1 GAO-12-480R Defense Management

United States Government Accountability Office

Washington, DC 20548

May 10, 2012 

The Honorable Carl Levin

Chairman 

The Honorable John McCain

Ranking Member

Committee on Armed Services

United States Senate 

The Honorable Howard P. “Buck” McKeon

Chairman 

The Honorable Adam Smith

Ranking Member 

Committee on Armed Services

House of Representatives

Subject: Defense Management: Actions Needed to Evaluate the Impact of Efforts to 

Estimate Costs of Reports and Studies

Citing long-term fiscal challenges affecting the federal government, in May 2010, the 

Secretary of Defense directed the Department of Defense (DOD) to undertake a 

departmentwide initiative to assess how the department is staffed, organized, and 

operated with the goal of reducing excess overhead costs and reinvesting these 

savings in sustaining DOD’s current force structure and modernizing its weapons 

portfolio.1

 

1 Remarks as delivered by former Secretary of Defense Robert M. Gates, Abilene, Kansas, May 8, 2010.

The Secretary’s initiative targeted both shorter- and longer-term 

improvements and set specific goals and targets for achieving cost savings and 

efficiencies. The initiative was organized along four tracks, each of which had a 

different focus (see enc. I). The fourth track focused on specific areas where DOD 

could take immediate action to reduce inefficiencies and overhead, in particular, to 

reduce headquarters and support bureaucracies and to instill a culture of cost 

consciousness and restraint in the department. As part of the fourth track, the 

Secretary of Defense announced a number of specific initiatives, including actions 

intended to address the need to reduce or eliminate reporting requirements for DOD 

reports and studies. For example, in his August 9, 2010, speech announcing the 

overall efficiency initiative, the Secretary of Defense stated that the department is 

“awash in taskings for reports and studies” and directed several specific actions that, 

according to the press release accompanying the announcement, were intended to 
2 GAO-12-480R Defense Management

“combat the enormous amounts of taskings for reports and studies.”2 In his remarks, 

the Secretary noted that there is little basis to determine whether the value gained is 

worth the considerable time and resources expended to generate reports and 

studies. With respect to specific actions, the Secretary directed DOD and its 

components to track the approximate cost of preparing DOD reports and studies and 

publish the cost on the front cover of each report or study. He also called for a 

comprehensive review of all oversight reports and use of the results to reduce the 

volume of reports and studies generated internally while engaging with Congress on 

ways to meet their needs while working together to reduce the number of reports. 

In September 2010, the Secretary of Defense tasked DOD’s Cost Assessment and 

Program Evaluation (CAPE) office with implementing the Secretary’s requirement to 

publish the cost of preparing DOD reports and studies. By November 2010, the 

CAPE office had developed a cost estimating tool and corresponding guidance on 

using the tool, which described the categories of costs to be estimated and identified 

the types of reports and studies for which costs were to be estimated.3 The following 

month, the Secretary of Defense issued a memorandum requiring the use of the tool 

beginning on February 1, 2011.4

In House Report Number 112-78, which accompanied a bill for the National Defense 

Authorization Act for Fiscal Year 2012,5

 

2 Remarks as delivered by former Secretary of Defense Robert M. Gates, The Pentagon, August 9, 2010, and 

DOD News Release No. 706-10, “Sec. Gates Announces Efficiency Initiatives” (Aug. 9, 2010). 

the House Committee on Armed Services 

commended DOD for implementing a process for collecting an estimate of resources 

required to generate internally and externally required reports and agreed that 

additional transparency would be useful for decision makers when determining the 

utility of various reporting requirements. The committee also observed that any tool 

used to collect costs was only as useful as the inputs received and directed GAO to 

conduct an assessment of DOD’s methodology and tools for collecting cost data on 

both internally and externally required reports and to submit a report, including any 

recommendations needed to improve the data collection, transparency, and utility of 

the tool. Specifically, we evaluated DOD’s approach to estimate the costs of 

selected reports and studies, including (1) whether DOD entities are capturing and 

presenting costs in a manner consistent with relevant cost estimating best practices; 

(2) the status of DOD’s efforts to track whether organizations are developing cost 

estimates for all required types of reports and studies; and (3) whether DOD has 

evaluated the usefulness of its efforts to estimate the costs of reports and studies as 

one of the means for achieving the Secretary’s intended purpose of increasing the 

transparency of costs, reducing or eliminating reporting requirements, and instilling a 

culture of cost consciousness across DOD. 

3 Guidance for using the tool has been updated and the most recent version can be found in DOD Cost 

Guidance Group, Studies and Reports Guidance Document: DOD Cost Guidance Portal (Sept. 16, 2011), and 

DOD Cost Guidance Group, Cost Guidance Frequently Asked Questions: DOD Cost Guidance Portal (Sept. 16, 

2011).

4 Secretary of Defense Memorandum, Consideration of Costs in DOD Decision-Making (Dec. 27, 2010). 5 H.R. Rep. No.112-78 (2011), which accompanied a bill for the National Defense Authorization Act for Fiscal 

Year 2012, Pub. L. No. 112-81 (2012).
3 GAO-12-480R Defense Management

To determine whether the tool is being used to capture and present costs in a 

manner consistent with relevant cost estimating best practices, we reviewed the cost 

estimating tool and compared it to characteristics of cost estimating best practices 

identified in GAO’s Cost Estimating and Assessment Guide6 and related managerial 

cost accounting guidance.7

 

6 GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital 

Program Costs, GAO-09-3SP (Washington, D.C: March 2009). GAO developed this guide in order to establish a 

consistent methodology that can be used across the federal government for developing, managing, and 

evaluating cost estimates.

GAO’s Cost Estimating and Assessment Guide reflects 

best practices for developing and managing cost estimates for capital programs. 

Because DOD is estimating noncapital costs, we assessed DOD’s tool used to 

generate cost estimates against the best practices most applicable to noncapital 

costs as well as against relevant managerial cost accounting standards and 

guidance, which we determined are consistent with the selected best practices. 

Specifically, we determined the extent to which the estimates resulting from use of 

the tool were “comprehensive,” “well documented,” and “accurate”—essential 

elements for high-quality, reliable cost estimates. We also interviewed DOD officials 

to corroborate our understanding of their use of the tool and its corresponding 

guidance. All data elements we assessed are sufficiently reliable for the purpose of 

assessing DOD’s cost estimating tool against best practices. We had originally 

intended to review a representative sample of DOD reports and studies for which 

cost estimates had been generated and published. However, as described in this 

report, DOD does not currently have the ability to distinguish between real estimates 

and estimates that were developed while individuals were using the tool for training 

purposes. As a result, DOD could not provide us with a comprehensive list of all 

reports and studies for which costs had been estimated. However, DOD officials 

were able to provide us information on nine reports prepared for Congress for which 

cost estimates had been generated in 2011. We reviewed these nine reports and 

interviewed the key officials responsible for developing the cost estimates for them. 

As described in this report, in some cases, officials were not able to readily retrieve 

documentation; therefore, we were unable to fully evaluate the extent to which they 

consistently applied DOD’s guidance for estimating costs. To describe the status of 

DOD’s efforts to track whether organizations are developing cost estimates for all 

required types of reports and studies, we reviewed guidance and interviewed DOD 

officials to assess the nature of their tracking efforts. To determine whether DOD has 

evaluated the usefulness of its efforts to estimate the costs of reports and studies as 

one of the means for achieving the Secretary’s intended purpose of increasing the 

transparency of costs, reducing or eliminating reporting requirements, and instilling a 

culture of cost consciousness across DOD, we reviewed DOD guidance. We also 

interviewed DOD officials responsible for developing and using the tool, including the 

individuals who generated the nine reports that we reviewed to determine any steps 

7 Federal Accounting Standards Advisory Board, Statement of Federal Financial Accounting Standards (SFFAS) 

No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government (Washington, D.C.: 

July 1995), and DOD Financial Management Regulation 7000.14R, Accounting Policy and Procedures, vol. 

4 (2012), see ch. 19, “Managerial Cost Accounting,” and ch. 22, “Cost Finding.”
4 GAO-12-480R Defense Management

taken to evaluate the impact of the cost estimating effort, including whether they had 

obtained feedback from internal and external decision makers. 

We conducted this performance audit between October 2011 and May 2012 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. More detailed 

information on our scope and methodology is provided in enclosure II. 

Results in Brief 

DOD is estimating and publishing approximate costs for selected types of internally 

and externally required reports, but in some cases its approach is not fully consistent 

with relevant cost estimating best practices and cost accounting standards. 

Specifically, DOD entities have been directed to use the cost estimating tool to 

capture marginal costs of activities associated with completing a report or study that 

would not have been performed otherwise. These costs consist of certain manpower 

costs (such as the prorated salaries of military and civilian personnel based on the 

time they spent) and nonlabor costs (such as contract services, travel, or printing). In 

comparing DOD’s approach to (1) GAO’s Cost Estimating and Assessment Guide—

which states that high-quality, reliable cost estimates should be comprehensive, well

documented, and accurate—and (2) relevant accounting standards, we found the 

following. 

Comprehensive. GAO’s cost guide states that cost estimates should include all 

costs, but allows flexibility for the estimates to exclude costs where information is 

limited as long as steps are taken to clearly define and document what costs are 

included or excluded. DOD’s guidance on using the tool defines and documents 

decisions to include certain manpower and all nonlabor costs in its calculation. In 

addition, it documents the decision to exclude other manpower costs, such as those 

for health care and training expenses. It also provides broad examples of some 

types of activities to consider in estimating costs, but leaves it up to the discretion of 

the individuals generating the cost estimate to decide which types of activities to 

include or exclude. As a result, based on the nine reports we reviewed, we found 

inconsistencies in the types of activities individuals decided to include when 

developing their cost estimates. For example, we found that for six of the nine 

reports we reviewed, some individuals calculated the manpower costs for activities 

associated with coordinating the report through the final review while others did not. 

In addition, according to relevant accounting standards, appropriate procedures and 

practices should be established to enable, among other things, the interpretation and 

communication of cost information. However, when presenting the cost estimate on 

the front cover of a report or study, the language DOD uses does not provide 
5 GAO-12-480R Defense Management

information on what costs are included or excluded. Specifically, it does not indicate 

that the estimate reflects only certain marginal manpower and nonlabor costs. 

Without further explanation, this wording could be subject to misinterpretation such 

that recipients of the reports or studies may assume that all costs are included in the 

estimate when that is not the case.

Well documented. GAO’s Cost Estimating and Assessment Guide states that cost 

estimates should be easily traceable to source documents. While DOD’s guidance 

on using the tool states that individuals should be prepared to explain how they 

developed the cost estimate, it does not include a requirement for individuals to 

retain source documentation. In practice, we found that of the nine reports we 

reviewed, individuals were able to easily retrieve documentation for the estimates 

prepared for three reports, but not for the other six. As a result, DOD may not have 

the information needed so that others can understand how a cost estimate was 

derived and readily replicate it. 

Accurate. GAO’s Cost Estimating and Assessment Guide further states that cost 

estimates should have all cost inputs checked to verify that they are accurate. 

However, we found that DOD’s guidance on using the tool has no requirement to 

independently verify the costs used to generate the cost estimate. In practice, the 

individual generating the cost estimate is responsible for ensuring its accuracy. As a 

result, without independent verification, DOD cannot ensure that cost estimates are 

accurate and reliable.

DOD currently lacks a means to ensure that organizations are developing cost 

estimates for all required types of reports and studies, but is taking steps to enhance 

its ability to monitor the preparation of reports and studies to satisfy reporting 

requirements, including those for which a cost estimate is required to be generated. 

DOD’s guidance on using the tool identified 10 specific types of reports or studies 

that require a cost estimate. The guidance states that the DOD component preparing 

a report or study is responsible for ensuring that a cost estimate, if required, is 

included. However, the guidance does not include any process or requirement to 

track whether organizations are developing required cost estimates. According to 

CAPE officials who developed the tool, they were not directed to ensure that cost 

estimates have been developed for all required reports and studies, and they added 

that the cost estimating tool was not designed to track reports and studies that 

require a cost estimate. These same officials noted that the magnitude of DOD’s 

reporting requirements makes it challenging to identify the universe of these 

requirements and to track the completion of reports and studies to meet them, 

including whether cost estimates have been generated. In the past year, DOD has 

initiated efforts to improve its visibility over its internal and external reporting 

requirements. In March 2011, the Secretary of Defense issued a memorandum 

requiring the Assistant Secretary of Defense for Legislative Affairs to enhance that 

office’s database capability and further automate the process of tracking external 

reports to Congress and required the Office of the Director of Administration and 

Management to track internal reports. The Office of Legislative Affairs enhanced its 

Congressional Hearings and Reporting Requirements Tracking System by adding a 
6 GAO-12-480R Defense Management

data field to record the estimated costs of reports or studies generated by DOD 

components. To gain greater visibility of internal reporting requirements, the Office of 

the Director of Administration and Management tasked Washington Headquarters 

Services with developing a repository for tracking internal reports. According to a 

Washington Headquarters Services official, the repository has a field to capture 

whether an internal report or study has a cost estimate. Currently, the repository is in 

development and has been populated with reports that date back 3 years. 

DOD has not evaluated and currently does not plan to evaluate the usefulness of its 

efforts to estimate the costs of selected reports and studies as one of the means for 

achieving the Secretary of Defense’s intended purpose of increasing the 

transparency of costs, reducing or eliminating reporting requirements, and instilling a 

culture of cost consciousness across DOD. According to GAO’s Standards for 

Internal Control in the Federal Government,

8 activities such as assessments need to 

be established to monitor performance, and managers need to compare actual 

performance against targets and then analyze any significant differences so that 

appropriate action can be taken to ensure that organizational goals are met. 

However, under current guidance, no requirement exists for DOD to evaluate the 

impact of its cost estimating efforts, such as whether these efforts have prompted 

internal or external decision makers to consider cost as a factor in deciding whether 

to establish a reporting requirement for DOD. Without evaluating the impact of its 

efforts, including seeking the views of internal and external decision makers, DOD 

does not have the information it needs to assess whether the time and effort it is 

investing to develop cost estimates is having the desired effect of achieving greater 

transparency, reducing reporting requirements, and raising cost consciousness, as 

intended by the Secretary. 

We are making a recommendation to the Secretary of Defense to take steps to 

evaluate DOD’s effort to estimate costs to determine whether that effort is having the 

desired effect of achieving greater transparency, reducing or eliminating reporting 

requirements, and raising cost awareness. Based on the results of this evaluation, if 

DOD plans to continue the effort to estimate costs for selected reports and studies, 

we recommend that the Secretary modify the current guidance or otherwise take 

steps to improve DOD’s cost estimating approach. In commenting on a draft of our 

report, DOD partially concurred with our recommendations, except it disagreed with 

one of the steps we recommended to improve its cost estimating approach. Our 

comments on specific points made in DOD’s letter begin on page 14 and DOD’s 

comments are reprinted in enclosure V. The department also provided technical 

comments on our draft report, which we incorporated as appropriate.

 

8 GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: 

November 1999).
7 GAO-12-480R Defense Management

Background

In September 2010, the CAPE office, in conjunction with the military services, 

established the Cost Guidance Group to implement the Secretary of Defense’s 

requirement to estimate the cost of preparing DOD reports and studies and publish 

that cost on the front cover. This group, consisting of representatives from the Office 

of the Director of Administration and Management, the Joint Staff, and the military 

departments, among others, developed the guidance and tool that the Secretary of 

Defense directed DOD and its components to begin using by February 1, 2011. 

Figure 1 provides a timeline of key events related to the CAPE office’s 

implementation of the Secretary’s requirement. 

Figure 1: Timeline of the Development and Implementation of DOD’s Cost Estimating Tool

The tool, also referred to as a calculator, is web based and maintained on an 

unclassified DOD website (see enc. III for a snapshot of the tool). DOD entities use 

the tool for training purposes as well as to generate cost estimates that will be 

published on reports and studies. The corresponding guidance for the tool is also 

maintained on the website and identifies the types of reports and studies that require 

a cost estimate, instructs individuals on how to access and utilize the tool, and 

identifies manpower and nonlabor costs that could be considered for inclusion in the 

cost estimate, among other things. The guidance and the tool are updated 

incrementally with both minor and major changes. 

Guidance on using the tool identifies 10 types of reports or studies that require a 

cost estimate. Specifically, a cost estimate is required if the report or study is 

• to be provided to the Secretary of Defense,

• to be provided to the Deputy Secretary of Defense,

• to be provided to Congress, 

• to be included in the Defense Technical Information Center holdings, 

• executed by DOD contractors, 
8 GAO-12-480R Defense Management

• executed by federally funded research and development centers, 

• executed by a board created by DOD,

• executed by a board created by law,

• executed by a commission created by DOD, or

• executed by a commission created by law. 

In addition, although it is not required, guidance on using the tool recommends that a 

cost estimate be generated for all reports and studies.

DOD Captures Certain Costs for Selected Reports and Studies, but Its 

Approach Does Not Fully Reflect Relevant Cost Estimating Best Practices and 

Cost Accounting Standards

DOD is estimating and publishing approximate costs for selected internally and 

externally required reports, but in some cases, its approach is not fully consistent 

with relevant cost estimating best practices and cost accounting standards. 

DOD Estimates and Publishes Certain Marginal Costs as Directed by the Secretary 

of Defense

DOD entities use the cost estimating tool to capture marginal costs—costs for 

activities that would not otherwise have been performed had the report or study not 

been developed—associated with preparing and completing a report or study. Costs 

to be captured consist of (1) manpower costs, such as the prorated salaries based 

on time spent by military personnel and DOD civilians to develop and publish a 

report or study,9 and (2) nonlabor costs, such as costs for travel, contractor-related 

services, and printing. Once the estimate is generated, individuals include the dollar 

amount of the estimate on the front cover of the corresponding report or study. 

Specifically, the language on the front cover states that “Preparation of this 

report/study cost the Department of Defense a total of approximately $_______ in 

Fiscal Year _____” and includes the date that the cost estimate was generated and 

a unique reference identification number for the report or study. CAPE officials 

responsible for developing the tool stated that the Secretary of Defense approved 

this approach for estimating and publishing the costs of reports and studies and 

emphasized that the Secretary’s intent was to develop an easy to use, 

nonburdensome approach for estimating costs. As a result, the tool was not 

designed with the level of precision of a more formal cost estimating process. 

DOD’s Approach for Estimating Costs Is Not Fully Consistent with Relevant Best 

Practices and Cost Accounting Standards

We evaluated DOD’s approach for estimating costs against some of the best 

practices contained in GAO’s Cost Estimating and Assessment Guide, which states 

 

9 The tool automatically calculates salary costs for military personnel based on composite rates and civilian 

personnel based on the General Schedule, neither of which includes all costs associated with manpower. 
9 GAO-12-480R Defense Management

that high-quality and reliable cost estimates should be comprehensive, well

documented, and accurate. In addition, we compared DOD’s approach with 

Statement of Federal Financial Accounting Standards No. 4 and relevant portions of 

DOD’s Financial Management Regulation, which state that appropriate procedures 

and practices should be established to enable, among other things, the interpretation 

and communication of cost information. We found that DOD’s approach in using the 

tool to estimate costs is not fully consistent with relevant best practices and cost 

accounting standards, as discussed below. 

Comprehensive

While GAO’s Cost Estimating and Assessment Guide states that cost estimates 

should include all costs, it allows flexibility for the estimates to exclude costs where 

information is limited.10 In such cases, the decisions on what costs are to be 

included or excluded should be clearly defined and documented in the ground rules 

and assumptions used to develop the cost estimate.11 Consistent with this guide, 

DOD’s guidance on using the tool defines and documents decisions to include or 

exclude certain manpower costs and to include all nonlabor costs. For example, it 

identifies specific manpower costs that are excluded from the calculation, such as 

costs associated with health care and training. Additionally, the guidance provides 

broad examples of some types of activities to consider in estimating costs, but states 

that individuals should use their best judgment in determining what costs to include. 

In calculating manpower costs, the guidance indicates that if individuals developing 

a report or study collected data or took other actions that they would have done even 

if the report or study was not required, the costs associated with these activities 

should not be included in the cost estimate. For example, the guidance states 

activities that are part of an individual’s normal job activities—such as attending 

meetings; coordinating reports, studies, or proposals; and completing security 

reviews of documents—should not be included in the manpower calculation. On the 

other hand, if a study or report required activities that would not have otherwise been 

undertaken, costs associated with these activities should be included in the estimate 

of manpower costs. The guidance also provides examples of nonlabor activities 

individuals could consider in developing the cost estimate, such as costs associated 

with contractors, printing, software or hardware purchases, lease or rental fees for 

space, and travel.

Ultimately, the guidance leaves it up to the individuals generating the cost estimate 

to decide which types of activities to include or exclude in the cost estimate. As a 

result, in our review of nine reports that DOD prepared for Congress, we found 

inconsistencies in the types of activities individuals decided to include when 

developing their cost estimates (see enc. IV for a description of these reports, which 

ranged in estimated costs from about $3,000 to over $2.3 million). For example, for 

six of the nine reports we reviewed, we found that individuals included in their 

manpower calculations the time they spent coordinating the report for review and 

 

10 Similarly, SFFAS No. 4 permits flexibility when measuring and reporting costs for special purpose cost studies. 11 Grounds rules represent a common set of agreed-on estimating standards that provide guidance and minimize 

conflicts in definitions. Assumptions represent a set of judgments about past, present, or future conditions 

postulated as true in the absence of positive proof. 
10 GAO-12-480R Defense Management

approval and the time that their supervisors spent finalizing it. For the other reports 

we reviewed, costs for this activity were not included. One of the officials that 

decided to include time spent on coordinating the report in the cost estimate stated 

that DOD’s guidance was unclear as to whether coordination was limited to the 

review and approval of a report. Therefore, given the significant amount time he 

spent coordinating the development of the report (e.g., time spent clarifying 

guidance or coordinating inputs), he decided to include those costs in the cost 

estimate. We also found instances where costs for nonlabor activities that DOD’s 

guidance states individuals could consider in developing estimates were not 

included even though costs were incurred. Specifically, we found that for four of the 

reports we reviewed, officials told us that costs had been incurred for printing but 

were not included in the cost estimate. They stated that they did not include them 

because they believed their printing costs were so small that the level of effort 

needed to calculate those costs outweighed the value of including them in the 

estimate. In some cases, officials were not able to readily retrieve documentation; 

therefore, we were unable to fully evaluate the extent to which they consistently 

applied DOD’s guidance for estimating costs.

In addition, according to DOD’s Financial Management Regulation and incorporated 

portions of Statement of Federal Financial Accounting Standards No. 4, appropriate 

procedures and practices should be established to enable, among other things, the 

interpretation and communication of cost information. While DOD has developed 

boilerplate language for use when presenting the cost estimate on the front cover of 

a report or study, the language does not provide information on what costs are 

included or excluded. Specifically, it does not indicate that the estimate reflects only 

certain marginal manpower and nonlabor costs. Rather, DOD includes a general 

statement that says “Preparation of this report/study cost the Department of Defense 

a total of approximately $_______ in Fiscal Year _____.” Without further 

explanation, this wording could be subject to misinterpretation such that recipients of 

the reports or studies may assume that all costs are included in the estimate when 

that is not the case.

Well Documented 

GAO’s Cost Estimating and Assessment Guide states that high-quality, reliable cost 

estimates should be easily traceable to source documents. While DOD’s guidance 

on using the tool states that individuals should be prepared to explain how they 

developed a cost estimate, it does not include a requirement for individuals to retain

source documentation. According to DOD officials responsible for the development 

of the tool, the tool is not a database and therefore was never intended to be used to 

capture references to supporting documents. When talking with officials responsible 

for developing cost estimates, we found that for three of the nine reports, they were 

able to easily retrieve the documentation they used to generate the cost estimate. 

For example, some individuals were able to provide us with e-mails containing data 

on the amount of time individuals spent working on the report or study. Officials 

responsible for three of the other six reports stated that they could not easily provide 

the information because they had moved on to other positions and no longer had 
11 GAO-12-480R Defense Management

access to their records. The remaining officials stated that with time, they might be 

able to find and provide the source documentation. 

Accurate

GAO’s Cost Estimating and Assessment Guide further states that high-quality, 

reliable cost estimates should have all cost inputs independently checked to verify 

that they are accurate. The guidance on using the tool does not include any process 

or requirement for another individual to independently verify the manpower and 

nonlabor costs used to generate the cost estimate. In the absence of any guidance, 

CAPE and service officials responsible for administering the tool stated that they had 

not been assigned responsibility for validating or vetting inputs used to develop the 

cost estimate. According to these same officials, the individual generating the cost 

estimate is responsible for ensuring its accuracy. In some cases, individuals who 

were responsible for generating cost estimates for the nine reports we reviewed 

stated that they included the information used to develop the cost estimates when 

they submitted the reports to their supervisors for approval. 

In the absence of clearly defined parameters as to which activities should be 

covered, full disclosure of the scope of the estimates, the availability of source 

documentation, and a means to independently verify the estimates, DOD does not 

have the information it needs to readily replicate the estimates and assure itself that 

the estimates are consistent, accurate, and reliable. 

DOD Does Not Currently Have a Means to Ensure That Required Types of 

Reports and Studies Have Cost Estimates, but Has Efforts Under Way to 

Improve Its Visibility 

DOD currently lacks a means to ensure that organizations are developing cost 

estimates for all required types of reports and studies, but is taking steps to enhance 

its ability to monitor the preparation of reports and studies to satisfy reporting 

requirements, including those for which a cost estimate is required to be generated. 

DOD’s guidance on using the tool identified 10 specific types of reports or studies 

that require a cost estimate. The guidance also states that the DOD office preparing 

the report or study is responsible for ensuring that a cost estimate, if required, is 

included. However, the guidance does not include any process or requirement to 

track whether organizations are developing required cost estimates. 

According to CAPE officials who developed the tool, they were not directed to 

ensure that cost estimates have been developed for all required reports and studies. 

They added that the cost estimating tool was not designed to track reports and 

studies that require a cost estimate. For example, officials stated that while the tool 

stores information each time a user generates a cost estimate, they cannot 

distinguish between real estimates and those that were developed while individuals 

were using the tool for training purposes. Therefore, when we requested a list of all 

the reports and studies for which individuals had prepared cost estimates, they were 
12 GAO-12-480R Defense Management

unable to provide us such a list. CAPE officials also noted that the magnitude of 

DOD’s reporting requirements makes it challenging to identify the universe of these 

requirements and to track the completion of reports and studies to meet them, 

including whether cost estimates have been generated. 

In the past year, DOD has taken steps to improve the department’s visibility over its 

internal and external reporting requirements. For example, in March 2011, the 

Secretary of Defense issued a memorandum requiring the Assistant Secretary of 

Defense for Legislative Affairs to enhance that office’s database capability and 

further automate the process of tracking external reports to Congress, and required 

the Office of the Director of Administration and Management to track internal 

reports.12 The Office of Legislative Affairs enhanced its Congressional Hearings and 

Reporting Requirements Tracking System13 by adding a data field to record the 

estimated costs of reports or studies generated by DOD components. To gain 

greater visibility of internal reporting requirements, the Office of the Director of 

Administration and Management tasked Washington Headquarters Services with 

developing a repository for tracking internal reports. According to a Washington 

Headquarters Services official, the repository has a field to capture whether an 

internal report or study has a cost estimate. Currently, the repository is in 

development and has been populated with reports that date back 3 years. However, 

officials stated that this only captures reporting requirements involving multiple DOD 

components and does not reflect all of DOD’s internal reporting requirements. The 

official noted that Washington Headquarters Services is planning to send out a data 

call to all of DOD in an effort to capture the universe of internal reporting 

requirements.

DOD Lacks a Plan to Evaluate the Impact of Its Efforts to Estimate Costs 

DOD has not evaluated and currently does not plan to evaluate the usefulness of its 

efforts to estimate the costs of selected reports and studies as one of the means for 

achieving the Secretary of Defense’s intended purpose of increasing the 

transparency of costs, reducing or eliminating reporting requirements, and instilling a 

culture of cost consciousness across DOD. According to GAO’s Standards for 

Internal Control in the Federal Government, activities such as assessments need to 

be established to monitor performance and managers need to compare actual 

performance against targets and then analyze any significant differences so that 

appropriate action can be taken to ensure that organizational goals are met. 

However, under current guidance, no requirement exists for DOD to evaluate the 

impact of its cost estimating efforts, such as whether it has prompted internal or 

external decision makers to consider cost as a factor in deciding whether to 

establish a reporting requirement for DOD. In addition, CAPE officials responsible for 

developing and administering the tool stated they have not been otherwise directed 

to take steps nor have they taken steps to conduct any such evaluation, including 

 

12 Secretary of Defense Memorandum, Track Four Efficiency Initiatives Decisions (Mar. 14, 2011). 13 The Congressional Hearings and Reporting Requirements Tracking System is DOD’s official system used to 

track congressional processes. 
13 GAO-12-480R Defense Management

reaching out to internal and external decision makers to obtain their views. CAPE 

officials stated that anecdotally they have heard some officials remark that they 

believe the tool has increased the transparency of costs and improved cost 

awareness. However, most of the DOD officials who generated cost estimates for 

the nine reports we reviewed stated that they had not sought or received any 

feedback from internal or external decision makers about the cost estimates 

published on the front covers of the reports or studies. Without evaluating the impact 

of its efforts, including seeking the views of internal and external decision makers, 

DOD does not have the information it needs to assess whether the time and effort it 

is investing to develop cost estimates is having the desired effect of achieving 

greater transparency, reducing reporting requirements, and raising cost 

consciousness, as intended by the Secretary. 

Conclusions 

When the Secretary of Defense directed DOD to track the cost of preparing reports 

and studies, his intention was to generate an approximate cost that could raise 

awareness of the costs associated with the level of effort DOD expends in 

generating reports or studies. In response to the Secretary’s directions, officials from 

the CAPE office, in conjunction with officials from other DOD offices, expended time 

and effort to develop an approach to estimate the cost of reports and studies. DOD 

components are also expending time and effort to use the tool to develop cost 

estimates for selected reports and studies. Because of this investment, it is 

important that DOD officials have an understanding of the impact publishing a cost 

estimate is having on internal and external decision makers. Further, there are 

actions that DOD can take to improve its approach so that it better aligns with key 

characteristics of cost estimating best practices—actions that would help DOD 

ensure that it has the information it needs to readily replicate the estimate and 

assure itself and the recipients of the reports or studies that the estimates are clearly 

defined and consistent, accurate, and reliable. Without first evaluating the impact its 

cost estimating approach is having, DOD officials will not be positioned to determine 

whether the resources invested in generating and publishing the approximate costs 

are having the desired effect or whether they should take steps to improve their cost 

estimating approach. 

Recommendations for Executive Action

To determine whether its effort to estimate costs is having the desired effect of 

achieving greater transparency, reducing or eliminating reporting requirements, and 

raising cost awareness, we recommend that the Secretary of Defense take steps to 

evaluate the effort, including reaching out to internal and external decision makers to 

obtain their views on how it has affected their decisions to establish internal and 

external reporting requirements and whether they have a common understanding of 

what types of costs are being reported. 

Based on the results of this evaluation, if DOD plans to continue the effort to 

estimate costs for selected reports and studies, we recommend that the Secretary 
14 GAO-12-480R Defense Management

modify the current guidance or otherwise take steps to improve DOD’s cost 

estimating approach, including 

• clarifying those activities that should be included in the estimate as they are 

incurred, including time spent at every level to review and approve the report 

or study;

• requiring that the language on the front cover of reports and studies make 

clear that the estimate is based on certain marginal manpower and nonlabor 

costs; 

• requiring that source documentation used to develop the cost estimate is 

retained and easily accessible for review purposes; and

• establishing and implementing a verification process to provide reasonable 

assurance of consistency and completeness of cost inputs used to develop 

the cost estimate.

Agency Comments and Our Evaluation

DOD provided written comments on a draft of this report. The full text of DOD’s 

written comments is reprinted in enclosure V. The department also offered technical 

comments, which we incorporated as appropriate.

Overall, DOD stated that it largely agreed with GAO’s recommendation to evaluate 

the effectiveness of estimating and publishing the costs of DOD studies and reports 

and that the department remains committed to improving the existing cost estimating 

guidance, methods, and tools associated with this policy. However, DOD expressed 

concern that we had inaccurately characterized the objectives of its cost estimating 

policy. For example, DOD believed that the title of our review—Department of 

Defense’s (DOD) Reporting Cost Data Collection—suggested that the department 

was collecting cost data on reports. DOD also stated that our draft report 

inaccurately stated that an objective of the current policy is to reduce or eliminate 

reporting requirements. According to DOD, the department’s effort to reduce or 

eliminate reporting requirements is a separate endeavor entailing the formal 

submission of legislation to Congress, and is inappropriately linked in our draft report 

to the initiative to estimate and publish the costs of DOD studies and reports.

We disagree with DOD’s view that we have inappropriately linked the initiative to 

estimate and publish costs to the objective of eliminating and reducing reporting 

requirements. We recognize that DOD has undertaken a specific effort to review all 

reports stemming from both external and internal reporting requirements, and have 

clarified our report accordingly. However, in our review of various DOD documents, 

including prepared remarks made by the Secretary and a press release from his 

office, it is clear that the review cited by DOD was one of several actions, which 

included the effort to estimate and publish costs, that were intended to address the 

volume of reporting requirements. We, therefore, modified the report to provide 

additional contextual information from these sources to amplify the Secretary’s 

intent. In the introductory paragraphs of the report, we now include information 

contained in the Secretary of Defense’s August 9, 2010, speech announcing the 

efficiency initiative as well as the accompanying press release further describing his 

remarks. Specifically, we note the following: In his August 9, 2010 speech 
15 GAO-12-480R Defense Management

announcing the overall efficiency initiative, the Secretary of Defense stated that the 

department is “awash in taskings for reports and studies” and directed several 

specific actions that according to the press release accompanying the 

announcement, were intended to “combat the enormous amounts of taskings for 

reports and studies.”14 In his remarks, the Secretary noted that there is little basis to 

determine whether the value gained is worth the considerable time and resources 

expended to generate reports and studies. With respect to specific actions, the 

Secretary directed DOD and its components to track the approximate cost of 

preparing DOD reports and studies and publish the cost on the front cover of each 

report or study. He also called for a comprehensive review of all oversight reports 

and use of the results to reduce the volume of reports and studies generated 

internally while engaging Congress on ways to meet needs while working together to 

reduce the number of reports. With regard to the title of our review, this title was 

used for administrative purposes, including its use in our letter to notify DOD of our 

work. We note that in several places throughout the draft report, we describe DOD’s 

effort as a cost estimating approach rather than an effort to collect cost data.

With regard to our recommendation that DOD evaluate its effort to estimate the 

costs of reports and studies, including reaching out to internal and external decision

makers to obtain their views on how it has affected their decisions to establish 

internal and external reporting requirements and whether they have a common 

understanding of what types of costs are being reported, DOD partially concurred. 

DOD agreed that there could be value gained in evaluating its efforts but stated that 

any such evaluation must avoid linking the efforts of this policy to objectives that are 

unrelated to its original intent. Specifically, DOD stated that its policy was not 

designed to reduce or eliminate reporting requirements, which it characterized as a 

separate effort. In addition, DOD stated that its policy was not designed to apply cost 

estimating best practices from GAO’s Cost Estimating and Assessment Guide. It 

noted that DOD’s guidance and methodology for estimating costs differ from criteria 

used to estimate costs for other DOD decision making. It further stated that DOD 

would not support a change to the rigor associated with estimating the costs of DOD 

studies and reports unless it is guaranteed that the marginal value gained by 

increasing the level of accuracy outweighs the additional efforts required to produce 

more accurate cost estimates. 

With regard to engaging with internal and external decision makers to better 

understand the effectiveness of the current cost estimating policy, DOD stated that 

this process had already begun. Specifically, DOD noted that members of the 

department have communicated internally with DOD employees and externally with 

non-DOD employees to understand ways in which the value gained by the policy 

could be improved. In its comments, DOD stated that it had received evidence that 

the value gained by the policy is significant and cited specific examples to illustrate 

its point. For example, DOD noted that contact had occurred between the Chairman 

of the House Armed Services Committee and the Secretary of Defense regarding 

the costs associated with a particular DOD report, which led to agreement that the 

 

14 Remarks as delivered by former Secretary of Defense Robert M. Gates, The Pentagon, August 9, 2010, and 

DOD News Release No. 706-10, “Sec. Gates Announces Efficiency Initiatives” (Aug. 9, 2010). 
16 GAO-12-480R Defense Management

report’s quality required improvement and could be produced at lower costs. In 

addition, DOD cited actions taken by DOD decision makers to expand the scope of 

the policy to include additional types of reports or to establish mechanisms to ensure 

that reports to Congress are not transmitted without a cost estimate. DOD also noted 

that DOD decision makers have contacted CAPE staff to commend the Secretary’s 

effort to raise cost awareness and improve transparency through the use of the cost 

estimating guidance, methods, and tools. Finally, DOD stated that it will continue to 

monitor the effectiveness of the current policy by engaging with DOD employees, 

senior-level DOD staff, and individuals outside of DOD. 

We are encouraged that the department agrees that there could be value gained in 

evaluating efforts to raise cost awareness and improve transparency of costs by 

estimating and publishing costs of the DOD studies and reports. However, we 

disagree with DOD’s characterization of the underlying intent of the evaluation that 

we recommended. As discussed previously, the Secretary included the effort to track 

and publish costs for reports and studies among efforts intended to address the 

volume of taskings for reports and studies. Therefore, we believe that in any 

evaluation of the effort, it would be essential to specifically obtain the views of 

decision makers on the benefits of estimating report costs, including how such 

efforts affected their decision making on whether to call for future reports or studies. 

As stated in our report and as reflected in the examples that DOD described in its 

response, we recognize that DOD has obtained anecdotal feedback from internal 

and external sources regarding the cost estimating effort. Given the time and effort 

that DOD components are expending to use the tool to develop cost estimates, we 

continue to believe that DOD needs to develop an evaluation approach that will give 

it a more complete picture of how decision makers have been influenced by the cost 

estimating policy. Without such information, it will continue to be difficult for DOD to 

assess the value of the policy, including whether the time and effort it is expending 

to estimate costs is a worthwhile investment. 

We further note that our recommendation that DOD evaluate its cost estimating 

effort did not suggest that such an evaluation would assess whether DOD should 

apply cost estimating best practices. Rather, we recommended that DOD first 

evaluate whether its effort is achieving its desired effect. Based on the results of this 

evaluation, we recommended that if DOD decided to continue the effort, it should 

modify existing guidance or otherwise take steps to improve its cost estimating 

approach so that it better aligns with key characteristics of cost estimating best 

practices. We note that DOD specifically states in its written comments that the 

department intends to continue the current policy. Therefore, as discussed below in 

our response to DOD’s specific comments regarding that part of our 

recommendations, we continue to believe that opportunities exist for DOD to 

improve its cost estimating approach to make it more consistent with relevant best 

practices. 

With regard to our recommendations that DOD modify the current guidance or 

otherwise take steps to improve DOD’s cost estimating approach, DOD partially 

concurred with three of our proposed recommendations and did not concur with the 

fourth one. 
17 GAO-12-480R Defense Management

• DOD partially concurred with our recommendation to clarify those activities 

that should be included in the estimate as they are incurred, including time 

spent at every level to review and approve the report or study. DOD stated 

that providing clarity to the overall guidance will continue to be a priority, 

adding that the direction to exclude coordination efforts in the cost estimate is 

explicitly documented in guidance. As we noted in the draft report, we 

recognize that DOD’s guidance states that manpower costs should not be 

included when participation only involves normal job activities, such as 

attending meetings and coordinating studies, reports, or proposals. However, 

we found that some of the individuals who generated cost estimates found the 

guidance confusing with regard to whether to include or exclude costs 

associated with coordination activities that are beyond an individual’s normal 

job activity. As a result, we found inconsistencies in how these individuals 

decided to account for this activity when generating their cost estimates.

• DOD partially concurred with our recommendation requiring that source 

documentation used to develop the cost estimate is retained and easily 

accessible for review purposes. DOD stated that its Cost Guidance Portal, 

which includes the tool, has several features to assist users in obtaining 

source documentation of their cost estimates, including an automatic e-mail 

with a detailed summary report of the cost estimate and a hyperlink to each 

cost estimate. We recognize that these features enable DOD to retrieve the 

information that was input into the cost estimating tool. However, it does not 

include a reference to the actual source documents. As we discuss in the 

report, some individuals responsible for generating the cost estimates that we 

reviewed had difficulty retrieving the source documentation that they used to 

develop the estimates. We continue to believe that without specifically 

requiring individuals to retain source documentation, DOD may not have the 

information needed so that others can understand how a cost estimate was 

derived and readily replicate it. 

• DOD did not concur with our recommendation to establish and implement a 

verification process to provide reasonable assurance of consistency and 

completeness of cost inputs used to develop the cost estimate. The 

department stated that it currently has the ability to pull detailed cost 

estimates for specific studies and reports, when necessary, and to contact 

each DOD employee who prepares a cost estimate, which DOD believes 

provides a reasonable level of accountability. DOD also stated that 

implementing a verification process similar to the one proposed by GAO 

would be a costly endeavor. For example, verifying the amount of time spent

by each DOD employee preparing a study or report would require the 

department to reduce time spent on other, higher-priority missions. Rather 

than implementing a costly verification process for review of cost estimates 

after they have been submitted, the department will continue to train users 

prior to their preparation and submission of cost estimates. We agree that the 

department can pull information for a specific report or study and contact 

DOD employees regarding estimates. However, we disagree that DOD’s 

ability to take these steps constitutes the same type of accountability that 

would be present if DOD had a verification process in place. We are not 
18 GAO-12-480R Defense Management

suggesting that such a process would require DOD to verify the time spent by 

each employee to prepare a report or study. Rather, we would expect that 

any verification effort would include steps to review whether the estimate was 

developed in a manner consistent with DOD’s guidance. Such a process 

would provide a greater assurance of consistency and completeness of the 

cost inputs used to develop the cost estimate. In addition, while we agree that 

training is important, we note that training is not currently required before an 

individual is able to use the tool, and individuals may therefore continue to 

develop cost estimates without the benefit of any training. 

• DOD partially concurred with our recommendation requiring that the language 

on the front cover of reports and studies make clear that the estimate is 

based on certain marginal manpower and nonlabor costs. DOD stated that 

while the department is open to modifying the phrase that is published on the 

front cover of reports or studies, the objective should not be to detail the 

specific costs included or excluded on the front cover and that the cost on the

front cover should always represent the marginal costs borne by DOD in 

preparing the study or report. We agree that DOD does not need to detail all 

the specific costs included or excluded in the cost estimate on the front cover. 

Rather, DOD should modify the language on the front cover of reports and 

studies to make it clear that the estimate is based on certain marginal 

manpower and nonlabor costs. 

- - - - - 

We are sending copies of this report to appropriate congressional committees and 

the Secretary of Defense. In addition, this 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) 

512-9619 or pickups@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. GAO staff 

who made key contributions to this report are listed in enclosure VI.

Sharon L. Pickup

Director

Defense Capabilities and Management 

Enclosures - 6
19 GAO-12-480R Defense Management

Enclosure I: Description of the Four Tracks of the Secretary of Defense’s 

Efficiency Initiative

In May 2010, the Secretary of Defense directed the Department of Defense (DOD) 

to undertake a departmentwide initiative to assess how the department is staffed, 

organized, and operated with the goal of reducing excess overhead costs and 

reinvesting these savings into sustaining DOD’s current force structure and 

modernizing its weapons portfolio. The Secretary’s initiative targeted both shorterand longer-term improvements and set specific goals and targets for achieving cost 

savings and efficiencies. The Secretary’s initiative was organized along four tracks—

each of which had a different focus, as shown in table 1.15 

Table 1: Description of the Four Tracks of the Secretary of Defense’s Efficiency Initiative

Track Purpose

Track 1 Military services and other components: Tasked to find savings of about $100 billion in 

overhead costs that are to be reinvested over 5 years, starting with DOD’s fiscal year 

2012 budget. 

Track 2 External and internal suggestions: Sought ideas, suggestions, and proposals for 

efficiencies from outside normal, official DOD channels (e.g., “think tanks,” industry, 

external boards, and DOD employees).

Track 3 Departmentwide review of certain areas: Assessed personnel and health care policies, 

logistics, and acquisition to identify efficiencies.

Track 4 Specific issues identified by the Secretary: Focused on specific areas where DOD could 

take immediate action to reduce inefficiencies and overhead, in particular, to reduce 

headquarters and support bureaucracies and to instill a culture of cost consciousness 

and restraint in the department.

Source: DOD.

Note: Other components include various offices within the Office of the Secretary of Defense, the combatant commands, DOD 

agencies, and DOD field activities. 

 

 

15 GAO, Streamlining Government: Key Practices from Select Efficiency Initiatives Should Be Shared 

Governmentwide, GAO-11-908 (Washington, D.C.: Sept. 30, 2011). 
20 GAO-12-480R Defense Management

Enclosure II: Scope and Methodology 

Our objectives were to evaluate DOD’s efforts to implement an approach to 

estimating the costs of selected reports and studies, including (1) whether DOD 

entities are capturing and presenting costs in a manner consistent with relevant cost 

estimating best practices; (2) the status of DOD’s efforts to track whether 

organizations are developing cost estimates for all required types of reports and 

studies; and (3) whether DOD has evaluated the usefulness of its efforts to estimate 

the cost of reports and studies as one of the means for achieving the Secretary’s 

intended purpose of increasing the transparency of costs, reducing or eliminating 

reporting requirements, and instilling a culture of cost consciousness across DOD. 

To determine whether DOD entities are capturing and presenting costs in a manner 

consistent with relevant cost estimating best practices, we reviewed the cost 

estimating tool used by DOD entities to generate cost estimates and compared it to 

several best practices recognized in GAO’s Cost Estimating and Assessment Guide

and relevant managerial cost accounting guidance—Statement of Federal Financial 

Accounting Standards No. 4 and relevant sections of DOD’s Financial Management 

Regulation. GAO’s Cost Estimating and Assessment Guide reflects best practices 

for developing and managing cost estimates for capital programs. Because DOD’s 

cost estimating tool covers noncapital costs, we assessed the tool against the best 

practices in the guide that we identified as most applicable to these types of cost. 

We compared the tool to three characteristics—comprehensive, well documented, 

and accurate—in the guide to determine if the estimate generated by the tool is of 

high quality and reliable. We scored each best practice as not met (the tool provided 

no evidence that satisfies any of the criterion), minimally met (the tool provided 

evidence that satisfies a small portion of the criterion), partially met (the tool 

provided evidence that satisfies about half of the criterion), substantially met (the tool 

provided evidence that satisfies a large portion of the criterion), and met (the tool 

provided complete evidence that satisfies the entire criterion). We determined the 

overall assessment by assigning an individual rating to the best practice: not met = 

1, minimally met = 2, partially met = 3, substantially met = 4, and met = 5. To 

perform this analysis, we reviewed documents provided by the Cost Assessment 

and Program Evaluation (CAPE) office, including guidance on using the tool and the 

tool itself, and conducted interviews with DOD officials to corroborate our 

understanding of the tool and its corresponding guidance. In addition, we compared 

the cost estimating tool with Statement of Federal Financial Accounting Standards 

No. 4 and relevant sections of DOD’s Financial Management Regulation to 

determine the extent to which the tool reflects relevant cost accounting standards 

and cost management guidance. All data elements we assessed are sufficiently 

reliable for the purpose of assessing the reliability of DOD’s cost estimating tool. 

Further, we had originally intended to review a representative sample of DOD 

reports and studies with cost estimates published on the front cover. However, DOD 

could not readily provide us with a comprehensive list of all reports and studies that 

included cost estimates from which we could select reports and studies to review 

because DOD could not distinguish between real cost estimates and estimates that 

were developed while individuals were using the tool for training purposes. DOD was 
21 GAO-12-480R Defense Management

able to provide us information on nine reports prepared for Congress on which 

Congress had requested more information, and identify the individuals responsible 

for generating the cost estimates for these reports. Therefore, we reviewed these 

nine reports. Using semistructured interviews, we held discussions with the key 

officials responsible for developing the cost estimates for these reports to gain an 

understanding of their experience with using the tool and corresponding guidance 

and their level of confidence in the cost estimates generated, among other things. In 

addition, we reviewed supporting documentation for some of the estimates as well 

as the snapshot of the data that was entered into the tool. In some cases, officials 

were not able to readily retrieve documentation; therefore, we were unable to fully 

evaluate the extent to which they consistently applied DOD’s guidance for estimating 

costs. We were unable to assess the reliability of the data used to generate the cost 

estimates that were included on these nine reports, or to generalize these findings to 

all reports, but we feel that the review of these nine reports is sufficient for providing 

context about the process, and we are making a recommendation about future data 

collection efforts.

To describe DOD’s efforts to determine whether organizations are developing cost 

estimates for all required types of reports and studies, we reviewed guidance and 

interviewed DOD officials to assess the nature of their tracking efforts. Specifically, 

we conducted interviews, gathered information and documents regarding internal 

and external report tracking mechanisms from officials in the CAPE office; the Office 

of the Assistant Secretary of Defense for Legislative Affairs; the Office of the Director 

of Administration and Management; Washington Headquarters Services; and the 

legislative affairs offices of the Departments of the Army, Navy, and Air Force.

To determine whether DOD has evaluated the usefulness of its efforts to estimate 

the cost of reports and studies as one of the means for achieving the Secretary’s 

intended purpose of increasing the transparency of costs, reducing or eliminating 

reporting requirements, and instilling a culture of cost consciousness across DOD, 

we reviewed relevant DOD guidance and GAO’s Standards for Internal Control in 

the Federal Government. We also interviewed DOD officials responsible for 

administering and using the tool, including the individuals who generated the nine 

reports for Congress, to determine if they had taken steps to obtain feedback from 

internal and external decision makers regarding the impact of estimating costs and 

publishing the cost estimate on the front covers of the reports and studies.

We conducted this performance audit between October 2011 and May 2012 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. 
22 GAO-12-480R Defense Management

 

Enclosure III: Snapshot of Fields in DOD’s Cost Estimating Tool

The tool designed by DOD consists of fields with drop-down menus to allow users to 

choose the category of costs they wish to input, among other types of information. 

Additionally, the tool contains information such as the definition of what constitutes a 

report or study and a real-time calculator. (See fig. 2.) 

Figure 2: Fields in DOD’s Cost Estimating Tool
23 GAO-12-480R Defense Management

Enclosure IV: Description of Nine Reports Prepared for Congress That GAO 

Reviewed

We reviewed information on nine reports DOD prepared for Congress for which cost 

estimates had been generated in 2011 and interviewed the key officials responsible 

for developing the cost estimates. The reports we reviewed were prepared by 

organizations within the Office of the Secretary of Defense, the Navy, and the Air 

Force. Four of the cost estimates consisted solely of manpower costs, and the other 

five consisted of manpower and nonlabor costs. (See table 2.) 

Table 2: Description of Nine DOD Reports Prepared for Congress That GAO Reviewed

Organization 

that prepared 

the report

Report Date Cost estimate (dollars in thousands)

Manpower Nonlabor Total 

Navy Integration of Current and Future 

Unmanned Payloads into Submarines

January 12, 

2011 $3 $0 $3

Office of the 

Under Secretary 

of Defense for 

Acquisition, 

Technology and 

Logistics

Panel on Contracting Integrity 2010 

Report to Congress

January 28, 

2011 18 0 $18

Navy Report to Congress on Repair of Naval 

Vessels in Foreign Shipyards

February 8, 

2011 11 0 $11

Office of the 

Under Secretary 

of Defense for 

Policy

Report on the Joint Use of Federal 

Forest Fire Fighting Assets/C-130 Fire 

Fighting Capabilities

February 9, 

2011 51 120 $171

Office of the 

Secretary of 

Defense, Cost 

Assessment and 

Program 

Evaluation

A Review of the Army's Modular Force 

Structure 

February 16, 

2011 149 460 $609

Air Force

Expeditionary Combat Support System 

(ECSS) Increment 1 Major Automated 

Information System (MAIS) Critical 

Change Report

February 18, 

2011 1,232 1,146 $2,378

Navy Strategic Plan for Homeporting the 

Littoral Combat Ship

February 24, 

2011 11 0 $11

Office of the 

Under Secretary 

of Defense for 

Personnel and 

Readiness

Department of Defense Foreign 

Language Proficiency Fiscal Year 2010 

Report to Congress

March 2011 78 23 $101

Navy Littoral Combat Ship (LCS) Monthly 

Cost Report to Congress

March 24, 

2011 2 1 $3

Source: DOD. 
24 GAO-12-480R Defense Management

Enclosure V: Comments from the Department of Defense 
25 GAO-12-480R Defense Management
26 GAO-12-480R Defense Management
27 GAO-12-480R Defense Management
28 GAO-12-480R Defense Management
29 GAO-12-480R Defense Management
30 GAO-12-480R Defense Management

Enclosure VI: GAO Contact and Staff Acknowledgments

GAO Contact

Sharon L. Pickup, (202) 512-9619 or pickups@gao.gov

Staff Acknowledgments

In addition to the contact named above, key contributors to this report were 

James A. Reynolds, Assistant Director; Bruce Brown; Frances Abe Dymond; Mae 

Jones; Terry Richardson; Karen Richey; Amber Lopez Roberts; Robert Sharpe; 

Amie Steele; Stacey Steele; Sonja S. Ware; and Karen Nicole Willems.

(351661)
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