oversight

DOD Civilian Workforce: Observations on DOD's Efforts to Plan for Civilian Workforce Requirements

Published by the Government Accountability Office on 2012-07-26.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Testimony
                             Before the Subcommittee on Readiness,
                             House Armed Services Committee


                             DOD CIVILIAN
For Release on Delivery
Expected at 11:30 a.m. EDT
Thursday, July 26, 2012

                             WORKFORCE
                             Observations on DOD’s
                             Efforts to Plan for Civilian
                             Workforce Requirements
                             Statement of Brenda S. Farrell
                             Director, Defense Capabilities and Management




GAO-12-962T
                                              July 26, 2012

                                              DOD CIVILIAN WORKFORCE
                                              Observations on DOD’s Efforts to Plan for Civilian
                                              Workforce Requirements
Highlights of GAO-12-962T, a testimony
before the Subcommittee on Readiness,
Committee on Armed Services, House of
Representatives.



Why GAO Did This Study                        What GAO Found
DOD’s workforce of 783,000 civilians          Prior Department of Defense (DOD) civilian workforce downsizing efforts in the
performs a wide variety of duties,            1990s were not oriented toward shaping the makeup of the workforce, resulting
including some traditionally performed        in significant imbalances in terms of shape, skills, and retirement eligibility.
by military personnel, such as mission-       Specifically, in a series of reviews GAO found that DOD’s efforts in the 1990s to
essential logistics support and               reduce its federal civilian workforce to levels below that of 1987 were hampered
maintenance, as well as providing             by incomplete data and lack of a clear strategy for avoiding skill imbalances and
federal civilian experts to Afghanistan       other adverse effects of downsizing. For instance, in 1992, GAO found that DOD
and other theaters of operations.             used incomplete and inconsistent data related to workers, workload, and
With the long-term fiscal challenges          projected force reductions. Further, the approaches DOD has relied on to
facing the nation, reductions to the          accomplish downsizing have sometimes had unintended consequences. The use
civilian workforce may be considered          of voluntary attrition, hiring freezes, and financial separation incentives allowed
to achieve cost savings. Human capital        DOD to mitigate some adverse effects of civilian workforce reductions, but were
has remained a critical missing link in       less oriented toward shaping the makeup of the workforce than was the
reforming and modernizing the federal         approach the department used to manage its military downsizing. For DOD, this
government’s management practices,            was especially true of the civilian acquisition workforce. The department, which in
even as legislation and other actions         2011 obligated about $375 billion to acquire goods and services, was put on the
since 1990 have been put in place to          verge of a retirement-driven talent drain in this workforce after 11 consecutive
address major management areas. In            years of downsizing, according to a DOD report. Finally, GAO has found that the
the past, GAO has observed that the
                                              use of strategies such as financial separation incentives makes it difficult to
federal government has often acted as
                                              document or estimate the actual cost savings of government downsizing efforts,
if people were costs to be cut rather
                                              especially in cases where the work previously performed by the eliminated
than assets to be valued. DOD
previously experienced significant            personnel continues to be required. For example, if the work continues to be
downsizing in the 1990s where it did          required, it may need to be contracted out to private companies and contract
not focus on reshaping the civilian           costs should be considered in determining whether net savings resulted from
workforce in a strategic manner.              workforce reductions.
Particularly as decision makers               DOD has taken positive steps towards identifying its critical skills, but there are
consider proposals to reduce the              opportunities to enhance the department’s current strategic workforce plans.
civilian workforce, it will be critical to
                                              GAO and the Office of Personnel Management have identified leading principles
DOD’s mission for the department to
                                              to incorporate into effective workforce plans, such as the need to identify and
have the right number of federal
civilian personnel with the right skills.     address critical skills and competencies. DOD has been required to have a
                                              civilian strategic workforce plan since 2006. Currently, DOD is required to
This testimony discusses DOD’s                develop a strategic workforce plan that includes, among other things, an
1) prior experience with civilian             assessment of the skills, competencies and gaps, projected workforce trends,
workforce downsizing, and 2) current          and needed funding of its civilian workforce. GAO has found improvements in
strategic human capital planning              DOD’s efforts to strategically manage its civilian workforce. For instance, GAO
efforts.                                      reported in 2010 that DOD’s 2009 strategic workforce plan assessed critical skills
This testimony is based on GAO                and identified 22 mission-critical occupations, such as acquisition and financial
reviews issued from March 1992                management. However, DOD’s plan only discussed competency gap analyses
through June 2012.                            for 3 of its 22 mission-critical occupations, which GAO has reported is key to
                                              enabling an agency to develop specific strategies to address workforce needs.
                                              For example, GAO found that DOD had not conducted a competency gap
                                              analysis for its financial management workforce, and GAO remains concerned
                                              that DOD lacks critical information it needs to effectively plan for its workforce
                                              requirements. GAO is currently reviewing DOD’s latest strategic workforce plan,
View GAO-12-962T. For more information,       which was released in March 2012. The results of this review are expected to be
contact Brenda S. Farrell at (202) 512-3604   released in September 2012.
or farrellb@gao.gov

                                                                                      United States Government Accountability Office
Chairman Forbes, Ranking Member Bordallo, and Members of the
Subcommittee:

Thank you for providing me the opportunity to be here today to discuss
GAO’s observations on the Department of Defense’s (DOD) civilian
workforce requirements. Having the right number of federal civilian
personnel with the right skills is critical to achieving the DOD mission—
particularly as the department faces the current and emerging challenges
of the 21st century. DOD’s civilian workforce performs a wide variety of
duties and responsibilities, including mission-essential combat support
functions, such as logistics support and maintenance, which traditionally
have been performed by the uniformed military. A key component of this
workforce also provides federal civilian experts to Afghanistan and other
theaters of operation. Moreover, career civilian personnel possess
“institutional memory,” which is particularly important in DOD because of
the frequent rotation of military personnel and the short tenure of the
average political appointee. During its downsizing in the early 1990s, our
prior work 1 found that DOD did not focus on reshaping the civilian
workforce in a strategic manner. That downsizing resulted in skills
imbalances and a workforce characterized by a growing gap between
older, experienced employees and younger, less experienced ones. At
the time of this downsizing, a common concern often voiced by Defense
managers was that workforce constraints were driving workload rather
than workload requirements being used to define workforce levels.

With the long-term fiscal challenges facing the nation, reductions to the
civilian workforce may be considered to achieve cost savings. Our prior
work has noted that an organization’s people—its human capital—are its
most critical asset in managing for results. However, human capital has
remained a critical missing link in reforming and modernizing the federal
government’s management practices, even as legislation and other
actions since 1990 have attempted to address most major management
areas. Further, GAO’s reports have noted that the federal government
has often acted as if people were costs to be cut rather than assets to be
valued. In 2001, after a decade of government downsizing and curtailed
investments in human capital, we reported that federal human capital
strategies were not appropriately constituted to adequately meet the



1
 GAO, Defense Force Management: Expanded Focus in Monitoring Civilian Force
Reductions Is Needed, GAO/T-NSIAD-92-19 (Washington, D.C.: March 18, 1992).




Page 1                                                                GAO-12-962T
current and emerging needs of the government and the country’s citizens
in the most effective, efficient, and economical manner possible. That
same year, we designated strategic human capital management across
the entire federal government as a high-risk area 2 because of the long-
standing lack of leadership in the area and, in part, because critical skill
gaps could undermine agencies’ abilities to accomplish their missions.
While significant progress has been made—for example, through the
various authorities and flexibilities provided to agencies for managing the
federal workforce—the area remains high risk governmentwide 3 because
of a need to develop and implement plans to address current and
emerging critical skill gaps that are undermining agencies’ abilities to
meet their vital missions. The federal government’s current budget and
long-term fiscal pressures underscore the importance of a strategic and
efficient approach to human capital management—an approach that
would help ensure the recruitment and retention of individuals with the
needed critical skills. Specifically, with regard to DOD, our subsequent
work has emphasized that effective planning can enable the department
to have the right people, with the right skills, doing the right jobs, in the
right places, at the right time by making flexible use of its internal
workforce and appropriately using contractors. Particularly as decision
makers consider proposals to reduce the civilian workforce, it will be
critical to DOD’s mission for the department to have the right number of
federal civilian personnel with the right skills.

My testimony today will discuss our observations on (1) DOD’s prior
experience with civilian workforce downsizing, and (2) its current strategic
human capital planning efforts. For this testimony, we relied on our prior
work on a range of governmentwide and human capital-related issues.
We conducted the work supporting our prior reports, which were issued
from March 1992 through June 2012, in accordance with generally
accepted government auditing standards.




2
GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: January 2001).
3
GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).




Page 2                                                                GAO-12-962T
                       GAO’s body of work related to prior workforce reductions at DOD and other
Prior Civilian         organizations demonstrates the importance of strategic workforce planning,
Workforce Reductions   including a consideration of costs, to help ensure that DOD has a fully
                       capable workforce to carry out its mission. According to GAO’s Standards
Demonstrate the        for Internal Control, 4 management should ensure that skill needs are
Importance of          continually assessed and that the organization is able to obtain a workforce
Strategic Workforce    that has the required skills that match those necessary to achieve
                       organizational goals. Section 322 of the National Defense Authorization Act
Planning               for Fiscal Year 1991 directed DOD to establish guidelines for reductions in
                       the number of civilian workers employed by industrial or commercial type
                       activities. The act also directed certain DOD agencies or components to
                       submit 5 year master plans for those workers, providing information on
                       workload, demographics, and employee furloughs and involuntary
                       separations, with the materials submitted to Congress in support of the
                       budget request for fiscal year 1991. 5 Subsequently, in 1992, we reported
                       that DOD intended to undertake a multiyear downsizing effort aimed at
                       reducing the civilian workforce by nearly 229,000 positions, or to 20 percent
                       below its fiscal year 1987 levels. However, in 2000, we reported that DOD’s
                       approach to prior force reductions was not oriented toward shaping the
                       makeup of the workforce, resulting in significant imbalances in terms of
                       shape, skills, and retirement eligibility.

                       In a series of subsequent reviews, 6 we found that the department’s efforts
                       were hampered by incomplete data and the lack of a clear strategy for
                       avoiding the adverse effects of downsizing and minimizing skills
                       imbalances. For instance, we reported in 1992 that DOD’s 1991
                       downsizing plan developed in response to section 322 had a number of
                       data gaps and limitations, including incomplete and inconsistent data
                       related to workload, workers, and projected force reductions. More
                       specifically, DOD pointed out that the plan’s data limitations were partly
                       due to uncertainty about the results of a pending Base Closure and



                       4
                        GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1
                       (Washington, D.C.: November 1999).
                       5
                        The National Defense Authorization Act for Fiscal Year 1991, Pub. L. No. 101-510, §322
                       (1990).
                       6
                        GAO, Defense Force Management: Expanded Focus in Monitoring Civilian Force
                       Reductions Is Needed, GAO/T-NSIAD-92-19 (Washington, D.C.: March 18, 1992); and
                       Defense Force Management: Challenges Facing DOD as It Continues to Downsize Its
                       Workforce, GAO/NSIAD-93-123 (Washington, D.C.: February 12, 1993).




                       Page 3                                                                     GAO-12-962T
Realignment round and the impacts of Operations Desert Shield and
Desert Storm. We concluded that broader assessments were needed to
determine the magnitude of civilian workforce reductions and their
potential impact on given areas and regions, as well as the impact of
hiring constraints on the ability of all DOD civilian organizations to
efficiently and effectively accomplish their missions.

We also have reported 7 that the approaches DOD has relied on to
accomplish past civilian workforce downsizing have sometimes had
unintended consequences, such as workforce skills imbalances. For
instance, DOD’s approach to past civilian downsizing relied primarily on
voluntary attrition and retirements and varying freezes on hiring authority
to achieve force reductions, as well as the use of existing authorities for
early retirements to encourage voluntary separations at activities facing
major reductions-in-force. The National Defense Authorization Act for
Fiscal Year 1993 authorized a number of transition assistance programs
for civilian employees, including financial separation incentives—
”buyouts”—to induce the voluntary separation of civilian employees. 8
DOD credited the use of these separation incentives, early retirement
authority, and various job placement opportunities in its avoidance of
nearly 200,000 involuntary demotions and separations. The tools
available to DOD to manage its civilian downsizing helped mitigate some
adverse effects of force reductions. However, DOD’s approach to civilian
workforce reductions was less oriented toward shaping the makeup of the
workforce than was the approach it used to manage its military
downsizing and resulted in significant imbalances in terms of shape,
skills, and retirement eligibility. We also reported 9 that, while managing
force reductions for its uniformed military, DOD followed a policy of trying
to achieve and maintain a degree of balance between its accessions and
losses in order to “shape” its uniformed forces in terms of rank, years of
service, and specialties. In contrast, we did not see as much attention
devoted to planning and managing civilian workforce reductions.




7
 GAO, Human Capital: Strategic Approach Should Guide DOD Civilian Workforce
Management, GAO/T-GGD/NSIAD-00-120 (Washington, D.C.: March 9, 2000).
8
 The National Defense Authorization Act for Fiscal Year 1993, Pub. L. No. 102-484,
§4465 (1992).
9
GAO/T-NSIAD-92-19.




Page 4                                                                      GAO-12-962T
Moreover, the Acquisition 2005 Task Force’s final report 10 found, for
instance, that this was especially true of the civilian acquisition workforce,
which from September 1989 to September 1999 was reduced by almost
47 percent. This rate of reduction substantially exceeded that of the rest
of the DOD workforce. Eleven consecutive years of downsizing produced
serious imbalances in the skills and experience of the highly talented and
specialized civilian acquisition workforce, putting DOD on the verge of a
retirement-driven talent drain.

Our work on the downsizing conducted by other organizations adds
further perspective on some challenges associated with certain strategies
and the need to conduct effective planning when downsizing a workforce.
In 1995, we conducted a review 11 of downsizing undertaken by 17 private
companies, 5 states, and 3 foreign governments, generally selected
because they were reputed to have downsized successfully. We reported
that a number of factors may constrain organizations’ downsizing
strategies, such as public sentiment, budget limitations, legislative
mandates to maintain certain programs, and personnel laws. Moreover,
we found that using attrition as a sole downsizing tool can result in skills
imbalances in an organization’s workforce because the employees who
leave are not necessarily those the organization determined to be excess.
Further, we also found that attrition is often not sufficient to reduce
employment levels in the short term. In addition, some workforce
reduction strategies have been found to slow the hiring, promotion, and
transfer process and create skills imbalances. However, we found that
one key theme emerged from such downsizing efforts. Specifically, most
organizations found that workforce planning had been essential in
identifying positions to be eliminated and pinpointing specific employees
for potential separation. In organizations where planning did not occur or
was not effectively implemented, difficulties arose in the downsizing. For
example, we reported that a lack of effective planning for skills retention
can lead to a loss of critical staff, and that an organization that simply
reduces the number of employees without changing work processes will
likely have staffing growth recur eventually.




10
 The Acquisition 2005 Task Force, Final Report: Shaping the Civilian Acquisition
Workforce of the Future (October 2000).
11
 GAO, Workforce Reductions: Downsizing Strategies Used in Select Organizations,
GAO/GGD-95-54 (Washington, D.C.: March 13, 1995).




Page 5                                                                      GAO-12-962T
                      We have also identified the potential cost implications of downsizing in
                      our prior work. In 1995, we reported that the savings realized from
                      government downsizing efforts are difficult to estimate. Payroll savings
                      attributed to workforce reductions would not be the amount of actual
                      savings to the federal government from the personnel reductions because
                      of other costs associated with such efforts—for example, separation
                      incentives— or, in the case of reductions-in-force, severance pay. In
                      addition, the ultimate savings would depend on what happened to the
                      work previously performed by the eliminated personnel. For example, if
                      some of the work was contracted out to private companies, contract costs
                      should be considered in determining whether net savings resulted from
                      workforce reductions.

                      In 2001, we concluded that, considering the enormous changes that
                      DOD’s civilian workforce had undergone and the external pressures and
                      demands faced by the department, taking a strategic approach to human
                      capital would be crucial to organizational results. As I will discuss further,
                      this is no less true today than it was in 2001.


                      I turn now to opportunities we have identified for DOD to enhance its
Opportunities Exist   strategic human capital planning. Since the end of the Cold War, the
for DOD to Enhance    civilian workforce has undergone substantial change, due primarily to
                      downsizing, base realignments and closures, competitive sourcing
Its Strategic Human   initiatives, and DOD’s changing mission. For example, between fiscal
Capital Planning      years 1989 and 2002, DOD’s civilian workforce shrank from 1,075,437 to
                      670,166—about a 38 percent reduction. According to the department, as
                      of January 2012, DOD’s total civilian workforce had grown to include
                      about 783,000 civilians. 12 As I have noted, the achievement of DOD’s
                      mission is dependent in large part on the skills and expertise of its civilian
                      workforce, and today’s current and long-term fiscal outlook underscore
                      the importance of a strategic and efficient approach to human capital
                      management. The ability of federal agencies to achieve their missions
                      and carry out their responsibilities depends in large part on whether they
                      can sustain a workforce that possesses the necessary education,
                      knowledge, skills, and competencies. Our work has shown that
                      successful public and private organizations use strategic management


                      12
                        This workforce total is based on Defense Civilian Personnel Data Service data as of
                      January 31, 2012 obtained from the Defense Civilian Personnel Advisory Service monthly
                      update briefing entitled DOD Demographics as of Jan. 31, 2012,




                      Page 6                                                                    GAO-12-962T
approaches to prepare their workforces to meet present and future
mission requirements. Preparing a strategic human capital plan
encourages agency managers and stakeholders to systematically
consider what is to be done, how it will be done, and how to gauge
progress and results. While the department has made progress adopting
some of these approaches, we remain concerned that some missing key
elements of strategic workforce planning will hinder DOD’s ability to most
effectively and efficiently achieve its mission.

As we have reported in the past, federal agencies have used varying
approaches to develop and present their strategic workforce plans. To
facilitate effective workforce planning, we and the Office of Personnel
Management have identified six leading principles such workforce plans
should incorporate, including:

•   aligning workforce planning with strategic planning and budget
    formulation;

•   involving managers, employees, and other stakeholders in planning;

•   identifying critical skills and competencies and analyzing workforce
    gaps;

•   employing workforce strategies to fill the gaps;

•   building the capabilities needed to support workforce strategies
    through steps to ensure the effective use of human capital flexibilities;
    and

•   monitoring and evaluating progress toward achieving workforce
    planning and strategic goals.

The application of these principles will vary depending on the particular
circumstances the agency faces. For example, an agency that is faced
with the need for a long lead time to train employees hired to replace
those retiring and an increasing workload may focus its efforts on
estimating and managing retirements. Another agency with a future
workload that could rise or fall sharply may focus on identifying skills to
manage a combined workforce of federal employees and contractors.

Over the past few years, Congress has enacted a number of provisions
requiring DOD to conduct human capital planning efforts for its overall
civilian, senior leader, and acquisition workforces and provided various



Page 7                                                             GAO-12-962T
tools to help manage the department’s use of contractors, who augment
DOD’s total civilian workforce. For example, the National Defense
Authorization Act for Fiscal Year 2006 directed DOD to create and
periodically update a strategic human capital plan that addressed, among
other things, the existing critical skills and competencies of the civilian
workforce as well as projected needs, gaps in the existing or projected
civilian workforce, and projected workforce trends. 13 Subsequent acts
established additional requirements for the human capital plan, including
requirements to assess issues related to funding of its civilian
workforce. 14

We have closely monitored DOD’s efforts to address the aforementioned
requirements. In our September 2010 review of DOD’s 2009 update to its
human capital strategic plan 15 we found that, although DOD had
demonstrated some progress in addressing the legislative requirements
related to its Civilian Human Capital Strategic Workforce Plan, several
key elements continued to be missing from the process—including such
elements as competency gap analyses and monitoring of progress. Our
work found that DOD’s plan addressed the requirement to assess critical
skills. Specifically, the overall civilian workforce plan identified 22 mission-
critical occupations 16 that, according to the department, represent the
results of its assessment of critical skills. According to DOD, mission-
critical occupations are those occupations that are key to current and
future mission requirements, as well as those that present a challenge
regarding recruitment and retention rates and for which succession



13
  The National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163.
§ 1122 (2006).
14
  See, for example, The John Warner National Defense Authorization Act for Fiscal Year
2007, Pub. L. No. 109-364. § 1102 (2006); The National Defense Authorization Act for
Fiscal Year 2008, Pub. L. No. 110-181, § 851 (2008); The National Defense Authorization
Act for Fiscal Year 2010, Pub. L. No. 111-84, § 1108 (2009); and The National Defense
Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, §935 (2011). See also 10
U.S.C. §115b, for the current requirements.
15
 GAO, Human Capital: Further Actions Needed to Enhance DOD’s Civilian Strategic
Workforce Plan, GAO-10-814R (Washington, D.C.: September 27, 2010).
16
  DOD has identified 24 enterprisewide mission-critical occupations; 22 of these
occupations are associated specifically with the overall civilian workforce and are
discussed in the strategic workforce plan, while, the remaining 2 are acquisition-related
occupations—contracting and quality assurance—and are discussed in the Defense
Acquisition Workforce Improvement Strategy (published as a separate report).




Page 8                                                                         GAO-12-962T
planning is needed. Examples of mission-critical occupations include (1)
contracting, (2) accounting, and (3) information technology management.

However, as noted, DOD’s plan lacked such key elements as competency
gap analysis and monitoring of progress. Our prior work17 identified
competency gap analyses and monitoring progress as two key elements in
the strategic workforce planning process. Competency gap analyses
enable an agency to develop specific strategies to address workforce
needs and monitoring progress demonstrates the contribution of workforce
planning to achieving program goals. For example, at the time of our
review, because the plan discussed competency gap analyses for only 3 of
the 22 mission-critical occupations and did not discuss competency gaps
for the other 19 mission-critical occupations, we determined that the
requirement was only partially addressed. Moreover, DOD was in the initial
stages of assessing competency gaps for its senior leader workforce, but it
had not completed the analysis needed to identify gaps. Without including
analyses of gaps in critical skills and competencies as part of its strategic
workforce planning efforts, DOD and the components may not be able to
design and fund the best strategies to fill their talent needs through
recruiting and hiring or to make appropriate investments to develop and
retain the best possible workforce. Further, DOD leadership may not have
information necessary to make informed decisions about future workforce
reductions, should further reductions to its workforces become necessary.18
We currently have ongoing work assessing DOD’s 2010 Strategic
Workforce Plan, which the department released in March 2012. The results
of this review are expected to be released in September 2012.

In light of the challenges DOD has faced in its strategic workforce
planning, we support the department’s participation in efforts being made
across the federal government to address governmentwide critical skills
gaps. Currently, the Office of Personnel Management and DOD are



17
  GAO, DOD Civilian Personnel: Comprehensive Strategic Workforce Plans Needed,
GAO-04-753 (Washington, D.C.: June 2004).
18
  In May 2010, the Secretary of Defense directed DOD to undertake a department-wide
efficiency initiative to assess how the department is staffed, organized, and operated; the
goal was to reduce excess overhead costs and to reinvest the resulting savings in
sustaining the force structure and modernizing the weapons portfolio of the department.
As part of this initiative, the Secretary directed the department to freeze the number of
Office of the Secretary of Defense, defense agency, field activity, Joint Staff, and
Combatant Command billets at the fiscal year 2010 levels for the next three years.




Page 9                                                                         GAO-12-962T
leading a working group comprised of members of the Chief Human
Capital Officers Council tasked with (1) identifying mission-critical
occupations and functional groups, (2) developing strategies to address
gaps in these occupations and groups, and (3) implementing and
monitoring these strategies.

Our reviews of DOD’s acquisition, information technology, and financial
management workforces—which include a number of DOD’s identified
mission-critical occupations—amplifies some of our overarching
observations related to strategic workforce planning. In fiscal year 2011
alone, DOD obligated about $375 billion to acquire goods and services to
meet its mission and support its operations in the United States and
abroad. As noted, our prior work found that the significant reductions to
the acquisition workforce in the 1990s produced serious imbalances in
the skills and experience of this highly talented and specialized workforce.
The lack of an adequate number of trained acquisition and contract
oversight personnel has, at times, contributed to unmet expectations and
placed DOD at risk of potentially paying more than necessary. Our
February 2011 high-risk report noted that DOD needs to ensure that its
acquisition workforce is adequately sized, trained, and equipped to meet
department needs. We further reported in November 2011 that the
department has focused much-needed attention on rebuilding its
acquisition workforce and made some progress in terms of growing the
workforce, identifying the skills and competencies it needed, and used
such information to help update its training curriculum.

While DOD has acknowledged that rebuilding its acquisition workforce is a
strategic priority, our most recent review19 of the Defense Acquisition
Workforce Development Fund found that DOD continues to face
challenges in strategic workforce planning for its acquisition workforce.20


19
  GAO, Defense Acquisition Workforce: Improved Processes, Guidance, and Planning
Needed to Enhance Use of Workforce Funds, GAO-12-747R (Washington, D.C.:
June 20, 2012).
20
  In section 852 of the National Defense Authorization Act for Fiscal Year 2008, Congress
established the Defense Acquisition Workforce Development Fund to help alleviate some
long standing challenges and provide additional funds for the recruitment, training, and
retention of acquisition personnel. In authorizing the Defense Acquisition Workforce
Development Fund, Congress noted that its intention was to ensure that the DOD
acquisition workforce has the capacity—both in personnel and skills—needed to properly
perform its mission, provide appropriate oversight of contractor performance, and ensure
that the department receives the best value for the expenditure of resources.




Page 10                                                                      GAO-12-962T
Specifically, we found that DOD lacks an overarching strategy to clearly
align this fund with its acquisition workforce plan. The department has also
not developed outcome-related metrics, such as the extent to which the
fund is helping DOD address its workforce skills and competencies gaps.
Moreover, we remain concerned that the acquisition workforce continues to
face challenges in terms of the age and retirement eligibility of its members.
According to the most recent reported data from the Federal Acquisition
Institute, as of December 2011, the average age of the acquisition
workforce ranged from 47 years to 51.7 years, with at least 36 percent of
the workforce becoming eligible to retire over the next 10 years.

We have also identified a number of challenges associated with DOD’s
workforce planning for its financial management and information
technology workforces. With regard to the financial management
workforce, we reported21 in July 2011 that DOD’s financial management
has been on GAO’s high-risk list since 1995 and, despite several reform
initiatives, remains on the list today. Specifically, we noted that effective
financial management in DOD will require a knowledgeable and skilled
workforce that includes individuals who are trained and certified in
accounting. DOD accounting personnel are responsible for accounting for
funds received through congressional appropriations, the sale of goods
and services by working capital fund businesses, revenue generated
through nonappropriated fund activities, and the sales of military systems
and equipment to foreign governments or international organizations.
According to DOD’s fiscal year 2012 budget request, the Defense
Finance and Accounting Service22 processed approximately 198 million
payment-related transactions and disbursed over $578 billion in fiscal
year 2010. However, we also reported in July 2011 that DOD’s strategic
workforce plan lacked a competency gap analysis for its financial
management workforce, thus limiting the information DOD has on its
needs and gaps in that area and the department’s ability to develop an
effective financial management recruitment, retention, and investment
strategy to address other financial management challenges. With regard



21
  GAO, DOD Financial Management: Numerous Challenges Must Be Addressed to
Improve Reliability of Financial Information, GAO-11-835T (Washington, D.C.:
July 27, 2011).
22
  The Defense Finance and Accounting Service was created on November 26, 1990 as
DOD’s accounting agency to consolidate, standardize, and integrate finance and
accounting requirements, functions, procedures, operations, and systems.




Page 11                                                                GAO-12-962T
to DOD’s information technology workforce, we reported 23 in November
2011 that, as threats to federal information technology infrastructure and
systems continue to grow in number and sophistication, the ability to
secure these infrastructure and systems will depend on the knowledge,
skills, and abilities of the federal and contractor workforce that
implements and maintains these systems. We noted that DOD’s
information assurance workforce plan—which addresses information
technology—incorporates critical skills, competencies, categories, and
specialties of the information assurance workforce, but only partially
describes strategies to address gaps in human capital approaches and
critical skills competencies.

DOD’s workforce is comprised of military personnel, civilians, and
contractors. DOD has acknowledged, however, that with approximately
30 percent of its workforce eligible to retire by March 31, 2015, and the
need to reduce its reliance on contractors to augment the current
workforce, it faces a number of significant challenges. Our September
2010 review of DOD’s strategic workforce plan found that the department
had issued a directive stating that missions should be accomplished using
the least costly mix of personnel (military, civilian, and contractors)
consistent with military requirements and other needs. However, the
department’s workforce plan did not provide an assessment of the
appropriate mix of military, civilian, and contractor personnel capabilities.
More recently, the House Report 24 accompanying a proposed bill for the
National Defense Authorization Act for Fiscal Year 2013 directs GAO to
assess what measures DOD is taking to appropriately balance its current
and future workforce structure against its requirements. Specifically, we
plan for our review to include: (1) the process by which DOD identified its
civilian workforce requirements, taking into consideration the withdrawal
from Iraq and impending withdrawal from Afghanistan; and (2) the
analysis done by DOD to identify core or critical functions, including which
of those functions would be most appropriately performed by military,
civilian, or contractor personnel. Our report is due to the Armed Services
Committees of the House and Senate by March 15, 2013.




23
 GAO, Cybersecurity Human Capital: Initiatives Need Better Planning and Coordination,
GAO-12-8 (Washington, D.C.: November 29, 2011).
24
  H.R. Rep. No. 112-479, at 196-197 (2012), which accompanies H.R. 4310, 112th Cong.
(2012).




Page 12                                                                   GAO-12-962T
                  In conclusion, DOD has a large, diverse federal civilian workforce that is
                  key to maintaining our national security. However, as we have noted,
                  DOD’s workforce also includes military and contractor personnel and
                  changes made to one of these groups may impact the others. As such,
                  we are currently assessing the measures the department is taking to
                  appropriately balance its current and future workforce structure and its
                  requirements.


                  Chairman Forbes, Ranking Member Bordallo, this concludes my prepared
                  remarks. I would be happy to respond to any questions that you or other
                  Members of the Subcommittee may have at this time.


                  For future questions about this statement, please contact Brenda S.
Contacts and      Farrell, Director, Defense Capabilities and Management, at
Acknowledgments   (202) 512-3604 or farrellb@gao.gov. In addition, contact points for our
                  Offices of Congressional Relations and Public Affairs may be found on
                  the last page of this statement. Individuals who made key contributions to
                  this statement include Margaret Best, Assistant Director; Spencer Tacktill;
                  Jennifer Weber; Erik Wilkins-McKee; Nicole Willems; and John Van
                  Schaik. In addition, Penny Berrier, Mark Bird, Timothy DiNapoli, Gayle
                  Fischer, Steven Lozano, Belva Martin, Carol Petersen, and Rebecca
                  Shea made contributions to this report.




                  Page 13                                                          GAO-12-962T
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