oversight

Defense Management: DOD Needs to Implement Statutory Requirements and Identify Resources for Its Cross-Functional Reform Teams

Published by the Government Accountability Office on 2019-01-17.

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

               United States Government Accountability Office
               Report to Congressional Committees




               DEFENSE
January 2019




               MANAGEMENT

               DOD Needs to
               Implement Statutory
               Requirements and
               Identify Resources for
               Its Cross-Functional
               Reform Teams




GAO-19-165
                                               January 2019

                                               DEFENSE MANAGEMENT
                                               DOD Needs to Implement Statutory Requirements and
                                               Identify Resources for Its Cross-Functional Reform
Highlights of GAO-19-165, a report to
                                               Teams
congressional committees




Why GAO Did This Study                         What GAO Found
DOD continues to confront                      The Department of Defense (DOD) has implemented four statutory requirements
organizational challenges that hinder          in section 911 of the National Defense Authorization Act (NDAA) for Fiscal Year
collaboration. To address these                (FY) 2017, but has not addressed five requirements intended to support cross-
challenges, section 911 of the NDAA            functional teams and promote department-wide collaboration (see table).
for FY 2017 directed the Secretary of
Defense to issue an organizational             Status of Department of Defense’s Implementation of Requirements in Section 911 of the
strategy that identifies critical              National Defense Authorization Act (NDAA) for Fiscal Year 2017, as of December 2018
objectives that span multiple functional        Section 911 requirement                                             Statutory due date               Status
boundaries; establish cross-functional          Award contract for a study on cross-functional teams March 15, 2017                                  Completed
teams to support this strategy and              Provide the results of the study to Congress                        July 15, 2017                    Completed
provide related guidance and training;          Establish cross-functional teams                                    September 30, 2017               Completed
and take actions to streamline the
                                                Issue report on cross-functional teams                              June 23, 2018                    Completed
Office of the Secretary of Defense.
Further, section 921 of the NDAA for            Develop and issue an organizational strategy                        September 1, 2017                Not completed
FY 2019 calls for the Secretary of              Issue guidance on cross-functional teams                            September 30, 2017               Not completed
Defense to reform the department’s              Streamline Office of the Secretary of Defense                       June 23, 2018                    Not completed
enterprise business operations.                 Provide training to cross-functional team members                   Not specified                    Not completed
                                                and their supervisors
The NDAAs for FY 2017 and 2019 also
included provisions for GAO to assess           Provide training to presidential appointees                         Within 3 months of               Not completed
                                                                                                                    appointment
DOD’s actions in response to sections
911 and 921, respectively. This report         Source: GAO analysis of the NDAA for Fiscal Year 2017 and Department of Defense information. | GAO-19-165
assesses the extent to which DOD has           For two of these requirements, DOD has missed the statutory deadline by more
made progress in (1) addressing the            than a year. GAO previously recommended that DOD take actions to improve its
requirements of section 911, and (2)           implementation of section 911, and DOD reported it is doing so, such as revising
reforming the department’s enterprise          its draft cross-functional team guidance to address statutory requirements. Fully
business operations under section 921.         implementing GAO’s prior recommendations and the remaining statutory
GAO reviewed documentation on
                                               requirements would better position DOD to effectively implement its cross-
DOD’s implementation of sections 911
                                               functional teams and advance a collaborative culture, as required by the NDAA.
and 921; interviewed cross-functional
team leaders, members, and other                Nine cross-functional teams are driving DOD’s enterprise business reform efforts
DOD officials; and compared DOD’s               under section 921 of the FY 2019 NDAA, but the teams’ progress has been
implementation of its cross-functional          uneven. As of September 2018, DOD reported that these nine teams were
teams to GAO’s key practices.                   pursuing a total of 135 business reform initiatives. However, 104 of these
What GAO Recommends                             initiatives have not reached the implementation phase. A key challenge facing
                                                the teams is that some lack resources to fully implement their approved
GAO recommends that DOD establish               initiatives. For example, DOD officials stated that the department did not fulfill
a process to identify and prioritize            four of nine funding requests from the teams in fiscal year 2018 to implement
funding for implementing its cross-             their initiatives. As of September 2018, DOD officials estimated that the teams
functional teams’ business reform               need about $6.7 billion to implement their initiatives from FYs 2018 through
initiatives. DOD concurred with this            2024, but DOD has not identified sources for this funding. GAO’s prior work on
recommendation.                                 efficiency initiatives found that up-front investments may be required to realize
                                                long-term savings. In addition, GAO’s prior work on leading practices for
                                                implementing effective cross-functional teams highlights the importance of
View GAO-19-165. For more information,         providing teams with access to resources and having well-defined team
contact Elizabeth Field at (202) 512-2775 or   operations with established rules and procedures. However, DOD has not
fielde1@gao.gov.
                                               established a process for identifying and prioritizing available funding for
                                               implementing the teams’ initiatives. Without such a process, DOD and the teams
                                               may not be able to adequately plan for and execute their reform initiatives.
                                                                                                            United States Government Accountability Office
Contents


Letter                                                                                 1
               DOD Has Made Limited Progress since June 2018 in Addressing
                 Remaining Statutory Requirements and Is Reducing the
                 Number of Cross-Functional Teams It Considers Responsive to
                 Section 911                                                           6
               DOD’s Enterprise Business Reform Is Largely Driven by Nine
                 Cross-Functional Teams, but Progress Has Been Uneven                13
               Conclusions                                                           22
               Recommendation for Executive Action                                   22
               Agency Comments                                                       23

Appendix I     Prior GAO Reports on the Department of Defense’s (DOD)
               Implementation of Section 911 of the National Defense Authorization
               Act (NDAA) for Fiscal Year 2017                                       24



Appendix II    Summary of Requirements in Section 911 of the National Defense
               Authorization Act for Fiscal Year 2017                                26



Appendix III   Overview of the Department of Defense’s (DOD) Nine Cross-
               Functional Teams Implementing Business Reform Initiatives             28



Appendix IV    Leading Practices for Implementing Effective Cross-Functional
               Teams                                                                 31



Appendix V     Comments from the Department of Defense                               33



Appendix VI    GAO Contact and Staff Acknowledgments                                 35




               Page i                                       GAO-19-165 Defense Management
Tables
          Table 1: Recently Addressed and Remaining Statutory
                  Requirements from Section 911 of the National Defense
                  Authorization Act for Fiscal Year 2017                                            7
          Table 2: Prior GAO Reports on the Department of Defense’s
                  (DOD) Implementation of Section 911 of the National
                  Defense Authorization Act (NDAA) for Fiscal Year 2017
                  and Status of Recommendations, as of December 2018                                24
          Table 3: Status of Requirements in Section 911 of the National
                  Defense Authorization Act for Fiscal Year 2017, as of
                  December 2018                                                                     26
          Table 4: Leading Practices and Key Characteristics of Cross-
                  Functional Teams                                                                  31

Figures
          Figure 1: Department of Defense Office of the Chief Management
                   Officer Gating Process for Business Reform Initiatives
                   and the Status of Initiatives (Total and by Team), as of
                   September 2018                                                                   18
          Figure 2: Composition of the Department of Defense’s (DOD) Nine
                   Cross-Functional Business Reform Teams, as of
                   September 2018                                                                   29




          Abbreviations

          CMO               Chief Management Officer
          DOD               Department of Defense
          NDAA              National Defense Authorization Act
          OCMO              Office of the Chief Management Officer



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          Page ii                                                  GAO-19-165 Defense Management
                       Letter




441 G St. N.W.
Washington, DC 20548




                       January 17, 2019

                       The Honorable James M. Inhofe
                       Chairman
                       The Honorable Jack Reed
                       Ranking Member
                       Committee on Armed Services
                       United States Senate

                       The Honorable Adam Smith
                       Chairman
                       The Honorable Mac Thornberry
                       Ranking Member
                       Committee on Armed Serves
                       House of Representatives

                       The Department of Defense (DOD) has faced organizational,
                       management, and cultural challenges that can limit effective and efficient
                       collaboration across the department to accomplish departmental
                       objectives. For example, our prior work found that DOD’s efforts to
                       implement a hierarchical, portfolio-based approach to strategically acquire
                       contracted services had not been successful. 1 In part, we found that the
                       cultural barriers and military commanders’ reluctance to give up certain
                       responsibilities for determining how and which services were needed to
                       meet their missions hindered DOD’s efforts. We have highlighted these
                       challenges in additional reports, including our High-Risk report, which
                       calls attention to agencies and program areas that are high risk because
                       of their vulnerabilities to fraud, waste, abuse, and mismanagement, or are
                       most in need of transformation. 2 Further, the National Defense Business

                       1
                        GAO, Defense Contracted Services: DOD Needs to Reassess Key Leadership Roles and
                       Clarify Policies for Requirements Review Boards, GAO-17-482 (Washington, D.C.: Aug.
                       31, 2017). In this report, we recommended, and DOD concurred, that it needed to
                       reassess the roles, responsibilities, authorities, and organizational placement of key
                       leadership that had been established at the DOD and military department levels to lead
                       this transformation.
                       2
                        GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts
                       Needed on Others, GAO-17-317 (Washington, D.C.: Feb. 15, 2017). DOD currently
                       manages seven of the areas we have designated as high risk: (1) Weapons systems
                       acquisition, (2) supply chain management, (3) contract management, (4) financial
                       management, (5) business systems modernization, (6) support infrastructure
                       management, and (7) approach to business transformation.




                       Page 1                                                GAO-19-165 Defense Management
Operations Plan for Fiscal Years 2018-2022 highlights that collaboration
and communication among the Office of the Secretary of Defense,
military services, and combatant commands are essential to ensuring the
success of the readiness program across the department.

Section 911 of the National Defense Authorization Act (NDAA) for Fiscal
Year 2017 contained multiple requirements to help advance a more
collaborative culture within DOD. 3 DOD’s Chief Management Officer
(CMO) is leading the department’s efforts to implement section 911. 4 This
section directed the Secretary of Defense to do the following, among
other things:

•   Formulate and issue an organizational strategy for DOD. The
    organizational strategy, the act stated, should identify the critical
    objectives and other organizational outputs that span multiple
    functional boundaries and would benefit from the use of cross-
    functional teams to ensure collaboration and integration across the
    department.
•   Establish cross-functional teams that, among other things, address
    the critical objectives and outputs outlined in the department’s
    organizational strategy.
•   Issue guidance on cross-functional teams and provide training to
    members of those established teams and their supervisors on
    elements of successful cross-functional teams.
•   Provide training on leadership, modern organizational practice,
    collaboration, and the operation of cross-functional teams to
    individuals who have been appointed by the President and confirmed
    by the Senate to a position within the Office of the Secretary of
    Defense, or to request waivers from this requirement.
•   Take actions—as the Secretary of Defense considers appropriate—to
    streamline the organizational structure and processes of the Office of
    the Secretary of Defense.


3
Pub. L. No. 114-328, § 911 (2016).
4
 Prior to February 2018, the Deputy Chief Management Officer led the department’s
efforts to implement section 911 of the NDAA for Fiscal Year 2017. The CMO assumed
these responsibilities effective February 1, 2018, in accordance with section 910 of the
NDAA for Fiscal Year 2018, which disestablished the position of the Deputy Chief
Management Officer as a presidentially-appointed, Senate-confirmed position and
established the CMO position.




Page 2                                                   GAO-19-165 Defense Management
Section 911 of the NDAA for Fiscal Year 2017 also included a provision
for us—every 6 months after the date of enactment on December 23,
2016, through December 31, 2019—to submit a report to the defense
committees. This report is to set forth a comprehensive assessment of
the actions that DOD has taken pursuant to section 911 during each 6-
month period and cumulatively since the NDAA’s enactment. We have
issued three reports to date. In our first report, issued in June 2017, we
found that DOD had taken steps in several areas to begin implementing
the requirements of section 911. 5 In our second report, issued in February
2018, we found that DOD had implemented some of the statutory
requirements outlined in section 911, but could do more to promote
department-wide collaboration, as required under the statute. 6 We
recommended, and DOD concurred, that the CMO take four actions to
improve the department’s implementation of section 911. In our third
report, issued in June 2018, we found that DOD had taken additional
steps in response to section 911, but still had not implemented several
requirements intended to support cross-functional teams and promote
department-wide collaboration. 7 Appendix I identifies these three reports,
including the four recommendations from our February 2018 report and
the status of DOD’s implementation of those recommendations.



5
 GAO, Defense Management: DOD Has Taken Initial Steps to Formulate an
Organizational Strategy, but These Efforts Are Not Complete, GAO-17-523R (Washington,
D.C.: June 23, 2017). We reported that (1) DOD was exploring options for providing the
required training to presidential appointees; (2) DOD awarded a contract for a study on
leading practices for cross-functional teams; and (3) DOD was taking initial steps to
develop an organizational strategy. We did not make recommendations in this report.
6
 GAO, Defense Management: DOD Needs to Take Additional Actions to Promote
Department-Wide Collaboration, GAO-18-194 (Washington, D.C.: Feb. 28, 2018). We
reported that (1) DOD’s draft organizational strategy did not address all elements required
by statute; (2) DOD had established one cross-functional team, and that draft team
guidance addressed most statutory elements and leading practices for implementing
cross-functional teams; and (3) DOD had developed, but not provided, training for its
presidential appointees and cross-functional team members, but the training for the
presidential appointees did not address all statutory requirements.
7
 GAO, Defense Management: DOD Senior Leadership Has Not Fully Implemented
Statutory Requirements to Promote Department-Wide Collaboration, GAO-18-513
(Washington, D.C.: June 25, 2018). We reported that (1) DOD had established 10 cross-
functional teams that were in various stages of implementation; (2) DOD had updated, but
not issued, its draft organizational strategy; and (3) DOD had not fulfilled three statutory
requirements related to guidance and training for cross-functional teams and presidential
appointees. We did not make recommendations in this report because DOD was taking
actions to address the recommendations from our February 2018 report.




Page 3                                                    GAO-19-165 Defense Management
This report is our fourth on DOD’s implementation of section 911 of the
NDAA for Fiscal Year 2017. In addition, this report addresses a new
provision related to DOD reform, contained in section 921 of the John S.
McCain NDAA for Fiscal Year 2019 (hereafter referred to as the NDAA for
Fiscal Year 2019). Section 921 requires the Secretary of Defense, acting
through the CMO, to reform the enterprise business operations of the
department through reductions, eliminations, or improvements across all
organizations and elements of DOD with respect to any activity related to
civilian resources management, logistics management, services
contracting, or real estate management to increase effectiveness and
efficiency of mission execution. 8 We are required to submit a report by
May 2019, setting forth an assessment of DOD’s actions pursuant to the
provision. 9 Because we determined that DOD’s efforts to establish cross-
functional teams dedicated to improving the department’s business
operations are closely linked to the section 921 requirements, we are
combining our assessment of DOD’s actions related to both sections 911
and 921 in this report.

In this report, we assess the extent to which DOD has made progress in
implementing (1) the section 911 requirements related to DOD’s
organizational strategy and cross-functional teams and (2) the section
921 requirements to reform the enterprise business operations of the
department.

For the first objective, we reviewed documentation and interviewed
OCMO and other DOD officials on the department’s efforts to finalize its
draft organizational strategy; establish cross-functional teams; provide
guidance on cross-functional teams; provide training to cross-functional
team members, their supervisors, and presidential appointees; report on
the establishment of cross-functional teams; and take actions to
streamline the organizational structure and processes of the Office of the
Secretary of Defense. We evaluated DOD’s efforts against the
requirements in section 911 of the NDAA for Fiscal Year 2017.


8
 Pub. L. No. 115-232, § 921 (2018). Section 921 requires DOD to reform the enterprise
business operations of the department no later than January 1, 2020, and at least every 5
years thereafter. The CMO is required to submit a report to the congressional defense
committees that describes the activities carried out by the CMO under this section during
the preceding 5 years, no later than January 1 of every fifth calendar year beginning with
January 1, 2025.
9
See Pub. L. No. 115-232, § 921(b)(6)(B) (2018).




Page 4                                                   GAO-19-165 Defense Management
For the second objective, we reviewed documentation and interviewed
OCMO and other DOD officials on the department’s efforts to reform the
enterprise business operations of the department, as required by section
921 of the NDAA for Fiscal Year 2019. We also reviewed department-
wide goals, objectives, and performance measures for business reform in
key strategic documents, including the National Defense Business
Operations Plan for Fiscal Years 2018-2022, the Fiscal Year 2019 DOD
Annual Performance Plan, and the Report to Congress on Restructuring
the DOD Acquisition, Technology, and Logistics Organization and CMO
Organization. In addition, we conducted interviews with the leaders and
members from the nine cross-functional teams dedicated to improving the
department’s business operations and analyzed the information from
these meetings. We interviewed team members separately from team
leaders to encourage candid discussion about the operations of the
teams. Two GAO analysts independently reviewed interviewees’
responses to our questions to code them in terms of leading practices for
implementing effective cross-functional teams that we have identified in
our prior work. The analysts then compared how they coded the
statements. Where there was disagreement in the coding, the analysts
discussed their analyses and tried to reach a consensus. In cases where
they could not reach a consensus, a third analyst decided how the
information should be coded. In addition, we reviewed OCMO’s efforts to
oversee the teams’ progress, including observing a demonstration of the
dashboard used to monitor the teams’ metrics. We compared this
information to leading practices for implementing effective cross-
functional teams 10 and key practices for implementing efficiency initiatives
that we have identified in our prior work. 11


10
   We previously reported on eight leading practices for implementing effective cross-
functional teams. See GAO-18-194. We identified these leading practices by reviewing
literature and case studies on the use of cross-functional teams in the private and public
sectors, as well as interviewing six academic and practitioner experts. Leading practices
for effective cross-functional teams are aligned with leading practices for interagency
collaboration. See GAO, Managing for Results: Key Considerations for Implementing
Interagency Collaborative Mechanisms, GAO-12-1022 (Washington, D.C.: Sept. 27,
2012).
11
  GAO, Streamlining Government: Key Practices from Select Efficiency Initiatives Should
Be Shared Governmentwide, GAO-11-908 (Washington, D.C.: Sept. 30, 2011). To identify
the key practices, we synthesized practices identified by federal and state officials and
also compared them with leading practices identified in the Government Performance and
Results Act (GPRA) of 1993 and the GPRA Modernization Act of 2010, relevant literature,
and past GAO reports on organizational transformation, management integration,
efficiency measures, and tracking and reporting agency results.




Page 5                                                    GAO-19-165 Defense Management
                           We conducted this performance audit from May 2018 to January 2019 in
                           accordance with generally accepted government auditing standards.
                           Those standards require that we plan and perform the audit to obtain
                           sufficient, appropriate evidence to provide a reasonable basis for our
                           findings and conclusions based on our audit objectives. We believe that
                           the evidence obtained provides a reasonable basis for our findings and
                           conclusions based on our audit objectives.



DOD Has Made
Limited Progress
since June 2018 in
Addressing
Remaining Statutory
Requirements and Is
Reducing the Number
of Cross-Functional
Teams It Considers
Responsive to
Section 911

DOD Has Addressed One      DOD has addressed one additional statutory requirement of section 911
Statutory Requirement      of the NDAA for Fiscal Year 2017 since our June 2018 report. However,
                           DOD has still not addressed five other requirements, including (1) issuing
since June 2018, but Has
                           its organizational strategy, (2) issuing guidance on cross-functional
Not Addressed Five         teams, (3) providing training on cross-functional teams for team members
Remaining Requirements     and their supervisors, (4) providing training for presidential appointees,
                           and (5) taking actions to streamline the Office of the Secretary of
                           Defense, as shown in table 1. 12




                           12
                             Appendix II lists the requirements of section 911 of the NDAA for Fiscal Year 2017, the
                           corresponding due date, and the date completed, if applicable, for each requirement as of
                           December 2018.




                           Page 6                                                  GAO-19-165 Defense Management
Table 1: Recently Addressed and Remaining Statutory Requirements from Section 911 of the National Defense Authorization
Act for Fiscal Year 2017

                                                                                                                                          Status of Department of Defense
 Requirement                                                                Due date                                                      actions, as of December 2018
 Issue organizational strategy                                              September 1, 2017                                             Not yet completed
 Issue guidance on cross-functional teams                                   September 30, 2017                                            Not yet completed
 Issue report on the establishment of cross-                                June 23, 2018                                                 Submitted on June 21, 2018
 functional teams
 Take actions to streamline the organizational                              June 23, 2018                                                 Not yet completed
 structure and processes of the Office of the
 Secretary of Defense
 Training for cross-functional team members and                             Not specified                                                 Not yet completed
 their supervisors
                                                                                                                          a
 Training for presidential appointees                                       Within 3 months of appointment                                Not yet completed
Source: GAO analysis of section 911 of the National Defense Authorization Act for Fiscal Year 2017 and Department of Defense information. | GAO-19-165

                                                                 Note:
                                                                 a
                                                                  As of January 2, 2019, 23 of 35 presidential appointees in the Office of the Secretary of Defense had
                                                                 been in their positions for more than 3 months.


                                                                 DOD addressed one of the statutory requirements in section 911 by
                                                                 submitting a report to Congress on the establishment of cross-functional
                                                                 teams on June 21, 2018. The report described the number of cross-
                                                                 functional teams established to date and the design and function of those
                                                                 teams, consistent with the requirements in section 911.

                                                                 OCMO officials told us that DOD plans to address three of the five
                                                                 remaining requirements by March 2019. Specifically, the department
                                                                 plans to take the following actions.

                                                                 •      Issue DOD’s organizational strategy. DOD has drafted, but not issued,
                                                                        its organizational strategy, which section 911 required to be issued by
                                                                        September 1, 2017. In June 2018, we reported that OCMO officials
                                                                        had revised the draft strategy to address the recommendation from
                                                                        our February 2018 report, including identifying potential action steps
                                                                        for the department that align with our leading practices for mergers




                                                                 Page 7                                                                             GAO-19-165 Defense Management
      and organizational transformations. 13 OCMO officials have again
      revised the draft organizational strategy, incorporating, among other
      things, the criteria that distinguish cross-functional teams established
      under section 911 from other cross-functional working groups,
      committees, integrated product teams, and task forces, as required by
      section 918 the NDAA for Fiscal Year 2019. 14 The officials said they
      expect the Secretary of Defense to issue the strategy in March
      2019—18 months later than required by section 911.
•     Take actions to streamline the Office of the Secretary of Defense.
      OCMO officials have revised the draft organizational strategy to
      identify the actions the department has taken that it views as
      responsive to this requirement. For example, the draft strategy states
      that DOD has delegated authority to approve certain global force
      management actions to the Chairman of the Joint Chiefs of Staff and
      certain acquisition oversight functions to the military departments.
      Section 911 required DOD to take these actions by June 23, 2018. As
      noted above, however, the organizational strategy has not been
      finalized. We will assess these actions against the requirements of
      section 911 after the organizational strategy has been issued.
•     Issue guidance on cross-functional teams. DOD has drafted, but not
      issued, guidance on cross-functional teams, which section 911
      required to be issued by September 30, 2017. In June 2018, we
      reported that OCMO officials had revised the draft guidance to
      address the recommendation from our February 2018 report. 15 OCMO
      officials stated that they have no other planned revisions and that they


13
  GAO-18-513. We identified leading practices and implementation steps for mergers and
organizational transformations that can help agencies transform their cultures so that they
are more results-oriented, customer-focused, and collaborative. The leading practices
include: (1) ensure top leadership drives the transformation; (2) establish a coherent
mission and integrated strategic goals to guide the transformation; (3) focus on a key set
of principles and priorities at the outset of the transformation; (4) set implementation goals
and a timeline to build momentum and show progress from day one; (5) dedicate an
implementation team to manage the transformation process; (6) use the performance
management system to define responsibility and assure accountability for change; (7)
establish a communication strategy to create shared expectations and report related
progress; (8) involve employees to obtain their ideas and gain their ownership for the
transformation; and (9) build a world-class organization. See GAO, Results-Oriented
Cultures: Implementation Steps to Assist Mergers and Organizational Transformations,
GAO-03-669 (July 2, 2003).
14
    Pub. L. No. 115-232, § 918(b)(1) (2018).
15
    GAO-18-513.




Page 8                                                     GAO-19-165 Defense Management
      expect the Secretary of Defense to issue the guidance in March
      2019—18 months later than required by section 911.
Further, OCMO officials told us that DOD plans to finalize the draft
curricula and provide training to fulfill two additional section 911
requirements after the organizational strategy is issued.

•     Training for cross-functional team members and their supervisors.
      OCMO has not provided the required training to cross-functional team
      members and their supervisors. OCMO officials stated that they plan
      to send the draft training curriculum for cross-functional team
      members and their supervisors to the Secretary after they send the
      strategy. In February 2018, we reported that the draft training
      curriculum addressed the section 911 requirements; OCMO officials
      told us they plan no further revisions to the curriculum. 16 After the
      Secretary approves the curriculum, the officials stated, they plan to
      offer the training to cross-functional team members. Some cross-
      functional team members we met with stated that receiving training on
      cross-functional teams earlier would have been helpful for them to
      understand how to operate in a cross-functional team environment,
      such as reporting to both the team leader and to their home
      organization.
•     Training for presidential appointees. OCMO has not provided the
      required training to individuals filling presidentially-appointed, Senate-
      confirmed positions in the Office of the Secretary of Defense. Section
      911 requires these individuals to complete the training within 3
      months of their appointment, or for DOD to request waivers. However,
      as of January 2, 2019, 23 of 35 such officials had been in their
      positions for more than 3 months, and none had received the training
      or been granted a training waiver. 17 In our February 2018 report, we
      found that the draft curriculum met only one of the four required
      elements in section 911. 18 We recommended, and DOD concurred,

16
    GAO-18-194.
17
  Pub. L. No. 114-328, § 911(f)(2) (2016) permits the President to waive the training
requirement if the Secretary of Defense determines that the individual possesses, through
training and experience, the skill and knowledge to be provided through the required
training.
18
  GAO-18-194. Section 911 requires the training to include the following four elements: (1)
leadership, (2) modern organizational practice, (3) collaboration, and (4) the operation of
cross-functional teams. In February 2018, we reported that the draft training curriculum
addressed only one of the required elements—the element about the operation of cross-
functional teams.




Page 9                                                   GAO-19-165 Defense Management
    that the CMO should either (1) provide training that includes all of the
    required elements in section 911 or (2) develop criteria for obtaining a
    waiver and have the Secretary of Defense request such a waiver from
    the President for these required elements. In October 2018, an
    OCMO official stated that OCMO had revised the draft training
    curriculum for presidential appointees to include all of the required
    elements in section 911. The official also stated that OCMO plans to
    send the draft training curriculum to the Secretary of Defense for
    review after OCMO sends the organizational strategy. Once the
    curriculum is approved, the official stated that OCMO plans to
    recommend to the Secretary of Defense that all presidential
    appointees in the Office of the Secretary of Defense receive the
    training and does not plan to request waivers.
As described above, we have previously recommended that DOD take
actions to improve its implementation of the section 911 requirements
related to the organizational strategy, guidance, and training. As we have
reported before, addressing our recommendations and fully implementing
the remaining requirements would better position DOD to effectively
implement its cross-functional teams and advance a collaborative culture,
as required by the NDAA. We will continue to monitor DOD’s progress in
addressing these statutory requirements and our related
recommendations.




Page 10                                         GAO-19-165 Defense Management
DOD Plans to Establish     DOD is establishing a new cross-functional team to address growing
One Cross-Functional       challenges in the electronic warfare mission area. 19 Section 918 of the
Team, Disestablish         NDAA for Fiscal Year 2019 requires DOD to establish this cross-
                           functional team by November 11, 2018, to identify gaps in electronic
Another, and Will No       warfare and joint electromagnetic spectrum operations, capabilities, and
Longer Consider Nine       capacities within the department across personnel, procedural, and
Business Reform Teams      equipment areas. 20 In January 2019, an OCMO official stated that the
as Responsive to Section   Office of the Under Secretary of Defense for Acquisition and Sustainment
                           had drafted the team's charter and that it had been sent to the Secretary
911                        of Defense for review and approval. 21

                           In addition, DOD plans to disestablish the first cross-functional team
                           established in response to section 911 to address challenges with
                           personnel vetting and background investigations. This team was
                           responsible for managing the transfer of background investigations for
                           certain DOD personnel from the Office of Personnel Management to
                           DOD. 22 However, Office of the Under Secretary of Defense for
                           Intelligence officials stated that DOD plans to subsume the roles and
                           responsibilities of the team into a new Personnel Vetting Transformation
                           Office. According to the officials, the new office will be responsible for
                           managing the administration’s proposed transfer of background
                           investigations for all executive branch personnel from the Office of




                           19
                             Electronic warfare is military action involving the use of electromagnetic and directed
                           energy to control the electromagnetic spectrum or to attack the enemy. See DOD, DOD
                           Dictionary of Military and Associated Terms (as of September 2018).
                           20
                            Pub. L. No. 115-232, §§ 918 and 1053 (2018).
                           21
                             Section 1053 of the NDAA for Fiscal Year 2019 requires DOD to designate a senior
                           official to oversee the cross-functional team and serve as an ex-officio member of the
                           Electronic Warfare Executive Committee established in March 2015. Pub. L. No. 115-232,
                           § 1053 (2018).
                           22
                             In August 2017, the Secretary of Defense issued a memorandum authorizing a cross-
                           functional team to address challenges with personnel vetting and background
                           investigation programs. The cross-functional team was established to assist with the
                           transition of background investigations for certain DOD personnel from the Office of
                           Personnel Management’s National Background Investigations Bureau to DOD’s Defense
                           Security Service. Section 925 of the NDAA for Fiscal Year 2018 required DOD to
                           implement a phased transition plan to transfer the conduct of background investigations of
                           certain DOD personnel from the Office of Personnel Management to DOD. Pub. L. No.
                           115-91, § 925 (2017).




                           Page 11                                                   GAO-19-165 Defense Management
Personnel Management to DOD. 23 As a result, the cross-functional team’s
roles and responsibilities would overlap with those of the Personnel
Vetting Transformation Office, the officials stated. The officials expect to
formally disestablish the cross-functional team in the first quarter of fiscal
year 2019 after DOD issues the charter for the Personnel Vetting
Transformation Office.

Last, DOD continues to implement its nine cross-functional teams
dedicated to reforming and improving business operations, but plans to
no longer consider these teams as responsive to section 911. The
National Defense Business Operations Plan for Fiscal Years 2018-2022,
issued in May 2018, stated that these teams were established pursuant to
section 911. 24 As of October 2018, however, DOD’s draft organizational
strategy states that these teams were not established in response to
section 911. Instead, it describes them as a second layer of cross-
functional coordination that will aid in ensuring broader implementation of
collaborative and team-oriented practices in the department. We describe
these teams’ efforts to improve DOD’s enterprise business operations
below and in appendix III.




23
  The President’s Reform Plan and Reorganization Recommendations proposed
transferring background investigations for all executive branch personnel from the Office
of Personnel Management to DOD. See Office of Management and Budget, Delivering
Government Solutions in the 21st Century: Reform Plan and Reorganization
Recommendations (Washington, D.C.: June 21, 2018).
24
  The National Defense Business Operations Plan presents the department’s priority
business operation goals and objectives with specific and measurable priority and
performance goals. The plan includes three strategic goals for business operations: (1)
rebuild military readiness as DOD builds a more lethal joint force; (2) strengthen alliances
and attract new partners; and (3) reform the department’s business practices for greater
performance and affordability.




Page 12                                                   GAO-19-165 Defense Management
DOD’s Enterprise
Business Reform Is
Largely Driven by
Nine Cross-
Functional Teams, but
Progress Has Been
Uneven
Nine Cross-Functional    The National Defense Business Operations Plan for Fiscal Years 2018-
Teams Are Key to DOD’s   2022 highlights nine cross-functional teams as key mechanisms for
                         implementing the plan’s strategic objective to improve and strengthen
Enterprise Business
                         business operations through a move to enterprise or shared services.
Reform                   From October 2017 through January 2018, the Deputy Secretary of
                         Defense, at the direction of the Secretary, established these nine teams
                         to implement initiatives intended to improve the quality and productivity of
                         the department’s business operations, including moving toward more use
                         of enterprise services. According to memoranda appointing the team
                         leaders, the teams support the Secretary of Defense’s focus on creating a
                         more lethal and effective force by allowing the department to reallocate
                         resources from business operations to readiness and to recapitalization of
                         the combat force. These nine teams—hereafter referred to as business
                         reform teams and whose leaders report to the CMO—address community
                         services management, financial management, health care management,
                         human resources, information technology and business systems, real
                         property management, service contracts and category management,
                         supply chain and logistics, and testing and evaluation. 25 They are
                         described in more detail in appendix III.

                         The Fiscal Year 2019 DOD Annual Performance Plan identifies
                         performance goals and measures to achieve the strategic goals and
                         objectives described in the National Defense Business Operations Plan,
                         including the goal of reforming the department’s business practices. 26 It
                         25
                           The CMO is responsible for managing DOD’s enterprise business operations on behalf
                         of the Secretary of Defense, among other responsibilities, pursuant to section 910 of the
                         NDAA for Fiscal Year 2018. Pub. L. No. 115-91, § 910 (2017).
                         26
                          The Fiscal Year 2019 Annual Performance Plan is an appendix to the National Defense
                         Business Operations Plan for Fiscal Years 2018-2022.




                         Page 13                                                  GAO-19-165 Defense Management
designates several business reform team leaders as responsible for
meeting the performance goals and associated performance measures.
For example, the leader of the information technology and business
systems reform team is responsible for the performance goal to transform
how the department delivers secure, stable, and resilient information
technology infrastructure in support of warfighter lethality. This goal is
consistent with the team’s overarching objective to plan and execute the
transformation of all business systems affecting support areas within the
department.

The Annual Performance Plan’s objectives and timeframes related to the
business reform teams, however, do not fully align with some of the
initiatives that the teams are pursuing. For example, according to the
plan, the leader of the community services management team is
responsible for developing a strategic plan for armed forces retirement
home reform by the second quarter of 2018. However, according to a list
of the team’s current initiatives as of September 2018, the team was not
pursuing this initiative. In October 2018, OCMO officials stated that
Washington Headquarters Service is currently leading the armed forces
retirement home reform effort. When we asked these officials how they
view the relationship between performance measures in the plan and
those of the business reform teams’ initiatives, they acknowledged that
the teams’ initiatives have evolved since the plan’s development and that
the teams have identified additional initiatives that may not be reflected in
the plan. They also noted that OCMO drafted the content for the Fiscal
Year 2019 DOD Annual Performance Plan before most of the teams were
fully staffed and operational. As of October 2018, the officials stated that
OCMO was coordinating with the team leaders to review the Fiscal Year
2019 DOD Annual Performance Plan and, as appropriate, to modify or
develop new performance measures and targets for the Fiscal Year 2020
DOD Annual Performance Plan. Given DOD’s efforts to address this
issue, we are not making a recommendation at this time, but will continue
to monitor their efforts as part of our ongoing work on the high-risk nature
of DOD’s business transformation efforts.




Page 14                                         GAO-19-165 Defense Management
The Progress of the           DOD has made some progress establishing and organizing the business
Business Reform Teams         reform teams, but implementation of the teams’ initiatives has been
                              uneven. We found that implementation of the business reform teams has
Has Been Uneven, and
                              demonstrated some key characteristics of leading practices for
Some Teams Lack               implementing effective cross-functional teams that we have identified in
Resources to Fully            our prior work. 27 For example, across all the teams we spoke with,
Implement Their Initiatives   members were responsible for leading the development of their team’s
                              initiatives and communicating with their home organizations to obtain
                              input, demonstrating a well-defined team structure. In addition, the
                              business reform teams are structured to facilitate open and regular
                              communication, another leading practice. For example, the teams are
                              generally co-located with each other, which enables direct communication
                              among team members and between teams, members stated. Further,
                              members from most of the teams we spoke with were supportive of their
                              team leaders and viewed them as effective in their roles, demonstrating
                              an inclusive team environment. Team leaders across all teams also
                              stated that they regularly interact with senior management, such as
                              through weekly one-on-one meetings with the CMO or Deputy CMO. This
                              engagement reflects a key characteristic that states team leaders should
                              regularly interact with senior management.

                              However, we found that the business reform teams’ efforts have not
                              proceeded according to early plans outlined by the department. DOD’s
                              August 2017 report to Congress on restructuring the CMO organization
                              stated that the teams were intended to help modify processes to move
                              toward enterprise service delivery. 28 According to the report, the
                              department would transition to DOD enterprise services by the end of
                              fiscal year 2018. In July 2018, OCMO officials acknowledged that they
                              were behind schedule, but told us they expected to catch up to this
                              deadline by the end of fiscal year 2018, as originally planned. That
                              deadline was not realized. According to OCMO officials, the teams are

                              27
                                See GAO-18-194. In this report, we identified eight leading practices associated with
                              effective cross-functional teams: (1) open and regular communication, (2) well-defined
                              team goals, (3) inclusive team environment, (4) senior management support, (5) well-
                              defined team structure, (6) autonomy, (7) committed cross-functional team members, and
                              (8) an empowered cross-functional team leader. These leading practices and their related
                              key characteristics are reproduced in appendix IV.
                              28
                                Section 901 of the NDAA for Fiscal Year 2017 required DOD to conduct a review and
                              identify a recommended organizational and management structure for DOD that, among
                              other things, implements the Under Secretary of Defense for Research and Engineering,
                              Under Secretary of Defense for Acquisition and Sustainment, and Chief Management
                              Officer positions. Pub. L. No. 114-328, § 901 (2016).




                              Page 15                                                 GAO-19-165 Defense Management
identifying new milestones for implementing initiatives, some of which will
contribute to a move toward enterprise services.

In addition, the business reform teams vary in the number of initiatives
they are pursuing. As of September 2018, OCMO reported that the teams
were pursuing a total of 135 initiatives and that the number of initiatives
per team ranged from 2 to 38. For example, the community services
management team was developing 2 initiatives—1 to examine the
feasibility of merging DOD’s three military exchange services and the
Defense Commissary Agency into a single resale enterprise, and the
other to streamline the inventory of DOD lodging. 29 In contrast, the supply
chain and logistics team was developing 21 short- and long-term
initiatives, such as reducing the footprint of underutilized warehouses and
developing better data interoperability throughout the supply chain and
logistics enterprise. 30

Further, the teams’ progress in advancing their initiatives to the
implementation and monitoring phase has varied. The Reform
Management Group oversees the business reform teams. The Deputy
Secretary of Defense chairs the Reform Management Group, and the
CMO facilitates regular meetings of the group. 31 The Reform
Management Group authorizes the business reform teams to proceed
with their initiatives through five gates—0 through 4. These gates trace

29
   Community services include those functions on a military installation that affect quality of
life for members and their families, such as exchanges and commissaries; lodging and
facilities; morale, welfare, and recreation activities; and DOD schools.
30
  The DOD supply chain is a global network that provides materiel, services, and
equipment to the joint force.
31
  According to OCMO officials, additional members of the Reform Management Group
consist of the Chief Management Officer, Under Secretary of Defense for Research and
Engineering, Under Secretary of Defense for Acquisition and Sustainment, Under
Secretary of Defense for Comptroller/Chief Financial Officer, Under Secretary of Defense
for Personnel and Readiness, Director of Cost Assessment and Program Evaluation,
Assistant Secretary of Defense for Legislative Affairs, Assistant to the Secretary of
Defense for Public Affairs, DOD Chief Information Officer, Joint Staff, Under Secretary of
the Army, Under Secretary of the Navy, Under Secretary of the Air Force, Chief of the
National Guard Bureau, and leaders of the business reform teams. Initially, the CMO and
Director of Cost Assessment and Program Evaluation co-facilitated the Reform
Management Group. In October 2018, the Director of Cost Assessment and Program
Evaluation told us that he recently stopped attending Reform Management Group
meetings because of competing demands on his time. However, a senior OCMO official
stated that Cost Assessment and Program Evaluation still maintains high-level
participation on the Reform Management Group.




Page 16                                                     GAO-19-165 Defense Management
initiatives from conception to implementation and monitoring. Before
proceeding from one gate to the next, the teams must submit certain
deliverables to the Reform Management Group for review and approval.
For example, before an initiative can proceed to gate 1, OCMO requires
the teams to submit a charter for the initiative, which can identify, among
other things, the problem or opportunity statement, the project scope,
expected outcomes and risk analysis, and preliminary performance
measures. 32 Figure 1 provides an overview of the five gates and the
status of initiatives by gate, as of September 2018.




32
  In September 2018, we reported that the human resources management business
reform team lacked comprehensive information on overhead costs that could guide reform
and did not have time frames or deliverables for completing certain reform initiatives. We
recommended that the team collect information on overhead costs charged by all DOD
human resources services providers and identify time frames and deliverables for
identifying and adopting optimal information technology solutions for human resources.
DOD concurred with and plans to take steps to address our recommendations. GAO,
Defense Management: DOD Needs to Address Inefficiencies and Implement Reform
across Its Defense Agencies and DOD Field Activities, GAO-18-592 (Washington, D.C.:
Sept. 6, 2018).




Page 17                                                  GAO-19-165 Defense Management
Figure 1: Department of Defense Office of the Chief Management Officer Gating Process for Business Reform Initiatives and
the Status of Initiatives (Total and by Team), as of September 2018




                                         As shown in figure 1, while some teams have successfully advanced
                                         several initiatives to gate 4, others have not yet progressed initiatives past
                                         gate 2. Specifically, as of September 2018, DOD reported that 104 of the
                                         teams’ 135 initiatives had not yet reached gate 3, the implementation
                                         phase. According to the teams we interviewed, several factors may affect
                                         the progress of an initiative, such as its complexity or a team’s approach
                                         to developing initiatives. For example, the community services
                                         management team leader stated that the team is primarily focused on the
                                         consolidation of the defense commissaries and exchanges, an initiative
                                         that is relatively large in scope and complexity. According to the team
                                         leader, this initiative involves a number of internal stakeholders, including
                                         all of the military services, as well as outreach to external stakeholders,
                                         such as veterans’ organizations. In addition, the leader stated that the


                                         Page 18                                            GAO-19-165 Defense Management
team would need legislative changes to fully implement the initiative. As a
result of the large scope and complexity, the leader expects the initiative
to take longer to implement than others. Some teams have pursued a
proof-of-concept approach to developing their initiatives, which involves
pilots to test initiatives to prove their value prior to department-wide
implementation. For example, the health care management team is
conducting a regional pilot to test the feasibility of consolidating the
purchasing of services across the military health system.

DOD has asserted that some of its initiatives have produced benefits
through savings or efficiencies. For example, according to a September
2018 DOD report on the department’s investments in support of the
National Defense Strategy, the department achieved $1.61 billion in
benefits by implementing private-sector best practices in purchasing
goods and service contracts in the Air Force and defense agencies. 33 In
addition, DOD reported that the department saved $297 million through
commercial information technology solutions, department-wide network
management, and optimized data centers. Further, according to the
report, consolidating four health care enterprises improved patient care
and medical readiness, with an estimated savings of more than $2.5
billion annually by 2023. OCMO officials stated that they are still in the
process of working with the Office of the Under Secretary of Defense for
Comptroller to document savings generated from the business reform
teams’ initiatives. Given that OCMO officials stated they are taking steps
to document savings generated from the teams’ initiatives, we are not
making a recommendation at this time, but will continue to monitor their
efforts as part of our ongoing work on the high-risk nature of DOD’s
business transformation efforts.

One senior DOD official involved in the reform effort acknowledged that
the teams’ progress has been uneven. He cited a number of factors that
can affect teams’ implementation, including the degree to which the
teams have support from the highest levels of department leadership to
operate independently and advance changes that may be unpopular with
internal or external stakeholders, and the ability of teams to tackle
longstanding systemic challenges, such as inaccurate cost data
throughout the department. This official and several teams we met with



33
  DOD, Providing for the Common Defense - A Promise Kept to the American Taxpayer
(September 2018).




Page 19                                             GAO-19-165 Defense Management
cited the importance of the team leader’s commitment to driving team
success.

We found that uncertainty with funding for initiatives may be an additional
factor inhibiting some teams’ progress. In some cases, the business
reform teams need funding to further develop and implement their
initiatives, such as the supply chain and logistics team’s requirement for
$2.4 million to conduct a pilot project that included conducting three site
visits for warehouse and labor assessments in support of one of its
initiatives. According to OCMO officials, the business reform teams can
request funding from OCMO to further develop their initiatives, or if
funding is not available from OCMO, the teams can seek funding from
functional organizations. However, even in the early stages of their
implementation, some teams told us that they did not have access to
sufficient funding to fully develop and implement some of their approved
initiatives or that the process for obtaining the funding was uncertain. 34
For example, in June 2018, one team leader told us that the team did not
have sufficient funding to implement four initiatives. The leader also
stated that the team was not alerted to the lack of funding until
immediately prior to its planned implementation of these initiatives.
Members from another team stated that the Reform Management Group
wanted the team to implement its initiatives more quickly, which increased
the amount of funding the team needed for implementation. When the
team requested additional funding, however, OCMO did not have it
available. Further, OCMO officials told us that the teams submitted nine
requests for funding in fiscal year 2018, but OCMO did not have funding
to support four of these requests as of the end of fiscal year 2018. 35

As the teams continue to develop and implement their initiatives, the
number of requests for funding may increase in the future. Our prior work
on efficiency initiatives has found that up-front investments may often be
required to realize long-term efficiencies and savings. 36 In this regard,
OCMO officials told us that, as of September 2018, the nine teams had
planned investments of about $6.7 billion to implement their initiatives

34
  Some teams told us that they had received the funding they needed or that they had not
yet needed funding.
35
  OCMO did not have funding to support two requests from the information technology
and business systems team and two from the real property management team, according
to a list of funding requests maintained by OCMO.
36
 See GAO-11-908.




Page 20                                                 GAO-19-165 Defense Management
from fiscal years 2018 through 2024. OCMO officials stated that this
amount is a projection from the teams, and DOD has not yet identified
sources for this funding. In addition, officials stated that more investment
could be needed as the teams continue to develop initiatives and more
enter the implementation phase. However, according to DOD’s budget
materials for fiscal year 2019, requested funding for OCMO—a source
used to fund the development of some of the teams’ initiatives—will
decrease from about $48 million in fiscal year 2018, to about $36 million
in fiscal year 2019.

Leading practices for implementing effective cross-functional teams
highlight the importance of senior management providing teams with
access to resources. 37 These leading practices also state that teams
should have well-defined team operations with established rules and
procedures. Further, the findings from a study contracted by DOD in
August 2017 to determine how best to implement effective cross-
functional teams identified actions for DOD to consider for supporting the
implementation of its cross-functional teams, including identifying funding
mechanisms to fully support cross-functional teams. 38 The study
suggested that language outlining the preferred mechanisms and
authorities for this purpose can be included in cross-functional team
guidance.

OCMO officials told us that the office maintains a list of funding requests
from the teams and prioritizes which initiatives to fund based on several
factors including estimated yield, feasibility, and available resources for
implementation. However, OCMO did not have a process for identifying
and prioritizing available funding for implementing the initiatives planned
by the business reform teams for fiscal year 2018, and has not
established one for fiscal year 2019. According to OCMO officials, the
department initially planned to use available funding from OCMO or the
savings generated by the initiatives to fund the development and

37
 See GAO-18-194.
38
  Section 911(b) of the NDAA for Fiscal Year 2017 required DOD to award a contract for a
study to determine how to best implement effective cross-functional teams in DOD. DOD
awarded the contract to McKinsey & Company, a global management consulting firm that
works with private, public, and social-sector institutions. McKinsey & Company’s study for
DOD presented findings on leading practices for implementing cross-functional teams that
were drawn from a literature review, DOD and non-DOD case studies, and interviews. See
McKinsey & Company, Harnessing the Power of Cross-Functional Teams within the
Department of Defense (Washington, D.C.: Aug. 15, 2017).




Page 21                                                 GAO-19-165 Defense Management
                     implementation of other initiatives. However, OCMO officials have since
                     recognized that funding is needed and they are in the early stages of
                     developing an approach to do so. Specifically, OCMO officials said they
                     are working with the Office of the Under Secretary of Defense for
                     Comptroller to identify funding for initiatives in fiscal year 2020. While
                     there will likely be initiatives that cannot be funded given limited
                     resources, OCMO and the reform teams could benefit from a clear
                     process for identifying and prioritizing available funding. Without such a
                     process, OCMO and the reform teams may not be able to adequately
                     plan for and execute their initiatives.


                     Section 911 of the NDAA for Fiscal Year 2017 called for organizational
Conclusions          and management reforms to assist DOD in addressing challenges that
                     have hindered collaboration and integration across the department. While
                     the department has taken some steps to implement the section 911
                     requirements, it has still not met statutory due dates for implementing key
                     requirements intended to support its cross-functional teams and to
                     advance a more collaborative culture within the department. We continue
                     to believe it is important for senior leadership to demonstrate their
                     commitment to fulfilling section 911 by addressing our prior related
                     recommendations and by completing the remaining requirements.

                     Further, section 921 of the NDAA for Fiscal Year 2019 requires DOD to
                     reform its enterprise business operations to increase the effectiveness
                     and efficiency of mission execution. DOD has highlighted its nine cross-
                     functional teams dedicated to improving the department’s business
                     operations as key to achieving enterprise business reform. However, this
                     effort has been marked by a slow start and uneven progress, and teams
                     face a number of challenges. One key challenge is the teams’ lack of
                     resources to drive their initiatives forward. OCMO has not established a
                     process for identifying and prioritizing available funding for the
                     development and implementation of the teams’ initiatives, which has
                     hampered the success of some of the enterprise reform efforts.


                     The Secretary of Defense should ensure that the Chief Management
Recommendation for   Officer establishes a process for identifying and prioritizing available
Executive Action     funding to develop and implement initiatives from the cross-functional
                     reform teams. (Recommendation 1)




                     Page 22                                         GAO-19-165 Defense Management
                  We provided a draft of this report to DOD for review and comment. In its
Agency Comments   written comments, which are reproduced in Appendix V, DOD concurred
                  with our recommendation and described ongoing and planned actions to
                  address it.


                  We are sending copies of this report to the appropriate congressional
                  committees, the Acting Secretary of Defense, and DOD’s Acting Chief
                  Management Officer. In addition, the report is available at no charge on
                  our website at http://www.gao.gov.

                  If you or your staff have any questions about this report, please contact
                  me at (202) 512-2775 or fielde1@gao.gov. Contact points for our Offices
                  of Congressional Relations and Public Affairs may be found on the last
                  page of this report. GAO staff who made key contributions to this report
                  are listed in appendix VI.




                  Elizabeth Field
                  Acting Director
                  Defense Capabilities and Management




                  Page 23                                        GAO-19-165 Defense Management
Appendix I: Prior GAO Reports on the Department
                                         Appendix I: Prior GAO Reports on the
                                         Department of Defense’s (DOD)
                                         Implementation of Section 911 of the National

of Defense’s (DOD) Implementation of Section 911
                                         Defense Authorization Act (NDAA) for Fiscal
                                         Year 2017


of the National Defense Authorization Act (NDAA)
for Fiscal Year 2017
                                         Section 911 of the NDAA for Fiscal Year 2017 included a provision for
                                         us—every 6 months after the date of enactment on December 23, 2016,
                                         through December 31, 2019—to submit to the defense committees a
                                         report. Each report is to set forth a comprehensive assessment of the
                                         actions that DOD has taken pursuant to section 911 during each 6-month
                                         period and cumulatively since the NDAA’s enactment. We issued our first
                                         report in June 2017, and did not make recommendations. We issued our
                                         second report in February 2018, and made four recommendations to
                                         improve DOD’s implementation of section 911. We issued our third report
                                         in June 2018, and did not make recommendations. Table 2 identifies our
                                         three prior reports on DOD’s implementation of section 911 and the status
                                         of the four recommendations from our February 2018 report.

Table 2: Prior GAO Reports on the Department of Defense’s (DOD) Implementation of Section 911 of the National Defense
Authorization Act (NDAA) for Fiscal Year 2017 and Status of Recommendations, as of December 2018

                               Report issuance                                                        Status of DOD’s
Report title                   date                    Recommendation                                 implementation
Defense Management: DOD         June 25, 2018          We did not make recommendations in this        Not applicable
Senior Leadership Has Not Fully                        report.
Implemented Statutory
Requirements to Promote
Department-Wide Collaboration,
GAO-18-513
Defense Management: DOD        February 28, 2018       The Secretary of Defense should ensure that the Not yet implemented
Needs to Take Additional                               Chief Management Officer (CMO), in its
Actions to Promote Department-                         revisions to the draft organizational strategy,
Wide Collaboration,                                    address how the department will promote and
GAO-18-194                                             achieve a collaborative culture, as required
                                                       under section 911 of the NDAA for Fiscal Year
                                                       2017. The CMO could accomplish this by
                                                       incorporating our leading practices on mergers
                                                       and organizational transformations.
                                                       The Secretary of Defense should ensure that the Not yet implemented
                                                       CMO obtain stakeholder input on the
                                                       development of the organizational strategy from
                                                       key stakeholders, including the Secretary of
                                                       Defense, the military departments, the
                                                       combatant commands, and defense agencies.
                                                       The Secretary of Defense should ensure that the Not yet implemented
                                                       CMO fully address all requirements in section
                                                       911 of the NDAA for Fiscal Year 2017 and
                                                       incorporate leading practices for effective cross-
                                                       functional teams in guidance on Secretary of
                                                       Defense-empowered cross-functional teams.




                                         Page 24                                                 GAO-19-165 Defense Management
                                                         Appendix I: Prior GAO Reports on the
                                                         Department of Defense’s (DOD)
                                                         Implementation of Section 911 of the National
                                                         Defense Authorization Act (NDAA) for Fiscal
                                                         Year 2017




                                                Report issuance                                                       Status of DOD’s
Report title                                    date                   Recommendation                                 implementation
                                                                       The Secretary of Defense should ensure that the Not yet implemented
                                                                       CMO either: (a) provide training for
                                                                       presidentially-appointed, Senate-confirmed
                                                                       individuals in the Office of the Secretary of
                                                                       Defense that includes the required elements—
                                                                       leadership, modern organizational practice, and
                                                                       collaboration—in section 911 of the NDAA for
                                                                       Fiscal Year 2017, or (b) develop criteria for
                                                                       obtaining a waiver and have the Secretary of
                                                                       Defense request such a waiver from the
                                                                       President for these required elements if the
                                                                       individual possesses—through training and
                                                                       experience—the skill and knowledge otherwise
                                                                       to be provided through a course of instruction.
Defense Management: DOD                         June 23, 2017          We did not make recommendations in this        Not applicable
Has Taken Initial Steps to                                             report.
Formulate an Organizational
Strategy, but These Efforts Are
Not Complete, GAO-17-523R
Source: GAO analysis of DOD information. I GAO-19-165




                                                         Page 25                                                 GAO-19-165 Defense Management
Appendix II: Summary of Requirements in
                                               Appendix II: Summary of Requirements in
                                               Section 911 of the National Defense
                                               Authorization Act for Fiscal Year 2017


Section 911 of the National Defense
Authorization Act for Fiscal Year 2017
                                               Section 911 of the National Defense Authorization Act for Fiscal Year
                                               2017 requires the Secretary of Defense to take several actions. Table 3
                                               summarizes these requirements, the due date, and the date completed, if
                                               applicable, as of December 2018.

Table 3: Status of Requirements in Section 911 of the National Defense Authorization Act for Fiscal Year 2017, as of
December 2018

Not later than . . .                 The Secretary is to . . .                                               Date completed
Not specified                        Ensure that team members and all leaders in functional                Not yet completed
                                     organizations that are in the supervisory chain for personnel serving
                                     on such team receive training in elements of successful cross-
                                     functional teams, including teamwork, collaboration, conflict
                                     resolution, and appropriately representing the views and expertise
                                     of their functional components.
3 months of the appointment of       Send the individual to a training course in leadership, modern          Not yet completed
an individual to a position in the   organizational practice, collaboration, and the operation of cross-
Office of the Secretary of           functional teams. This training requirement can be waived under
Defense appointable by and with      certain circumstances.
the advice and consent of the
Senate
March 15, 2017                       Award any necessary contract for a study to determine how to best       June 9, 2017
                                     implement effective cross-functional teams in the Department of
                                     Defense (DOD). This study should include (1) lessons learned, as
                                     reflected in academic literature, business and management school
                                     case studies, and the work of leading management consultant
                                     firms, on the successful and failed application of cross-functional
                                     teams in the private sector and government, and on the cultural
                                     factors necessary to support effective cross-functional teams and
                                     (2) the historical and current use by DOD of cross-functional
                                     working groups, integrated process teams, councils, and
                                     committees, and the reasons why such entities have or have not
                                     achieved high levels of teamwork or effectiveness.
July 15, 2017                        Provide the results of the study to the congressional defense           September 28, 2017
                                     committees.
September 1, 2017                    Develop and issue an organizational strategy that (1) identifies the    Not yet completed
                                     critical objectives and other organizational outputs for DOD that
                                     span multiple functional boundaries and would benefit from the use
                                     of cross-functional teams; (2) improves the manner in which DOD
                                     integrates the expertise and capacities of the functional
                                     components of DOD for effective and efficient achievement of such
                                     objectives and outputs; (3) improves the management of
                                     relationships and processes involving the Office of the Secretary of
                                     Defense, the Joint Staff, the combatant commands, the military
                                     departments, and the defense agencies with regard to such
                                     objectives and outputs; (4) improves the ability of DOD to work
                                     effectively in interagency processes with regard to such objectives
                                     and outputs in order to better serve the President; and (5) achieves
                                     an organizational structure that enhances performance with regard
                                     to such objectives and outputs.




                                               Page 26                                                     GAO-19-165 Defense Management
                                                                 Appendix II: Summary of Requirements in
                                                                 Section 911 of the National Defense
                                                                 Authorization Act for Fiscal Year 2017




Not later than . . .                              The Secretary is to . . .                                                              Date completed
September 30, 2017                                Establish cross-functional teams to address critical objectives and                    August 25, 2017
                                                  outputs for such teams as determined to be appropriate in
                                                                                               a
                                                  accordance with the organizational strategy.
September 30, 2017                                Issue guidance on cross-functional teams (1) addressing the role,                      Not yet completed
                                                  authorities, reporting relationships, resourcing, manning, training,
                                                  and operations of cross-functional teams; (2) delineating decision-
                                                  making authority of such teams; (3) providing that the leaders of
                                                  functional components of DOD that provide personnel to such
                                                  teams respect and respond to team needs and activities; and (4)
                                                  emphasizing that personnel selected for assignment to such teams
                                                  shall faithfully represent the views and expertise of their functional
                                                  components while contributing to the best of their ability to the
                                                  success of the team concerned.
18 months after the date of the                   Submit to Congress a report on the establishment of cross-                             June 21, 2018
enactment of this act (i.e., June                 functional teams, including descriptions from the leaders of teams
23, 2018)                                         on the manner in which the teams were designed and how they
                                                  functioned.
18 months after the date of the                   Take actions, as the Secretary considers appropriate, to streamline                    Not yet completed
enactment of this act (i.e., June                 the organizational structure and processes of the Office of the
23, 2018)                                         Secretary of Defense in order to increase spans of control, achieve
                                                  a reduction in layers of management, eliminate unnecessary
                                                  duplication between the Office of the Secretary of Defense and the
                                                  Joint Staff, and reduce the time required to complete standard
                                                  processes and activities.
18 months after the date on                       Complete an analysis of the successes and failures of teams                            Not yet completed and
which the first cross-functional                  established, and determine how to apply the lessons learned from                       deadline has not passed
team is established (i.e.,                        that analysis.
                    b
February 25, 2019)
Source: GAO analysis of section 911 of the National Defense Authorization Act for Fiscal Year 2017 and DOD information. | GAO-19-165

                                                                 Notes:
                                                                 a
                                                                  For each cross-functional team established pursuant to section 911, the Secretary of Defense is
                                                                 required to (1) assign as leader of such team a senior qualified and experienced individual, who shall
                                                                 report directly to the Secretary regarding the activities of such team; (2) delegate to the team leader
                                                                 authority to select members of such team from among civilian employees of the department and
                                                                 members of the armed forces in any grade who are recommended for membership on such team by
                                                                 the head of a functional component of the department within the Office of the Secretary of Defense,
                                                                 the Joint Staff, and the military departments, by the commander of a combatant command, or by the
                                                                 director of a defense agency; (3) provide the team leader with necessary full-time support from team
                                                                 members, and the means to co-locate team members; and (4) ensure that the congressional defense
                                                                 committees are provided information on the progress and results of such team upon request.
                                                                 b
                                                                  This requirement is not described in this report.




                                                                 Page 27                                                               GAO-19-165 Defense Management
Appendix III: Overview of the Department of
              Appendix III: Overview of the Department of
              Defense’s (DOD) Nine Cross-Functional Teams
              Implementing Business Reform Initiatives

Defense’s (DOD) Nine Cross-Functional
Teams Implementing Business Reform
Initiatives
              The Deputy Secretary of Defense has established nine cross-functional
              teams since October 2017 to implement reform initiatives intended to
              improve the quality and productivity of the department’s business
              operations, including moving toward more use of enterprise services.
              According to the memoranda appointing the team leaders, these teams
              support the Secretary of Defense’s focus on creating a more lethal and
              effective force by allowing the department to reallocate resources from
              business operations to readiness and to recapitalization of the combat
              force.

              As of September 2018, these nine cross-functional teams varied in size,
              ranging from 5 to 31 members. According to OCMO officials, the size of
              the teams can vary based on the knowledge and expertise needed to
              implement the teams’ initiatives. The team leaders are either presidential
              appointees or members of the Senior Executive Service. In addition, the
              Deputy Secretary of Defense directed the military departments and
              functional organizations to appoint reform team members, and the teams
              include representatives from the military departments, functional
              organizations relevant to the reform topic, and external experts. At the
              time we met with the teams, most reported that they were the appropriate
              size and had the right skills and expertise represented on the team.
              Figure 2 provides additional details on the composition of these nine
              cross-functional teams, as of September 2018.




              Page 28                                        GAO-19-165 Defense Management
                                       Appendix III: Overview of the Department of
                                       Defense’s (DOD) Nine Cross-Functional Teams
                                       Implementing Business Reform Initiatives




Figure 2: Composition of the Department of Defense’s (DOD) Nine Cross-Functional Business Reform Teams, as of
September 2018




                                       a
                                       The timeline for establishing these nine teams is from October 2017 through January 2018 because
                                       DOD established the first teams in October 2017 and the last team in January 2018.




                                       Page 29                                                      GAO-19-165 Defense Management
Appendix III: Overview of the Department of
Defense’s (DOD) Nine Cross-Functional Teams
Implementing Business Reform Initiatives




b
 The number of team members includes full-time civilian, military, and contractor personnel assigned
to the team. In addition, three teams—community services, supply chain and logistics, and testing
and evaluation—have external experts assigned as members on the team.
c
 According to OCMO officials, the number of team members for the community services management
team also includes members of the Enterprise Management of Community Services Task Force that
was established to support the team’s initiative on the consolidation of the defense commissaries and
exchanges.
d
 OCMO officials stated that these team leaders are also performing the duties of their previous
positions.




Page 30                                                         GAO-19-165 Defense Management
Appendix IV: Leading Practices for
                                            Appendix IV: Leading Practices for
                                            Implementing Effective Cross-Functional
                                            Teams


Implementing Effective Cross-Functional
Teams
                                            In February 2018, we reported on eight leading practices for
                                            implementing effective cross-functional teams. 1 Table 4 identifies these
                                            leading practices and their related key characteristics.

Table 4: Leading Practices and Key Characteristics of Cross-Functional Teams

Leading practice              Description                                        Key characteristics
Open and regular              Efficient cross-functional teams have effective    •   Cross-functional teams should openly share
communication                 communication mechanisms.                              information within the team.
                                                                                 •   Teams should proactively seek feedback and
                                                                                     information from stakeholders.
                                                                                 •   Cross-functional teams should have open and
                                                                                     regular communication with team members, team
                                                                                     leaders, and management.
Well-defined team goals       Effective cross-functional teams have clear,       •   Team goals should be clear, well defined, linked,
                              updated, and well-defined goals common to              updated, and commonly shared with team
                              the team, team leader, and management.                 members, team leaders and senior leaders
                                                                                     (management).
                                                                                 •   Team objectives should have linkages to the
                                                                                     organization’s goals.
                                                                                 •   Team members and leaders should be supportive
                                                                                     of the cross-functional team’s goals.
Inclusive team environment    Effective cross-functional teams invest in a       •   Cross-functional teams should invest in a single
                              supportive and inclusive team environment              team culture with shared values of inclusiveness
                              where all team members have collective                 and collective responsibility.
                              responsibility and individual accountability for   •   Cross-functional team members should be
                              the team’s work.                                       supportive and trusting of one another.
                                                                                 •   Cross-functional team members should have
                                                                                     mutual respect and cooperation with each other.
                                                                                 •   Individual team members should participate and
                                                                                     be accountable for the team’s work.
Well-defined team structure   Effective cross-functional teams have well-        •   Cross-functional teams should have a well-defined
                              defined team operations with project-specific          structure, project-specific rules, and procedures.
                              rules and procedures established for each          •   Cross-functional teams should be collocated within
                              team.                                                  the same physical proximity.
                                                                                 •   Cross-functional teams should have appropriate
                                                                                     training and learning environments.




                                            1
                                             GAO-18-194. We identified these leading practices by reviewing literature and case
                                            studies on the use of cross-functional teams in the private and public sectors, as well as
                                            interviewing six academic and practitioner experts. Leading practices for effective cross-
                                            functional teams are aligned with the leading practices for interagency collaboration we
                                            have identified in our prior work. See GAO, Managing for Results: Key Considerations for
                                            Implementing Interagency Collaborative Mechanisms, GAO-12-1022 (Washington, D.C.:
                                            Sept. 27, 2012).




                                            Page 31                                                    GAO-19-165 Defense Management
                                           Appendix IV: Leading Practices for
                                           Implementing Effective Cross-Functional
                                           Teams




Leading practice             Description                                     Key characteristics
Autonomy                     Effective cross-functional teams are            •   Cross-functional teams should be empowered to
                             independent and have the ability to make            make decisions.
                             decisions independently and rapidly.            •   Cross-functional teams should be able to
                                                                                 creatively solve problems.
Senior management support    Effective cross-functional teams have senior    •   Senior management should support cross-
                             managers who view the teams as a priority           functional teams as a priority.
                             within the organization and provide these       •   Senior management should provide cross-
                             teams with resources and rewards to                 functional teams with access to resources and
                             recognize their work.                               rewards.
                                                                             •   Senior management should provide career
                                                                                 advancement opportunities, recognition, and
                                                                                 incentives for cross-functional team leaders and
                                                                                 members.
Committed cross-functional   Effective cross-functional teams have           •   Cross-functional team members should have a
team members                 members committed to the team’s goals.              wide diversity of knowledge and expertise.
                                                                             •   Cross-functional team members should be
                                                                                 committed to working toward achieving the team’s
                                                                                 goals.
Empowered cross-functional   The selected cross-functional team leader       •   Cross-functional team leaders should be
team leader                  should be clear in guidance for team                empowered to provide clear guidance and be
                             members, be proactive, empowered to make            proactive in decision making.
                             decisions and provide feedback and              •   Cross-functional team leaders should provide
                             developmental opportunities to team                 feedback and developmental opportunities to team
                             members.                                            members.
                                                                             •   Cross-functional team leaders should regularly
                                                                                 interact with senior management.
Source: GAO. | GAO-19-165




                                           Page 32                                                 GAO-19-165 Defense Management
Appendix V: Comments from the Department
                              Appendix V: Comments from the Department
                              of Defense



of Defense

Note: The report number
in DOD’s comment letter
refers to the draft sent to
the department for
comment and sensitivity
review. The report
number changed after
DOD determined that the
final report was cleared
for public release.




                              Page 33                                    GAO-19-165 Defense Management
Appendix V: Comments from the Department
of Defense




Page 34                                    GAO-19-165 Defense Management
Appendix VI: GAO Contact and Staff
                  Appendix VI: GAO Contact and Staff
                  Acknowledgments



Acknowledgments


                  Elizabeth Field, (202) 512-2775 or fielde1@gao.gov
GAO Contact
                  In addition to the contact named above, Margaret Best (Assistant
Staff             Director), Tracy Barnes, Arkelga Braxton, William Carpluk, Michael
Acknowledgments   Holland, William Lamping, Chad Johnson, Matthew Kienzle, Amie Lesser,
                  Ned Malone, Judy McCloskey, Sheila Miller, Sally Newman, Richard
                  Powelson, Daniel Ramsey, Ron Schwenn, Jared Sippel, Susan Tindall,
                  and Sarah Veale made key contributions to this report.




(102812)
                  Page 35                                      GAO-19-165 Defense Management
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