Weapon System Acquisitions: Opportunities Exist to Improve the Department of Defense's Portfolio Management
Highlights
What GAO Found
The Department of Defense (DOD) is not effectively using portfolio management to optimize its weapon system investments, as evidenced by affordability challenges in areas such as shipbuilding and potential duplication among some of its programs. Best practices recommend assessing investments collectively from an enterprise-wide perspective and integrating requirements, acquisition, and budget information, but several factors inhibit DOD's ability to do so.
Fragmented governance: DOD has numerous processes, organizations, and decision makers to oversee weapon system investments that operate in stove-pipes, not as an integrated whole. The requirements and acquisition processes also focus on individual programs rather than assessing investments collectively, as best practices recommend.
Lack of sustained leadership and policy: DOD stopped implementing its portfolio management efforts and policy, in part due to changes in leadership. DOD's policy is also dated, does not fully reflect best practices, and does not identify an office with sufficient authority to implement it.
Perceived lack of decision-making authority: Enterprise-level involvement is key to optimizing investments across DOD because the military services prioritize needs and optimize investments within their services rather than across the military. Title 10, which gives the services responsibility over equipping the force, does not preclude enterprise-level influence over service investment decisions, but some DOD officials said it limits their influence.
DOD's enterprise-level requirements, acquisition, and budgeting communities, meaning those at the at the Office of the Secretary of Defense, Joint Chiefs of Staff, and Joint Staff level, are not consistently conducting portfolio reviews or collaborating to integrate key information. As a result, DOD may be missing opportunities to better leverage its resources and identify investment priorities that best reflect DOD-wide needs. Best practices and portfolio management standards state that organizations should conduct regular reviews to adjust to strategic changes, among other reasons. The Joint Staff, which is responsible for validating warfighting needs, has taken the most concrete actions to conduct portfolio reviews, but even these efforts did not integrate key requirements, acquisition, and budget information. Requirements and acquisition officials said they lacked the resources, readily accessible data, and analytical tools to effectively conduct reviews. For example, the Joint Staff lacks a database that pulls together current information to help it manage its portfolios and has to rely on repeated data calls, which are inefficient and time consuming.
The military services have conducted reviews more consistently than the enterprise level and their experiences at the service level may offer lessons for DOD. They have used the reviews to reduce redundancies, plan for budget uncertainty, and realign resources. Nevertheless, their reviews lack some of the key information needed to provide an integrated assessment of needs, investments, and resources and are limited to the services' own programs. A more integrated approach to portfolio reviews at both the enterprise and military-service levels would better position DOD to conduct sound investment planning.
Why GAO Did This Study
DOD's weapon system acquisition programs have a total estimated acquisition cost of over $1.4 trillion. Portfolio management is an approach used by organizations to evaluate, select, prioritize, and allocate resources to projects that best accomplish strategic or organizational goals. In March 2007, GAO recommended that DOD implement a department-wide portfolio management approach for weapon system investments.
Senate Report 113-44 accompanying the National Defense Authorization Act for Fiscal Year 2014 included a provision that GAO review DOD processes for identifying duplicative and inefficient acquisitions. This report assesses the extent to which (1) DOD uses portfolio management to optimize weapon system investments; (2) DOD conducts integrated portfolio reviews; and (3) the military services conduct portfolio reviews. GAO compared DOD and military service policies and portfolio reviews with best practices and standards for portfolio management.
Recommendations
GAO recommends that DOD update its portfolio management policy, designate a senior official responsible for its implementation; conduct annual portfolio reviews that integrate key information from the requirements, acquisition, and budget processes; and invest in analytical tools to support its portfolio management efforts. DOD partially concurred with the recommendations. However, as discussed in the report, DOD's planned actions will not fully address the issues GAO identified.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense |
Priority Rec.
To improve DOD's use of portfolio management for its weapon system investments and ensure that its investment plans are affordable, strategy-driven, balance near- and long-term needs, and leverage efforts across the military services, as well as to provide a solid foundation for future portfolio management efforts at the enterprise-level, the Secretary of Defense should revise DOD Directive 7045.2 on Capability Portfolio Management in accordance with best practices and promote the development of better tools to enable more integrated portfolio reviews and analyses of weapon system investments. Key elements of this recommendation would include (1) designating the Deputy Secretary of Defense or some appropriate delegate responsibility for implementing the policy and overseeing portfolio management in DOD; (2) requiring annual enterprise-level portfolio reviews that incorporate key portfolio review elements, including information from the requirements, acquisition, and budget processes; (3) directing the Joint Staff, AT&L, and CAPE to collaborate on their data needs and develop a formal implementation plan for meeting those needs either by building on the database the Joint Staff is developing for its analysis or investing in new analytical tools; and (4) incorporating lessons learned from military service portfolio reviews and portfolio management activities, such as using multiple risk and funding scenarios to assess needs and re-evaluate priorities. |
DOD partially concurred with our recommendation, and in July 2018 and September 2023, took action to implement it. In July 2018, the Deputy Secretary of Defense issued a memorandum that, among other things, assigned the Under Secretary of Defense for Acquisition and Sustainment (OUSD (A&S)) for key aspects of portfolio management across the department. OUSD (A&S) subsequently revised the department's capability portfolio management policy, DOD Directive 7045.20, and in September 2023, the Deputy Under Secretary of Defense approved it. While the directive does not require enterprise-level portfolio reviews, its states that the department plans to integrate the outcomes from the respective portfolio reviews within each of the requirements, acquisition, and budgeting processes to support DOD-wide decision making, which meets the intent of our recommendation. More specifically, the Deputy Secretary of Defense is to receive recommendations from various portfolio reviews conducted by the OUSD (A&S), the OUSD for Research and Engineering, the Office of the Chairman of the Joint Chiefs of Staff, and the Office of the Director for Cost Assessment and Program Evaluation. The directive states that the outcomes of the portfolio reviews will inform decisions made by the Deputy Secretary of Defense's Management Action Group and the annual President's Budget Request process. In addition, the directive states that portfolio management should be data driven and leverage schedule, cost, and performance metrics for systems and interdependencies among portfolio elements. This includes using the department's authoritative data management and analytics platform, Advana. DOD officials involved in updating the directive said that they created a working group to further define implementation of the directive. The working group is addressing topics such as determining common data to be used across the various portfolio reviews and how to synthesize and integrate portfolio review outcomes. DOD capability portfolio management remains of interest to Congress, and the Senate Armed Services Committee included a provision in its report to the National Defense Authorization Act for fiscal year 2023 for us to conduct additional work in this area.
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| Department of Defense | To improve DOD's use of portfolio management for its weapon system investments and ensure that its investment plans are affordable, strategy-driven, balance near- and long-term needs, and leverage efforts across the military services, and to help ensure the military services' portfolio reviews are conducted regularly and effectively integrate information from the requirements, acquisition, and budget communities, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force to update or develop policies that require them to conduct annual portfolio reviews that incorporate key portfolio review elements, including information from the requirements, acquisition, and budget processes. |
DOD partially concurred with our recommendation. However, DOD did not indicate that it would take any action to address it. Instead, DOD responded that the services' budget processes and Office of the Secretary of Defense's review of the services' budgets meet the intent of our recommendation. Our report findings showed otherwise. As of July 2024, the Secretary of Defense had yet to direct the military departments to update or develop policies requiring them to conduct annual portfolio reviews. DOD updated its portfolio management guidance (DOD Directive 7045.20) in September 2023, which outlines the roles and responsibilities for the military departments in the various portfolio reviews that the Office of the Secretary of Defense and the Office of the Chairman of the Joint Chiefs of Staff conduct. However, the directive does not include a requirement for the military departments to conduct annual portfolio reviews. DOD officials told us that while the military departments are not yet required to conduct annual portfolio reviews, they will be integral to their efforts to conduct synchronized portfolio reviews across DOD's enterprise-level requirements, acquisition, and budgeting communities starting in fiscal year 2025. Officials also said they would reconsider implementation of this recommendation after completing the reviews and as they develop an implementation instruction for the updated portfolio management directive. We will continue to monitor DOD's progress in implementing this recommendation.
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