oversight

Defense Headquarters: Total Personnel and Costs Are Significantly Higher Than Reported to Congress

Published by the Government Accountability Office on 1997-10-30.

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

                  United States General Accounting Office

GAO               Report to the Honorable
                  Charles E. Grassley, U.S. Senate



October 1997
                  DEFENSE
                  HEADQUARTERS
                  Total Personnel and
                  Costs Are Significantly
                  Higher Than Reported
                  to Congress




GAO/NSIAD-98-25
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-275837

             October 30, 1997

             The Honorable Charles E. Grassley
             United States Senate

             Dear Senator Grassley:

             Since at least the early 1970s, Congress has been concerned about the size
             of management headquarters in the Department of Defense (DOD). At your
             request, we reviewed DOD’s program to account for its management
             headquarters and headquarters support activities. Specifically, our
             objectives were to determine (1) the accuracy and reliability of DOD’s
             reported data on management headquarters and headquarters support
             personnel1 and costs, (2) reasons that data on personnel and costs could
             be inaccurate, and (3) DOD’s plans to reduce the size of its management
             headquarters and headquarters support activities.


             In 1972, after receiving inconsistent data on DOD headquarters from the
Background   military services, the House Appropriations Committee directed DOD to
             define headquarters functions, list headquarters activities, and develop a
             common method of accounting for headquarters personnel and costs. In
             response, in 1973 the Deputy Secretary of Defense issued DOD
             Directive 5100.73. Over the years, the directive has been revised and is
             now titled “Department of Defense Management Headquarters and
             Headquarters Support Activities.”

             The directive defines management as exercising oversight, direction, and
             control of subordinate organizations or units by (1) developing and issuing
             policies and providing policy guidance; (2) reviewing and evaluating
             program performance; (3) allocating and distributing resources; or
             (4) conducting mid- and long-range planning, programming, and budgeting.
             It defines headquarters support as professional, technical, administrative,
             or logistic support that is performed in, or provided directly to, a
             management headquarters. The definition includes both staff support and
             operating support (such as secretarial or computer support). It excludes
             specific products or technical and operating-type services that are
             provided on a DOD- or componentwide basis (such as payroll services) and
             base operating support functions provided by a host to all tenants.



             1
              Unless stated otherwise, we have used the term “personnel” throughout this report to connote
             positions for which funding has been requested or provided.



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The directive includes a list of organizations that DOD classifies as
management headquarters and headquarters support activities. This list
includes the Office of the Secretary of Defense (OSD); the Joint Staff;
defense agency headquarters; unified command headquarters;
international military headquarters; and military department headquarters,
including the headquarters of acquisition centers, major commands, and
similar Navy organizations. In addition to the listed entities, the directive
establishes criteria for DOD components to use in identifying other
personnel and organizations that perform management headquarters and
headquarters support functions. The directive, as implemented in DOD,
requires that DOD annually report to Congress all military and civilian
personnel and all budgeted funds for organizations identified under the
directive. OSD and the military departments report this data to Congress on
four separate budget documents, called PB-22 exhibits.

Many DOD management headquarters listed in the directive have numerous
subordinate noncombat organizations that perform a wide variety of
functions, from direct staff support to their parent headquarters to
operating military academies. In the Army and Air Force, these types of
organizations are called field operating agencies/activities, staff support
agencies, or direct reporting units. The Navy has no specific term for these
noncombat support activities—at the Department of the Navy level, they
are a subset of “Echelon 2” organizations, a generic term for Navy
organizations that report to the Secretary of the Navy or the Chief of Naval
Operations (OPNAV).

In the past, we reported that DOD had an incentive to respond to pressures
to reduce its management headquarters by transferring personnel to
nonmanagement headquarters organizations. We also reported that past
efforts to reduce headquarters personnel in OSD and military department
headquarters were achieved primarily through transfers of functions and
personnel to other organizations.2

Concerned that DOD’s efforts to reduce its infrastructure, including
headquarters, have lagged behind the cuts made in operational forces,
Congress has taken several actions to reduce headquarters personnel. For
example, in 1990, Congress ordered DOD to reduce total personnel assigned
to DOD management headquarters and headquarters support activities by
20 percent over 5 years in order to bring the size of headquarters “into line

2
Highlights of a Report on Staffing and Organization of Top-Management Headquarters in the
Department of Defense (GAO/FPCD-76-35A, 1976), Defense Headquarters Staff Reductions: An
Overview (GAO/FPCD-78-72, Oct. 2, 1978), and Staffing Data for Department of Defense Top
Management Headquarters Organizations (GAO/FPCD-83-29, May 6, 1983).



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                   with” legislated force structure and budgetary reductions. Also, in the
                   National Defense Authorization Act for Fiscal Year 1997, Congress
                   directed DOD to reduce OSD, its DOD support activities, and the Washington
                   Headquarters Services (WHS) by 25 percent over 5 years.


                   DOD’s  annual budget exhibits to Congress on management headquarters
Results in Brief   and headquarters support are unreliable because the number of personnel
                   and costs are significantly higher than reported. As a result, neither DOD
                   nor Congress can determine trends in headquarters personnel and costs to
                   help them make informed decisions about the appropriate size of
                   headquarters. During fiscal years 1985-96, DOD reported steady decreases
                   in its management headquarters and headquarters support personnel—a
                   31-percent decline from about 77,000 to 53,000. However, these data did
                   not include personnel at most of DOD’s noncombat organizations that are
                   subordinate to management headquarters. In our review of selected
                   subordinate organizations, we found that almost three-fourths were
                   primarily performing management or headquarters support functions and
                   should have been reported to Congress by DOD, using the criteria in DOD
                   Directive 5100.73. Also, a DOD study group concluded that DOD has about
                   81,000 management headquarters and support personnel, or 30,000 more
                   than were reported to Congress in the President’s budget for fiscal year
                   1998.

                   DOD’s headquarters costs are also significantly higher than reported to
                   Congress. DOD’s data indicate that management headquarters and
                   headquarters support costs decreased from $5.3 billion to $4.3 billion in
                   constant 1997 dollars during fiscal years 1985-96. However, DOD’s reported
                   data did not include all costs, as required by its financial management
                   regulation. In addition, cost data for management headquarters and
                   headquarters support activities are scattered among several budget
                   documents, making it difficult to determine total costs.

                   DOD’s reported headquarters personnel and cost data are understated for
                   several reasons. Sustained criticism from Congress about the size of DOD’s
                   headquarters has been a disincentive for DOD to accurately report the
                   number of such personnel and their related costs. Thus, DOD has “played
                   games” to “hide” management headquarters personnel from Congress,
                   according to several Office of the Secretary of Defense and military
                   service officials. Second, many DOD officials believe that they are required
                   to report only personnel that make policy, allocate resources, or plan for
                   the future, even though DOD Directive 5100.73 requires that headquarters



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                       support personnel be reported. Third, the directive’s criteria for analyzing
                       organizations to determine whether they should be included in budget
                       exhibits on management headquarters are complicated. Finally, oversight
                       by the Office of the Secretary of Defense and the military services has
                       been limited.

                       DOD  faces challenges in reducing the size of its headquarters. While DOD
                       wants to reduce the size and cost of its management headquarters to
                       reallocate funds to other areas, it has not determined the scope of future
                       reductions or developed a detailed plan for making the reductions. DOD is
                       examining the effects of a possible 15-percent reduction in management
                       headquarters and support personnel during fiscal years 1998-2003, a cut of
                       about 7,650 more personnel than is currently programmed in its Future
                       Years Defense Program. At the same time, a Defense Reform Task Force is
                       assessing the missions, functions, and size of the Office of the Secretary of
                       Defense and other headquarters. Determining whether and how much to
                       reduce management headquarters is difficult because DOD has no generally
                       accepted staffing standards to objectively size a management
                       headquarters. Furthermore, DOD officials have a range of views on whether
                       and how to reduce management headquarters further—some advocate
                       significant reductions while others have no plans to reduce.

                       We are making recommendations intended to (1) simplify the criteria in,
                       and expand the scope of, DOD Directive 5100.73 to generate more accurate
                       and complete data and (2) provide Congress with a readily available
                       summary of the total costs of DOD management headquarters and
                       headquarters support activities.


                       The total number of personnel associated with DOD’s management
Number of              headquarters and headquarters support activities are significantly higher
Headquarters           than DOD has reported to Congress. DOD reported steady decreases in its
Personnel Are          management headquarters and headquarters support personnel from
                       about 77,000 to 53,000 during fiscal years 1985-96, a 31-percent decrease.
Significantly Higher   However, DOD does not report personnel at most of its noncombat
Than DOD Reports       organizations that are directly subordinate to management headquarters.
                       In our review of selected subordinate noncombat organizations, we found
                       that almost three-fourths of the organizations were primarily performing
                       management or management support functions and should have been
                       reported to Congress by DOD, using the criteria in DOD Directive 5100.73.
                       Some personnel in these subordinate organizations had been part of
                       headquarters, but they were transferred out of headquarters, or



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                            reclassified as nonheadquarters, during periods when Congress mandated
                            that DOD reduce its management headquarters personnel. For example, in
                            1992 the Air Force removed about 2,000 personnel in its numbered air
                            forces headquarters from reporting under DOD’s management headquarters
                            program. We also found situations in which the military services use
                            unusual accounting devices that distort the true size of organizations; in
                            addition, the size of OSD is unclear because of definitional issues.


DOD Reported Steady         DOD reported steady decreases in its management headquarters and
Decreases in Headquarters   headquarters support personnel from about 77,000 to 53,000 during fiscal
Personnel During 1985-96    years 1985-96, a 31-percent decrease. These reported decreases were, to
                            some extent, in response to reductions directed by Congress. This rate of
                            decrease is somewhat less than the 36-percent decrease in combat forces
                            over the same time period. Figure 1 shows reported personnel levels for
                            management headquarters and headquarters support for past and future
                            fiscal years.




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Figure 1: Reported DOD Management Headquarters Personnel (Fiscal Years 1985-99)
30,000

25,000

20,000

15,000

10,000

 5,000

      0
          1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
                                          Fiscal year

                         Navy total Defense-wide total Army total Air Force total




                                        Notes: Data for 1985-96 are reported actual values. Data for 1997-99 are estimates.

                                        The Defense-wide category includes management headquarters personnel in OSD; OSD support
                                        organizations; the Joint Staff; and the headquarters of defense agencies, DOD field activities, and
                                        the U.S. Special Operations Command.

                                        Source: OSD’s Director of Administration and Management (OSD/DA&M) and DOD’s PB-22
                                        exhibits.




                                        Although DOD showed a steady decline in management headquarters and
                                        headquarters support personnel overall, the Defense-wide category
                                        increased 34 percent, from 7,089 in fiscal year 1985 to 9,533 in fiscal
                                        year 1996. The increase in OSD alone was 23 percent—from 1,691 to 2,078
                                        during this time. (See app. I for a discussion of OSD personnel.) The
                                        increase in Defense-wide personnel was especially high from fiscal year



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                          1988 to 1990—from 7,599 to 10,347, an increase of 36 percent. During that
                          time, an additional 1,500 personnel in the Defense Logistics Agency’s
                          management support activities (now called DOD support activities) were
                          included in DOD’s report, according to agency officials. Also, in fiscal year
                          1990, DOD’s report included for the first time headquarters personnel from
                          the U.S. Special Operations Command.

                          DOD projects smaller annual decreases in management headquarters and
                          headquarters support personnel for fiscal years 1997-99 than those
                          reportedly made during the last 10 years. Beyond 1999, DOD’s estimates for
                          these personnel are contained only in the Future Years Defense Program
                          (FYDP), which shows a slight decrease, from 49,699 to 49,270 during fiscal
                          years 2000-03. However, these projections do not include any changes that
                          may occur as a result of implementing recommendations based on the
                          Quadrennial Defense Review (QDR).


Almost Three-Fourths of   Based on our review of 40 noncombat organizations subordinate to the
Selected Organizations    10 management headquarters we audited, we concluded that DOD had not
Should Have Been          included 29 organizations and 2,853 personnel in its reports to Congress
                          on management headquarters and headquarters support (see table 1). We
Reported                  selected organizations to review based on a variety of factors, including
                          conditions that OSD/DA&M officials agreed may indicate that an organization
                          is providing management support. These indicators, also called “red flags”
                          by OSD/DA&M, are headquarters officials serving additional duty as senior
                          officials in the subordinate organization (called “dual hatting”), transfer of
                          personnel from headquarters to create or augment subordinate
                          organizations, diverse functions that mirror headquarters functions, and
                          collocation of the subordinate organization with its headquarters.
                          Although the presence of one or more of these indicators is not
                          conclusive, it led us to perform the analysis called for in DOD Directive
                          5100.73.




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Table 1: Review of Subordinate Noncombat Organizations That Report to Management Headquarters
                                                             Total     Subordinate Organizations that    Personnel that
                                      Subordinate     subordinate       noncombat should be reported          should be
                                       noncombat       noncombat organizations      on PB-22 but are        reported on
Management headquarters             organizationsa      personnel      we reviewed                not PB-22 but are notb
OSD                                                  27           157,164                     2                        1                     108
Army Secretariat, Army Staff                         77             21,703                    5                        5                     546
Navy Secretariat, Chief of Naval                     64             13,863                    4                        4                     379
Operations, Headquarters Marine
Corps
Air Force Secretariat, Air Staff                     40             20,592                    5                        3                     510
U.S. Atlantic Command                                13              1,097                    3                        2                     269
U.S. Army Training and Doctrine                      13              1,393                    4                        4                     164
Command
U.S. Army Forces Command                              1                293                    1                        1                     293
U.S. Atlantic Fleet                                  25              5,902                    2                        1                       7
Air Combat Command                                   16              1,829                    5                        2                     121
Air Education and Training                            9                692                    9                        6                     456
Command
Total                                              285            224,528                   40                       29                     2,853
                                          a
                                            Army and Air Force major commands are excluded. Navy and Marine Corps operational fleets,
                                          forces, bases, and acquisition commands are excluded.
                                          b
                                              Personnel not reported on PB-22 exhibits are reported to Congress on other budget exhibits.

                                          Source: DOD and GAO.



                                          Many different types of organizations should have been reported to
                                          Congress because they perform management or management support
                                          functions covered by DOD’s directive:

                                      •   The Army’s Congressional Inquiry Division, a field operating activity with
                                          41 personnel, augments 46 personnel that are designated as headquarters
                                          personnel. The division is one of seven in the Office of the Chief of
                                          Legislative Liaison in the Pentagon.
                                      •   The Navy’s International Programs Office, an Echelon 2 command with
                                          169 personnel, manages foreign assistance programs for the Navy and
                                          reports to the Assistant Secretary of the Navy (Research, Development,
                                          and Acquisition).
                                      •   The Air Intelligence Agency’s 497th Intelligence Group, a direct reporting
                                          unit with 305 personnel located in Washington, D.C., primarily supports
                                          the Air Staff.




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                          •   The U.S. Army’s Forces Command’s Field Support Activity, with 293
                              personnel, is merely an accounting device for personnel integrated
                              throughout Forces Command headquarters.
                          •   The U.S. Atlantic Command’s Information Systems Support Group, a
                              support activity with 117 personnel that was previously considered part of
                              headquarters, provides computer support to the Command’s headquarters.
                          •   The Air Combat Command’s Studies and Analyses Squadron, a field
                              operating activity with 71 personnel, studies issues for its headquarters.

                              Appendix II contains details on these and other noncombat organizations
                              we reviewed.

                              In addition to these organizations that we found, OSD/DA&M agreed that
                              other organizations should have been reported in DOD’s annual PB-22
                              exhibits. For example, OSD’s fiscal year 1998 PB-22 exhibit on
                              Defense-wide activities omitted the management headquarters personnel
                              and costs for five defense agencies—the Ballistic Missile Defense
                              Organization, the Defense Advanced Research Projects Agency, the
                              Defense Commissary Agency, the Defense Finance and Accounting
                              Service, and the Defense Security Assistance Agency. In total, these
                              agencies had about 1,300 management headquarters personnel and
                              $150 million in related operations and maintenance costs for fiscal
                              year 1997. The fiscal year 1998 PB-22 exhibit did include, however, the
                              management headquarters personnel and costs of the National Security
                              Agency,3 a defense agency explicitly covered by DOD Directive 5100.73 that
                              had not been reported on the exhibit since fiscal year 1993.


Personnel Transfers and       An unknown portion of DOD’s reported personnel decreases in
Reclassifications Have        management headquarters and headquarters support activities were due to
Decreased Reported            transferring personnel to nonheadquarters organizations or to
                              reclassifying personnel and their functions as nonheadquarters, rather
Headquarters Numbers          than actually reducing DOD personnel. In April 1997, in response to
                              questions from the House Committee on National Security, DOD stated that
                              a “good number” of its reported decrease in management headquarters
                              personnel since 1985 were due to transfers of personnel from headquarters
                              activities to operational activities and that a “minimal number” of the
                              decrease was due to reclassification of positions. DOD emphasized that it




                              3
                               The number of headquarters personnel and the costs at the agency are classified.



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had achieved real reductions in management headquarters personnel, but
it could not quantify the number.4

In the past, we have reported that headquarters personnel reductions in
OSD and the military department headquarters in Washington were
achieved primarily through transfers of functions and personnel to other
organizations.5 For example, although OSD, the Army, and the Navy had
reduced personnel by about 2,900 during 1977-78, only 62 employees had
been removed from DOD’s payroll through retirement, resignation, and
involuntary separation. We could not determine whether these transfers
had any adverse impact, primarily because few functional changes or
physical relocations were involved. Most transferred functions and
personnel remained in the Washington area; for example, in October 1977,
OSD created WHS and transferred 265 OSD personnel to it.6


In 1988, DOD’s Deputy Inspector General studied the headquarters of the
unified and specified commands.7 Among other things, he found many
cases where integral headquarters support functions and personnel had
been transferred from headquarters to support organizations. The primary
purpose of many of these transfers was to avoid the headquarters
connotation and/or personnel limitations placed on headquarters in
legislation and congressional committee reports, according to his report.

As the Air Force began to restructure its numbered air forces in the early
1990s, it requested to stop reporting as management headquarters about
2,000 personnel in the headquarters of numbered air forces. The Air
Force’s request came as Congress mandated reductions in DOD
management headquarters during fiscal years 1991-95. OSD/DA&M approved
the Air Force’s request subject to its review in fiscal year 1993. However,
the review never took place.




4
 The scope of our audit did not include systematically counting DOD’s personnel transfers or
reclassifications.
5
 Defense Headquarters Staff Reductions: An Overview (GAO/FPCD-78-72, Oct. 2, 1978).
6
 WHS is a DOD field activity that is directed by an OSD official, the Director of Administration and
Management. WHS provides support to OSD, DOD field activities, and other specified defense
activities in the National Capital Region. Specifically, WHS provides services, such as budgeting and
accounting, civilian and military personnel management, office services, correspondence and cables
management, directives and records management, housekeeping, security, and computer and graphics
support.
7
 Review of Unified and Specified Command Headquarters (“The Vander Schaaf Report”), Feb. 1988.



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                        Our review of 2 of the 16 numbered air forces8 indicated that the Air Force
                        had not fully implemented its restructuring plans. Both headquarters
                        continue to perform some management headquarters and headquarters
                        support functions, such as inspections and readiness oversight, which are
                        covered by DOD Directive 5100.73. Since the Air Force and OSD/DA&M have
                        not analyzed the numbered air forces since they began restructuring, they
                        cannot be sure that the Air Force’s exemption for these organizations is in
                        compliance with DOD’s directive. (See app. III for our discussion of
                        numbered air forces.)


Inappropriate Use of    In some instances, the military services have used accounting devices that
Special Accounting      have masked the number of personnel in certain headquarters
Devices Masks Size of   organizations. However, DOD Directive 5100.73 prohibits “special personnel
                        accounting devices” to mask or distort the true size or structure of
Headquarters            headquarters.

                        The Air Force has accounted for 242 personnel that directly support the
                        Secretary and the Chief of Staff of the Air Force in a “non-unit”—an
                        accounting device. Air Force leaders do not know which of their personnel
                        are accounted for as headquarters and which are accounted for in the
                        non-unit, according to Air Force officials. The Air Force does not report
                        these personnel as part of the Secretariat or the Air Staff but instead
                        reports them on a separate line on its PB-22 exhibit.

                        If the Air Force added these 242 personnel to its reported fiscal year 1997
                        total of 2,460 for the Secretariat and the Air Staff, it would exceed its
                        statutory limit of 2,639 personnel by 63.9 According to an Air Staff official,
                        the 242 personnel would have been accounted for as a part of the
                        Secretariat and the Air Staff, if Congress had not legislated a personnel
                        ceiling. Nonetheless, in an April 1997 meeting, Air Force officials stated
                        that the Air Force was not circumventing the ceiling and they pointed out
                        that OSD/DA&M had approved of this reporting arrangement. An OSD/DA&M
                        official stated that he did not know whether the office had formally
                        approved the arrangement but that it would not be viewed as a problem
                        since the Air Force had reported the personnel on its PB-22 exhibit.


                        8
                        The two numbered air forces we reviewed were the 12th Air Force at Davis-Monthan Air Force Base,
                        Arizona, and the 19th Air Force at Randolph Air Force Base, Texas.
                        9
                         As part of the Goldwater-Nichols DOD Reorganization Act of 1986, Congress directed that the total
                        number of military and civilian personnel assigned to the Air Force Secretariat and the Air Staff may
                        not exceed 2,639 (10 U.S.C. 8014). Similar personnel ceilings apply to the Department of the Army,
                        10 U.S.C. 3014, and to the Department of the Navy, 10 U.S.C. 5014.



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                         Two Navy organizations appear to be accounting devices to hold
                         headquarters personnel. The OPNAV Support Activity’s 168 personnel and
                         the Field Support Activity’s 34 personnel are not reported as part of the
                         1,023 OPNAV personnel but rather are reported separately as part of the
                         Navy’s departmentwide total. However, the two organizations are each
                         commanded by OPNAV officials who are “dual-hatted.” Furthermore, OPNAV
                         Support Activity personnel are intermingled and fully integrated with
                         OPNAV staff. A cognizant Navy official could not explain the distinction
                         between support personnel that are accounted for as part of OPNAV proper
                         and those accounted for as part of the OPNAV Support Activity. Navy
                         documents show that the OPNAV Support Activity’s mission is to provide
                         administrative, technical, and office services support to OPNAV, while the
                         Field Support Activity’s mission is to assist the Vice Chief of Naval
                         Operations in budgeting, evaluating resource execution, and providing
                         manpower and facilities for assigned organizations.

                         At the Army’s Forces Command, Fort McPherson, Georgia, the
                         Command’s Field Support Activity is merely an accounting device for 293
                         personnel integrated throughout Forces Command headquarters.


Size of OSD Is Unclear   The size of OSD is unclear because of definitional issues. OSD does not
                         report, as part of OSD, certain headquarters personnel that are a part of OSD
                         or are integral to its operation. OSD defines its personnel to include about
                         2,000 civilian and military personnel assigned to various OSD offices and
                         certain OSD-administered temporary commissions. However, OSD does not
                         include any of the approximately 1,400 DOD Inspector General personnel in
                         its total, even though by law the Inspector General is part of OSD and
                         appears on OSD organization charts. OSD also excludes direct support
                         provided by DOD support activities, WHS, and the Air Force Pentagon
                         Communications Agency.10 DOD does separately report these activities as
                         well as 56 Inspector General personnel on its Defense-wide PB-22 exhibit,
                         and it provides further information to Congress on them in annual budget
                         justification materials. Our review, however, disclosed that OSD
                         underreported WHS support to OSD by 82 personnel. Also, OSD did not report
                         26 personnel in the Defense Airborne Reconnaissance Office as
                         management headquarters personnel, even though they are, in effect, part
                         of OSD. (See app. I.)



                         10
                            The two remaining DOD support activities (the C4I Integration Support Activity and the Plans and
                         Program Analysis Support Center) and WHS are under the direction, authority, and control of OSD
                         officials.



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In 1994, the DOD Inspector General recommended that DOD abolish DOD
support activities and transfer their personnel to OSD because the structure
of the activities was not conducive to effective accountability and
management and actually hindered effective mission accomplishment by
OSD managers.11 While OSD has not eliminated the DOD support activity
organizational category, it has abolished some activities.12

In the National Defense Authorization Act for Fiscal Year 1997, Congress
directed OSD, its DOD support activities, and WHS to reduce their combined
personnel by 25 percent by October 1, 1999, with interim reductions in
1997 and 1998. The baseline for the reductions is the number of personnel
in these organizations as of October 1, 1994. The baseline is 4,815 and the
ceiling for October 1, 1997, is 4,093, a reduction of 722.

OSD plans to meet the 1997 ceiling primarily by contracting out WHS
custodians and by reclassifying nearly 300 personnel at the Defense
Manpower Data Center. The Center was considered a DOD support activity,
but in December 1996 the Deputy Secretary of Defense merged it with the
Defense Civilian Personnel Management Service to form the DOD Human
Resources Activity, which is headed by the Under Secretary of Defense
(Personnel and Readiness). OSD will take credit for the reduction but
achieve no near-term savings from the merger and reclassification of the
Center’s personnel. OSD has not determined how it will reduce personnel
to meet the 1998 and 1999 ceilings; an ongoing study will provide the
Secretary of Defense with advice on this matter.

DOD should rebaseline the composition of OSD, according to a May 1997
contractor study commissioned by the Deputy Secretary of Defense in
response to congressional guidance that DOD review the organization and
functions of OSD.13 The study concluded that DOD had in the past
purposefully redefined certain activities outside of OSD, thus making OSD
appear smaller while increasing personnel in less visible organizations.
The study recommended that the Secretary of Defense include as part of

11
 Defense Support Activities: Providing Technical and Analytical Support to the Office of the Secretary
of Defense (94-INS-08, June 23, 1994).
12
  As of August 1997, only two DOD support activities remained. In July 1997, the Deputy Secretary of
Defense abolished the DOD support activity that serviced the Under Secretary of Defense (Acquisition
and Technology) and transferred 156 of its 187 personnel to the office of the Under Secretary. The
Under Secretary requested the transfer to reduce his total personnel, save at least $2 million, and
alleviate morale problems caused by having to apply different personnel management directives to
support activity personnel and OSD personnel, even though they worked side-by-side on the same
tasks.
13
 The Office of the Secretary of Defense: Creating a New Organization for a New Era (Hicks &
Associates, Inc., McLean, Virginia, #SAIC 97-1026, May 1997).



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                      OSD the headquarters element of the DOD Inspector General, elements of
                      WHS that support OSD, and the DOD support activities. The study also
                      recommended that OSD’s role focus on top leadership and management
                      tasks and that OSD be divested of program management, execution, and
                      lower priority tasks. Regarding the congressionally directed cuts, the study
                      concluded that DOD and Congress should not decide on an optimal
                      personnel ceiling for OSD until they agree on OSD’s composition and roles.


                      DOD has significantly understated the costs of its management
Headquarters Costs    headquarters and headquarters support activities. DOD reported a
Are Significantly     19-percent decrease in costs—from $5.3 billion to $4.3 billion—during
Higher Than DOD       fiscal years 1985-96 and projects that costs will be about $5 billion through
                      fiscal year 2003. However, DOD’s cost data are unreliable. Some of DOD’s
Reports               PB-22 exhibits have only reflected partial headquarters costs, contrary to a
                      DOD financial management regulation that calls for the reporting of all
                      budgeted funds. Other PB-22 cost estimates made by military service
                      officials in Washington, and reported to Congress, were significantly less
                      than the estimates made by the military commands. As previously
                      discussed, our review found 29 organizations with nearly 2,900 personnel
                      that should be reported by DOD as management headquarters or
                      headquarters support. DOD has understated headquarters costs by about
                      $215 million by not reporting these personnel, using an average cost per
                      headquarters person of $75,000 based on DOD data.


DOD’s Cost Data Are   DOD  reported a 19-percent decrease in management headquarters and
Unreliable            headquarters support costs—from $5.3 billion to $4.3 billion—during fiscal
                      years 1985-96, using constant 1997 dollars and PB-22 data.14 These costs
                      were primarily composed of operations and maintenance costs and
                      military personnel costs. In general, within operations and maintenance
                      accounts, civilian pay/benefits and “other contractual services”15 were the
                      largest cost categories.




                      14
                       Under DOD Directive 5100.73, personnel and costs associated with base operating support functions
                      and componentwide technical and operating-type services (such as payroll services) are not reported.
                      15
                       According to Office of Management and Budget Circular A-11, the “other contractual services” cost
                      category includes advisory and assistance services; purchases of goods and services from government
                      accounts; payments for medical care; research and development contracts; operation and maintenance
                      of facilities and equipment; and other services. Under DOD Directive 5100.73, operation and
                      maintenance of facilities, such as headquarters buildings, are excluded when this support is performed
                      by a host organization (i.e., a base command) for all tenants.



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                                      PB-22 data are unreliable. The Navy’s annual PB-22 exhibit includes only
                                      estimated personnel costs for military and civilian positions, contrary to
                                      DOD Financial Management Regulation 7000.14-R that calls for reporting of
                                      all budgeted funds to support an activity.16 For example, the Navy reported
                                      $11.6 million in operations and maintenance costs for fiscal year 1996 for
                                      the Commander in Chief, U.S. Atlantic Fleet headquarters. This amount
                                      understated actual costs by $17.6 million, an error of over 150 percent. At
                                      the U.S. Atlantic Command, a unified command administered by the Navy,
                                      officials documented $43.4 million in actual operations and maintenance
                                      costs during fiscal year 1996, $39.1 million (or 9 times) more than the Navy
                                      reported to Congress on its PB-22 exhibit.17 Navy officials told us they had
                                      issued guidance to correct this problem. Furthermore, on the latest
                                      Defense-wide PB-22 exhibit prepared by the DOD Comptroller, no military
                                      personnel costs or other costs funded outside of the operations and
                                      maintenance appropriation were reported.

                                      DOD projects that management headquarters and headquarters support
                                      costs will be about $5 billion through fiscal year 2003, using constant 1997
                                      dollars and FYDP data (see table 2).18

Table 2: DOD’s Estimated
Headquarters Costs for Fiscal Years   1997 dollars in billions
1998-2003                                                                           1998      1999       2000      2001       2002         2003
                                      Army                                          $ 0.9     $ 0.9      $ 1.3     $ 1.3      $ 1.4        $ 1.4
                                      Navy/Marine Corps                               1.4       1.4        1.3       1.3        1.3         1.3
                                      Air Force                                       1.1       1.1        1.1       1.1        1.1         1.1
                                      Defense-wide                                    1.5       1.4        1.3       1.3        1.3         1.3
                                      Total cost (FYDP)                              $4.9      $4.7      $5.0       $5.0      $5.1         $5.1
                                      Notes: Numbers may not add due to rounding. Estimates for the military services include some
                                      costs for Defense-wide activities that are budgeted for by the military services (such as military
                                      personnel costs).

                                      Source: DOD’s 1998-2003 FYDP and DOD deflators.




                                      16
                                       In September 1997, after our audit work was completed, the Acting Under Secretary of Defense
                                      (Comptroller) redefined the cost data required. PB-22 exhibits should show costs directly in support of
                                      management headquarters, excluding operational expenses for items centrally funded or managed at
                                      headquarters but executed elsewhere in DOD.
                                      17
                                       DOD stated that not all operations and maintenance costs at the U.S. Atlantic Command necessarily
                                      support management headquarters functions.
                                      18
                                       The FYDP projects costs beyond fiscal year 1999, the last year on PB-22 exhibits. Because of
                                      differences in how costs and personnel are reported in DOD’s PB-22 exhibits compared with DOD’s
                                      FYDP, the headquarters cost data for fiscal years 1998-2003 from DOD’s FYDP are not easily
                                      comparable with PB-22 data.



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                            According to these estimates, DOD will not free up funds in its management
                            headquarters accounts to help fund modernization efforts or other
                            initiatives. These projections, based on the completed 1998-2003 FYDP, do
                            not reflect cost reductions in management headquarters being sought by
                            the Secretary of Defense that could arise from ongoing DOD studies.

                            The FYDP’s estimates of management headquarters and headquarters
                            support costs are also unreliable. Program elements in the FYDP reserved
                            for these costs also contain other costs. For example, the Army’s
                            estimated management headquarters costs include $2.3 billion during
                            fiscal years 2000-2003 in one program element for military construction
                            projects. After the Army decides which projects to fund, it will disperse
                            the funds to separate program elements that are not counted as part of the
                            cost of management headquarters. Also, according to a DOD Comptroller
                            official, the Navy’s management headquarters cost data in the FYDP are
                            inaccurate because of the Navy’s method of estimating the costs.


                            DOD’s  management headquarters and headquarters support personnel and
Headquarters                cost data are understated for several reasons. Sustained criticism from
Personnel and Costs         Congress about the size of DOD’s headquarters has been a disincentive for
Are Understated for         DOD to accurately report the number of such personnel and their related
                            costs. Thus, DOD has “played games” to “hide” management headquarters
Several Reasons             personnel from Congress, according to several OSD and military service
                            officials. Second, many DOD officials believe that they are required to
                            report only personnel that make policy, allocate resources, or plan for the
                            future, even though DOD Directive 5100.73 requires that headquarters
                            support personnel be reported. Third, the directive’s criteria for analyzing
                            organizations to determine whether they should be included in budget
                            exhibits on management headquarters are complicated. Finally, oversight
                            by OSD and the military services has been limited.


Disincentives to Accurate   Many DOD officials believe that being counted as a management
Accounting Cause DOD to     headquarters or headquarters support activity increases the chance of
“Hide” Headquarters         personnel reductions, given the history of congressional reductions to
                            management headquarters personnel. Therefore, DOD organizations have
Personnel and Costs         incentives to avoid inclusion in DOD’s management headquarters program,
                            according to an OSD/DA&M official, the Vice Commander of the Air Combat
                            Command, and our analysis.




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Officials from OSD and each of the military departments told us that DOD
components have organized themselves in such a way as to “hide”
personnel performing headquarters or headquarters support functions.
According to an OSD personnel official, the military service chiefs and
others know that DOD’s reported numbers of management headquarters
personnel are too low. He referred to DOD’s actions over the years as a
game of “hiding the ball.” Separately, Army and Navy officials told us that
their departments “play games” by not designating personnel as
management headquarters or headquarters support when, under DOD
Directive 5100.73, they should. Instead, management and support
functions are placed in field operating agencies or staff support groups
that report to management headquarters but are not reported to Congress
on DOD’s PB-22 exhibits, according to the officials. As far back as 1984, the
Secretary of Defense wrote of DOD being criticized for “hiding”
headquarters by labeling them as operational instead of management
organizations. A senior Navy official explained that bureaucracies find
ways to “live with” directives and laws that impose constraints. Likewise,
Air Force actions have led to a “strange organizational structure,”
according to an Air Staff official. An official in the office of the Secretary
of the Army noted that this “game goes on” because headquarters work
does not diminish when Congress mandates reductions in numbers of
headquarters personnel.

According to a former DOD Deputy Inspector General, DOD has a long
history of redefining management headquarters to reduce their apparent
size, ignoring the rules for counting personnel assigned to management
headquarters, and renaming organizations to remove them from the
headquarters tracking system. In a 1988 study of unified and specified
commands, the Deputy found that the definition of headquarters in DOD
Directive 5100.73 led to a significant understatement of the number of
personnel that directly supported headquarters. Many personnel were
transferred from headquarters to support organizations to avoid the
headquarters connotation and/or legislated personnel limits, but they
continued to function as part of headquarters, according to the study. The
study recommended that DOD revise the definition of headquarters
personnel to more completely identify the number of personnel directly
supporting management headquarters. However, DOD did not implement
this recommendation because it was based on a lack of understanding of
the purpose of the management headquarters program, according to
OSD/DA&M.




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Officials Misinterpret     According to officials at several subordinate noncombat organizations,
Scope of DOD’s Directive   their organizations, costs, and personnel do not have to be reported under
                           DOD Directive 5100.73 because they do not “make policy.” However,
                           Washington, D.C., officials that manage their departments’ compliance
                           with the directive are aware that the directive’s scope includes
                           headquarters support functions and in fact lists and defines 33 such
                           functions. While the directive does not preclude DOD components from
                           establishing subordinate units to carry out support functions, it does
                           require components to account for all management headquarters and
                           headquarters support activities, however organized, using specific criteria.


DOD’s Directive Has        DOD Directive 5100.73 has complicated criteria for analyzing whether
Complicated Criteria       organizations, particularly headquarters support organizations, should be
                           counted and reported to Congress. Under the directive, each DOD
                           component is to analyze the percentage of “work” or “effort” devoted to
                           4 management functions and 33 headquarters support functions at each of
                           its organizations. Different rules for reporting personnel and costs are
                           applied depending on whether the percentage of management-related
                           work exceeds 25 or 50 percent of an organization’s total work/effort.

                           In specific cases, there is ambiguity as to whether an organization qualifies
                           as a management headquarters or headquarters support activity under the
                           directive, but OSD/DA&M is charged with making the final determination. For
                           example, the Third Army asked to have all of its headquarters personnel
                           removed from DOD’s management headquarters reporting system.
                           However, after a review by OSD/DA&M and others, OSD/DA&M excluded only a
                           portion of Third Army headquarters personnel from reporting under DOD’s
                           directive.


DOD’s Oversight of         DOD’s oversight of its management headquarters and headquarters support
Headquarters Accounting    accounting system has been limited, which has not facilitated compliance
System Has Been Limited    with DOD Directive 5100.73. The directive requires OSD/DA&M to determine
                           the composition of, maintain, and monitor the official list of DOD
                           management headquarters and headquarters support functions and
                           organizations and to conduct periodic reviews to ensure DOD components
                           accurately identify and account for management headquarters and
                           headquarters support activities. In addition, the directive requires the DOD
                           components to designate a single office to implement the directive,
                           maintain an information system that identifies the number and size of their
                           management headquarters and headquarters support activities, ensure that



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                       their list of such activities is accurate, and conduct surveys or studies and
                       establish administrative controls to comply with the directive.

                       OSD/DA&M   has one person that spends part of his time monitoring
                       compliance with the directive; in the past 3 years, the office has reviewed
                       five cases for compliance. The Navy’s primary office for monitoring the
                       management headquarters program is the Office of the Assistant Secretary
                       of the Navy (Financial Management and Comptroller), according to
                       officials who work there. However, our questions to this office on the
                       management headquarters program typically had to be referred to other
                       Navy offices.

                       The Office of the Assistant Secretary for Manpower and Reserve Affairs
                       controls the Army’s management headquarters program and is the
                       approval authority for any changes requested by Army commanders.
                       According to an Office official, the Army’s Manpower Analysis Agency, a
                       field operating activity that reports to the Assistant Secretary, conducts
                       manpower surveys of commands and, among other things, determines
                       whether commands have properly accounted for their management
                       headquarters personnel. However, Manpower Analysis Agency officials
                       said “no one is checking” the Army’s management headquarters program.
                       Until 1992, this Agency reviewed Army organizations to determine
                       compliance with the program, but it stopped doing so routinely when the
                       Army gave its commanders more authority with less oversight, according
                       to Agency officials.

                       In response to our inquiries, representatives from the offices of the
                       inspector generals and auditors of the Army, the Navy, and the Air Force
                       said they had not audited or inspected this area. In addition to its 1994
                       study discussed earlier, in 1989, the DOD Inspector General reviewed DOD
                       support activities, formerly called management support
                       activities/agencies.19


                       DOD faces challenges in reducing the size of its management headquarters
Challenges Remain in   and headquarters support activities. While DOD wants to reduce the size
Reducing Size of DOD   and cost of its management headquarters to reallocate funds to other
Headquarters           areas, it has not determined the scope of future reductions or developed a
                       detailed plan for making the reductions. Also, DOD has different definitions
                       of management headquarters and headquarters support—when analyzing

                       19
                        Management Support Activities (89-INS-12, Oct. 17, 1989). We also reported on this topic in Defense
                       Budget Issues: Uniform Definition of Management Support Agencies Needed (GAO/NSIAD-90-255,
                       July 30, 1990).



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                             their headquarters internally, DOD officials include more activities than are
                             reported on DOD’s PB-22 exhibits. Determining whether and how much to
                             reduce management headquarters is difficult because DOD has no generally
                             accepted staffing standards to objectively size a management
                             headquarters. Furthermore, DOD officials have a range of views on whether
                             and how to reduce management headquarters further—some advocate
                             significant reductions while others have no plans to reduce.


DOD Wants to Reduce          The QDR report concluded that significant cuts in DOD headquarters are
Headquarters Personnel,      feasible and desirable.20 However, it did not recommend a detailed plan for
but It Has Not Developed a   reducing headquarters, in part, because senior DOD officials lacked a
                             reliable database to serve as a baseline for analysis. A subsequent study,
Detailed Plan                ordered by the QDR and led by OSD, examined the effects of reducing DOD
                             headquarters and headquarters support personnel by 15 percent during
                             fiscal years 1998-2003—a total cut of about 12,550 positions, or about 7,650
                             more than reductions currently programmed in DOD’s 1998-2003 FYDP. This
                             number was based on the plan to reduce the percentage of headquarters
                             personnel, relative to total DOD personnel, to the 1989 level of 3.3 percent.
                             The estimated 1998 level without further reductions is 3.7 percent,
                             according to the study.21

                             In implementing this reduction, DOD does not want to make equal
                             across-the-board percentage reductions for each component; it will
                             instead analyze major structural changes, such as consolidating
                             organizations and eliminating entire organizational echelons, according to
                             the leader of DOD’s study. In addition, the Defense Reform Task Force,
                             established by the Secretary of Defense, is to report in November 1997 on
                             the size and functions of OSD, defense agencies, DOD field activities, and the
                             military departments.


DOD Defines Headquarters     DOD has different definitions of management headquarters and
More Broadly for Internal    headquarters support—when analyzing their headquarters internally, DOD
Planning Purposes            officials include more activities than are reported on DOD’s PB-22 exhibits.
                             For example, on its PB-22 budget exhibit for fiscal year 1998, the Army
                             estimated a total of 2,784 personnel for Headquarters, Department of the



                             20
                               The Report of the Quadrennial Defense Review (May 19, 1997).
                             21
                                Organizational Staffing: Review of Headquarters Activities (marked “Final Report” and “Draft,”
                             undated).



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                           Army.22 However, as part of its analysis for redesigning this Headquarters,
                           the Army included 19,502 personnel because it counted all personnel in its
                           58 field operating agencies that report to the Army Secretariat or to the
                           Army Staff. Also, when the Navy studied its Secretariat, the study team
                           included the numerous subordinate activities/offices that are not part of,
                           but report to, the Navy Secretariat. Only two of these activities—the Office
                           of Civilian Personnel Management and the Chief of Naval Research—are
                           included on the Navy’s PB-22 budget exhibit and reported to Congress.

                           In a follow-on study to the QDR, the study group created a new definition of
                           management headquarters and headquarters support activities because
                           senior DOD officials had concluded that the numbers reported under DOD
                           Directive 5100.73 were unreliable. The group’s expanded definition
                           included the DOD Inspector General, selected personnel at DOD field
                           activities, military service field operating agencies, and headquarters
                           subordinate to headquarters currently reported under the directive. Using
                           this new definition, the group concluded that DOD had about 81,000
                           management headquarters and headquarters support personnel, or 30,000
                           more than were reported to Congress in the President’s budget for fiscal
                           year 1998. However, OSD/DA&M and military service officials have criticized
                           this definition and DOD has not adopted this revised definition.


DOD Has No Standards for   According to military service officials, there are no overall staffing
Determining the            standards to objectively quantify the number of personnel required for
Appropriate Number of      headquarters functions. The Air Force at one time sized its headquarters
                           staff at major commands at between 1.7 and 2.0 percent of the total
Headquarters Personnel     personnel under each command’s headquarters, but no longer does so,
                           according to Air Force officials. Without quantifiable standards for
                           headquarters staff work, which may not be feasible given the nature of the
                           work, DOD and Congress are left to rely on judgment for sizing
                           headquarters. In the past, this has led OSD and the military services to
                           apportion percentage cuts across-the-board to their components, although
                           some organizations have reengineered.

                           Our work has shown that successful businesses have effectively tied
                           personnel reductions to reengineering business processes.23 For example,
                           one company began reductions to control costs and increase efficiency by


                           22
                            Headquarters Department of the Army is composed of the Army Secretariat; the Office of the Chief of
                           Staff, Army; the Army Staff; and staff support agencies.
                           23
                            Workforce Reductions: Downsizing Strategies Used in Selected Organizations (GAO/GGD-95-54,
                           Mar. 13, 1995).



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                              using across-the-board cuts but found that because the cuts were not tied
                              to a larger strategy, they only exacerbated the company’s problems. The
                              company’s more recent restructuring efforts involved analyses of the
                              distribution of employees and resources to determine where to cut and
                              where to consolidate—a strategy that proved successful. These lessons are
                              applicable to DOD as it develops a strategy for reducing its activities.


Officials’ Views on Further   DOD officials have a range of views on whether and how to further reduce
Headquarters Reductions       management headquarters. Senior DOD officials and some military
Vary                          commanders have publicly advocated reductions, while others have no
                              plans to reduce.

                              The Commander in Chief, U.S. Atlantic Command, stated in March 1996
                              that it is time to review the number and size of headquarters as well as the
                              size of the defense agencies. Likewise, the Air Combat Commander
                              concluded that a pervasive “inattention to the cost of doing business, from
                              the flight line on up” was wasting resources and that headquarters
                              specifically were “bloated,” according to the Vice Commander. The
                              Commander has instructed his staff to analyze, as a preliminary goal,
                              reducing the Command’s 2,284 headquarters personnel by 400 and
                              reducing the Command’s subordinate activities by 600 personnel,
                              according to the Vice Commander. At the time of our review, this study
                              was in its initial stages.

                              In contrast to the Air Combat Command’s numerical goals, the Deputy
                              Under Secretary of the Navy (Institutional and Strategic Planning) has led
                              a headquarters reengineering study without setting numerical goals. In his
                              view, headquarters personnel should not be reduced by the same
                              percentage as operational forces because a minimum level of headquarters
                              personnel is always required, whatever the size of the operating forces. He
                              further believes that a comprehensive understanding of the requirements
                              placed on headquarters is necessary to determine the number of personnel
                              needed. Thus, he said that management reforms in Navy headquarters
                              should come from within the Navy and should not be mandated by
                              outsiders.

                              The Deputy Assistant Secretary of the Army (Force Management,
                              Manpower and Resources) said that the need to save money drives many
                              of the Army’s organizational changes and that the Army is studying options
                              to reduce the number of its major commands. Various factors complicate
                              headquarters reductions, including demands by certain OSD and Joint Staff



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                  officials to protect Army personnel levels in their functional areas and
                  political pressures not to cut personnel in congressional districts.

                  The Air Education and Training Command has no plans to reengineer or
                  reduce its headquarters. Command officials and the Air Force’s PB-22
                  exhibit indicate no change in the number of personnel projected during
                  fiscal years 1997-99. Similarly, an OPNAV official told us that the Navy does
                  not plan to reduce OPNAV personnel. Some OPNAV directorates are
                  restructuring to more efficiently do their work, not to reduce personnel,
                  according to this official.


                  DOD needs to change its directive for reporting management headquarters
Conclusions       and headquarters support personnel and costs to Congress because overall
                  the data are inaccurate and incomplete—total personnel and costs are
                  significantly higher than reported. DOD and Congress cannot rely on the
                  data to determine trends in headquarters and help them make informed
                  decisions about whether headquarters are appropriately sized. One
                  approach would be for DOD to increase enforcement of its existing
                  directive. However, this is not the best alternative because DOD, in an era
                  of downsizing, would require additional personnel for enforcement. Also,
                  the directive’s complicated criteria for determining which organizations to
                  report to Congress is a problem. A simpler definition that would include
                  more organizations could lead to the collection of more meaningful data
                  and eliminate the need for complicated analyses of organizational work
                  efforts. DOD’s current definition can be expanded without counting the
                  headquarters of operational or combat organizations, which should be
                  analyzed separately.

                  Also, DOD’s estimated costs for its management headquarters and
                  headquarters support are scattered among several budget documents.
                  Having the total cost in one document would facilitate DOD and
                  congressional reviews. DOD has already placed a summary of its total
                  personnel in one document.


                  To generate accurate information needed by Congress and the Secretary
Recommendations   of Defense to carry out their oversight and management responsibilities,
                  we recommend that the Secretary of Defense revise DOD Directive 5100.73
                  to expand its coverage and simplify its criteria. The revised directive
                  should require the inclusion of all personnel assigned to all noncombat
                  organizations that are subordinate to DOD management headquarters,



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                     including those at the major command level, such as field operating
                     activities, direct reporting units, and other similar organizations that
                     support their parent headquarters. The revised definition should permit
                     common sense exemptions, such as the students and faculty of military
                     academies and componentwide operating-type services, such as payroll
                     services.

                     To provide Congress with a cost summary, we also recommend that the
                     Secretary of Defense direct the Under Secretary of Defense (Comptroller)
                     to report the total cost, including all appropriations, of DOD’s management
                     headquarters and headquarters support in one document.


                     DOD provided written comments on a draft of this report. These comments
Agency Comments      are reprinted in appendix V. DOD partially concurred with our first
and Our Evaluation   recommendation and concurred with our second recommendation. DOD
                     acknowledged that, in some cases, the process for analyzing DOD
                     organizations to determine whether they should be included in
                     management headquarters budget exhibits can be complicated,
                     labor-intensive, and subjective in nature. However, DOD believes it is
                     impossible to develop a single fair definition of management headquarters
                     and headquarters support activities that can be universally applied, given
                     the large size and complexity of the Department. DOD has established a
                     Management Headquarters Working Group to recommend to the Secretary
                     of Defense whether DOD Directive 5100.73 should be revised, replaced, or
                     augmented. DOD stated that it would summarize the total costs for its
                     management headquarters and headquarters support, beginning with the
                     fiscal year 1999 President’s budget submission. DOD also provided us with
                     technical corrections and clarifying comments that we incorporated into
                     our final report, as appropriate.


                     To determine the accuracy and reliability of PB-22 data, we selected
                     10 headquarters and their subordinate noncombat organizations to review.
                     We also reviewed two numbered air forces. To determine reported trends
                     in DOD’s management headquarters personnel and costs, we obtained
                     annual PB-22 exhibits and DOD’s 1998-2003 FYDP. To obtain information on
                     plans to reduce the size of DOD’s management headquarters, we
                     interviewed officials in the 10 headquarters organizations we audited and
                     officials involved with studies of management headquarters. (See app. IV.)




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We are providing copies of this report to appropriate Senate and House
committees; the Secretaries of Defense, the Army, the Navy, and the Air
Force; and the Director of the Office of Management and Budget. We will
also provide copies to other interested parties upon request.

Please contact me at (202) 512-3504 if you or your staff have any questions
concerning this report. Major contributors to this report are listed in
appendix VI.

Sincerely yours,




Richard Davis
Director, National Security
  Analysis




Page 25                                   GAO/NSIAD-98-25 Defense Headquarters
Contents



Letter                                                                                              1


Appendix I                                                                                         28
                          Reported Personnel Levels                                                30
Office of the Secretary   DARO and WHS                                                             31
of Defense
Appendix II                                                                                        33
                          Army Secretariat and Army Staff                                          33
Subordinate               Navy Secretariat and Chief of Naval Operations                           36
Noncombat                 Air Force Secretariat and Air Staff                                      38
                          U.S. Atlantic Command                                                    40
Organizations             U.S. Army Training and Doctrine Command                                  41
                          U.S. Army Forces Command                                                 43
                          Commander in Chief, U.S. Atlantic Fleet                                  45
                          Air Combat Command                                                       46
                          Air Education and Training Command                                       47

Appendix III                                                                                       51

Numbered Air Forces
Appendix IV                                                                                        54

Objectives, Scope,
and Methodology
Appendix V                                                                                         57

Comments From the
Department of
Defense
Appendix VI                                                                                        59

Major Contributors to
This Report
Tables                    Table 1: Review of Subordinate Noncombat Organizations That               8
                            Report to Management Headquarters




                          Page 26                                 GAO/NSIAD-98-25 Defense Headquarters
          Contents




          Table 2: DOD’s Estimated Headquarters Costs for Fiscal Years             15
            1998-2003

Figures   Figure 1: Reported DOD Management Headquarters Personnel                  6
          Figure I.1: OSD and its Subordinate Organizations                        29
          Figure I.2: Reported Personnel Levels for OSD and OSD Support            31




          Abbreviations

          CINCLANTFLT      Commander in Chief, U.S. Atlantic Fleet
          DA&M             Director of Administration and Management
          DARO             Defense Airborne Reconnaissance Office
          DOD              Department of Defense
          FORSCOM          U.S. Army Forces Command
          FYDP             Future Years Defense Program
          OPNAV            Office of the Chief of Naval Operations
          OSD              Office of the Secretary of Defense
          QDR              Quadrennial Defense Review
          TRADOC           U.S. Army Training and Doctrine Command
          USACOM           U.S. Atlantic Command
          WHS              Washington Headquarters Services


          Page 27                                 GAO/NSIAD-98-25 Defense Headquarters
Appendix I

Office of the Secretary of Defense


               The Secretary of Defense is the principal defense policy adviser to the
               President and is responsible for the formulation of general defense policy
               and policy related to all matters of direct and primary concern to the
               Department of Defense (DOD) and for the execution of approved policy.
               The Office of the Secretary of Defense (OSD) is the Secretary’s principal
               staff element for policy development, planning, resource management,
               fiscal, and program evaluation responsibilities. Two DOD support activities,
               15 defense agencies, 9 DOD field activities (including the Washington
               Headquarters Services (WHS)), and the Defense Airborne Reconnaissance
               Office (DARO) are subordinate to OSD. DOD support activities provide OSD
               with technical and/or analytical support. Defense agencies perform
               selected support and service functions on a departmentwide basis. DOD
               field activities also perform selected support and service functions but
               with a more limited scope than defense agencies. DARO is a unique
               organizational type, because it is not a DOD support activity, defense
               agency, or DOD field activity. Each of these agencies/activities is under the
               authority, direction, and control of an OSD official. (See fig. I.1.)




               Page 28                                    GAO/NSIAD-98-25 Defense Headquarters
                                                      Appendix I
                                                      Office of the Secretary of Defense




Figure I.1: OSD and Its Subordinate Organizations

                                                     Secretary of Defense
                                                      Deputy Secretary




          Inspector         General         Legislative                   Intelligence         Public            Administration
           General          Counsel           Affairs                      Oversight           Affairs               and
                                                                                                                  Management




                                                                           National           American            Washington
                          Defense Legal      National
                                                                           Imagery             Forces            Headquarters
                            Services         Security
                                                                         and Mapping         Information         Services (FA)
                           Agency (DA)     Agency (DA)
                                                                         Agency (DA)        Services (FA)




    Under Secretary         Director,          Assistant
                                               Secretary                  Under Secretary
     (Acquisition          Operational                                                        Under Secretary        Under Secretary
                                              (Command,                   (Personnel and
         and                Test and                                                           (Comptroller)            (Policy)
                                                Control,                    Readiness)
     Technology)           Evaluation       Comms. & Intel)



       Office of                                                           DOD Human             Plans and          Defense Prisoner
                                           C4I Integration
      Economic                                                              Resources            Programs            of War/Missing
                                           Support Activity
      Ajustment                                                              Activity         Analysis Support      Personnel Office
                                               (DSA)
         (FA)                                                                 (FA)             Center (DSA)               (FA)



        Defense                               Defense                   Defense Medical          Defense            Defense Technical
        Airborne                            Intelligence                   Programs              Contract                Security
     Reconnaissance                           Agency                        Activity           Audit Agency           Administration
         Office                                 (DA)                         (FA)                  (DA)                   (FA)



          Defense
     Advanced Research                        Defense                                        Defense Finance       Defense Security
                                                                            TRICARE          and Accounting          Assistance
          Projects                          Information
                                                                          Support Office         Service               Agency
        Agency (DA)                       Systems Agency
                                                                              (FA)                (DA)                   (DA)
                                                (DA)


         Defense
         Special                              Defense
                                                                         DOD Education
        Weapons                             Investigative
                                                                            Activity
       Agency (DA)                             Service
                                                                             (FA)
                                                (DA)


         Defense
         Logistics                                                           Defense
         Agency                                                            Commissary
           (DA)                                                              Agency
                                                                              (DA)



      Ballistic Missile
         Defense                                           Reported by OSD as part of OSD
       Organization
            (DA)
                                          DA               Defense Agency
                                          DSA              DOD Support Activity
                                          FA               Field Activity
          On-Site
        Inspection
          Agency
           (DA)

                                                      Source: OSD’s Director of Administration and Management (OSD/DA&M).



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                     Office of the Secretary of Defense




                     The size of OSD is unclear because of definitional issues. OSD does not
Reported Personnel   report, as part of OSD, certain headquarters personnel that are a part of OSD
Levels               or are integral to its operation. OSD defines its personnel to include about
                     2,000 civilian and military personnel assigned to various OSD offices and
                     certain OSD-administered temporary commissions. However, OSD does not
                     include any of the approximately 1,400 DOD Inspector General personnel in
                     its total, although by law the Inspector General is part of OSD and appears
                     on OSD organizational charts. OSD also excludes direct support provided by
                     DOD support activities, WHS and the Air Force Pentagon Communications
                     Agency. DOD separately reports these activities as well as 56 Inspector
                     General personnel on its Defense-wide PB-22 exhibit and provides further
                     information to Congress on them in annual budget justification materials.

                     As defined by OSD, during fiscal years 1985-96, OSD personnel increased
                     from 1,691 to 2,078, or 23 percent. For fiscal years 1997-99, OSD projects a
                     3- to 6-percent annual decrease in OSD personnel, to 1,823 personnel in
                     fiscal year 1999, according to the Defense-wide PB-22 exhibit in the fiscal
                     year 1998 President’s budget. These levels were determined, in part, by a
                     December 1994 decision by the Deputy Secretary of Defense to reduce OSD
                     civilian personnel by 5 percent per year during fiscal years 1996-2001.

                     During fiscal years 1985-96, OSD support personnel increased by
                     90 percent, from 662 to 1,260 personnel. The largest annual increase was
                     752 in fiscal year 1991, due to the reporting of DOD support activities, a new
                     category. In fiscal year 1997, OSD estimates that its support will decrease
                     by 379 personnel, primarily due to a reclassification and reorganization
                     involving 300 personnel at the Defense Manpower Data Center, formerly a
                     DOD support activity. (See fig. I.2.)




                     Page 30                                    GAO/NSIAD-98-25 Defense Headquarters
                                         Appendix I
                                         Office of the Secretary of Defense




Figure I.2: Reported Personnel Levels for OSD and OSD Support
2,500


2,000


1,500


1,000


  500


     0
         1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
                                         Fiscal year

                                                 OSD OSD support




                                         Source: OSD/DA&M, compiled from PB-22 budget exhibits.

                                         Notes: Fiscal years 1985-96 are actual values; 1997-99 are estimates. OSD support includes all
                                         personnel in DOD support activities and some personnel in WHS and the Air Force Pentagon
                                         Communications Agency that provide direct support to OSD.



                                         We reviewed DARO and WHS for compliance with DOD Directive 5100.73.
DARO and WHS                             DARO is not reported on DOD’s PB-22 budget exhibits, but it is clearly a
                                         management headquarters organization under DOD Directive 5100.73
                                         because it allocates resources and conducts mid- and long-range planning,
                                         programming, and budgeting. Essentially, DARO is part of OSD, but it is not
                                         counted as such because of OSD’s personnel ceilings, according to a DARO
                                         official. Of DARO’s 28 government personnel, only 2 are on OSD’s manning
                                         document; the remaining 26 personnel are not reported by DOD as
                                         management headquarters.




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Office of the Secretary of Defense




DOD  created DARO in 1993 to increase senior management attention and
oversight of airborne reconnaissance systems. DARO develops and manages
the $2 billion per year Defense Airborne Reconnaissance Program. DARO is
under the authority, direction, and control of the Under Secretary of
Defense (Acquisition and Technology). Although DARO is not officially part
of OSD—and is neither a defense agency nor a DOD field activity—it is listed
in the DOD telephone directory in the Office of the Under Secretary of
Defense (Acquisition and Technology), and DARO’s message address is
SECDEF WASHINGTON DC//USDA&T/DARO//.

We also reviewed WHS for compliance with DOD Directive 5100.73. We
agreed with OSD/DA&M as to which WHS directorates were primarily
performing headquarters support functions and which were primarily
performing nonheadquarters functions under the definitions in DOD
Directive 5100.73. However, OSD underreported WHS headquarters support
personnel by 82 on the Defense-wide PB-22 exhibit. According to our
analysis of its manning document, 466 WHS personnel should have been
reported as headquarters support, but OSD reported 384 personnel for
fiscal year 1997.

WHS is a DOD field activity created in 1977 by the Secretary of Defense,
primarily by transferring personnel from OSD. The Director of WHS is
dual-hatted as an OSD official, the Director of Administration and
Management. WHS’ mission is to support specified DOD activities in the
National Capital Region. For OSD, DOD field activities, and other specified
defense activities, WHS provides services, such as budgeting and
accounting, civilian and military personnel management, office services,
correspondence and cables management, directives and records
management, housekeeping, security, and computer and graphics support.

OSD/DA&M  officials could not explain why some WHS personnel were not
part of OSD. That is, given the nature of some of the positions, such as
receptionists for the Secretary of Defense, they could not explain the basis
for deciding whether these personnel would be accounted for in OSD or
WHS. They said that since WHS’ mission included support to OSD, this
condition was not a problem. They also observed that the total number
assigned to OSD “is a politically sensitive number.”




Page 32                                   GAO/NSIAD-98-25 Defense Headquarters
Appendix II

Subordinate Noncombat Organizations


                        At the 10 headquarters organizations we audited, we judgmentally selected
                        40 subordinate noncombat organizations to review. Specifically, we
                        reviewed mission and functions documents, organizational manning
                        documents, and organizational history. We also discussed the
                        organization’s activities, products, services, customers, and relationship
                        with headquarters with cognizant officials in the subordinate organization
                        and in its headquarters.

                        We determined that 29 of the 40 subordinate noncombat organizations
                        should have been reported by DOD as management headquarters or
                        headquarters support activities, using the criteria in DOD Directive 5100.73.
                        One of these organizations was previously discussed in appendix I; the
                        remaining 28 organizations are discussed in this appendix.


                        For fiscal year 1997, the Army had 2,491 personnel in the Army Secretariat
Army Secretariat and    and the Army Staff and 21,703 personnel in 77 field operating activities and
Army Staff              staff support activities subordinate to the Army Secretariat and the Army
                        Staff. We reviewed five of these activities, using the criteria in DOD
                        Directive 5100.73, and found that all five—the Congressional Inquiry
                        Division, the Cost and Economic Analysis Center, the Information
                        Management Support Center, the Army National Guard Readiness Center,
                        and the Installation Support Management Activity—with a total of 546
                        personnel, should have been reported to Congress by the Army as
                        management headquarters or headquarters support activities but were not.
                        Army officials raised no objections to our assessment of their field
                        activities and concurred with our facts.


Congressional Inquiry   The Congressional Inquiry Division, a field operating activity with 41
Division                personnel, is one division within the Army’s Office of the Chief of
                        Legislative Liaison. Its primary function is to reply to all letters written to
                        DOD by members of Congress that raise Army issues. The Division gathers
                        information from installations and Army commands and prepares a
                        coordinated response. In addition, the Division provides computer support
                        and mailroom services for the entire office and educates new
                        congressional staff on the Army. The Division’s 41 personnel are
                        collocated with its sister divisions’ 46 management headquarters personnel
                        in the Pentagon.


Cost and Economic       The Cost and Economic Analysis Center, with 76 personnel, conducts cost
Analysis Center         and economic analyses of weapons, automated information systems, force


                        Page 33                                     GAO/NSIAD-98-25 Defense Headquarters
                         Appendix II
                         Subordinate Noncombat Organizations




                         structure, operations and support, and installations to support Army
                         planning, programming, and budgeting. In addition, it manages the Army’s
                         cost review board and cost position for selected major programs. The
                         Center’s data and analyses are used by the Army Secretariat, including its
                         program executive offices, the Army Staff, OSD, Forces Command, the
                         Training and Doctrine Command, and the Army Materiel Command.

                         Organizationally, the Center is imbedded as one of four divisions in the
                         Office of the Assistant Secretary of the Army (Financial Management &
                         Comptroller). The Center’s director is dual-hatted as the Deputy for Cost
                         Analysis, a management headquarters position. The Center is the only
                         division in the Assistant Secretary’s office classified as a field operating
                         activity and not reported as part of Army Secretariat personnel on the
                         Army’s PB-22 exhibit. The Center’s personnel—66 of whom are operations
                         research or systems analysts—are located in Falls Church, Virginia, near
                         the Pentagon. Both operations analysis and cost analysis are headquarters
                         support functions listed in DOD Directive 5100.73.


Information Management   The Information Management Support Center, with 139 personnel,
Support Center           provides all information management support and services for the Army
                         Secretariat, the Army Staff, and their assigned agencies and activities. The
                         Center reports to the Secretary of the Army’s Administrative Assistant and
                         is located in the Pentagon. The Army established the Center in 1994 based
                         in part on an internal study recommendation on information management.
                         The study recommended, among other things, that the Army consolidate
                         its headquarters positions in information management. The creation of the
                         Center resulted in the transfer of 109 personnel from management
                         headquarters to the Center.


Army National Guard      The Army National Guard Readiness Center has 195 civilian and active
Readiness Center         military personnel who support the Army Directorate of the National
                         Guard Bureau.1 These personnel work in the same directorates as the
                         headquarters personnel of the Army Directorate. We believe that the Army
                         Directorate’s 279 active military and civilian personnel function as one
                         staff, though 195 personnel (70 percent) are accounted for as part of the
                         Readiness Center, while 84 are accounted for as part of the Army Staff, a

                         1
                          This staff level does not include 141 active military and civilians who are assigned to the Center but
                         work for the Chief of the National Guard Bureau’s “joint staff” and not for the Army Directorate. It also
                         excludes six personnel at the Professional Education Center, Little Rock, Arkansas; another six
                         personnel at Fort Benjamin Harrison, Indiana; and the Operations Support Airlift Command, a field
                         activity that manages aircraft nationwide.



                         Page 34                                                   GAO/NSIAD-98-25 Defense Headquarters
                       Appendix II
                       Subordinate Noncombat Organizations




                       management headquarters.2 Organizationally, the Center is a field
                       operating agency that reports to the National Guard Bureau. In the DOD
                       telephone directory, the Center is one of several subdivisions listed under
                       the Director, Army National Guard Bureau. Furthermore, the Bureau’s
                       organization chart shows it is located both in the Pentagon and at the
                       Center’s building, nearby in Arlington, Virginia.

                       The Center’s mission is the same as that of the Army Directorate: to
                       provide functional support to the 54 states and territories of the Army
                       National Guard; to serve as the National Guard Bureau Chief’s
                       intermediate channel of communications between the Army and the states
                       and territories; and to manage the Army National Guard’s functional areas
                       that is, personnel, operations, training and readiness, logistics, force
                       management, aviation and safety, engineering, information systems,
                       environmental programs, and comptroller. The Center’s major functions
                       include both Army Staff-level functions and major command-level
                       functions, such as developing policy and assisting Headquarters,
                       Department of the Army, in developing resource requirements and
                       allocating resources.


Installation Support   The Installation Support Management Activity, with 95 personnel, is a field
Management Activity    operating activity under the Army’s Assistant Chief of Staff for Installation
                       Management. The activity provides policy recommendations, program
                       management, oversight, and analysis for installation facilities, housing, and
                       public works. Facility management is a headquarters support function
                       listed in DOD Directive 5100.73. Organizationally, the activity’s divisions
                       and personnel are interspersed within the Assistant Chief of Staff’s
                       headquarters organization or collocated in the Pentagon with headquarters
                       personnel. The Deputy Assistant Chief of Staff for Installation
                       Management is dual-hatted as the Director of this activity. Most of the
                       activity’s personnel are housing management specialists/analysts and
                       general engineers.

                       The distinction, or lack thereof, between this activity and its headquarters
                       is such that when we requested a concept plan for the activity, we received
                       a concept plan for the headquarters organization. However, an analysis
                       prepared by activity officials at our request concluded that less than
                       21 percent of the activity’s personnel perform management headquarters
                       or headquarters support functions, below the 25-percent threshold in DOD


                       2
                        An additional 568 full-time Guard personnel are part of the Army Directorate—530 are accounted for
                       in the Center and 38 in the Army Staff.



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                         Appendix II
                         Subordinate Noncombat Organizations




                         Directive 5100.73. Given all of the above, we believe that more than
                         50 percent of the activity’s effort is for management and headquarters
                         support functions.


                         For fiscal year 1997, the Department of the Navy had 2,267 total personnel
Navy Secretariat and     in the Navy Secretariat, the Office of the Chief of Naval Operations
Chief of Naval           (OPNAV), and Headquarters, Marine Corps and 13,863 personnel in 64
Operations               organizations subordinate to these three organizations. We reviewed four
                         of these subordinate organizations, using the criteria in DOD Directive
                         5100.73, and found that all personnel in three organizations—the Naval
                         Center for Cost Analysis, the Legal Services Support Group, and the Navy
                         International Programs Office—with a total of 312 personnel, should have
                         been reported to Congress by the Navy as management headquarters or
                         headquarters support but were not. In addition, the Navy should have
                         reported a portion of the Naval Information Systems Management Center
                         (67 personnel, or 48 percent) as headquarters support.


Naval Center for Cost    The Naval Center for Cost Analysis, with 52 personnel, prepares cost
Analysis                 estimates of the resources required to develop, procure, and operate
                         systems and forces in support of Navy planning, programming, budgeting,
                         and acquisition management. Most personnel are operation research
                         analysts. Operations analysis and cost analysis are headquarters support
                         functions listed in DOD Directive 5100.73. The Center’s customers include
                         the Assistant Secretary of the Navy (Research, Development, and
                         Acquisition), the Assistant Secretary of the Navy (Financial Management
                         and Comptroller), OPNAV, and the Navy’s Chief Information Officer, all
                         management headquarters officials/organizations. The Center is located in
                         Arlington, Virginia, near the Pentagon, and it reports to the Assistant
                         Secretary of the Navy (Financial Management and Comptroller). It was
                         created in 1985 to implement legislation mandating the Navy to create a
                         cost-estimating organization independent of the Navy’s research,
                         development, and acquisition organization.


Legal Services Support   The Legal Services Support Group, with 91 personnel, provides legal
Group                    services throughout the Navy, including all Offices of Counsel and their
                         client headquarters and field activities, in the areas of litigation,
                         environmental law, and the Freedom of Information Act. It handles
                         significant cases of interest to the General Counsel, including contract
                         claims litigation over $400,000, civil personnel litigation, and federal



                         Page 36                                   GAO/NSIAD-98-25 Defense Headquarters
                            Appendix II
                            Subordinate Noncombat Organizations




                            environmental litigation. The Group reports to the Navy’s General
                            Counsel.

                            Although a document establishing the Group in 1989 stated that it is a
                            “nonmanagement headquarters shore activity,” there are indicators that
                            the organization exists only on paper and is, in fact, not distinct from the
                            General Counsel office. For example, the Group’s Director is also an
                            Associate General Counsel—a dual-hat relationship in which he is counted
                            as management headquarters (as part of the Secretariat) while his staff are
                            not counted as management headquarters or headquarters support. In a
                            hand-drawn organization chart prepared by the Group’s Director—no
                            official chart exists—the Group’s personnel, all of whom are civilian
                            attorneys, are interspersed within components of the General Counsel’s
                            office. Most personnel are located in Arlington, Virginia, near the
                            Pentagon. Furthermore, the Naval Litigation Office, the forerunner of the
                            Legal Services Support Group, was transferred from a management
                            headquarters activity to a nonmanagement activity without any apparent
                            change in its duties, missions, or functions, according to Navy documents.


Navy International          The Navy International Programs Office, with 169 personnel, implements
Programs Office             departmental policies and manages international efforts concerning
                            research, development, and acquisition for the Navy, according to its
                            mission statement. In our view, this office should have reported all of its
                            personnel as management headquarters or headquarters support because
                            most of the effort in four of its five directorates3 was for functions covered
                            by DOD Directive 5100.73, such as security, data automation, facilities,
                            financial management, and policy-making.


Naval Information Systems   The Naval Information Systems Management Center had 139 personnel at
Management Center           the time of our review. The Center will be disestablished by
                            September 1997, according to Navy officials, because the Navy is creating
                            a chief information officer organization as required by the fiscal year 1996
                            DOD Authorization Act. According to its purpose and mission statement,
                            the Center performs shore activities assigned by the Assistant Secretary of
                            the Navy (Research, Development, and Acquisition). The Assistant
                            Secretary is the Center’s primary customer, according to officials. Created
                            in 1991 and described as a “management support activity,” the Center
                            consolidated information technology functions centering on acquisition,

                            3
                            The Arms Control Directorate, with 12 government personnel, has an operational mission to prepare
                            Navy facilities for foreign inspections under various arms control agreements.



                            Page 37                                                GAO/NSIAD-98-25 Defense Headquarters
                        Appendix II
                        Subordinate Noncombat Organizations




                        management oversight, software development, policy-making, and
                        information security.

                        The Center’s efforts, with the exception of the Contracting Directorate,
                        met the criteria of the data automation headquarters support function
                        defined in DOD Directive 5100.73. The Contracting Directorate, with 72
                        personnel, supported the Navy Department as a whole and not just
                        management headquarters. Contracting is not a headquarters support
                        function listed in DOD’s directive. However, under the methodology in
                        DOD’s directive, the 67 personnel outside of the Contracting Directorate
                        that performed headquarters support functions should have been reported
                        on the Navy’s PB-22 exhibit.


                        For fiscal year 1997, the Air Force had 2,460 personnel in the Air Force
Air Force Secretariat   Secretariat and the Air Staff and 20,592 personnel in 40 direct reporting
and Air Staff           units and field operating activities that are subordinate to the Secretariat
                        and the Air Staff. We reviewed five activities, using the criteria in DOD
                        Directive 5100.73, and found that three activities—the Air Force Studies
                        and Analysis Agency, the Air Force Medical Operations Agency, and the
                        497th Intelligence Group—with a total of 510 personnel, should have been
                        reported by the Air Force to Congress as management headquarters or
                        headquarters support activities but were not. The 11th Wing and the Air
                        Force Frequency Management Agency are properly classified as a
                        nonmanagement headquarters under the DOD directive.4 Air Force officials
                        did not agree with our assessment that three field operating agencies
                        should be classified as headquarters support organizations.


Air Force Studies and   The Air Force Studies and Analysis Agency has 132 personnel located in
Analysis Agency         the Pentagon. It reports to the Deputy Chief of Staff for Plans and
                        Operations. The agency primarily does modeling and simulation studies of
                        air superiority, ground superiority, nuclear superiority, and campaign
                        activities. This function is part of the operational analysis headquarters
                        support function defined in DOD Directive 5100.73. Furthermore, its


                        4
                         The 11th Wing administers the Air Force Band, the Air Force Honor Guard, and the Arlington National
                        Cemetery Chaplaincy; operates Bolling Air Force Base; and supports the Air Force Secretariat, the Air
                        Staff, designated Air Force field operating activities, and other organizations. We found that 415
                        personnel are located in the Pentagon primarily to support the Air Staff and the Secretariat with the
                        following functions: chaplain, security police, supply, transportation, civil engineering,
                        inspection/audit, communications/computer, contracting, medical, comptroller, operations, plans,
                        programming, personnel, manpower, and legal. Because the Wing has 2,195 personnel, this level of
                        headquarters support is less than 25 percent of the Wing’s work and under DOD Directive 5100.73, the
                        Air Force is not required to report these personnel on its PB-22 exhibit.



                        Page 38                                                 GAO/NSIAD-98-25 Defense Headquarters
                           Appendix II
                           Subordinate Noncombat Organizations




                           customers are management headquarters. A 1997 study plan for the
                           Agency indicated that 35 of its 40 studies had DOD management
                           headquarters as its customers, for example, OSD, the Joint Staff, and the Air
                           Staff.

                           The Air Force redesignated the Agency in 1991. In 1984, its predecessor—a
                           direct reporting unit to the Chief of Staff of the Air Force—was created in
                           an apparent response to mandated reductions in management
                           headquarters personnel. According to an Air Force document, the unit was
                           created to “draw down” the size of the Air Staff by 162 personnel, but it
                           stated “there will be no changes in administrative, manpower, personnel,
                           and budget support as currently provided” and “there will be no ‘real
                           change’ in the Air Staff status for the [Agency].” The Air Force’s
                           reclassification of these positions from management headquarters to
                           nonmanagement headquarters became effective in September 1984, the
                           deadline for a congressional provision to reduce DOD management
                           headquarters by 5 percent.


Air Force Medical          The Air Force Medical Operations Agency has 73 personnel who are
Operations Agency          classified as medical services management, according to its unit manning
                           document. The Agency develops policies and programs to improve
                           aerospace medicine, preventive medicine, and clinical health services for
                           the Air Force. The Agency’s divisions perform many management
                           headquarters or headquarters support functions included under medical
                           services, a headquarters support function defined in DOD
                           Directive 5100.73. The Agency’s primary customers are the Surgeon
                           General of the Air Force (to whom its director reports), the Chief of Staff
                           of the Air Force, the Air Staff, and the Office of the Assistant Secretary of
                           Defense for Health Affairs—all of which are headquarters officials or
                           organizations. The Air Force created the Agency in July 1992 by
                           transferring a directorate from the Surgeon General’s office to the new
                           Agency.


497th Intelligence Group   The 497th Intelligence Group, headquartered at Bolling Air Force Base,
                           Washington, D.C., has 305 personnel. According to its master plan, its
                           mission is “intelligence infrastructure and services (security, weapons
                           system support, automation, and information operations) to defense
                           community users worldwide.” The unit’s history states that the Group has
                           a unique role of providing planning, policy implementation, and functional
                           management support to the Air Staff and other DOD customers in



                           Page 39                                     GAO/NSIAD-98-25 Defense Headquarters
                      Appendix II
                      Subordinate Noncombat Organizations




                      Washington, D.C., and around the world. Our analysis shows that over
                      50 percent of the Group’s effort is for headquarters support functions,
                      such as security, acquisition, and data automation support, as defined in
                      DOD Directive 5100.73; therefore, under the directive, all of its personnel
                      should have been reported on the Air Force’s PB-22 exhibit.


                      For fiscal year 1997, the U.S. Atlantic Command (USACOM) had 501
U.S. Atlantic         personnel in its headquarters and 1,097 personnel in 13 noncombat
Command               activities subordinate to USACOM headquarters. We reviewed three of these
                      activities, using the criteria in DOD Directive 5100.73, and found the
                      Information Systems Support Group, with 117 personnel, and a portion of
                      the Atlantic Intelligence Command, with 152 personnel, should be
                      reported to Congress by DOD as headquarters support but were not. The
                      Cruise Missile Support Activity is properly classified as a nonmanagement
                      headquarters activity under the DOD directive. USACOM officials agreed that
                      the Information Systems Support Group should be reported as a
                      headquarters support activity, and one official noted that the Joint Staff
                      had removed the Group from reporting under DOD’s headquarters tracking
                      program. An Atlantic Intelligence Command official said that the
                      Intelligence Command is not a management headquarters because it does
                      not create policy, review and evaluate programs, or conduct long-range
                      planning. However, he agreed that the Intelligence Command provides
                      intelligence services directly to management headquarters, which is a
                      headquarters support function covered by DOD Directive 5100.73.


Information Systems   All of the 117 personnel in the Information Systems Support Group should
Support Group         be reported as headquarters support because more than 50 percent of the
                      group’s effort is to provide automated data processing support to a
                      management headquarters, a support function covered by DOD
                      Directive 5100.73. The Group provides analysis, programming, installation,
                      and other technical support services to satisfy information system
                      requirements of USACOM staff and subordinate commands; 24-hour
                      operations and management of various computer systems, including the
                      local area network at USACOM headquarters; and an inventory of automated
                      data processing equipment under USACOM’s Command, Control,
                      Communication, and Computer System Directorate at headquarters.
                      According to a Group official, USACOM could not function without the
                      computer support provided by the Group.




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                        Appendix II
                        Subordinate Noncombat Organizations




                        The Group’s personnel are collocated with headquarters personnel, and a
                        USACOM headquarters official is “dual-hatted” as the Group’s commander.
                        Furthermore, these personnel were previously classified as management
                        headquarters until 1992. All of these conditions are indicators of possible
                        headquarters support activity, according to OSD/DA&M officials.


Atlantic Intelligence   At least 152, or 27 percent, of the Atlantic Intelligence Command’s 572
Command                 personnel for fiscal year 1997 should be reported by DOD as management
                        headquarters and/or headquarters support because they provide integral
                        support to USACOM’s Directorate of Intelligence by working there. In some
                        Directorate of Intelligence divisions, the Atlantic Intelligence Command
                        provides all of the personnel. For example, 78 personnel from the Atlantic
                        Intelligence Command work in the Current Intelligence and Current
                        Analysis Divisions in USACOM’s Directorate of Intelligence.

                        The Atlantic Intelligence Command serves as USACOM’s Joint Intelligence
                        Center and, as such, provides tailored, on-demand, integrated intelligence
                        products, services, and training for USACOM and manages its theater
                        intelligence production program in support of national and theater
                        requirements. The Intelligence Center’s primary customers are USACOM and
                        other unified commands, which are management headquarters, and the
                        service component commands and their units, such as the Air Combat
                        Command, a management headquarters. Under DOD Directive 5100.73,
                        management of intelligence collection, analysis, production, and
                        evaluation programs, and intelligence services provided directly to a
                        management headquarters activity are covered functions.


                        For fiscal year 1997, the U.S. Army Training and Doctrine Command
U.S. Army Training      (TRADOC) had 919 personnel in its headquarters and 1,393 personnel in 13
and Doctrine            field operating activities subordinate to TRADOC headquarters. We reviewed
Command                 four of these activities, using the criteria in DOD Directive 5100.73, and
                        found that all personnel in three activities—the Training Operations
                        Management Activity, the Training Development and Analysis Activity, and
                        the Internal Review and Audit Compliance Activity—with a total of 112
                        personnel, should have been reported to Congress by the Army as
                        management headquarters or headquarters support but were not. In
                        addition, the Army should have reported a portion of the Combat
                        Developments Field Operating Activity (52 personnel, or 26 percent) as
                        headquarters support. TRADOC officials believe these field operating
                        activities were properly classified as nonmanagement headquarters,



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                            Appendix II
                            Subordinate Noncombat Organizations




                            although they stated that the definition of management and headquarters
                            support in DOD Directive 5100.73 needs to be clarified because it is open to
                            interpretation.


Training Operations         The Training Operations Management Activity has 42 personnel collocated
Management Activity         with TRADOC headquarters personnel. It plans, coordinates, and oversees all
                            of the Army’s training courses conducted by centers and schools in the
                            Total Army School System and is involved in curriculum development and
                            review, a headquarters support function under DOD Directive 5100.73. The
                            Activity oversees the documenting, programming, scheduling, equipment
                            management, ammunition management, support systems management,
                            and training for courses; according to a TRADOC official, it is the link
                            between TRADOC headquarters and subordinate centers and schools. The
                            Activity supports TRADOC headquarters and the Army by assessing the
                            schools’ capabilities to meet training requirements and by working within
                            TRADOC headquarters to resolve problems at centers and schools.



Training Development and    The Training Development and Analysis Activity, with 59 personnel,
Analysis Activity           develops concepts, strategies, and guidance for current and future
                            training; develops and reviews curricula; researches technology and
                            initiatives for future training concepts; focuses on TRADOC-identified
                            training problems; and develops technology-based solutions for TRADOC’s
                            Training Directorate. This Activity is collocated with TRADOC’s
                            headquarters, and part of it was previously reported as management
                            headquarters. In addition, DOD Directive 5100.73 cites training and
                            education as headquarters support functions.


Internal Review and Audit   The Internal Review and Audit Compliance Activity, with 11 personnel,
Compliance Activity         provides internal review and audit compliance services to TRADOC
                            headquarters, the Reserve Officer Training Command Cadet Command,
                            and the Army Training Support Center. Personnel from these offices were
                            combined to create this field operating activity; previously, 9 of the 11
                            personnel were counted as part of TRADOC’s headquarters. The inspection
                            and evaluation of management headquarters activities and subordinate
                            units is a headquarters support function, as is the management of audit
                            programs, under the criteria in DOD Directive 5100.73.


Combat Developments         The Combat Developments Field Operating Activity, with 201 personnel, is
Field Operating Activity    responsible for coordinating and integrating delivery for approved combat


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                   Appendix II
                   Subordinate Noncombat Organizations




                   development requirement documents that support the development and
                   fielding of materiel systems; conducting special experiments and studies;
                   and managing the changes to current force designs used across the Army.
                   The Activity’s primary customer is TRADOC’s Combat Developments
                   Directorate, and in fiscal year 1994, over 100 personnel were transferred
                   from this headquarters Directorate to the Activity. Today, most personnel
                   assigned to the Activity are collocated with TRADOC headquarters
                   personnel. Both collocation with headquarters and transfers of personnel
                   from headquarters are indicators of possible headquarters support activity,
                   according to OSD/DA&M officials.

                   According to DOD Directive 5100.73, the development and analysis of
                   strategic, defensive, and tactical operations—including planning and
                   requirements—provided directly to a management headquarters is a
                   headquarters support function. Also, if an organization devotes more than
                   25 percent, but less than 50 percent, of its efforts to management
                   headquarters support, then this portion of the organization’s personnel
                   should be included in the program. The Activity’s records show 52
                   personnel within four divisions performing some management
                   headquarters functions directly for management headquarters activities.
                   These personnel accounted for 26 percent of the total personnel assigned
                   to the Activity.


                   For fiscal year 1997, the U.S. Army Forces Command (FORSCOM) had 1,582
U.S. Army Forces   personnel in its headquarters5 and 293 personnel in one field operating
Command            activity. A recent headquarters restructuring led FORSCOM to eliminate all
                   but one of its field operating activities; the remaining organization is the
                   FORSCOM Field Support Activity. This Activity should have been reported by
                   the Army to Congress as a headquarters support activity but was not.
                   FORSCOM officials did not dispute our evidence concerning the Activity, and
                   they took no position on our conclusion that the Activity is merely an
                   extension of FORSCOM headquarters and should be reported to Congress
                   under the criteria in DOD Directive 5100.73. However, they did say that
                   perhaps they were interpreting the directive incorrectly. We also reviewed
                   the Army Signal Command, a new organization under FORSCOM created
                   when the Army abolished the Information Systems Command. Although
                   the Army previously reported the Information Systems Command, a major
                   command, as a management headquarters, the Army Signal Command is
                   not reported on the Army’s PB-22 exhibit.

                   5
                    However, 468 of these positions are not available to FORSCOM because they are being withheld by
                   the Army, according to FORSCOM officials.



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                        Subordinate Noncombat Organizations




FORSCOM Field Support   Since 1973, FORSCOM headquarters has had multiple field operating
Activity                activities that have totaled more than 200 military and civilian personnel
                        annually. However, a recent headquarters restructuring led FORSCOM to
                        eliminate all but one of its field operating activities. The remaining
                        organization is the FORSCOM Field Support Activity, with 293 military and
                        civilian personnel in fiscal year 1997. None of these personnel are reported
                        to the Congress as management headquarters or headquarters support
                        personnel.

                        This Activity is not a discrete organization separate from headquarters.
                        Activity personnel work in the headquarters building and are assigned to
                        the same directorates, and many possess the same job series and grade
                        levels as personnel designated as FORSCOM headquarters staff. For example,
                        the Activity has 46 personnel identified as management analysts and 20 as
                        logistics management specialists within its various work centers.
                        Individual headquarters directors decided which positions were
                        categorized as headquarters and which were counted in the Activity for
                        each functional area. Furthermore, the head of the Activity is FORSCOM’s
                        Chief of Staff—a headquarters official; other managers in the Activity
                        (two-star generals) are also dual-hatted as headquarters directors.
                        According to OSD/DA&M officials, these conditions are indicators that an
                        organization is performing management support functions.

                        During our audit, FORSCOM requested that the Army increase its
                        management headquarters personnel ceiling by 100 to allow it to count
                        some, but not all, Field Support Activity personnel as management
                        headquarters. FORSCOM based its request on a recent FORSCOM headquarters
                        restructuring that combined tasks, functions, and missions in a way that
                        may have “clouded” the distinction between management headquarters
                        and nonmanagement headquarters work, according to officials. The Army
                        has not approved FORSCOM’s request because of pending legislation that
                        would reduce DOD management headquarters personnel, according to a
                        FORSCOM official.



Army Signal Command     On September 16, 1996, the Army eliminated a major command when it
                        transitioned its Information Systems Command to the Army Signal
                        Command, a new subordinate command. The Army Signal Command
                        operates several signal brigades and battalions worldwide. The Army does
                        not report the Army Signal Command as a management headquarters,
                        unlike its predecessor, because it is not a major command and all previous




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                      Subordinate Noncombat Organizations




                      management headquarters functions were transferred to FORSCOM and
                      other Army commands, according to an Army official.

                      The Army’s restructuring reduced the size of the Command’s headquarters
                      from 554 to 393 personnel by transferring several functions, such as
                      publications and printing, engineering, acquisition, software development,
                      and data processing, to other Army commands. While the new Command
                      is more operationally oriented, more than two-thirds of its headquarters
                      personnel are civilians. According to FORSCOM officials, civilians typically
                      do not deploy; moreover, the Command has yet to determine the number
                      that would. The Command continues to perform some headquarters
                      support functions described in DOD Directive 5100.73. For example, it
                      inspects and audits subordinate units, assesses training, and evaluates and
                      monitors unit readiness. Moreover, neither the Army nor OSD have done a
                      detailed analysis to determine the percentage of personnel that perform
                      either management or management support functions. Without such an
                      analysis, we believe it is questionable to exclude the Army Signal
                      Command headquarters from the Army’s PB-22 exhibit. Command officials
                      agree that the Command continues to perform many of the same activities
                      as when the Army reported it as a management headquarters, but they did
                      not agree that the Command should be reported to Congress as a
                      management headquarters or headquarters support activity.


                      For fiscal year 1997, the Commander in Chief, U.S. Atlantic Fleet
Commander in Chief,   (CINCLANTFLT) staff had 542 personnel in its headquarters and an additional
U.S. Atlantic Fleet   5,902 personnel in 25 direct reporting units subordinate to CINCLANTFLT. We
                      reviewed two of these activities, using the criteria in DOD Directive 5100.73,
                      and found that one of them—the Naval Shores Activities—with seven
                      personnel, should have been reported by the Navy to Congress as a
                      headquarters support activity but was not. CINCLANTFLT’s Manpower
                      Analysis Team was properly classified as a nonmanagement headquarters
                      because its primary customers are nonmanagement headquarters shore
                      activities. Some officials involved with the Naval Shore Activities believed
                      it was not management headquarters because it does not control any
                      resources and provides direct support to nonmanagement headquarters
                      activities. However, other CINCLANTFLT officials involved with DOD’s
                      management headquarters program agreed that an error had occurred in
                      classifying the activity as nonmanagement headquarters. They did not
                      know why these personnel were not included in CINCLANTFLT’s
                      headquarters totals, but they believe that they should have been.




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                         Subordinate Noncombat Organizations




Naval Shore Activities   The Naval Shore Activities organization has seven personnel, some of
                         which are dual-hatted in positions at CINCLANTFLT headquarters. All
                         personnel are collocated with headquarters personnel and the Activities’
                         funding is contained in a line item in DOD’s Future Years Defense Program
                         (FYDP) reserved for management headquarters activities. The Chief of
                         Naval Operations notice establishing this organization in 1994 specifically
                         created it as a management headquarters activity to coordinate shore
                         activity support to operating forces, other naval activities, and tenant
                         commands; command assigned shore installations; and perform other
                         functions as directed by higher authority. This organization is being
                         disestablished as of October 1, 1997.


                         For fiscal year 1997, the Air Combat Command had 2,284 personnel in its
Air Combat Command       headquarters and 1,829 personnel in 16 field operating activities
                         subordinate to Command headquarters. We reviewed five of the activities,
                         using the criteria in DOD Directive 5100.73, and found that two—the
                         Studies and Analyses Squadron and the Quality and Management
                         Innovation Squadron—with 121 personnel, should have been reported by
                         the Air Force to Congress as headquarters support organizations but were
                         not. Three activities—the Logistics Support Group/Maintenance Support
                         Office, the Civil Engineering Squadron, and the Intelligence
                         Squadron—were properly classified as nonmanagement headquarters
                         activities because their primary efforts were not headquarters support
                         and/or their customers are mainly nonheadquarters organizations.
                         Command officials agreed that the Studies and Analyses Squadron
                         performed headquarters support functions as defined by DOD
                         Directive 5100.73; thus, it should have been reported by the Air Force on
                         its PB-22 exhibit. They did not agree that the Quality and Management
                         Innovation Squadron provided headquarters support under the criteria in
                         the DOD directive because they said that most of its effort was for bases
                         and wings, not the headquarters.


Studies and Analyses     The Studies and Analyses Squadron, with 71 personnel, provides the Air
Squadron                 Combat Command and Air Force senior leaders with analyses to support
                         their decision-making. The Squadron uses simulation, modeling, and other
                         analytical tools to provide specialized technical information to its
                         customers—80 percent of whom are at the Command’s headquarters,
                         according to the Squadron’s statistics. The Air Force activated the
                         Squadron in 1994 as a result of the Air Force’s reengineering efforts;
                         previously, this function had been classified as a management



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                         Subordinate Noncombat Organizations




                         headquarters activity. Furthermore, the Squadron is collocated with the
                         Command’s headquarters. Both reclassification and collocation are
                         indicators of possible headquarters support activity, according to OSD/DA&M
                         officials.


Quality and Management   In October 1996, the Air Force merged the Air Combat Command’s
Innovation Squadron      Management Engineering Flight, a field operating activity, with the
                         Directorate of Quality Improvement, a headquarters unit that provided
                         quality assurance evaluations for the Command. The Quality and
                         Management Innovation Squadron, which resulted from the merger, has 50
                         personnel to provide quality innovation and manpower engineering
                         services to improve the Command’s processes and achieve efficiencies.
                         The Squadron’s primary customers are the Command’s headquarters,
                         wings, and units. Like the Studies and Analyses Squadron, this Squadron is
                         collocated with Command headquarters; furthermore, 40 percent of its
                         personnel were part of the headquarters until October 1996. According to
                         DOD Directive 5100.73, management analysis and management engineering
                         functions, including the analysis of systems, procedures, organizations,
                         methods, and techniques and the development or maintenance of work
                         measurement systems, are headquarters support functions. And although
                         “quality management” is not specifically listed among the 33 headquarters
                         support functions in DOD Directive 5100.73, OSD/DA&M officials told us that
                         the list is not exclusive; that is, as new disciplines are developed, such as
                         information management or quality management, these disciplines can be
                         considered in analyzing organizations for compliance with the directive.


                         For fiscal year 1997, the Air Force’s Air Education and Training Command
Air Education and        had 1,206 personnel in its headquarters and 692 personnel in nine field
Training Command         operating activities subordinate to its headquarters. We reviewed all nine
                         of these activities, using the criteria in DOD Directive 5100.73, and found
                         that six—the Studies and Analysis Squadron, the Quality Management and
                         Innovation Flight, the Computer Systems Support Squadron, the Training
                         Support Squadron, the Air Operations Squadron, and the Civil Engineering
                         Flight—with a total of 456 personnel, should have been reported to
                         Congress by the Air Force as management headquarters or headquarters
                         support but were not. Three activities—the Occupational Measurement
                         Squadron, the Contracting Squadron, and the Program Management
                         Flight—were properly classified as nonmanagement headquarters because
                         these activities have significant Air Force or DOD-wide missions that are
                         not considered management headquarters or headquarters support under



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                         Subordinate Noncombat Organizations




                         DOD Directive 5100.73. Command officials do not believe that any of the
                         personnel assigned to their field operating activities should be reported as
                         management headquarters or headquarters support because they do not
                         develop policy, prepare plans, or allocate resources. However, Command
                         officials acknowledged that the Command’s field operating activities do
                         perform some of the management support functions listed in DOD Directive
                         5100.73.


Studies and Analysis     The Studies and Analysis Squadron, with 56 personnel, conducts studies
Squadron                 and tests at the direction of Air Education and Training Command
                         headquarters to support decisionmaking at headquarters. The Squadron
                         plans, executes, and reports on the tests of new and modified training
                         systems. Previous projects included a study of basic military training and
                         an economic analysis of the costs and benefits of an advanced training
                         system for the Command’s technical training. The Squadron’s staff
                         includes specialists in regression analysis, modeling and simulation, and
                         electrical engineering analysis. As defined by DOD Directive 5100.73,
                         professional, technical, or logistical support to a headquarters is a
                         headquarters support function.


Quality Management and   The Quality Management and Innovation Flight, with 21 personnel,
Innovation Flight        provides Air Education and Training Command headquarters with quality
                         management principles, management engineering activities, and
                         productivity programs to improve the Command’s mission performance,
                         planning, and resource use. The Flight’s specific responsibilities include
                         facilitating the Command’s strategic planning for quality, conducting unit
                         self assessments, training quality management trainers at the subordinate
                         units, and managing the Command’s suggestion program. Moreover, the
                         Flight commander said that, until January 1997, the eight personnel with
                         quality management duties were attached to the Command Group within
                         the headquarters. The remaining 13 personnel perform management
                         engineering functions. The DOD directive identifies strategic planning and
                         management engineering and analysis as management support functions,
                         and OSD/DA&M officials said that quality management is also a management
                         support function. Further, the transfer of personnel and functions from a
                         headquarters to a subordinate organization is an indicator of possible
                         management support activity, according to OSD/DA&M officials.


Computer Systems         The Computer Systems Support Squadron, with 148 personnel, is the
Support Squadron         central design activity for the Command’s computer systems, and it


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                            Subordinate Noncombat Organizations




                            operates the headquarters computer network. This Squadron establishes
                            the Command’s software policy and standards and manages its radio
                            frequency spectrum, land mobile radios, and cellular telephones.
                            Furthermore, the Squadron conducts business process analyses to support
                            the Command’s current and future automation requirements. Computer
                            support to headquarters, including data standardization and computer
                            systems policy development, is considered a management support
                            function, according to the DOD directive.


Training Support Squadron   The Training Support Squadron, with 89 personnel, develops training
                            syllabi and courseware for both Command aircraft and undergraduate
                            flight training and manages the Command’s Graduate Evaluation Program.
                            DOD Directive 5100.73 identifies the management of training and
                            educational programs and curriculum development and review as
                            management headquarters or headquarters support functions.


Air Operations Squadron     The Air Operations Squadron, with 77 personnel, is under the Operations
                            Directorate and provides operational and readiness support, including
                            crisis response, unit/individual deployments, contingency operations, and
                            intelligence support to its headquarters, functions covered under DOD’s
                            directive. For example, the Squadron provides policy and procedures for
                            conducting and evaluating headquarters deployment exercises, and its
                            personnel collect and analyze readiness data on the Command’s
                            subordinate units.


Civil Engineering Flight    The Civil Engineering Flight, with 65 personnel, manages the Command’s
                            military construction, base realignment and closure programs, military
                            family housing, and environmental projects, and it has specialized
                            engineering and technical capabilities not found at base-level engineering
                            squadrons. The Flight has design and construction management
                            responsibilities and must approve all minor construction projects over
                            $450,000. The management of engineering programs, including design
                            development and review and technical review of construction, is a
                            headquarters support function according to DOD’s directive. Furthermore,
                            Flight officials have determined that six personnel are performing
                            headquarters support functions and should be transferred to Command
                            headquarters. Although officials said the headquarters does not currently
                            have the positions to allow this transfer, it would merely be a paper
                            change because the Flight is collocated and fully integrated with the



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Engineering Directorate branches it supports in headquarters. According
to Command officials, the Flight is integrated with headquarters to save
management overhead and to promote efficiency and effectiveness.




Page 50                                  GAO/NSIAD-98-25 Defense Headquarters
Appendix III

Numbered Air Forces


                 The Air Force has 16 active duty numbered air forces assigned to 6 of its 8
                 major commands. The Air Combat Command and the Pacific Air Forces
                 have four numbered air forces each, while the Air Education and Training
                 Command, the Air Force Space Command, the Air Mobility Command, and
                 U.S. Air Forces Europe have two each. The Air Force Materiel Command
                 and the Air Force Special Operations Command do not have any
                 numbered air forces.

                 The 12th Air Force is the Air Force component command for the U.S.
                 Southern Command, a unified command; as such, its principal mission is
                 to ensure that its units can fulfill their military missions, including antidrug
                 missions in the Southern Command’s area of responsibility. However, the
                 organizing, training, and equipping of assigned active wings is the
                 responsibility of the Air Combat Command—the parent organization of the
                 12th Air Force. The 19th Air Force was reactivated in 1993 when the Air
                 Education and Training Command was established. The 19th Air Force is
                 responsible for almost all Air Force flight instruction, both general
                 undergraduate, and specialized flight training for fighter, airlift, and tanker
                 aircraft. It only has a training mission; its headquarters does not deploy for
                 military operations.

                 The 12th and 19th Air Forces are organized differently because of their
                 different missions and functions. The 12th Air Force headquarters contains
                 a command group and four divisions. In addition, the 12th Air Force has
                 850 personnel in two squadrons and two groups that are designated as the
                 Air Force’s air component to the Southern Command. These 850 personnel
                 are not considered part of the 12th Air Force headquarters. The 19th Air
                 Force does not have this type of structure because it does not support a
                 unified command. These two numbered air forces also have other
                 organizational differences. For example, unlike the 12th Air Force
                 headquarters, the 19th Air Force headquarters does not have an inspector
                 general division, a manpower office, a Latin American Affairs office, a
                 command historian, or protocol or public affairs officials.


                 In 1992, the Secretary of the Air Force asked OSD/DA&M to exclude about
Review Results   2,000 personnel in the numbered air force headquarters from the Air
                 Force’s management headquarters total. The Air Force provided
                 documentation to OSD/DA&M concerning its plans to reorganize and reorient
                 these headquarters into operational organizations. Management and
                 administration functions that had been mixed among combat-oriented
                 functions would be eliminated or realigned, according to the Air Force.



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                 Appendix III
                 Numbered Air Forces




                 The Air Force’s planned actions came as Congress mandated reductions in
                 DOD management headquarters during fiscal years 1991-95.1


                 In 1992, OSD/DA&M approved the exclusion of numbered air forces from
                 reporting under DOD’s management headquarters program, subject to a
                 review by OSD/DA&M in fiscal year 1993. However, OSD/DA&M did not review
                 the numbered air forces. Starting with fiscal year 1993, the Air Force no
                 longer reported numbered air forces headquarters personnel on its PB-22
                 exhibits sent to Congress. Yet, our review of the 12th and 19th Air Forces
                 showed that the Air Force did not fully implement its planned
                 reorganization and that numbered air forces continue to perform some
                 management headquarters and headquarters support functions covered by
                 DOD Directive 5100.73.



12th Air Force   The 12th Air Force headquarters, with 110 personnel, performs some
                 management functions that, according to the Air Force’s restructuring
                 plan, were to be transferred to major commands or wings. For example,
                 the plan said that numbered air force inspection functions were to be
                 transferred to major commands. Yet, 12th Air Force headquarters has a
                 30-person inspector general office with responsibilities that include
                 monitoring the operational readiness of subordinate guard and reserve
                 units—a headquarters support function specifically listed in DOD
                 Directive 5100.73. Additionally, the 12th Air Force headquarters has a
                 two-person history office, a three-person manpower office, a protocol
                 official, and a public affairs official. The proposed reorganization plan said
                 that these functions would be transferred in their entirety to wings or
                 major commands. Furthermore, the 12th Air Force headquarters has a
                 Latin American Affairs office with 11 personnel responsible for managing
                 an exchange program with Latin air forces. In sum, 48 of 110 headquarters
                 personnel perform management or headquarters support functions.


19th Air Force   The 19th Air Force headquarters, with 99 personnel, oversees the Air
                 Education and Training Command’s flying training program and assesses
                 compliance with the Command’s training policies and directives.
                 Headquarters support functions listed in DOD Directive 5100.73 and
                 performed by the 19th Air Force include analyzing training results and
                 overseeing unit readiness. In addition, its logistics branch, with seven
                 personnel, manages the munitions and weapons program for the entire
                 Command. This branch’s responsibilities include providing guidance and

                 1
                  National Defense Authorization Act for Fiscal Year 1991, sec. 906 (P.L. 101-510).



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Appendix III
Numbered Air Forces




written direction to all munitions and weapons elements within the
Command, consolidating and estimating munitions requirements, and
representing the Command. The Command’s Logistics Directorate is
discussing the transfer of this function from the 19th Air Force to the
Command’s headquarters, according to a 19th Air Force official.




Page 53                                   GAO/NSIAD-98-25 Defense Headquarters
Appendix IV

Objectives, Scope, and Methodology


                  Our objectives were to determine (1) the accuracy and reliability of DOD’s
                  reported data on management headquarters and headquarters support
                  personnel and costs, (2) reasons that data on personnel and costs could be
                  inaccurate, and (3) DOD’s plans to reduce the size of its management
                  headquarters and headquarters support activities.

                  To determine the accuracy and reliability of certain PB-22 cost data and
                  the completeness of personnel data reported under DOD Directive 5100.73,
                  we selected 10 headquarters to review. We chose organizations from the
                  following categories: Defense-wide headquarters, military department
                  headquarters, and unified command headquarters. Given congressional
                  interest in headquarters in the Washington, D.C., area, we included four of
                  these organizations in our review. To minimize travel costs, we also
                  selected DOD organizations near our available GAO staff in Norfolk, Virginia,
                  and Atlanta, Georgia. The headquarters we reviewed were

              •   Office of the Secretary of Defense, Pentagon, Arlington, Virginia;
              •   Army Secretariat and Army Staff, Pentagon, Arlington, Virginia;
              •   Navy Secretariat and OPNAV, Pentagon, Arlington, Virginia;1
              •   Air Force Secretariat and Air Staff, Pentagon, Arlington, Virginia;
              •   U.S. Atlantic Command, Norfolk, Virginia;
              •   Navy’s Commander in Chief, Atlantic Fleet, Norfolk, Virginia;
              •   U.S. Army Training and Doctrine Command, Fort Monroe, Virginia;
              •   Air Combat Command, Langley Air Force Base, Virginia;
              •   U.S. Army Forces Command, Fort McPherson, Georgia; and
              •   Air Education and Training Command, Randolph Air Force Base, Texas

                  In addition to these headquarters, we visited two numbered air forces
                  because our review of DOD records indicated these organizations had been
                  reported as management headquarters, and after a reorganization in the
                  early 1990s, questions remained about the extent of management and
                  headquarters support functions continuing at these organizations. We
                  visited the 12th Air Force, Davis-Monthan Air Force Base, Arizona, and the
                  19th Air Force, collocated with the Air Education and Training Command.
                  As part of our FORSCOM review, we visited one of its subordinate
                  commands, the Army Signal Command, Fort Huachuca, Arizona. This
                  Command had been reported as a management headquarters when it was
                  an independent major command, the Information Systems Command.

                  At each of the 10 headquarters organizations we audited, we judgmentally
                  selected subordinate noncombat organizations to review. We selected

                  1
                   Due to time constraints, we did not review Headquarters, Marine Corps.



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Appendix IV
Objectives, Scope, and Methodology




organizations based on a variety of factors, including the organizations’
names, missions, and functions, and conditions that OSD/DA&M officials
agreed may indicate that an organization is providing management
support. These indicators, also called “red flags” by OSD/DA&M, are
headquarters officials serving additional duty as senior officials in the
subordinate organization (called “dual hatting”), transfer of personnel
from headquarters to create or augment subordinate organizations, diverse
functions that mirror headquarters functions, and collocation of the
subordinate organization with its headquarters. Although the presence of
one or more of these indicators is not conclusive, it led us to perform the
analysis called for in DOD Directive 5100.73. In general, our analysis
involved reviewing mission and functions documents, organizational
manning documents, and organizational history. We also discussed the
organization’s activities, products, services, customers, and relationship
with headquarters with cognizant officials in the subordinate organization
and in its headquarters. The primary disadvantage to this approach is that
our findings cannot be generalized to DOD as a whole or to entire types of
DOD organizations because we did not randomly sample the organizations
we reviewed. The primary advantage is that we obtained an in-depth
understanding of each organization reviewed, which gave us adequate
information to judge compliance with DOD Directive 5100.73.

Both the FYDP and PB-22 exhibits contain errors that make them unreliable
for assessing the resources expended by DOD for management
headquarters and headquarters support activities. According to DOD
Directive 5100.73, program elements (or line items) in the FYDP that end in
“98” are reserved exclusively to account for personnel and costs of DOD’s
management headquarters and headquarters support activities. In the FYDP,
we found costs in “98” program elements that were not related to
management headquarters. An official in the Office of the Under Secretary
of Defense (Comptroller), who performed her own analysis of these
program elements, also found costs unrelated to management
headquarters, particularly in Navy and Defense-wide program elements.
For PB-22 cost data, we performed a limited check of the data’s accuracy
for one fiscal year by comparing the PB-22 data with financial records at
the headquarters spending the money. As discussed previously, at many
headquarters we found significant discrepancies between costs reported
on the PB-22 exhibits and costs incurred by headquarters. With respect to
PB-22 personnel data, OSD/DA&M acknowledged that these exhibits contain
errors. For example, in the Defense-wide PB-22 exhibit prepared for the
President’s budget for fiscal year 1998, OSD did not report the headquarters
of five defense agencies that it agrees should have been reported. For the



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Appendix IV
Objectives, Scope, and Methodology




personnel numbers that were reported on the PB-22 exhibits, we did not
independently verify their accuracy.

To determine past and projected trends in DOD’s management headquarters
personnel and costs, as reported by DOD, we used annual PB-22 exhibits
prepared by OSD and the military departments and submitted to Congress.
For management headquarters data beyond fiscal year 1999, we used DOD’s
1998-2003 FYDP.

To obtain information on plans to reduce the size of DOD’s management
headquarters, we interviewed officials in the 10 headquarters
organizations we audited and OSD and military service officials who are
involved with studies of management headquarters, such as the study
called for by the Quadrennial Defense Review report.

We performed our review from October 1996 to August 1997 in accordance
with generally accepted government auditing standards.




Page 56                                  GAO/NSIAD-98-25 Defense Headquarters
Appendix V

Comments From the Department of Defense




             Page 57        GAO/NSIAD-98-25 Defense Headquarters
Appendix V
Comments From the Department of Defense




Page 58                                   GAO/NSIAD-98-25 Defense Headquarters
Appendix VI

Major Contributors to This Report


                        Janet St. Laurent, Assistant Director
National Security and   Douglas M. Horner, Evaluator in Charge
International Affairs   Arnett Sanders, Senior Evaluator
Division, Washington,
D.C.
                        Leo B. Sullivan, Jr., Senior Evaluator
Atlanta Field Office    Frank C. Smith, Senior Evaluator


                        Joseph A. Rutecki, Senior Evaluator
Norfolk Field Office    Carleen C. Bennett, Senior Evaluator




(701105)                Page 59                                  GAO/NSIAD-98-25 Defense Headquarters
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