The Department of Defense (DOD) spends billions of dollars each year to maintain key business operations intended to support the warfighter, including systems and processes related to the management of contracts, finances, the supply chain, support infrastructure, and weapon systems acquisition. We have designated a number of these areas as high risk because of their vulnerability to fraud, waste, abuse, and mismanagement and because of opportunities to achieve greater efficiencies and free up resources for higher-priority needs. In 2005, we identified DOD's approach to business transformation as a high-risk area because (1) DOD had not established clear and specific management responsibility, accountability and control over business transformation-related activities and applicable resources; and (2) DOD lacked a clear strategic and integrated plan for business transformation with specific goals, measures and accountability mechanisms to monitor progress. Because of the complexity and magnitude of the challenges facing DOD in improving business operations, we have reported the need for a chief management officer (CMO) with significant authority and experience to focus the necessary attention and sustain progress. Both DOD and Congress have taken actions to address DOD's management of business transformation efforts. For example, DOD designated the Deputy Secretary of Defense as the CMO for DOD in May 2007. In the National Defense Authorization Acts for Fiscal Year 2008 and Fiscal Year 2009, Congress took steps that included: (1) designating the Deputy Secretary of Defense as the CMO for DOD; (2) creating a deputy chief management officer (DCMO) position; (3) requiring the secretaries of the military departments to designate the department under secretaries as CMOs; (4) requiring DOD to develop a strategic management plan (SMP); and (5) requiring the secretary of each military department to establish a business transformation office and to develop business transformation plans. Since we last reported, a DCMO has been confirmed by the Senate, DOD has updated its SMP, and DOD and the military departments have continued to refine their management approach to business transformation. This report addresses their progress since January 2009. We performed this review under the authority of the Comptroller General to conduct evaluations on his own initiative. Our objectives were to assess the extent to which DOD and the military departments have taken additional steps to (1) implement management frameworks for business transformation and (2) develop business transformation plans, supported by a strategic planning process, that enable them to align goals and planning efforts and to measure progress.

DOD and the military departments have taken additional steps to strengthen their management approach to business transformation. Opportunities exist, however, for the CMO and DCMO to take on a greater leadership role in implementing a departmentwide effort to achieve more efficiencies in its operations and to ensure results in individual business areas. Since January 2009, DOD has filled key positions, such as the DCMO and military department CMOs; established entities, such as a governance board to identify business process improvements; and undertaken various activities. Our work shows that key strategies for successful implementation of the CMO position include defining roles, responsibilities, structures, processes, reporting relationships, and ensuring a high level of authority. The CMO and DCMO have responsibilities, under statutes and department guidance, related to improving the efficiency and effectiveness of business operations, but they have not been assigned specific roles for integrating, monitoring or otherwise institutionalizing the ongoing efficiency initiative in the long term. The military department CMOs are leading efforts to implement the initiative in their organizations. Without assigning a specific role for the CMO and DCMO, it is not clear how DOD will establish accountability and leverage those positions to provide the leadership necessary to implement, integrate, and otherwise institutionalize the Secretary of Defense's recent efficiency initiative and sustain momentum and progress in the long term. Further, while DOD continues to take some actions to address weaknesses in individual business areas, we continue to see opportunities for the CMO and DCMO to provide the leadership needed to implement reforms and achieve goals reflected in the SMP, including those in areas we have identified as high risk. DOD and the military departments have made limited progress in developing business transformation plans, supported by a strategic planning process, which enable them to align goals and planning efforts and to measure progress. DOD's 2009 SMP identifies priorities and reform initiatives but lacks some key elements, such as a description of the problems to be addressed, measurable goals, and funding priorities. The military departments are in varying stages of their planning efforts--the Army issued its plan in October 2010 and the Navy issued its plan in November 2010. To establish ongoing accountability and better leverage the unique positions of the CMO and DCMO to provide the leadership necessary to follow up the Secretary's recent efficiency initiative for the long term, we recommend that the Secretary of Defense take the following action: (1) Assign specific roles and responsibilities to the CMO and DCMO for integrating the Secretary's efficiency initiative with ongoing reform efforts, overseeing its implementation, and otherwise institutionalizing the effort for the long term. To enhance DOD's ability to set strategic direction for its business transformation efforts, and better align and institutionalize its efforts to develop and implement plans and measure progress against established goals, we recommend that the Secretary of Defense direct the CMO to take the following two actions: (1) Ensure that DOD's revised SMP contains measurable goals and funding priorities linked to those goals. (2) Issue guidance to establish a strategic planning process with mechanisms--such as procedures and milestones--for routinely updating the SMP and military department business transformation plans.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Recommendations for Executive Action

Recommendation: To establish ongoing accountability and better leverage the unique positions of the CMO and DCMO to provide the leadership necessary to follow up the Secretary's recent efficiency initiative for the long term, the Secretary of Defense should assign specific roles and responsibilities to the CMO and DCMO for integrating the Secretary's efficiency initiative with ongoing reform efforts, overseeing its implementation, and otherwise institutionalizing the effort for the long term.

Agency Affected: Department of Defense

Status: Open

Comments: DOD concurred with this recommendation, but did not specify the action it planned to take to implement the recommendation. As of July 2012, based on a review of all the memos related to the efficiencies and recent discussions with the Deputy Chief Management Officer and Under Secretary of Defense (Comptroller) offices, there is currently no guidance that formally assigns the DCMO and Comptroller responsibility for tracking and overseeing the implementation of the efficiency initiatives. However, during a March 2011 testimony before the Senate Armed Services Committee, the Comptroller stated that the Deputy Chief Management Officer (DCMO) and the Under Secretary of Defense (Comptroller) were assigned the task of monitoring the implementation of the efficiency initiative and report successes and problems to the Deputy Secretary of Defense, DOD's Chief Management Officer (CMO). Given the responsibilities, under statute and department guidance, related to improving the efficiency and effectiveness of business operations, the DCMO,in conjunction with the Under Secretary of Defense (Comptroller), is positioned to monitor, integrate, and otherwise institutionalize the Secretary of Defense's ongoing efficiency initiative. The recommendation will remain open in the absence of formal guidance that institutionalizes the responsibilities of the CMO and DCMO.

Recommendation: To enhance DOD's ability to set strategic direction for its business transformation efforts, and better align and institutionalize its efforts to develop and implement plans and measure progress against established goals, the Secretary of Defense should direct the CMO to ensure that DOD's revised SMP contains measurable goals and funding priorities linked to those goals.

Agency Affected: Department of Defense

Status: Open

Comments: DOD concurred with this recommendation and agreed that that the Strategic Management Plan (SMP) should contain measurable goals linked to the budget. As of July 2012, GAO is conducting ongoing work reviewing DOD's most recent SMP, issued in September 2011, including if the plan contains measurable goals and funding priorities linked to those goals. The expected issuance date of this report is December 2012.

Recommendation: To enhance DOD's ability to set strategic direction for its business transformation efforts, and better align and institutionalize its efforts to develop and implement plans and measure progress against established goals, the Secretary of Defense should direct the CMO to issue guidance to establish a strategic planning process with mechanisms---such as procedures and milestones---for routinely updating the SMP and military department business transformation plans. In particular, this guidance should include elements such as how DOD and the military departments---including the CMO, DCMO, and military department CMOs---will reach consensus on business priorities, coordinate review and approval of updates to plans, synchronize the development of plans with the budget process, and monitor the implementation of reform initiatives, and report progress, on a periodic basis, towards achieving established goals.

Agency Affected: Department of Defense

Status: Open

Comments: DOD partially concurred with this recommendation. As of July 2012, DOD has not issued guidance to establish a strategic planning process with mechanisms, such as procedures and milestones, for routinely updating the Strategic Management Plan and the business transformation plans of the military departments, therefore, this recommendation will remain open.