United States General Accounting Office GAO National Security and International ,4ffairs Division June 1997 Defense Management Issue Area Plan Fiscal Years 1997-99 GAO/LAP-97-4 ,” As the investigative arm of Congress and the nation’s auditor, the General Accounting Office is charged with following the federal dollar wherever it goes. Reflecting stringent standards of objectivity and independence, GAO'S audits, evaluations, and investigations promote a more efficient and cost-effective government; expose waste, fraud, abuse, and m ismanagement in federal programs; help Congress target budget reductions; assess financial information management; and alert Congress to developing trends that may have significant fiscal or budgetary consequences. In fulfilling its responsibilities, GAO performs original research and uses hundreds of databases or creates its own when information is unavailable elsewhere. To ensure that GAO'S resources are duected toward the most important issues facing Congress, each of GAO'S 33 issue areas develops a strategic plan that describes the significance of the issues it addresses, its objectives, and the focus of its work. Each issue area relies heavily on input from congressional committees, agency officials, and subject-matter experts in developing its strategic plan. Defense managers face many challenges as they strive to stream line operations, particularly those associated with the Department of Defense (DOD) logistics-related business activrties, while continuing to accomplish their required m issions. DOD business activities refer to operations and m frastructure support functions such as depot maintenance, the purchase of parts and supplies for inventory, storage and disposal, and transportation. These activities will absorb a major share of DOD'S budget for fiscal year 1997-perhaps as much as $80 billion. To fund acquisitions for weapon systems modernization, DOD is seeking a reduction of $20 billion annually in these kinds of costs. Initiatives to achieve DOD'S reduction objective include privatization, acquisition reform , technology msertion, organizational stream lining and consolidation, management process reengineering, base and facility closures, personnel reductions, inventory reductions, and private sector use of facilities. GAO'S overall objectives for Defense Management issues are to improve the management and operational effectiveness and efficiency of DOD'S business activities and facilities and to support congressional needs regarding high interest programs such as environmental cleanup and compliance. Our focus will be on the implementation and effectiveness of DOD'S cost reduction initiatives. Principal issues to be examined in the Defense Management area include Page 1 GAO/UP-97-4 Foreword l inventory management practices and efforts to reduce inventory levels; . depot maintenance excess capacity costs and workload allocations between the public and private sector; 9 opportunities to streamline and improve the efficiency and effectiveness of defense transportation systems and processes; . the transition of former military bases to civilian use; . DOD'S environmental compliance and cleanup efforts; and l financial and information management systems and processes. In the pages that follow, we describe our objectives and planned work on these issues. Because unanticipated events may affect this plan, GAO'S planning process allows for updating and flexibility to respond to new emerging issues. If you have any questions or suggestions about this plan, please call me at (202) 512-8412. David R. Warren Director, Defense Management Issues Page 2 GAO/UP-97-4 Foreword Table I: Key Issues Table II: Planned 6 Major Work Table III: GAO Contacts Page 3 “F-’Table I: Key Issues Issue Significance Business Activities and Facilities Infrastructure costs accounted for $152 billron (59 percent) of DOD’s fiscal year 1997 Management: budget, DOD expects to achieve an annual budget savings of $20 billion in operational Is DOD effectively and efficrently managing support and infrastructure costs to fund planned weapons procurement The savings are Its logrstrcs support operations and other expected to result from base closures, pnvatrzatron rnrttatrves, acqutsrtron reforms, business activitres and facrlrttes to rnclude organizational streamlrnrng, and consolrdatrons, management process reengrneenng, effectively reducing operating and and Inventory reductions To date, the expected savrngs from these inrtratrves have fallen infrastructure costs7 short of DOD budget plans and expectations If these initiatrves are not fully successful, DOD will need to consider delaying or canceling planned weapons acquisitions and/or reducing its force structure Fully achieving these savings may be difficult without another legislated round of base closures similar to those prevtously authorized High interest Programs: DOD has a number of programs underway that are of high Interest to Congress and the Is DOD’s management of high interest public These programs are generally costly and rnclude things sueh as envrronmental programs effective and efficient? cleanup and compliance and chemical weapons disposal Despite their Importance, these programs have historically experienced significant cost growth and schedule delays, and often have not achieved their original objectives In addition, DOD’s implementatron of Government Performance Review Act requirements IS also an area of high interest and could significantly impact DOD operations Page 4 Table I: Key Issues Objectives Focus of work ldentrfy opportunrtres to reduce rnfrastructure costs through outsourcrng, DOD rnrtratrves for reducing infrastructure costs reengrneenng, streamlrnrng, consolrdatrng, or elrmrnatrng infrastructure actrvrtres and functions DOD efforts to downsize infrastructure actrvrtres and functions in line with the force structure Determine the Impact of recommendations by the Quadrennral Defense Review on DOD’s infrastructure costs and busrness activities. Infrastructure actrvrtres that are costly, duplicative, or managed inefficiently Assess whether DOD IS effectively managing privatization and outsourcing. DOD strategy and plans for pnvatrzrng or outsourcing non-core functions Evaluate actions by DOD to reduce accumulation of costly and excessive inventones lmplementatron of privatization and outsourcing rnitratrves Identify opportunities for consolidating depot maintenance workloads DOD inventory requirements determination and reducing high maintenance costs DOD plans to reduce costly excess depot marntenance Assess opportunities to streamlrne DOD’s transportation organizations capacity and systems Implementation, costs, and savings of base closures Evaluate internal controls over property disposal operations DOD management of contractor-furnrshed equipment and property Determine whether DOD IS effrcrently and effectively managing high DOD efforts related to environmental compliance and risk/interest programs cleanup Evaluate DOD’s rmplementatron of the Government Performance and DOD programs to dispose of chemical weapons and Review Act related materials Management of the National Defense Stockpile DOD plans and actions to implement the Government Performance and Review Act Issue Planned major job starts Business Activities and Facilities Management of Mothballed Facrlrtres Management Management of Government Furnished Property Provided to Contractors/Grantees BRAC implementation Management of Government-Owned Contractor-Operated Facilities Excess On-Order Material Primary Inventory Control Activities (PICA)/Secondary Inventory Control Activities (SICA) lnrtratrves to Reduce Repair Leadtrme War Reserve Stock Requirements DOD Efforts to Reduce Navy Ship Maintenance Infrastructure and Facrlrtres Commercial Contracting Practices for Depot Maintenance Pnvatrzatron Reengineenng Efforts at Publrc Depots Army/MTMC Efforts to Outsource Personal Property Programs U S Transportation Command and Information D Systems Infrastructure Management and Privatization of DRMS Operations ,’ Impact of Quadrennial Review Recommendations on DOD Business Activities Service and Defense Working Capital Funds and Prices Reengrneenng Strategy to Reduce Finance and Accounting Structure and Network High Interest Programs Opportunrtres to Control Environmental Qualrty Expenditures DOD Envrronmental Compliance Management DOD Cleanup Pnontrzatron and Cost lmplementatron of GPRA lnrtratrves Page 6 GAO/UP-97-4 Table III: GAO Contacts ; David R. Warren Director Associate Directors Charles I. Patton (202) 512-8412 James F. Wiggins Barry W. Holman (Acting) Assistant Directors Uldis Adamsons Ron Berteotti Gary Billen Julia C. Denman Rick Gist James E. Hatcher Thomas J. Howard George Jahnigen Kenneth R. Knouse James Murphy Nomi Taslitt Foy Wicker Page 7 Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and Mastercard credit cards are accepted, aIso. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 6015 Gaithersbnrg, MD 20884-6015 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. 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Defense Management Issue Area Plan--Fiscal Years 1997-99
Published by the Government Accountability Office on 1997-06-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)