Index


Defense Infrastructure: Improved Performance Measures Would Enhance
Defense Reform Initiative (Letter Report, 08/04/1999, GAO/NSIAD-99-169).

Pursuant to a congressional request, GAO provided information on the
Defense Reform Initiative (DRI), focusing on: (1) the types of
performance measures used to track progress toward achieving DRI program
goals; (2) opportunities to add or improve on existing performance
measures; and (3) performance measurement limitations.

GAO noted that: (1) DRI initiatives are assessed largely through output
performance measures that provide an indication of the status of
implementation; (2) as the Department of Defense (DOD) continues its
efforts to reform its business processes, opportunities exist to
increase the emphasis on outcome measures that would help it better
assess results of the initiatives individually and collectively; (3)
however, credible financial and other performance data needed to
establish more outcome-oriented measures are not available in some
areas; and (4) the fact that DOD does not have adequate cost systems
continues to impair its ability to develop reliable cost-based
performance measures.

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

 REPORTNUM:  NSIAD-99-169
     TITLE:  Defense Infrastructure: Improved Performance Measures
	     Would Enhance Defense Reform Initiative
      DATE:  08/04/1999
   SUBJECT:  Performance measures
	     Defense economic analysis
	     Defense cost control
	     Reengineering (management)
	     Management information systems
	     Privatization
	     Federal agency reorganization
	     Strategic planning
	     Private sector practices
	     Military downsizing
IDENTIFIER:  DOD Quadrennial Defense Review
	     Defense Reform Initiative
	     DOD Total Asset Visibility Initiative
	     DOD Commercial Activities Management Information System

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A Report to the Chairman, Committee on Armed Services,
House of Representatives

GAO/NSIAD-99-169

August 1999 DEFENSE INFRASTRUCTURE

Improved Performance Measures Would Enhance Defense Reform
Initiative

National Security and International Affairs Division

B-282781 Letter August 4, 1999 The Honorable Floyd D. Spence
Chairman, Committee on Armed Services House of Representatives

Dear Mr. Chairman: The Defense Reform Initiative (DRI) represents
an important set of actions aimed at improving the effectiveness
and efficiency of the Department of Defense's (DOD) business
operations. This letter responds to your request

for information to supplement our recently issued report on the
DRI effort. 1 As you requested, we are providing additional
information on the performance measures DOD has in place to track
the progress of the DRI. Specifically, this report addresses (1)
types of performance measures used to track progress toward
achieving DRI program goals, (2) opportunities to add or improve
on existing performance measures, and (3) performance

measurement limitations. Where appropriate, we have updated the
status of individual initiatives included in the DRI. As agreed
with your office, this report only focuses on initiatives
originally included in the DRI program. Further information on our
scope and methodology are included in appendix I. In general, DOD
uses two types of performance measures to help gauge DRI progress
output and outcome measures. 2 Output measures provide status
information about an initiative or program in terms of completing
an action in a specified time frame. Outcome- oriented measures
show results

or outcomes related to an initiative or program in terms of its 
effectiveness, efficiency, and/ or impact. Results in Brief Currently,
 DRI initiatives are assessed largely through output performance 
measures that provide an indication of the status of implementation. 
As DOD continues its efforts to reform its business processes, 
opportunities 1 Defense Reform Initiative: Organization, Status, 
and Challenges (

GAO/NSIAD-99-87
, Apr. 21, 1999). 2 The Results Act (P. L. 103- 62) defines outcome 
measures as an assessment of the results of a program activity 
compared to its intended purpose; it defines output measure as the 
tabulation, calculation, or recording of activity or effort that can 
be expressed in a quantitative or qualitative manner.

or outcomes related to an initiative or program in terms of its
effectiveness, efficiency, and/ or impact. Results in Brief
Currently, DRI initiatives are assessed largely through output
performance measures that provide an indication of the status of
implementation. As DOD continues its efforts to reform its
business processes, opportunities 1 Defense Reform Initiative:
Organization, Status, and Challenges (  GAO/NSIAD-99-87 , Apr. 21,
1999). 2 The Results Act (P. L. 103- 62) defines outcome measures
as an assessment of the results of a program activity compared to
its intended purpose; it defines output measure as the tabulation,
calculation, or recording of activity or effort that can be
expressed in a quantitative or qualitative manner.

exist to increase the emphasis on outcome measures that would help
it better assess results of the initiatives individually and
collectively. However, credible financial and other performance
data needed to establish more outcome- oriented measures are not
available in some areas. The fact that DOD does not have adequate
cost systems continues to impair its ability to develop reliable
cost- based performance measures. This report contains a
recommendation for DOD to develop outcome- oriented performance
measures for the DRI.

Background In November 1997, DOD announced the DRI as a major
effort to reduce infrastructure costs and improve business
operations. The DRI was undertaken to help implement the goals of
the May 1997 Quadrennial Defense Review (QDR). The QDR assessed
DOD's force mix, budget levels, missions, and support structures,
and subsequently provided the foundation for DOD's strategic plan
for purposes of compliance with the

Government Performance and Results Act. 3 Among other things, the
strategic plan called for DOD to shift about $20 billion from
operation and maintenance accounts to weapons systems
modernization accounts by fiscal year 2003. 4 DOD expects the DRI
to reduce infrastructure costs to help achieve this shift in
funding. The DRI, as announced in November 1997, included a
variety of initiatives that were expected to help achieve
infrastructure reductions and business process improvements. These
initiatives were grouped under four major areas or pillars:

 adopting best business practices to reengineer business and
support operations,  expanding the use of competition between the
public and private

sectors to improve performance and reduce the cost of commercial-
type activities and depot maintenance,

3 The Results Act requires federal agencies to set strategic
goals, measure performance, and report on the degree to which
goals are met. Its intent is to focus agencies on results, service
delivery, and program outcomes. It is expected to provide the
Congress and other decisionmakers with objective information on
the relative effectiveness and efficiency of federal programs. 4
As savings occur or are anticipated, DOD expects the military
services and defense agencies to apply them to other internal
needs during the annual budgeting process and incorporate them
into the Future Years Defense Program.

 eliminating facilities that are no longer needed and/ or drain
resources, and  reorganizing and reducing the size of DOD
headquarters organizations so they focus on corporate- level
tasks. Since the DRI was announced, DOD has expanded the scope of
the reform effort. In March 1999, DOD announced that several
additional initiatives would be brought under the umbrella of the
DRI, including acquisition, financial management, and logistics
reform efforts, as well as some

initiatives that were less related to business process reforms. To
determine if the DRI is achieving its stated goals of reducing
infrastructure and improving business processes, DOD needs
performance information to assess DRI progress. This assessment is
consistent with the requirements of the Results Act, which calls
for DOD, as well as other federal agencies, to improve program
effectiveness, accountability, and public confidence by focusing
on the outcome achieved from the resources expended. For the DRI,
goals and performance measures were set for

some initiatives in the DRI Report or in supplemental management
directives from the Deputy Secretary of Defense. 5 In addition,
DOD's Fiscal Year 2000 Performance Plan establishes performance
measures for several DRI initiatives as well as broader
performance measures that support goals of the QDR. 6

As noted, DOD generally uses two types of performance measures to
help gauge DRI progress output and outcome measures. Output
measures provide status information about an initiative or program
in terms of completing an action in a specified time frame. For
example, an output measure could show if an organizational change
was completed on time or if a quantifiable goal, such as
privatizing a specified number of housing

units, had been completed by a specified date. Outcome- oriented
measures show results or outcomes related to an initiative or
program in terms of its effectiveness, efficiency, and/ or impact.
For example, an outcome measure could show how processing time had
been reduced, customer service had 5 These supplemental management
directives are called Defense Reform Initiative Directives (DRID).
As of April 1999, the Deputy Secretary of Defense had issued 49
DRIDs.

6 The Results Act requires agencies to develop annual performance
plans. DOD's most recent plan is included as appendix J in the
February 1999 edition of the Secretary's Annual Report to the
Congress. We currently have a separate review underway examining
DOD's Fiscal Year 2000 Performance Plan as part of a
governmentwide review of how well such plans meet Results Act
requirements. That report is expected to be completed this summer.

been improved, or savings had been realized from particular
initiatives or groups of initiatives. In addition, most programs
or initiatives have some form of associated cost consequences that
can be directly or indirectly measured and considered in assessing
outcomes.

Both types of measures are appropriate for assessing performance.
While implementation of the Results Act has caused agencies to
increase emphasis on developing outcome measures, output measures
are still needed to assess how initiatives or groups of
initiatives are progressing toward given goals.

Opportunities to Initiatives initially included under the DRI
umbrella are in various stages of Improve DRI progress, ranging
from early implementation to completion. Most of the initiatives
have output performance measures, which largely focus on
Performance Measures

implementation progress or status, rather than results or outcome
measures. However, opportunities exist under individual DRI
pillars for increased focus on outcome- oriented measures.
Observations on performance measures for individual initiatives
are summarized below and outlined more fully by individual
initiatives in appendix II. Recent GAO

reports related to individual initiatives are listed by DRI pillar
in appendix III.

Pillar I Adopting Best Performance measures have been established
for six of the seven Business Practices

initiatives in this pillar and are under development for the
seventh. As shown in table 1, the measures for three of the
initiatives are strictly output- oriented while the other three
have a combination of output and outcome measures.

Table 1: Performance Measures for Pillar I Initiatives Performance
measures DRI initiative Output Outcome

Paper- free contracting  Electronic malls Purchase cards  Prime
vendors   Total asset visibility  Travel system reengineering
Household good transportation

Output measures generally indicate progress toward a specific
numerical goal. For example, the measure for purchase cards, which
are essentially government credit cards, shows the percentage of
eligible transactions carried out using the card. Outcome-
oriented measures, on the other hand, attempt to capture impact,
or at least aspects of it. For example, the

Defense Logistics Agency (DLA), which administers the prime vendor
7 program, has embedded measures for response times and fill rates
into its contracts with the private- sector vendors who supply
inventory under this program. The only initiative for which no
formal measures have been established is electronic malls.
Electronic malls are virtual one- stop shops in which DOD
customers can buy parts and supplies over the Internet. The malls
provide access to electronic catalogs as well as to government
contracts. Although DOD is tracking progress toward integrating
the malls that DLA and the services have established into a single
site, measures focusing on various aspects of the malls'
operations are still under

development. Preliminary measures, all of which are output-
oriented, are now undergoing review within the Office of the
Secretary of the Defense (OSD).

There are opportunities to add to or improve on existing
performance measures, and where feasible, additional measures
could be developed for initiatives under this first pillar. First,
the output- oriented measures DOD uses for several of the
initiatives do not, by their nature, indicate what impact these
initiatives are having on improving operations. For example,
paperless contracting is supposed to help DOD acquire and pay for
goods 7 Prime vendors are contractors that buy inventory items
from a variety of suppliers, store them in commercial warehouses,
and ship them to customers as needed.

faster and at lower cost. Yet no outcome- oriented measures exist
to show how paper- free contracting is contributing to this goal.
Second, the existing measures do not provide a means for
determining the impact of individual initiatives on broader- based
goals contained in DOD's Performance Plan. For example, the
Performance Plan calls for reducing supply inventories and points
to the prime vendor program as one of six

methods expected to help achieve these reductions. DOD's measures
for the prime vendor program, however, will not enable DOD to
determine how this program is contributing to reductions in
inventory levels.

Further, data limitations may hamper efforts to assess progress in
implementing some of the initiatives under this pillar. For
example, the measures that have been established for Total Asset
Visibility (TAV) do not account for key elements of this
initiative, making it difficult to precisely determine the
progress of this effort. Areas not measured include the

tracking of requisitions, assets in process and in transit, and
the improvement of logistics management within theaters of
operation. Moreover, the data used to calculate the measures that
do exist suffer from several problems. These problems include
inconsistencies among the services in establishing baselines for
measurement and the lack of information on the timeliness and
accuracy of the data that is captured. Our recent TAV report
recommended that DOD establish outcome- oriented goals and
performance measures for all relevant components of the

initiative to help address these shortcomings. 8 These measures
should be closely linked to improvement targets in documents such
as DOD's Performance Plan and its Logistics Strategic Plan. In
addition, unless substantive improvements are made to the accuracy
of the systems' data used to support TAV, it will be difficult to
reliably measure TAV

implementation. 9 Pillar II Streamlining Existing performance
measures for both A- 76 competitions and depot Through Competition

maintenance competitions, the two initiatives under this pillar,
are output oriented in that they measure progress against a given
numerical goal (see table 2).

8 See Defense Inventory: DOD Could Improve Total Asset Visibility
With Results Act Framework (GAO/NSIAD-99-40, Apr. 12, 1999). 9 See
DOD Financial Management: More Reliable Information Key to
Assuring Accountability and Managing Defense Operations More
Efficiently (GAO/ T- AIMD/ NSIAD- 99- 145, Apr. 14, 1999).

Table 2: Performance Measures for Pillar II Initiatives
Performance measures DRI initiative Output Outcome

A- 76 competitions  Depot maintenance competitions

For A- 76, DOD has set targets for the number of positions to be
subjected each year to the competitions, and it is tracking
progress against those targets. These targets, which have
continued to evolve and increase over the last 2 years, have been
included in DOD's Fiscal Year 2000 Performance Plan. For depot
maintenance, DOD is also tracking adherence to a given target or,
more appropriately, a contracting- out ceiling. The depot
maintenance ceiling was set by 10 U. S. C. 2466, which states that
not more than 50 percent of funds made available in a fiscal year
to a military

department or defense agency for depot- level repair and
maintenance can be used to contract for performance by nonfederal
personnel. DOD tracks the extent to which it is complying with
this requirement. Unlike the A- 76

program, however, depot maintenance competitions are not included
in the DOD Performance Plan. DOD could establish outcome- oriented
measures for this pillar. For A- 76, DOD could benefit by
supplementing its current measure with one that provides a clearer
indication of success. Specifically, a more telling measure would
be the amount of long- term savings resulting from the
competitions. Although DOD maintains estimates of projected
savings, we have identified various shortcomings in these
estimates with DOD not having a basis for tracking long- term
savings. Given DOD's long- standing problems of putting in place a
reliable method of accumulating the cost information necessary to
provide a baseline for measuring savings, DOD will doubtless face
challenges in developing more accurate savings estimates.
Nonetheless, given that about $11 billion in savings anticipated
from A- 76 competitions are being built in to future years'
budgets, such a

measure would seem essential; otherwise, DOD will not be able to
determine whether the program is meeting expectations and, if it
is not, whether mid- course corrections and budget adjustments are
needed. To accurately track savings associated with the A- 76
competitions, DOD will have to improve the quality of data in its
Commercial Activities Management Information System (CAMIS). We
recently reported that DOD could not rely on the CAMIS database to
provide accurate and

complete data necessary to track program outcome and savings. 10
DOD has recognized the limitations in the CAMIS data and has
established a working group composed of military service and major
defense agency representatives to improve the accuracy and
completeness of the system. DOD expects to have system
improvements implemented by the fall of 1999.

With respect to depot maintenance competitions, the Air Force
pointed out that it expects to save about $3.6 billion over the
next 7 to 15 years as a result of three recent public- private
competitions. Because the Air Force anticipates that these savings
will be reflected in future years budgets, it is important that it
establish mechanisms for tracking and reporting on the savings
that are actually achieved. This will give the Air Force
information

to assess the impact of the competitions and determine if its
savings projections are being achieved.

Our prior reporting on depot maintenance issues also suggests two
additional output- oriented measures, which could be beneficial.
One is a measure that assesses DOD's progress in increasing the
competitiveness of its depot- maintenance contracts. In a 1998
report, we pointed out that

91 percent of the depot maintenance contracts we reviewed were
awarded non- competitively, mostly to the original equipment
manufacturers. 11 We concluded that, as DOD continues to pursue
contracting out maintenance to the full extent allowed by law, the
Department needs to use competitively awarded depot maintenance
contracts to ensure the best

value. A second potential performance measure maximum potential
capacity is drawn from our previous reporting on this issue, where
we noted that that this measure could be used to provide a clearer
measure of excess capacity. 12 In our 1997 depot maintenance
testimony, we stated that while a

maximum potential capacity utilization of between 75 percent and
85 percent is generally considered an efficient operating level,
DOD depots 10 See DOD Competitive Sourcing: Results of Recent
Competitions (GAO/NSIAD-99-44, Feb. 23, 1999).

11 See Defense Depot Maintenance: Contracting Approaches Should
Address Workload Characteristics (GAO/NSIAD-98-130, Jun. 15,
1998). 12 We noted that DOD had normally measured excess capacity
by an analysis that constrained facility and equipment
availability by the availability of trained personnel and the
organization of work stations, assuming an 8- hour workday, for 5
days a week. See Defense Depot Maintenance: Uncertainties and
Challenges DOD Faces in Restructuring Its Depot Maintenance
Program (GAO/T-NSIAD-97-112, May 1, 1997).

had a projected maximum capacity utilization of about 50 percent
for 1999. Operating at lower utilization levels leads to higher
costs. Moreover, maximum capacity utilization is germane to the
outsourcing question

because, as DOD seeks to contract out the maximum extent of depot
work allowed, it siphons off work that could be used to help DOD
more fully utilize its assets. Using information on excess
capacity as part of the outsourcing decision could provide
insights into the extent and type of work best suited for
outsourcing as well as help DOD monitor the impact of competition
on depot maintenance utilization. Historically, while DOD has had
information on depot capacity, its approach to measuring it has
been limited. For example, its calculations have generally assumed
that depot equipment will be operated for only one 8- hour shift
daily, 5 days a week. In contrast, a maximum potential capacity
performance measure allows for

the expanded use of industrial assets through longer workdays and/
or additional shifts. It also does not limit capacity measurement
to the availability of trained personnel, as DOD's measure does.
Such a measure, used in conjunction with other measures of
capacity, such as the one DOD has traditionally used, would give
DOD a more complete picture of its depot maintenance capacity.

Pillar III Eliminating Performance measures are in place for six
of the eight initiatives under this Unneeded Infrastructure

pillar. Four of the initiatives for which measures have been
established are relying solely on output- oriented measures. The
other two initiatives have a mix of output- and outcome- oriented
measures.

Table 3: Performance Measures for Pillar III Initiatives
Performance measures DRI initiative Output Outcome

Base closures  Defense Information Systems Agency (DISA)
consolidations   Eliminating Defense Finance and Accounting
Service (DFAS) locations

Consolidation of research, development, test, and evaluation
facilities

Demolition of excess structures  Regional energy demonstrations
Utilities privatization  Housing privatization

As stated under previous pillars, output- oriented measures
typically indicate progress toward a specific numerical goal. For
example, the measures for base closures include the reduction in
excess acreage and reductions in plant replacement value.
Similarly, the measure for

demolition tracks the amount of square footage demolished. The
initiatives that have outcome- oriented measures are DISA
consolidations and regional energy demonstrations. In DISA's case,
measures directly affected by consolidation- related improvements
have been incorporated into DISA's performance contract, which
sets forth goals and measures by which DOD

will assess DISA's performance. The measures address costs and
productivity, work load and capacity issues, and quality of
service. In the case of regional energy demonstrations, DOD
tracked the extent to which new purchasing approaches affected
energy costs and conservation methods reduced energy consumption.
As for the initiatives that do not yet have performance measures

eliminating DFAS operating locations and consolidating research,
development, test, and evaluation facilities it is unclear what
measures DOD will use. DFAS completed a study intended to serve as
the basis for eliminating DFAS operating locations, but it is
still awaiting DOD approval. Similarly, DOD is still working on a
consolidation plan for the research, development, test, and
evaluation facilities, making discussion of formalized measures
premature. DOD's Performance Plan, however, does contain a broader
performance indicator that will likely apply to the consolidation
of these facilities. This indicator calls for reductions in the
acquisition work force, of which research, development, test, and
evaluation personnel are a part.

As we have stated in previous pillars, output- oriented measures
are clearly useful in tracking progress on a given initiative.
However, they provide a less clear basis for assessing impact of
the initiatives than would be available using outcome- oriented
measures such as those that might indicate whether utility-
related costs have been reduced through privatization, or to what
extent housing privatization is helping DOD meet its goal of
eliminating inadequate housing for service personnel. Pillar IV
Changing the The DRI called for about 40 specific organizational
changes to help meet

Organization the goals of this pillar. Many of the changes have
involved transferring responsibility for certain functions from
one organization to another, while

others have involved establishing new positions and organizations.
The DRI also called for specific staff reductions in the various
organizations

throughout DOD, generally over a period of several years. These
reductions include a 33- percent decrease in OSD staff; a 29-
percent decrease in the Joint Staff and associated activities; a
7- percent reduction in unified command personnel; a 36- percent
decrease in DOD field

activities and other operating organizations reporting to OSD; and
a 10- percent decrease in all other headquarters organizations,
including the headquarters of the military departments and their
major commands. The single largest staffing reduction, however, is
to occur in the defense agencies. The DRI called for reducing
their combined staff of nearly 130,000 personnel by 21 percent.

Each of these changes generally involve fewer implementing actions
than initiatives under the other pillars. Generally, the changes
can be measured by whether they have been completed and by the
increases and/ or decreases in personnel assigned to a particular
organization. In general, almost all of the changes under this
pillar have been carried out or are under way. The organizational
changes are being carried out through two primary approaches. In
the first approach, a number of the changes were put in motion via
DRI directives that were issued shortly after the DRI report was
issued. Of the 49 DRI directives issued, more than two- thirds
have dealt with organizational changes. In the other approach,
budget- related decisions were issued directing specific changes.

According to DOD documents, most of these changes were carried out
in fiscal year 1998.

The specific staffing reductions are to be met through a number of
approaches. As appendix II shows, these approaches include
transferring personnel to other organizations and returning to the
services military personnel who had been detailed to other
organizations, such as the Joint Staff. They also include
eliminating positions through measures such as early- out
incentives, outsourcing, and cutting positions that were already
vacant. The largest staffing cuts at the defense agencies,
however, are expected to be achieved in conjunction with other DRI
initiatives (such as A- 76 competitions), according to officials
at the three agencies we examined. 13 Since most organizations
have several years to carry out the

reductions, most reductions have not yet been completed. According
to DOD officials and documents, however, the affected
organizations have 13 Defense Logistics Agency, Defense
Information Systems Agency, and Defense Finance and Accounting
Service.

planned for the reductions and expect to meet the goals by the
given deadlines. Conclusions The DRI effort represents an
important set of actions aimed at improving

the effectiveness and efficiency of DOD's business operations.
Currently, performance measures associated with the DRI
initiatives emphasize status or output in 14 of the 17 initiatives
under the three pillars that focus on reforming business processes
and achieving infrastructure reductions. Without greater use of
outcome measures, DOD will not be able to systematically assess
the initiatives' impact on service improvement and cost reduction.
Many of the initiatives transferring responsibility for certain
functions from one organization to another, under the fourth
pillar discussed in this report, have already been implemented.
Others initiatives under this latter pillar involve personnel
reductions planned to occur by the

end of fiscal year 2003. Although we did not review each of the
initiatives in depth, our work did identify opportunities to
improve on the use of outcome measures under first three pillars
addressed in this report. For example, under pillar I, we noted
that no measures exist to indicate how paperless contracting is
contributing to the goal of helping DOD acquire and pay for goods
faster

and at lower cost or how the prime vendor program is contributing
to reductions in DOD's inventory levels. Likewise, under pillar
II, we noted that DOD lacks performance measures which would
identify the amount of long- term savings resulting from
competitive sourcing, a key uncertainty about this program. Also,
under pillar III, we noted that while the housing privatization
initiative has a numeric goal for number of units to be
privatized, no outcome measures were identified, such as tracking
the contribution of this initiative to eliminating inadequate
housing. While output measures are often necessary to track
progress of the initiatives, outcome measures are needed to
determine if the initiatives have accomplished desired service
improvements or cost reduction goals. As DOD continues its efforts
to reform its business processes, DOD could better assess results
of the initiatives individually and collectively by

increasing its emphasis on outcome measures. DOD's ability to do
this could be limited in some areas by the lack of credible
financial and other management information.

Recommendation We recommend that the Secretary of Defense
incorporate additional outcome oriented measures for initiatives
under each of the three DRI pillars that focus on reforming
business processes and achieving infrastructure reductions.

Agency Comments In commenting on a draft of this report, DOD
agreed to continue working on the development of outcome- based
measures where appropriate. It noted that it had formed a Results
Act Working Group that would review DOD's performance goals for
fiscal year 2001, verify the Results Act methodology, and collect
and report data on results achieved for resources

expended. It also pointed out that the Defense Reform Office has
initiated a review to determine appropriate performance metrics
for other reform initiatives. DOD's comments are included in their
entirety as appendix IV. We are sending copies of this report to
the Honorable William S. Cohen, Secretary of Defense; the
Honorable F. W. Peters, Secretary of the Air

Force; the Honorable Louis Caldera, Secretary of the Army; the
Honorable Richard Danzig, Secretary of the Navy; Lt. Gen. Henry T.
Glisson, Director, Defense Logistics Agency; the Honorable Jacob
J. Lew, Director, Office of Management and Budget; and interested
congressional committees and members. We will also make copies
available to others upon request. GAO

points of contact concerning this report and other key
contributors are listed in appendix V.

Sincerely yours, David R. Warren, Director Defense Management
Issues

Letter 1 Appendix I

16 Objectives, Scope, and Methodology

Appendix II 18

Defense Reform Initiative Performance Measures Appendix III

34 GAO Products Related to Initiatives Under Individual DRI
Pillars

Appendix IV 37

Comments From the Department of Defense

Appendix V 39

GAO Contacts and Staff Acknowledgments Tables Table 1: Performance
Measures for Pillar I Initiatives 5

Table 2: Performance Measures for Pillar II Initiatives 7 Table 3:
Performance Measures for Pillar III Initiatives 9 Table II. 1:
Performance Measures for Adopting Best Business

Practices 19 Table II. 2: Performance Measures for Streamlining
Through

Competition 23

Table II. 3: Performance Measures for Eliminating Unneeded
Infrastructure 25 Table II. 4: Status of Organizational Changes 29

Abbreviations

ASD Assistant Secretary of Defense CAMIS Commercial Activities
Management Information System DFAS Defense Finance and Accounting
Service DISA Defense Information Systems Agency DLA Defense
Logistics Agency DOD Department of Defense DRI Defense Reform
Initiative DRID Defense Reform Initiative Directive OSD Office of
the Secretary of Defense QDR Quadrennial Defense Review TAV Total
Asset Visibility USD Under Secretary of Defense

Appendi I x Objectives, Scope, and Methodology The Chairman, House
Committee on Armed Services asked us to supplement the information
in our recently issued report on the Department of Defense's (DOD)
Defense Reform Initiative (DRI). 1 Specifically, the Committee
asked us to review the types of performance measures DOD has in
place to monitor the progress and success of the DRI. Our
objectives were to provide additional information and observations
on (1) types of performance measures being used to track progress
toward achieving DRI program goals, (2) opportunities to add or
improve on existing performance measures, and (3) performance
measurement limitations. Where appropriate, we updated the status
information on individual initiatives included in our earlier
report to the Subcommittee on Readiness. As agreed with your
staff, we focused on the initiatives originally included in the
DRI program, not those subsequently added as reflected in DOD's
March 1999 program update.

To identify performance measures used by DOD organizations to
measure the progress of individual initiatives included in the
DRI, we met with and/ or conducted telephone interviews with
representatives from the Office of the Secretary of Defense (OSD),
the military services, and Defense agencies that are responsible
for implementing specific initiatives. During these discussions we
obtained updated information on the status of the initiatives, and
we identified and discussed the performance measures DOD used to
monitor their implementation. We reviewed documentation related to
specific initiatives and discussed the likelihood that they will
meet implementation schedules called for in the DRI Report. We
also requested information about the savings expected for each
initiative. We categorized the performance measures being used
into two groups output and outcome measures using criteria
promulgated by the Government Performance and Results Act. After
reviewing the types of measures DOD has in place for the DRI, we
made observations on how the

measures could be improved. Our observations were based primarily
on findings from other related GAO work that addressed elements of
the DRI and/ or that specifically addressed the topic of
performance measurement. To identify limitations with the quality
of data DOD has available to support performance measurement, we
relied on our prior work related to specific initiatives or
aspects of the DRI. Over the past several years, we have issued
numerous reports and testimonies that address this issue. 1
Defense Reform Initiative: Organization, Status, and Challenges
(GAO/NSIAD-99-87, Apr. 21, 1999).

During our work, we interviewed officials in OSD, including
representatives of the Under Secretary of Defense (Acquisition and
Technology), the Under Secretary of Defense (Comptroller), and the
Director of the DRI Office. We also met with two DOD- wide cross-
functional teams (the Task Force for Reengineering Initiatives and
the Paperless Contracting Working Level Team) located in
Washington, D. C., and we conducted work at the DOD Purchase Card
Joint Program Management Office in Falls Church, Virginia; the
Defense Travel System Project Management Office in Arlington,
Virginia; Army Headquarters, Air Force Headquarters, Navy
Headquarters, and Marine Corps Headquarters in Washington, D. C.;
Defense Finance and Accounting Service

Headquarters, Arlington, Virginia; Defense Information Systems
Agency Headquarters, Arlington, Virginia; Defense Logistics Agency
Headquarters, Fort Belvoir, Virginia; Air Force Materiel Command
Headquarters, Wright- Patterson Air Force Base, Ohio; Army
Materiel Command Headquarters, Arlington, Virginia; Naval
Facilities Engineering Command and Naval Sea Systems Command,
Arlington, Virginia; Naval Supply Systems Command, Mechanicsburg,
Pennsylvania; and the Army

Installation Service Activity, Rock Island, Illinois. We performed
our work from June 1998 through May 1999 in accordance with
generally accepted auditing standards.

Defense Reform Initiative Performance Appe ndi I I x Measures The
following tables provide details on the specific measures used for
each initiative. The initiatives are grouped by the four areas, or
pillars, in the DRI Report. The first three tables correspond to
three of these pillars: Adopting Best Business Practices,
Streamlining Through Competition,

and Eliminating Unneeded Infrastructure. They identify the
performance measures used and provide the status of each
initiative. The fourth table corresponds to the final DRI pillar,
Changing the Organization. Since this last pillar focuses on
organizational changes and staffing reductions rather

than on specific initiatives, the table does not include
information on performance measures. It simply lists the changes
that were called for and provides the status of each change.

Adopting Best Under this pillar, the DRI Report sets forth a
number of reengineering Business Practices initiatives that are
intended to apply best business practices to certain DOD

business processes. These initiatives involve converting specific
DOD business operations, such as contracting and bill paying, to
electronically- based processes; using the private sector to a
greater extent

to help DOD better manage its inventory; providing total
visibility of DOD equipment, supplies, and spare parts;
overhauling how official travel by DOD personnel is managed; and
improving the process for moving military personnel and their
families. DOD believes these initiatives will improve

efficiencies and save money and better position DOD to respond to
the demands of today's environment. Moreover, they are expected to
improve DOD's ability to serve its various constituents, such as
the warfighters. As shown in table II. 1, the DRI Report set
specific goals and deadlines for many of these initiatives. It did
not provide corresponding savings targets, but the report said
savings could be achieved as processes increasingly

become more efficient and effective.

Table II. 1: Performance Measures for Adopting Best Business
Practices Performance measures

Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures

measures Status of initiatives

Paperless Make all aspects of The DOD Performance

Paperless The percentage

Available information contracting the major weapons

Plan sets percentage contracting is paperless goals are indicates
that DOD will

systems contracting paper- free goals for major included as part
of output- oriented and not meet the deadline. process paperless

categories of the a measure that track DOD's efforts to An
integrated process by Jan. 1, 2000, contracting process: tracks
DOD's implement a paperless team was established through increased
purchase requests, progress toward contracting process. to plan
and coordinate application of funding documents, meeting the The
broader- based work in the services computer solicitations,
National measures in the and defense agencies technology. awards/
modifications, Partnership for Performance Plan, and to track
progress. receipts, and

Reinventing such as logistics However, establishing a

payments/ invoices. Also, Government goal of response time,
attempt standard process, the plan has goals for reducing paper to
show outcomes but interfacing the different percent of total
acquisition

transactions by 50 do not isolate how data systems, and
transactions that are

percent by FY individual initiatives, coordinating conducted
electronically. 2000.

such as paperless complementary efforts The initiative is also
contracting, will affect among the many offices expected to
contribute to the overall measure.

involved are difficult, reducing acquisition cycle time- consuming
tasks. time, logistics response time and the acquisition work
force, all of which are

measures in DOD's Performance Plan. Electronic

Expand use of None The program The preliminary DLA and the
services malls electronic malls. manager has measures are

established several Allow for on- line developed a output-
oriented. electronic malls that payment with preliminary set of
Although these

allow on- line purchases purchase cards by measures that are
measures have yet to from suppliers. DOD, July 1998. Use now being
reviewed be approved, DOD is however, is integrating purchase
cards for by OSD. These

also tracking progress most of these sites into all electronic
mall measures focus on

toward having a single a single, DOD- wide

purchases by things such as DOD- wide mall.

mall in accordance with Jan. 1, 2000. availability of items,
congressional direction the extent of sales (P. L. 105- 261).
DOD's

through the malls, Chief Information and various

Officer reported to the technical aspects of Congress in April
1999 the program.

that this integration would be completed by October 2000.

(continued)

Performance measures Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures

measures Status of initiatives

Purchase By FY 2000, buy 90 DOD's Performance Plans

None This measure is Use of these cards has cards percent of goods
states the same output- oriented and steadily increased. By and
services 90- percent goal as

tracks the percentage mid- 1998, DOD had

costing $2, 500 or mentioned in the DRI of eligible transactions
reached about 85 less using the

Report. Purchase cards carried out using the percent usage.
purchase card.

are also cited as DOD's card.

However, in FY 1998, primary means of DOD increased the size
achieving paperless of the universe of contracting for small
transactions, affecting purchases.

DOD's ability to meet the 90- percent usage goal before FY 2000.
DOD will have to reengineer certain processes. DOD is also
exploring benefits and risks of increasing the dollar limit to
$10, 000 or $25,000.

Prime Increase use of None. The prime vendor DLA is tracking how

DLA is using output DOD expects the vendors prime vendors program,
however, is one

much the military and outcome- oriented services to increase

(private- sector of several efforts that are

services are using measures to gauge the

prime- vendor providers who help expected to contribute to the
prime vendor

success of the purchases in all store, distribute, another Results
Act contracts

program. DLA, categories of and manage measure stated in DOD's

established by DLA. however, is not tracking DLA- managed items.
inventory) for all Performance Plan: DLA also has

how the prime vendor While DLA has had items managed by reduction
in supply performance

program is contributing success with certain

Defense Logistics inventories.

measures, such as to reductions in supply categories of items,
Agency (DLA). response times and inventories, except in a

progress to date has Have prime vendor fill rates, embedded few
isolated cases.

been limited for facility contracts for one in its prime- vendor
maintenance items. category of those contracts.

Although contracts items facility have been established,
maintenance

the services have not supplies available fully embraced the for
all installations program for these types in the U. S. by

of items. DLA is now Jan. 1, 1999.

working with the services to overcome this problem.

(continued)

Performance measures Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures

measures Status of initiatives

Total asset Make in- theater DOD's Performance Plan

None The measures are DOD is unlikely to meet visibility

TAV fully establishes the goal to output- oriented. They its 2000
goal. Because (TAV)

operational in 2000. make 90 percent of DOD's are insufficient, of
the problems with the TAV is considered a

worldwide inventory visible however, to fully gauge

measures, there is key part of and accessible to the progress and
insufficient data to achieving integrated material success of this

precisely determine just- in- time managers by FY 2000.
initiative. Key how well TAV is logistics, and DOD

elements, such as progressing. has committed to visibility of in-
transit providing total items, are not being asset visibility
(TAV) tracked. The data departmentwide.

underlying the measures that do exist suffer from several
problems.

Travel system Implement new None DOD has

The measure is DOD awarded the initial reengineering system for
official established a outcome- oriented. contract serving one of
DOD travel by savings goal of However, as the new

18 regions in the U. S. in October 2000. $481 million system is
tested at the spring of 1998. Full between FY

additional sites, savings implementation

1999- FY 2006. estimates will likely throughout DOD is not This
goal was

have to be revised. expected until 2001. based on the value Also,
since most of the

However, there may be of increased savings estimates are

delays because of the productivity based on productivity
difficulty involved in expected. The

improvements, they implementing the new

Defense Travel generally reflect time system in the 17 other
System Project DOD personnel will regions, which

Office is tracking 28 save in preparing and encompass millions of
cost elements to processing travel DOD employees.

gauge these documents. DOD, savings.

however, does not expect this increased productivity to have much
of an impact on the budget or manpower needs.

(continued)

Performance measures Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures

measures Status of initiatives

Household Reengineer None Measures being

Several of the Four pilot projects are

goods processes for used in pilot measures, which we planned or
under way transportation

moving military projects that are identified during our to test
different personnel and their testing new

review of two pilot approaches for families. approaches include

projects, are improving the customer outcome- oriented. Our
household goods satisfaction, the

reviews found, program. The optimum amount of loss and however,
that several approach has yet to be damage claims, weaknesses
existed in determined. Plans for and small business the
methodologies

evaluating the success participation. DOD used to support of each
option are still the measures. These evolving. Impact on
weaknesses along with small businesses data weaknesses

remains a contentious precluded us from issue. validating the
results that were available.

Streamlining Through Under this pillar, the DRI Report called for
an aggressive program of Competition

subjecting commercial- type activities now conducted by the
government to the competitive forces of the marketplace. These
efforts are to be administered through the A- 76 process, a
procedure established through Office of Management and Budget
Circular A- 76 that specifies how competitions between the
government and the private sector are to be conducted. In
addition, the DRI called for DOD to continue to subject depot
maintenance work to competition and contract out to the full
extent allowed by law. Depot maintenance workloads performed in-
house and valued at more than $3 million are not subject to
Circular A- 76; instead, they are subject to the competition
requirements of 10 U. S. C. 2469.

DOD believes that subjecting functions to competition with the
private sector sharpens performance and leads to better value.
Moreover, it believes A- 76 competitions in particular, regardless
of who wins, can achieve significant savings. Of the various
initiatives set forth in the DRI, DOD expects its A- 76
competitions to provide one of the biggest sources of savings. 1
DOD has $11 billion in funding for readiness and modernization 1
We agree that competitive sourcing can produce savings; however,
we have expressed uncertainties about the magnitude of short- term
savings from these competitions. See DOD Competitive Sourcing:

Questions About Goals, Pace, and Risks of Key Reform Initiative
(GAO/NSIAD-99-46, Feb. 22, 1999).

programs that are depending on the successful implementation of
the A- 76 program. Table II. 2 outlines the performance measures
and status of these initiatives.

Table II. 2: Performance Measures for Streamlining Through
Competition Performance measures

Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures measures Status of initiatives

A- 76 Subject 229, 000 The DOD Performance DOD is projecting

This output- oriented Much uncertainty exists competitions
positions to A- 76 Plan measure is the

$11 billion in cumulative measure tracks DOD's over whether DOD
will

competitions by number of positions savings between FY efforts to
announce and

meet its goals. There FY 2005.

subject to A- 76 1997 and 2005, and

start A- 76 competitions. are already indications competition
studies. more than It does not provide

that the services and The goal is for DOD to $3 billion in savings

DOD managers with defense agencies are subject 52, 000 each year
thereafter.

information about the having troubles

positions to A- 76 costs, personnel launching and

competitions in FY reductions, additional completing the studies

1999 and 53,400 in FY contractual obligations, according to DOD's
2000.

and long- term savings timetable. There has

associated with the been limited planning to results of the
studies. validate viability of Without this study targets and
fully

information, DOD will identify investment

not have a complete costs. picture of the impact of the program.
In particular, it will not have adequate information to determine
if the

program is producing the projected $11 billion in savings being
incorporated into future years' budget plans.

(continued)

Performance measures Observations on DRI goals/

performance Initiatives objectives Results Act measures Other
measures measures Status of initiatives

Depot Continue to None DOD and the services This output- oriented
DOD recently reported maintenance

subject depot track the percentage of measure tracks DOD's to
Congress that the

competitions maintenance to depot maintenance

compliance with current public and private competition and

contracted out to legislation. It does not allocation for depot
contract out to the

ensure compliance with provide DOD managers maintenance work in
full extent allowed

law. a means to assess

FY 1998 was 57. 7 by law. Under a infrastructure reduction percent
and 42. 3 1998 law, DOD or business process

percent, respectively. can increase the improvements. Also, recent
amount of depot competitions for maintenance work workloads at the
it contracts out to closing San Antonio 50 percent of and
Sacramento funds spent on depots resulted in depot awards to the
public maintenance. sector; each award

used a private sector partner( s).

Eliminating Unneeded Under this pillar, the DRI Report called for
shrinking the size of DOD's Infrastructure infrastructure. To
accomplish this, the report laid out a four- pronged strategy:
eliminate entire installations through base- closure rounds in
2001

and 2005; privatize housing and utilities; demolish unneeded
structures; and consolidate, restructure, and regionalize
activities to achieve economies of scale. DOD believes these steps
will help generate savings that could be diverted to
modernization. It also believes that, through privatization, the
private sector will recapitalize aging facilities that DOD

cannot afford to upgrade on its own. The DRI established goals and
deadlines for several initiatives in this pillar. Table II. 3
outlines these initiatives. Although the DRI did not set specific
savings targets for most initiatives in this pillar, it did lay
out potential savings from additional base closures. According to
DOD's most recent estimate, two additional rounds would generate
savings of $3.4 billion annually once closures and realignments
are completed and the costs of these actions are offset by
savings. The magnitude of these potential savings places base
closures alongside A- 76 competitions as one of the largest single
sources of savings among the DRI initiatives.

Table II. 3: Performance Measures for Eliminating Unneeded
Infrastructure Performance measure

Observations on DRI goals/

Results Act performance Initiatives objectives measures Other
measures

measures Status of initiatives

Base closures Hold additional DOD's Performance DOD has
traditionally These measures

Congress has not rounds in 2001 and Plan contains a

measured base provides limited status authorized additional 2005.

measure for closures in terms of information. If base- closure
rounds. assessing reduction reductions in plant

additional rounds are Congressional in excess acreage.

replacement value or approved, other concerns about prior percent
of major measures will rounds have produced domestic bases.
probably need to be reluctance to approve However, each of

developed to track additional rounds. these measures has

savings. significant limitations. Plant replacement values, in
addition to not being calculated

on a consistent basis between the military services, give little
information on excess capacity. Additionally, the services vary in
terms of what is considered a major base, and bases vary
considerably in size.

Defense Information Reduce number of None Measures directly The
measures in the DISA expects to have

Systems Agency data centers from affected by performance contract
its revised structure in (DISA) 16 to 6.

consolidation- related are outcome- oriented. place by FY 2000.
consolidations

improvements have Additional measures The consolidation been built
into DISA's

used by DISA provide effort also involves performance contract
both output and reengineering with the Defense outcome
information.

activities and Management establishing 23 Council. The

regional centers using measures address

existing infrastructure. costs and productivity, work load and
capacity

issues, and quality of service. Further, DISA is tracking the
consolidation effort through various other measures.

(continued)

Performance measure Observations on DRI goals/

Results Act performance Initiatives objectives measures Other
measures

measures Status of initiatives

Defense Finance Reduce number of None Until a study of DOD has not
DFAS has not yet and Accounting operating locations

operating locations is established an overall begun to eliminate

Service (DFAS) by 8. approved by DOD

measure for this operating locations. location eliminations and
provided to the

initiative. DFAS is Although DFAS has Congress, we cannot
responsible for already estimated that determine what implementing
the

it will have excess performance initiative and reporting capacity
of 34 percent measures will be progress to DOD. by FY 2003, the
study established for this that will serve as the

initiative. basis for the eliminations is still

pending. Last fall, section 914 of the FY 99 Defense Authorization
Act added new

requirements for DFAS to incorporate into the study. The study,
including the response to section 914, was to be completed by Jan.
15, 1999. As of June 30, 1999, study results

were being reviewed internally.

Consolidation of No goals or None. The DOD None No overall

DOD is developing a research and

deadlines given. Performance Plan performance indicator plan for
restructuring development, test does, however, was established.
these facilities in and evaluation contain a

However, DOD has accordance with facilities performance

developed a section 912( c) of the

indicator calling for cost- based Fiscal Year 1998

reductions in the management tool that Defense Authorization

acquisition work contains a series of Act. The study is not force.
Since financial and yet completed, and it personnel from the non-
financial is uncertain when it research, measures. These

will be finalized. No development, test, measures are large- scale
and evaluation designed to provide

consolidations, facilities are part of improved data on however,
are likely to this work force, the costs and other data take place
outside of consolidations will associated with base- closure
rounds. likely contribute to operating DOD's these reductions.

research, development, test, and evaluation facilities. Future use
of this tool is uncertain.

(continued)

Performance measure Observations on DRI goals/

Results Act performance Initiatives objectives measures Other
measures

measures Status of initiatives

Demolition of excess Demolish and

DOD's Performance None The measures are

All services are structures dispose of 80 million

Plan contains the output- oriented. expected to reach square feet
of following measures:

overall goals. OSD is excess space at 1. Cumulative encouraging
the military facilities. square feet services to identify Each
service has

demolished. more sites for specific goals

2. Cost per demolition. Good dictating the amount cumulative
square progress attributed to of square footage to foot
demolished. management attention be demolished, with

It also refers to DRI and funding being completion dates goals for
earmarked for ranging from years demolishing 80

demolitions. 2000 to 2003.

million square feet by FY 2003. Regional energy Develop plan for
None The Defense Energy The measures are

Three demonstration demonstrations demonstration

Support Center output- and projects have been

projects to test new tracked the impact of outcome- oriented.
completed. The ways of purchasing

using new purchasing The outcome- oriented projects identified

and managing methods on energy measures provide areas for further
study, DOD's energy costs and installation information on the

more effective ways to needs by June 1, management hours impact of
switching to purchase fuel, and 1998.

for two demonstration alternative methods of opportunities to
projects. In a third purchasing energy

reduce energy project, the center and employing consumption. The
helped the military measures to reduce

center is also working services with efforts

energy consumption. with the services on

to reduce energy utilities privatization consumption. The

efforts. measures for this project were the number of energy-
saving performance contracts awarded and decreases in overall
energy costs. (continued)

Performance measure Observations on DRI goals/

Results Act performance Initiatives objectives measures Other
measures

measures Status of initiatives

Utilities privatization Privatize all utilities None DOD is
tracking the The measures are

DOD will not meet the by Jan. 1, 2000.

status of actions on output- oriented. original DRI goal. Because
of each utility system. Although the Since the original
difficulties The services are also

economic analyses report was issued, surrounding this tracking up-
front will provide estimates DOD has privatized initiative, the
costs and various

of the economic only a few systems. deadline has been other
output- related impact of the

The initiative is extended to measures. Finally, privatizations,
it is complex, Sept. 30, 2003. economic analyses

unclear as to what time- consuming, and However, the

are to be conducted extent DOD and the expensive. number of
utilities to to determine whether services plan to follow

consider for the long- term up to determine privatization was
economic benefit of whether those savings increased from
privatizing each utility actually occur. about 1,700 to outweighs
the almost 2,400

long- term cost. Once systems. the studies are completed, DOD
expects to have a better view of the potential overall savings.

Housing Privatize:

None DOD is tracking the The measures are

The services will not privatization 3,500 units by FY number of
housing output- oriented. They

meet the original DRI 1998; 15,000 units units privatized, the do
not provide insights goals. The initiative is by FY 1999; and
number of housing into outcomes, such

complex and 30,000 by FY 2000. units planned for as whether the

time- consuming. Eliminate all privatization and the
privatizations are Housing privatizations inadequate housing time
frames in which helping DOD meet its

continue to be of great by 2010. those privatizations

goal of eliminating all interest to top military are to occur. DOD
inadequate housing

leaders and the DRI II reduced

reports this by 2010. Also, data Congress because of goals: 1, 000
units in information quarterly used to report their potential
impact FY 1998; 13,000 to the House and

progress may be more on the quality of life for units in FY 1999;
Senate Appropriation indicative of units service personnel. and
30,000 by FY Committees. under contract than 2000. units completed
and occupied. Changing the Under this pillar, the DRI Report
called for a series of reorganizations, Organization

reductions, and other organizational adjustments. These changes
were primarily directed at OSD; defense agencies, field
activities, and other support organizations; and the unified
commands and Joint Chiefs of Staff offices. Table II. 4 outlines
these changes. According to the DRI Report, the idea behind the
changes is to (1) ensure that OSD focuses on core,

corporate- level tasks rather than getting involved in program
management and day- to- day management of subordinate activities;
(2) strengthen OSD's focus on long- term strategic, program, and
financial planning; and (3) weed out unnecessary overlap,
complexity, and redundancy. Further, as part of these changes, the
DRI called for flatter, more streamlined headquarters throughout
DOD. DOD hopes these changes will better position the Department
to carry out its mission and make for better, more streamlined
decision- making. Also, the DRI stated that these changes could
result in savings. The expectation for savings, however, is
secondary to the primary

goal of fashioning a more responsive, less bureaucratic
organization.

Table II. 4: Status of Organizational Changes Organizational
change Status Create new organizations and positions

Establish Defense Management Council Completed Reduce number of
boards and committees Completed Negotiate performance contracts
with defense agencies Certain contracts completed according to
specified deadlines;

others drafted and undergoing review, also in accordance with
direction. Establish a Threat Reduction and Treaty Compliance
Agency Agency established and called the Defense Treat Reduction

Agency. Physical consolidation of the activities comprising the
new agency ongoing.

Establish a Chancellor for Education and Professional Completed,
but organizationally assigned instead to the DOD Development (to
be assigned to the National Defense University) Human Resources
Activity. Restructure Director of Military Support Ongoing. Office
established and concept of operations drafted. Operational
capability expected by January 2000.

Improving OSD support to the Secretary Policy Secretariat

Go from four assistant secretaries of Defense to three: Assistant
Completed, but the decision was made to retain the ASD

Secretary of Defense (ASD) (International Security Affairs), ASD
(Special Operations/ Low- Intensity Conflict) instead of (Strategy
and Threat Reduction), and ASD (Special Operations and

establishing the ASD (Special Operations and Humanitarian
Humanitarian Assistance)

Assistance). Transfer responsibility for programming guidance
portion of the

Completed Defense Planning Guidance from ASD (Strategy &
Requirements) to Director, Program Analysis and Evaluation, Under
Secretary of Defense (USD) (Comptroller)

Transfer space policy functions from USD (Acquisition and
Transfers were completed, but personnel were transferred to
Technology) to USD (Policy) Command, Control, Communications, and
Intelligence

secretariat instead after a mid- course correction. (continued)

Organizational change Status

Devolve responsibility for managing technical development and
Completed

acquisition programs and activities concerned with space systems
and space integration to military departments and other DOD
activities responsible for managing these programs

Transfer the Net Assessment Directorate to the National Defense
Completed

University Transfer the National Security Education Program
Directorate to the Completed National Defense University Transfer
the Secretary of Defense Strategic Studies Group and the

Completed Secretary of Defense Fellows Program Support Staff to
the National Defense University

Transfer USD (Policy) Humanitarian Assistance and Humanitarian
Completed. Name changed to Defense Security Cooperation

Demining program management functions to the Defense Security
Agency. Assistance Agency

Open the Drug Demand Reduction functions of the DOD Competitions
are under way.

Counter- drug Program to competition with private- sector
providers Command, Control, Communications, and Intelligence
Secretariat

Disestablish ASD (Command, Control, Communications and Canceled

Intelligence); transfer intelligence functions to newly
established ASD (Intelligence); transfer command, control,
communications, and acquisition functions to USD (Acquisition and
Technology); and

realign personnel and resources of C4I Integration Support
Activity Transfer the U. S. Nuclear Command and Control System
Support Completed staff from OSD to Commander, Strategic Command
Integrate DOD Polygraph Institute, Personnel Security Research

Completed Center, and DOD Security Institute within Defense
Investigative Service and rename as Defense Security Service

Acquisition and Technology Secretariat

Realign internal structure of office of USD (Acquisition and Plans
for realignment completed. Changes pending.

Technology) to strengthen Director of Defense Research and
Engineering

Transfer program management functions formerly conducted by Legal
restrictions prevented changes from being carried out as

Assistant to the Secretary of Defense for Nuclear and Chemical and
originally envisioned, resulting in a mid- course correction:
Biological Defense Programs to Defense Threat Reduction and

Oversight of chemical/ biological and nuclear matters remains in
Treaty Compliance Agency and the Army OSD/ Acquisition and
Technology. Implementation and operations are the responsibility
of the new threat reduction agency. Chemical demilitarization
responsibilities have been transferred to the Army, except for the
Alternative Technology

Program. Transfer USD (Acquisition and Technology) international
armaments

Canceled cooperation program management activities to Defense
Security Assistance Agency (now known as the Defense Security
Cooperation Agency)

(continued)

Organizational change Status

Transfer management of Defense Acquisition University and
Canceled. Defense Acquisition University and its associated

Defense Systems Management College to National Defense resources
will continue to reside in the Defense Logistics

University, with oversight by new chancellor of education Agency.

Transfer USD (Acquisition and Technology) electronic commerce
Completed

functions and associated resources to the Defense Logistics Agency
and create a combined Defense Logistics Agency/ Defense
Information Systems Agency Electronic Commerce Program Office
Transfer oversight of Defense Technical Information Center to
Completed Defense Information Systems Agency Conduct study to
determine whether additional efficiencies can be Completed. No
additional efficiencies identified.

gained by opening up Defense Technical Information Center
functions to competition with the private sector

Personnel and Readiness Secretariat

Transfer Health Care program management functions from ASD
Completed. These functions were combined with the Defense (Health
Affairs) to a DOD field activity Medical Programs Activity and the
Tricare Support Office to establish the Tricare Management
Activity.

Transfer all administrative and operating support for the USD
Completed (Personnel & Readiness) advisory groups to the DOD Human
Resources Activity

Transfer oversight of Defense Commissary Agency to secretaries of
Congressionally directed revisions: agency is to continue to be
military departments managed and funded through OSD. Day- to- day
management

of the agency, however, has been devolved to the Commissary
Operating Board, composed of representatives of the secretaries of
the military departments.

Finance Secretariat

Transfer Overseas Military Banking Operations to the Defense
Completed

Finance and Accounting Service Transfer Defense Property
Accountability implementation to the Completed Defense Logistics
Agency Disestablish the Plans and Programs Analysis Support Center
and

Completed realign its functions and resources to Director, Program
Analysis and Evaluation, USD (Policy), and USD (Acquisition and
Technology)

Other OSD staff offices or organizations that report to OSD

Transfer Directorate for Freedom of Information and Security
Review Completed from ASD (Public Affairs) to Washington
Headquarters Service Expand the scope of American Forces
Information Service activities In process. Competitions to be held
in accordance with Office

that could be opened to competition with private- sector providers
of Management and Budget Circular A- 76. Transfer Defense Privacy
Office from Director, Administration and Completed Management,
OSD, to Washington Headquarters Service OSD, Joint Chiefs of
Staff, and Combatant Command Staff Relationships

Joint Staff, and Chairman- controlled activities

Restructure Joint Staff to eliminate redundancy with OSD: (See
below) (continued)

Organizational change Status

J- 1: Divest responsibility for quality of life and social issues
but keep Completed responsibility for Joint Manpower System, Joint
Staff personnel programs, and Joint Duty Assignment Management
Information

System J- 5: Eliminate coordination on technology transfer issues
Completed J- 8 and USD (Comptroller): Establish joint Contingency
Operations Completed Costs Working Group to provide single source
for project costs of military operations

Transfer 5 of 9 chairman- controlled activities to combatant
Transfers to occur through 2003.

commands, services or joint agencies Eliminate unnecessary
physical controls in Joint Chiefs of Staff Completed spaces in the
Pentagon Headquarters of the combatant commands

Reduce combatant command headquarters by about 1,000 billets.
Reductions to occur through 2003. The functions associated with
those billets will be eliminated, consolidated, or assigned to
other organizations.

Transfer about 600 personnel from chairman- controlled activities
to Transfers to occur through 2003. the combatant commands Reduce
the combatant commands' Joint Intelligence Centers by 400

Reductions to occur through 2003. billets, or about 10 percent
Specific numerical goals

OSD and associated activities personnel will be reduced 33 percent
OSD expected to reach target by end of FY 1999.

from FY 1996 levels by May 1999 Defense agency personnel will be
reduced 21 percent over 5 years Defense agencies we spoke with
(Defense Logistics Agency, Defense Information Systems Agency, and
Defense Finance and Accounting Service) foresaw no problems
meeting goal. Personnel in DOD field activities and other
operating organizations Plans call for meeting targets by
deadline. reporting to OSD will be reduced 36 percent over 2
years. The Joint Staff and associated activities personnel will be
reduced

Plans call for meeting targets by deadline. 29 percent from FY
1996 levels by the end of FY 2003 All other headquarters elements,
including the headquarters of the

Plans call for meeting targets by deadline. military departments
and their major commands, will be reduced 10 percent from their
fiscal year 1998 levels by the end of FY 2003

The headquarters of the combatant commands will be reduced by 7
Plans call for meeting targets by deadline.

percent by the end of FY 2003 Miscellaneous DRI directives
involving reorganizations

Establishment of OSD Human ResourcesTransition Program to
Completed help DOD avoid involuntary separations resulting from
the DRI For counter- drug personnel, transfer from USD (Policy) to
services Completed

all centrally managed civilian personnel end strength and full-
time equivalent authority

DOD components to plan for DRI realignments Completed Air Force to
establish joint DOD Computer Forensics Laboratory and

Lab achieved initial operating capability July 1, 1998, but
related Training Program efforts ongoing.

(continued)

Organizational change Status

Evaluate whether certain joint activities could be transferred to
the Completed combatant commands Realign DOD Spectrum Management
Responsibilities Completed

Funding for DOD Spectrum Management Responsibilities Completed

GAO Products Related to Initiatives Under Appendi I I I x
Individual DRI Pillars Pillar: Adopting Best Defense
Transportation: Progress of MTMC Pilot (GAO/NSIAD-99-130R,
Business Practices Apr. 15, 1999). Defense Inventory: DOD Could
Improve Total Asset Visibility With Results Act Framework
(GAO/NSIAD-99-40, Apr. 12, 1999).

Defense Transportation: Efforts to Improve DOD's Personal Property
Program (GAO/T-NSIAD-99-106, Mar. 18, 1999).

Best Practices: Elements Critical to Successfully Reducing
Unneeded RDT& E Infrastructure (GAO/ NSIAD/ RCED- 98- 23, Jan. 8,
1998). Inventory Management: Greater Use of Best Practices Could
Reduce DOD's Logistics Costs (GAO/T-NSIAD-97-214, July 24, 1997).
Defense Transportation: Reengineering the DOD Personal Property
Program (GAO/NSIAD-97-49, Nov. 27, 1996).

Defense Transportation: The Army's Hunter Pilot Project to
Outsource Relocation Services (GAO/NSIAD-98-149, June 10, 1998).

Managing Technology: Best Practices Can Improve Performance and
Produce Results (GAO/T-AIMD-97-38, Jan. 31, 1997). Pillar:
Streamlining Defense Reform Initiative: Progress, Opportunities,
and Challenges Through Competition

(GAO/T-NSIAD-99-95, Mar. 2, 1999). Force Structure: A- 76 Not
Applicable to Air Force 38 th Engineering Installation Wing Plan
(GAO/NSIAD-99-73, Feb. 26, 1999).

DOD Competitive Sourcing: Results of Recent Competitions
(GAO/NSIAD-99-44, Feb. 23, 1999). DOD Competitive Sourcing:
Questions About Goals, Pace, and Risks of Key Reform Initiative
(GAO/NSIAD-99-46, Feb. 22, 1999).

Defense Depot Maintenance: Public and Private Sector Workload
Distribution Reporting Can Be Further Improved (GAO/NSIAD-98-175,
July 23, 1998).

Defense Depot Maintenance: Contracting Approaches Should Address
Workload Characteristics (GAO/NSIAD-98-130, June 15, 1998).
Defense Outsourcing: Better Data Needed to Support Overhead Rates
for A- 76 Studies (GAO/NSIAD-98-62, Feb. 27, 1998).

Defense Depot Maintenance: Uncertainties and Challenges DOD Faces
in Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-
112, May 1, 1997). Defense Outsourcing: Challenges Facing DOD As
It Attempts to Save Billions In Infrastructure Costs (GAO/T-NSIAD-
97-110, Mar. 12, 1997).

Base Operations: Challenges Confronting DOD As It Renews Emphasis
on Outsourcing (GAO/NSIAD-97-86, Mar. 11, 1997). Air Force Depot
Maintenance: Privatization- in- Place Plans Are Costly While
Excess Capacity Exists (GAO/NSIAD-97-13, Dec. 31, 1996).

Pillar: Eliminating Military Bases: Status of Prior Base
Realignment and Closure Rounds Unneeded (GAO/NSIAD-99-36, Dec. 11,
1998). Infrastructure

Military Bases: Review of DOD's 1998 Report on Base Realignment
and Closure (GAO/NSIAD-99-17, Nov. 13, 1998). Military Bases:
Lessons Learned From Prior Base Closure Rounds (GAO/NSIAD-97-151,
July 25, 1997). Military Housing: Privatization Off to a Slow
Start and Continued Management Attention Needed (GAO/NSIAD-98-
178), July 17, 1998). Defense Infrastructure: Demolition of
Unneeded Buildings Can Help Avoid Operating Costs (GAO/NSIAD-97-
125, May 13, 1997). Military Bases: Cost to Maintain Inactive
Ammunition Plants and Closed Bases Could Be Reduced (GAO/NSIAD-97-
56, Feb. 20, 1997).

DOD Infrastructure: DOD's Planned Finance and Accounting
Infrastructure Is Not Well Justified (GAO/NSIAD-95-127, Sept. 18,
1995).

DOD Infrastructure: DOD Is Opening Unneeded Finance and Accounting
Offices (GAO/NSIAD-96-113, Apr. 14, 1996). Defense Infrastructure:
Budget Estimates for 1996- 2001 Offer Little Savings for
Modernization (GAO/NSIAD-96-131, Apr. 4, 1996). Defense Budget:
Observations on Infrastructure Activities (GAO/NSIAD-97-127BR,
Apr. 4, 1997).

Pillar: Changing the Defense Headquarters: Status of Efforts to
Reduce Headquarters Personnel Organization (GAO/NSIAD-99-45, Feb.
17, 1999).

Quadrennial Defense Review: Some Personnel Cuts and Associated
Savings May Not Be Achieved (GAO/NSIAD-98-100, Apr. 30, 1998).
Defense Headquarters: Total Personnel and Costs Are Significantly
Higher Than Reported to Congress (GAO/NSIAD-98-25, Oct. 30, 1997).

Appendi I V x Comments From the Department of Defense

Appe ndi V x GAO Contacts and Staff Acknowledgments GAO Contacts
David Warren, (202) 512- 8412 James E. Hatcher, (937) 258- 7959
Acknowledgments In addition to those named above, Cheryl Andrew,
Bruce Fairbairn, James Fuquay, Johnetta Gatlin- Brown, Fred Naas,
and Jeanne Willke made key

contributions to this report.

job code Let r e t

GAO United States General Accounting Office

GAO/NSIAD-99-169

Page 1 GAO/NSIAD-99-169 Defense Infrastructure United States
General Accounting Office

Washington, D. C. 20548

Let t er

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Contents

Contents Page 15 GAO/NSIAD-99-169 Defense Infrastructure

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Appendix I

Appendix I Objectives, Scope, and Methodology

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Page 18 GAO/NSIAD-99-169 Defense Infrastructure

Appendix II

Appendix II Defense Reform Initiative Performance Measures

Page 19 GAO/NSIAD-99-169 Defense Infrastructure

Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

Page 26 GAO/NSIAD-99-169 Defense Infrastructure

Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix II Defense Reform Initiative Performance Measures

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Appendix III

Appendix III GAO Products Related to Initiatives Under Individual
DRI Pillars

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Appendix III GAO Products Related to Initiatives Under Individual
DRI Pillars

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Appendix IV

Appendix IV Comments From the Department of Defense

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Appendix V

(709404) Let t e r

Appendix V GAO Contacts and Staff Acknowledgments

Page 40 GAO/NSIAD-99-169 Defense Infrastructure

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