DEPARTMENT OF 

DEFENSE

Actions Needed to 

Address Five Key 

Mission Challenges

Report to Congressional Addressees

June 2017

GAO-17-369

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-369, a report to 

congressional addressees

June 2017

DEPARTMENT OF DEFENSE 

Actions Needed to Address Five Key Mission 

Challenges

What GAO Found

The Department of Defense (DOD) faces five key challenges that significantly 

affect the department’s ability to accomplish its mission. These include the need 

to (1) rebalance forces and rebuild readiness; (2) mitigate threats to cyberspace 

and expand cyber capabilities; (3) control the escalating costs of programs, such 

as certain weapon systems acquisitions and military health care, and better 

manage its finances; (4) strategically manage its human capital; and (5) achieve 

greater efficiencies in defense business operations. DOD has demonstrated 

progress addressing challenges, but significant work remains. Specifically:

Rebalance forces and rebuild readiness: The military services today are 

generally smaller and less combat ready than they have been in many years, 

and each military service has been forced to cut critical needs in areas such as 

training, maintenance, and modernization due to budgetary constraints, 

according to DOD. Officials said that the result of the current state of readiness is 

that military forces are not strong enough to protect vital U.S. national security 

interests from worldwide threats. DOD has pursued plans to strengthen military 

capabilities, but must take key actions to rebalance, rebuild, and modernize the 

capabilities of U.S. military forces. For example, DOD needs to take further steps 

to meet the demands of geographic commanders and examine whether there 

are opportunities to reduce the high demand on special operations forces. DOD 

also needs to provide decision makers with complete and accurate budget and 

cost information to make well-informed decisions on weapon systems 

modernization investments and mitigate potential risks to certain modernization 

initiatives, including regarding the F-35 aircraft—a program on which DOD plans 

to spend over $1 trillion to operate and sustain over its life cycle. The military 

services have plans underway to rebuild readiness for portions of their military 

forces, but these initiatives are at risk without more comprehensive planning and 

an approach to measure progress in attaining goals (see table). Since 2011, 

GAO has directed 39 recommendations to DOD in this area, of which 35 remain 

open, including 5 priority recommendations. 

Summary of Readiness Challenges Faced by the Military Services 

Military service Summary of readiness challenges

Army Ground force readiness has improved in recent years but the Army has 

reported that gaps remain against other nation-states. GAO has found 

that readiness goals and timelines are not clear for all portions of the 

military force, especially for the reserve component.

Air Force Readiness has steadily declined due to continuous operations and a 

smaller inventory of aircraft. The Air Force is seeking to balance nearterm readiness recovery with the need to modernize its aging aviation

fleet. The Air Force has stated its readiness goals will take a decade to 

achieve, and are predicated on a slowing of operations and consistent 

funding. 

Navy The fleet has experienced increasing maintenance challenges as a 

high pace of operations has continued and maintenance has been 

deferred. Readiness recovery for the Navy is premised on the 

adherence to deployment and maintenance schedules, but GAO has 

found that the Navy has had difficulty completing maintenance on time. 

Marine Corps Ground force readiness has improved in recent years but acute 

readiness problems exist in aviation units. The Marine Corps has 

View GAO-17-369. For more information, 

contact Cathleen A. Berrick at (202) 512-3404 

or berrickc@gao.gov.

Why GAO Did This Study

The United States faces a complex 

national security environment, to 

include strategic challenges presented 

by traditional state actors and

destabilizing nonstate actors, such as 

the Islamic State of Iraq and Syria. 

Recognizing these challenges, DOD 

has emphasized the importance of 

providing forces that are capable of 

performing a full range of missions.

GAO has issued hundreds of reports 

that bring greater attention to areas 

where DOD can strengthen its 

operations to more efficiently and 

effectively meet its mission.

This report identifies (1) key challenges 

affecting DOD’s ability to accomplish 

its mission, progress made on these 

challenges, and work remaining; and 

(2) factors that have affected DOD’s 

ability to address these key challenges. 

This report builds on GAO’s past work

with an emphasis on reports issued 

since 2011. GAO also analyzed DOD

information on recent actions taken in 

response to GAO’s prior work.

What GAO Recommends

GAO has made approximately 3,100 

recommendations to DOD since 2006. 

Of these, about 1,037 remain open,

including 78 priority recommendations

that, if implemented, could significantly 

improve DOD’s operations. In 

commenting on this report, DOD stated 

that although the report made no new 

recommendations, the department

stands by its responses and 

concurrence to taking the requisite 

actions needed to address all previous 

recommendations.
Page 2

established specific strategies and metrics to achieve readiness goals 

for certain but not all force communities.

Source: GAO analysis of Department of Defense (DOD) documentation and GAO’s previously issued 

work.| GAO-17-369

Mitigate threats to cyberspace and expand cyber capabilities: In February 

2016, the Director of National Intelligence identified cyber threats as first among 

strategic threats to the United States, surpassing terrorism. According to the 

2016 Federal Information Security Management Act report, more than 30,000 

data security incidents compromised federal information systems during fiscal 

year 2016, 16 of which were categorized as major incidents. DOD has become 

increasingly reliant on the Internet and other networks, which are central to its 

military operations and enable essential services. At the same time, the 

vulnerability of its cyber networks has grown significantly, due in part to the 

increase in the severity of cyber attacks. DOD has made progress in developing 

a cyber strategy to defend its networks and protect the nation from cyber attacks, 

but needs to take additional actions to improve its planning for the continuity of 

operations in a degraded cyber environment, such as providing defense 

organizations with guidance and training to practice responses during exercises. 

DOD also needs to take further action to strengthen its insider threat awareness 

program to address the increased risk of the unauthorized disclosure of classified 

information from defense information systems and to improve the visibility and 

oversight of the cyber capabilities of all National Guard units, such as computer 

network defense teams that could be used during a cyber incident. Since 2011, 

GAO has directed 33 recommendations to DOD in unclassified and sensitive but 

unclassified reports, of which 14 remain open, including 5 priority 

recommendations.

Control escalating costs and manage finances: DOD’s $580 billion fiscal year 

2016 budget accounts for nearly half of the federal government’s discretionary 

spending, and DOD’s costs are growing. DOD plans to invest $574 billion to 

develop and acquire 78 major acquisition programs through fielding, such as the 

F-35 and the Littoral Combat Ship, while annual military health care costs are 

expected to increase from about $60 billion in fiscal year 2017 to about $70 

billion by fiscal year 2028. Further, DOD remains one of the few federal entities 

that cannot demonstrate an ability to accurately account for and reliably report its 

spending or assets. DOD has undertaken a series of reform initiatives to control 

costs and improve its financial management, but needs to more consistently 

implement leading acquisition practices to manage the costs of its weapon 

systems. DOD also needs to better address improper payments to control rising 

costs in the military health system, which has experienced a 217 percent 

increase in costs since 2001 (see fig.). Further, DOD should take steps to identify 

underutilized space in its facilities to reduce its reliance on costly leased facilities. 

Finally, DOD needs to remediate financial management deficiencies, which 

prevent it from producing auditable financial statements and result in inadequate 

financial and other information available to DOD to manage its operations. Since 

2011, GAO has directed 79 recommendations to DOD in this area, of which 72 

remain open, including 52 priority recommendations. 

Military Health System Costs, Fiscal Years 2001 through 2028 (Projected)
Page 3

Strategically manage human capital: DOD estimates that it will spend nearly 

$180 billion in fiscal year 2017 on pay and benefits for its military personnel and 

about $70 billion for its civilian employees. Taken together, funding for military 

and civilian pay and benefits represents nearly 50 percent of DOD’s budget in 

fiscal year 2016 (see fig.). DOD also estimates that it spent about $115 billion on 

certain contractor-provided services in fiscal year 2015, although we have raised 

questions regarding the reliability of DOD’s information on its contractor 

workforce. Current budget and long-term fiscal pressures on the department 

increase the importance of strategically managing DOD’s human capital. DOD 

has taken steps to develop better information about the skill sets possessed and 

needed within the department’s military, civilian, and contractor workforces, but 

needs to take further actions to complete a workforce mix assessment, improve 

the methodology for estimating workforce costs, and address skill gaps in critical 

workforces. DOD should also establish a comprehensive compensation strategy 

for its military personnel to help achieve its recruiting and retention goals, 

including a cost-effective approach for managing the $3.4 billion the department 

spent in fiscal year 2015 on special and incentive pays for active-duty service 

members. Since 2011, GAO has directed 67 recommendations to DOD in this 

area, of which 64 remain open. 

Department of Defense’s (DOD) Military and Civilian Pay and Benefits, Fiscal Year 2016

Achieve greater efficiencies in defense business operations: DOD spends 

billions of dollars each year acquiring business systems and contractor-provided 

services to support the warfighter. In 2014 alone, DOD obligated $85 billion on 

three types of contractor-provided services—including an amount obligated for 

knowledge-based and research and development services that was more than 

double what the department spent to purchase aircraft, land vehicles, and ships. 

DOD has emphasized the need to improve its business practices and reduce 

overhead and free up resources for higher priorities, but needs to take additional 

actions to drive business transformation efforts, implement management controls 

for its business systems investments, and develop guidance to manage the 

acquisition of contracted services. DOD also needs to improve the reliability of its 

data to enable it to properly size its headquarters organizations, which have 

experienced significant growth; to accomplish missions; and identify potential 

cost savings. Since 2011, GAO has directed 49 recommendations to DOD in this 

area, of which 38 remain open, including 8 priority recommendations. 

GAO’s prior work identified four cross-cutting factors that have affected DOD’s 

ability to address the department’s key challenges. Specifically:

• Lack of sustained leadership involvement: More than 9 years after 

Congress designated the Deputy Secretary of Defense as the Chief 
Page 4

Management Officer and created the Deputy Chief Management Officer 

position to provide leadership over the department’s business functions, all of 

DOD’s business areas remain on our High-Risk List—areas that are 

vulnerable to waste, fraud, or mismanagement (see fig.). In December 2016, 

Congress established a separate Chief Management Officer position from 

the Deputy Secretary of Defense and replaced the Under Secretary of 

Defense for Acquisition, Technology, and Logistics with two new Under 

Secretary positions to further address DOD’s leadership challenges. These 

new positions provide an opportunity to enhance DOD’s leadership focus on 

DOD’s key challenges, but DOD will need to clearly define the key 

responsibilities and authorities for these positions to help ensure that they 

can effectively drive transformation efforts.

Department of Defense’s (DOD) High-Risk Areas, Years on the High-Risk List, and Status of 

DOD’s Efforts to Address Five Criteria for Removal 

• Misalignment between programs and resources and budgets: The 

federal government faces an unsustainable long-term fiscal path, and the 

Congress and the new administration will need to consider difficult policy 

choices in the short term regarding federal spending. However, since 2005, 

GAO has reported that DOD’s approach to planning and budgeting often 

results in a mismatch between the department’s programs and available 

resources. As a result, DOD faces significant affordability challenges for 

some of its major acquisition programs that have unsustainable cost 

estimates and that will vie for significant funding commitments.

• Ineffective strategic planning and performance monitoring: GAO has 

reported since 2005 on strategic planning and performance monitoring 

challenges that have affected the efficiency and effectiveness of DOD’s 

operations, both at the strategic readiness level and across all of DOD’s 

major business areas–including contract management, financial 

management, and supply chain management. DOD has missed opportunities 

to hold officials accountable for progress made toward meeting goals and 

milestones, make timely and well-informed actions to address identified 

challenges, and encourage continuous improvements in performance across 

its major business functions.

• Ineffective management control system: DOD has not addressed longstanding challenges in implementing an effective management control 

system to improve accountability and effectively and efficiently achieve its 

mission. DOD does not have quality information on costs related to mission 

critical programs, such as weapon systems, and the department is unable to 

effectively assess the affordability of the programs that support them. Since 

2005, GAO has reported on internal control deficiencies with DOD’s financial 

management that have contributed to inconsistent and sometimes unreliable 

reports to Congress on weapon system operating and support costs, among 

other areas. This inconsistent and unreliable reporting limits the visibility that 

Congress needs to effectively oversee defense programs, and impairs its 

ability to make cost-effective choices. 
Page i GAO-17-369 Department of Defense

Letter 1

DOD Has Made Progress Addressing Key Challenges in 

Accomplishing Its Mission, but Significant Work Remains 8

Four Cross-Cutting Factors Have Affected DOD’s Ability to 

Address Key Mission Challenges 52

Concluding Observations 60

Agency Comments 60

Appendix I Actions That the Department of Defense (DOD) Needs to Take to 

Address Our 78 Priority Open Recommendations 63

Appendix II Our Work Related to the Department of Defense’s 

Key Mission Challenges 66

Appendix III Comments from the Department of Defense 74

Appendix IV GAO Contact and Staff Acknowledgments 75

Tables

Table 1: Summary of Readiness Challenges Faced by the Military 

Services 9

Table 2: Key Actions That the Department of Defense (DOD) 

Should Take to Help Rebalance Forces, Modernize 

Weapon Systems, and Rebuild Readiness in an Evolving 

Global Security Environment 17

Table 3: Key Actions That the Department of Defense (DOD) 

Should Take to Help Mitigate Threats to Cyberspace and 

in Expanding Cyber Capabilities 24

Table 4: Key Actions That the Department of Defense (DOD) 

Should Take to Help Address the Challenges It Faces in

Controlling Escalating Costs and Managing Finances 38

Table 5: Key Actions That the Department of Defense (DOD) 

Should Take to Help Address Challenges to Strategically 

Manage Human Capital 45

Contents
Page ii GAO-17-369 Department of Defense

Table 6: Key Actions That the Department of Defense (DOD) 

Should Take to Help Achieve Efficiencies in Its Business 

Operations 52

Table 7: Examples of Actions by Area That the Department of 

Defense (DOD) Needs to Take to Address Our Priority 

Recommendations That Remain Open 64

Figures

Figure 1: Department of Defense’s (DOD) High-Risk Areas, Years 

Added to the High-Risk List, and Status of DOD’s Efforts 

to Address Five Criteria for Removal 4

Figure 2: Increase in Authorized Military Positions Compared with 

Increase in Special Operations Funding and Average 

Number of Special Operations Personnel Deployed, 

Fiscal Years 2001 and 2014 11

Figure 3: Air Force Projections of the Air Force Aircraft Inventory, 

Fiscal Years 2017 through 2046 14

Figure 4: Indicators of Declining Ship Conditions and Materiel

Readiness for Selected Navy Ships 16

Figure 5: Our Framework of Key Elements to Incorporate at Each 

Phase of the Department of Defense’s (DOD) Insider 

Threat Programs 22

Figure 6: Military Health System Costs, Fiscal Years 2001 through 

2028 (Projected) 26

Figure 7: Distribution of the 1-Year Change in Total Acquisition 

Costs within the Fiscal Year 2016 Portfolio of Major 

Weapon System Programs 29

Figure 8: Implementation of Knowledge-Based Practices for New 

Acquisition Programs at System Development Start 30

Figure 9: TRICARE and Medicare Outlays and Estimated 

Improper Payments, Fiscal Year 2013 33

Figure 10: The Department of Defense’s (DOD) Funding for 

Military and Civilian Pay and Benefits, Fiscal Year 2016 39

Figure 11: Turnover in Chief Management Officer (CMO) and 

Deputy Chief Management Office (DCMO) Positions 

since 2010 53
Page iii GAO-17-369 Department of Defense

Abbreviations

ALIS Autonomic Logistics Information System

CMO Chief Management Officer

DCMO Deputy Chief Management Officer

DHA Defense Health Agency

DOD Department of Defense

DOE Department of Energy

IPA Independent public accountants

NATO North Atlantic Treaty Organization

OCO Overseas contingency operations

OMB Office of Management and Budget

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Page 1 GAO-17-369 Department of Defense

441 G St. N.W.

Washington, DC 20548

June 13, 2017

Congressional Addressees

The United States faces a complex and uncertain national security 

environment to include threats presented by traditional state actors, as 

well as destabilizing actions by nonstate actors such as al-Qaida and the 

Islamic State of Iraq and Syria. Since 2001, the Department of Defense 

(DOD) has been heavily engaged in the Middle East and Afghanistan 

conducting counter terrorism operations and building the capacity of 

partner nation security forces. DOD is simultaneously facing other 

strategic challenges, such as countering Russian and Iranian aggression 

and protecting our allies and partners in these regions, remaining ready 

on the Korean peninsula in the face of North Korea’s provocations, 

maintaining regional stability in the Asia-Pacific region amid tensions in 

the South China Sea, conducting a global campaign against terrorists and 

other violent extremist organizations, and protecting the department’s 

mission-critical networks from cyber attacks. 1 Recognizing these 

challenges, DOD has emphasized the importance of providing agile, 

flexible, and operationally ready forces that are capable of performing a 

full range of potential missions, and implementing defense institutional 

reforms to more efficiently and effectively manage its operations and free 

up resources for higher priorities.

The national security environment is further complicated by a myriad of 

other influences that pose potential obstacles to DOD’s ability to 

effectively and efficiently conduct its operations. For instance, our 

January 2017 report on the nation’s fiscal health outlined the current fiscal 

condition of the federal government and its future fiscal path, and 

demonstrated that the federal government is highly leveraged in debt by 

historical norms and is on an unsustainable long-term fiscal path caused 

by a structural imbalance between revenue and spending.2 We concluded 

that addressing this imbalance would require significant changes in fiscal 

policy that will place budgetary strains on the federal government, 

including DOD, which accounts for approximately half of the federal 

 1

Department of Defense, 2017 Defense Posture Statement: Taking the Long View, 

Investing for the Future (Washington, D.C.: February 2016).

2

GAO, The Nation’s Fiscal Health: Action Is Needed to Address the Federal Government’s 

Fiscal Future, GAO-17-237SP (Washington, D.C.: Jan. 17, 2017).

Letter
Page 2 GAO-17-369 Department of Defense

government’s discretionary spending. 3 DOD has also faced budget 

uncertainty—including across-the-board spending reductions in fiscal 

year 2013, known as sequestration, and a federal government shutdown 

in October 2013, and will have to adapt to potentially shifting priorities 

from the new administration and Congress. 4 DOD has stated that it 

cannot implement the national defense strategy under the budget caps 

set by the Budget Control Act of 2011. 5 Within this fiscal environment, the 

President is proposing a $54 billion increase to DOD’s budget for fiscal 

year 2018. Even if this increase is approved, however, DOD will still face 

significant affordability challenges as it works to rebuild the readiness of 

its forces while simultaneously modernizing to meet future threats.

Further, DOD has remained engaged with the North Atlantic Treaty 

Organization (NATO) to make continued progress on shared interests 

and to deter and defend against Russian aggression in Europe, and has 

secured a NATO commitment to set concrete goals for defense spending 

on specified alliance priorities. However, continuing fiscal problems in 

some European countries may contribute to political instability, which may 

affect DOD’s efforts to strengthen partnerships with NATO allies and 

partners. Additionally, climate risks to environmental and economic 

systems—including agriculture, infrastructure, ecosystems, and human 

health—present a security challenge for DOD, such as the growing threat 

 3

“Discretionary spending” refers to outlays from budget authority that are provided in and 

controlled by appropriation acts, in contrast to mandatory spending, such as that for Social 

Security, Medicare, or other entitlement programs, which is provided for in law other than 

appropriation acts. In fiscal year 2016, total discretionary spending was $1.2 trillion, of 

which $584 billion was spent on defense. See Congressional Budget Office, The Federal 

Budget in 2017 (Washington, D.C.: February 2017). 

4

In August 2011, Congress and the President enacted the Budget Control Act of 2011 

(BCA), Pub. L. No. 112-25 (2011) amending the Balanced Budget and Emergency Deficit 

Control Act of 1985 (BBEDCA), Pub. L. No. 99-177 (1985). Among other things, the BCA 

imposed discretionary spending limits for fiscal years 2012 through 2021 to reduce 

projected spending by about $1 trillion. The BCA also established the Joint Select 

Committee on Deficit Reduction (Joint Committee), which was tasked with proposing 

legislation to reduce the deficit by an additional $1.2 trillion or more through fiscal year 

2021. The Joint Committee was directed to report its proposal by December 2, 2011, and 

Congress and the President were to enact legislation by January 15, 2012. The Joint 

Committee did not report a proposal, and Congress and the President did not enact 

legislation. This failure triggered the sequestration process in section 251A of BBEDCA, 

as amended, known as the “Joint Committee sequestration.” As required, the President 

ordered a sequestration of discretionary and direct spending on March 1, 2013—5 months 

into fiscal year 2013.

5

In January 2017, the President directed DOD to develop a new national military strategy 

and conduct a nuclear posture review. 
Page 3 GAO-17-369 Department of Defense

of increased natural disasters, refugee flows, and conflicts over basic 

resources such as food and water.

As the largest agency in the federal government, DOD’s mission is to 

provide the military forces needed to deter conflict, fight and win wars if 

needed, and protect the security of the United States. The department is 

supported by key business operations that are intended to help facilitate 

its warfighting mission. These key business operations include numerous 

systems and processes related to the management of contracts, finances, 

the supply chain, support infrastructure, and weapon systems acquisition, 

and are inextricably linked to the readiness and capabilities of the U.S. 

military forces. We and others have highlighted key areas where DOD 

can strengthen its operations. Since 1990, for example, we have 

maintained a High-Risk List to call attention to agencies and program 

areas that are vulnerable to fraud, waste, abuse, and mismanagement, or 

are in need of broad-based transformation. Our High-Risk program has 

served to identify and help resolve serious weaknesses in areas that 

involve substantial resources and provide critical services to the public. 

DOD currently bears responsibility in whole or in part, for half (17 of 34) of 

the areas we have designated as high risk–7 of which DOD manages and 

10 of which DOD shares management responsibilities with other federal 

agencies. 6 Figure 1 shows when the 7 areas were added to the High-Risk 

List and DOD’ status in addressing the five criteria for removal from the 

list—leadership commitment, capacity, action plan, monitoring, and 

demonstrated progress. 7 Some progress in addressing these high-risk 

areas has been possible through concerted efforts of the Congress, DOD, 

and Office of Management and Budget leadership, but significant work 

remains.

 6

GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts 

Needed on Others, GAO-17-317 (Washington, D.C.: Feb. 15, 2017). Agencies must meet 

the following five criteria to be removed from our High-Risk List: (1) a strong commitment 

to and top leadership support for addressing problems; (2) the capacity to address 

problems; (3) a corrective action plan; (4) a program to monitor corrective measures; and 

(5) demonstrated progress in implementing corrective measures.

7

We added DOD’s personnel security clearance program to our high-risk list in 2005 and 

removed it in 2011. 
Page 4 GAO-17-369 Department of Defense

Figure 1: Department of Defense’s (DOD) High-Risk Areas, Years Added to the 

High-Risk List, and Status of DOD’s Efforts to Address Five Criteria for Removal

Note: Agencies must meet the following five criteria to be removed from GAO’s High-Risk List: (1) a 

strong commitment to, and top leadership support for, addressing problems; (2) the capacity to 

address problems; (3) a corrective-action plan; (4) a program to monitor corrective measures; and (5) 

demonstrated progress in implementing corrective measures. “Met” means actions have been taken 

that meet the criterion and that there are no significant actions that need to be taken to further 

address this criterion. “Partially met” means some, but not all, necessary actions have been taken to 

meet the criterion. “Not met” means few, if any, actions have been taken toward meeting the criterion.

We have issued hundreds of reports and made approximately 3,100 

recommendations to DOD since 2006, which, if implemented, could 

strengthen DOD’s accountability, programs, and services. 8 However, 

DOD lags behind the rest of the government in implementing our 

recommendations. In our 2016 Performance and Accountability Report,

we reported that on a government-wide basis, 77 percent of our 

recommendations had been implemented.9 In comparison, DOD 

implemented about 69 percent of our recommendations since 2006, with 

approximately 1,037 recommendations remaining open.10 Further, since 

 8

For the purposes of this report, we reviewed our prior work issued since 2011. We have 

issued numerous reports and made additional recommendations to improve DOD’s 

operations outside of this time period. 

9

GAO, Performance and Accountability Report, Fiscal Year 2016, GAO-17-1SP 

(Washington, D.C.: Nov. 15, 2016). Experience has shown that it takes time for some 

recommendations to be implemented. For this reason, we measure the percentage rate of 

recommendations implemented made 4 years prior to a given fiscal year (e.g., the fiscal 

year 2015 implementation rate is the percentage of recommendations made in fiscal year 

2011 products that were implemented by the end of fiscal year 2015). The governmentwide implementation rate over the past 4 years is the percentage cited in this report. 

10This number does not include recommendations that are classified or all 

recommendations designated Controlled Unclassified Information, which we track 

separately.
Page 5 GAO-17-369 Department of Defense

August 2015 we have identified priority recommendations that we believe 

could significantly improve DOD’s operations. DOD has made progress in 

some areas and has addressed 14 of these priority recommendations, but 

78 remain open.11 For example, the department has taken a series of 

actions to better protect critical DOD information that is processed, 

stored, or transits on an information system that is owned by, or operated 

by or for, contractors, including those within the defense industrial base. 

However, DOD has not addressed other priority recommendations, 

including collecting reliable information on the costs associated with its 

headquarters functions, which could facilitate the identification of 

opportunities for consolidation or elimination of positions, as we 

recommended in 2016. In appendix 1, we list examples of actions that 

DOD needs to take to address our 78 open priority recommendations to 

the department.

We are also statutorily mandated to identify and report annually to 

Congress on federal programs, agencies, offices, and initiatives—either 

within departments or government-wide—that have duplicative goals or 

activities. These annual reports also identify additional opportunities to 

achieve greater efficiencies and effectiveness by means of cost savings 

and enhanced revenue collection. In our 2011 through 2017 annual 

reports, we directed 168 recommended actions to DOD in areas such as 

personnel and logistics, weapon systems, and health care, in response to

which DOD has taken some action that has resulted in cost savings and 

other benefits. For example, consistent with our recommendation, the 

Army did not introduce a new family of camouflage uniforms into its 

inventory, resulting in a cost avoidance of about $4.2 billion over 5 

years. 12 However, DOD has not taken actions in other areas that, if 

addressed, would yield significant financial and other benefits. For 

example, we reported that DOD could identify procurement inefficiencies 

and opportunities to consolidate purchases for the over $1 billion it 

 11This number includes new priority recommendations that we identified in June 2017.

12GAO, 2016 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, 

and Duplication and Achieve Other Financial Benefits, GAO-16-375SP (Washington, D.C.: 

Apr. 13, 2016). Consistent with our recommendation, a provision in the National Defense 

Authorization Act for Fiscal Year 2014 established as policy that the Secretary of Defense 

shall eliminate the development and fielding of service-specific combat and camouflage 

utility uniforms in order to adopt and field a common uniform or family of uniforms to be 

used by all service members. Subject to certain exceptions, the provision prohibits military 

departments from adopting new pattern designs or uniform fabrics unless they will be 

adopted by all services or the military department adopts a uniform already in use by 

another service. (Pub. L. No. 113-66, § 352 (a), (b) (2013)).
Page 6 GAO-17-369 Department of Defense

spends annually leasing commercial satellite communication networks if it 

enforced its current policy and conducted an analysis of its spending in 

this area. DOD agreed, but has not fully addressed these 

recommendations. 13

This report identifies key challenges affecting DOD’s ability to accomplish 

the department’s mission, progress made, and work remaining to address 

these challenges; and factors that have affected DOD’s ability to address 

these key challenges. It also describes actions DOD has taken to 

implement our recommendations most relevant to the key challenges and 

identifies recommendations in these areas that we believe the department 

should give high priority to addressing. We initiated work to prepare this 

report under the Comptroller General’s authority to address issues of 

broad interest to the Congress, with an emphasis on longer-range, 

crosscutting, and transformational issues. This report builds on our past 

work—97 percent of which is requested by the Congress or required by 

law—to provide policy makers with a comprehensive compendium of 

DOD’s challenges that require sustained leadership commitment and 

attention.

To determine the key challenges and factors affecting DOD’s ability to 

execute its mission, we collected and analyzed DOD strategy documents 

that were issued between 2011 and 2016.14 We analyzed the frequency 

with which priorities and associated challenges appeared across the 

strategy documents to determine the extent to which similar priorities and 

associated challenges are identified within and across the documents. 

Specifically, we identified the priorities and associated challenges DOD 

described as essential to completing its mission. We then assessed the 

frequency, depth, and context with which each priority and associated 

 13For additional information, see GAO, Defense Satellite Communications: DOD Needs 

Additional Information to Improve Procurements, GAO-15-459 (Washington, D.C.: July 17, 

2015).

14The list of documents analyzed included the following: National Military Strategy of the

United States of America (Washington, D.C.: June 2015); National Security Strategy 

(Washington, D.C.: February 2015); United States Department of Defense, Agency 

Strategic Plan, Fiscal Years 2015-2018, Version.2.0 (Washington, D.C.: April 2016); 2017 

Defense Posture Statement: Taking the Long View, Investing in the Future (Washington, 

D.C.: February 2016); Fiscal Year 2017 Budget Request, Defense Budget Overview 

(Washington, D.C.: February 2016); Agency Strategic Plan, Fiscal Years 2015-2018, 

Version 1.0 (Washington, D.C.: May 2015); Fiscal Year 2016 Budget Request Overview 

(Washington, D.C.: February 2015);Quadrennial Defense Review (Washington, D.C.: 

March 2014); and Strategic Management Plan: The Business of Defense, FY 2014-

FY2015 (Washington, D.C.: July 2013).
Page 7 GAO-17-369 Department of Defense

challenge we identified was cited in DOD documents. We also reviewed 

our prior work issued within the past 5 years to determine the extent to 

which GAO had previously identified similar priorities and challenges. 

Further, we also drew on the collective knowledge of our subject matter 

experts and compared our assessment of DOD’s priorities and challenges 

with GAO’s institutional knowledge. We took further steps to corroborate 

our analysis, to include incorporating feedback from DOD on the priorities 

and challenges we identified, and reviewing the DOD Inspector General’s 

list of management challenges for 2016. 15

We determined what progress, if any, DOD had made addressing the key 

challenges by examining DOD’s strategies and senior leadership

statements. We compared this information with our previously issued 

work as well as with related recommendations made within the past 5 

years, including our high-risk; duplication, overlap, and fragmentation; 

and key issues products.16 Specifically, we reviewed our prior work to 

determine the extent to which DOD had implemented recommendations 

we made related to our assessment of the identified priorities and 

challenges. We further assessed the status of the priority 

recommendations we made to DOD—recommendations that we believe 

the department should give a high priority to addressing, based on the 

subject matter knowledge of our staff. We also identified factors affecting 

DOD’s ability to make additional progress in addressing the key 

challenges by reviewing the causes of issues we identified in our relevant 

work issued since 2011. Specifically, we reviewed our prior work going 

back 5 years and determined factors affecting DOD’s progress in each 

challenge area. We list this prior work in appendix II.

We conducted this performance audit from June 2016 to June 2017 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 15Inspector General of the Department of Defense, Management Challenges Fiscal Year 

2016 (December 2016).

16We identified a set of key issues across the federal government that require greater 

management attention. Each key issue has a web page on our website, 

http://www.gao.gov that provides information about our work on these issues and 

highlights our most relevant reports.
Page 8 GAO-17-369 Department of Defense

DOD faces five key challenges that significantly affect the department’s 

ability to accomplish its mission—specifically the need for DOD to (1) 

rebalance forces and rebuild readiness in an evolving global security 

environment; (2) mitigate threats in cyberspace and expand cyber 

capabilities; (3) control the escalating costs of programs, such as certain 

weapon systems acquisitions and military health care, and manage its 

finances; (4) strategically manage its human capital; and (5) achieve 

greater efficiencies in defense business operations. DOD has 

demonstrated progress addressing each of these challenges, but 

significant work remains.

The military services are generally smaller and less combat ready today 

than they have been in many years, and each military service has been 

forced to cut critical needs in areas such as training, maintenance, and 

modernization due to budget constraints, according to DOD.17 Officials 

said that the result of the current state of readiness is that military forces 

are not strong enough to protect vital U.S. national security interests from 

worldwide threats. After more than a decade combatting violent 

extremists and conducting contingency operations in Afghanistan, Iraq, 

and most recently Syria, DOD has prioritized the rebalancing of its forces 

in recent budget requests to build and sustain the capabilities necessary 

to prevail across a full range of potential contingencies. However, DOD 

has acknowledged that unrelenting demands from geographic 

commanders for particular types of forces are disrupting manning, 

training, and equipping cycles. As a result, the military departments 

remain hard pressed to sustain meeting high levels of operational 

demands while concurrently rebuilding readiness. See table 1 for a 

summary of readiness challenges faced by the military services.

 17Office of the Under Secretary of Defense (Comptroller) Chief Financial Officer, Request 

for Additional FY 2017 Appropriations (Washington, D.C.: Mar 16, 2017). 

DOD Has Made 

Progress Addressing 

Key Challenges in 

Accomplishing Its 

Mission, but 

Significant Work 

Remains

Rebalance Forces and 

Rebuild Readiness in an 

Evolving Global Security 

Environment
Page 9 GAO-17-369 Department of Defense

Table 1: Summary of Readiness Challenges Faced by the Military Services

Military service Summary of readiness challenges

Army Ground force readiness improved in recent years but the Army has reported that gaps remain against nationstates. For example, the Army reports that two thirds of its initial critical formations—units needed at the outset 

of a major conflict—are at acceptable levels of readiness, but it cautions that it risks consuming readiness as 

fast as the service can build it given current demands. 

Air Force Readiness has steadily declined due to continuous operations and a smaller inventory of aircraft. The Air 

Force reports that its overall readiness stands at historically low levels with less than 50 percent of forces at 

acceptable readiness levels and shortages of over 1,500 pilots and 3,400 aircraft maintainers. The Air Force 

is seeking to balance near-term readiness recovery with the need to modernize its aging fleet. 

Navy The fleet has experienced increasing maintenance challenges as a high pace of operations has continued and 

maintenance has been deferred. Readiness recovery for the Navy is premised on the adherence to 

deployment and maintenance schedules. However, GAO reported that from 2011 through 2014, only 28 

percent of scheduled maintenance was completed on time and just 11 percent for carriers. The Navy recently 

reported that one of its attack submarines—the USS Albany—was delayed by over 4 years in getting out of 

the shipyard and an aircraft carrier—the USS George H.W. Bush—came out of its last maintenance period 

nearly 5 months late. 

Marine Corps Ground force readiness has improved markedly in recent years but acute readiness problems exist in aviation 

units. According to the Marine Corps, as of February 2017, approximately 80 percent of aviation units lack the 

minimum number of ready aircraft for training and they are significantly short of ready aircraft for wartime 

requirements. 

Source: GAO analysis of Department of Defense (DOD) documentation and GAO’s previously issued work. | GAO-17-369

DOD has sought to rebalance and rebuild the readiness of its forces while 

also meeting emerging geopolitical challenges that threaten U.S. national 

security interests and regional stability, such as Russian aggression in 

Europe and North Korea’s provocative threats in the Asia-Pacific. 

However, the demand for military forces has created significant gaps in 

training and maintenance and reduced the margin of error in responding 

to a shifting security environment. To execute the defense strategy, DOD 

must balance the risks and costs of preparing for current conflicts and 

traditional threats with the need to modernize its capabilities and adapt for 

future ones. As DOD rebuilds and modernizes its forces, it must make 

difficult affordability choices related to upgrading its aging equipment and 

weapon systems, while simultaneously sustaining legacy systems and 

force structure that are needed to meet current operational needs. Our 

work has found that DOD must address several key challenges to 

rebalance and modernize the capabilities of U.S. military forces, and 

rebuild these forces to an even higher level of readiness.

DOD has taken some positive steps to rebalance and rebuild the 

capabilities of its forces to provide a responsive and versatile military that 

can meet global needs across the full spectrum of operations. For 

example, DOD increased and maintained the size of its special 
Page 10 GAO-17-369 Department of Defense

operations forces—who are specially organized, trained, and equipped to 

conduct operations in hostile or politically sensitive environments—even 

as the department reduced the size of conventional military forces. DOD 

also invested resources to organize and train conventional military forces 

to be ready to respond to intense and stressful combat operations in the 

future, and also engage with and strengthen partner nation security forces 

to meet current operational needs. DOD further pursued modernization 

plans, including the “third offset strategy,” a set of initiatives aimed at 

strengthening the military services’ competitive edge, maintaining DOD’s 

capabilities, and offsetting the technological advances of U.S. foes. For 

example, DOD and the Air Force have prioritized investing in the stealthy, 

fifth-generation fighter capability by modernizing the F-22 and buying the 

F-35 aircraft. DOD, along with the Department of Energy (DOE), is also 

undertaking an extensive, multifaceted, and costly effort to sustain and 

modernize the nation’s nuclear weapon stockpile, infrastructure, delivery 

systems, and nuclear command and control systems that DOD and DOE 

estimate will cost around $320 billion over the next decade. 18 DOD has 

also stated that rebuilding readiness is the department’s top priority, and 

the military services have plans underway to rebuild the readiness for 

portions of their respective forces. DOD has made progress in these 

areas, but substantial work remains for DOD in rebalancing its forces and 

rebuilding readiness.

The following sections identify our assessment of remaining work, 

including additional actions that DOD should take to make further 

progress.

Rebalancing forces: DOD has not fully assessed whether opportunities 

exist to meet the demands of its geographic commanders and minimize 

the negative readiness impacts of operational deployments on certain 

forces. For example, despite an increase in resources and a sustained 

high deployment level for special operations forces, DOD has not taken 

steps to examine whether additional opportunities exist to reduce the high 

demand on these forces by sharing some of their responsibilities with 

conventional forces. We reported in July 2015 that between fiscal years 

2001 and 2014, the average number of special operations personnel 

deployed increased by nearly 150 percent, and that DOD expected this 

 18GAO, Nuclear Weapons Sustainment: Improvements Made to Budget Estimates Report, 

but Opportunities Remain to Further Enhance Transparency, GAO-16-23 (Washington, 

D.C.: Dec. 10, 2015). 
Page 11 GAO-17-369 Department of Defense

high pace of deployments to continue (see fig. 2).19 However, we reported 

that DOD had not recently evaluated whether some activities conducted 

by special operations forces could be conducted by conventional forces. 

In 2003, DOD determined that there were opportunities to share the 

burden between special operations and conventional forces, including for 

certain counterdrug missions and foreign conventional force training. In 

our July 2015 report, we found that special operations forces have 

continued to perform some activities that could be conducted by 

conventional forces, such as noncombatant evacuation missions.

Figure 2: Increase in Authorized Military Positions Compared with Increase in 

Special Operations Funding and Average Number of Special Operations Personnel 

Deployed, Fiscal Years 2001 and 2014

We also identified areas where DOD and the military services have not 

determined whether plans to rebalance the capabilities of U.S. military 

forces will meet the needs of global commanders. For example, we 

reported in September 2016 that the Air Force has not comprehensively 

reassessed the assumptions underlying the annual training requirements 

for its combat aircrews since 2012.20 We raised questions as to whether 

the assumptions used by the Air Force about the total annual live-fly 

sortie requirements by aircraft, the criteria for designating aircrews as 

experienced or inexperienced, and the mix between live and simulator 

training account for current and emerging training needs. In August 2015, 

 19GAO, Special Operations Forces: Opportunities Exist to Improve Transparency of 

Funding and Assess Potential to Lessen Some Deployments, GAO-15-571 (Washington, 

D.C.: July 16, 2015). 

20GAO, Air Force Training, Further Analysis and Planning Needed to Improve 

Effectiveness, GAO-16-864 (Washington, D.C.: Sept. 19, 2016). 
Page 12 GAO-17-369 Department of Defense

we also reported that while the Army and the Marine Corps have been 

able to fill requests for advise and assist missions in Afghanistan (i.e. 

missions intended to engage with and strengthen partner nation security 

forces), their approaches affected the overall readiness levels of affected 

units. 21 For example, we found that staffing advisor teams required 

brigades to deploy a significant portion of their leadership and expertise 

for the advisor mission resulting in a degradation of brigade readiness. 

Recognizing that the advising team structure can negatively impact 

readiness, the Army announced in February 2017 that it was creating 

Security Force Assistance Brigades in fiscal year 2018 to minimize the 

overall readiness impact to the service. However, it is unclear if this 

initiative will provide combatant commanders with the capabilities needed 

to accomplish their missions while minimizing the readiness impact on the 

Army.

Weapon systems modernization: DOD expects to invest $951 billion 

through fiscal year 2021 to help research, develop, test, evaluate and 

procure modern technology and capabilities for the military, including 

more than $14 billion annually over the next decade to procure the F-35 

aircraft. DOD also plans to recapitalize the three legs of the nuclear 

triad,22 among other modernization investments. Nuclear delivery 

systems are aging, including the bombs and warheads they carry, and in 

some cases are being deployed long beyond their intended service lives. 

For example, the Minuteman III ballistic missile, which was first deployed 

in 1970, is expected to stay in service through 2030 through successive 

modernization efforts. However, DOD has not ensured that decision 

makers have complete and accurate budget and cost information to make 

well-informed decisions on investments in weapon system upgrades and 

new technologies, or developed plans to address potential risks to certain 

modernization initiatives. We reported in September 2014 that it is 

unclear whether DOD’s operating and support cost estimates for the F-35 

program, DOD’s most expensive weapon system, reflect the most likely 

 21See GAO, Overseas Contingency Operations: Observations on the Use of Force 

Management Levels in Afghanistan, Iraq, and Syria, GAO-17-246T (Washington, D.C.: 

Dec. 1, 2016) and Security Force Assistance: More Detailed Planning and Improved 

Access to Information Needed to Guide Efforts of Advisor Teams in Afghanistan, GAO-13-

381 (Washington, D.C.: Apr. 30, 2013). 

22The United States maintains nuclear weapons that rely on three delivery systems, 

referred to as the nuclear triad. The three components include strategic nuclear weapons 

that are delivered by intercontinental ballistic missiles, submarine-launched ballistic 

missiles, and heavy bombers. 
Page 13 GAO-17-369 Department of Defense

costs that the program will incur. With operating and support estimates 

totaling around $1 trillion over a 56-year life cycle, we found that although 

the estimates were comprehensive, weaknesses existed with respect to a 

few of the assumptions, such as spare part replacement rates and depot 

maintenance, and that the estimates did not include necessary analyses 

that would make them reliable. 23

Furthermore, in April 2016 we reported that DOD had not developed 

credible and accurate cost estimates associated with the F-35’s central 

logistics system, the Autonomic Logistics Information System (ALIS).24

ALIS, a complex system supporting operations, mission planning, supply 

chain management, maintenance, and other processes, has estimated 

costs of approximately $16.7 billion over its 56-year life cycle. However, 

we found that the estimate is not fully credible and complete since DOD 

has not performed uncertainty and sensitivity analyses as part of its costestimating process. Similarly, in December 2015 we reported that, when 

reporting these costs to Congress, DOD had not thoroughly documented 

the methodologies and comparative information for its nuclear 

modernization cost estimates, such as the 22-percent increase in the 

intercontinental ballistic missile estimate, a difference of approximately 

$2.5 billion. 25

We also reported in August 2016 that DOD and the Air Force did not have 

complete and quality information on the full implications of the divestment 

of the A-10 aircraft, including gaps that could be created by divestment 

and mitigation options. 26 DOD and the Air Force have prioritized investing 

in the next generation of multirole fighter aircraft while placing a lower 

priority on older, less capable aircraft such as the A-10, and the Air Force 

plans to retire its legacy aircraft, such as the F-16, in the coming years 

(see fig. 3). The Air Force is taking a number of steps to try to mitigate 

any potential negative impacts from its proposed A-10 divestments, but it 

 23GAO, F-35 Sustainment: Need for Affordable Strategy, Greater Attention to Risks, and 

Improved Cost Estimates, GAO-14-778 (Washington, D.C.: Sept. 23, 2014). 

24GAO, F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its Central 

Logistics System, GAO-16-439 (Washington, D.C: Apr. 14, 2016). 

25GAO, Nuclear Weapons Sustainment: Improvements Made to Budget Estimates, but 

Opportunities Remain to Further Enhance Transparency, GAO-16-23 (Washington, D.C.: 

Dec. 10, 2015). 

26GAO, Force Structure: Better Information Needed to Support A-10 and Other Future 

Divestment Decisions, GAO-16-816 (Washington, D.C.: Aug. 24, 2016). 
Page 14 GAO-17-369 Department of Defense

has not established clear requirements for the missions the A-10 

performs, and in the absence of these requirements has not fully 

identified the capacity or capability gaps that could result from its 

divestment. For example, experts convened by the Air Force in 2015 

concluded that A-10 divestiture creates a capability gap since the Air 

Force is losing a high-capacity and cost-efficient ability to kill armor, 

moving, and close-proximity targets in poor weather conditions. We 

therefore recommended that the Air Force develop quality information to 

inform its decision before again proposing divestment. DOD’s fiscal year 

2018 budget request appears to align with this recommendation. The 

request fully funds the A-10 fleet and highlights this action as a key 

component of DOD’s efforts to address “force structure holes.” The 

request further notes that the Air Force is assessing a long-term strategy 

for the A-10 fleet.

Figure 3: Air Force Projections of the Air Force Aircraft Inventory, Fiscal Years 2017 through 2046

Rebuilding readiness: DOD has reported that the military services face 

significant readiness challenges in protecting U.S. national security 

interests. According to DOD, budget cuts have led to undermanned units, 

diminished ammunition stockpiles, a broad lack of training, and 

equipment and facilities that are out of date or not properly maintained. 

As a result, the department faces persistently low readiness levels—with 
Page 15 GAO-17-369 Department of Defense

some forces at historically low levels—and has identified readiness 

rebuilding as a top priority. However, we reported in September 2016 that 

the department’s readiness rebuilding efforts are at risk without a 

comprehensive plan that includes critical planning elements, such as 

comprehensive strategies and resource levels needed to achieve 

identified goals, and an approach for measuring progress. 27 Specifically, 

we found that the military services’ plans to address declines in readiness 

and capacity across the force do not contain key strategic planning 

elements, which would help position the military services to meet their 

readiness goals and support their rebuilding efforts. In addition, although 

DOD and the military services track readiness trends, the military services 

have not consistently established metrics or developed a method to 

evaluate progress in attaining readiness recovery goals.

We also reported in May 2016 that the Navy’s efforts to rebuild readiness 

and achieve employability and sustainability goals for the Navy’s various 

classes of ships were at risk. 28 To meet operational demands over the 

past decade, the Navy has increased ship deployment lengths and has 

reduced or deferred ship maintenance. These decisions have reduced the 

predictability of ship deployments for sailors and for the ship repair 

industrial base. They have also resulted in declining ship conditions 

across the fleet and a worsening trend in overall ship readiness, and have 

increased the amount of time that ships require to complete maintenance 

in the shipyards. For example, we reported that the number of casualty 

reports—incidents of degraded or out-of-service equipment—nearly 

doubled for both U.S. homeported ships and overseas homeported ships 

from January 2009 through July 2014 (see fig. 4).29 Increased 

maintenance periods, in turn, compress the time during which ships are 

available for training and operations, referred to as “employability.”

 27GAO, Military Readiness: DOD’s Readiness Rebuilding Efforts May Be at Risk without a 

Comprehensive Plan, GAO-16-841 (Washington, D.C.: Sept. 7, 2016). 

28GAO, Military Readiness: Progress and Challenges in Implementing the Navy’s 

Optimized Fleet Response Plan, GAO-16-466R (Washington, D.C.: May 2, 2016). 

29GAO, Navy Force Structure: Sustainable Plan and Comprehensive Assessment Needed 

to Mitigate Long-Term Risks to Ships Assigned to Overseas Homeports, GAO-15-329 

(Washington, D.C.: May 29, 2015).
Page 16 GAO-17-369 Department of Defense

Figure 4: Indicators of Declining Ship Conditions and Materiel Readiness for 

Selected Navy Ships

Note: The analysis of the timing of maintenance and the analysis of lost operational days include 

surface combatant ships, and both analyses are for the fiscal years 2011 through 2014 time frame. 

The analysis of casualty reports per ship (i.e., incidents of degraded or out-of-service equipment) 

includes surface combatant and amphibious ships for the period January 2009 through July 2014.

To address these issues, the Navy began implementing a revised 

operational schedule in November 2014, which is intended to maximize 

employability while preserving maintenance and training, and restore 

operational and personnel tempos to acceptable levels. However, our 

analysis of Navy data for fiscal years 2011 through 2014 shows that prior 

to the implementation of the revised schedule, the majority of 

maintenance availabilities completed by both the public and private 

shipyards took more time than scheduled, thereby reducing the time 

during which ships were available for training and operations. As of May 

2015, only a small portion of the fleet had entered the revised 

maintenance schedule, and as a result it is too early to assess its overall 

effectiveness. However, the first three aircraft carriers to enter the revised 

schedule have not completed maintenance tasks on time, a benchmark 

that is crucial to meeting the Navy’s employability goals. Further, any 

changes to assumptions the Navy made in formulating the revised 

schedule, including those related to available funding levels, force 

structure, or deployments, will further place achieving its goals at risk.

By determining the most appropriate forces and training to meet the 

demands of its combatant commanders, ensuring policy makers have 

information to make well-informed weapon system modernization 

choices, and developing a comprehensive plan to rebuild readiness with 

methods for evaluating outcomes, DOD and decision makers would be 
Page 17 GAO-17-369 Department of Defense

better positioned to evaluate whether U.S. military forces have the 

capacity and capabilities to prevail across a full range of potential 

contingencies. Since 2011, we have directed 39 recommendations to 

DOD in this area, of which 35 remain open, including 5 priority 

recommendations. Table 2 highlights key actions DOD should take to 

help address the challenges in rebalancing forces, modernizing weapon 

systems, and rebuilding readiness in an evolving global security 

environment.

Table 2: Key Actions That the Department of Defense (DOD) Should Take to Help Rebalance Forces, Modernize Weapon 

Systems, and Rebuild Readiness in an Evolving Global Security Environment

Challenge/key actions needed

Rebalancing forces

DOD needs to determine the most appropriate forces and training needed to meet the demands of its combatant commands that 

minimize the negative impact of the length and frequency of deployments. Specifically, DOD should evaluate whether certain activities 

performed by special operations forces could be conducted by its conventional military forces; comprehensively reassess the 

assumptions that underpin Air Force aircrew training requirements; and determine whether plans for advise-and-assist missions are 

effective while minimizing any readiness impact. (See the following GAO reports: GAO-15-571, GAO-16-864, GAO-15-568.)

Weapon systems modernization

DOD needs to ensure that policy makers have information to make well-informed weapon systems modernization choices. 

Specifically, DOD should provide thorough, complete, and accurate budget estimates and plans documenting gaps and risks for 

DOD’s large weapon systems programs such as the F-35 and the nuclear enterprise. (See the following GAO reports: GAO-16-23, 

GAO-16-439, GAO-16-816.)

Rebuilding readiness

DOD needs to develop a comprehensive plan to rebuild readiness and methods for evaluating the effectiveness of readiness recovery 

efforts. Specifically, DOD should develop a plan that includes readiness goals and a strategy for achieving the goals; metrics for 

measuring progress at specific milestones; identification of external factors that may impact recovery plans and potential mitigations; 

and plans for department-level oversight of military service readiness recovery plans. (See the following GAO report: GAO-16-841.) 

Source: GAO analysis of GAO’s previously issued work. | GAO-17-369

Cyber threats to U.S. national and economic security are increasing in 

frequency, scale, sophistication, and severity of impact. A 2016 Federal 

Information Security Management Act report noted that more than 30,000 

data security incidents compromised federal information systems during 

fiscal year 2016—16 of which were categorized as major incidents that 

needed to be reported to Congress. In July 2015, a major cyber breach 

was reported at the Office of Personnel Management, which affected at 

least 21.5 million individuals and resulted in the release of personally 

identifiable information on federal contractors and employees, including 

Mitigate Threats in 

Cyberspace and Expand 

Cyber Capabilities
Page 18 GAO-17-369 Department of Defense

those at DOD.30 Recognizing this strategic challenge, in February 2016 

the Director of National Intelligence identified cyber threats as first among 

strategic threats to the United States, surpassing terrorism. 31

DOD has become increasingly reliant on the Internet and other networks, 

which are central to the department’s operations and enable essential 

services including logistics, budgeting, personnel, and policymaking. We 

have reported that the security of the federal government’s cyber systems 

and data is vital to public confidence and to the nation’s safety, prosperity, 

and well-being. 32 However, the vulnerability of DOD’s networks, along 

with those across the federal government has grown, and hostile actors 

have used cyberspace as an asymmetric capability to strike the U.S. 

homeland and interests.

DOD has acknowledged the need to coordinate cyber efforts and clarify 

roles and responsibilities for addressing domestic cyber incidents with the 

Department of Homeland Security—which has primary responsibility for 

the protection of critical cyber infrastructure within the United States—and 

has prioritized investments to expand its current cyber capabilities. Our 

work has found that DOD must address weaknesses in (1) its planning for 

the continuity of operations in a degraded cyber environment, (2) the 

protection of classified information and systems from insider threats, and 

(3) the visibility and oversight of its capabilities that could be used during 

a cyber incident.33

DOD has made progress in developing cyber capabilities that are needed 

to simultaneously defend its networks, systems, and information; protect 

the nation from cyber attacks of significant consequence; and work with 

other departments and branches of the federal government to address 

cyber-related issues. In April 2015, DOD issued a cyber strategy to guide 

the development of the department’s cyber forces and strengthen the 

 30“Personally identifiable” information is information that is collected, maintained, and 

shared by both federal and nonfederal entities. 

31James R. Clapper, Director of National Intelligence, Statement for the Record on the 

Worldwide Threat Assessment of the U.S. Intelligence Community for the Senate Armed 

Services Committee (Feb. 9, 2016). 

32GAO-17-317.

33We have also conducted reviews of DOD’s cyber efforts that are not publicly available 

because the reports contain controlled unclassified or classified information. For the 

purposes of this report, we are using information from our unclassified work. 
Page 19 GAO-17-369 Department of Defense

department’s cyber defense and deterrence posture. A central aim of 

DOD’s cyber strategy is to set specific goals and objectives to guide the 

development of the Cyber Mission Force and of DOD’s wider cyber 

workforce to protect and defend U.S. national interests. DOD has also 

taken steps to improve its ability to provide support for state and local civil 

authorities to improve cybersecurity and contingency planning in 

response to a hostile attack on cyber infrastructure. For example, from 

2013 through 2015, DOD conducted or participated in nine exercises that 

were designed to test cybersecurity policies for supporting civil authorities 

or to test the response to simulated attacks on cyber infrastructure owned 

by civil authorities. In addition, in response to our July 2015 report, DOD 

issued a memorandum directing the services and other defense agencies 

to develop plans identifying the goals, milestones, and resources needed 

to identify, register, and implement cybersecurity controls on DOD facility 

industrial control systems, which are computer-controlled systems that 

monitor and operate utilities infrastructure. 34 DOD has made progress in 

these areas, but substantial work remains for DOD to mitigate threats to 

cybersecurity and expand its cyber capabilities.

We discuss below our assessment of remaining work, including additional 

actions that DOD should take to make further progress.

Continuity of operations in a degraded cyber environment: DOD, 

along with the rest of the federal government, needs to take additional 

steps to protect its critical cyber capabilities and ensure continuity of 

operations. In February 2017, we reported that federal agencies, 

including DOD, have not fully developed and implemented complete 

strategies, policies, plans, and procedures for responding to cyber 

incidents and effectively overseeing response activities. Our work 

assessing DOD’s cyber efforts found that DOD has not fully conducted 

the planning needed to maintain continuity of operations in a degraded 

cyber environment, which could affect DOD’s ability to perform essential 

functions—such as combat operations and homeland defense. DOD has 

stated that expenditures on cyber capabilities have begun to provide a 

measurable return on investment and that the department is interdicting 

more threats than ever before, but the department also acknowledges 

that unauthorized intrusions of its networks still occur.

 34GAO, Defense Infrastructure: Improvements in DOD Reporting and Cybersecurity 

Implementation Needed to Enhance Utility Resilience Planning, GAO-15-749 

(Washington, D.C.: July 23, 2015).
Page 20 GAO-17-369 Department of Defense

The evolving array of cyber threats, along with the continuing threat of 

nuclear attacks and natural disasters, has underscored the need for DOD 

to further strengthen its planning for continuity of operations and the

collection of relevant data to inform planning. Doing so would help ensure 

that the department can continue to perform its mission-essential 

functions even if its information systems and networks become 

unavailable, infiltrated, or destroyed, which can occur due to natural 

disasters (e.g., hurricanes), system or infrastructure failures, and by 

intentional or unintentional human-caused incidents. Since April 2014, we 

have been calling upon DOD to revise its guidance on continuity plans to 

describe the priority of continuity planning for cyber events or to provide 

additional guidance to DOD components on how to include accurate and 

complete data on information systems and networks necessary to 

perform mission-essential functions in continuity plans. 35 DOD also needs 

to provide its components with tools—such as guidance, training, and 

exercises—that both emphasize the need to conduct continuity exercises 

in a degraded cyber environment and assist DOD components in 

developing and practicing effective responses during continuity exercises. 

We further reported that DOD had not evaluated its approach to assigning 

tasks among its components that assures continuity of mission-essential 

functions or evaluated the readiness of its components to respond to an 

incident that degrades the cyber environment.

In July 2015, we reported that DOD does not have comprehensive and 

accurate utility disruption data. 36 Specifically, DOD’s collection and 

reporting of utility disruption data is not comprehensive and contains 

inaccuracies because not all types and instances of utility disruptions 

have been reported and because there are inaccuracies in reporting of 

disruptions’ duration and cost. Further, according to officials, DOD 

installations are not reporting all disruptions that meet the DOD criteria of 

commercial utility service disruptions lasting 8 hours or longer. This is 

likely due, in part, to military service guidance that differs from instructions 

for DOD’s data collection template. As of March 2016, DOD has 

implemented steps to improve its data collection and validation process, 

but additional work remains.

 35GAO, Defense Cybersecurity: DOD Needs to Better Plan for Continuity of Operations in 

a Degraded Cyber Environment and Increase Oversight, GAO-14-404SU (Washington, 

D.C.: Apr. 1, 2014). (For Official Use Only)

36GAO-15-749. 
Page 21 GAO-17-369 Department of Defense

Protect classified information and systems from insider threat: Since 

2010, the United States has suffered grave damage to national security 

and an increased risk to the lives of U.S. citizens due to the unauthorized 

disclosures of classified information by individuals with authorized access 

to defense information systems. In June 2015, we reported that DOD had 

taken action to implement minimum standards established by the National 

Insider Threat Task Force. 37 For example, the seven DOD components 

we assessed had begun to provide insider threat awareness training to all 

personnel with security clearances. However, DOD had not addressed all 

tasks associated with the minimum standard; had not analyzed gaps or 

incorporated risk assessments into the program; and had not consistently 

incorporated all of the key elements associated with an insider threat 

framework that we developed synthesizing information from a White 

House report, an executive order, DOD guidance and reports, national 

security systems guidance, and leading practices recommended by the 

National Insider Threat Task Force (see fig. 5).

 37GAO, DOD Should Strengthen Management and Guidance to Protect Classified 

Information and Systems, GAO-15-544 (Washington, D.C.: June 2, 2015). 
Page 22 GAO-17-369 Department of Defense

Figure 5: Our Framework of Key Elements to Incorporate at Each Phase of the Department of Defense’s (DOD) Insider Threat 

Programs

Visibility of cyber capabilities: We reported in September 2016 that 

DOD may be limited in responding to a cyber attack in a timely manner 

because it does not have visibility into all of its domestic capabilities that 

could be used in the event of a cyber incident. 38 Specifically, DOD has 

not maintained a database that would allow the department to fully and 

 38GAO, Defense Civil Support: DOD Needs to Identify National Guard’s Cyber Capabilities 

and Address Challenges in Its Exercises, GAO-16-574 (Washington, D.C.: Sept. 6, 2016).
Page 23 GAO-17-369 Department of Defense

quickly identify existing cyber capabilities of all National Guard cyber 

units, as required by law. 39 We reported that National Guard Bureau 

officials had identified two systems that the bureau traditionally uses to 

identify National Guard capabilities—the Defense Readiness Reporting 

System40 and the Joint Information Exchange Environment 41—but 

acknowledged that neither of these systems could be used to fully or 

quickly identify National Guard cyber capabilities. We found examples of 

three types of cyber capabilities in National Guard units—communications 

directorates, computer network defense teams, and cyber units—that 

DOD may be unaware of if requested to support civil authorities during a 

cyber incident. This is because some National Guard capabilities were 

established to support state and local governments and do not have a 

federal mission and, therefore, would not be reported in the Defense 

Readiness Reporting System. Further, the amount of time required to 

query other systems may not be feasible during a cyber incident, which 

could impede DOD from using the full range of its capabilities.

By improving the planning for cyber operations and the visibility and 

oversight of department-wide cyber capabilities, DOD would be better 

positioned to ensure that it maintains critical mission continuity; 

safeguards classified information and systems; and quickly responds to a 

cyber incident. Since 2011, we have directed 33 recommendations to 

DOD in unclassified and sensitive but unclassified reports, of which 14 

remain open, including 5 priority recommendations. Table 3 highlights key 

actions DOD should take to help address challenges it faces in mitigating 

threats to cyberspace and in expanding cyber capabilities.

 39DOD is required to maintain a database of emergency response capabilities that 

includes (1) the types of emergency response capabilities that each state’s National 

Guard, as reported by states, may be able to provide in response to a domestic natural or 

manmade disaster, both to their home states and under state-to-state mutual assistance 

agreements; and (2) the types of emergency response capabilities and an identification of 

the units that DOD may be able to provide during national emergencies. Pub. L. No. 109-

364, §1406(1) (2006) and codified at 10 U.S.C. § 113 (note).

40DOD uses the Defense Readiness Reporting System to assess the ability of units and 

joint forces to fight and meet the demands of the national security strategy and captures 

organizational capabilities to perform a wider variety of missions and mission-essential 

tasks. 

41The Joint Information Exchange Environment is the National Guard’s system of record 

to facilitate information sharing and collaboration within the National Guard, to coordinate 

requests for assistance, and to identify specific National Guard capabilities to support a 

request for assistance. 
Page 24 GAO-17-369 Department of Defense

Table 3: Key Actions That the Department of Defense (DOD) Should Take to Help Mitigate Threats to Cyberspace and in 

Expanding Cyber Capabilities

Challenge/key actions needed

Continuity of operations in a degraded cyber environment

DOD needs to improve the planning and data related to the department’s ability to maintain continuity in a degraded cyber 

environment. Specifically, DOD should fully implement the government-wide and DOD cyber security strategy and provide its 

components with tools—such as official guidance, training, and exercises—that both emphasize the need to conduct continuity 

exercises in a degraded cyber environment and assist in developing and practicing effective responses during continuity exercises. 

DOD should also improve the effectiveness of its process for collecting and reporting utilities disruption data. (See the following GAO 

reports: GAO-14-404SU, GAO-15-749.)

Protection of classified information and systems from insider threat

DOD needs to develop and strengthen its insider threat programs. Specifically, DOD should issue guidance to help DOD officials 

identify actions, such as the key elements included in the GAO Insider Threat Framework, to enhance DOD’s insider threat programs. 

(See the following GAO report: GAO-15-544.)

Visibility of cyber capabilities

DOD needs to ensure that it has full visibility into all of the department’s available cyber capabilities. Specifically, DOD should develop 

and maintain a database that identifies all National Guard cyber capabilities to include the types of cyber-related emergency response 

capabilities. (See the following GAO report: GAO-16-574.)

Source: GAO analysis of GAO’s previously issued work. | GAO-17-369

DOD’s $580 billion fiscal year 2016 budget accounts for nearly half of the 

federal government’s discretionary spending, and DOD’s costs are 

growing. For example, DOD plans to invest $574 billion in future funding 

to develop and acquire major acquisition programs, and the department’s 

annual military health care costs are expected to increase from about $60 

billion in fiscal year 2017 to about $70 billion by fiscal year 2028. DOD 

also maintains a substantial inventory of infrastructure, owning over 70 

percent of the federal government’s physical assets, with a reported 

replacement value of about $880 billion. Senior leaders have 

acknowledged the need for the department to effectively manage the 

resources entrusted to it. However, DOD is one of the few federal 

agencies that cannot accurately account for and report its spending or 

assets.

Like the rest of the federal government, DOD’s budget has been affected 

by policies that are intended to correct the imbalance between spending 

and revenue. For example, the Budget Control Act of 2011 imposed an 

$800 billion reduction in planned spending for DOD from fiscal years 2012 

Control Escalating Costs 

and Manage Finances
Page 25 GAO-17-369 Department of Defense

through 2021.42 Given these constrained budgetary resources and DOD’s 

recognition that there are opportunities to be more efficient in the 

department’s operations, the department has undertaken a series of 

reform initiatives to control costs for programs that make up a significant 

portion of DOD’s budget and improve DOD’s financial management 

operations. At the same time, DOD is pursuing new technologies and is 

investing significant resources to develop and procure a portfolio of 78 

major defense acquisition programs. However, DOD has experienced 

cost and schedule overruns that expose its procurement budgets to 

unnecessary risk.

In addition, DOD’s military health system must ensure access to quality 

health care for service members and their families, but it has experienced

a more than two-fold increase in costs in fiscal years 2001 through 2017, 

and DOD has likely underestimated its improper payments for health care 

services. 43 Further, total military health system costs are expected to 

increase from about $60 billion in fiscal year 2017 to a projected $70 

billion annually by fiscal year 2028 (see fig. 6).

 42The Bipartisan Budget Act of 2013 extended the budget caps and sequestration through 

2023. As a result of funding reductions from the Budget Control Act of 2011, the Bipartisan 

Budget Act of 2013 and other actions, DOD estimates reductions in planned defense 

spending from fiscal years 2012 through 2021 will exceed $1 trillion dollars. DOD, 

Estimated Impacts of Sequestration-Level Funding (Apr. 3, 2014).

43The military health system provides health care to 9.4 million eligible service members 

and their families, military retirees and their families, and dependent survivors. It is 

comprised of the Defense Health Program, health care accrual for retirees, as well as 

certain other costs.
Page 26 GAO-17-369 Department of Defense

Figure 6: Military Health System Costs, Fiscal Years 2001 through 2028 (Projected)

Note: The military health system provides health care to 9.4 million eligible service members and their 

families, military retirees and their families, and dependent survivors. It is comprised of the Defense 

Health Program, health care accrual for retirees, as well as certain other costs.

DOD also manages installations worldwide to support military readiness, 

consisting of about 562,000 facilities, but has maintained excess 

infrastructure relative to the department’s force structure needs.44 DOD 

has expressed a commitment to holding itself accountable for the funding 

it receives and is taking actions to allow for an annual financial statement 

audit, but it continues to remain one of the few federal entities that cannot 

demonstrate an ability to accurately account for and reliably report on its 

spending or assets. Our work has found that DOD must address these 

and other weaknesses to control costs as it faces a period of constrained 

budgetary resources and fiscal uncertainty.

Since 2010, DOD has implemented a series of Better Buying Power 

initiatives that outline steps the department is taking across its weapon 

system acquisition portfolio to reduce cost and schedule overruns and 

achieve better capability and performance results for the warfighter. 45

These initiatives include setting and enforcing affordability constraints, 

 44Department of Defense, Base Structure Report – Fiscal Year 2015 Baseline (Sept. 30, 

2014). 

45Office of the Under Secretary of Defense, Acquisition, Technology, and Logistics 

Memorandum: Better Buying Power: Guidance for Obtaining Greater Efficiency and 

Productivity in Defense Spending (Sept. 14, 2010); Office of the Under Secretary of 

Defense, Acquisition, Technology, and Logistics Memorandum: Implementation Directive 

for Better Buying Power – Obtaining Greater Efficiency and Productivity in Defense 

Spending (Nov. 3, 2010); Department of Defense Instruction 5000.02, Operation of the 

Defense Acquisition System (Jan.7, 2015) (incorporating change 2, effective Feb. 2, 

2017).
Page 27 GAO-17-369 Department of Defense

implementing “should cost” management to control contract costs, and 

eliminating redundancies within portfolios, among others. In implementing 

these initiatives, DOD has achieved better acquisition outcomes in some 

programs, including collectively reducing the total cost estimate for 14 

programs that began systems development during this period by over 

$580 million since their first full estimates.

DOD has also taken steps to modernize the military health system and 

control health care costs. After decades of incremental alterations to its 

health care programs, DOD created the Defense Health Agency (DHA) in 

2013 to provide administrative governance for a more cost-effective and 

integrated military health system. DHA has implemented various 

initiatives, such as consolidating shared medical services; eliminating 

redundant processes; coordinating resources; and matching personnel, 

infrastructure, and funding to missions and populations in demand. DOD 

has also taken steps to control costs for its support infrastructure. For 

example, DOD consolidated some of its base support services and 

reported a net reduction of 7.7 million square feet of support infrastructure 

in fiscal year 2013, which represented about 75 percent of the federal 

government’s total reduction under a government-wide initiative. 46 DOD 

also established financial improvement and audit readiness guidance, 

implemented training programs to help build a skilled financial 

management workforce, and developed corrective action plans to track 

the remediation of audit issues.47 However, DOD continues to identify the 

need for sufficient numbers of qualified and experienced personnel as a 

challenge to achieving its goals of financial improvement and audit 

readiness. DOD has made progress in these areas, but substantial work 

remains for DOD to further control costs and manage its finances.

 46The Freeze the Footprint implementation memorandum issued by the Office of 

Management and Budget in 2012 required agencies to develop and submit plans 

describing the agency’s overall approach in managing its real property usage and 

spending. 

47Congress mandated in the National Defense Authorization Act for Fiscal Year 2010 that 

DOD develop and maintain a plan that includes specific actions to be taken and costs 

associated with (1) correcting the financial management deficiencies that impair DOD’s 

ability to prepare complete, reliable, and timely financial management information, and (2) 

ensuring that DOD’s financial statements are validated as ready for audit not later than 

September 30, 2017. Pub. L. No. 111-84, § 1003(a),123 Stat. 2190, 2439-40 (Oct. 28, 

2009), codified at 10 U.S.C. § 2222 note. 
Page 28 GAO-17-369 Department of Defense

The following sections identify our assessment of remaining work, 

including additional actions that DOD should take to make further 

progress.

Weapon system acquisition: This portfolio of 78 major defense 

acquisition programs will require roughly a quarter of DOD’s development 

and procurement funding over the next 5 years. Currently, DOD’s total 

investment in these major defense acquisition programs is estimated at 

$1.5 trillion, of which $574 billion is for future funding. However, over the 

past year, we reported that a majority of DOD’s 78 major programs (46 

out of the 78 programs) had experienced a cost increase, as shown in 

figure 7. 48

 48GAO, Defense Acquisitions: Assessments of Selected Weapon Programs,

GAO-17-333SP (Washington, D.C.: Mar. 30, 2017).
Page 29 GAO-17-369 Department of Defense

Figure 7: Distribution of the 1-Year Change in Total Acquisition Costs within the Fiscal Year 2016 Portfolio of Major Weapon 

System Programs

We have reported that DOD could achieve significant cost savings by 

consistently employing acquisition best practices in its weapon systems 

programs, such as early systems engineering, analyzing alternatives, 

managing changes in system requirements, and applying prototyping 

early in development testing.49 While DOD has made progress in 

decreasing the amount of cost growth realized in its portfolio of major 

acquisition programs, it has not uniformly implemented acquisition best 

practices and reforms across the portfolio, which has resulted in some 

 49See, for example, GAO, Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: 

Mar. 1, 2011). 
Page 30 GAO-17-369 Department of Defense

programs that realized significant cost growth and delays in delivering 

needed capabilities.

We have also found that new acquisition programs started each year at 

DOD fulfill only some of the best practices intended to achieve a level of 

knowledge that would demonstrate that the program is capable of 

meeting its performance requirements and cost and schedule 

commitments. Specifically, in March 2017 we found that most of the 

programs we assessed were not fully following a knowledge-based 

acquisition approach. 50 Further, only one of the four programs that began 

or planned to begin system development during the fiscal year 2016 

assessment period demonstrated a total match between resources and 

requirements (see fig. 8). The remaining 41 programs we reviewed 

implemented knowledge-based leading practices to varying degrees.

Figure 8: Implementation of Knowledge-Based Practices for New Acquisition 

Programs at System Development Start

 50GAO-17-333SP.
Page 31 GAO-17-369 Department of Defense

We further reported that some programs have progressed through the 

acquisition cycle without the appropriate levels of knowledge at key 

junctions, which is of particular concern for programs that entered the 

system development phase before satisfying knowledge-based best 

practices. For example, DOD faces technical, design, and production 

challenges for some of its large programs, such as the CVN 78 aircraft 

carrier, which has experienced an almost 23-percent increase in program 

costs since construction was authorized in fiscal year 2008—from $10.5 

billion to $12.9 billion. In an effort to meet required installation dates 

aboard the CVN 78, the Navy elected to produce some of these systems 

prior to demonstrating their maturity, which introduces the risk of late and 

costly design changes and rework. In addition, progress in constructing 

the CVN 78 was overshadowed by inefficient out-of-sequence work, 

driven largely by material shortfalls, engineering challenges, and delays in 

developing and installing critical technology systems. 

Military health care: Military health care costs constituted about 6 

percent of DOD’s total budget in fiscal years 1994 and 2000, but have 

grown considerably by about 217 percent in fiscal years 2000 and 2017. 

As noted above, DOD created DHA in 2013 to create a more costeffective and integrated military health system. DHA provides 

administrative support for the services’ respective medical programs and 

combines common “shared” services in certain areas to achieve cost 

savings. However, DOD has not established key processes for monitoring 

improper payments or fully implemented DHA reforms, which include 

limited efforts to modernize the military health system and reduce health 

care costs.

In February 2015, we reported that DOD has not developed a 

comprehensive methodology to monitor improper payments to control 

costs in the military health care plan (i.e., TRICARE). We reported that in 

its fiscal year 2015 agency financial report, DOD reported spending about 

$19.7 billion on the purchased care option of TRICARE, yet reported 

improper payments of only about $158 million, an error rate of 0.8 

percent, compared with Medicare’s error rate of 12 percent. This 

considerable disparity raises questions about the accuracy of the 
Page 32 GAO-17-369 Department of Defense

methodology for calculating TRICARE improper payments.51 In our 

February 2015 report, we found that TRICARE’s methodology for 

estimating improper payments for fiscal year 2013 was less 

comprehensive than the measurement methodology used to estimate 

Medicare improper payments because TRICARE’s methodology does not 

comprehensively capture errors that occur at the provider level or errors 

that can only be identified through an examination of underlying medical 

record documentation. As a result, for fiscal year 2013, there were 

significant differences in the improper payment rate for TRICARE and 

Medicare (see fig. 9).

 51In May 2017, DOD officials noted that our report only reviewed DOD’s administrative 

claims review program, which is a less inclusive evaluation of DOD’s military health 

improper payments review program. Officials noted that there are multiple components of 

DOD’s improper payment report programs, including an Improper Payment Evaluation 

Branch consisting of the administrative claims reviews, a Clinical Operations Directorate, 

involving clinical peer reviews; and the TRICARE Operations Directorate involved in the 

development of benefit policy and management of TRICARE Managed Care Support 

contract functions. Our report assessed how DOD was measuring the error rate for its 

official improper payment estimate. In our recommendation, we noted that once DOD 

implemented a more comprehensive improper payment methodology, it should consider 

developing more robust corrective action plans that address underlying causes of 

improper payments, such as those determined by medical record reviews. For more 

information, see GAO, Improper Payments: TRICARE Measurement and Reduction 

Efforts Could Benefit from Adopting Medical Record Reviews, GAO-15-269 (Washington, 

D.C.: Feb. 18, 2015).
Page 33 GAO-17-369 Department of Defense

Figure 9: TRICARE and Medicare Outlays and Estimated Improper Payments, Fiscal Year 2013

Notes: The TRICARE and Medicare improper payment estimates represent payments from the prior 

fiscal year. Fiscal year 2013 estimates were the most recently available at the time we conducted our 

analysis.

a

TRICARE outlays and improper payment estimates include payments made through the TRICARE 

purchased care system. DOD refers to TRICARE purchased care payments as “military health 

benefits” in its agency financial reports.

b

Medicare outlays and improper payment estimates are for the Medicare fee-for-service program.

With respect to DHA, we reported in September 2015 (nearly 2 years 

after DHA’s creation) that DOD had not fully implemented key 

processes—including developing personnel requirements, identifying cost 

savings, and establishing performance measures—to monitor the 

department’s implementation of DHA reforms. 52 More specifically, we 

reported in 2013 that DOD had not developed DHA staffing requirements 

to monitor the effect of possible personnel growth and the composition of 

its workforce. In the absence of such requirements, the military services 

questioned the accuracy of the estimated $46.5 million in annual 

personnel savings on which DOD had, in part, based its decision to 

 52See GAO, Defense Health Care Reform: Actions Needed to Help Ensure Defense 

Health Agency Maintains Implementation Progress, GAO-15-759 (Washington, D.C.: 

Sept. 10, 2015).
Page 34 GAO-17-369 Department of Defense

establish DHA. 53 We further reported that DOD’s cost estimates for DHA 

were unclear and missing key details. For example, although DOD had 

developed a business case analysis approach to help achieve cost 

savings and has applied this approach to eight of its ten shared service 

areas, it has not developed these analyses for the remaining two areas of 

shared services—(1) public health and (2) medical education and training. 

We also reported that DOD did not have comprehensive performance 

measures and quantifiable targets to assess progress in achieving DHA’s 

cost-savings goals, and that opportunities existed to reduce health care 

costs by millions of dollars by completing, implementing, and monitoring 

comprehensive plans for each of its approved health care initiatives. For 

example, in 2012, we reported that DOD had calculated that it would save 

$300 million by meeting one of its health care initiative cost growth targets 

related to clinical and business practices, such as purchased care 

reimbursements.54

Defense support infrastructure: DOD has not effectively and efficiently 

managed its portfolio of facilities or controlled the costs of maintaining 

excess support infrastructure relative to its force structure needs. DOD’s 

most recent Base Realignment and Closure round occurred in 2005 and, 

according to DOD officials, was the largest to date. DOD officials noted in 

May 2017 some reasons for cost overruns associated with the 2005 Base 

Realignment and Closure round, including, among others, higher costs for 

military construction materials and efforts to align DOD's infrastructure 

with military strategy. Our work on DOD’s implementation of the 2005 

Base Realignment and Closure round identified weaknesses that 

hampered DOD’s ability to execute its responsibilities related to the cost 

and savings estimation process and efforts to measure performance.55 In 

addition, we reported that DOD had underestimated specific infrastructure 

 53GAO, Defense Health Care Reform: Additional Implementation Details Would Increase 

Transparency of DOD’s Plans and Enhance Accountability, GAO-14-49 (Washington, 

D.C.: Nov. 6, 2013). 

54GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, 

D.C.: Feb. 28, 2012). 

55See GAO, Military Base Realignments and Closures: More Guidance and Information 

Needed to Take Advantage of Opportunities to Consolidate Training, GAO-16-45

(Washington, D.C.: Feb.18, 2016); Defense Infrastructure: Improved Guidance Needed for 

Estimating Alternatively Financed Project Liabilities, GAO-13-337 (Washington, D.C.: Apr. 

13, 2013); and Military Bases: Opportunities Exist to Improve Future Base Realignment 

and Closure Rounds, GAO-13-149 (Washington, D.C.: Mar. 7, 2013).
Page 35 GAO-17-369 Department of Defense

requirements in the model that it used to estimate expected costs and 

savings from implementing closures and realignments under the Base 

Realignment and Closure process.56 Specifically, DOD did not fully 

identify requirements for military construction, relocating military 

personnel and equipment, and information technology when entering 

these costs into its model, which resulted in inaccurate cost estimates. 

We reported that the primary reason costs increased for the 2005 Base 

Realignment and Closure round was higher-than-anticipated military 

construction costs—an increase of 86 percent from $13.2 billion originally 

estimated to $24.5 billion after implementation ended in 2011.

In addition, DOD can improve the accuracy and completeness of its 

facilities utilization and leasing information to more effectively manage the 

department’s portfolio of facilities and control the costs of maintaining 

excess support infrastructure relative to its force structure needs.57 In 

February 2017 we reported that DOD had utilization data on about 97 

percent of its facilities as of September 2015—the most recent data 

available—increasing from 53 percent as of September 2013. However, 

we reported that, of the facilities that have a utilization rating of 100, 24 

percent had either no inspection date or had most recently been 

inspected prior to September 30, 1999, which calls into question the

accuracy of these data.58 We also reported in March 2016 that DOD did 

not always assess the use of available space resulting from planned force 

reductions at its installations or systematically identified the availability of 

underutilized space prior to entering into lease agreements.59

Financial management: Long-standing internal control deficiencies have 

adversely affected the economy, efficiency, and effectiveness of DOD’s 

operations. The effects of DOD’s financial management problems extend 

beyond financial reporting and negatively affect DOD’s ability to manage 

the department and make sound decisions regarding its mission and 

operations. Among other issues, DOD’s financial management problems 

 56GAO-13-149.

57See GAO, Defense Infrastructure: DOD Needs to Improve Its Efforts to Identify 

Unutilized and Underutilized Facilities, GAO-14-538 (Washington, D.C.: Sept. 9, 2014); 

and Defense Infrastructure: More Accurate Data Would Allow DOD to Improve the 

Tracking, Management, and Security of Its Leased Facilities, GAO-16-101 (Washington, 

D.C.: Mar. 15, 2016). 

58GAO-17-317.

59GAO-16-101.
Page 36 GAO-17-369 Department of Defense

have contributed to (1) inconsistent and sometimes unreliable reports to 

Congress on weapon system operating and support costs, limiting the 

visibility that Congress needs to effectively oversee weapon system 

programs and (2) an impaired ability to make cost-effective choices, such 

as deciding whether to outsource specific activities or how to improve 

efficiency through technology.

In January 2017, we reported that DOD’s financial management problems 

have continued to significantly impede our ability to render an opinion on 

the federal government’s consolidated financial statements and have 

prevented DOD from producing auditable department-wide financial 

statements.60 For example, DOD’s reported inventory, buildings, and 

other property and equipment represent 75 percent of the federal 

government’s reported physical assets as of September 30, 2016. 

However, DOD cannot demonstrate that it accurately and completely 

accounted for all of these assets, including their location and condition. 

DOD also reported fiscal year 2015 procurement obligations that 

represent over 60 percent of the federal government’s equity. However, 

DOD lacks effective systems, processes, and controls related to its 

procurement activity, including contract pay.

We also identified several long-standing and interrelated deficiencies that 

have hindered DOD’s financial management activities. 61 For example, 

DOD leadership has not assured that DOD’s components adhere to audit 

readiness plans and guidance. As a result, components lack the 

necessary leadership, processes, systems, and controls to improve 

financial management operations and audit readiness. DOD also has not 

assured that the military services enhance their policies and procedures 

for developing audit corrective action plans and improve processes for 

identifying, tracking, and remediating financial management-related audit 

findings and recommendations. We further reported that DOD needs to 

continue to (1) develop and deploy enterprise resource planning systems 

as a critical component of it financial improvement and audit readiness 

 60GAO, Financial Audit: Fiscal Years 2016 and 2015 Consolidated Financial Statements 

of the U.S. Government, GAO-17-283R (Washington, D.C.: Jan. 12, 2017).

61See GAO, DOD Financial Management: Significant Efforts Still Needed for Remediating 

Audit Readiness Deficiencies, GAO-17-85 (Washington, D.C.: Feb. 9, 2017); DOD 

Financial Management: Improvements Needed in the Navy’s Audit Readiness Efforts for 

Fund Balance with Treasury, GAO-16-47 (Washington, D.C.: Aug. 19, 2016); and DOD 

Financial Management: Greater Visibility Needed to Better Assess Audit Readiness for 

Property, Plant, and Equipment, GAO-16-383 (Washington, D.C.: May 26, 2016).
Page 37 GAO-17-369 Department of Defense

strategy and (2) design manual work-arounds for older systems to satisfy 

audit requirements and improve data used for day-to-day decision 

making. 62 We also reported in February 2017 that all three of the 

independent public accountants (IPA) contracted to audit the fiscal year 

2015 Schedules of Budgetary Activity (Budgetary Schedule) of the Army, 

the Air Force, and the Navy issued disclaimers, meaning that the IPAs 

were unable to complete their work or issue an opinion because they 

lacked sufficient evidence to support the amounts presented. These IPAs 

also identified material weaknesses in internal control and collectively 

issued over 700 findings and recommendations. These weaknesses 

included the military services’ inability to, among other things, reasonably 

assure that the Budgetary Schedules reflected all of the relevant financial 

transactions that occurred and that documentation was available to 

support such transactions. As a result of these financial management 

issues, DOD expects the department-wide financial statement audit 

planned for fiscal year 2018 to result in significant audit findings and a 

disclaimer of opinion. In addition, DOD reported that it anticipates 

receiving disclaimers of opinion on its full financial statements for several 

years, but emphasized that being subject to audit will help the department 

make progress.

By consistently applying weapon system acquisition best practices, 

managing improper payments associated with military health care, 

comprehensively implementing military health care reforms, more 

effectively managing its portfolio of support infrastructure, and addressing 

long-standing financial management deficiencies, DOD would be better 

positioned to identify opportunities to direct its resources to its highest 

priorities. Since 2011, we have directed 79 recommendations to DOD in 

this area, of which 72 remain open, including 52 priority 

recommendations. Table 4 highlights key actions DOD should take to 

help address the challenges it faces in controlling costs and managing 

finances.

 62An enterprise resource planning system is an automated system using commercial offthe-shelf software consisting of multiple, integrated functional modules that perform a 

variety of business-related tasks, such as general ledger accounting, payroll, and supplychain management. 
Page 38 GAO-17-369 Department of Defense

Table 4: Key Actions That the Department of Defense (DOD) Should Take to Help Address the Challenges It Faces in 

Controlling Escalating Costs and Managing Finances

Challenges/key actions needed

Weapon systems acquisition

DOD needs to fully implement best practices to effectively manage escalating weapon systems costs across its $1.5 trillion portfolio. 

Specifically, DOD should consistently implement knowledge-based acquisition practices that relate to testing critical technologies 

before system development and performing critical system reviews at the appropriate juncture. (See the following GAO report: 

GAO-17-333SP.)

Military health care

DOD needs to fully implement key processes to monitor improper payments and the implementation of DHA. Specifically, DOD should 

develop a comprehensive methodology to monitor improper payments to control the costs of military health care, and develop 

personnel requirements, identify cost savings opportunities, and establish performance measures for its DHA reforms. (See the 

following GAO reports: GAO-15-759, GAO-15-269.)

Defense support infrastructure

DOD needs to ensure that it has accurate and complete information to effectively manage its portfolio of facilities and identify 

opportunities to reduce costs for excess support infrastructure relative to its force structure needs. Specifically, DOD should assess 

the utilization of its property and ensure that it uses accurate and complete information to better identify potential areas to reduce and 

consolidate its infrastructure. (See the following GAO reports: GAO-14-538, GAO-16-101.)

Financial management

DOD needs to implement financial management process improvements to address deficiencies with the department’s financial 

management operations. Specifically, DOD should fully implement a process to monitor and address corrective actions reported 

during audits, and the military services should improve processes for tracking and monitoring financial management-related audit 

findings and recommendations. (See the following GAO reports: GAO-17-317, GAO-16-383, GAO-15-463, GAO-17-85.)

Source: GAO analysis of GAO’s previously issued work. | GAO-17-369

DOD is one of the nation’s largest employers, managing a total workforce 

of about 2.1 million active-duty and reserve military personnel and 

approximately 769,000 civilian personnel. DOD estimates that it will 

spend nearly $180 billion in fiscal year 2017 on pay and benefits for 

military personnel and about $70 billion for its civilian employees. Taken 

together, funding for military and civilian pay and benefits represented 

nearly 50 percent of DOD’s budget in fiscal year 2016 (see fig. 10). DOD 

is also supported by about 561,000 contractor personnel, who help 

maintain weapon systems; support base operations; and provide 

information technology, management, and administrative support, among 

other responsibilities. 63 DOD estimates that it spent about $115 billion on 

its contractor workforce in fiscal year 2015, although we have raised 

questions regarding the reliability of the department’s information on this 

workforce.

 63This represents the total estimate of contractor full-time equivalents in fiscal year 2015. 

Strategically Manage 

Human Capital
Page 39 GAO-17-369 Department of Defense

Figure 10: The Department of Defense’s (DOD) Funding for Military and Civilian Pay 

and Benefits, Fiscal Year 2016

As with other large organizations, DOD must compete for talent in the 

21st Century, and recruit, develop, promote, and retain a skilled and 

diverse workforce of service members and civilians. However, DOD, as 

other federal agencies, faces mission-critical skill gaps that pose a risk to 

national security and impede the department from cost-effectively serving 

the public and achieving results. For example, the need for some skill 

sets, such as cyber, intelligence, maintenance, engineering, disability 

evaluation, and auditing has increased while the need for other skill sets 

may decrease over time. Moreover, the changing nature of federal work 

and a potential wave of employee retirements could produce gaps in 

leadership and institutional knowledge, which may aggravate the 

problems created by existing skill gaps.

Current budget and long-term fiscal pressures on the department only 

increase the importance of strategically managing human capital. DOD 

has recognized that efficient human capital management is imperative 

because personnel costs will likely drive many of the department’s future 

strategic decisions, and that it must incur compensation costs that are 

effective in helping it achieve its recruiting and retention goals. Our work 

has found that DOD must address several weaknesses to determine its 

appropriate workforce mix and costs, address critical skill gaps, and 

develop an effective military compensation strategy as it attempts to 
Page 40 GAO-17-369 Department of Defense

strategically manage its military and civilian workforces and contracted 

support. 64

DOD has begun to implement a significant phase of its civilian workforce 

performance management system, called “New Beginnings,” which aims 

to create a department-wide civilian workforce performance management 

process, and has taken steps to develop better information and data 

about the size, capabilities, and skills possessed and needed within its 

total workforce. For example, in June 2014 DOD incorporated some 

results-oriented performance measures into its civilian workforce plan, 

and in June 2016 issued guidance that established a common structure 

for managing and evaluating workforce competency gaps for developing 

its future strategic workforce plans. In an effort to address critical skill 

gaps in its cybersecurity workforce, DOD updated its cybersecurity 

workforce plan in 2014 to include a description of the strategies it plans to 

employ to address gaps in human capital approaches and critical skills 

and competencies.

DOD has also taken steps to evaluate the effectiveness of specific pay, 

retirement, health care, and quality of life benefits included in military 

compensation, and proposed a range of options to reduce military 

compensation costs, such as limiting the amount of the annual pay raise 

and implementing increases in enrollment fees, deductibles, and co-pays 

for TRICARE participants. DOD has also begun a study to determine the 

appropriate mix of pay and benefits to use in making comparisons with 

private-sector compensation, and is developing a more comprehensive 

methodology for making these comparisons. DOD has made progress in 

these areas, but substantial work remains for the department in managing 

its human capital.

The following sections identify our assessment of remaining work, 

including additional actions that DOD could take to make further progress.

Workforce mix and costs: Since 2004 we have reported on challenges 

DOD faces in developing a strategic workforce plan that would enable the 

department to make efficient and cost-effective human capital decisions. 

 64See, for example, GAO, Human Capital: DOD Should Fully Develop Its Civilian Strategic 

Workforce Plan to Aid Decision Makers, GAO-14-565 (Washington, D.C.: July 9, 2014);

Defense Acquisition Workforce: Actions Needed to Guide Planning Efforts and Improve 

Workforce Capability, GAO-16-80 (Washington, D.C.: Dec. 14, 2015); and Military 

Compensation: Additional Actions Are Needed to Better Manage Special and Incentive 

Pay Programs, GAO-17-39 (Washington, D.C.: Feb. 3, 2017). 
Page 41 GAO-17-369 Department of Defense

For example, we reported that DOD had not assessed the appropriate 

mix of military, civilian, and contractors to prioritize its investments and 

improve its overall workforce.65 DOD noted in its strategic workforce plans 

that assessing this mix is a significant challenge, and that it planned to 

complete a workforce mix assessment in a future plan. However, the 

requirement to develop and submit its biennial strategic workforce plan 

was repealed in the National Defense Authorization Act for Fiscal Year 

2017 and not replaced with another legislative requirement. DOD officials 

have stated that the department is engaged in internal workforce planning 

efforts to better align its workforce mix and costs.

We also reported in September 2013 that DOD had opportunities to 

improve its methodology for estimating workforce costs. 66 For example, 

DOD has not followed our leading practices for cost estimation and it 

likely underestimated certain costs, such as those for training, which 

prevents the department from making cost-effective comparisons and 

decisions regarding the use of its military, civilian, and contractor 

workforces. We further reported in December 2015 that DOD has not fully 

developed and implemented a plan to achieve savings for its civilian and 

contractor workforces, consistent with congressional direction.67

We further found that civilian full-time equivalents by themselves may not 

be reliable measures of the cost of the civilian personnel workforce. For 

example, our analysis shows that from fiscal years 2012 through 2016, 

civilian full-time equivalents declined by 3.3 percent, but civilian personnel 

 65See GAO, Human Capital: DOD Needs Complete Assessments to Improve Future 

Civilian Strategic Workforce Plans, GAO-12-1014 (Washington, D.C.: Sept. 27, 2012); 

Human Capital: Additional Steps Needed to Help Determine the Right Size and 

Composition of DOD’s Total Workforce, GAO-13-470 (Washington, D.C.: May 29, 2013); 

and Human Capital: DOD Should Fully Develop Its Civilian Strategic Workforce Plan to 

Aid Decision Makers, GAO-14-565 (Washington, D.C.: July 9, 2014).

66GAO, Human Capital: Opportunities Exist to Further Improve DOD’s Methodology for 

Estimating the Costs of Its Workforces, GAO-13-792 (Washington, D.C.: Sept. 25, 2013).

67We reported that DOD’s September 2014 and February 2015 reports did not fully 

address most statutory requirements identified in section 955 of the National Defense

Authorization Act for Fiscal Year 2013. Specifically, DOD partially addressed three 

statutory requirements and did not address three statutory requirements. For example, 

DOD’s reports also do not include information that demonstrates that savings goals are 

being achieved for the civilian and contractor workforces. The reports do not provide 

savings for the civilian workforce but instead outline planned reductions in full-time 

equivalent positions. For more information, see GAO, Civilian and Contractor Workforces: 

Complete Information Needed to Assess DOD’s Progress for Reductions and Associated 

Savings, GAO-16-172 (Washington, D.C.: Dec. 23, 2015).
Page 42 GAO-17-369 Department of Defense

costs declined by only 0.9 percent, adjusted for inflation. As a result, 

reductions to civilian full-time equivalents may not achieve commensurate 

savings, and larger full-time equivalent reductions may be required in 

order for DOD to meet mandated savings requirements for the civilian 

and contractor workforces.

Critical skill gaps: DOD has not taken sufficient actions to strengthen 

the management of certain mission-critical workforces. For example, in 

December 2015 we reported that DOD had developed a five-phased 

process, including surveys of its employees, to assess the skills of its 

acquisition workforce and to identify and close skill gaps.68 DOD 

completed competency assessments for 12 of its 13 career fields and is 

developing new training classes to address some skill gaps. However, 

DOD has not determined the extent to which workforce skill gaps 

identified in initial career field competency assessments have been 

addressed and what workforce skill gaps currently exist. Further, DOD 

has not established time frames for when career fields should conduct 

another round of competency assessments to assess progress toward 

addressing previously identified gaps and to identify emerging needs. The 

department’s November 2016 acquisition workforce strategic plan 

identified that career field competency assessments should be conducted 

a minimum of every 5 years, but it is too soon to tell whether DOD will 

conduct these assessments as recommended in the plan.

DOD also has not addressed certain personnel challenges resulting from 

the increased demand for its unmanned aerial systems. In 2014, we 

reported that the Air Force did not accurately identify the crew ratios 

needed to meet requirements for its unmanned aerial systems pilots or 

establish the effective mix of personnel to satisfy its pilot shortages, 

including evaluating the use of military enlisted and federal civilian 

personnel to help address pilot needs. 69 In January 2017, we further 

reported that the Air Force and the Army had not resolved key challenges 

in managing these pilots or tailored their human capital strategies to 

address pilot gaps, to include evaluating the extent to which federal 

civilians could be used as pilots.70

 68GAO-16-80.

69GAO, Air Force: Actions Needed to Strengthen Management of Unmanned Aerial 

System Pilots, GAO-14-316 (Washington, D.C.: Apr. 10, 2014).

70GAO, Unmanned Aerial Systems: Air Force and Army Should Improve Strategic Human 

Capital Planning for Pilot Workforces, GAO-17-53 (Washington, D.C.: Jan. 31, 2017).
Page 43 GAO-17-369 Department of Defense

Military compensation: Since 2011, we have reported that DOD has not 

completed the steps necessary to develop a more comprehensive 

compensation strategy that could improve the ability of the department to 

recruit and retain a highly qualified force to carry out its mission while 

minimizing unnecessary costs. 71 DOD has taken some steps to evaluate 

the effectiveness of specific pay and benefits included in military 

compensation, as we suggested in March 2011, but has not 

comprehensively assessed the effectiveness of its mix of pays and 

benefits and used the results to develop a compensation strategy. For 

example, the department is implementing changes to the military 

retirement system that will provide eligible service members who have at 

least 2 but fewer than 20 years of service when departing the military with 

a portable retirement benefit.72 A DOD official stated in January 2017 that 

the department has also completed a study to review how military 

compensation compares to private sector compensation, among other 

efforts. 

However, as of March 2017, DOD had not completed an assessment of 

the effectiveness of all types of military pay and benefits, or identified 

opportunities to achieve long-term cost avoidance by addressing in a 

compensation strategy the types of compensation that are effective and 

by not incurring costs for compensation that may not be effective to help it 

achieve its recruiting and retention goals. For example, in November 

2015, we reported that special and incentive pays were not always being 

used to fill military occupational specialties that were consistently below 

authorized levels for the Army and the Army National Guard, and that 

incentives were being used sometimes for military occupational 

specialties that were consistently above approved levels. 73 We further 

reported in February 2017 that DOD has not effectively managed special 

and incentive pays for its active-duty service members—which totaled 

 71GAO-11-318SP. 

72Prior to this change, the military retirement system generally provided no retirement 

benefit to service members who departed before the completion of 20 years of service. 

73GAO, Military Recruiting: Army National Guard Needs to Continue Monitoring, Collect 

Better Data, and Assess Incentives Programs, GAO-16-36 (Washington, D.C.: Nov. 17, 

2015).
Page 44 GAO-17-369 Department of Defense

more than $3.4 billion in fiscal year 2015.74 In May 2017, DOD officials 

noted that Army's Career Satisfaction Program is one example of the 

services using non-monetary pay incentives to improve retention. 

However, we found that while DOD and the military services have 

occasionally offered service members non-monetary incentives, they do 

not routinely assess whether nonmonetary incentives could be used as 

less costly approaches to addressing retention challenges, and that 

DOD’s guidance for special and incentive pay does not explicitly 

incorporate personnel performance into eligibility criteria for retention 

bonuses as a way to foster top talent and improve program results. We 

also found that the military services were not consistently applying key 

principles of effective human capital management to its special and 

incentive pay programs for three high-skill occupations (nuclear 

propulsion, aviation, and cybersecurity) that reflect a range of 

characteristics of such programs and are associated with missions 

deemed critical by the department. In May 2017, DOD officials stated that 

DOD applies some human capital principles in its management of military 

compensation programs, noting that DOD’s review of the programs 

showed that they met or partially met 98 percent of the criteria for 

effective human capital management. However, we believe that more fully 

implementing such principles to include more precisely targeting its 

bonuses to occupations in critical need, and using these pays to foster its 

top talent, would help to ensure that DOD’s resources are optimized for 

the greatest return on investment.

By comprehensively assessing its workforce mix and costs, strengthening 

the management of critical skill gaps, and establishing a cost-effective 

military compensation strategy, DOD would be better positioned to 

determine and maintain the most effective and efficient mix of military and 

civilian personnel and contractor support. Table 5 highlights key actions 

DOD should take to help address the challenges it faces to strategically 

 74We use the term “special and incentive pays” to refer to special pays, incentive pays, 

and bonuses authorized in chapter 5 of Title 37 of the U.S. Code. Collectively, DOD uses 

its special and incentive pay programs to compensate and incentivize servicemembers for 

occupations that are dangerous, less desirable, or require special skills and training for 

which higher compensation is available in the civilian labor market. Since fiscal year 2005, 

DOD’s obligations for these pays have fluctuated as its end strength has fluctuated. 

These pays rose from $5.8 billion in fiscal year 2005 to $7.1 billion in fiscal year 2008, and 

then decreased to $3.4 billion in fiscal year 2015. For more information, see GAO, Military 

Compensation: Additional Actions Are Needed to Better Manage Special and Incentive 

Pay Programs, GAO-17-39 (Washington, D.C.: Feb. 3, 2017).
Page 45 GAO-17-369 Department of Defense

manage its human capital. Since 2011, we have directed 67 

recommendations to DOD in this area, of which 64 remain open.

Table 5: Key Actions That the Department of Defense (DOD) Should Take to Help Address Challenges to Strategically Manage 

Human Capital

Challenges/key actions needed

Workforce mix and costs

DOD needs to assess the appropriate workforce mix and more accurately estimate workforce costs. Specifically, DOD should 

determine the appropriate mix of the military and civilian and contractor workforce in its strategic workforce plan and improve its cost 

estimation methodology for these workforces to help make cost-effective comparisons. (See the following GAO reports: 

GAO-12-1014, GAO-13-470, GAO-14-565, GAO-13-792, GAO-16-172, GAO-17-128.)

Critical skill gaps

DOD needs to update its plans and strategies to manage its critical acquisition workforce and unmanned aerial system pilots that 

address career goals, workforce mix, and critical shortages. For example, DOD should identify the crew ratios needed to meet 

requirements for its unmanned aerial system pilots and establish the effective mix of personnel to satisfy its pilot shortages (See the 

following GAO reports: GAO-12-747R, GAO-12-1014, GAO-13-470, GAO-14-565, GAO-13-792, GAO-16-80, GAO-14-316, 

GAO-17-53.)

Military compensation

DOD needs to establish a cost-effective compensation strategy to help achieve its recruiting and retention goals. Specifically, DOD 

should address in a compensation strategy what types of compensation are effective and routinely assess whether nonmonetary 

incentives could be used as less costly approaches for addressing retention challenges. (See the following GAO reports: 

GAO-11-318SP, GAO-17-39.)

Source: GAO analysis of GAO’s previously issued work. | GAO-17-369

DOD spends billions of dollars each year acquiring business systems and 

contractor-provided services that provide fundamental support to the 

warfighter in the areas of health care; logistics; personnel; and financial 

management, among other areas. In fiscal year 2014 alone, DOD 

obligated $85 billion to its three largest types of contractor-provided 

services: knowledge-based, facility-related, and research and 

development services. This amount is more than double the amount that 

DOD obligated to purchase aircraft, land vehicles, and ships. DOD senior 

leaders have prioritized defense institutional reform, and have 

emphasized the need to improve business practices and reduce 

overhead as a means to achieve greater efficiencies and free up 

resources for higher priorities.

However, problems in DOD’s management of the department’s business 

functions continue to negatively affect the ability of DOD to satisfy its 

mission. In 2005, we designated DOD’s business transformation efforts—

those intended to increase the efficiency and effectiveness of what we 

identified as DOD’s core business functions—as high risk because DOD 

Achieve Greater 

Efficiencies in Defense 

Business Operations
Page 46 GAO-17-369 Department of Defense

did not have integrated planning or sustained oversight of its business 

processes. 75 We have also designated DOD’s efforts to modernize and 

consolidate the department’s business systems, contract management, 

financial management, and weapon systems acquisition as high risk 

because of planning and leadership challenges.

Congressional direction and personnel growth in headquarters 

organizations have led DOD to pursue several personnel reduction 

initiatives to achieve efficiencies since 2014. However, DOD has faced 

obstacles accounting for the resources devoted to its multiple layers of 

headquarters activities because of complex and overlapping relationships 

among them, incomplete data, and unclear personnel requirements. Our 

work has found that DOD must address several weaknesses to 

successfully implement its business transformation efforts, manage 

investments to modernize business systems, manage the acquisition of 

services, and properly size the department’s headquarters organizations 

to accomplish assigned missions.

DOD established new governance forums, issued new plans to guide its 

business transformation efforts, and established or clarified roles and 

responsibilities for senior positions related to its business functions. In 

2012, DOD established the Defense Business Council as a senior-level 

governance forum to oversee its core business functions. The Defense 

Business Council has recently begun conducting high-level performance 

reviews to assess progress in achieving department-wide goals and 

objectives in DOD’s Agency Strategic Plan, which is intended to be a 

department-wide performance plan for assessing progress across DOD’s 

business areas. The Defense Business Council has also started to 

identify opportunities to gain efficiencies across DOD’s headquarters 

offices and defense agencies. For example, in March 2017, senior DOD 

officials stated that DOD had implemented a new initiative to review how 

it accounts for costs across its business functions.76 DOD and the military 

departments have also established roles and responsibilities for senior 

 75GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

DOD characterizes its core business functions as follows: financial management, 

acquisitions, defense security enterprise, installations and environment, logistics, human 

resources and health care management, security cooperation, and enterprise information 

technology infrastructure.

76According to senior DOD officials, the initiative will focus initially on improvements in 

cost accounting practices for the real property, information technology, and medical 

business functions, but will be expanded to all of DOD’s business functions over a 3-year 

period. 
Page 47 GAO-17-369 Department of Defense

business transformation positions, such as Chief Management Officers 

(CMOs) and Deputy CMOs (DCMOs). DOD has further taken other steps 

to avoid potential overlap and duplication and gain efficiencies in its 

business systems investments. For example, DOD established an 

authoritative data source for defense business system certification 

funding and improved the data it uses to manage business systems 

acquisition.

Senior DOD leadership also remains committed to addressing its contract 

management challenges, and since 2015 has made significant progress 

in addressing operational contract support issues, such as incorporating 

operational contract support considerations into operational plans. DOD 

has also established a framework to define its major headquarters 

activities, a key step needed to track resources for these organizations 

and identify opportunities to consolidate or eliminate certain positions to 

achieve the department’s goals to reduce its headquarters resources. 

DOD has made progress in all of these areas, but substantial work 

remains to strengthen its business operations and achieve efficiencies.

The following sections identify our assessment of remaining work, 

including additional actions that DOD should take to make further 

progress.

Business transformation: DOD has not conducted effective 

performance reviews needed to ensure accountability for achieving 

results for its business transformation initiatives, or established a 

department-wide performance plan to monitor progress. Although the 

Office of the DCMO has recently begun to hold performance reviews to 

assess progress in achieving department-wide strategic goals and 

objectives, the reviews have not held business function leaders 

accountable in part because military department performance information 

was not included in the scope of the reviews. In July 2015, the Office of 

the DCMO issued the DOD Agency Strategic Plan, which according to 

DOD is a plan that establishes goals and priorities to manage its major 

business operations. However, the plan does not identify specific 

initiatives to improve DOD’s business transformation efforts, identify the 

systems and processes needed to address business transformation 

matters, or identify how progress will be assessed. In addition, while the 

Agency Strategic Plan is intended to apply to the entire department, we 

reported that the military departments had a limited role in the 

development of the plan. Further, the military departments have not 
Page 48 GAO-17-369 Department of Defense

aligned their respective plans with the Agency Strategic Plan, or used the 

Agency Strategic Plan to monitor their business functions.77

Business system modernization: DOD has developed an enterprise 

architecture—a blueprint for DOD’s business system modernization 

efforts that is intended to guide and constrain the implementation of 

business systems; however, the current version is missing important 

content associated with achieving the department’s goal of using the 

architecture to guide, constrain, and enable interoperable business 

systems. In addition, the department has not fully defined and established 

management controls and plans to more effectively and efficiently 

manage its business system investments, which totaled approximately 

$10 billion in fiscal year 2015. DOD officials stated in May 2017 that the 

department has used its business enterprise architecture for at least the 

past three investment review cycles to help identify duplicate investments. 

In addition, officials have provided examples of benefits attributed, at 

least in part, to the department’s enterprise architecture. For example, 

according to officials with the Office of the DCMO, two proposed defense 

business systems were not approved due, in part, to architecture reviews 

that revealed that the requested capabilities were already available in 

other systems. In addition, DOD officials stated in May 2017 that the 

architecture informed a decision to investigate potential duplication and 

overlap and opportunities to develop shared services among fourth estate 

and financial management systems.78 However, the department has not 

yet demonstrated that it is actively and consistently using such 

assessments of potential duplication and overlap to eliminate duplicative 

systems. In January 2017, the department issued a plan to improve the 

usefulness of its business architecture. However, the department’s effort 

to complete its federated business architecture remains a work in 

progress. In addition, DOD needs to take steps to ensure that, among 

other things, documents submitted as part of the business system 

investment management process include critical information for 

conducting all assessments, such as information about cost in 

 77GAO, Defense Business Transformation: DOD Should Improve Its Planning with and 

Performance Monitoring of the Military Departments, GAO-17-9 (Washington, D.C.: Dec. 

7, 2016).

78DOD defines the fourth estate as DOD organizations, other than the military services, 

that have DOD manpower resources. These organizations include the Office of the 

Secretary of Defense; the defense agencies; DOD field activities; the Office of the DOD 

Inspector General; the Joint Staff; and the combatant commands.
Page 49 GAO-17-369 Department of Defense

relationship to return on investment. 79 We also reported in February 2017 

that DOD had not yet established an action plan (or plans) highlighting 

how it intends to, among other things, improve its business system 

investment management process or improve its business system 

acquisition outcomes.80

Services acquisition: DOD has not fully developed guidance and plans 

needed to strategically manage its acquisition of services to determine 

what the department is buying today and what it intends to buy in the 

future, or provide the Congress with visibility into its planned spending for 

contracted services. Specifically, we reported in February 2017 that, while 

DOD issued new guidance in January 2016 for acquiring services, DOD 

lacks an action plan to enable it to assess progress in achieving its goals 

of more effectively managing services acquisition, and efforts to identify 

goals and associated metrics are in the early stages of development.81

We also reported in February 2016 that, while data on future service 

acquisitions are generally maintained by DOD program offices, DOD and 

military department guidance do not require that the data be specifically 

identified in DOD’s budget forecasts, and DOD’s January 2016 instruction 

does not clearly identify what level of detail should be collected, leaving 

DOD at risk of developing inconsistent data between the military 

departments. 82

Headquarters management: Our body of work on DOD’s headquarters 

reduction initiatives found that department-wide efforts to improve the 

efficiency of headquarters organizations and identify related costs savings 

may not be fully implemented or may not result in meaningful savings. In 

February 2012, we reported that DOD could recognize cost avoidance 

and save billions of dollars by reviewing and identifying further 

opportunities for consolidating or reducing the size of headquarters 

organizations. 83 In a 2015 review of its six business processes, which 

included savings opportunities beyond headquarters reductions, the 

 79GAO, DOD Business Systems Modernization: Additional Actions Needed to Achieve 

Intended Outcomes, GAO-15-627 (Washington, D.C.: July 16, 2015). 

80GAO-17-317. 

81GAO-17-317. 

82GAO, DOD Service Acquisition: Improved Use of Available Data Needed to Better 

Manage and Forecast Service Contract Requirements, GAO-16-119. (Washington, D.C.: 

Feb. 18, 2016). 

83GAO-12-342SP.
Page 50 GAO-17-369 Department of Defense

Defense Business Board identified between $62 billion and $84 billion in 

potential cumulative savings opportunities for fiscal years 2016 through 

2020 that could be achieved through civilian personnel attrition and 

retirements to occur without replacements over the next 5 years and by 

improving core processes such as reducing excessive organizational 

layers, among other factors.84

However, we reported that DOD has not had a clear or accurate 

accounting of headquarters’ resources, including contractors, to use as a 

starting point to track headquarters reduction initiatives. 85 We further 

reported that DOD has not periodically reviewed the size and structure of 

these organizations, such as the geographic combatant commands, and 

that personnel management systems have not consistently identified and 

tracked assigned personnel. 86 We also found that DOD headquarters 

organizations have neither systematically determined their workforce 

requirements nor established procedures to periodically reassess these 

requirements, as outlined in DOD and other guidance, limiting DOD’s 

ability to identify efficiencies and limit headquarters growth in these 

organizations. 87 In 2016, DOD established a revised definition for “major 

headquarters activities,” but the one department-wide data set that 

identifies military and civilian positions by specific DOD headquarters 

 84In addition, in February 2015, the Defense Business Board, using preliminary data from 

a DOD efficiency review known as the Core Business Process Review, presented 

advisory recommendations to the Secretary of Defense, stating that its recommendations 

would result in potential savings of between $75 billion and $150 billion in the next 5

years. Among these were best practices and recommendations aimed at optimizing 

contracts, reviewing organizational structures to reduce areas of complexity and 

redundancy, implementing the consolidation of data centers, and identifying skills gaps. 

See Defense Business Board, Report to the Secretary of Defense: Transforming 

Department of Defense’s Core Business Processes for Revolutionary Change (Feb. 9, 

2015).

85GAO, Defense Headquarters: DOD Needs to Reevaluate Its Approach for Managing 

Resources Devoted to the Functional Combatant Commands, GAO-14-439 (Washington, 

D.C.: June 26, 2014).

86GAO, Defense Headquarters: DOD Needs to Periodically Review and Improve Visibility 

of Combatant Commands’ Resources, GAO-13-293 (Washington, D.C.: May 15, 2013). 

87GAO, Defense Headquarters: DOD Needs to Reassess Personnel Requirements for the 

Office of the Secretary of Defense, Joint Staff, and Military Service Secretariats,

GAO-15-10 (Washington, D.C.: Jan. 21, 2015).
Page 51 GAO-17-369 Department of Defense

functions contains unreliable data because DOD has not aligned these 

data with its revised definition. 88

By effectively monitoring department-wide business transformation 

efforts, establishing management controls for its business system 

investments, developing guidance to monitor service acquisitions, and 

improving the reliability of its headquarters data, DOD will be better 

positioned to identify opportunities to gain additional efficiencies in its 

business operations. Table 6 highlights key actions DOD should take to 

help achieve efficiencies across its defense business operations. Since 

2011, we have directed 49 recommendations to DOD in this area, of 

which 38 recommendations remain open, including 8 priority 

recommendations.

 88GAO, Defense Headquarters: Improved Data Needed to Better Identify Streamlining and 

Cost Savings Opportunities by Function, GAO-16-286 (Washington, D.C.: June 30, 2016).
Page 52 GAO-17-369 Department of Defense

Table 6: Key Actions That the Department of Defense (DOD) Should Take to Help Achieve Efficiencies in Its Business 

Operations

Challenges/key actions needed

Business transformation

DOD needs to effectively monitor business transformation efforts and demonstrate progress in implementing corrective measures

to drive business transformation efforts. Specifically, DOD’s Deputy Chief Management Officer (DCMO) should conduct regular 

performance monitoring, fully develop a corrective action plan to track corrective measures, and demonstrate progress in 

achieving business transformation and efficiency goals. (See the following GAO reports: GAO-17-317, GAO-17-9.)

Business system modernization

DOD needs to fully define and establish management controls and develop adequate plans to manage its business systems 

investments. Specifically, DOD should consistently use the business enterprise architecture to eliminate duplicative systems,

further define and establish management controls and plans to more effectively and efficiently manage its business systems 

investments, and take steps to improve its business system acquisition outcomes. (See the following GAO reports: GAO-17-317, 

GAO-15-627.)

Services acquisition

DOD needs to fully develop guidance to strategically manage its acquisition of services and provide Congress with increased 

visibility into spending for contracted services. Specifically, DOD should revise its programming guidance to collect information on

how contracted services will be used to meet requirements beyond the budget year, and modify its approach for reporting 

contracted services in its budget exhibit to ensure that all projected requirements are included. (See the following GAO reports: 

GAO-17-317, GAO-16-119.)

Headquarters management

DOD needs to improve the reliability of data to identify headquarters cost savings opportunities. Specifically, DOD should align its data 

on positions that have headquarters-related DOD functions with the revised definition of DOD’s “major headquarters activities,” and 

collect information on costs associated with functions within headquarters organizations. (See the following GAO report: 

GAO-16-286.)

Source: GAO analysis of GAO’s previously issued work. | GAO-17-369

Our body of work at DOD has identified four cross-cutting factors that 

have affected DOD’s ability to address its key mission challenges: (1) the 

lack of sustained leadership involvement, (2) a misalignment between 

programs and budgets and resources, (3) ineffective strategic planning 

and performance monitoring, and (4) an ineffective management control 

system.

Lack of sustained leadership involvement: Sustained leadership 

involvement is critical to DOD’s success in addressing long-standing 

management challenges, implementing lasting department-wide reforms, 

and achieving greater accountability. Since 1990, we have reported on 

leadership challenges across the department. In 2007, we suggested to 

Congress that it consider enacting legislation to establish a full-time CMO 

position at DOD with significant authority and experience and a sufficient 

term to provide focused and sustained leadership over the department’s 

business functions. In 2008, Congress passed the National Defense 

Four Cross-Cutting 

Factors Have Affected 

DOD’s Ability to 

Address Key Mission 

Challenges
Page 53 GAO-17-369 Department of Defense

Authorization Act for Fiscal Year 2008, which designated the Deputy 

Secretary of Defense as the CMO and created the DCMO position, which 

differed from our recommendation that DOD create a separate full-time 

CMO position as an Executive Level II position that reports directly to 

Secretary of Defense.89 Since 2008, DOD has made some progress in 

sustaining leadership over its business functions, including developing 

specific roles and responsibilities for the CMO and DCMO and 

establishing a senior-level governance forum co-chaired by the DCMO 

and the DOD Chief Information Officer to oversee the department’s 

business functions. However, DOD has had challenges retaining 

individuals in some of its top leadership positions, and significant work 

remains to address long-standing challenges in the management of 

DOD’s business functions (see fig. 11).

Figure 11: Turnover in Chief Management Officer (CMO) and Deputy Chief 

Management Office (DCMO) Positions since 2010

Nine years after the creation of the CMO and DCMO positions, all of 

DOD’s business functions remain on our High-Risk List. For example, 

with respect to financial management, in 2005 we reported that DOD had 

not established a framework to oversee and integrate financial 

management improvement efforts, such as developing remediation plans 

and accountability mechanisms to ensure progress and lasting financial 

management reform. In February 2017 we further reported that DOD had 

not reasonably assured that its components had effective leadership and 

processes in place to substantially improve DOD’s financial management 

 89Pub. L. No. 110-181, § 904 (2008).
Page 54 GAO-17-369 Department of Defense

operations and audit readiness. 90 Consequently, although DOD 

leadership has shown a commitment to financial management reform and 

established associated plans and guidance, we have seen little tangible 

evidence of progress in achieving significant financial management 

reforms. Regarding business system modernization, we reported in 2005 

that DOD leadership had not ensured that these investments were 

effectively implementing acquisition best practices so that each 

investment might deliver the expected benefits and capabilities on time 

and within budget. We further reported in February 2017 that the DCMO 

and other DOD stakeholders did not yet have the full range of 

management controls in place needed to effectively oversee these 

investments.91

Congress has remained concerned about DOD’s leadership challenges 

and, in the National Defense Authorization Act for Fiscal Year 2017, 

established a new CMO position and replaced the Under Secretary of 

Defense for Acquisition, Technology, and Logistics with the Under 

Secretary of Defense for Research and Engineering and the Under 

Secretary of Defense for Acquisition and Sustainment. 92 These new 

positions provide an opportunity to enhance the department’s leadership 

focus on its key mission challenges, but DOD will need to clearly define 

key responsibilities and authorities to help ensure that these positions can 

effectively drive transformation efforts. For example, section 901 of the 

National Defense Authorization Act for Fiscal Year 2017 requires the 

CMO to have extensive experience managing large or complex 

organizations, and to establish policies on and supervise all of the 

department’s business operations. In addition, the provision requires the 

CMO to have the authority to direct the Secretaries of the military 

departments and the heads of all other DOD organizations with regard to 

business operations. This provision further requires that the Secretary of 

Defense conduct a review of DOD leadership positions and subordinate 

organizations, and define relationships, including the placement of the 

 90GAO-17-317.

91GAO-17-317. 

92Pub. L. No. 114-328, § 901 (2016) created a new Chief Management Officer position 

with broad responsibilities and duties related to DOD’s business operations. The statute 

also established the Under Secretary of Defense for Research and Engineering to serve 

as DOD’s Chief Technology Officer and principal advisor to the Secretary of Defense on 

all research, engineering, and technology development activities, and the Under Secretary 

of Defense for Acquisition and Sustainment to serve as the Chief Acquisition and 

Sustainment Officer with the mission to deliver and sustain timely, cost-effective 

capabilities for the armed forces. The new positions are to be effective February 1, 2018.
Page 55 GAO-17-369 Department of Defense

CMO within the department, to inform how the position will be 

implemented. Our prior work has found that a CMO position similar to the 

one set forth in the provision may help DOD address its challenges in 

implementing business transformation and other efforts, and provide 

focused and sustained leadership over them. However, the provision 

does not specify how the CMO will carry out its authority, what the CMO’s 

precedence in the department will be, what the CMO’s executive 

schedule level will be, and how long the term of service for the position 

will be.

The new Under Secretary for Research and Engineering will have 

responsibility for technological development and testing, while the Under 

Secretary for Acquisition and Sustainment will have responsibility for 

acquiring and sustaining DOD’s capabilities and overseeing the 

modernization of nuclear forces and the development of capabilities to 

counter weapons of mass destruction. We have reported on the potential 

benefits of separating technology development from system development 

for acquisition programs, but the National Defense Authorization Act for 

Fiscal Year 2017 did not contain any provisions for DOD to realign its 

acquisition process along these lines. Further, in considering the 

cumulative effect of these changes, it is unclear whether the newly 

established acquisition Under Secretary positions will have adequate 

authority to address long-standing issues in holding the military 

departments and service acquisition executives accountable for major 

defense acquisition programs before they start and for their execution 

once they begin. We will continue to assess the department’s leadership 

commitment to addressing DOD’s key mission challenges, and we will 

also assess the impact of these new positions.93

Misalignment between programs and resources and budgets: In 

January 2017, we reported that the federal government faces an 

unsustainable long-term fiscal path and that the Congress and the new 

administration will need to consider difficult policy choices in the short 

term regarding federal spending.94 However, since 2005, we have 

reported that DOD’s approach to planning and budgeting often results in 

a mismatch between the department’s programs and available 

 93Section 911 of the National Defense Authorization Act for Fiscal Year 2017 also directed 

the Secretary of Defense to develop an organizational strategy, through the use crossfunctional teams, to improve collaboration and integration as well as effectiveness and 

efficiency in achieving critical objectives and outputs across the department. We are 

required to assess and report to Congress actions taken to implement this strategy.

94See, for example, GAO-17-237SP. 
Page 56 GAO-17-369 Department of Defense

resources.95 For example, while we have found that DOD has reported 

some progress in implementing acquisition reforms to control program 

costs for its weapon systems, we have reported that DOD has 

inconsistently implemented knowledge-based acquisition leading 

practices to estimate costs for its $1.5 trillion portfolio of large weapon 

systems.96 Because DOD does not routinely identify accurate and 

realistic resource needs, unexpected growth in some of its major 

acquisition programs—including the F-35, AIM-9X Block II Air-to-Air 

Missile, and MQ-8 Fire Scout—will affect numerous programs that 

simultaneously vie for significant funding commitments. In addition, we 

have reported that the Missile Defense Agency, which has spent 

approximately $90 billion since 2002, has been unable to fully estimate all 

life-cycle costs and stabilize acquisition funding baselines in order to 

assess affordability over time, which has affected DOD’s ability to make 

investment and program decisions that align with the budget. Further 

straining DOD’s budget is a proposed near-simultaneous recapitalization 

and modernization of all three legs of the nuclear triad, which DOD 

estimates will cost around $270 billion over the next two decades.97

Since 2001, DOD has increasingly relied on funding for overseas 

contingency operations (OCO) to pay for operating costs—those for dayto-day operations that are typically funded through the base budget—

raising uncertainty as to whether over the long term the department can 

afford the forces and weapon systems and other programs it currently 

maintains.98 We reported in January 2017 that the amount of OCO 

appropriations DOD considers as nonwar related increased from about 4 

percent in fiscal year 2010 to about 12 percent in fiscal year 2015, an 

increase that reflects DOD’s expanding the use of OCO appropriations 

from contingency-related operations in Iraq and Afghanistan to other 

 95GAO, 21st Century Challenges: Reexamining the Base of the Federal Government,

GAO-05-325SP (Washington, D.C.: Feb. 1, 2005).

96See, for example, GAO-04-248, GAO-17-333SP and GAO-15-290. See the DOD 

Weapon Systems Acquisition section for a discussion on challenges with aligning 

programs and budgets in the weapon systems portfolio. 

97Department of Defense, Accomplishments (2009-2016) Taking the Long View, Investing 

for the Future, Secretary Ashton Carter Cabinet Exit Memo (Washington, D.C.: Jan. 5, 

2017).

98DOD defines “contingency operations” as small-, medium-, or large-scale military 

operations, including support for peacekeeping operations, major humanitarian assistance 

efforts, noncombatant evacuation operations, and international disaster relief efforts. 

Since 2001, Congress has provided DOD with over $1.6 trillion in appropriations for these 

operations.
Page 57 GAO-17-369 Department of Defense

activities, such as efforts to deter Russia and reassure U.S. allies. 99

Senior DOD officials have acknowledged that costs funded by OCO 

appropriations are likely to endure after contingency operations have 

ceased. However, DOD has not developed a plan to transition enduring 

OCO-funded costs to the base budget, and senior level DOD officials 

maintain that DOD will be unable to make this transition until there is 

sufficient relief from the sequester-level discretionary budget caps 

established in the Budget Control Act of 2011. In January 2017, we 

recommended that DOD collaborate with the Office of Management and 

Budget to modify guidance on what costs should be included in OCO 

funding requests, and that DOD develop a complete and reliable estimate 

of its enduring OCO-funded costs and report those costs with its future 

base budget requests.

Ineffective strategic planning and performance monitoring: For more 

than a decade we have reported on strategic planning and performance 

monitoring challenges that have affected the efficiency and effectiveness 

of DOD’s operations both at the strategic readiness level and across all of 

DOD’s major business areas–including contract management, financial 

management, and supply chain management. 100 DOD has made some 

important progress in these areas, such as implementing a corrective 

action plan and demonstrating sustained progress on the management of 

its spare parts from 2010 through 2017. As a result, we removed the 

inventory management component of the supply chain management highrisk area—an issue that has been on our High-Risk List since 1990. 101

However, more work remains. For example, in 2016 we reported that 

DOD may be unable to determine the effectiveness of the military 

departments’ respective readiness recovery efforts or assess the 

departments’ ability to meet the demands of the National Military Strategy 

because DOD has not used effective strategic planning practices–that is, 

identified goals and metrics for measuring progress against the goals and 

evaluated performance and progress toward meeting the goals. 102 We 

also reported that DOD had made progress in establishing an effective 

 99GAO, Overseas Contingency Operations: OMB and DOD Should Revise the Criteria for 

Determining Eligible Costs and Identify the Costs Likely to Endure Long Term, GAO-17-68 

(Washington, D.C.: Jan. 18, 2017). 

100For example, see GAO-05-207 and Military Readiness: New Reporting System Is 

Intended to Address Long-Standing Problems, but Better Planning Is Needed, 

GAO-03-456 (Washington, D.C.: Mar. 28, 2003).

101GAO-17-317. 

102GAO-16-841.
Page 58 GAO-17-369 Department of Defense

strategic plan to integrate business transformation efforts across DOD’s 

major business areas, but that DOD continued to lack a strategic planning 

process that defined a role for the military departments in those efforts.103

We have also reported that in its performance monitoring efforts DOD has 

missed opportunities to hold officials accountable for progress made 

toward DOD-identified goals and milestones, to make timely and wellinformed actions to address identified challenges, and to encourage 

continuous improvements in performance across its major business 

functions. We reported in July 2015, for example, that DOD’s 

performance monitoring practices have been inconsistent with 

government-wide requirements because DOD had not conducted 

performance reviews that were led by the CMO or other top agency 

leaders at least once a quarter to review progress on all agency priority 

goals, which cover many of DOD’s major business functions, or to 

discuss at-risk goals and improvement strategies, among other issues.104

We also reported that DOD’s ability to make further progress in the 

business systems modernization and financial management business 

areas have been hindered by limitations in its performance monitoring. 

For example, DOD has not developed an action plan to monitor progress 

in making business system improvements and has not obtained 

complete, detailed information on all corrective action plans from the 

military services to fully monitor and assess DOD’s progress in resolving 

its financial management deficiencies.

Ineffective management control system: A critical component of an 

effective management control system is the use of quality information to 

inform day-to-day decision making. 105 However, we have also reported 

since 2011 that DOD does not have quality information on costs related to 

mission critical programs, the department’s headquarters functions, and 

the department’s major business areas. 106 Without quality information 

regarding the costs associated with DOD’s mission-critical weapon 

systems, for example, DOD will be unable to effectively assess the 

 103GAO-17-9.

104GAO, Managing for Results: Agencies Report Positive Effects of Data-Driven Reviews 

on Performance but Some Should Strengthen Practices, GAO-15-579 (Washington, D.C.: 

July 7, 2015). 

105GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: Sept. 10, 2014).

106GAO-16-439.
Page 59 GAO-17-369 Department of Defense

affordability of the programs that support them. Among other things, DOD 

will be unable to accurately estimate the cost to recapitalize the nuclear 

triad, to complete the acquisition and deployment of the F-35, and to 

evaluate gaps that could result from the divestment of the A-10. We also 

reported in 2016 that DOD does not have cost data associated with 

functions within headquarters organizations, including within its business 

areas, which is needed to facilitate the identification of opportunities for 

consolidation or elimination of positions across an organization. 107 Absent 

internal control systems needed to help ensure quality cost information, 

DOD’s ability to provide meaningful information to Congress to inform 

future budget and funding decisions is hindered.

We have reported that DOD also faces long-standing challenges in 

implementing an effective management control system to improve 

accountability and effectively and efficiently achieve its mission. For 

example, since 2005 our body of work on DOD’s financial management 

has found that DOD has been unable to receive an audit opinion on its 

financial statements because of its serious financial management 

problems, including material internal control weaknesses. DOD has 

begun to address our 2014 recommendation about internal control 

weaknesses, identifying internal controls as a critical capability in DOD’s 

audit readiness guidance. However, as of April 2017, the Defense 

Finance and Accounting Service had not fully implemented the steps 

needed to address requirements in DOD’s audit readiness guidance 

related to planning, testing, and implementing corrective actions. As a 

result, the Defense Finance and Accounting Service does not have 

assurance that its processes, systems, and controls can produce and 

maintain accurate, complete, and timely financial management 

information for the approximately $200 billion in contract payments it 

annually processes on behalf of DOD components. 108 Implementing 

internal control steps, to include performing required testing of contract 

pay processes and documenting how previously identified internal control 

deficiencies have been addressed, can help ensure that DOD 

implements, maintains, and sustains the necessary financial 

improvements to effectively carry out its contract pay mission.

 107GAO-16-286.

108GAO, DOD Financial Management: The Defense Finance and Accounting Service 

Needs to Fully Implement Financial Improvements for Contract Pay, GAO-14-10 

(Washington, D.C.: June 23, 2014). 
Page 60 GAO-17-369 Department of Defense

DOD plays a critically important role in protecting the security of the 

United States while simultaneously working to maintain regional security 

and stability abroad. The department must fulfill this vital role while facing 

a complex and changing national security environment with unique and 

rapidly evolving threats. Although the United States’ military strength is 

unparalleled across the globe, the department faces a myriad of 

influences that pose obstacles to its effectiveness and progress, including 

budgetary strains and uncertainty, and growing and evolving demands 

that challenge its ability to restore needed levels of readiness after more 

than a decade of war. At the same time, the department must be more 

efficient in managing the significant resources entrusted to it, including 

the billions of dollars invested in acquiring major weapon systems, as well 

as its vast and complex business operations supporting its warfighting 

mission. The department has made noteworthy progress addressing key 

challenges that affect its mission but significant work remains, and the 

department will need to continue to make difficult decisions regarding 

reaching an affordable balance between investments in current needs 

and new capabilities.

We have issued hundreds of reports and made thousands of 

recommendations to DOD to help position it to address its challenges. 

While DOD has taken action to implement many of them, it lags behind 

the rest of the federal government in implementing our recommendations, 

with 1,037 recommendations remaining open, including 78 priority 

recommendations that we believe require top leadership attention and 

that, if implemented, could result in significant financial savings and 

increased efficiencies. Implementing these recommendations would go a 

long way toward addressing the factors that have consistently affected 

DOD’s ability to efficiently and effectively meet the department’s mission, 

as well as position the department to make significant and sustained 

progress across its key challenges. The need for progress will be critical 

in an era of increased uncertainty both domestically and abroad, and 

must continue to be the department’s top priority.

We provided a draft of this report to DOD for comment. In its comments, 

reproduced in appendix III, DOD stated that although this report is a 

review of progress made of previous GAO audits and no new 

recommendations were issued, the department stands by its responses 

and concurrence to taking the requisite actions needed to address all 

previous recommendations. DOD also provided technical comments, 

which we incorporated into the report, as appropriate.

Concluding 

Observations

Agency Comments 
Page 61 GAO-17-369 Department of Defense

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Defense, the Deputy Secretary of Defense, 

and the 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) 512-3404 or berrickc@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. Key contributors to this report are listed in appendix 

IV.

Cathleen A. Berrick

Managing Director

Defense Capabilities and Management
Page 62 GAO-17-369 Department of Defense

List of Addressees

The Honorable John McCain

Chairman

The Honorable Jack Reed

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Mac Thornberry

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Jason Chaffetz

Chairman

Committee on Oversight and Government Reform

House of Representatives
Appendix I: Actions That the Department of 

Defense (DOD) Needs to Take to Address Our 

78 Priority Open Recommendations

Page 63 GAO-17-369 Department of Defense

Since August 2015, we have identified priority recommendations in letters 

to the Secretary of Defense—recommendations that we have made to the 

Department of Defense (DOD) that we believe the department should 

give a high priority to addressing. These priority recommendations are in

the areas of acquisitions and contract management, readiness, 

headquarters management, health care, cybersecurity, information 

technology, financial management, and support infrastructure. In table 7, 

we identify examples of actions that we believe DOD should take to 

implement our priority recommendations in each of these areas. As of 

June 2017, 78 of these priority recommendations remained open. More 

specific information on our priority recommendations directed to DOD, 

including their status, can be found on the GAO web application, GAO 

Priorities for Policy Makers, which is available free of charge in the App 

Store® or Google Play.TM

Appendix I: Actions That the Department of 

Defense (DOD) Needs to Take to Address 

Our 78 Priority Open Recommendations
Appendix I: Actions That the Department of 

Defense (DOD) Needs to Take to Address Our 

78 Priority Open Recommendations

Page 64 GAO-17-369 Department of Defense

Table 7: Examples of Actions by Area That the Department of Defense (DOD) Needs to Take to Address Our Priority 

Recommendations That Remain Open

Area Examples of actions needed (report with priority recommendation)

Acquisitions and contract management • Evaluate potential impacts of various funding and technical changes on F-35 

procurement plans. (GAO-15-364)

• Ensure that the Navy is procuring Littoral Combat Ships that meet its needs. 

(GAO-14-749)

• Ensure that the Ford-class carrier program is supported by sound requirements and 

a comprehensive testing strategy that reduces technical risks. (GAO-13-396)

• Improve the management and transparency of the U.S. missile defense approach in 

Europe. (GAO-13-432)

• Ensure that senior leaders are better positioned to make informed contracting 

decisions. (GAO-16-119)

• Improve department-wide strategic sourcing efforts to achieve significant cost 

savings. (GAO-12-919)

• Improve DOD’s lesson learned efforts through the collection of operational contract 

support issues. (GAO-15-243)

• Further integrate operational contract support into the military services’ planning.

(GAO-13-212)

• Improve DOD’s efforts to vet foreign vendors. (GAO-16-105)

• Ensure that major acquisition decisions are informed by sufficient cost, design, and 

capability knowledge. (GAO-16-356)

• Advocate an independent assessment performed by the American Bureau of 

Shipping, or some other independent entity with relevant subject matter expertise to 

understand Littoral Combat Ship seaframe performance. (GAO-16-201)

• Develop affordability constraints linked to the military services’ budgets to determine 

the extent to which the military services can afford to operate and sustain the F-35 

throughout its life cycle. (GAO-14-778)

Readiness • Ensure that DOD has established a plan and oversight mechanisms for rebuilding the 

readiness of its forces. (GAO-16-841)

Headquarters management • Collect reliable information on the costs associated with functions within 

headquarters organizations. (GAO-16-286)

• Determine requirements to identify opportunities for a more efficient use of 

resources. (GAO-15-10)

• Establish a baseline to improve the management of headquarters reduction efforts. 

(GAO-14-439)

• Ensure that headquarters organizations are properly sized to meet assigned 

missions. (GAO-13-293)

• Improve DOD’s ability to identify how many headquarters personnel the department 

has, including contractors. (GAO-12-345)

Health care • Better assess and address the full extent of improper payments in the TRICARE 

program. (GAO-15-269)

• Provide decision makers with appropriate and more complete information on the 

continuing implementation, management, and oversight of the Defense Health 

Agency. (GAO-15-759)
Appendix I: Actions That the Department of 

Defense (DOD) Needs to Take to Address Our 

78 Priority Open Recommendations

Page 65 GAO-17-369 Department of Defense

Area Examples of actions needed (report with priority recommendation)

Cybersecurity • Improve the planning and oversight of the department’s ability to maintain continuity 

in a degraded cyber environment. (GAO-14-404SU)

• Clarify roles and responsibilities of key DOD entities that may be called upon to 

support a cyber incident. (GAO-16-332)

Information technology • Report all data center consolidation cost savings and avoidances. (GAO-14-713)

Financial management • Complete the recommended Financial Improvement and Audit Readiness 

implementation efforts. (GAO-15-463)

• Focus the Defense Finance and Accounting Service actions on three contract pay 

processes and related controls that have not yet been tested, and complete 

corrective actions on any identified deficiencies in these processes and controls. The 

related processes and controls are (1) Treasury reporting, (2) accounting and 

reconciliation, and (3) contract closeout and reconciliation. In addition, DOD needs to 

complete and appropriately document corrective actions on our remaining 

recommendations. (GAO-14-10)

• Ensure that improper payment estimating and reporting and recovery audits fully 

comply with the Improper Payments Elimination and Recovery Act of 2010 and Office 

of Management and Budget requirements. (GAO-13-227)

• Improve processes for tracking and monitoring financial management-related audit 

findings. (GAO-17-85)

Support infrastructure • Better assess and identify available space on facilities to reduce the reliance on 

leased facilities. (GAO-16-101)

• Improve information upon which to inform any future Base Realignment and Closure 

process decisions, and ensure goals are implemented and progress monitored. 

(GAO-13-149, GAO-13-337, GAO-16-45)

Source: GAO’s analysis of GAO’s previously issued work. | GAO-17-369
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 66 GAO-17-369 Department of Defense

Our work identified five key challenges that impact Department of 

Defense’s (DOD) ability to accomplish its mission–specifically, the need 

for DOD to (1) rebalance forces and rebuild readiness in an evolving 

global security environment; (2) mitigate threats to cyberspace and 

expand cyber capabilities; (3) control the escalating costs of programs, 

such as certain weapon systems acquisitions and military health care, 

and manage its finances; (4) strategically manage its human capital; and 

(5) achieve greater efficiencies in defense business operations. We have 

listed related work completed since 2011 for each of these challenge 

areas below. Also listed below are our cross-cutting products, such as the 

high-risk; duplication, overlap, and fragmentation; and key issues 

products.

Overseas Contingency Operations: OMB and DOD Should Revise the 

Criteria for Determining Eligible Costs and Identify the Costs Likely to 

Endure Long Term. GAO-17-68. Washington, D.C.: January 18, 2017.

Air Force Training, Further Analysis and Planning Needed to Improve 

Effectiveness. GAO-16-864. Washington, D.C.: September 19, 2016.

Military Readiness: DOD’s Readiness Rebuilding Efforts May Be at Risk 

without a Comprehensive Plan. GAO-16-841. Washington, D.C.: 

September 7, 2016.

Force Structure: Better Information Needed to Support Air Force A-10 

and Other Future Divestment Decisions. GAO-16-816. Washington, D.C.: 

August 24, 2016.

Military Readiness: Progress and Challenges in Implementing the Navy’s 

Optimized Fleet Response Plan. GAO-16-466R. Washington, D.C.: May 

2, 2016.

F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its 

Central Logistics System. GAO-16-439. Washington, D.C.: April 14, 2016.

Nuclear Weapons Sustainment: Improvements Made to Budget Estimates 

Report, but Opportunities Remain to Further Enhance Transparency.

GAO-16-23. Washington, D.C.: December 10, 2015.

Regionally Aligned Forces: DOD Could Enhance Army Brigades’ Efforts 

in Africa by Improving Activity Coordination and Mission-Specific 

Preparation. GAO-15-568. Washington, D.C.: August 26, 2015.

Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Challenge 1: 

Rebalance Forces 

and Rebuild 

Readiness in an 

Evolving Global 

Security Environment
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 67 GAO-17-369 Department of Defense

Nuclear Weapons Sustainment: Improvements Made to Budget 

Estimates, but Opportunities Exist to Further Enhance Transparency. 

GAO-15-536. Washington, D.C.: July 31, 2015.

Special Operations Forces: Opportunities Exist to Improve Transparency 

of Funding and Assess Potential to Lessen Some Deployments. 

GAO-15-571. Washington, D.C.: July 16, 2015.

Navy Force Structure: Sustainable Plan and Comprehensive Assessment 

Needed to Mitigate Long-Term Risks to Ships Assigned to Overseas 

Homeports. GAO-15-329. Washington, D.C.: May 29, 2015.

F-35 Sustainment: Need for Affordable Strategy, Greater Attention to 

Risks, and Improved Cost Estimates. GAO-14-778. Washington, D.C.: 

September 23, 2014.

Security Force Assistance: More Detailed Planning and Improved Access 

to Information Needed to Guide Efforts of Advisor Teams in Afghanistan.

GAO-13-381. Washington, D.C.: April 30, 2013.

Missile Defense: Opportunity to Refocus on Strengthening Acquisition 

Management. GAO-13-432. Washington, D.C.: April 26, 2013.

Defense Civil Support: DOD Needs to Identify National Guard’s Cyber 

Capabilities and Address Challenges in Its Exercises. GAO-16-574. 

Washington, D.C.: September 6, 2016.

Civil Support: DOD Needs to Clarify Its Roles and Responsibilities for 

Defense Support of Civil Authorities during Cyber Incidents. GAO-16-332. 

Washington, D.C.: April 4, 2016.

Defense Infrastructure: Improvements in DOD Reporting and 

Cybersecurity Implementation Needed to Enhance Utility Resilience 

Planning. GAO-15-749. Washington, D.C.: July 23, 2015.

Insider Threats: DOD Should Strengthen Management and Guidance to 

Protect Classified Information and Systems. GAO-15-544. Washington, 

D.C.: June 2, 2015.

Defense Cybersecurity: DOD Needs to Better Plan for Continuity of 

Operations in a Degraded Cyber Environment and Provide Increased 

Challenge 2: Mitigate 

Threats to 

Cyberspace and

Expand Cyber 

Capabilities
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 68 GAO-17-369 Department of Defense

Oversight. GAO-14-404SU. Washington, D.C.: April 1, 2014. (For Official 

Use Only)

DOD Financial Management: Significant Efforts Still Needed for 

Remediating Audit Readiness Deficiencies. GAO-17-85. Washington, 

D.C.: February 9, 2017.

Financial Audit: U.S. Government’s Fiscal Years 2015 and 2016 

Consolidated Financial Statements. GAO-17-283R. Washington, D.C.: 

January 12, 2017.

Littoral Combat Ship and Frigate: Congress Faced with Critical 

Acquisition Decisions. GAO-17-262T. Washington, D.C.: December 1, 

2016.

DOD Financial Management: Improvements Needed in the Navy’s Audit 

Readiness Efforts for Fund Balance with Treasury. GAO-16-47. 

Washington, D.C.: August 19, 2016.

DOD Financial Management: Greater Visibility Needed to Better Assess 

Audit Readiness for Property, Plant, and Equipment. GAO-16-383. 

Washington, D.C.: May 26, 2016.

Defense Infrastructure: More Accurate Data Would Allow DOD to Improve 

the Tracking, Management, and Security of Its Leased Facilities. 

GAO-16-101. Washington, D.C.: March 15, 2016.

Military Base Realignments and Closures: More Guidance and 

Information Needed to Take Advantage of Opportunities to Consolidate 

Training. GAO-16-45. Washington, D.C.: February 18, 2016.

DOD Financial Management: Continued Actions Needed to Address 

Congressional Committee Panel Recommendations. GAO-15-463. 

Washington, D.C.: September 28, 2015.

Defense Health Care Reform: Actions Needed to Help Ensure Defense 

Health Agency Maintains Implementation Progress. GAO-15-759. 

Washington, D.C.: September 10, 2015.

F-35 Joint Strike Fighter: Assessment Needed to Address Affordability 

Challenges. GAO-15-364. Washington, D.C.: April, 14, 2015.

Challenge 3: Control 

Escalating Costs and 

Manage Finances
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 69 GAO-17-369 Department of Defense

Improper Payments: TRICARE Measurement and Reduction Efforts 

Could Benefit from Adopting Medical Record Reviews. GAO-15-269. 

Washington, D.C.: February 18, 2015.

Defense Infrastructure: DOD Needs to Improve Its Efforts to Identify 

Unutilized and Underutilized Facilities. GAO-14-538. Washington, D.C.: 

September 8, 2014.

Defense Health Care Reform: Additional Implementation Details Would 

Increase Transparency of DOD’s Plans to Enhance Accountability.

GAO-14-49. Washington, D.C.: November 6, 2013.

Ford Class Carriers: Lead Ship Testing and Reliability Shortfalls Will Limit 

Initial Fleet Capabilities. GAO-13-396. Washington, D.C.: September 5, 

2013.

Military Bases: DOD Has Processes to Comply with Statutory 

Requirements for Closing or Realigning Installations. GAO-13-645. 

Washington, D.C.: June 27, 2013.

DOD Financial Management: Significant Improvements Needed in Efforts 

to Address Improper Payment Requirements. GAO-13-227. Washington, 

D.C.: May 13, 2013.

Defense Infrastructure: Improved Guidance Needed for Estimating 

Alternatively Financed Project Liabilities. GAO-13-337. Washington, D.C.: 

April 18, 2013.

Military Bases: Opportunities Exist to Improve Future Base Realignment 

and Closure Rounds. GAO-13-149. Washington, D.C.: March 7, 2013.

Excess Facilities: DOD Needs More Complete Information and a Strategy 

to Guide Its Future Disposal Efforts. GAO-11-814. Washington, D.C.: 

September 19, 2011.

Defense Acquisition Workforce: DOD Has Opportunities to Further 

Enhance Use and Management of Development Fund. GAO-17-332. 

Washington, D.C.: March 28, 2017.

Military Compensation: Additional Actions Are Needed to Better Manage 

Special and Incentive Pay Programs. GAO-17-39. Washington, D.C.: 

February 3, 2017.

Challenge 4: 

Strategically Manage 

Human Capital
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 70 GAO-17-369 Department of Defense

Unmanned Aerial Systems: Air Force and Army Should Improve Strategic 

Human Capital Planning for Pilot Workforces. GAO-17-53. Washington, 

D.C.: January 31, 2017.

DOD Inventory of Contracted Services: Timely Decisions and Further 

Actions Needed to Address Long-Standing Issues. GAO-17-17. 

Washington, D.C.: October 31, 2016.

DOD Civilian and Contractor Workforces: Additional Cost Savings Data 

and Efficiencies Plan Are Needed. GAO-17-128. Washington, D.C.: 

October 12, 2016.

Unmanned Aerial Systems: Further Actions Needed to Fully Address Air 

Force and Army Pilot Workforce Challenges. GAO-16-527T. Washington, 

D.C.: March 16, 2016.

Civilian and Contractor Workforces: Complete Information Needed to 

Assess DOD’s Progress for Reductions and Associated Savings.

GAO-16-172. Washington, D.C.: December 23, 2015.

Defense Acquisition Workforce: Actions Needed to Guide Planning Efforts 

and Improve Workforce Capability. GAO-16-80. Washington, D.C.: 

December 14, 2015.

DOD Inventory of Contracted Services: Actions Needed to Help Ensure 

Inventory Data Are Complete and Accurate. GAO-16-46. Washington, 

D.C.: November 18, 2015.

Military Recruiting: Army National Guard Needs to Continue Monitoring, 

Collect Better Data, and Assess Incentives Programs. GAO-16-36. 

Washington D.C.: November 17, 2015.

Unmanned Aerial Systems: Actions Needed to Improve DOD Pilot 

Training. GAO-15-461. Washington, D.C.: May 14, 2015.

Defense Contractors: Additional Actions Needed to Facilitate the Use of 

DOD’s Inventory of Contracted Services. GAO-15-88. Washington, D.C.: 

November 19, 2014.

Human Capital: DOD Should Fully Develop Its Civilian Strategic 

Workforce Plan to Aid Decision Makers. GAO-14-565. Washington, D.C.: 

July 9, 2014.
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 71 GAO-17-369 Department of Defense

Air Force: Actions Needed to Strengthen Management of Unmanned 

Aerial System Pilots. GAO-14-316. Washington, D.C.: April 10, 2014.

Human Capital: Opportunities Exist to Further Improve DOD’s 

Methodology for Estimating the Costs of Its Workforces. GAO-13-792. 

Washington, D.C.: September 25, 2013.

Human Capital: Additional Steps Needed to Help Determine the Right 

Size and Composition of DOD’s Total Workforce. GAO-13-470. 

Washington, D.C.: May 29, 2013.

Human Capital: Critical Skills and Competency Assessments Should Help 

Guide DOD Civilian Workforce Decisions. GAO-13-188. Washington, 

D.C.: January 17, 2013.

Human Capital: DOD Needs Complete Assessments to Improve Future 

Civilian Strategic Workforce Plans. GAO-12-1014. Washington, D.C.: 

September 27, 2012.

Defense Acquisition Workforce: Improved Processes, Guidance, and 

Planning Needed to Enhance Use of Workforce Funds. GAO-12-747R. 

Washington, D.C.: June 20, 2012.

Defense Business Transformation: DOD Should Improve Its Planning with 

and Performance Monitoring of the Military Departments. GAO-17-9. 

Washington, D.C.: December 7, 2016.

Defense Headquarters: Improved Data Needed to Better Identify 

Streamlining and Cost Savings Opportunities by Function. GAO-16-286. 

Washington, D.C.: June 30, 2016.

DOD Major Automated Information Systems: Improvements Can Be 

Made in Reporting Critical Changes and Clarifying Leadership 

Responsibility. GAO-16-336. Washington, D.C.: March 30, 2016.

DOD Service Acquisition: Improved Use of Available Data Needed to 

Better Manage and Forecast Service Contract Requirements. 

GAO-16-119. Washington, D.C.: February 18, 2016.

Defense Satellite Communications: DOD Needs Additional Information to 

Improve Procurements. GAO-15-459. Washington, D.C.: July 17, 2015.

Challenge 5: Achieve 

Efficiencies in 

Defense Business 

Operations
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 72 GAO-17-369 Department of Defense

DOD Business Systems Modernization: Additional Action Needed to 

Achieve Intended Outcomes. GAO-15-627. Washington, D.C.: July 16, 

2015.

Defense Headquarters: DOD Needs to Reassess Personnel 

Requirements for the Office of the Secretary of Defense, Joint Staff, and 

Military Service Secretariats. GAO-15-10. Washington, D.C.: January 21, 

2015.

Defense Headquarters: DOD Needs to Reevaluate Its Approach for 

Managing Resources Devoted to the Functional Combatant Commands. 

GAO-14-439. Washington, D.C.: June 26, 2014.

DOD Business Systems Modernization: Further Actions Needed to 

Address Challenges and Improve Accountability. GAO-13-557. 

Washington, D.C.: May 17, 2013.

Defense Headquarters: DOD Needs to Periodically Review and Improve 

Visibility of Combatant Commands’ Resources. GAO-13-293. 

Washington, D.C.: May 15, 2013.

DOD Business Systems Modernization: Governance Mechanisms for 

Implementing Management Controls Need to Be Improved. GAO-12-685. 

Washington, D.C.: June 1, 2012.

Defense Headquarters: Further Efforts to Examine Resource Needs and 

Improve Data Could Provide Additional Opportunities for Cost Savings.

GAO-12-345. Washington, D.C.: March 21, 2012.

Defense Acquisitions: Assessments of Selected Weapon Programs. 

GAO-17-333SP. Washington, D.C.: March 30, 2017.

High-Risk Series: Progress on Many High-Risk Areas, While Substantial 

Efforts Needed on Others. GAO-17-317. Washington, D.C.: February 15, 

2017.

The Nation’s Fiscal Health: Action Is Needed to Address the Federal 

Government’s Fiscal Future. GAO-17-237SP. Washington, D.C.: January 

17, 2017.

Performance and Accountability Report, Fiscal Year 2016. GAO-17-1SP. 

Washington, D.C.: November 15, 2016.

Our Cross-Cutting 

Reports
Appendix II: Our Work Related to the 

Department of Defense’s Key Mission 

Challenges

Page 73 GAO-17-369 Department of Defense

2016 Annual Report: Additional Opportunities to Reduce Fragmentation, 

Overlap, and Duplication and Achieve Other Financial Benefits. 

GAO-16-375SP. Washington, D.C.: April 13, 2016.

Managing for Results: Agencies Report Positive Effects of Data-Driven 

Reviews on Performance but Some Should Strengthen Practices. 

GAO-15-579. Washington, D.C.: July 7, 2015.

2015 Annual Report: Additional Opportunities to Reduce Fragmentation, 

Overlap, and Duplication and Achieve Other Financial Benefits. 

GAO-15-404SP. Washington, D.C.: April 14, 2015.

High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February 

11, 2015.

DOD Financial Management: The Defense Finance and Accounting 

Service Needs to Fully Implement Financial Improvements for Contract 

Pay. GAO-14-10. Washington, D.C.: June 23, 2014.

2012 Annual Report Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue. 

GAO-12-342SP. Washington, D.C.: February 28, 2012.

Opportunities to Reduce Potential Duplication in Government Programs, 

Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington, 

D.C.: March 1, 2011.

21st Century Challenges: Reexamining the Base of the Federal 

Government. GAO-05-325SP. Washington, D.C.: February 1, 2005.

High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 

2005.

Defense Acquisitions: Assessments of Major Weapon Programs. 

GAO-04-248. Washington, D.C.: March 31, 2004.

Military Readiness: New Reporting System Is Intended to Address LongStanding Problems, but Better Planning Is Needed. GAO-03-456. 

Washington, D.C.: March 28, 2003.
Appendix III: Comments from the Department 

of Defense

Page 74 GAO-17-369 Department of Defense

Appendix III: Comments from the 

Department of Defense
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 75 GAO-17-369 Department of Defense

Cathleen A. Berrick, (202) 512-3404 or berrickc@gao.gov

In addition to the contact named above, Matt Ullengren (Assistant 

Director); Bonnie Anderson; Lori Atkinson; Jason Bair; Vincent Balloon; 

Thomas Baril; Tracy Barnes; Daniel Berg; Margaret Best; Arkelga 

Braxton; Penney Harwell Caramia; Angela Clowers; Kevin Copping; 

Alissa Czyz; Timothy DiNapoli; Debra Draper; Gary Engel; Brenda S. 

Farrell; Gayle Fischer; Gina Flacco; Paul Francis; Brent Helt; Gina 

Hoffman; Michael Holland; Charles Michael Johnson, Jr.; Mae Jones; 

Joseph Keener; Asif Khan; Joseph W. Kirschbaum; Brian Lepore; Michele 

Mackin; Ned Malone; Judith McCloskey; Jacqueline McColl; Valerie 

Melvin; Zina Dache Merritt; J. Christopher Mihm; Jamilah Moon; Elizabeth 

Morris; Marcus Oliver; John Pendleton; Natalia Pena; Richard Powelson; 

Erika Prochaska; William Reinsberg; James Reynolds; Cary B. Russell; 

Tina Won Sherman; Andrew Von Ah; Shana Wallace; Chris Watson; and 

Kristy Williams made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100915)
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