DOD Finalized Its Organizational Strategy and Guidance on Cross- Functional Teams but Removed Specific Implementation Steps from the Strategy and Has Not Implemented Remaining Section 911 Requirements DOD has completed three additional statutory requirements of section 911 since our August 2019 report, but has not completed three remaining requirements, as shown in table 2. We previously reported that DOD had completed four of the statutory requirements, specifically awarding a contract for a study to determine how to best implement cross-functional teams, providing the results of the study to Congress, establishing any cross-functional teams to address critical department objectives and outputs, and reporting to Congress on the establishment of the cross- functional teams. Thus, in total, DOD has completed seven of the 10 statutory requirements. For more detail on all 10 statutory requirements, see appendix II. DOD Finalized Its Organizational Strategy but the Strategy Lacks Specific Implementation Steps On October 29, 2019, the Secretary of Defense approved DOD’s organizational strategy. In preparing the strategy for review and approval, OCMO obtained input on the draft organizational strategy from other DOD and OSD components, consistent with a recommendation from our February 2018 report that OCMO obtain stakeholder input on the development of the organizational strategy. We found that the strategy addresses key requirements of section 911, including identifying critical objectives that would benefit from the use of cross-functional teams and providing for the appropriate use of these teams. As part of the organizational strategy, DOD also identified the actions it has taken to streamline the organizational structure and processes of the Office of the Secretary of Defense, another requirement of section 911. For example, the strategy states that DOD has delegated authority to approve certain global force management actions to the Chairman of the Joint Chiefs of Staff and delegated certain acquisition oversight functions to the military departments. Further, consistent with our recommendation from our February 2018 report that the CMO address how the department will promote and achieve a collaborative culture, the organizational strategy includes a short reference to our leading practices for mergers and organizational transformations. However, while the approved organizational strategy cites the leading practices, it does not include specific implementation steps that explain how DOD will follow these practices. Earlier drafts of the organizational strategy that we had reviewed included more specific implementation steps, but those steps were removed during the internal DOD review process. As we reported in August 2019, a January 2019 draft of the organizational strategy included practical implementation steps DOD planned to take to advance a collaborative culture, each of which were shown to align with our leading practices for mergers and organizational transformations. For example, consistent with the leading practice for establishing a coherent mission and integrated strategic goals to guide the transformation, the January 2019 draft proposed that the CMO develop an implementation plan with goals and milestones for its efforts to implement the organizational strategy, communicate those goals and milestones, and report periodically on the achievement of the goals. However, in place of these specific steps, the approved organizational strategy simply lists these leading practices and makes a broad statement that DOD is committed to further incorporating and institutionalizing these practices at every opportunity. An OCMO official told us these implementation steps were removed as the OCMO prepared the draft for department-wide coordination and submission to the Secretary of Defense for review and approval. According to that official, OCMO officials made this change because the Secretary and Deputy Secretary of Defense were newly confirmed, and OCMO officials did not want to commit them to a specific course of action. That official also told us that DOD might use its senior leadership forums, such as the Deputy’s Management Action Group (DMAG), to monitor implementation of the organizational strategy and identify opportunities to improve collaboration, including implementation of our leading practices. However, the official acknowledged that any plan to use such forums for monitoring implementation has not been finalized. As we stated in making our February 2018 recommendation that the department address how it would promote and achieve a collaborative culture, section 911 identified several outcomes that DOD should achieve to advance such a culture. We also noted that DOD could use our leading practices for mergers and organizational transformations to address how the department will advance a culture that is collaborative, team-oriented, results-driven, and innovative. We further stated that DOD would be better positioned to transform and meet its mission if it incorporated these leading practices in its organizational strategy as a way to better articulate how the department will achieve the outcomes that advance a collaborative culture across DOD and address the requirements of section 911. Specific implementation steps like those included in earlier drafts of the organizational strategy offered the department a clear path forward for pursuing the goals of section 911 and promoting a collaborative culture. Absent these steps, such as developing an implementation plan with goals and milestones, it is less clear how DOD intends to implement the organizational strategy and assess progress toward its goals. Identifying and documenting specific implementation steps to advance a collaborative culture—such as those OCMO included in earlier drafts of the organizational strategy—is necessary to fully address the requirements of section 911. DOD Finalized Guidance on Cross-Functional Teams and Plans More Detailed Guidance to Fulfill All Section 911 Requirements On December 12, 2019, the Secretary of Defense approved DOD’s guidance on cross-functional teams. We found that this two-page guidance addresses most, but not all, of the 911 requirements and leading practices for cross-functional teams. Specifically, it addresses in whole or in part six of the seven section 911 requirements and six of the eight leading practices. The Secretary-approved guidance also directs the CMO to develop more detailed implementing guidance. It will be important for the CMO to develop and issue this detailed implementing guidance to fully address section 911 requirements and our leading practices for effective cross- functional teams, consistent with a recommendation in our February 2018 report. According to an OCMO official, OCMO plans to use previously drafted terms of reference as the basis for the CMO’s more detailed implementing guidance. Based on our review, when the Secretary of Defense approved guidance is considered along with the draft terms of reference expected to serve as detailed implementing guidance, both documents will fully address all section 911 requirements and leading practices for effective cross-functional teams. We will monitor the department’s progress in issuing this guidance as part of our normal process of assessing DOD’s efforts to implement our recommendations. DOD Has Not Addressed Requirements for Training and Analysis Training for Cross-Functional Teams Members and Their Supervisors DOD has not approved its curriculum for training for cross-functional team members and their supervisors. In February 2018, we reported that DOD’s draft curriculum for cross-functional team members and their supervisors addressed the section 911 requirements for that training. We reported in August 2019 that DOD had provided required training using its draft curriculum to members of the EMSO team—DOD’s only established section 911 team at the time—but had not provided training to their supervisors. According to DOD’s comments on our August 2019 report, DOD expected the draft curricula for training for cross-functional team members and their supervisors to have been approved simultaneously with the issuance of the Secretary’s guidance on cross-functional teams. According to OCMO officials, however, DOD has contracted for the delivery of the required training for cross-functional team members and their supervisors. One of those officials also told us OCMO now expects that training to be completed in 2020. Another OCMO official told us that the OCMO has been further refining the draft curriculum based on feedback from the members of the EMSO team and external experts before submitting the curriculum for review and approval. Training for Presidential Appointees DOD has not provided required training on cross-functional teams and related subjects to presidential appointees and the curriculum has not been approved. Section 911 required presidentially appointed, Senate- confirmed officials to receive training on leadership, modern organizational practice, collaboration, and the operation of cross- functional teams within 3 months of their appointment or to receive a waiver from the President of the United States. As of October 2019, 23 of 36 such positions had been filled and the officials had been in their positions for more than 3 months; none had received the statutorily mandated training. According to DOD’s comments on our August 2019 report, DOD expected the draft training curricula for presidential appointees to have been approved simultaneously with the issuance of the Secretary’s guidance on cross-functional teams. According to OCMO officials, however, DOD has contracted for the delivery of the required training for presidential appointees. One of those officials also told us they now expect that training to be provided in 2020. An OCMO official told us that OCMO has been further refining the draft curriculum and discussing possible venues for providing this training for presidential appointees, including one of the weekly meetings that the Deputy Secretary of Defense has with all Office of the Secretary of Defense presidential appointees. Analysis of Successes and Failures of Cross-Functional Teams DOD has not completed the required analysis of the successes and failures of its cross-functional teams. Section 911 requires DOD’s analysis to be completed with support from external experts in organizational and management sciences within 18 months of the establishment of the first cross-functional team under section 911. Because the first cross-functional team was established in August 2017, this analysis was due in February 2019. According to OCMO officials, DOD has contracted with an organization to help develop the analysis. One of the officials also told us DOD expects the analysis to be completed in 2020. Another OCMO official told us in December 2019 that work on the assessment, including a survey and structured interviews, was underway, and that an initial draft report was expected by the end of December 2019. DOD’s Electromagnetic Spectrum Operations Cross-Functional Team Is Continuing Its Work and DOD Has Expanded the Number of Teams DOD’s Electromagnetic Spectrum Operations Cross-Functional Team Is Continuing to Work toward Its Mission but Resource Issues Remain DOD’s EMSO team is continuing to work toward its mission to develop requirements and specific plans to improve EMSO capabilities across the department and to achieve operational superiority. The team is developing 13 initiatives in four areas—governance, organization, capabilities and gaps, and training and readiness. In addition, the team issued a report required by section 1053 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the mandated assessments of the electronic warfare capabilities of the Russian Federation and the People’s Republic of China in consultation with the Director of the Defense Intelligence Agency. Section 1053 also required the team to, among other things, update the department’s Electronic Warfare Strategy in coordination with the Electronic Warfare Executive Committee. According to an EMSO official, the team is developing a new strategy, which is scheduled for completion in June 2020. The EMSO team is continuing to demonstrate leading practices for effective cross-functional teams, similar to what we reported in August 2019. Specifically, at that time, we reported that the EMSO team was demonstrating leading practices for effective cross-functional teams, such as a well-defined team structure and well-defined team goals. Based on the results of our recent survey of individual team members, most team members believe the team is demonstrating open and regular communication, an inclusive team environment, has an empowered cross-functional team leader, and has well-defined team goals. However, our survey results show that team members responded less favorably to questions about senior management support than to questions about the other leading practices. Specifically, less than half of the respondents agreed with the statements that DOD’s senior leadership provides the team with sufficient resources for its work, supported the team as a priority, and supported the team’s goals and objectives. In their survey responses and during interviews, team members expressed their concerns about the lack of resources, such as funding and sufficient office space to perform their work. According to team officials, they are continuing to work with the OCMO to resolve the team’s resource issues. In our August 2019 report, we stated that the team’s progress was negatively affected by funding delays resulting from disagreements among senior leadership over the responsibility for funding the team. The disagreement had been resolved for fiscal year 2019, but had not yet been resolved for future fiscal years. We recommended, and DOD concurred, that the CMO and EMSO cross- functional team clarify roles and responsibilities for providing administrative support and funding for the team beyond fiscal year 2019 in accordance with the memorandum establishing the team. According to EMSO team officials, however, funding for future years has not been identified. The team has discussed its funding needs with the OCMO and staff from the Office of the Deputy Secretary of Defense, but there is still no clarity regarding responsibility for funding the team. The team’s budget submission as part of DOD’s fiscal year 2021 budget process was withdrawn because the amount requested was smaller than the amounts typically reviewed in the process. According to an EMSO team official, the OCMO is providing funding for the team incrementally on a quarterly basis, and is facing challenges with funding the team’s request for a contract due to the department operating under a continuing resolution. According to another EMSO team official, the team is maintaining the status quo with its current funding and is not considering any additional initiatives. We also reported in our August 2019 report that, according to a team official, while the team had its own office space, the space did not have the level of security required to allow the team to work on a third of its initiatives. Team officials have since told us the team plans to move to an appropriately secure space in early 2020. We will continue to monitor DOD’s progress to secure resources and office space for the team as part of our normal process of assessing DOD’s efforts to implement our recommendations. DOD Has Expanded the Number of Cross- Functional Teams In its approved organizational strategy, DOD identified two existing task forces to expand the number of cross-functional teams. First, the Secretary of Defense established the Close Combat Lethality Task Force in February 2018 to develop, evaluate, recommend, and implement improvements to U.S. squad-level infantry combat formations and strengthen the combat, lethality, survivability, resiliency, and readiness of infantry squads. Second, the Secretary of Defense established the Protecting Critical Technology Task Force in October 2018 to address concerns over the security of the department’s critical technology and the loss of classified information and controlled unclassified information that puts DOD’s investments at risk and erodes the lethality and survivability of U.S. forces. According to an OCMO official, the OCMO updated the organizational strategy and designated these two task forces as cross- functional teams as a result of input from DOD senior leadership during their review of the draft organizational strategy. Based on our review of the documents used to establish the two task forces, we found that they would meet only some of the requirements we reviewed for cross-functional teams as mandated by section 911. For example, we found that the documentation for the Close Combat Lethality Task Force, as it was established, shows that the task force has a clearly established objective; is directed to develop recommendations such as policy changes and investment decisions; and is directed to make decisions on cross-functional issues—some of the key section 911 requirements. Similarly, we found that the documentation for the Protecting Critical Technology Task Force, as established, shows that the director of the task force has the authority to select the membership from across the department, another key requirement. However, based on the documents we reviewed, we found that the teams would not meet other requirements. For example, we found that the documentation for both teams did not ensure that those team members and leaders who are supervisors receive training in elements of successful cross-functional teams. According to an OCMO official, the OCMO will ensure that these task forces identified as cross-functional teams meet the requirements of section 911. For example, the OCMO will provide the required training. DOD’s newly issued guidance on cross-functional teams could help ensure that existing and any new cross-functional teams meet section 911 requirements. In addition, it could help provide these existing and any new teams with the information, direction, and authority they need to comply with mandated requirements for cross-functional teams. For example, section 911 permits the Secretary to delegate to cross- functional teams any decision-making authority that the Secretary considers appropriate to achieve the objectives of the teams; DOD’s guidance delineates the decision-making authority of cross-functional teams. Conclusions More than 3 years after the passage of the National Defense Authorization Act for Fiscal Year 2017, DOD has begun to take key steps to address the requirements of section 911 and to promote a more collaborative culture in the department, including issuing its organizational strategy and making greater use of cross-functional teams under the act. Even as it has taken these steps, challenges for the departments’ ongoing implementation of section 911 remain. The department has still not addressed key requirements to help promote a collaborative culture and, according to officials, still has not identified responsibility for funding one of its cross-functional teams established under section 911. Further, specific implementation steps that would have offered the department a clear path forward for pursuing the goals of section 911 and promoting a collaborative culture at DOD were removed from DOD’s approved organizational strategy—a disappointing development. Identifying and documenting specific implementation steps to encourage a collaborative culture is necessary to fully address the requirements of section 911 and encourage such a culture. Recommendation for Executive Action The Secretary of Defense should ensure that the Chief Management Officer identify and document specific implementation steps to advance a collaborative culture, consistent with our leading practices for mergers and organizational transformations. Agency Comments We provided a draft of this report to DOD for review and comment. In its written comments, which are reproduced in Appendix IV, DOD concurred with our recommendation. DOD also provided additional information on the steps that DOD has taken or plans to take to advance a collaborative culture, such as the Secretary and Deputy Secretary of Defense’s use of DOD’s senior governance forums to encourage collaboration across the department. DOD also stated that it plans to incorporate policies based on best practices for cultivating a collaborative organizational climate into the CMO’s guidance on the implementation of cross-functional teams as well as future National Defense Strategies and National Defense Business Operations Plans. We are sending copies of this report to the appropriate congressional committees and to the Secretary of Defense and Chief Management Officer. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2775 or fielde1@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this are listed in appendix V. Appendix I: Prior GAO Reports on the Department of Defense’s (DOD) Implementation of Section 911 of the National Defense Authorization Act (NDAA) for Fiscal Year 2017 Section 911 of the NDAA for Fiscal Year 2017 included a provision for us—every 6 months after the date of enactment on December 23, 2016, through December 31, 2019—to submit to the congressional defense committees a report. Each report is to set forth a comprehensive assessment of the actions that DOD has taken pursuant to section 911 during each 6-month period and cumulatively since the NDAA’s enactment. Table 3 identifies our five prior reports on DOD’s implementation of section 911 and the status of the 11 recommendations from those reports. Appendix II: Summary of Requirements in Section 911 of the National Defense Authorization Act for Fiscal Year 2017 Section 911 of the National Defense Authorization Act for Fiscal Year 2017 requires the Secretary of Defense to take several actions. Table 4 summarizes these requirements, the due date, and the date completed, if applicable, as of December 2019. Appendix III: Leading Practices for Implementing Effective Cross-Functional Teams In February 2018, we reported on eight leading practices for implementing effective cross-functional teams. Table 5 identifies these leading practices and their related key characteristics. Appendix IV: Comments from the Department of Defense Appendix V: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Margaret Best (Assistant Director), Daniel Ramsey (Analyst-in-Charge), Sierra Hicks, Alexa Kelly, Richard Powelson, and Paulina Reaves made key contributions to this report. Other contributors included Tracy Barnes, Arkelga Braxton, Michael Holland, Ned Malone, Judy McCloskey, Jeremy Rogers, Ron Schwenn, and Sarah Veale.


DOD’s Efforts to Implement Section 911 Requirements Have Largely Stalled, and Funding Delays Have Slowed DOD’s Newest Cross- Functional Team DOD Has Continued to Delay Full Implementation of Section 911 Requirements DOD is up to 21 months late in fully addressing five remaining requirements of section 911 related to DOD’s organizational strategy and cross-functional teams, as shown in figure 1 and discussed below. Specifically, DOD has not fully addressed the following statutory requirements: 1. Issue an organizational strategy: DOD has not issued its organizational strategy, which as of June 2019 is 21 months past the statutorily required issuance date of September 1, 2017. In January 2019, we reported that OCMO officials had revised the draft organizational strategy, incorporating, among other things, the criteria that distinguish cross-functional teams established under section 911 from other types of cross-functional working groups, committees, integrated product teams, and task forces, as required by section 918(b) of the John S. McCain NDAA for Fiscal Year 2019. The revised draft of the organizational strategy also includes steps DOD plans to take to advance a collaborative culture. As we reported in our June 2018 report, these steps, as outlined in the draft strategy, align with our leading practices for mergers and organizational transformations, which we recommended that DOD incorporate into its strategy. Based on our review of OCMO’s current draft of the organizational strategy, we found that it addresses all required elements laid out in section 911 of the NDAA for Fiscal Year 2017. That January 2019 draft strategy, according to an official from OCMO’s Administration and Organizational Policy Directorate, was provided to OCMO leadership for review as early as August 2018, but has not been approved. A senior OCMO official stated that approval of the draft was delayed to ensure it aligned with the National Defense Strategy, issued in January 2018, and the National Defense Business Operations Plan, issued in May 2018, and to incorporate additional requirements of the John S. McCain NDAA for Fiscal Year 2019, which was enacted in August 2018. In addition, according to senior OCMO and Office of the Deputy Secretary of Defense officials, the Acting CMO and the Deputy Secretary of Defense informally discussed the draft organizational strategy, but those conversations did not lead to the Acting CMO formally approving the draft for department-wide coordination. In May 2019, a senior OCMO official told us that the Acting CMO was fully committed to completing department-wide coordination of the draft strategy in June 2019 and advancing it for issuance by the Secretary of Defense in July 2019. After providing a draft of this report to the department for comment, we learned that the organizational strategy was circulated for department-wide coordination on July 12, 2019, with components expected to provide input by August 5, 2019. 2. Issue guidance for cross-functional teams: DOD has not issued guidance for cross-functional teams, which, as of June 2019, is 20 months past the required date of September 30, 2017. In June 2018, we reported that OCMO officials had revised the draft guidance to fully address all section 911 requirements and incorporate leading practices for effective cross-functional teams in the guidance, consistent with our February 2018 recommendation. Based on our review of this draft, we found that it addresses all required elements from section 911 of the NDAA for Fiscal Year 2017, as well as all of the leading practices for effective cross-functional teams. That draft guidance, according to an official from OCMO’s Administration and Organizational Policy Directorate, was provided to OCMO leadership for review as early as August 2018, but has not been approved by the CMO. 3. Provide training to cross-functional team members and their supervisors: OCMO officials have provided some of the required training to members and leaders of a recently established cross- functional team described later in this report. The training included several required elements, including information on the characteristics of successful cross-functional teams, conflict resolution, and how to appropriately represent the views and expertise of functional components. However, OCMO officials have not provided training to supervisors in team members’ functional organizations as required. We reported in February 2018 that DOD had developed a draft curriculum for this training that addressed the section 911 requirements. An OCMO official told us it has not altered the curriculum since then, but that the department has still not provided the training to team members’ supervisors because the curriculum has not been approved by the Acting CMO or the Secretary of Defense. Such approval, though not required by statute, would demonstrate senior leadership support for cross-functional teams, a leading practice we have identified. Further, according to an OCMO official, department-wide coordination and approval would serve to strengthen the effectiveness of the training. However, the need for this training is evident. For example, when we observed one of the training sessions, a member of a cross-functional team stated that he did not believe his supervisors knew what cross-functional teams were. 4. Provide training to presidential appointees: OCMO has not provided the required training to individuals filling presidentially appointed, Senate-confirmed positions in the Office of the Secretary of Defense. Section 911 requires these individuals to complete the training within 3 months of their appointment or DOD to request waivers. As of June 2019, 24 of 36 such officials had been appointed and in their positions for more than 3 months, and, according to an OCMO official, none had received their training or been granted a training waiver. An OCMO official told us in October 2018 he had revised the draft training curriculum following our February 2018 report to include all the required elements in section 911. However, as of May 2019, OCMO officials had not provided a copy of the revised curriculum for our review. After the curriculum is approved, the officials stated that they plan to recommend to the Secretary of Defense that all presidential appointees in the Office of the Secretary of Defense receive the training, rather than request waivers. 5. Report on successes and failures of cross-functional teams: OCMO has not completed an analysis of the successes and failures of DOD’s cross-functional teams, which, as of June 2019, is 3 months past its required completion date. Section 911 requires that an analysis of the success and failures of the teams and how to apply lessons learned from that analysis is completed 18 months after the establishment of the first cross-functional team. With the establishment of the first cross-functional team on personnel vetting in August 2017, the required completion date for the report was February 25, 2019. An OCMO official stated that OCMO planned to conduct an analysis on the personnel vetting team, but had not yet begun and had not set a time frame for doing so. DOD has not addressed most of these remaining requirements of section 911 because, according to an OCMO official, the Acting CMO has not approved the draft documents prepared by OCMO staff to satisfy the requirements. Moreover, the Acting CMO has not coordinated most of the documents department-wide and provided them to the Secretary of Defense for review and issuance. Specifically, according to an OCMO official, the Acting CMO has not reviewed or approved the guidance on cross-functional teams or curricula for cross-functional team members, their supervisors, and presidential appointees. These delays occurred in part because the department has not established and communicated internal deadlines for reviewing, coordinating, and approving these documents. According to OCMO officials, the primary reason they have not met these other outstanding requirements, including the guidance and training for cross-functional teams, is that they would like to have the organizational strategy approved and issued first, so that it can be reflected in the accompanying materials. However, while the OCMO has set an internal time frame for the organizational strategy, it has not set similar time frames for completing the remaining requirements. Standards for Internal Control in the Federal Government emphasize the need to establish time frames to implement actions effectively. In addition, as we reported in June 2018, establishing time frames with key milestones and deliverables to track implementation progress are important for agency reform efforts. By not setting and following clear internal deadlines for meeting the outstanding section 911 requirements, DOD has continued to fall short in meeting statutory requirements and missed opportunities to effectively implement its cross-functional teams and advance a collaborative culture that could bolster broader efforts within the department, such as reforming its business operations. DOD Established a Cross- Functional Team on Electromagnetic Spectrum Operations, but the Team’s Efforts Have Been Slowed by Delayed Funding Decisions Sections 918 and 1053(c) of the John S. McCain NDAA for Fiscal Year 2019 required the Secretary of Defense to establish a cross-functional team pursuant to section 911 of the NDAA for Fiscal Year 2017 on electronic warfare to identify gaps in electronic warfare and joint electromagnetic spectrum operations, capabilities, and capacities within the department across personnel, procedural, and equipment areas. In addition, section 1053(d) of the act required the electronic warfare cross- functional team to, among other things, (1) update the department’s Electronic Warfare Strategy in coordination with the Electronic Warfare Executive Committee by February 9, 2019, and (2) provide assessments of the electronic warfare capabilities of the Russian Federation and the People’s Republic of China in consultation with the Director of the Defense Intelligence Agency by May 10, 2019. Section 918 of the John S. McCain NDAA for Fiscal Year 2019 required the team’s establishment by November 11, 2018; however, DOD did not establish an electromagnetic spectrum operations cross-functional team until February 2019, and the team did not begin its work until April 2019. An official from the team told us that the standup of the team was delayed due to the extensive department-wide review of the February 2019 memorandum that established the team. Because of the delayed establishment of the team, DOD officials estimated that the required update to DOD’s Electronic Warfare Strategy would be completed by the end of September 2019—7 months after the statutory deadline—and that the required assessments would be provided by fall 2019. According to the team’s establishment memorandum, the team will continue its work until at least fiscal year 2022. In addition to the requirements discussed above, section 911 of the NDAA for Fiscal Year 2017 includes specific requirements for cross- functional teams established under that section, including that each team’s objectives be clearly established in writing and that the team should establish a strategy to achieve those objectives. We found that DOD and the electromagnetic spectrum operations cross-functional team have addressed 10 of 11 of those requirements for cross-functional teams. We also found that the team demonstrates several of the leading practices for cross-functional teams. For example, we found that the team has a well-defined team structure and well-defined team goals. However, as previously discussed, DOD has not fully addressed the section 911 requirement for training for cross-functional team members’ supervisors. We were also told by team officials that DOD was delayed in providing administrative support and funding to support the team’s operations. According to the memorandum establishing the electromagnetic spectrum operations team, the CMO is responsible for providing administrative support to the new team, to include providing the team with office space, information technology equipment, contracting, human resources, security, cross-functional team training, and other services, as appropriate. The memorandum also requires the team to work with the CMO to develop resource requirements for team operations for fiscal years 2019 and 2020 to ensure adequate resources are immediately available. However, according to a team official, funding was not provided to the team until late May 2019—over 3 months after the team was established and over 1 month after most of the team members were provided by their home units to work on the team full time. According to a team official, this funding was to be used for several team requirements, including dedicated office space, computer systems, travel funds, and contractor support. This funding was delayed in part because of disagreements over responsibility for funding the team under the terms of the memorandum establishing the team. Specifically, according to a team official, OCMO officials believed that funding should be provided by another organization, such as the Joint Staff. Team and Joint Staff officials told us that they believed the OCMO was responsible for this funding based on the memorandum establishing the team. A team official further stated that funding was provided only when the Deputy Secretary of Defense directed that funding be provided to the team. OCMO officials told us that because the team was not a budgeted activity for fiscal year 2019, the team was added to DOD’s unfunded requirements list. The Under Secretary of Defense (Comptroller) identified funds for the team via the unfunded requirements process at the end of April 2019. However, a team official told us funding for the team for future fiscal years has not been identified and responsibility for providing that funding is still unclear. OCMO officials told us that the team will continue to rely on the unfunded requirements process for funding, since the team is not a budgeted activity for fiscal year 2020, and would need to compete for funding through DOD’s program budget review process for fiscal year 2021 and later fiscal years. Those officials also told us that the team has not yet signed a memorandum of agreement that is required to execute transfer of the funds to the team. A team official told us the team had not yet signed the memorandum because it believed the memorandum would transfer responsibility for funding the team from OCMO to the team. As noted previously, team officials believe the OCMO is responsible for this funding based on the memorandum establishing the team. According to a team official, this delay in funding hampered the team’s ability to achieve full operating capability. For example, until late May the team was working from the Pentagon Conference Center and OCMO conference rooms with only one secure laptop. A team official told us in June 2019 that though the team has moved into its own office space, that space does not have the level of security required for the team to work on a third of its initiatives. As a result, the team was also delayed in conducting mission analysis, work plan development, organizational design, and production of executive-level briefings. A team official told us the team expects to be at full operating capability in late July 2019. Leading practices for implementing effective cross-functional teams highlight the importance of senior management providing teams with access to resources. In addition, Standards for Internal Control in the Federal Government state that agencies’ management should assign responsibility to achieve the entity’s objectives. If DOD does not clarify roles and responsibilities for providing funding for the new cross- functional team, the Acting CMO and the electromagnetic spectrum operations team may continue to have delays in funding and those delays may negatively affect the team’s ability to conduct its work and to meet its objectives. Conclusions Section 911 of the NDAA for Fiscal Year 2017 called for organizational and management reforms to assist DOD in addressing challenges that have hindered collaboration and integration across the department. The department has taken some steps to implement the section 911 requirements, but still has not met statutory time frames for implementing key requirements intended to support its cross-functional teams and to advance a more collaborative culture within the department. Setting specific internal deadlines would help ensure action on these outstanding statutory requirements. Moreover, DOD has established a new electromagnetic spectrum operations cross-functional team under section 911—one of the only requirements for which the department has made progress since our last report—but has not ensured that the team will have the funding it needs beyond fiscal year 2019 to maintain full operational capability and accomplish its assigned objectives. Senior leadership commitment to fully supporting this team and fulfilling all section 911 requirements could help the department make important advances in the type of collaboration necessary for the department to accomplish some of its most ambitious goals. Recommendations for Executive Action We are making the following six recommendations to DOD: The Secretary of Defense should ensure that the CMO meets DOD’s August 2019 deadline for final submission of the organizational strategy to the Secretary of Defense for review and issuance. (Recommendation 1) The Secretary of Defense should ensure that the CMO meets DOD’s September 2019 deadline for review and approval of DOD’s guidance on cross-functional teams and final submission to the Secretary for review and issuance. (Recommendation 2) The Secretary of Defense should ensure that the CMO meets DOD’s September 2019 deadline for review and approval of DOD’s training curriculum for cross-functional team members and their supervisors. (Recommendation 3) The Secretary of Defense should ensure that the CMO meets DOD’s September 2019 deadline for review and approval of DOD’s training curriculum for presidential appointees. (Recommendation 4) The Secretary of Defense should ensure that the CMO meets DOD’s November 2019 deadline for drafting, review, and approval of DOD’s report on the success and failures of cross-functional teams and final submission to the Secretary for review and approval. (Recommendation 5) The Secretary of Defense should ensure that the CMO and the electromagnetic spectrum operations cross-functional team clarify roles and responsibilities for providing administrative support and funding for the team beyond fiscal year 2019 in accordance with the memorandum establishing the team. (Recommendation 6) Agency Comments and Our Evaluation We provided a draft of this report to DOD for review and comment. In written comments that are reproduced in appendix IV, DOD concurred with our recommendations. DOD officials provided separate oral technical comments, which we incorporated as appropriate. In its response, DOD provided new information on a timeline for completing the outstanding section 911 requirements. Specifically, DOD updated its internal deadline for submission of the organizational strategy to the Secretary of Defense from July 2019 to August 2019. DOD also stated that it plans to issue the guidance on cross-functional teams and training for cross-functional team members, their supervisors, and presidential appointees by September 2019 and complete its report on the successes and failures of cross-functional teams by November 2019. We updated our first five recommendations to reflect this information. Establishing these timelines is an important step forward in meeting the statutory requirements under section 911 as well as addressing our recommendations. As part of our next and final audit of DOD’s implementation of section 911 requirements, we will assess the extent to which the department has met these new internal deadlines and fully addressed our recommendations in this report. Fully addressing these outstanding requirements will strengthen DOD’s ability to effectively implement its cross-functional teams and advance a collaborative culture within the department. We are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, and DOD’s Deputy Chief Management Officer. In addition, the report is available at no charge on our website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2775 or fielde1@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V. Appendix I: Prior GAO Reports on the Department of Defense’s (DOD) Implementation of Section 911 of the National Defense Authorization Act (NDAA) for Fiscal Year 2017 Section 911 of the NDAA for Fiscal Year 2017 included a provision for us—every 6 months after the date of enactment on December 23, 2016, through December 31, 2019—to submit to the congressional defense committees a report. Each report is to set forth a comprehensive assessment of the actions that DOD has taken pursuant to section 911 during each 6-month period and cumulatively since the NDAA’s enactment. Table 1 identifies our four prior reports on DOD’s implementation of section 911 and the status of the five recommendations from those reports. Appendix II: Summary of Requirements in Section 911 of the National Defense Authorization Act for Fiscal Year 2017 Section 911 of the National Defense Authorization Act for Fiscal Year 2017 requires the Secretary of Defense to take several actions. Table 2 summarizes these requirements, the due date, and the date completed, if applicable, as of June 2019. Appendix III: Leading Practices for Implementing Effective Cross-Functional Teams In February 2018, we reported on eight leading practices for implementing effective cross-functional teams. Table 3 identifies these leading practices and their related key characteristics. Appendix IV: Comments from the Department of Defense Appendix V: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Margaret Best (Assistant Director), Tracy Barnes, Arkelga Braxton, Sierra Hicks, Michael Holland, Matthew Kienzle, Amie Lesser, Ned Malone, Judy McCloskey, Sheila Miller, Richard Powelson, Daniel Ramsey, Ron Schwenn, and Sarah Veale made key contributions to this report.


DOD’s Plan Generally Addresses Requirements of Section 921, but Assessing Feasibility of Reforms Is Difficult DOD’s 921 plan identifies eight initiatives across the covered activities and generally addresses most of the elements required under section 921. Specifically, section 921 required the CMO to provide a plan, schedule, and cost estimate for conducting its reforms of the covered activities. DOD’s plan provides a schedule for all eight efforts, and provides a cost estimate for all but one, which OCMO officials indicated was still under development. The plan identifies costs of at least $116.3 million to $116.8 million to implement these initiatives through fiscal year 2021. We discuss DOD’s funding of these costs later in this report. According to DOD’s plan, the eight initiatives have the following objectives: Civilian hiring improvement. Shorten the time needed to hire civilian employees, improve the matching of enterprise needs to employee competencies, and establish standard metrics and reports on performance of an improved hiring process. Human resources regulatory reform. Develop a new proposed legal authority that allows the department to simplify, streamline, and standardize civilian personnel policies. In addition, use regulatory reform to better recruit, compensate, and retain a qualified civilian workforce at DOD. Human resources service delivery. Establish a common human resources business and service delivery model, a standard set of performance measures, and a cost accountability structure that will be applied to all human resources service providers, with a focus on certain defense agencies and field activities. Strategic sourcing of sustainment and commodity procurement. Improve the buying power of the department, increasing data transparency related to sustainment and commodity procurement, and apply best-in-class cost and contract management practices with suppliers to drive higher performance and lower cost. Maintenance work packages and bills of material. Improve the accuracy of depot maintenance work packages and related bills of material and develop recommendations for process improvements. Munitions readiness. Produce an integrated tool capable of providing senior leaders with an effective assessment of all the variables associated with the health and readiness of the munitions inventory and the ability to assess options for correcting negative trends. Service requirements review boards. Expand the use of service requirement review boards—which review, validate, prioritize, and approve contracted services requirements to accurately inform the budget and acquisition process. Category management. Implement best practices for purchasing goods and services, such as consolidating separate requirements into single contracts, allowing DOD to achieve savings from volume discounts and develop tools aimed at focusing spending on contracts that meet certain best practices for management. Several of these initiatives address aspects of our prior recommendations related to the objectives of the initiatives. How findings and recommendations from GAO and agency inspectors general have been addressed in proposed reforms is among the key questions GAO has previously identified for assessing agency reform efforts. We found that DOD’s initiatives address aspects of our findings and recommendations, but in some cases do not fully address them. For example: In September 2018, we reported that at least six organizations within DOD, including three defense agencies and field activities and the three military departments, provide human resources services to other defense agencies or organizations. All perform the same types of human resources services, such as those related to civilian workforce hiring across DOD. We also reported that there is fragmentation and overlap within the defense agencies and field activities that provide human resources services to other defense agencies or organizations within DOD. This fragmentation and overlap has resulted in negative effects, such as inconsistent performance information regarding hiring, fragmented information technology systems, and inefficiencies associated with overhead costs. We recommended, and DOD concurred, that DOD collect consistent performance information and comprehensive overhead cost information as well as establish time frames and deliverables for key reform efforts. DOD’s human resource service delivery initiative is intended, in part, to address our recommendations. This initiative, however, is focused only on the defense agencies and field activities responsible for human resources service delivery, and does not include all human resources service providers we highlighted in our September 2018 report. In June 2016, we reported that the Defense Logistics Agency and the military services have some internal efficiency measures for supply and depot operations; however, they generally have not adopted metrics that measure the accuracy of planning factors that are necessary to plan efficient and effective support of depot maintenance. Additionally, the Defense Logistics Agency and the services do not track the potentially significant costs to supply and depot maintenance operations that are created by backorders. Further, we reported that without relevant metrics on cost and planning factors, DOD, the Defense Logistics Agency, and the services are unable to optimize supply and maintenance operations and may miss opportunities to improve the efficiency and effectiveness of depot maintenance. We recommended, and DOD concurred, that DOD, the Defense Logistics Agency, and the services develop metrics to monitor costs and accuracy of demand planning factors. DOD’s initiative on maintenance work packages and bills of material includes steps that may, in part, address these recommendations. Specifically, the initiative plans to assess the accuracy of bills of material, one of the planning factors we recommended DOD develop and implement metrics for, but does not include assessing the accuracy of other planning factors. In August 2017, we reported that DOD’s service requirement review boards were intended to prioritize and approve contracted services in a comprehensive portfolio-based manner to achieve efficiencies, but the military commands we reviewed did not do so. Instead, commands largely leveraged existing contract review boards that occurred throughout the year and focused on approving individual contracts. As a result, the review boards at these commands had minimal effect on supporting decisions within and across service portfolios or capturing efficiencies that could inform the commands’ programming and budgeting decisions. We recommended, and DOD concurred, that DOD clarify policies concerning the purpose and timing of the review board process. DOD’s initiative on service requirements review boards expands the use of these boards, and indicates that they are timed to inform budgets for the following fiscal year, but does not indicate whether guidance to do so has been provided. In its concurrence, DOD stated it would update the relevant DOD instruction to include this guidance, but, as of June 2019, DOD has not issued an updated instruction that includes this guidance. Although these initiatives intend to address aspects of our prior recommendations, assessing the feasibility of DOD’s reform effort is difficult because many of the planned initiatives entail collecting information that will lay the groundwork for later reforms. For example, the human resources service delivery initiative tasks the reform team to draft a project charter, collect and analyze information on human resources service providers within DOD, and eventually develop recommended courses of action for reform by fiscal year 2020. Similarly, the initiative on maintenance work packages and bills of material tasks the reform team to identify opportunities to improve processes, make recommendations to address deficiencies, improve efficiency, and improve material availability and then to develop an implementation plan for the recommendations by the end of fiscal year 2019, with implementation beginning in fiscal year 2020. DOD Provided Limited Documentation of Progress in Implementing Its 921 Plan and Achieving Cost Savings, and Has Not Fully Funded Some Plan Initiatives DOD Provided Limited Documentation of Progress in Implementing Its 921 Plan OCMO officials told us that DOD is making progress in implementing the 921 plan’s initiatives according to the schedules contained in the plan, and they provided summary documentation stating that progress has been made on five of the eight initiatives. However, OCMO did not provide sufficiently detailed documentation for us to independently assess progress on any of the initiatives. Specifically, OCMO provided us some documentation on the progress of the eight initiatives, but this information varied by initiative and was limited. As a result, we were unable to independently assess and verify DOD’s progress in implementing its initiatives. Specifically: For the human resources regulatory reform, civilian hiring improvement, and human resources service delivery initiatives, OCMO provided briefing materials on the status of each milestone under the initiatives, indicating that those initiatives are progressing according to the schedule in the plan. However, DOD did not provide separate underlying documentation for each milestone. For example, under the plan, the teams conducting these initiatives were to have established by June 2019 a common DOD process and metrics for civilian hiring, prepared drafts of updated DOD policies and fiscal year 2020–2021 talent management guidance, and collected and mapped different human resources service delivery models. However, OCMO did not provide documentation of the common DOD process and metrics for civilian hiring, drafts of updated policies and guidance, or human resources service delivery model maps. For the service requirements review boards initiative, OCMO provided documentation stating that the service requirements review boards had largely been completed on schedule, but did not provide information on the outcomes of these boards. OCMO officials told us that delays in completing 3 of 69 boards had prevented them from fully meeting planned deadlines. For the category management initiative, OCMO officials told us that the first two quarterly “sprints”—reviews of different contracts or categories of goods or services to identify savings—for fiscal year 2019 had been completed and the third was in progress, but did not provide documentation to support this assertion. For example, OCMO did not provide information on the outcomes of the sprints. For the strategic sourcing of sustainment and commodity resources, maintenance work packages and bills of material, and munition readiness initiatives, DOD did not provide any documentation on the progress of the initiatives. While most of DOD’s initiatives included in its plan identify either performance metrics or targets, five of the eight initiatives also state that part of the work of the initiatives will be to establish such metrics or targets. Among our key questions for assessing agency reform efforts is the extent to which the agency has established clear outcome-oriented goals and performance measures for the proposed reforms, and whether the agency has put processes in place to collect the needed data and evidence that will effectively measure the reform’s goals. Identifying and collecting this information can lay the groundwork for further reform efforts. Moreover, we found that objectives for some of the initiatives in DOD’s plan are similar to those presented in prior plans with deadlines that have already passed, suggesting that progress on some initiatives is going more slowly than the department originally anticipated. For example, DOD’s August 2017 report to Congress on restructuring the CMO organization included an initiative to create a single civilian personnel system and rating system for certain employees by the middle of fiscal year 2018. DOD’s 921 plan contains a similar initiative on human resources regulatory reform, which aims to develop standardized civilian personnel policies and processes. Development of the initiative is not scheduled to be completed until the end of fiscal year 2019, and implementation would not occur until fiscal year 2020, at the earliest, compared to the original fiscal year 2018 deadline for the initiative. DOD Reported Cost Savings from Broader Reform Efforts but Provided Limited Documentation of Those Savings DOD has stated that its business operations reform efforts—which are not limited to the covered activities under section 921—will produce cost savings; however, DOD did not provide underlying documentation to allow us to independently validate the savings. Specifically, in its budget materials for fiscal year 2020, released in March 2019, DOD reported that its reform efforts had saved $4.7 billion in fiscal years 2017 and 2018, and are expected to save $6.0 billion in fiscal year 2019 and $7.7 billion in fiscal year 2020, the first year of required savings under section 921. Of those $7.7 billion in expected savings for fiscal year 2020, about $2.6 billion were in business process and systems improvements. According to OCMO and Office of the Under Secretary of Defense (OUSD) (Comptroller) officials, the OUSD (Comptroller) has validated these savings and the savings have been programmed or budgeted in the fiscal years reported. Specifically, according to OUSD (Comptroller) officials, all of the savings reported in DOD’s budget materials have been validated against OUSD Comptroller’s own systems that record budget information and decisions that are incorporated into DOD’s programming and budgeting process. OUSD (Comptroller) provided a spreadsheet detailing the various reforms and savings DOD cited in its budget materials, but did not provide the underlying support to allow us to independently validate the savings, such as documentation of budgetary decisions that reflect the savings. Our prior work over the past 7 years has found repeated shortcomings in DOD’s ability to demonstrate that it has achieved its goal for savings from reform efforts. Most recently, in September 2018, we reported that DOD could not demonstrate that it met several cost savings requirements mandated by the NDAA for Fiscal Year 2016, in part because there were no baseline costs established to measure any reductions against and documentation supporting cost savings estimates from other efficiencies was not detailed enough. DOD is taking steps to address this challenge and report on its cost baseline to perform all covered activities by January 1, 2020, as required by section 921. Specifically, in March 2019, we reported that OCMO is taking steps to establish cost baselines for DOD’s major lines of business through the fiscal year 2019–2020 timeframe. According to OCMO officials, they are also regularly adjusting the fiscal year 2019 baseline to reflect savings identified during the fiscal year. As of June 2019, OCMO is reviewing its approach for reporting the savings required by section 921 and plans to complete the review by October 2019. OCMO is coordinating with OUSD (Comptroller) on both establishment of the baseline and reporting of savings. DOD Has Not Fully Funded Some of the Initiatives in Its 921 Plan While DOD has already funded some of the initiatives included in its plan through its annual budget request process, it continues to face challenges obtaining funding for others. According to DOD’s plan, four of the eight initiatives had no costs associated with them or the initiative has been funded to date using existing resources through the regular budget process, and DOD does not anticipate any additional costs for the initiatives. Funding needs for the remaining four initiatives have not been fully determined or met. Specifically: 1. Funding needs for the human resources service delivery initiative have not yet been determined. OCMO expects to fund the cost of this initiative as a part of the initial stand-up costs for OCMO’s Office of Fourth Estate Management in fiscal year 2020. OCMO officials told us they are reviewing baseline needs for the office and anticipate realigning resources to support the new office. 2. Funding needs for the human resources regulatory reform initiative have been determined, but OCMO has not confirmed that funding has been obtained. DOD’s plan states that future costs for the initiative may include approximately $500,000 for research and studies. To the extent possible, the plan states, DOD will use funds from the OUSD for Personnel and Readiness for studies, but DOD has not indicated that those funds have been obtained. 3. Funding needs for the strategic sourcing of sustainment and commodity procurement initiative have not been determined. According to OCMO, the Defense Logistics Agency and the military services are developing a detailed cost estimate for this initiative. However, neither the plan nor OCMO officials we spoke with identified where any funding that may be needed will come from once the costs are determined. 4. Funding needs for the plan’s category management initiative to conduct reviews of contracts and categories of goods and services have not been fully met. The initiative includes quarterly “sprints” reviewing different contracts or categories of goods or services to identify savings. According to DOD’s plan, each sprint is assisted by consulting firms and industry analyses and is estimated to cost about $11 million. DOD plans to complete a total of 10 sprints, at a total cost of $110 million. According to OCMO, limited funding has hindered execution of two of the sprints so far. OCMO has requested $12 million in its budget request for fiscal year 2020 to support this effort and expects the remaining sprints to be funded by savings identified through earlier sprints. However, in January 2019, we reported on problems associated with this approach. Specifically, we reported that OCMO officials told us the department initially planned to use available funding from OCMO or the savings generated by reform initiatives to fund development of other initiatives, but has since recognized that additional funding is needed. Among the key questions we previously identified for assessing agency reform efforts is the extent to which the agency has considered how the upfront costs of proposed reforms will be funded. In January 2019, we reported that some reform teams lacked resources to fully implement approved initiatives. We recommended, and DOD concurred, that DOD establish a process to identify and prioritize funding for implementing its cross-functional teams’ business reform initiatives. An OCMO official told us OCMO updated its reform management framework—the process it uses for managing its business reform efforts—in part to address this recommendation. However, in light of the continued challenges related to funding that we identified as part of this review, the effectiveness of changes to this framework at this time is unclear. As a result, we will continue to monitor the extent to which OCMO’s adjustments to its processes have addressed this recommendation as OCMO continues to implement its business reforms. Agency Comments We provided a draft of this report to DOD for review and comment. In response, DOD officials told us they concurred and had no comments on the report. We are sending copies of this report to the appropriate congressional committees and to the Secretary of Defense and Deputy Chief Management Officer. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2775 or fielde1@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this are listed in appendix III. Appendix I: Changes to DOD’s Reform Teams and Processes Since we last reported on the Department of Defense’s (DOD) business reform efforts in January 2019, the Office of the Chief Management Officer (OCMO) has, among other things, changed the composition of the teams and the framework it is using to manage the efforts. Specifically, OCMO has disestablished the teams on real property management, human resources, and testing and evaluation, split the team on information technology and business systems into two separate teams for information technology and business systems, and made changes to the leadership or composition of each of the remaining teams. See table 1 for a summary of these changes. According to an OCMO official responsible for OCMO’s management of the reform efforts, OCMO has not removed any initiatives from the business reform efforts as a result of the changes to these teams, but some teams’ initiatives were absorbed into other business reform teams or organizations that OCMO believed were more appropriate for leading the initiatives, such as the relevant DOD principal staff assistant. For example, the category management team assumed responsibility for the real property management team’s initiatives. According to the same official, OCMO’s new Fourth Estate Management Office and components of the Office of the Under Secretary of Defense (OUSD) for Personnel and Readiness assumed responsibility for some of the human resources team’s initiatives. In addition, an OCMO official told us OCMO revised its business reform management framework—the process it uses for managing its business reform efforts. According to an overview of the new framework provided by OCMO, the new process is designed to establish a simplified, standardized, and repeatable process for managing these reforms and identifying and prioritizing funding for reform initiatives. An OCMO official told us that one of the goals of the updated process is to improve the uniformity of documentation across business reform teams and initiatives. That official told us the updated process also reduced the number of decision points—through which reform teams receive approval from DOD’s Reform Management Group to proceed with an initiative—from five to two. Further, OCMO introduced new processes for estimating and tracking the costs and potential savings resulting from reform initiatives. Among other things, the updated framework includes input from the OUSD (Comptroller). Specifically, according to OCMO documentation and OUSD (Comptroller) officials, OUSD (Comptroller) officials review estimates of the costs and potential savings recorded in OCMO’s reform management portal—a database OCMO uses to monitor business reform initiatives. OUSD (Comptroller) assigns a confidence score based on the degree to which each initiative has been developed. According to an OUSD (Comptroller) official, initiatives that are less developed will have a lower confidence score because they are further from full implementation and subject to more unknowns than those that are closer to implementation. OUSD (Comptroller) officials told us OUSD (Comptroller) uses confidence scores to adjust estimates of potential savings, and to lower potential savings associated with newer initiatives. According to OUSD (Comptroller) officials, these estimates of potential savings are not included in any savings amounts the department reports externally, such as in DOD budget materials, until they are actually programmed or budgeted. Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Margaret Best (Assistant Director), Daniel Ramsey (Analyst-in-Charge), Sierra Hicks, Alexa Kelly, and Richard Powelson made key contributions to this report. Other contributors included Bonnie Anderson, Tracy Barnes, Arkelga Braxton, Timothy J. DiNapoli, Michael Holland, Richard Larsen, Ned Malone, Ron Schwenn, Anne Stevens, John Van Schaik, and Sarah Veale.


DOE’s Estimated Environmental Liability Was $494 Billion in Fiscal Year 2018 and May Continue to Grow In its fiscal year 2018 financial statement, DOE reported an estimated environmental liability of $494 billion. The majority of this liability was for cleanup work overseen by EM. We reported in January 2019 that in recent years, EM’s environmental liability has grown annually at a level that has outpaced the department’s annual spending on cleanup activities, and its liability may continue to grow. DOE Estimated Its Environmental Liability Was $494 Billion in Fiscal Year 2018 In its fiscal year 2018 financial statement, DOE reported its estimated environmental liability at $494 billion. In the financial statement, EM accounted for $377 billion (over 75 percent) of DOE’s total liability. In developing its environmental liability estimate, EM estimates the costs of storing, treating, or disposing of a variety of waste types. Storing and treating radioactive tank waste account for the largest portion of EM’s costs. For example, in January 2019 we reported that, in fiscal year 2017 (the most recent year for which these data were available at the time of our review), EM’s responsibilities to store and treat radioactive waste stored in underground tanks accounted for nearly half of EM’s total environmental liability, and its responsibilities for addressing contaminated facilities and remediating soil and groundwater contamination accounted for about one-quarter. Figure 2 shows the percentage and dollar amount of EM’s environmental liability by cleanup activity for fiscal year 2017. In January 2019, we also found that, of the 16 sites across the United States at which EM has cleanup responsibilities, two sites accounted for more than 70 percent of EM’s environmental liability in fiscal year 2017: the Hanford site and the Savannah River site (see fig. 3). These sites also include the majority of EM’s radioactive tank waste and the majority of radioactive contamination, which is particularly costly and complicated to treat. The Hanford site has 177 tanks containing 55 million gallons of waste, and the Savannah River site has 43 tanks containing 36 million gallons of waste. EM’s Environmental Liability May Continue to Grow We reported in January 2019 that in recent years, EM’s environmental liability has grown annually at a level that has outpaced the department’s annual spending on cleanup activities. This growth has occurred at the same time as the number of contaminated sites has decreased. In fiscal years 2011 through 2018, EM spent over $48 billion, primarily to address radioactive tank waste as well as treat and dispose of other nuclear and hazardous materials. Nonetheless, since 2011, EM’s environmental liability grew by $214 billion, from $163 billion to $377 billion, according to our analysis of DOE financial data and documents (see fig. 4). EM’s environmental liability may continue to grow because its currently estimated environmental liability does not include the costs of all cleanup activities for which the agency will likely be responsible in the future and because the cost of addressing some of EM’s largest projects is still underestimated. First, not all of the cleanup activities EM must undertake are captured in the current liability because, according to federal accounting standards, only work that is probable and reasonably estimable is required to be reported in an agency’s liability. For example, EM has not yet developed a cleanup plan or cost estimate for the Nevada National Security site and, as a result, the cost of future cleanup of this site was not included in EM’s reported environmental liability. The nearly 1,400-square-mile site has been used for hundreds of nuclear weapons tests since 1951. These activities have resulted in more than 45 million cubic feet of radioactive waste at the site, but the costs for the cleanup of this waste are excluded from EM’s annually reported environmental liability. Second, the current cost associated with some of EM’s cleanup efforts may be underestimated. For example, as of April 2018, EM and its contractor had still not negotiated a cost for completing the WTP—DOE’s largest and most complex construction project. Further, although EM typically spends about $6 billion per year on cleanup activities, a large amount of its cleanup budget does not support actual cleanup activities. Instead, this funding goes toward recurring activities necessary to maintain the sites rather than toward reducing the environmental liability. EM refers to these activities as “minimum safety” work. According to EM officials, examples of such work include physical security, health and radiation protection, or critical facility and infrastructure maintenance for safe conditions. These officials said that minimum safety work constitutes 30 to 60 percent of individual sites’ budgets, for a total of at least $2.7 billion of EM’s fiscal year 2018 budget, as we reported in February 2019. The Assistant Secretary for EM noted in September 2018 that much of DOE’s environmental liability is associated with managing minimum safety work and that significant potential cost savings could result from reducing minimum safety work. Accordingly, she stated that EM planned an initiative in fiscal year 2019 to examine how EM can reduce this work. EM has undertaken several ad hoc studies and initiatives to address the growing costs in its cleanup program. However, EM has not conducted a formal root cause analysis to identify the causes for the growth in its environmental liabilities. Specifically, EM headquarters officials we interviewed said they were aware of the increases to the environmental liability from year to year, as well as the areas in which the liability changed; however, they said they had not done a detailed analysis of the root causes of the growth. A leading practice for program management is monitoring and controlling the program, which includes conducting root cause analyses and developing corrective action plans. However, in February 2019, we found that EM’s cleanup policy does not follow this leading practice because it does not include any such requirements. We recommended that EM review and revise its policy to include program management leading practices in its requirements, including for monitoring and controlling the program. DOE agreed with our recommendation and stated that it plans to revise its policy. EM Has Not Resolved Management Challenges in Its Cleanup Program EM has not resolved long standing management challenges that affect its cleanup program and contracts. In March 2019, we issued our 2019 High- Risk Series, which included updates related to DOE’s environmental liability and its contract management. While officials at EM have taken some steps toward management improvements aimed at reducing its environmental liabilities, we found that EM has not demonstrated progress toward resolving these challenges. We have identified several unresolved issues including the following: EM does not have a program-wide cleanup strategy. We reported in January 2019 that EM relies primarily on individual sites to locally negotiate cleanup activities and establish priorities. Our analysis of DOE documents identified instances of decisions involving billions of dollars where such an approach did not always balance overall risks and costs. For example, we reiterated what we found in May 2017 that two EM sites had plans to treat similar radioactive tank waste differently, and the estimated costs for treating the waste at one site— Hanford—may be tens of billions more than those at the other site— Savannah River. In addition, EM sites generally do not consider other sites’ risks and priorities when making cleanup decisions. We reported in January 2019 that this approach is not consistent with recommendations we and others have made over the last 2 decades that EM develop national priorities to balance risks and costs across and within its sites. Moreover, EM has not developed a program- wide strategy that sets such priorities and describes how EM will address its greatest risks. Instead, according to agency officials, it continues to prioritize and fund cleanup activities by individual site. We recommended in January 2019 that EM develop a program-wide strategy that outlines how EM will direct available resources to address human health and environmental risks across and within sites. DOE agreed with our recommendation and has since said it is working toward this goal. EM manages most of its cleanup work as operations activities, under less stringent requirements than capital asset projects. In February 2019, we reported that EM manages its cleanup work under different requirements, depending on whether it classifies the work as a capital asset project or an operations activity. EM currently manages most of its work as operations activities. In its fiscal year 2019 budget, operations activities accounted for 77 percent of EM’s budget (about $5.5 billion), and capital asset projects accounted for 18 percent (about $1.3 billion). Operations activities have less stringent requirements. For example, unlike capital asset projects, operations activities are not required to go through a thorough upfront planning process to determine the scope of work to be completed. In addition, under EM cleanup requirements, operations activities are not subject to independent oversight by entities outside EM. As a result, DOE management does not have information on how EM manages operations activities and cannot hold EM accountable for cost- effective and timely completion of this cleanup work. Since 2015, experts in DOE’s Office of Project Management have raised concerns that some operations activities, such as cleanup of radioactive tank waste, should be classified as capital asset projects. In February 2019, we recommended that EM work with DOE’s Office of Project Management—which is responsible for providing DOE-wide leadership and assistance pertaining to project management—to establish requirements for classifying cleanup work as capital asset projects or operations activities and then work together to asses EM’s ongoing operations activities to determine if they should be reclassified as capital asset projects based on the newly established requirements. DOE generally agreed with our recommendations and committed to review and revise its requirements as appropriate. EM’s cleanup policy does not follow program and project management leading practices. In February 2019, we also found that EM’s 2017 cleanup policy, which outlines procedures that govern the EM program and its operations activities, does not follow most selected leading practices for program and project management. Specifically, we found that EM’s 2017 cleanup policy does not follow any of 9 selected program management leading practices related to scope, cost, schedule performance, and independent reviews. For example, the policy does not require the program management leading practice of monitoring and controlling the program, including conducting root cause analyses and developing corrective action plans. Further, EM’s 2017 cleanup policy follows only 3 of 12 selected project management leading practices related to these areas. For example, EM’s 2017 cleanup policy does not require any independent reviews of its operations activities by anybody outside of EM. We recommended that DOE review and revise EM’s cleanup policy to include program and project management leading practices related to scope, cost, schedule performance, and independent reviews. DOE agreed with our recommendations. In addition, broader DOE management challenges affect EM and have implications for EM’s ability to effectively manage its cleanup work and begin reducing its environmental liability. EM, like DOE, executes its program activities primarily through the use of contracts. We have reported that about 90 percent of DOE’s budget is spent on contractors that manage the laboratories and carry out DOE’s programs. DOE’s contract management, however, is one of the areas we have identified as posing a high risk of fraud, waste, abuse, and mismanagement because of DOE’s record of inadequate management and oversight of contractors. As a result, DOE’s contract and project management has been on our High Risk List since 1990. Most recently, we found in March 2019 that DOE did not always ensure that contractors audited subcontractors’ incurred costs as required in their contracts. We identified more than $3.4 billion in subcontract costs incurred over a 10-year period that had not been audited as required, and some subcontracts remained unaudited or unassessed for more than 6 years. Completing audits in a timely manner is important because of a 6-year statute of limitations to recover unallowable costs that could be identified through such audits. We recommended that DOE develop procedures that require local offices to monitor contractors to ensure timely completion of required subcontract audits. DOE partially concurred with this recommendation and stated that it plans to review existing requirements and guidance and to consider the extent to which it requires monitoring of contractors’ progress in completing required subcontract audits. As we noted in the March 2019 report, we believe that DOE’s plans to further examine the issues raised in our report is a positive step toward resolving the issues; however, we continue to believe that the actions called for in our recommendations remain valid and that DOE could more efficiently resolve the issues by proceeding to implement those actions. EM Has Not Reported Required Information about the Status of Its Cleanup Accurate and reliable information on the status and progress in a program is essential for effective management and to ensure key stakeholders are provided the information they need to fulfill their oversight, advisory, and other essential roles. However, EM’s performance measures for operations activities do not provide a clear picture of overall performance, and EM has not followed best practices in implementing its performance reporting systems. In addition, EM has historically not provided all of the statutorily required information about the status of its cleanup effort, and the information EM has reported has been incomplete or inaccurate. Finally, in its recent budget materials, EM did not include the funding it says it needs to meet its schedule cleanup milestones. EM’s Cleanup Performance Measures Do Not Provide a Clear Picture of Overall Performance In February 2019, we found that EM’s performance measures for operations activities—which constitute most of its cleanup activities—do not provide a clear picture of overall performance. According to EM documentation and officials, EM uses three tools to measure the overall performance of operations activities: earned value management (EVM), performance metrics, and cleanup milestones. We found problems with EM’s use of each of these tools. Figure 5 summarizes our findings on these three performance measures and how they affect EM’s ability to effectively manage the cleanup effort. First, we found in February 2019 that EM does not always ensure that its EVM data are comprehensive or reliable. EVM measures the value of work accomplished in a given period and compares it with the planned value of work scheduled for the period and with the actual cost of the work accomplished. EM relies primarily on EVM data to measure the overall performance of its operations activities. EM relies on contractors’ EVM systems to measure the performance of its contractors’ operations activities. We reviewed all 20 EM contracts covering operations activities and found that EM requires its contractors to maintain EVM systems for 17 of all 20 contracts. We also found that EM paid its contractors to maintain these systems and provide EVM reports to EM. However, we found that EM has not followed best practices to ensure that these systems are (1) comprehensive, (2) provide reliable data, and (3) are used by EM leadership for decision-making—which are the three characteristics of a reliable EVM system. For example, only about half of the EVM systems met the best practices for conducting integrated baseline reviews and performing ongoing surveillance. Among those, many of the reviews were not rigorous enough to ensure that the performance measurement baseline captured all of the work. We found that EM officials were not performing thorough surveillance reviews to ensure that EVM systems were in alignment with EVM guidelines and that the data being reported by the EVM systems were reliable. In addition, the EVM data for contracts covering operations activities contained numerous, unexplained anomalies in all the months we reviewed, including missing or negative values for some of the completed work to date. Even though EM requires most of its contractors for operations activities to maintain EVM systems and pays them for doing so, EM’s 2017 cleanup policy generally does not require that EVM systems be maintained and used in a way that follow EVM best practices. The use of EVM as a management tool is considered an industry standard and a best practice for conducting cost and schedule performance analysis for projects. EVM data can alert project managers to potential problems sooner than expenditures alone can. Because EM does not follow best practices in administering its EVM systems, EM leadership may not have access to reliable performance data to make informed decisions in managing billions of dollars’ worth of cleanup work every year and to provide to Congress and other stakeholders. We recommended that EM update its cleanup policy to require that EVM systems be maintained and used in a way that follows EVM best practices. DOE agreed with this recommendation, and said it would implement it. Second, we found that EM’s performance metrics do not link performance to cost. EM collects performance metrics from the sites monthly to measure progress toward completing the scope of work for the contract and against a goal set at the beginning of each year. We found in February 2019 that EM’s performance metrics do not link that work to the cost of completing it. For example, EM reported that it eliminated 72,000 gallons of radioactive liquid waste out of a target of 342,000 gallons for fiscal year 2017 at the Savannah River site and disposed of 1,734 cubic meters of low-level waste out of a target of 360 cubic meters at the Idaho site. However, in neither case did EM indicate how much that work cost to accomplish, such as whether those costs were above or below what had been planned. Because EM’s metrics do not link performance to cost, the performance information EM has provided to Congress does not indicate whether EM received good value from the contractor since it does not show how much that work cost to accomplish. We recommended that EM integrate EVM data into EM’s performance metrics for operations activities. DOE agreed with this recommendation and said it would implement it. Finally, we found in February 2019 that sites regularly renegotiate cleanup milestones they are at risk of missing, and EM does not track data on the history of postponed milestones or the reasons why milestones were postponed. As a result, milestones have limited value as a means of tracking cleanup progress since EM does not track the original (or any previously revised) milestone dates, which could provide some data to measure the progress of cleanup activities. We recommended that EM track and report original milestones dates as well as changes to its cleanup milestones. DOE agreed with our recommendation and said it is already tracking this information at the site level. In response, we reiterated the importance of tracking these changes and reporting that information at the headquarters level to help inform Congress. EM Has Inconsistently Reported on Cleanup Status and Its Information May Be Misleading We reported in January 2019 that EM has not submitted congressionally mandated reports on its cleanup program and the information EM has reported has been incomplete or inaccurate. These reports are intended to provide Congress with information on the progress, challenges, and expected future costs of the EM cleanup program. Under the fiscal year 2011 National Defense Authorization Act, EM must annually develop and report to Congress a Future-Years Defense Environmental Management Plan that reflects estimated expenditures and proposed appropriations included in the DOE budget for defense environmental cleanup activities. It must do so at or about the same time that it submits its budget request. The plan is to cover the fiscal year for which the budget is submitted and at least the 4 succeeding fiscal years. The plan is required to describe the cleanup activities to be carried out during the period specified by the plan, estimated expenditures and proposed appropriations necessary to support them, and each milestone in an enforceable agreement governing the cleanup activity. For each milestone, EM is to identify whether the milestone will be met and, if not, explain why not and provide the date by which EM expects to meet it. EM submitted the required plan in fiscal year 2012 but did not submit plans from fiscal year 2013 through fiscal year 2016, as we found in January 2019, or in fiscal year 2018. EM’s most recent Future-Years Defense Environmental Management Plan, which DOE submitted to Congress in August 2017, included little of the information required by the fiscal year 2011 National Defense Authorization Act . Table 1 shows our assessment of the information EM provided in its 2017 Future-Years Defense Environmental Management Plan against the reporting requirements. We also found in February 2019 that the forecast completion dates for milestones listed in the 2012 and 2017 plans may not present an accurate picture of the status of the milestones and EM’s cleanup efforts. For example, in the 2012 plan, DOE reported that only four out of 218 milestones were at risk of missing their planned completion date, while the rest were on schedule. When comparing these milestones to the 2017 plan, we found that at least 14 of them had been postponed. Similarly, the 2017 plan listed only one milestone out of 154 as forecast to miss its due date. However, because EM does not have a historical record of the changes made to the milestones, it is unclear how many of these milestones were recently revised or actually represented their original due dates because the report does not include this information. Because DOE is not consistently and comprehensively submitting complete information about the status of its cleanup, Congress and other stakeholders may not have access to reliable information to make informed decisions about billions of dollars of cleanup work. We recommended that DOE submit in EM’s annually required Future-Years Defense Environmental Management Plan all mandated requirements, as well as information on annual growth in environmental liability estimates by site, the key factors causing that growth, and an explanation of significant differences between environmental liability estimates and life cycle cost estimates. DOE agreed with our recommendation and has since said it is working toward this goal. EM’s Recent Budget Materials Have Not Reflected the Funding EM Anticipates Is Needed to Meet Its Future Cleanup Responsibilities In addition to the Future-Years Defense Environmental Management Plan, DOE is to submit a budget request each fiscal year to Congress along with an explanation of what EM cleanup activities the funding will accomplish. However, in January 2019 we found that the information EM provided to Congress in its fiscal years 2016, 2017, and 2018 budget requests did not reflect the funding some senior DOE officials said EM needs to meet its scheduled cleanup milestones. We reported that in a 2015 presentation on cleanup priorities, EM’s Deputy Assistant Secretary noted that EM’s anticipated long-term funding needs for the full costs of cleanup far exceeded the office’s annual budget requests and noted that in fiscal years 2016, 2017, and 2018, EM anticipated that it needed nearly $8 billion annually to meet scheduled milestones called for in compliance agreements. However, DOE’s budget requests for those fiscal years were $5.8 billion, $6.1 billion, and $6.5 billion, respectively—a shortfall of at least $1.5 billion per year. The Deputy Assistant Secretary also noted that if EM continued to receive about $6 billion per year in the coming 2 decades, it would face a funding shortfall of about $28 billion. He also said that the time frame for EM’s cleanup mission would likely be extended for years, thereby increasing cleanup costs and raising the environmental liability. Similarly, we reported that in a 2017 site cleanup meeting, EM’s Associate Principle Deputy Assistant Secretary for Field Operations said that in order for EM to meet all of the cleanup requirements reflected in agreements with federal and state regulators, EM would need a much larger budget than was requested in fiscal year 2018. For example, this official said that EM’s Hanford site, which received about $2.5 billion in fiscal year 2018, needed more than $4 billion per year to meet scheduled milestones to construct and operate the WTP—one of many cleanup activities at the site—for the duration of its planned mission. The official added that EM’s annual budget will not cover all needs, particularly because infrastructure maintenance, repair, and replacement needs are growing and extending the completion of cleanup further into the future. We recommended that DOE disclose the funding EM needs to meet all of its scheduled milestones. DOE agreed with this recommendation and said it plans to request the funding needed to meet its cleanup agreements. Chair DeGette, Ranking Member Guthrie, and Members of the Subcommittee, this concludes my prepared remarks. I would be happy to respond to any questions that you may have at this time. GAO Contact and Staff Acknowledgments If you or your staff have any questions about this testimony, please contact David C. Trimble, Director, Natural Resources and Environment, at (202) 512-3841 or trimbled@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. GAO staff who made key contributions to this testimony are Amanda Kolling (Assistant Director), Chad Clady, Kelly Friedman, Cristian Ion, Jeff Larson, Cynthia Norris, Dan Royer, and Kiki Theodoropoulos. Related GAO Products Department of Energy Contracting: Actions Needed to Strengthen Subcontract Oversight. GAO-19-107. Washington, D.C.: March 12, 2019. High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas. GAO-19-157SP. Washington, D.C.: March 6, 2019. Nuclear Waste Cleanup: DOE Could Improve Program and Project Management by Better Classifying Work and Following Leading Practices. GAO-19-223. Washington, D.C.: February 19, 2019. Nuclear Waste: DOE Should Take Actions to Improve Oversight of Cleanup Milestones. GAO-19-207. Washington, D.C.: February 14, 2019. Department of Energy: Program-Wide Strategy and Better Reporting Needed to Address Growing Environmental Cleanup Liability. GAO-19-28. Washington, D.C.: January 29, 2019. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.