The Department of Defense is seeking savings as the largest federal agency with an annual budget of more than $500 billion and a workforce that includes uniformed service members, civilian federal employees, and defense contractor employees. Reforming the business operations of the Department is a significant undertaking which requires extensive analysis, planning, and collaboration throughout the defense enterprise to ensure the most impactful reforms are implemented, the plan noted.
“Pursuant to section 921 of the John S. McCain National Defense Authorization Act (NDAA) for FY 2019, Public Law 115-232, the report provides an initial plan, schedule, and cost estimate for conducting reforms within the enterprise business operations of the DoD. These reforms will include reductions, eliminations, or improvements, across all organizations and elements of the Department, with respect to covered activities, to increase effectiveness and efficiency of mission execution,” the report stated.
Business reform goes beyond efficiencies and reductions; however, it includes improving business processes, systems, or policies, improving innovation or processes for weapon system acquisition; and better alignment of resources to support the National Defense Strategy.
Reforming business operations to improve the lethality of the Department is one of the three pillars of the National Defense Strategy: (1) Build a More Lethal Force; (2) Strengthen alliances and Attract New Partners; and (3) Reform the Department for Greater Performance and Affordability. Current defense enterprise business reform efforts in the Department are being led by the Office of the Chief Management Officer (OCMO).
The OCMO is charged with establishing policies for, and directing, all enterprise business operations of the Department, including planning and processes, business transformation, performance management, and business information technology management. This office is leading reform efforts to improve enterprise business operations throughout the Department and establish a culture of continuous improvement focused on results and accountability.
Further, the Office of the CMO is conducting efficiency and effectiveness reviews of the Defense Agencies and DoD Field Activities (DAFAs) to identify common, shared services that are similar and/or duplicative in an effort to reform the Fourth Estate. The results of DAFA reviews will provide information that will be critical to improving enterprise business operations and shifting the Department toward the use of more enterprise services to conduct business operations.
The OCMO established reform teams to improve the quality and productivity of the business operations of the Department while reducing the cost of those operations in order to be better able to reallocate resources from business operations to readiness. The covered activities included in Section 921 of the FY2019 NDAA are being addressed by three of those reform teams: Human Resources, Supply Chain and Logistics, and Category Management, the plan explained, as outlined below:
Human Resources Reform Team (Sec 921 - Civilian Resources Management): Supports force readiness and lethality through strategic workforce planning and management. The team is pursuing enterprise human resources management solutions throughout the Department. Three key civilian resources management reform initiatives are: (1) Regulatory Reform; (2) Civilian Hiring Improvement; and (3) Human Resources Service Delivery.
Supply Chain and Logistics Reform Team (Sec 921 - Logistics Management): The goals of this team are to (1) increase materiel visibility; (2) strengthen sustainment; and (3) maximize buying power. Its vision is to deliver cost-effective readiness to improve lethality, while constantly innovating to outpace US adversaries. The top three supply chain and logistics reform initiatives, in coordination with the Defense Logistics Agency, address the following: (1) Strategic Sourcing of Sustainment/Commodity Procurement; (2) Maintenance Work Packages and Bills of Material; and (3) Munitions Readiness.
Category Management Reform Team (Sec 921 - Services Contracting, Real Estate Management): This team is developing a cross-agency contract and category management procurement methodology aimed at driving efficiencies and savings throughout the DoD. These efforts grew out of the successful Services Requirements Review Board (SRRB) reviews conducted by the OSD and the DAFAs that resulted in millions of dollars in programmed savings for the Department.
The contract and category management effort will also help the Department achieve enterprise business operations consistent with guidance for budget review as it moves from a budget-spend centric acquisition process to a strategic-spend centric acquisition process. The Department’s real property reform initiatives (including: lease process standardization, footprint consolidation, space utilization, contract optimization, etc.) are now being addressed as part of the category management effort.
To track and manage all reform activities, DoD instituted a reform initiative framework to track and report progress of initiatives; the financial savings will be monitored by a validation process supported by the Under Secretary of Defense (Comptroller & Cost Assessment and Program Evaluation offices). Further, the Department’s comprehensive plan to support all reform initiatives is detailed in this report.
As required by statute, DoD will provide a final report Jan. 1, 2020, and not less frequently than once every five years thereafter, which will report on all the enterprise business operations reforms that the CMO has accomplished.
The January 2020 report will include a certification of cost savings, which is required to be not less than 25 percent of the cost in dollars of performing covered activities in fiscal year 2019. If the CMO determines that the achievement of savings of 25 percent or more will create overall inefficiencies for the Department, the CMO will provide written notice and justification to the Congressional Defense Committees by October 1, 2019.
This justification will specify a lesser percentage of savings that the CMO determines to be necessary to achieve efficiencies in the delivery of covered activities together with a description of the efficiencies to be achieved. Congressional Defense Committees by October 1, 2019. This justification will specify a lesser percentage of savings that the CMO determines to be necessary to achieve efficiencies in the delivery of covered activities together with a description of the efficiencies to be achieved.
Download the report here.