Human Capital: DOD Needs Better Internal Controls and Visibility over Costs for Implementing Its National Security Personnel System
GAO-07-851
Published: Jul 16, 2007. Publicly Released: Jul 16, 2007.
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Highlights
Given a large-scale organizational change initiative, such as the Department of Defense's (DOD) National Security Personnel System (NSPS), is a substantial commitment that will take years to complete, it is important that DOD and Congress be kept informed of the full cost of implementing NSPS. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO analyzed the extent to which DOD has (1) fully estimated total costs associated with the implementation of NSPS and (2) expended or obligated funds to design and implement NSPS through fiscal year 2006. GAO interviewed department officials and analyzed the NSPS Program Executive Office's (PEO), and the military services' and the Washington Headquarters Services' (hereafter referred to as the components) cost estimates and reports of expended and obligated funds.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To provide decision makers in DOD and Congress with improved visibility and internal controls over the costs of NSPS, the Secretary of Defense should direct the National Security Personnel System Senior Executive to direct the NSPS Program Executive Office to define all direct and indirect costs necessary to effectively manage NSPS, in accordance with internal control standards, federal financial accounting standards, and DOD's financial management regulation principle related to comparability. | DOD partially concurred with our recommendation (stating that significant effort had already been expended identifying and collecting costs that could assist management officials with making good business decisions); however, the department has since addressed our recommendation by reexamining the system's costs. Specifically, in July 2007, DOD reconvened its department-wide NSPS Finance Integrated Product Team to advise the NSPS Program Executive Office on our report's findings and recommend revisions to the department's guidance on NSPS financial reporting. According to DOD, the NSPS Finance Integrated Product Team made recommendations that included expanding the cost category... definitions and clarifying the treatment of direct and indirect costs-a key concern we also raised in our report. These recommendations were accepted by the NSPS Program Executive Office and the components were advised of the new definitions and the resulting requirements in September 2007.
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| Department of Defense | To provide decision makers in DOD and Congress with improved visibility and internal controls over the costs of NSPS, the Secretary of Defense should direct the National Security Personnel System Senior Executive to direct the NSPS Program Executive Office to prepare a revised estimate of the full costs of implementing NSPS in accordance with the established definitions, internal control standards, federal financial accounting standards, and DOD's financial management regulation principle related to comparability. |
DOD concurred with our recommendation, stating that it would develop a revised estimate of the costs for implementing NSPS, and has since done so. Specifically, DOD revised its requirements for reporting NSPS implementation costs after reviewing the Statement of Federal Financial Accounting Standards and reported its revised estimate, along with draft revised NSPS regulations, in the Federal Register on May 22, 2008. DOD estimated the overall costs associated with continuing to implement NSPS would be approximately $143 million from fiscal years 2009 through 2011.
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| Department of Defense | To provide decision makers in DOD and Congress with improved visibility and internal controls over the costs of NSPS, the Secretary of Defense should direct the National Security Personnel System Senior Executive to develop a comprehensive oversight framework to ensure that all funds expended or obligated to design and implement NSPS are fully captured and reported. Such a framework should establish quality controls, including independent reviews of the data being reported by the components in the quarterly reports, to ensure the accuracy and completeness of the reported information. | DOD concurred with our recommendation, noting that the department should leverage existing policies and procedures to ensure oversight of these costs, and addressed the intent of our recommendation by taking a number of actions. Specifically, the Army established new account processing codes for NSPS that comply with the system's reporting categories and identified a central NSPS budget point of contact. Further, the Assistant Secretary of the Army (Financial Management and Comptroller) provided an independent review to determine whether Army major commands were meeting established internal procedures for tracking, capturing, and reporting NSPS implementation costs in specific...
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Topics
Cost analysisDefense cost controlDefense procurementInternal controlsNational security personnel systemNeeds assessmentProgram evaluationProgram managementStandardsStrategic planningCost estimatesProgram implementation