Defense Acquisition Organizations: Linking Workforce Reductions with
Better Program Outcomes (Testimony, 04/08/97, GAO/T-NSIAD-97-140).

GAO discussed issues associated with the acquisition workforce and
acquisition process of the Department of Defense (DOD), focusing on: (1)
the reasons why reducing infrastructure will be a complex and
challenging undertaking; and (2) DOD's plan to reduce and restructure
its acquisition workforce.

GAO noted that: (1) first, there is no agreed-upon definition of what
constitutes the acquisition workforce; (2) this makes targeting changes
and measuring their progress very difficult; (3) second, the workforce
cuts made to date have not resulted in expected savings and have kept
the basic organizational structure relatively intact; (4) third,
decisions to restructure or reduce the acquisition workforce should be
linked to getting better outcomes from the acquisition process; (5)
cutting personnel levels without changing how acquisition organizations
generate weapon system requirements and estimates will miss an
opportunity to address the deep-seated causes of acquisition problems;
(6) DOD was required to submit a plan to reduce and restructure its
acquisition workforce in response to the Fiscal Year 1996 Defense
Authorization Act, which it submitted in January of this year; (7) GAO's
preliminary observations show that the plan appears to fall short of
what is needed; (8) DOD has presented numbers in the plan that show a
declining workforce; (9) the definitional differences described earlier
could make it difficult to evaluate the extent of any quantitative
changes in the workforce; (10) these declines, as GAO has previously
shown, do not necessarily indicate commensurate savings, do not preclude
contracting out functions previously performed by government employees,
or ensure that organizations and functions have been appropriately
adjusted and not just "hollowed out"; (11) in responding to the
legislative requirement to eliminate duplication of functions and
maximize opportunities for consolidation among acquisition
organizations, the plan includes actions such as base closures and
pending plans that will not take effect until after the year 2000; (12)
the plan does not assess specific streamlining and restructuring
options, but rather concludes that DOD's current efforts are sufficient;
and (13) it is unclear whether the plan is maximizing opportunities to
consolidate or will result in an acquisition workforce and structure
that will achieve better program outcomes.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-97-140
     TITLE:  Defense Acquisition Organizations: Linking Workforce 
             Reductions with Better Program Outcomes
      DATE:  04/08/97
   SUBJECT:  Defense procurement
             Base closures
             Civilian employees
             Federal downsizing
             Personnel management
             Reductions in force
             Advanced weapons systems
             Future budget projections
             Defense cost control
             Privatization
IDENTIFIER:  F/A-18C/D Aircraft
             F/A-18E/F Aircraft
             Hornet Aircraft
             
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Cover
================================================================ COVER


Before the Subcommittees on Military Procurement and Military
Readiness, Committee on National Security, House of Representatives

For Release on Delivery
Expected at
10:00 a.m., EDT
Tuesday
April 8, 1997

DEFENSE ACQUISITION ORGANIZATIONS
- LINKING WORKFORCE REDUCTIONS
WITH BETTER PROGRAM OUTCOMES

Statement of Louis J.  Rodrigues, Director, Defense Acquisitions
Issues, National Security and International Affairs Division

GAO/T-NSIAD-97-140

GAO/NSIAD-97-140T


(707257)


Abbreviations
=============================================================== ABBREV

  DAWIA - Defense Acquisition Workforce Improvement Act
  DOD - Department of Defense
  FAA - Federal Aviation Administration
  GAO - General Accounting Office
  NSIAD - National Security and International Affairs Division
  RCED - Resources, Community, and Economic Development Division

============================================================ Chapter 0

Mr.  Chairmen and Members of the Subcommittees: 

I am pleased to be here today to discuss issues associated with the
acquisition workforce and acquisition process of the Department of
Defense (DOD). 

As you know, Mr.  Chairmen, we have reported many times on cost
growth and other problems on individual weapon systems; systemic
problems, such as the mismatch between planned programs and available
funding; and the underlying reasons for these problems.  I believe
that in contemplating changes to the acquisition workforce, there is
an opportunity to improve the acquisition process and the results it
produces.  It does not appear to us that DOD has taken that
opportunity.  It is not an easy task but we believe that it is the
right approach. 

Reducing infrastructure is one approach DOD is pursuing to increase
funds for modernization.  As an element of that infrastructure, the
defense acquisition workforce is a logical place to look for
efficiencies and savings.  This morning I will talk about the reasons
why this will be a complex and challenging undertaking.  I see these
reasons as threefold: 

First, there is no agreed-upon definition of what constitutes the
acquisition workforce.  This makes targeting changes and measuring
their progress very difficult.  Second, the workforce cuts made to
date have not resulted in expected savings and have kept the basic
organizational structure relatively intact.  Third, decisions to
restructure or reduce the acquisition workforce should be linked to
getting better outcomes from the acquisition process.  Cutting
personnel levels without changing how acquisition organizations
generate weapon system requirements and estimates will miss an
opportunity to address the deep-seated causes of acquisition
problems. 

I will elaborate on these points in my statement today and will offer
some preliminary observations on DOD 's plan to reduce and
restructure its acquisition workforce submitted in January in
response to legislation.  Before turning to these issues, I would
like to provide a general description of the current climate for
change. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

As you know, budgets available for defense modernization over the
last several years have been declining.  In response, there has been
a significant restructuring of the defense industry.  Lockheed and
Martin Marietta, the Northrop and Grumman Corporations, Hughes
Aircraft Company and General Dynamics Corporation's Missile
Operations, to name a few, have merged in the face of reduced defense
spending now and for the foreseeable future.  Those companies and
others have determined that their health and profitability required
more efficient structures, less overhead, and fewer employees.  So
too has DOD.  Yet within DOD itself, which is operating in the same
environment of declining resources but without the same business
imperatives, no such restructuring of the acquisition community of
this magnitude has occurred. 

The demand within DOD for available dollars is growing.  DOD has said
that funds needed for weapons modernization will come, in part, from
acquisition reform initiatives and infrastructure reductions. 
However, the significant level of savings has not yet materialized. 
It is clear there is a significant mismatch between desired program
funding and funds available that should not be perpetuated. 


   WHAT IS THE ACQUISITION
   WORKFORCE? 
---------------------------------------------------------- Chapter 0:2

A sound, agreed-upon definition of what constitutes the workforce is
important for two reasons.  It helps set the stage for identifying
those individuals and organizations involved in the acquisition
process and it is critical in establishing whether and to what extent
DOD is making cuts.  When measuring cuts on a percentage basis, which
DOD has been mandated to do, the larger the baseline, the larger the
cuts for any given percentage. 

The smallest universe I am aware of that defines DOD's acquisition
workforce is the 46,500 people DOD includes in its estimate of
personnel associated with infrastructure.  A second definition is
those individuals covered by the Defense Acquisition Workforce
Improvement Act (DAWIA) of 1990.  The DAWIA work force in fiscal year
1994 was about 114,000.  About 98,000 of these were civilians. 

A third definition is based on the DOD instruction that defines an
acquisition organization as one whose mission includes planning,
managing, and/or executing acquisition programs that are governed by
the DOD 5000 series of regulations.  In our November 1995 report,\1
we pointed out that the workforce associated with those organizations
in 1994 was about 464,000, of which about 398,000 were civilians. 

In its plan on workforce downsizing recently submitted in response to
section 906 of the Fiscal Year 1996 Defense Authorization Act, DOD
used a fourth definition.  This definition includes acquisition
organizations, minus depot trade skill personnel. 

DOD states that its workforce in the first quarter of fiscal year
1997 was comprised of about 382,420 military and civilian personnel,
using the same definition we used in our 1995 report.  DOD has stated
its intention to develop another definition of the acquisition
workforce.  If in doing so, however, the baseline changes, it may be
necessary to calculate future cuts differently. 

Finally, I should point out that these definitions may not include
all of the organizations within the services that establish
requirements to start new programs--groups with a significant impact
on the acquisition process.  We do not know how many additional
people this would entail. 


--------------------
\1 Defense Acquisition Organizations:  Changes in Cost and Size of
Civilian Workforce (GAO/NSIAD-96-46, Nov.  13, 1995). 


   MANAGING THE ACQUISITION
   WORKFORCE
---------------------------------------------------------- Chapter 0:3

In our November 1995 report on selected aspects of DOD's acquisition
workforce, we compared civilian acquisition workforce levels with
procurement budget funding.  Figure 1 provides an update of that
comparison. 

   Figure 1:  Comparison of
   Civilian Workforce in
   Acquisition Organizations to
   Procurement Budget

   (See figure in printed
   edition.)

Source:  GAO analysis of DOD data. 

As you can see, the number of individuals involved first increased
and then decreased during the period from 1980 to 1994, roughly
tracking DOD's budgets during that period.  In 1994, a year that
roughly matched DOD's budget level in 1980, DOD's civilian
acquisition workforce was 12 percent smaller.  Since 1994, DOD has
continued to reduce its civilian workforce.  At the time of our 1995
review, DOD officials stated that it would be possible to again see
increases in the acquisition workforce with any increases in the
defense procurement budget. 

In our 1995 report, we found that the personnel reductions did not
result in a commensurate decline in civilian payroll cost.  The
average annual payroll costs for civilians in acquisition
organizations was about $20 billion in 1980 and in 1994, measured in
1996 constant dollars.  The higher per capita costs were due to
several factors.  There was a significant decline in blue collar
workers and an increase in white collar employees.  In addition, DOD
officials stated that civilian payroll costs increased because of the
advent of locality pay and changes in grade structure. 

We also looked more closely at two occupational categories in DOD's
acquisition workforce--engineers and computer specialists.  These
groups increased from 1980 until 1990 and then decreased from 1990
until 1994.  During the period of decrease, we found that contracts
for these services were increasing.  To the extent that DOD was
contracting out for services its own personnel formerly provided--in
essence, outsourcing--savings from reducing those positions would be
offset.  In general, our work on outsourcing shows that there is
reason for caution about whether the magnitude of hoped for savings
can be achieved. 

Finally, despite the declines in both the defense procurement budgets
and the civilian workforce since 1990, the number of acquisition
organizations remains relatively constant.  Each acquisition
organization maintains similar occupational fields in common areas
such as personnel, budgeting, computing specialists, and contracting. 
Many other duties performed in these occupations are not unique to an
acquisition organization's mission.  As a result, there may be
significant opportunities to improve efficiencies in these areas. 

In one sense, the consistency in DOD's acquisition structure may
reflect the incentives underlying the process by which DOD acquires
systems.  Despite the many reform initiatives adopted by DOD over the
last several years, many of which represent improvements, the basic
incentives in weapons acquisition to downplay risk and present
optimistic assessments of cost, schedule, and performance still
exist.  Putting in place incentives and performance indices that
drive DOD acquisitions to be more efficient and effective, in other
words, to change the culture, should go hand in hand with a more
efficient structure that can operate successfully with a reduced
force and, perhaps, result in better outcomes. 

Let me turn now to those outcomes. 


   THE NEED FOR BETTER ACQUISITION
   OUTCOMES
---------------------------------------------------------- Chapter 0:4

DOD's acquisition process has provided the United States with
military weapons that no other country is in a position to challenge. 
Yet, despite a number of initiatives to improve the process, the
acquisition of these weapons has been and, in many cases continues to
be, fraught with significant problems.  Weapon systems cost more and
take longer to field than expected, encounter performance problems,
and are often difficult to produce or support.  Stretching out
production of proven systems to fund new starts or going into
production with unproven systems are conscious decisions that
contribute to these problems.  These outcomes put significant
pressure on the efficient use of resources.  Thus, the goal of
improving acquisition outcomes is perhaps more important today than
ever.  Understanding the factors that drive those outcomes is
critical in working toward this goal. 


      ACQUISITION OUTCOMES ARE
      ACCOMPANIED BY PERSISTENT
      PROBLEMS
-------------------------------------------------------- Chapter 0:4.1

At the aggregate level, a systemic problem with weapon acquisitions
has been described as "too many programs chasing too few dollars". 
We first reported on this issue in 1984.  At that time, our analysis
showed that from 1963 to 1983, the Congress provided an average of 32
percent more in appropriations for weapons than projected in DOD
plans, even though the numbers of weapons DOD procured were less than
anticipated.  In the late 1980s, we estimated the mismatch between
DOD's program estimates and estimated appropriations to be $553
billion over a 5-year period.  In 1995, we estimated this mismatch
could exceed $150 billion over a 5-year period.  It is still a
problem today, as evidenced by repeated delays in DOD's projected
buildup of procurement funding, illustrated in figure 2. 

   Figure 2:  Planned DOD
   Procurement Programs Since 1995

   (See figure in printed
   edition.)

Source:  DOD Future Years Defense Program data. 

To illustrate, assume that a weapon system was approved to begin low
rate production in fiscal year 1995 on the basis that the projected
funding increases would support full rate production in fiscal year
1998.  As you can see, as fiscal year 1998 approached, the projected
funding increases did not materialize.  Consequently, the program
started in fiscal year 1995 would have to continue in low rate
production, along with other programs, to fit within available
funding for fiscal year 1998. 

Despite the chronic nature of this funding mismatch, DOD continues to
(1) generate and support acquisitions of new weapon systems that will
not satisfy the most critical requirements at minimal cost and (2)
plan on the availability of more procurement funds than can be
reasonably expected to be in future budgets.  For example, we have
reported that DOD is proceeding with major investments to improve air
power capabilities without clear evidence that all of the programs
are justified.\2 Some of these programs will add only marginally to
already formidable capabilities; in some cases viable, less costly
alternatives exist.  As a case in point, we have reported that the
Navy's F/A-18E/F program will result in an aircraft whose operational
capabilities will only be marginally improved over that of the
F/A-18C/D model.\3 Yet, the C/D model would cost almost $17 billion
less (in fiscal year 1996 dollars) in recurring flyaway costs for the
purchase of 660 aircraft.\4

DOD's force modernization plans are based on several assumptions that
we believe are unlikely to materialize fully.  These assumptions
include: 

  -- Procurement funding levels will rise to $60.1 billion in fiscal
     year 2001-- over 40 percent higher than the fiscal year 1997
     procurement budget. 

  -- Significant savings will result from base closures, other
     infrastructure reductions, and outsourcing many support
     activities. 

  -- Significant savings will result from reforming the defense
     acquisition system. 

On individual acquisition programs, familiar problems still add
billions of dollars to defense acquisition costs.  Problems persist
regarding (1) questionable requirements and solutions that are not
the most cost-effective available; (2) unrealistic cost, schedule,
and performance estimates; (3) questionable program affordability;
and (4) the use of high-risk acquisition strategies.  Over the years,
we have observed that, while a small number of systems reach the
field as unqualified successes and a small number are canceled, most
weapons reach the field but cost more, take longer, and are often
harder to support than expected.  Generally, they represent a
significant improvement over those weapons they replace, but it is
not uncommon for them to have performance shortfalls or to require
expensive, time-consuming modifications to achieve the required
performance.  These outcomes are impervious to different reforms,
contract types, contractors, acquisition strategies, weapon types,
critics, military services, administrations, and Congresses.\5

To the extent these problems increase the costs of individual
programs, they exacerbate the aggregate funding mismatch that already
exists.  DOD usually resolves these funding mismatches--whether
stemming from across-the-board cuts in defense spending, the
unanticipated start of a new program, or cost growth-- by stretching
and reshuffling programs to fit new funding levels.  For example, we
have recently reported that DOD has inappropriately placed a high
priority on buying large numbers of untested weapons during low-rate
initial production to ensure commitment to new programs and thus has
had to cut by more than half its planned full-rate production for
many weapons that have already been tested.\6 The costs for 17 of 22
full-rate production systems we reviewed increased by $10 billion
beyond original estimates due to stretching out the completion of the
weapons' production. 


--------------------
\2 Combat Air Power:  Joint Mission Assessments Needed Before Making
Program and Budget Decisions (GAO/NSIAD-96-177, Sept.  20, 1996). 

\3 Navy Aviation:  F/A-18E/F Will Provide Marginal Operational
Improvement at High Cost (GAO/NSIAD-96-98, June 18, 1996). 

\4 Recurring flyaway costs include costs related to the production of
the basic aircraft and do not include all procurement costs. 

\5 Weapons Acquisition:  A Rare Opportunity for Lasting Change
(GAO/NSIAD- 93-15, Dec.  31, 1992). 

\6 Weapons Acquisition:  Better Use of Limited DOD Acquisition
Funding Would Reduce Costs (GAO/NSIAD-97-23, Feb.  13, 1997). 


      OUTCOMES ARE THE
      CONSEQUENCES OF AN
      UNDERLYING CULTURE
-------------------------------------------------------- Chapter 0:4.2

While occurrences such as performance shortfalls, schedule delays,
and cost increases are frequently cited as the major problems in
weapon acquisitions, we believe that they are largely the
consequences of a prevailing culture.  This culture can be defined as
the collective behavior of the various participants in the
acquisition process and the forces that motivate their behavior.  In
fact, the process may be more realistically portrayed as the
interaction of its participants than the methodological procedure
depicted on paper.  This culture has evolved as the acquisition
process has become a vehicle for meeting the diverse needs of its
participants. 

While participants may see their individual needs as aligned with the
national interest, collectively, these needs create incentives for
pushing programs and encouraging undue optimism, parochialism, and
other compromises of good judgment.  Under these circumstances, the
inevitable performance problems, cost growth, schedule slippage, and
difficulties with field support cannot be written off as mainly the
result of errors or lack of expertise.  Rather, these problems have
been the undesirable, but apparently acceptable, consequences of the
process.  They persist not because they are overlooked or
underregulated, but because they enable more programs to survive and
thus more needs to be met.  Over time, the threat and the ability of
weapon programs to help participants achieve their own goals have
institutionalized a culture that prefers continuing a program over
terminating it and hinders making difficult trade-offs to alleviate
cost, affordability, duplication, risk, and logistic supportability
concerns.  Collectively, these needs shape the cultural problem, for
they cannot be easily met without an ample supply of programs. 

The traditional difficulty the acquisition process has had in dealing
squarely with affordability limitations is a case in point.  In a
collective process that favors compromise, decisionmakers have
preferred to find ways to afford individual programs rather than
making difficult decisions between programs that would result in not
starting or terminating some.  The result has been to sustain more
programs at lower funding levels rather than to fully fund fewer
programs.  Program sponsors are motivated to make optimistic cost
assumptions and to reduce quantities, program scope, or prolong the
schedule to avoid cancellation.  Although these actions do not solve
the long-term affordability problem, they lessen the need for
decision-makers to make difficult choices among programs. 
Collectively, they provide insights as to why the production rates of
mature programs are lowered to make room for new production of
immature weapons. 

The seeds of weapon system problems can often be traced to the very
beginning of the acquisition process.  In addressing mission needs,
service organizations propose programs that perpetuate their
existence and oversell the programs to ensure their survival. 
Predictably, programs begin as parochial solutions embodying highly
optimistic estimates.  If the proposing organizations were to act
more objectively, they could doom their own programs and jeopardize
their own existence.  The decisions made in justifying a program are
crucial because they largely determine the eventual performance,
schedule, and cost of the weapon system.  An approved requirement
embodies how a weapon is to perform its mission and often the
specific technical characteristics it is to possess, thereby setting
the tone for the remainder of the acquisition. 

The parochialism endemic to the services' structures for developing
weapon system requirements tends to narrow consideration of
alternatives.  The convergence of parochial preferences and the
demand for high performance in justifying weapons creates incentives
for developing requirements that embody a preferred solution against
which alternatives can hardly compete.  The result is not necessarily
that the best solution to a valid need is selected, but that the
preferred solution is successfully justified. 

The organizations responsible for developing requirements for new
weapons generally represent individual communities, such as infantry,
within the services that analyze their own mission area deficiencies
and recommend solutions from within their communities.  These
organizations, over time, have institutionalized an advocacy for the
weapons under their purview and help perpetuate the funneling of
successor weapons into the acquisition process.  Under this system
for developing requirements, programs are justified on their unique
characteristics under the protection of closely-guarded missions,
making it difficult to broadly assess which alternative best serves
the general defense.  Narrow reviews of missions and requirements,
together with each service's reluctance to compromise in design or
performance goals for weapon systems, have contributed to the
services' large investment in service-unique weapons that perform
similar missions. 

As a program proceeds through development, the disposition for
sponsors to present program information optimistically and to protect
the program against disruption intensifies.  This behavior is
necessary to overcome the numerous challenges a program faces as it
competes for more funds.  At the same time, program support grows
because more acquisition participants have become active sponsors and
because the money spent has built a compelling argument for
continuing the program.  Together, these factors complement the
initial efforts to push the program and begin to pull it through the
acquisition process.  They enable the program to develop "a life of
its own" and to become its own objective.  Thus, even when the very
underpinnings of a program are badly shaken, strong arguments are
made by participants at all levels to continue the program as
planned.  This is particularly true for programs that have entered
the engineering and manufacturing development phase, by which time it
is generally conceded that they are committed to production. 
Ironically, if a weapon has serious problems, they are most likely to
surface during this phase-- when the program has become virtually
unstoppable. 

The foregoing does not stem from a pejorative view of individual
participants or organizations.  Rather, they do what they believe is
right given the pressures they face.  The difficulty lies in the fact
that there is no consensus on what is right.  In the absence of such
a consensus, the acquisition process serves to satisfy the diverse
needs of its participants within the umbrella of providing U.S. 
forces with the best weaponry.  In so doing, the incentives of the
process-- both positive and negative--favor maximizing programs. 
Parochialism, optimism, protectionism, and information hoarding are
pragmatic responses to these incentives, while cost growth, schedule
delays, duplication, and performance problems are the logical
consequences.  These cultural issues are not unique to DOD's weapons
acquisitions; we have reported on a similar situation with respect to
major acquisitions undertaken by the Federal Aviation
Administration.\7


--------------------
\7 Aviation Acquisition:  A Comprehensive Strategy Is Needed for
Cultural Change at FAA (GAO/RCED-96-159, Aug.  22, 1996). 


      A JOINT PERSPECTIVE IS
      NEEDED
-------------------------------------------------------- Chapter 0:4.3

Several attempts have been made to strengthen DOD's ability to set
program requirements and priorities from an aggregate perspective to
curb the dominance of the individual service perspective.  These
include (1) the Goldwater-Nichols Department of Defense
Reorganization Act of 1986, (2) the increased responsibilities given
to the Joint Requirements Oversight Council, and (3) the
establishment of the joint warfighting capability assessment process. 
Although these efforts have improved DOD's joint orientation, the
individual services continue to heavily influence defense decisions,
particularly those related to investments in weapons. 

In its May 1995 report, the Commission on Roles and Missions of the
Armed Forces faulted the decision support processes that DOD used to
develop requirements and make resource allocation decisions.  It
cited a need for the Joint Requirements Oversight Council and the
Office of the Secretary of Defense staff to address DOD needs in the
aggregate.  The Commission found that each service was fully engaged
in trying to deliver to the commanders in chief what it viewed as the
best possible set of its specific capabilities, without taking into
account the similar capabilities provided by the other services.  We
believe that the Chairman of the Joint Chiefs of Staff must be the
strong advocate for the joint perspective that the Goldwater-Nichols
legislation intended. 

In our review of combat air power, we found that DOD had not
sufficiently assessed joint mission requirements and was not well
positioned to determine the need for and priority of its planned
investments.  Joint warfighting capability assessment teams have thus
far had little impact in identifying unneeded overlaps and
duplication in existing capabilities or in weighing the relative
merits of alternatives.  Assessments that could threaten service
plans and budgets are frequently avoided, and the potential effects
of program reductions or cancellations on careers, jobs, and
industrial base inhibit serious consideration of alternatives. 

We also found that not enough information is available above the
service levels to weigh individual investments against aggregate
capabilities.  Consequently, there is little assurance that the
decisions to buy or modify air power systems are sound.  Aggregate
analysis has been limited by (1) weak analytical tools and databases,
(2) weaknesses in decision-making support processes (such as the
Office of the Secretary of Defense's oversight being limited by
information shortages and the limited ability of joint warfighting
concerns to influence the requirements for new weapons), and (3)
service resistance. 

Conversely, much of the information for making decisions on major
acquisition programs is developed by the individual services and is
limited in scope.  The services conduct considerable analyses to
identify mission needs and justify new weapons proposals.  The needs
are not based on assessments of the aggregate capabilities of the
services to perform missions and DOD does not routinely review
service modernization proposals from such a perspective.  Currently,
reviews done by the Office of the Secretary of Defense and the Joint
Requirements Oversight Council have not provided adequate assurance
that there is a valid mission need, that force capabilities are
properly sized, and that the most cost-effective alternative has been
identified. 


   DOD'S PLANNED RESTRUCTURING
---------------------------------------------------------- Chapter 0:5

As you know, DOD was required to submit a plan to reduce and
restructure its acquisition workforce in response to Section 906 of
the Fiscal Year 1996 Defense Authorization Act.  Specifically, the
plan was to (1) result in an acquisition workforce that was 25
percent smaller by the end of fiscal year 2000 than it was in fiscal
year 1996, (2) eliminate duplication of functions, (3) maximize
opportunities for consolidation among DOD's acquisition organizations
and (4) assess specific streamlining and restructuring options.  DOD
submitted the plan in January of this year and at the request of this
Committee, we have just begun an evaluation of it.  But today, I can
offer some preliminary observations. 

It appears that the plan falls short of what is needed. 

DOD has presented numbers in the plan that show a declining
workforce.  The definitional differences I described earlier in my
statement could make it difficult to evaluate the extent of any
quantitative changes in the workforce.  These declines, as we have
previously shown, do not necessarily indicate commensurate savings,
do not preclude contracting out functions previously performed by
government employees, or ensure that organizations and functions have
been appropriately adjusted and not just ╣hollowed out.║

In responding to the legislative requirement to eliminate duplication
of functions and maximize opportunities for consolidation among
acquisition organizations, the plan includes actions such as base
closures and pending plans that will not take effect until after the
year 2000.  The plan does not assess specific streamlining and
restructuring options but rather concludes that DOD's current efforts
are sufficient.  It is unclear whether the plan is maximizing
opportunities to consolidate or will result in an acquisition
workforce and structure that will achieve better program outcomes. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 0:6

If better program outcomes are desired and persistent acquisition
problems are to be alleviated, then the motives and incentives that
drive the participants and the process must be realigned to produce
such outcomes.  Thus, decisions on how to reduce or restructure DOD's
acquisition workforce should, at the same time, alter the status quo
and improve outcomes. 

Whether DOD's acquisition workforce and organizations drive the
outcomes of the acquisition process or are a reflection of them, they
are connected in a way that should be considered in contemplating
solutions. 


-------------------------------------------------------- Chapter 0:6.1

Mr.  Chairmen, this concludes my prepared statement.  I would be
happy to respond to any questions you or other Members of the
Subcommittees may have. 

RELATED GAO REPORTS

Defense Restructuring Costs:  Information Pertaining to Five Business
Combinations (GAO/NSIAD-97-97, Apr.  1, 1997). 

Defense Outsourcing:  Challenges Facing DOD As It Attempts to Save
Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar.  12,
1997). 

Combat Air Power:  Joint Mission Assessments Could Enhance Investment
Decisions (GAO/T-NSIAD-97-105, Mar.  5, 1997). 

Defense Aircraft Investments:  Major Program Commitments Based on
Optimistic Budget Projections (GAO/T-NSIAD-97-103, Mar.  5, 1997). 

Weapons Acquisition:  Better Use of Limited DOD Acquisition Funding
Would Reduce Costs (GAO/NSIAD-97-23, Feb.  13, 1997). 

High-Risk Series:  Defense Weapon Systems Acquisition (GAO/HR-97-6,
Feb.  1997). 

Combat Air Power:  Joint Mission Assessments Needed Before Making
Program and Budget Decisions (GAO/NSIAD-96-177, Sept.  20, 1996). 

Aviation Acquisition:  A Comprehensive Strategy Is Needed for
Cultural Change at FAA (GAO/RCED-96-159, Aug.  22, 1996). 

Navy Aviation:  F/A-18E/F Will Provide Marginal Operational
Improvement at High Cost (GAO/NSIAD-96-98, June 18, 1996). 

Acquisition Management:  Fiscal Year 1995 Waivers of Acquisition
Workforce Requirements (GAO/NSIAD-96-102, Apr.  15, 1996). 

Defense Infrastructure:  Budget Estimates for 1996-2001 Offer Little
Savings for Modernization (GAO/NSIAD-96-131, Apr.  4, 1996). 

Defense Acquisition Organizations:  Changes in Cost and Size of
Civilian Workforce (GAO/NSIAD-96-46, Nov.  13, 1995). 

DOD Infrastructure:  DOD's Planned Finance and Accounting Structure
Is Not Well Justified (GAO/NSIAD-95-127, Sept.  1995). 

Weapons Acquisition:  Low-Rate Initial Production Used to Buy Weapon
Systems Prematurely (GAO/NSIAD-95-18, Nov.  21, 1994). 

Weapons Acquisition:  A Rare Opportunity for Lasting Change
(GAO/NSIAD-93- 15, Dec.  31, 1992). 

Underestimation of Funding Requirements in Five Year Procurement
Plans (GAO/NSIAD-84-88, Mar.  12, 1984). 

*** End of document. ***