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. Page 1 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 2 GAO/NSIAD-98-25 Defense Headquarters B-275837 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 Page 3 GAO/NSIAD-98-25 Defense Headquarters B-275837 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 Page 4 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 5 GAO/NSIAD-98-25 Defense Headquarters B-275837 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 Page 6 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 7 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 8 GAO/NSIAD-98-25 Defense Headquarters B-275837 • 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. Page 9 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 10 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 11 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 12 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 13 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 14 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 15 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 16 GAO/NSIAD-98-25 Defense Headquarters B-275837 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. Page 17 GAO/NSIAD-98-25 Defense Headquarters B-275837 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 Page 18 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 19 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 20 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 21 GAO/NSIAD-98-25 Defense Headquarters B-275837 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 Page 22 GAO/NSIAD-98-25 Defense Headquarters B-275837 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, Page 23 GAO/NSIAD-98-25 Defense Headquarters B-275837 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.) Page 24 GAO/NSIAD-98-25 Defense Headquarters B-275837 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). Page 29 GAO/NSIAD-98-25 Defense Headquarters Appendix I 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. Page 31 GAO/NSIAD-98-25 Defense Headquarters Appendix I 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. Page 35 GAO/NSIAD-98-25 Defense Headquarters 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. Page 40 GAO/NSIAD-98-25 Defense Headquarters 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, Page 41 GAO/NSIAD-98-25 Defense Headquarters 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 Page 42 GAO/NSIAD-98-25 Defense Headquarters 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. Page 43 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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 Page 44 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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. Page 45 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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 Page 46 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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 Page 47 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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 Page 48 GAO/NSIAD-98-25 Defense Headquarters Appendix II 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 Page 49 GAO/NSIAD-98-25 Defense Headquarters Appendix II Subordinate Noncombat Organizations 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. Page 51 GAO/NSIAD-98-25 Defense Headquarters 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). Page 52 GAO/NSIAD-98-25 Defense Headquarters 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. Page 54 GAO/NSIAD-98-25 Defense Headquarters 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 Page 55 GAO/NSIAD-98-25 Defense Headquarters 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 Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. 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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)