Defense Efficiency Initiatives: Observations on DOD's Reported Reductions to Its Headquarters and Administrative Activities

Subsection 346(b) of the 2016 NDAA required DOD to (1) modify an existing plan to ensure that savings for major DOD headquarters activities are not less than 25 percent of a defined baseline amount, by fiscal year 2020, and (2) revise applicable guidance on DOD’s major headquarters activities as needed, including to incorporate the definition of the term “major DOD headquarters activities” to reflect language in subsection 346(b). However, DOD has not fully met the requirement to ensure that it modifies its existing plan to achieve the required savings. Specifically, while DOD’s May 2018 progress report includes a table that shows more than a 25 percent reduction of a baselined amount by fiscal year 2020, DOD has previously stated that part of these estimated cost savings are not auditable. GAO previously reported that the cost savings estimate was unreliable. Without a reliable cost savings estimate, DOD will not be able to ensure that it achieves the required savings. Further, while DOD has made progress in revising its applicable guidance on DOD’s major headquarters activities, it has not fully met the requirement of subsection 346(b). In August 2015, DOD published a framework describing the major headquarters activities and stated that it has established a new definition for its DOD headquarters in response to the section. However, DOD has not revised one of its instructions that is specifically related to major headquarters activities to reflect this new definition.

Subsection 346(c) of the 2016 NDAA required DOD to conduct a comprehensive review of its management and operational headquarters for the purposes of consolidating and streamlining headquarters functions and administrative support activities, and provide a report on the review. DOD’s August 2016 report in response to this requirement addressed all of the elements in the section. The report describes DOD’s review of its organization and of management and operational headquarters, among other things. More recently, as DOD stated in its May 2018 report, the department has been pursuing reform initiatives to consolidate business activities to achieve greater efficiencies.

Why GAO Did This Study

Section 346 of the 2016 NDAA directed DOD to, among other things, implement a plan to ensure that the department achieves at least $10 billion in cost savings from headquarters, administrative, and support activities of the department, from fiscal year 2015 through fiscal year 2019. It also required DOD to submit reports on its progress toward implementing the plan and achieving the required cost savings. The act also included a provision for GAO to assess and report on DOD's progress reports and the extent to which DOD is in compliance with section 346 of the act.