oversight

Defense Acquisition Organizations: Reductions in Civilian and Military Workforce

Published by the Government Accountability Office on 1997-10-23.

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

       United States
3A!O   General Accounting  Office
       Washington, D.C. 20548

       National Security and
       International Affairs Division



       B-277987

       October 23, 1997

       The Honorable Floyd D. Spence
       Chakman, Committee on National Security
       House of Representatives

       Subject:     Defense Acauisition Organizations: Reductions in Civilian and Mihtarv
                    Workforce

       Dear Mr. Chairman:

       The fiscal years 1996 and 1997 National Defense Authorization Acts Cp.L. 104106
       and P.L. 104-201, respectively) mandate the Department of Defense (DOD) to reduce
       its acquisition wortiorce. At your request, we reviewed personnel reductions in 20
       acquisition organizations from the end of fiscal year 1995 through the end of the
       second quarter of fiscal year 1997. (See enclosure I for a Ming of these
       organizations). Specificahy, we identified the (1) extent reductions in the 20
       organizations met legislative requirements, (2) number of civilians leaving the
       acquisition organizations but currently employed in other DOD organizations, and
       (3) occupational fields with the largest concentration of reductions. We also
       compared trends in DOD’s contracting activity from fiscal year 1994 to 1996 with
       the occupational fields most affected by the reductions and identified DOD’s efforts
       to redefine its acquisition workforce.

       This letter is an interim response to provide the Committee with preliminary
       information. We are not drawing conclusions or making specific recommendations
       based on the data at this time. A finaI report addressing these and other issues, as
       requested, will be issued later.

       BACKGROUND

       The National Defense Authorization Act for F’iscal Year 1996, among other things,
       required the Secretary of Defense to reduce the number of personnel (civilian and
       military) in acquisition organizations (as defined in DOD Instruction 5000.58, dated
       January 14, 1992) during fiscal year 1996 by 15,000 less than the total number of
       such personnel as of October 1, 1995. The National Defense Authorization Act for
       F’iscal Year 1997 expanded on these acquisition workforce reductions, requiring that
       by October 1, 1997, the number of acquisition personnel be reduced by an overaIl

                                              GAO/NSIAD-98-36RDOD Workforce Reductions
B-277987                                                  -


total of 30,000 below the level as of October 1, 1995. Excluded Tom the
reductions, however, are “personnel who possess technicaI competence in trade-
skill maintenance and repair positions involved in performing depot maintenance
functions.”

The 1996 act further required that the Secretary submit a plan on how to
restructure current DOD acquisition organizations in a manner that would enable
the Secretary to reduce the number of military and civilian personnel assigned to or
employed in DOD acquisition organizations (as defined by the Secretary) by 25
percent over a 5-year period beginning on October 1, 1995.

S-Y

The legislative mandates of fiscal years 1996 and 1997 to reduce the acquisition
workforce allow the Secretary of Defense wide latitude in implementing those cuts.
According to Defense Manpower Data Center (DMDC) data, DOD has exceeded the
requirements to reduce its acquisition workforce by 30,000. If current trends in
workforce reductions continue, it appears that DOD will also achieve an overall
acquisition workforce personnel reduction of 25 percent (94,400 of 377,600) by the
end of fiscal year 2000, consistent with its congressionally required plan.

Most of the downsizing was achieved through reductions in personnel, but a
significant portion was also attained through DOD’s streambning efforts that
resulted in disestablishing the Army Information Systems Command (AI%) and
distributing the majority of its personnel into a nonacquisition organization (i.e.,
outside of the purview of DOD Instruction 5000.58). These efforts also redirected
some personnel to other DOD organizations. Of approximately 40,000 civilian
personnel reductions, about 9,000 (roughly 22 percent) persons remain employed in
other DOD organizations. A review of reductions by occupational series shows that
the largest concentrations were in the following occupational fields Electronics
Engineering, Secretary, Computer Specialist, Contracting, Management Analyst, and
Administrative. By contrast, DOD’s contract awards for services rose steadily for
fiscal years 1994 to 1996 for most of the functions normally done by personnel in
these occupational fields. DOD is currently developing a methodology for
redeGning its acquisition workforce.

REDUCTIONS IN DOD’S ACQUISITION             WORKFORCE
EXCEED REQUIREMENTS

According to DMDC data, DOD has reduced its acquisition workforce by 50,334 or
20,334 more than required (see table 1). If current trends in workforce reductions
continue, it appears that DOD will also achieve an overall acquisition workforce
personnel reduction of 25 percent (94,400 of 377,600) by the end of fiscal year 2000,

Page 2                               GAOLMAD-98-36RDOD Workforce Reductions
B-277987                                                  -


consistent with its congressionally required plan. By the end of the second quarter
of fiscal year 1997, DOD has accomplished 54 percent (50,334) of the required
reductions. If DOD continues to streamline, consolidate organizations, and reduce
personnel at approximately the same rate, it could actually achieve its target
reduction well before fiscal year 2000. However, DOD does not expect that this
rate will continue throughout the next 3 years.

While most of the reductions identified in table 1 were achieved through actual
personnel reductions, a significant portion was also attained through DOD’s
streamlining efforts that resulted in disestablishing AISC. According to DOD
officials, the majority of AISC’s personnel (which consisted primarily of military
personnel) were transferred to the Army Forces Command, a nonacquisition
organization. The remaining personnel (mostly civilian) were transferred to the
Army Materiel Command, an acquisition organization.




Page 3                               GAOINSIAD-98-36RDOD Workforce Reductions
B-277987


Table 1: Overa.ll Changes (Civilian and Militxcy) in DOD’s- Workforce in
Acquisition Organizations (End of F’iscal Year 1995 - End of the 2nd Quarter 1997)




Source: DMDC.

Note: The numbers for depot personnel represent those delined by the Secretary of Defense as acquisition personnel.
Excluded are personnel who possess certain trade skills involved in depot maintenance.




Page 4                                                GAO/NSUD-9836RDOD Workforce Reductions
B-277987


MANY PERSONNEL LEAVING ACQUISITION                                        .- -
ORGANIZATIONS ARE EMPLOYED ELSEWHERE                                     IN DOD

According to DMDC data, about 40,000 civilian personnel have left DOD’s
acquisition organizations since the beginning of fiscal year 1996 (see table 2). Of
this number, about 9,000 (roughly 22 percent) persons remain employed in other
DOD organizations. Our preliminary review indicates that the majority of these
9,000 individuals are employed in organizations not covered by DOD Instrnction
5000.58. DOD stated that this redirection of personnel was beneficial to the
Department in several ways because it helped to (1) avoid reductions-m-force, (2)
reduce the strain on morale associated with downsizing, and ~ .) offset costs
associated with Wining new personnel.

Table 2: Number of Civilian Personnel Separated from Defense Acquisition
Organizations (End of Fiscal Year 1995 - End of the 2nd Quarter 1997)

  AcquisitionOrganization                                       I   Transferred       Left DOD         Total
                                                                                I               I
  Defense Logistics Agency                                      1           681 1         5,945 1      6,626

  Under Secretary of Defense (Acquisition)                                   64            149           213
  Amy Information Systems Command                                         3,472            673         4,145
  office of Chief of Naval Research                                          72            446           518

  Naval Air Systems Command                                                 496           4,887        5,383

 Army Strategic Defense Command                                              17            107           124
                                                                ,                 ,               I
  Naval Supply Systems Command                                              346           136           1,572
  Naval Sea Systems Command                                                 386          3,758         4,144

  Naval Facilities Engineering Command                          I         1,033          2,632         3,665
                                                                                I                 I
  Ball&k   Missile Defense Organization                         I            14 1           241           38
                                                                                I                 I
  Navy Program Executive Officer/Direct Reporting Program                    93            207           300
  ManagerOrganization
  Space & Naval Warfare Systems Command                         I           132            632 1         764
                                                                                  I            I
 Ass&ant Secretary of the Navy (Research, Development, and                    5              6            11
 Acquisition)

 Air Force Program Executive Organization                                     2              0             2

 Air Force Materiel Command                                                949           4,122         5,071
                                                                6
 Assistant Secretary of the Air Force (Acquisition)             9            20             41            61

 Armi Acquisition Executive                                                  41            258           299
 Army Materlel Command                                                    1,174          6,008         7,182

 Total                                                                   8,997          31,121        40,118

Source: DMDC.



Page 5                                                GAO/NSLAD-9836RDOD WorkEorceReductions
                    B-277987                                                   _


                    REDUCTIONS ARE CONCENTIWTED                 IN            ._ _
                    SEVERAL OCCUPATIONAL  FIELDS

                    The largest concentration of personnel reductions occurred in seven occupational
                    fields (see table 3). Table 3 also shows reductions of civilian personnel in these
                    occupational fields who are currently employed in other DOD organizations.

                    Table 3: Occupational Fields Associated with Largest Concentration of Civilian
                    Reductions (End of Fiscal Year 1995 - End of the 2nd Quarter 1997)




                         Number of Personnel




.   .__,   I.   I




                                                3
                                    Occupational    Field
                          Source: DMDC.




                     Page 6                                 GAO/NSIAD-9836RDOD WorkForceReductions
B-277987                                                  _


SUPPORT SERVICES          CONTRACT    AWARDS             .-
ARE INCREASING

Although we did not correlate specific contract awards to specific reductions in the
acquisition workforce, table 4 shows that support services contract awards
increased for certain occupational fields that are closely related to the occupational
fields with the largest personnel reductions as identified in table 3.

Table 4: Changes in DOD Support Service Contracts Fiscal Year 1994 - Fiscal Year
1996



   IV1996 Masin     IVillii
   50301




Page 7                               GAOiNSIAD-98-36R
                                                    DOD Workforce Reductions
               B-277987                                                     _


               DOD INITIATES  STUDY TO REDEFINE             THE            .- -
               ACQUISITION   WORKF’ORCE

                 In response to section 906 of the National Defense Authorization Act for Fiscal Year
                 1996, DOD established an Integrated Product Team to redefine the acquisition
                 workforce. To assist it in this endeavor, the Integrated Product Team has hired a
                 consulting firm to develop a model that can be used for rede&Gng the composition
                 of the acquisition workforce. The model will be based on an updated version of a
                 framework developed by the Packard Commission in the mid-198Osl. According to
                 DOD officials, under the new definition, the acquisition workforce is expected to
              ,--include

                - all personnel employed by DOD in certain acquisition occupations, such as
                  contracting, auditing, and property disposal, wherever they are located;
        :.
     , : -.     - ah personnel employed in certain acquisition support occupations, such as
:;.: - .
                  engineering, tiance and accounting, mathematics and statistics, and working
                  within acquisition organizations; and

                - an appropriate share of the clerical and administrative support personnel
                  providing direct support to the acquisition workforce.

                Additionally, DOD officials told us that they plan to ident@ separately ah DOD
                acquisition functions and activities wherever they are performed in the Department
                to improve manpower planning, oversight, and training.

                AGENCY     COMMENTS

                We provided DOD with copies of a draft of this report for its review and comment.
                We met with DOD officials, including the Director of Acquisition Education,
                Trainmg, and Career Development, who generally concurred with the information
                contained in this report. However, DOD noted that because the Department does
                not plan to continue the rate of reductions identified in this report it should not be
                used for forecasting personnel reductions. DOD’s comments are presented in their
                entirety in enclosure II.




                ‘See Final Report to the President, by the President’s Blue Ribbon Commission on
                Defense Management, June 1986.
                Page 8                                GAO/TEUD-98-36RDOD Workforce Reductions
B-277987


We are sending copies of this letter to DOD and other interested parties. If you
have any questions please contact me on (202) 5124841, or Mr. Clifton E. Spruill,
Assistant Director, on (202) 5124531, or Mr. James L. Morrison, Evaluator-in-
Chtige, on (202) 512-7078.

Sincerely yours,



Katherine V. Schinasi
Associate Director,
Defense Acquisitions Issues

Enclosures




Page 9                              GAO/N&ID-9836R DOD Workforce Reductions
ENCLOSURE I                                                         -   ENCLOSURE I


              LIST OF DEFENSE       ACQUISITION      ORGANIZATIONS

DOD Instruction 5000.58 states that an acquisition organization is an organization,
including its subordinate elements, whose mission includes planning, managing, and/or
executing acquisition programs that are governed by DOD Directive 5000.1 (reference
(n)), DOD Instruction 5000.2 (reference (o)), and related issuances. Specifkally, these
organizations are as follows (and any successor organizations of these commands):

-   Office of the Under Secretary of Defense (Acquisition and Technology)
-   Army Materiel Command
-   Army Information Systems Command
-   Army Strategic Defense Command [now Army Space and Strategic Defense
    Command]
-   Army Acquisition Executive
-   Office of the Assistant Secretary of the Navy (Research, Development, and
    Acquisition)
-   Naval Sea Systems Command
-   Naval Air Systems Command
-   Naval Supply Systems Command
-   Naval Facilities Engineering Command
-   Office of the Chief of Naval Research
-   Space and Naval Warfare Systems Command
-   Navy Strategic Systems Program OHice
-   Navy Program Executive Officer/Direct Reporting Program Manager Organization
-   Marine Corps Research, Development, and Acquisition Command [now Marine
    Corps Systems Command]
-   Office of the Assistant Secretary of the Air Force (Acquisition)
-   Air Force Systems/Air Force Logistics Commands [now Air Force Materiel
    Command]
-   Air Force Program Executive Organization
-   Defense Logistics Agency
-   Strategic Defense Initiative Organization [now Ballistic Missile Defense
    Organization]
-   Special Operations Command

We excluded the Special Operations Command from our analysis because, according
to DOD acquisition officials, only 110 of the Command’s 31,907 personnel are
classified as acquisition personnel.




           Page 10                              GAO/MUD-98-36R DOD Workforce Reductions
ENCLOSURE II                                                                                    ENCLOSURE II


                       COMMENTS FROM THE DEPARTMENT OF DEFENSE

                          OFFICE     OF THE UNDER           SECRETARY        OF DEFENSE
                                             3000 DEFENSE PENTAGON
                                            WASHINGTON.  DC 20301-3000



    TECHNOLOGY



           Ms. Katherine V. Schinasi
           Associate Director, Defense Acquisitions issues
           National Security and International Affairs Division
           U.S. General Accounting Office
           Washington, DC 20648

           Dear Ms. Schinasi:
                                                                                                               -
                    This is the Department of Defense response to the General Accounting Office (GAO)
           draft interim report, “Defense Acquisition Organizations: Reductions in Civilian and Military
           Workforce,” dated September 24, 1997 (GAO Code 707284 I OSD Case 1470

                   The Department of Defense concurs that this report provides an interim response to the
           request for a review of personnel reductions in acquisition organizations. Basing its analysis on
           independently derived data, the report notes that the Department of Defense is on track to
           achieve an overall reduction in acquisition organizations of 25 percent over a five year period
           ending in fiscal year 2000, which is the target in the plan required by the Congress. The report
           documents that reductions to date exceed Congressional mandates, that many personnel who
           leave acquisition organizations find employment elsewhere in DOD, that reductions tend to be
           concentrated in certain occupations, that support-contract awards are increasing, and that DOD
           is redefining the acquisition workforce as called for. These are factual findings which reflect
           compliance and sound management of the acquisition workforce.

                   There is one matter of interpretation that warrants comment. On page 2 the report
           accurately extrapolates the rate of reduction during 1996 and the first two quarters of 1997 to
           state that the DOD “could actually achieve their target reduction well before fiscal year 2000.”
           However, the Department of Defense’s Congressionally required plan explicitly shows that the
           rate during these two years is not to continue into the final three years of the plan. While
           continued efficiency gains in these latter years are expected to reduce workload and to permit
           personnel reductions, the slope of the line flattens, because major organizational efficiencies
           were realized early in the plan. Therefore the straight-line extrapolation should not be used for
           planning purposes, to impose constraints, or for forecasting personnel reductions.

                  Thank you for the opportunity to comment on the GAO draft interim report.

                                                        Sincerely,


                                                        &#hyDG.kLy
                                                        Donna S. Richbourg
                                                        Acting Deputy Under Secretary of Defense
(707254)                                                 (Acquisition Reform)

             Page II                                              GAONXAD-98-36RDOD Workforce Reductions
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