**GAO-11-181R**                      Published: Jan 26, 2011. Publicly Released: Jan 26, 2011.                  

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## Highlights

The Department of Defense (DOD) spends billions of dollars each year to maintain key business operations intended to support the warfighter, including systems and processes related to the management of contracts, finances, the supply chain, support infrastructure, and weapon systems acquisition. We have designated a number of these areas as high risk because of their vulnerability to fraud, waste, abuse, and mismanagement and because of opportunities to achieve greater efficiencies and free up resources for higher-priority needs. In 2005, we identified DOD's approach to business transformation as a high-risk area because (1) DOD had not established clear and specific management responsibility, accountability and control over business transformation-related activities and applicable resources; and (2) DOD lacked a clear strategic and integrated plan for business transformation with specific goals, measures and accountability mechanisms to monitor progress. Because of the complexity and magnitude of the challenges facing DOD in improving business operations, we have reported the need for a chief management officer (CMO) with significant authority and experience to focus the necessary attention and sustain progress. Both DOD and Congress have taken actions to address DOD's management of business transformation efforts. For example, DOD designated the Deputy Secretary of Defense as the CMO for DOD in May 2007. In the National Defense Authorization Acts for Fiscal Year 2008 and Fiscal Year 2009, Congress took steps that included: (1) designating the Deputy Secretary of Defense as the CMO for DOD; (2) creating a deputy chief management officer (DCMO) position; (3) requiring the secretaries of the military departments to designate the department under secretaries as CMOs; (4) requiring DOD to develop a strategic management plan (SMP); and (5) requiring the secretary of each military department to establish a business transformation office and to develop business transformation plans. Since we last reported, a DCMO has been confirmed by the Senate, DOD has updated its SMP, and DOD and the military departments have continued to refine their management approach to business transformation. This report addresses their progress since January 2009. We performed this review under the authority of the Comptroller General to conduct evaluations on his own initiative. Our objectives were to assess the extent to which DOD and the military departments have taken additional steps to (1) implement management frameworks for business transformation and (2) develop business transformation plans, supported by a strategic planning process, that enable them to align goals and planning efforts and to measure progress.

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## Topics

National Defense

AccountabilityBest practicesDefense capabilitiesDefense operationsFederal agency reorganizationManagement reengineeringMonitoringPerformance measuresStrategic planningBusiness planningBusiness transformation