agency as a PBO will allow the commissaries to serve their customers better and at lower cost to the taxpayer and the customer. The benefit to military personnel will be maintained. This management improvement will be achieved by a series of administrative waivers and legislative changes which will allow the Defense Commissary Agency to operate with additional efficiencies. The Defense Printing Service also plans to become a PBO in the Fall of 1996 pending approval of administrative waivers.

Conclusion

DoD continues to reinvent itself. One of NPR's current efforts involves providing the public with the capability to access information, services and actual transactions through the White House Homepage. Several areas within DoD are being reviewed for possible participation in this effort.

Encouragement and support for reinvention from top management, including the NPR, OMB, and DoD's policymakers, combined with innovations from the field, including the reinvention labs, have produced the synergy needed for successful innovation in DoD. This report chronicles some of the most important and most significant of these innovations.