United States General Accounting Office

GAO Report to the Honorable

Charles E. Grassley, U.S. Senate

October 1997 DEFENSE

HEADQUARTERS

Total Personnel and

Costs Are Significantly

Higher Than Reported

to Congress

GAO/NSIAD-98-25

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-275837 

October 30, 1997

The Honorable Charles E. Grassley

United States Senate

Dear Senator Grassley:

Since at least the early 1970s, Congress has been concerned about the size

of management headquarters in the Department of Defense (DOD). At your

request, we reviewed DOD’s program to account for its management

headquarters and headquarters support activities. Specifically, our

objectives were to determine (1) the accuracy and reliability of DOD’s

reported data on management headquarters and headquarters support

personnel1

 and costs, (2) reasons that data on personnel and costs could

be inaccurate, and (3) DOD’s plans to reduce the size of its management

headquarters and headquarters support activities.

Background In 1972, after receiving inconsistent data on DOD headquarters from the

military services, the House Appropriations Committee directed DOD to

define headquarters functions, list headquarters activities, and develop a

common method of accounting for headquarters personnel and costs. In

response, in 1973 the Deputy Secretary of Defense issued DOD

Directive 5100.73. Over the years, the directive has been revised and is

now titled “Department of Defense Management Headquarters and

Headquarters Support Activities.”

The directive defines management as exercising oversight, direction, and

control of subordinate organizations or units by (1) developing and issuing

policies and providing policy guidance; (2) reviewing and evaluating

program performance; (3) allocating and distributing resources; or

(4) conducting mid- and long-range planning, programming, and budgeting.

It defines headquarters support as professional, technical, administrative,

or logistic support that is performed in, or provided directly to, a

management headquarters. The definition includes both staff support and

operating support (such as secretarial or computer support). It excludes

specific products or technical and operating-type services that are

provided on a DOD- or componentwide basis (such as payroll services) and

base operating support functions provided by a host to all tenants.

1

Unless stated otherwise, we have used the term “personnel” throughout this report to connote

positions for which funding has been requested or provided.

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The directive includes a list of organizations that DOD classifies as

management headquarters and headquarters support activities. This list

includes the Office of the Secretary of Defense (OSD); the Joint Staff;

defense agency headquarters; unified command headquarters;

international military headquarters; and military department headquarters,

including the headquarters of acquisition centers, major commands, and

similar Navy organizations. In addition to the listed entities, the directive

establishes criteria for DOD components to use in identifying other

personnel and organizations that perform management headquarters and

headquarters support functions. The directive, as implemented in DOD,

requires that DOD annually report to Congress all military and civilian

personnel and all budgeted funds for organizations identified under the

directive. OSD and the military departments report this data to Congress on

four separate budget documents, called PB-22 exhibits.

Many DOD management headquarters listed in the directive have numerous

subordinate noncombat organizations that perform a wide variety of

functions, from direct staff support to their parent headquarters to

operating military academies. In the Army and Air Force, these types of

organizations are called field operating agencies/activities, staff support

agencies, or direct reporting units. The Navy has no specific term for these

noncombat support activities—at the Department of the Navy level, they

are a subset of “Echelon 2” organizations, a generic term for Navy

organizations that report to the Secretary of the Navy or the Chief of Naval

Operations (OPNAV).

In the past, we reported that DOD had an incentive to respond to pressures

to reduce its management headquarters by transferring personnel to

nonmanagement headquarters organizations. We also reported that past

efforts to reduce headquarters personnel in OSD and military department

headquarters were achieved primarily through transfers of functions and

personnel to other organizations.2

Concerned that DOD’s efforts to reduce its infrastructure, including

headquarters, have lagged behind the cuts made in operational forces,

Congress has taken several actions to reduce headquarters personnel. For

example, in 1990, Congress ordered DOD to reduce total personnel assigned

to DOD management headquarters and headquarters support activities by

20 percent over 5 years in order to bring the size of headquarters “into line

2

Highlights of a Report on Staffing and Organization of Top-Management Headquarters in the

Department of Defense (GAO/FPCD-76-35A, 1976), Defense Headquarters Staff Reductions: An

Overview (GAO/FPCD-78-72, Oct. 2, 1978), and Staffing Data for Department of Defense Top

Management Headquarters Organizations (GAO/FPCD-83-29, May 6, 1983).

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with” legislated force structure and budgetary reductions. Also, in the

National Defense Authorization Act for Fiscal Year 1997, Congress

directed DOD to reduce OSD, its DOD support activities, and the Washington

Headquarters Services (WHS) by 25 percent over 5 years.

Results in Brief DOD’s annual budget exhibits to Congress on management headquarters

and headquarters support are unreliable because the number of personnel

and costs are significantly higher than reported. As a result, neither DOD

nor Congress can determine trends in headquarters personnel and costs to

help them make informed decisions about the appropriate size of

headquarters. During fiscal years 1985-96, DOD reported steady decreases

in its management headquarters and headquarters support personnel—a

31-percent decline from about 77,000 to 53,000. However, these data did

not include personnel at most of DOD’s noncombat organizations that are

subordinate to management headquarters. In our review of selected

subordinate organizations, we found that almost three-fourths were

primarily performing management or headquarters support functions and

should have been reported to Congress by DOD, using the criteria in DOD

Directive 5100.73. Also, a DOD study group concluded that DOD has about

81,000 management headquarters and support personnel, or 30,000 more

than were reported to Congress in the President’s budget for fiscal year

1998.

DOD’s headquarters costs are also significantly higher than reported to

Congress. DOD’s data indicate that management headquarters and

headquarters support costs decreased from $5.3 billion to $4.3 billion in

constant 1997 dollars during fiscal years 1985-96. However, DOD’s reported

data did not include all costs, as required by its financial management

regulation. In addition, cost data for management headquarters and

headquarters support activities are scattered among several budget

documents, making it difficult to determine total costs.

DOD’s reported headquarters personnel and cost data are understated for

several reasons. Sustained criticism from Congress about the size of DOD’s

headquarters has been a disincentive for DOD to accurately report the

number of such personnel and their related costs. Thus, DOD has “played

games” to “hide” management headquarters personnel from Congress,

according to several Office of the Secretary of Defense and military

service officials. Second, many DOD officials believe that they are required

to report only personnel that make policy, allocate resources, or plan for

the future, even though DOD Directive 5100.73 requires that headquarters

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support personnel be reported. Third, the directive’s criteria for analyzing

organizations to determine whether they should be included in budget

exhibits on management headquarters are complicated. Finally, oversight

by the Office of the Secretary of Defense and the military services has

been limited.

DOD faces challenges in reducing the size of its headquarters. While DOD

wants to reduce the size and cost of its management headquarters to

reallocate funds to other areas, it has not determined the scope of future

reductions or developed a detailed plan for making the reductions. DOD is

examining the effects of a possible 15-percent reduction in management

headquarters and support personnel during fiscal years 1998-2003, a cut of

about 7,650 more personnel than is currently programmed in its Future

Years Defense Program. At the same time, a Defense Reform Task Force is

assessing the missions, functions, and size of the Office of the Secretary of

Defense and other headquarters. Determining whether and how much to

reduce management headquarters is difficult because DOD has no generally

accepted staffing standards to objectively size a management

headquarters. Furthermore, DOD officials have a range of views on whether

and how to reduce management headquarters further—some advocate

significant reductions while others have no plans to reduce.

We are making recommendations intended to (1) simplify the criteria in,

and expand the scope of, DOD Directive 5100.73 to generate more accurate

and complete data and (2) provide Congress with a readily available

summary of the total costs of DOD management headquarters and

headquarters support activities.

Number of

Headquarters

Personnel Are

Significantly Higher

Than DOD Reports

The total number of personnel associated with DOD’s management

headquarters and headquarters support activities are significantly higher

than DOD has reported to Congress. DOD reported steady decreases in its

management headquarters and headquarters support personnel from

about 77,000 to 53,000 during fiscal years 1985-96, a 31-percent decrease.

However, DOD does not report personnel at most of its noncombat

organizations that are directly subordinate to management headquarters.

In our review of selected subordinate noncombat organizations, we found

that almost three-fourths of the organizations were primarily performing

management or management support functions and should have been

reported to Congress by DOD, using the criteria in DOD Directive 5100.73.

Some personnel in these subordinate organizations had been part of

headquarters, but they were transferred out of headquarters, or

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reclassified as nonheadquarters, during periods when Congress mandated

that DOD reduce its management headquarters personnel. For example, in

1992 the Air Force removed about 2,000 personnel in its numbered air

forces headquarters from reporting under DOD’s management headquarters

program. We also found situations in which the military services use

unusual accounting devices that distort the true size of organizations; in

addition, the size of OSD is unclear because of definitional issues.

DOD Reported Steady

Decreases in Headquarters

Personnel During 1985-96

DOD reported steady decreases in its management headquarters and

headquarters support personnel from about 77,000 to 53,000 during fiscal

years 1985-96, a 31-percent decrease. These reported decreases were, to

some extent, in response to reductions directed by Congress. This rate of

decrease is somewhat less than the 36-percent decrease in combat forces

over the same time period. Figure 1 shows reported personnel levels for

management headquarters and headquarters support for past and future

fiscal years.

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Figure 1: Reported DOD Management Headquarters Personnel (Fiscal Years 1985-99)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

0

5,000

10,000

15,000

20,000

25,000

30,000

Fiscal year

Navy total Defense-wide total Army total Air Force total

Notes: Data for 1985-96 are reported actual values. Data for 1997-99 are estimates.

The Defense-wide category includes management headquarters personnel in OSD; OSD support

organizations; the Joint Staff; and the headquarters of defense agencies, DOD field activities, and

the U.S. Special Operations Command.

Source: OSD’s Director of Administration and Management (OSD/DA&M) and DOD’s PB-22

exhibits.

Although DOD showed a steady decline in management headquarters and

headquarters support personnel overall, the Defense-wide category

increased 34 percent, from 7,089 in fiscal year 1985 to 9,533 in fiscal 

year 1996. The increase in OSD alone was 23 percent—from 1,691 to 2,078

during this time. (See app. I for a discussion of OSD personnel.) The

increase in Defense-wide personnel was especially high from fiscal year

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1988 to 1990—from 7,599 to 10,347, an increase of 36 percent. During that

time, an additional 1,500 personnel in the Defense Logistics Agency’s

management support activities (now called DOD support activities) were

included in DOD’s report, according to agency officials. Also, in fiscal year

1990, DOD’s report included for the first time headquarters personnel from

the U.S. Special Operations Command.

DOD projects smaller annual decreases in management headquarters and

headquarters support personnel for fiscal years 1997-99 than those

reportedly made during the last 10 years. Beyond 1999, DOD’s estimates for

these personnel are contained only in the Future Years Defense Program

(FYDP), which shows a slight decrease, from 49,699 to 49,270 during fiscal

years 2000-03. However, these projections do not include any changes that

may occur as a result of implementing recommendations based on the

Quadrennial Defense Review (QDR).

Almost Three-Fourths of

Selected Organizations

Should Have Been

Reported

Based on our review of 40 noncombat organizations subordinate to the

10 management headquarters we audited, we concluded that DOD had not

included 29 organizations and 2,853 personnel in its reports to Congress

on management headquarters and headquarters support (see table 1). We

selected organizations to review based on a variety of factors, including

conditions that OSD/DA&M officials agreed may indicate that an organization

is providing management support. These indicators, also called “red flags”

by OSD/DA&M, are headquarters officials serving additional duty as senior

officials in the subordinate organization (called “dual hatting”), transfer of

personnel from headquarters to create or augment subordinate

organizations, diverse functions that mirror headquarters functions, and

collocation of the subordinate organization with its headquarters.

Although the presence of one or more of these indicators is not

conclusive, it led us to perform the analysis called for in DOD Directive

5100.73.

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Table 1: Review of Subordinate Noncombat Organizations That Report to Management Headquarters

Management headquarters

Subordinate

noncombat

organizationsa

Total

subordinate

noncombat

personnel

Subordinate

noncombat

organizations

we reviewed

Organizations that

should be reported

on PB-22 but are

not

Personnel that

should be

reported on

PB-22 but are notb

OSD 27 157,164 2 1 108

Army Secretariat, Army Staff 77 21,703 5 5 546

Navy Secretariat, Chief of Naval

Operations, Headquarters Marine

Corps

64 13,863 4 4 379

Air Force Secretariat, Air Staff 40 20,592 5 3 510

U.S. Atlantic Command 13 1,097 3 2 269

U.S. Army Training and Doctrine

Command

13 1,393 4 4 164

U.S. Army Forces Command 1 293 1 1 293

U.S. Atlantic Fleet 25 5,902 2 1 7

Air Combat Command 16 1,829 5 2 121

Air Education and Training

Command

9 692 9 6 456

Total 285 224,528 40 29 2,853

a Army and Air Force major commands are excluded. Navy and Marine Corps operational fleets,

forces, bases, and acquisition commands are excluded.

b Personnel not reported on PB-22 exhibits are reported to Congress on other budget exhibits.

Source: DOD and GAO.

Many different types of organizations should have been reported to

Congress because they perform management or management support

functions covered by DOD’s directive:

• The Army’s Congressional Inquiry Division, a field operating activity with

41 personnel, augments 46 personnel that are designated as headquarters

personnel. The division is one of seven in the Office of the Chief of

Legislative Liaison in the Pentagon.

• The Navy’s International Programs Office, an Echelon 2 command with

169 personnel, manages foreign assistance programs for the Navy and

reports to the Assistant Secretary of the Navy (Research, Development,

and Acquisition).

• The Air Intelligence Agency’s 497th Intelligence Group, a direct reporting

unit with 305 personnel located in Washington, D.C., primarily supports

the Air Staff.

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• The U.S. Army’s Forces Command’s Field Support Activity, with 293

personnel, is merely an accounting device for personnel integrated

throughout Forces Command headquarters.

• The U.S. Atlantic Command’s Information Systems Support Group, a

support activity with 117 personnel that was previously considered part of

headquarters, provides computer support to the Command’s headquarters.

• The Air Combat Command’s Studies and Analyses Squadron, a field

operating activity with 71 personnel, studies issues for its headquarters.

Appendix II contains details on these and other noncombat organizations

we reviewed.

In addition to these organizations that we found, OSD/DA&M agreed that

other organizations should have been reported in DOD’s annual PB-22

exhibits. For example, OSD’s fiscal year 1998 PB-22 exhibit on

Defense-wide activities omitted the management headquarters personnel

and costs for five defense agencies—the Ballistic Missile Defense

Organization, the Defense Advanced Research Projects Agency, the

Defense Commissary Agency, the Defense Finance and Accounting

Service, and the Defense Security Assistance Agency. In total, these

agencies had about 1,300 management headquarters personnel and

$150 million in related operations and maintenance costs for fiscal 

year 1997. The fiscal year 1998 PB-22 exhibit did include, however, the

management headquarters personnel and costs of the National Security

Agency,3

 a defense agency explicitly covered by DOD Directive 5100.73 that

had not been reported on the exhibit since fiscal year 1993.

Personnel Transfers and

Reclassifications Have

Decreased Reported

Headquarters Numbers

An unknown portion of DOD’s reported personnel decreases in

management headquarters and headquarters support activities were due to

transferring personnel to nonheadquarters organizations or to

reclassifying personnel and their functions as nonheadquarters, rather

than actually reducing DOD personnel. In April 1997, in response to

questions from the House Committee on National Security, DOD stated that

a “good number” of its reported decrease in management headquarters

personnel since 1985 were due to transfers of personnel from headquarters

activities to operational activities and that a “minimal number” of the

decrease was due to reclassification of positions. DOD emphasized that it

3

The number of headquarters personnel and the costs at the agency are classified.

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had achieved real reductions in management headquarters personnel, but

it could not quantify the number.4

In the past, we have reported that headquarters personnel reductions in

OSD and the military department headquarters in Washington were

achieved primarily through transfers of functions and personnel to other

organizations.5

 For example, although OSD, the Army, and the Navy had

reduced personnel by about 2,900 during 1977-78, only 62 employees had

been removed from DOD’s payroll through retirement, resignation, and

involuntary separation. We could not determine whether these transfers

had any adverse impact, primarily because few functional changes or

physical relocations were involved. Most transferred functions and

personnel remained in the Washington area; for example, in October 1977,

OSD created WHS and transferred 265 OSD personnel to it.6

In 1988, DOD’s Deputy Inspector General studied the headquarters of the

unified and specified commands.7

 Among other things, he found many

cases where integral headquarters support functions and personnel had

been transferred from headquarters to support organizations. The primary

purpose of many of these transfers was to avoid the headquarters

connotation and/or personnel limitations placed on headquarters in

legislation and congressional committee reports, according to his report.

As the Air Force began to restructure its numbered air forces in the early

1990s, it requested to stop reporting as management headquarters about

2,000 personnel in the headquarters of numbered air forces. The Air

Force’s request came as Congress mandated reductions in DOD

management headquarters during fiscal years 1991-95. OSD/DA&M approved

the Air Force’s request subject to its review in fiscal year 1993. However,

the review never took place.

4

The scope of our audit did not include systematically counting DOD’s personnel transfers or

reclassifications.

5

Defense Headquarters Staff Reductions: An Overview (GAO/FPCD-78-72, Oct. 2, 1978).

6

WHS is a DOD field activity that is directed by an OSD official, the Director of Administration and

Management. WHS provides support to OSD, DOD field activities, and other specified defense

activities in the National Capital Region. Specifically, WHS provides services, such as budgeting and

accounting, civilian and military personnel management, office services, correspondence and cables

management, directives and records management, housekeeping, security, and computer and graphics

support.

7

Review of Unified and Specified Command Headquarters (“The Vander Schaaf Report”), Feb. 1988.

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Our review of 2 of the 16 numbered air forces8 indicated that the Air Force

had not fully implemented its restructuring plans. Both headquarters

continue to perform some management headquarters and headquarters

support functions, such as inspections and readiness oversight, which are

covered by DOD Directive 5100.73. Since the Air Force and OSD/DA&M have

not analyzed the numbered air forces since they began restructuring, they

cannot be sure that the Air Force’s exemption for these organizations is in

compliance with DOD’s directive. (See app. III for our discussion of

numbered air forces.)

Inappropriate Use of

Special Accounting

Devices Masks Size of

Headquarters

In some instances, the military services have used accounting devices that

have masked the number of personnel in certain headquarters

organizations. However, DOD Directive 5100.73 prohibits “special personnel

accounting devices” to mask or distort the true size or structure of

headquarters.

The Air Force has accounted for 242 personnel that directly support the

Secretary and the Chief of Staff of the Air Force in a “non-unit”—an

accounting device. Air Force leaders do not know which of their personnel

are accounted for as headquarters and which are accounted for in the

non-unit, according to Air Force officials. The Air Force does not report

these personnel as part of the Secretariat or the Air Staff but instead

reports them on a separate line on its PB-22 exhibit.

If the Air Force added these 242 personnel to its reported fiscal year 1997

total of 2,460 for the Secretariat and the Air Staff, it would exceed its

statutory limit of 2,639 personnel by 63.9

 According to an Air Staff official,

the 242 personnel would have been accounted for as a part of the

Secretariat and the Air Staff, if Congress had not legislated a personnel

ceiling. Nonetheless, in an April 1997 meeting, Air Force officials stated

that the Air Force was not circumventing the ceiling and they pointed out

that OSD/DA&M had approved of this reporting arrangement. An OSD/DA&M

official stated that he did not know whether the office had formally

approved the arrangement but that it would not be viewed as a problem

since the Air Force had reported the personnel on its PB-22 exhibit.

8

The two numbered air forces we reviewed were the 12th Air Force at Davis-Monthan Air Force Base,

Arizona, and the 19th Air Force at Randolph Air Force Base, Texas.

9

As part of the Goldwater-Nichols DOD Reorganization Act of 1986, Congress directed that the total

number of military and civilian personnel assigned to the Air Force Secretariat and the Air Staff may

not exceed 2,639 (10 U.S.C. 8014). Similar personnel ceilings apply to the Department of the Army,

10 U.S.C. 3014, and to the Department of the Navy, 10 U.S.C. 5014.

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Two Navy organizations appear to be accounting devices to hold

headquarters personnel. The OPNAV Support Activity’s 168 personnel and

the Field Support Activity’s 34 personnel are not reported as part of the

1,023 OPNAV personnel but rather are reported separately as part of the

Navy’s departmentwide total. However, the two organizations are each

commanded by OPNAV officials who are “dual-hatted.” Furthermore, OPNAV

Support Activity personnel are intermingled and fully integrated with

OPNAV staff. A cognizant Navy official could not explain the distinction

between support personnel that are accounted for as part of OPNAV proper

and those accounted for as part of the OPNAV Support Activity. Navy

documents show that the OPNAV Support Activity’s mission is to provide

administrative, technical, and office services support to OPNAV, while the

Field Support Activity’s mission is to assist the Vice Chief of Naval

Operations in budgeting, evaluating resource execution, and providing

manpower and facilities for assigned organizations.

At the Army’s Forces Command, Fort McPherson, Georgia, the

Command’s Field Support Activity is merely an accounting device for 293

personnel integrated throughout Forces Command headquarters.

Size of OSD Is Unclear The size of OSD is unclear because of definitional issues. OSD does not

report, as part of OSD, certain headquarters personnel that are a part of OSD

or are integral to its operation. OSD defines its personnel to include about

2,000 civilian and military personnel assigned to various OSD offices and

certain OSD-administered temporary commissions. However, OSD does not

include any of the approximately 1,400 DOD Inspector General personnel in

its total, even though by law the Inspector General is part of OSD and

appears on OSD organization charts. OSD also excludes direct support

provided by DOD support activities, WHS, and the Air Force Pentagon

Communications Agency.10 DOD does separately report these activities as

well as 56 Inspector General personnel on its Defense-wide PB-22 exhibit,

and it provides further information to Congress on them in annual budget

justification materials. Our review, however, disclosed that OSD

underreported WHS support to OSD by 82 personnel. Also, OSD did not report

26 personnel in the Defense Airborne Reconnaissance Office as

management headquarters personnel, even though they are, in effect, part

of OSD. (See app. I.)

10The two remaining DOD support activities (the C4

I Integration Support Activity and the Plans and

Program Analysis Support Center) and WHS are under the direction, authority, and control of OSD

officials.

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In 1994, the DOD Inspector General recommended that DOD abolish DOD

support activities and transfer their personnel to OSD because the structure

of the activities was not conducive to effective accountability and

management and actually hindered effective mission accomplishment by

OSD managers.11 While OSD has not eliminated the DOD support activity

organizational category, it has abolished some activities.12

In the National Defense Authorization Act for Fiscal Year 1997, Congress

directed OSD, its DOD support activities, and WHS to reduce their combined

personnel by 25 percent by October 1, 1999, with interim reductions in

1997 and 1998. The baseline for the reductions is the number of personnel

in these organizations as of October 1, 1994. The baseline is 4,815 and the

ceiling for October 1, 1997, is 4,093, a reduction of 722.

OSD plans to meet the 1997 ceiling primarily by contracting out WHS

custodians and by reclassifying nearly 300 personnel at the Defense

Manpower Data Center. The Center was considered a DOD support activity,

but in December 1996 the Deputy Secretary of Defense merged it with the

Defense Civilian Personnel Management Service to form the DOD Human

Resources Activity, which is headed by the Under Secretary of Defense

(Personnel and Readiness). OSD will take credit for the reduction but

achieve no near-term savings from the merger and reclassification of the

Center’s personnel. OSD has not determined how it will reduce personnel

to meet the 1998 and 1999 ceilings; an ongoing study will provide the

Secretary of Defense with advice on this matter.

DOD should rebaseline the composition of OSD, according to a May 1997

contractor study commissioned by the Deputy Secretary of Defense in

response to congressional guidance that DOD review the organization and

functions of OSD.

13 The study concluded that DOD had in the past

purposefully redefined certain activities outside of OSD, thus making OSD

appear smaller while increasing personnel in less visible organizations.

The study recommended that the Secretary of Defense include as part of

11Defense Support Activities: Providing Technical and Analytical Support to the Office of the Secretary

of Defense (94-INS-08, June 23, 1994).

12As of August 1997, only two DOD support activities remained. In July 1997, the Deputy Secretary of

Defense abolished the DOD support activity that serviced the Under Secretary of Defense (Acquisition

and Technology) and transferred 156 of its 187 personnel to the office of the Under Secretary. The

Under Secretary requested the transfer to reduce his total personnel, save at least $2 million, and

alleviate morale problems caused by having to apply different personnel management directives to

support activity personnel and OSD personnel, even though they worked side-by-side on the same

tasks.

13The Office of the Secretary of Defense: Creating a New Organization for a New Era (Hicks &

Associates, Inc., McLean, Virginia, #SAIC 97-1026, May 1997).

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OSD the headquarters element of the DOD Inspector General, elements of

WHS that support OSD, and the DOD support activities. The study also

recommended that OSD’s role focus on top leadership and management

tasks and that OSD be divested of program management, execution, and

lower priority tasks. Regarding the congressionally directed cuts, the study

concluded that DOD and Congress should not decide on an optimal

personnel ceiling for OSD until they agree on OSD’s composition and roles.

Headquarters Costs

Are Significantly

Higher Than DOD

Reports

DOD has significantly understated the costs of its management

headquarters and headquarters support activities. DOD reported a

19-percent decrease in costs—from $5.3 billion to $4.3 billion—during

fiscal years 1985-96 and projects that costs will be about $5 billion through

fiscal year 2003. However, DOD’s cost data are unreliable. Some of DOD’s

PB-22 exhibits have only reflected partial headquarters costs, contrary to a

DOD financial management regulation that calls for the reporting of all

budgeted funds. Other PB-22 cost estimates made by military service

officials in Washington, and reported to Congress, were significantly less

than the estimates made by the military commands. As previously

discussed, our review found 29 organizations with nearly 2,900 personnel

that should be reported by DOD as management headquarters or

headquarters support. DOD has understated headquarters costs by about

$215 million by not reporting these personnel, using an average cost per

headquarters person of $75,000 based on DOD data.

DOD’s Cost Data Are

Unreliable

DOD reported a 19-percent decrease in management headquarters and

headquarters support costs—from $5.3 billion to $4.3 billion—during fiscal

years 1985-96, using constant 1997 dollars and PB-22 data.14 These costs

were primarily composed of operations and maintenance costs and

military personnel costs. In general, within operations and maintenance

accounts, civilian pay/benefits and “other contractual services”15 were the

largest cost categories.

14Under DOD Directive 5100.73, personnel and costs associated with base operating support functions

and componentwide technical and operating-type services (such as payroll services) are not reported.

15According to Office of Management and Budget Circular A-11, the “other contractual services” cost

category includes advisory and assistance services; purchases of goods and services from government

accounts; payments for medical care; research and development contracts; operation and maintenance

of facilities and equipment; and other services. Under DOD Directive 5100.73, operation and

maintenance of facilities, such as headquarters buildings, are excluded when this support is performed

by a host organization (i.e., a base command) for all tenants.

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PB-22 data are unreliable. The Navy’s annual PB-22 exhibit includes only

estimated personnel costs for military and civilian positions, contrary to

DOD Financial Management Regulation 7000.14-R that calls for reporting of

all budgeted funds to support an activity.16 For example, the Navy reported

$11.6 million in operations and maintenance costs for fiscal year 1996 for

the Commander in Chief, U.S. Atlantic Fleet headquarters. This amount

understated actual costs by $17.6 million, an error of over 150 percent. At

the U.S. Atlantic Command, a unified command administered by the Navy,

officials documented $43.4 million in actual operations and maintenance

costs during fiscal year 1996, $39.1 million (or 9 times) more than the Navy

reported to Congress on its PB-22 exhibit.17 Navy officials told us they had

issued guidance to correct this problem. Furthermore, on the latest

Defense-wide PB-22 exhibit prepared by the DOD Comptroller, no military

personnel costs or other costs funded outside of the operations and

maintenance appropriation were reported.

DOD projects that management headquarters and headquarters support

costs will be about $5 billion through fiscal year 2003, using constant 1997

dollars and FYDP data (see table 2).18

Table 2: DOD’s Estimated

Headquarters Costs for Fiscal Years

1998-2003

1997 dollars in billions

1998 1999 2000 2001 2002 2003

Army $ 0.9 $ 0.9 $ 1.3 $ 1.3 $ 1.4 $ 1.4

Navy/Marine Corps 1.4 1.4 1.3 1.3 1.3 1.3

Air Force 1.1 1.1 1.1 1.1 1.1 1.1

Defense-wide 1.5 1.4 1.3 1.3 1.3 1.3

Total cost (FYDP) $4.9 $4.7 $5.0 $5.0 $5.1 $5.1

Notes: Numbers may not add due to rounding. Estimates for the military services include some

costs for Defense-wide activities that are budgeted for by the military services (such as military

personnel costs).

Source: DOD’s 1998-2003 FYDP and DOD deflators.

16In September 1997, after our audit work was completed, the Acting Under Secretary of Defense

(Comptroller) redefined the cost data required. PB-22 exhibits should show costs directly in support of

management headquarters, excluding operational expenses for items centrally funded or managed at

headquarters but executed elsewhere in DOD.

17DOD stated that not all operations and maintenance costs at the U.S. Atlantic Command necessarily

support management headquarters functions.

18The FYDP projects costs beyond fiscal year 1999, the last year on PB-22 exhibits. Because of

differences in how costs and personnel are reported in DOD’s PB-22 exhibits compared with DOD’s

FYDP, the headquarters cost data for fiscal years 1998-2003 from DOD’s FYDP are not easily

comparable with PB-22 data.

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According to these estimates, DOD will not free up funds in its management

headquarters accounts to help fund modernization efforts or other

initiatives. These projections, based on the completed 1998-2003 FYDP, do

not reflect cost reductions in management headquarters being sought by

the Secretary of Defense that could arise from ongoing DOD studies.

The FYDP’s estimates of management headquarters and headquarters

support costs are also unreliable. Program elements in the FYDP reserved

for these costs also contain other costs. For example, the Army’s

estimated management headquarters costs include $2.3 billion during

fiscal years 2000-2003 in one program element for military construction

projects. After the Army decides which projects to fund, it will disperse

the funds to separate program elements that are not counted as part of the

cost of management headquarters. Also, according to a DOD Comptroller

official, the Navy’s management headquarters cost data in the FYDP are

inaccurate because of the Navy’s method of estimating the costs.

Headquarters

Personnel and Costs

Are Understated for

Several Reasons

DOD’s management headquarters and headquarters support personnel and

cost data are understated for several reasons. Sustained criticism from

Congress about the size of DOD’s headquarters has been a disincentive for

DOD to accurately report the number of such personnel and their related

costs. Thus, DOD has “played games” to “hide” management headquarters

personnel from Congress, according to several OSD and military service

officials. Second, many DOD officials believe that they are required to

report only personnel that make policy, allocate resources, or plan for the

future, even though DOD Directive 5100.73 requires that headquarters

support personnel be reported. Third, the directive’s criteria for analyzing

organizations to determine whether they should be included in budget

exhibits on management headquarters are complicated. Finally, oversight

by OSD and the military services has been limited.

Disincentives to Accurate

Accounting Cause DOD to

“Hide” Headquarters

Personnel and Costs

Many DOD officials believe that being counted as a management

headquarters or headquarters support activity increases the chance of

personnel reductions, given the history of congressional reductions to

management headquarters personnel. Therefore, DOD organizations have

incentives to avoid inclusion in DOD’s management headquarters program,

according to an OSD/DA&M official, the Vice Commander of the Air Combat

Command, and our analysis.

Page 16 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

Officials from OSD and each of the military departments told us that DOD

components have organized themselves in such a way as to “hide”

personnel performing headquarters or headquarters support functions.

According to an OSD personnel official, the military service chiefs and

others know that DOD’s reported numbers of management headquarters

personnel are too low. He referred to DOD’s actions over the years as a

game of “hiding the ball.” Separately, Army and Navy officials told us that

their departments “play games” by not designating personnel as

management headquarters or headquarters support when, under DOD

Directive 5100.73, they should. Instead, management and support

functions are placed in field operating agencies or staff support groups

that report to management headquarters but are not reported to Congress

on DOD’s PB-22 exhibits, according to the officials. As far back as 1984, the

Secretary of Defense wrote of DOD being criticized for “hiding”

headquarters by labeling them as operational instead of management

organizations. A senior Navy official explained that bureaucracies find

ways to “live with” directives and laws that impose constraints. Likewise,

Air Force actions have led to a “strange organizational structure,”

according to an Air Staff official. An official in the office of the Secretary

of the Army noted that this “game goes on” because headquarters work

does not diminish when Congress mandates reductions in numbers of

headquarters personnel.

According to a former DOD Deputy Inspector General, DOD has a long

history of redefining management headquarters to reduce their apparent

size, ignoring the rules for counting personnel assigned to management

headquarters, and renaming organizations to remove them from the

headquarters tracking system. In a 1988 study of unified and specified

commands, the Deputy found that the definition of headquarters in DOD

Directive 5100.73 led to a significant understatement of the number of

personnel that directly supported headquarters. Many personnel were

transferred from headquarters to support organizations to avoid the

headquarters connotation and/or legislated personnel limits, but they

continued to function as part of headquarters, according to the study. The

study recommended that DOD revise the definition of headquarters

personnel to more completely identify the number of personnel directly

supporting management headquarters. However, DOD did not implement

this recommendation because it was based on a lack of understanding of

the purpose of the management headquarters program, according to

OSD/DA&M.

Page 17 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

Officials Misinterpret

Scope of DOD’s Directive

According to officials at several subordinate noncombat organizations,

their organizations, costs, and personnel do not have to be reported under

DOD Directive 5100.73 because they do not “make policy.” However,

Washington, D.C., officials that manage their departments’ compliance

with the directive are aware that the directive’s scope includes

headquarters support functions and in fact lists and defines 33 such

functions. While the directive does not preclude DOD components from

establishing subordinate units to carry out support functions, it does

require components to account for all management headquarters and

headquarters support activities, however organized, using specific criteria.

DOD’s Directive Has

Complicated Criteria

DOD Directive 5100.73 has complicated criteria for analyzing whether

organizations, particularly headquarters support organizations, should be

counted and reported to Congress. Under the directive, each DOD

component is to analyze the percentage of “work” or “effort” devoted to 

4 management functions and 33 headquarters support functions at each of

its organizations. Different rules for reporting personnel and costs are

applied depending on whether the percentage of management-related

work exceeds 25 or 50 percent of an organization’s total work/effort.

In specific cases, there is ambiguity as to whether an organization qualifies

as a management headquarters or headquarters support activity under the

directive, but OSD/DA&M is charged with making the final determination. For

example, the Third Army asked to have all of its headquarters personnel

removed from DOD’s management headquarters reporting system.

However, after a review by OSD/DA&M and others, OSD/DA&M excluded only a

portion of Third Army headquarters personnel from reporting under DOD’s

directive.

DOD’s Oversight of

Headquarters Accounting

System Has Been Limited

DOD’s oversight of its management headquarters and headquarters support

accounting system has been limited, which has not facilitated compliance

with DOD Directive 5100.73. The directive requires OSD/DA&M to determine

the composition of, maintain, and monitor the official list of DOD

management headquarters and headquarters support functions and

organizations and to conduct periodic reviews to ensure DOD components

accurately identify and account for management headquarters and

headquarters support activities. In addition, the directive requires the DOD

components to designate a single office to implement the directive,

maintain an information system that identifies the number and size of their

management headquarters and headquarters support activities, ensure that

Page 18 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

their list of such activities is accurate, and conduct surveys or studies and

establish administrative controls to comply with the directive.

OSD/DA&M has one person that spends part of his time monitoring

compliance with the directive; in the past 3 years, the office has reviewed

five cases for compliance. The Navy’s primary office for monitoring the

management headquarters program is the Office of the Assistant Secretary

of the Navy (Financial Management and Comptroller), according to

officials who work there. However, our questions to this office on the

management headquarters program typically had to be referred to other

Navy offices.

The Office of the Assistant Secretary for Manpower and Reserve Affairs

controls the Army’s management headquarters program and is the

approval authority for any changes requested by Army commanders.

According to an Office official, the Army’s Manpower Analysis Agency, a

field operating activity that reports to the Assistant Secretary, conducts

manpower surveys of commands and, among other things, determines

whether commands have properly accounted for their management

headquarters personnel. However, Manpower Analysis Agency officials

said “no one is checking” the Army’s management headquarters program.

Until 1992, this Agency reviewed Army organizations to determine

compliance with the program, but it stopped doing so routinely when the

Army gave its commanders more authority with less oversight, according

to Agency officials.

In response to our inquiries, representatives from the offices of the

inspector generals and auditors of the Army, the Navy, and the Air Force

said they had not audited or inspected this area. In addition to its 1994

study discussed earlier, in 1989, the DOD Inspector General reviewed DOD

support activities, formerly called management support

activities/agencies.19

Challenges Remain in

Reducing Size of DOD

Headquarters

DOD faces challenges in reducing the size of its management headquarters

and headquarters support activities. While DOD wants to reduce the size

and cost of its management headquarters to reallocate funds to other

areas, it has not determined the scope of future reductions or developed a

detailed plan for making the reductions. Also, DOD has different definitions

of management headquarters and headquarters support—when analyzing

19Management Support Activities (89-INS-12, Oct. 17, 1989). We also reported on this topic in Defense

Budget Issues: Uniform Definition of Management Support Agencies Needed (GAO/NSIAD-90-255,

July 30, 1990).

Page 19 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

their headquarters internally, DOD officials include more activities than are

reported on DOD’s PB-22 exhibits. Determining whether and how much to

reduce management headquarters is difficult because DOD has no generally

accepted staffing standards to objectively size a management

headquarters. Furthermore, DOD officials have a range of views on whether

and how to reduce management headquarters further—some advocate

significant reductions while others have no plans to reduce.

DOD Wants to Reduce

Headquarters Personnel,

but It Has Not Developed a

Detailed Plan

The QDR report concluded that significant cuts in DOD headquarters are

feasible and desirable.20 However, it did not recommend a detailed plan for

reducing headquarters, in part, because senior DOD officials lacked a

reliable database to serve as a baseline for analysis. A subsequent study,

ordered by the QDR and led by OSD, examined the effects of reducing DOD

headquarters and headquarters support personnel by 15 percent during

fiscal years 1998-2003—a total cut of about 12,550 positions, or about 7,650

more than reductions currently programmed in DOD’s 1998-2003 FYDP. This

number was based on the plan to reduce the percentage of headquarters

personnel, relative to total DOD personnel, to the 1989 level of 3.3 percent.

The estimated 1998 level without further reductions is 3.7 percent,

according to the study.21

In implementing this reduction, DOD does not want to make equal

across-the-board percentage reductions for each component; it will

instead analyze major structural changes, such as consolidating

organizations and eliminating entire organizational echelons, according to

the leader of DOD’s study. In addition, the Defense Reform Task Force,

established by the Secretary of Defense, is to report in November 1997 on

the size and functions of OSD, defense agencies, DOD field activities, and the

military departments.

DOD Defines Headquarters

More Broadly for Internal

Planning Purposes

DOD has different definitions of management headquarters and

headquarters support—when analyzing their headquarters internally, DOD

officials include more activities than are reported on DOD’s PB-22 exhibits.

For example, on its PB-22 budget exhibit for fiscal year 1998, the Army

estimated a total of 2,784 personnel for Headquarters, Department of the

20The Report of the Quadrennial Defense Review (May 19, 1997).

21Organizational Staffing: Review of Headquarters Activities (marked “Final Report” and “Draft,”

undated).

Page 20 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

Army.22 However, as part of its analysis for redesigning this Headquarters,

the Army included 19,502 personnel because it counted all personnel in its

58 field operating agencies that report to the Army Secretariat or to the

Army Staff. Also, when the Navy studied its Secretariat, the study team

included the numerous subordinate activities/offices that are not part of,

but report to, the Navy Secretariat. Only two of these activities—the Office

of Civilian Personnel Management and the Chief of Naval Research—are

included on the Navy’s PB-22 budget exhibit and reported to Congress.

In a follow-on study to the QDR, the study group created a new definition of

management headquarters and headquarters support activities because

senior DOD officials had concluded that the numbers reported under DOD

Directive 5100.73 were unreliable. The group’s expanded definition

included the DOD Inspector General, selected personnel at DOD field

activities, military service field operating agencies, and headquarters

subordinate to headquarters currently reported under the directive. Using

this new definition, the group concluded that DOD had about 81,000

management headquarters and headquarters support personnel, or 30,000

more than were reported to Congress in the President’s budget for fiscal

year 1998. However, OSD/DA&M and military service officials have criticized

this definition and DOD has not adopted this revised definition.

DOD Has No Standards for

Determining the

Appropriate Number of

Headquarters Personnel

According to military service officials, there are no overall staffing

standards to objectively quantify the number of personnel required for

headquarters functions. The Air Force at one time sized its headquarters

staff at major commands at between 1.7 and 2.0 percent of the total

personnel under each command’s headquarters, but no longer does so,

according to Air Force officials. Without quantifiable standards for

headquarters staff work, which may not be feasible given the nature of the

work, DOD and Congress are left to rely on judgment for sizing

headquarters. In the past, this has led OSD and the military services to

apportion percentage cuts across-the-board to their components, although

some organizations have reengineered.

Our work has shown that successful businesses have effectively tied

personnel reductions to reengineering business processes.23 For example,

one company began reductions to control costs and increase efficiency by

22Headquarters Department of the Army is composed of the Army Secretariat; the Office of the Chief of

Staff, Army; the Army Staff; and staff support agencies.

23Workforce Reductions: Downsizing Strategies Used in Selected Organizations (GAO/GGD-95-54,

Mar. 13, 1995).

Page 21 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

using across-the-board cuts but found that because the cuts were not tied

to a larger strategy, they only exacerbated the company’s problems. The

company’s more recent restructuring efforts involved analyses of the

distribution of employees and resources to determine where to cut and

where to consolidate—a strategy that proved successful. These lessons are

applicable to DOD as it develops a strategy for reducing its activities.

Officials’ Views on Further

Headquarters Reductions

Vary

DOD officials have a range of views on whether and how to further reduce

management headquarters. Senior DOD officials and some military

commanders have publicly advocated reductions, while others have no

plans to reduce.

The Commander in Chief, U.S. Atlantic Command, stated in March 1996

that it is time to review the number and size of headquarters as well as the

size of the defense agencies. Likewise, the Air Combat Commander

concluded that a pervasive “inattention to the cost of doing business, from

the flight line on up” was wasting resources and that headquarters

specifically were “bloated,” according to the Vice Commander. The

Commander has instructed his staff to analyze, as a preliminary goal,

reducing the Command’s 2,284 headquarters personnel by 400 and

reducing the Command’s subordinate activities by 600 personnel,

according to the Vice Commander. At the time of our review, this study

was in its initial stages.

In contrast to the Air Combat Command’s numerical goals, the Deputy

Under Secretary of the Navy (Institutional and Strategic Planning) has led

a headquarters reengineering study without setting numerical goals. In his

view, headquarters personnel should not be reduced by the same

percentage as operational forces because a minimum level of headquarters

personnel is always required, whatever the size of the operating forces. He

further believes that a comprehensive understanding of the requirements

placed on headquarters is necessary to determine the number of personnel

needed. Thus, he said that management reforms in Navy headquarters

should come from within the Navy and should not be mandated by

outsiders.

The Deputy Assistant Secretary of the Army (Force Management,

Manpower and Resources) said that the need to save money drives many

of the Army’s organizational changes and that the Army is studying options

to reduce the number of its major commands. Various factors complicate

headquarters reductions, including demands by certain OSD and Joint Staff

Page 22 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

officials to protect Army personnel levels in their functional areas and

political pressures not to cut personnel in congressional districts.

The Air Education and Training Command has no plans to reengineer or

reduce its headquarters. Command officials and the Air Force’s PB-22

exhibit indicate no change in the number of personnel projected during

fiscal years 1997-99. Similarly, an OPNAV official told us that the Navy does

not plan to reduce OPNAV personnel. Some OPNAV directorates are

restructuring to more efficiently do their work, not to reduce personnel,

according to this official.

Conclusions DOD needs to change its directive for reporting management headquarters

and headquarters support personnel and costs to Congress because overall

the data are inaccurate and incomplete—total personnel and costs are

significantly higher than reported. DOD and Congress cannot rely on the

data to determine trends in headquarters and help them make informed

decisions about whether headquarters are appropriately sized. One

approach would be for DOD to increase enforcement of its existing

directive. However, this is not the best alternative because DOD, in an era

of downsizing, would require additional personnel for enforcement. Also,

the directive’s complicated criteria for determining which organizations to

report to Congress is a problem. A simpler definition that would include

more organizations could lead to the collection of more meaningful data

and eliminate the need for complicated analyses of organizational work

efforts. DOD’s current definition can be expanded without counting the

headquarters of operational or combat organizations, which should be

analyzed separately.

Also, DOD’s estimated costs for its management headquarters and

headquarters support are scattered among several budget documents.

Having the total cost in one document would facilitate DOD and

congressional reviews. DOD has already placed a summary of its total

personnel in one document.

Recommendations To generate accurate information needed by Congress and the Secretary

of Defense to carry out their oversight and management responsibilities,

we recommend that the Secretary of Defense revise DOD Directive 5100.73

to expand its coverage and simplify its criteria. The revised directive

should require the inclusion of all personnel assigned to all noncombat

organizations that are subordinate to DOD management headquarters,

Page 23 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

including those at the major command level, such as field operating

activities, direct reporting units, and other similar organizations that

support their parent headquarters. The revised definition should permit

common sense exemptions, such as the students and faculty of military

academies and componentwide operating-type services, such as payroll

services.

To provide Congress with a cost summary, we also recommend that the

Secretary of Defense direct the Under Secretary of Defense (Comptroller)

to report the total cost, including all appropriations, of DOD’s management

headquarters and headquarters support in one document.

Agency Comments

and Our Evaluation

DOD provided written comments on a draft of this report. These comments

are reprinted in appendix V. DOD partially concurred with our first

recommendation and concurred with our second recommendation. DOD

acknowledged that, in some cases, the process for analyzing DOD

organizations to determine whether they should be included in

management headquarters budget exhibits can be complicated,

labor-intensive, and subjective in nature. However, DOD believes it is

impossible to develop a single fair definition of management headquarters

and headquarters support activities that can be universally applied, given

the large size and complexity of the Department. DOD has established a

Management Headquarters Working Group to recommend to the Secretary

of Defense whether DOD Directive 5100.73 should be revised, replaced, or

augmented. DOD stated that it would summarize the total costs for its

management headquarters and headquarters support, beginning with the

fiscal year 1999 President’s budget submission. DOD also provided us with

technical corrections and clarifying comments that we incorporated into

our final report, as appropriate.

To determine the accuracy and reliability of PB-22 data, we selected

10 headquarters and their subordinate noncombat organizations to review.

We also reviewed two numbered air forces. To determine reported trends

in DOD’s management headquarters personnel and costs, we obtained

annual PB-22 exhibits and DOD’s 1998-2003 FYDP. To obtain information on

plans to reduce the size of DOD’s management headquarters, we

interviewed officials in the 10 headquarters organizations we audited and

officials involved with studies of management headquarters. (See app. IV.)

Page 24 GAO/NSIAD-98-25 Defense Headquarters
B-275837 

We are providing copies of this report to appropriate Senate and House

committees; the Secretaries of Defense, the Army, the Navy, and the Air

Force; and the Director of the Office of Management and Budget. We will

also provide copies to other interested parties upon request.

Please contact me at (202) 512-3504 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix VI.

Sincerely yours,

Richard Davis

Director, National Security

 Analysis

Page 25 GAO/NSIAD-98-25 Defense Headquarters
Contents

Letter 1

Appendix I 

Office of the Secretary

of Defense

28

Reported Personnel Levels 30

DARO and WHS 31

Appendix II 

Subordinate

Noncombat

Organizations

33

Army Secretariat and Army Staff 33

Navy Secretariat and Chief of Naval Operations 36

Air Force Secretariat and Air Staff 38

U.S. Atlantic Command 40

U.S. Army Training and Doctrine Command 41

U.S. Army Forces Command 43

Commander in Chief, U.S. Atlantic Fleet 45

Air Combat Command 46

Air Education and Training Command 47

Appendix III 

Numbered Air Forces

51

Appendix IV 

Objectives, Scope,

and Methodology

54

Appendix V 

Comments From the

Department of

Defense

57

Appendix VI 

Major Contributors to

This Report

59

Tables Table 1: Review of Subordinate Noncombat Organizations That

Report to Management Headquarters

8

Page 26 GAO/NSIAD-98-25 Defense Headquarters
Contents

Table 2: DOD’s Estimated Headquarters Costs for Fiscal Years

1998-2003

15

Figures Figure 1: Reported DOD Management Headquarters Personnel 6

Figure I.1: OSD and its Subordinate Organizations 29

Figure I.2: Reported Personnel Levels for OSD and OSD Support 31

Abbreviations

CINCLANTFLT Commander in Chief, U.S. Atlantic Fleet

DA&M Director of Administration and Management

DARO Defense Airborne Reconnaissance Office

DOD Department of Defense

FORSCOM U.S. Army Forces Command

FYDP Future Years Defense Program

OPNAV Office of the Chief of Naval Operations

OSD Office of the Secretary of Defense

QDR Quadrennial Defense Review

TRADOC U.S. Army Training and Doctrine Command

USACOM U.S. Atlantic Command

WHS Washington Headquarters Services

Page 27 GAO/NSIAD-98-25 Defense Headquarters
Appendix I 

Office of the Secretary of Defense

The Secretary of Defense is the principal defense policy adviser to the

President and is responsible for the formulation of general defense policy

and policy related to all matters of direct and primary concern to the

Department of Defense (DOD) and for the execution of approved policy.

The Office of the Secretary of Defense (OSD) is the Secretary’s principal

staff element for policy development, planning, resource management,

fiscal, and program evaluation responsibilities. Two DOD support activities,

15 defense agencies, 9 DOD field activities (including the Washington

Headquarters Services (WHS)), and the Defense Airborne Reconnaissance

Office (DARO) are subordinate to OSD. DOD support activities provide OSD

with technical and/or analytical support. Defense agencies perform

selected support and service functions on a departmentwide basis. DOD

field activities also perform selected support and service functions but

with a more limited scope than defense agencies. DARO is a unique

organizational type, because it is not a DOD support activity, defense

agency, or DOD field activity. Each of these agencies/activities is under the

authority, direction, and control of an OSD official. (See fig. I.1.)

Page 28 GAO/NSIAD-98-25 Defense Headquarters
Appendix I 

Office of the Secretary of Defense

Figure I.1: OSD and Its Subordinate Organizations

Secretary of Defense

Deputy Secretary

Inspector

General

General

Counsel

Legislative

Affairs

Intelligence

Oversight

Public

Affairs

Administration

and

Management

Defense Legal

Services

Agency (DA)

National

Security

Agency (DA)

National 

Imagery 

and Mapping 

Agency (DA)

American

Forces

Information

Services (FA)

Washington

Headquarters

Services (FA)

Under Secretary

(Acquisition

and

Technology)

Director,

Operational

Test and

Evaluation

Assistant

Secretary

(Command,

Control,

Comms. & Intel)

Under Secretary

(Personnel and

Readiness)

Under Secretary

(Comptroller)

Under Secretary

(Policy)

Office of

Economic

Ajustment

(FA)

C4I Integration

Support Activity

(DSA)

DOD Human

Resources

Activity

(FA)

Plans and

Programs

Analysis Support

Center (DSA)

Defense Prisoner

of War/Missing

Personnel Office

(FA)

Defense

Airborne

Reconnaissance

Office

Defense

Intelligence

Agency

(DA)

Defense Medical

Programs

Activity

(FA)

Defense 

Contract

Audit Agency

(DA)

Defense Technical 

Security

Administration

(FA)

Defense

Information

Systems Agency

(DA)

TRICARE

Support Office

(FA)

Defense Finance 

and Accounting 

Service

(DA)

Defense Security 

Assistance 

Agency

(DA)

Reported by OSD as part of OSD

DA 

DSA 

FA Field Activity

DOD Support Activity

Defense Agency

Defense

Advanced Research

Projects

Agency (DA)

Defense

Special 

Weapons

Agency (DA)

Defense

Logistics

Agency

(DA)

Ballistic Missile

Defense

Organization

(DA)

On-Site

Inspection

Agency

(DA)

Defense

Investigative

Service

(DA)

DOD Education

Activity

(FA)

Defense

Commissary 

Agency

(DA)

Source: OSD’s Director of Administration and Management (OSD/DA&M).

Page 29 GAO/NSIAD-98-25 Defense Headquarters
Appendix I 

Office of the Secretary of Defense

Reported Personnel

Levels

The size of OSD is unclear because of definitional issues. OSD does not

report, as part of OSD, certain headquarters personnel that are a part of OSD

or are integral to its operation. OSD defines its personnel to include about

2,000 civilian and military personnel assigned to various OSD offices and

certain OSD-administered temporary commissions. However, OSD does not

include any of the approximately 1,400 DOD Inspector General personnel in

its total, although by law the Inspector General is part of OSD and appears

on OSD organizational charts. OSD also excludes direct support provided by

DOD support activities, WHS and the Air Force Pentagon Communications

Agency. DOD separately reports these activities as well as 56 Inspector

General personnel on its Defense-wide PB-22 exhibit and provides further

information to Congress on them in annual budget justification materials.

As defined by OSD, during fiscal years 1985-96, OSD personnel increased

from 1,691 to 2,078, or 23 percent. For fiscal years 1997-99, OSD projects a

3- to 6-percent annual decrease in OSD personnel, to 1,823 personnel in

fiscal year 1999, according to the Defense-wide PB-22 exhibit in the fiscal

year 1998 President’s budget. These levels were determined, in part, by a

December 1994 decision by the Deputy Secretary of Defense to reduce OSD

civilian personnel by 5 percent per year during fiscal years 1996-2001.

During fiscal years 1985-96, OSD support personnel increased by

90 percent, from 662 to 1,260 personnel. The largest annual increase was

752 in fiscal year 1991, due to the reporting of DOD support activities, a new

category. In fiscal year 1997, OSD estimates that its support will decrease

by 379 personnel, primarily due to a reclassification and reorganization

involving 300 personnel at the Defense Manpower Data Center, formerly a

DOD support activity. (See fig. I.2.)

Page 30 GAO/NSIAD-98-25 Defense Headquarters
Appendix I 

Office of the Secretary of Defense

Figure I.2: Reported Personnel Levels for OSD and OSD Support

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

0

500

1,000

1,500

2,000

2,500

Fiscal year

OSD OSD support

Source: OSD/DA&M, compiled from PB-22 budget exhibits.

Notes: Fiscal years 1985-96 are actual values; 1997-99 are estimates. OSD support includes all

personnel in DOD support activities and some personnel in WHS and the Air Force Pentagon

Communications Agency that provide direct support to OSD.

DARO and WHS We reviewed DARO and WHS for compliance with DOD Directive 5100.73.

DARO is not reported on DOD’s PB-22 budget exhibits, but it is clearly a

management headquarters organization under DOD Directive 5100.73

because it allocates resources and conducts mid- and long-range planning,

programming, and budgeting. Essentially, DARO is part of OSD, but it is not

counted as such because of OSD’s personnel ceilings, according to a DARO

official. Of DARO’s 28 government personnel, only 2 are on OSD’s manning

document; the remaining 26 personnel are not reported by DOD as

management headquarters.

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Office of the Secretary of Defense

DOD created DARO in 1993 to increase senior management attention and

oversight of airborne reconnaissance systems. DARO develops and manages

the $2 billion per year Defense Airborne Reconnaissance Program. DARO is

under the authority, direction, and control of the Under Secretary of

Defense (Acquisition and Technology). Although DARO is not officially part

of OSD—and is neither a defense agency nor a DOD field activity—it is listed

in the DOD telephone directory in the Office of the Under Secretary of

Defense (Acquisition and Technology), and DARO’s message address is

SECDEF WASHINGTON DC//USDA&T/DARO//.

We also reviewed WHS for compliance with DOD Directive 5100.73. We

agreed with OSD/DA&M as to which WHS directorates were primarily

performing headquarters support functions and which were primarily

performing nonheadquarters functions under the definitions in DOD

Directive 5100.73. However, OSD underreported WHS headquarters support

personnel by 82 on the Defense-wide PB-22 exhibit. According to our

analysis of its manning document, 466 WHS personnel should have been

reported as headquarters support, but OSD reported 384 personnel for

fiscal year 1997.

WHS is a DOD field activity created in 1977 by the Secretary of Defense,

primarily by transferring personnel from OSD. The Director of WHS is

dual-hatted as an OSD official, the Director of Administration and

Management. WHS’ mission is to support specified DOD activities in the

National Capital Region. For OSD, DOD field activities, and other specified

defense activities, WHS provides services, such as budgeting and

accounting, civilian and military personnel management, office services,

correspondence and cables management, directives and records

management, housekeeping, security, and computer and graphics support.

OSD/DA&M officials could not explain why some WHS personnel were not

part of OSD. That is, given the nature of some of the positions, such as

receptionists for the Secretary of Defense, they could not explain the basis

for deciding whether these personnel would be accounted for in OSD or

WHS. They said that since WHS’ mission included support to OSD, this

condition was not a problem. They also observed that the total number

assigned to OSD “is a politically sensitive number.”

Page 32 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

At the 10 headquarters organizations we audited, we judgmentally selected

40 subordinate noncombat organizations to review. Specifically, we

reviewed mission and functions documents, organizational manning

documents, and organizational history. We also discussed the

organization’s activities, products, services, customers, and relationship

with headquarters with cognizant officials in the subordinate organization

and in its headquarters.

We determined that 29 of the 40 subordinate noncombat organizations

should have been reported by DOD as management headquarters or

headquarters support activities, using the criteria in DOD Directive 5100.73.

One of these organizations was previously discussed in appendix I; the

remaining 28 organizations are discussed in this appendix.

Army Secretariat and

Army Staff

For fiscal year 1997, the Army had 2,491 personnel in the Army Secretariat

and the Army Staff and 21,703 personnel in 77 field operating activities and

staff support activities subordinate to the Army Secretariat and the Army

Staff. We reviewed five of these activities, using the criteria in DOD

Directive 5100.73, and found that all five—the Congressional Inquiry

Division, the Cost and Economic Analysis Center, the Information

Management Support Center, the Army National Guard Readiness Center,

and the Installation Support Management Activity—with a total of 546

personnel, should have been reported to Congress by the Army as

management headquarters or headquarters support activities but were not.

Army officials raised no objections to our assessment of their field

activities and concurred with our facts.

Congressional Inquiry

Division

The Congressional Inquiry Division, a field operating activity with 41

personnel, is one division within the Army’s Office of the Chief of

Legislative Liaison. Its primary function is to reply to all letters written to

DOD by members of Congress that raise Army issues. The Division gathers

information from installations and Army commands and prepares a

coordinated response. In addition, the Division provides computer support

and mailroom services for the entire office and educates new

congressional staff on the Army. The Division’s 41 personnel are

collocated with its sister divisions’ 46 management headquarters personnel

in the Pentagon.

Cost and Economic

Analysis Center

The Cost and Economic Analysis Center, with 76 personnel, conducts cost

and economic analyses of weapons, automated information systems, force

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Appendix II 

Subordinate Noncombat Organizations

structure, operations and support, and installations to support Army

planning, programming, and budgeting. In addition, it manages the Army’s

cost review board and cost position for selected major programs. The

Center’s data and analyses are used by the Army Secretariat, including its

program executive offices, the Army Staff, OSD, Forces Command, the

Training and Doctrine Command, and the Army Materiel Command.

Organizationally, the Center is imbedded as one of four divisions in the

Office of the Assistant Secretary of the Army (Financial Management &

Comptroller). The Center’s director is dual-hatted as the Deputy for Cost

Analysis, a management headquarters position. The Center is the only

division in the Assistant Secretary’s office classified as a field operating

activity and not reported as part of Army Secretariat personnel on the

Army’s PB-22 exhibit. The Center’s personnel—66 of whom are operations

research or systems analysts—are located in Falls Church, Virginia, near

the Pentagon. Both operations analysis and cost analysis are headquarters

support functions listed in DOD Directive 5100.73.

Information Management

Support Center

The Information Management Support Center, with 139 personnel,

provides all information management support and services for the Army

Secretariat, the Army Staff, and their assigned agencies and activities. The

Center reports to the Secretary of the Army’s Administrative Assistant and

is located in the Pentagon. The Army established the Center in 1994 based

in part on an internal study recommendation on information management.

The study recommended, among other things, that the Army consolidate

its headquarters positions in information management. The creation of the

Center resulted in the transfer of 109 personnel from management

headquarters to the Center.

Army National Guard

Readiness Center

The Army National Guard Readiness Center has 195 civilian and active

military personnel who support the Army Directorate of the National

Guard Bureau.1

 These personnel work in the same directorates as the

headquarters personnel of the Army Directorate. We believe that the Army

Directorate’s 279 active military and civilian personnel function as one

staff, though 195 personnel (70 percent) are accounted for as part of the

Readiness Center, while 84 are accounted for as part of the Army Staff, a

1

This staff level does not include 141 active military and civilians who are assigned to the Center but

work for the Chief of the National Guard Bureau’s “joint staff” and not for the Army Directorate. It also

excludes six personnel at the Professional Education Center, Little Rock, Arkansas; another six

personnel at Fort Benjamin Harrison, Indiana; and the Operations Support Airlift Command, a field

activity that manages aircraft nationwide.

Page 34 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

management headquarters.2 Organizationally, the Center is a field

operating agency that reports to the National Guard Bureau. In the DOD

telephone directory, the Center is one of several subdivisions listed under

the Director, Army National Guard Bureau. Furthermore, the Bureau’s

organization chart shows it is located both in the Pentagon and at the

Center’s building, nearby in Arlington, Virginia.

The Center’s mission is the same as that of the Army Directorate: to

provide functional support to the 54 states and territories of the Army

National Guard; to serve as the National Guard Bureau Chief’s

intermediate channel of communications between the Army and the states

and territories; and to manage the Army National Guard’s functional areas

that is, personnel, operations, training and readiness, logistics, force

management, aviation and safety, engineering, information systems,

environmental programs, and comptroller. The Center’s major functions

include both Army Staff-level functions and major command-level

functions, such as developing policy and assisting Headquarters,

Department of the Army, in developing resource requirements and

allocating resources.

Installation Support

Management Activity

The Installation Support Management Activity, with 95 personnel, is a field

operating activity under the Army’s Assistant Chief of Staff for Installation

Management. The activity provides policy recommendations, program

management, oversight, and analysis for installation facilities, housing, and

public works. Facility management is a headquarters support function

listed in DOD Directive 5100.73. Organizationally, the activity’s divisions

and personnel are interspersed within the Assistant Chief of Staff’s

headquarters organization or collocated in the Pentagon with headquarters

personnel. The Deputy Assistant Chief of Staff for Installation

Management is dual-hatted as the Director of this activity. Most of the

activity’s personnel are housing management specialists/analysts and

general engineers.

The distinction, or lack thereof, between this activity and its headquarters

is such that when we requested a concept plan for the activity, we received

a concept plan for the headquarters organization. However, an analysis

prepared by activity officials at our request concluded that less than

21 percent of the activity’s personnel perform management headquarters

or headquarters support functions, below the 25-percent threshold in DOD

2

An additional 568 full-time Guard personnel are part of the Army Directorate—530 are accounted for

in the Center and 38 in the Army Staff.

Page 35 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

Directive 5100.73. Given all of the above, we believe that more than

50 percent of the activity’s effort is for management and headquarters

support functions.

Navy Secretariat and

Chief of Naval

Operations

For fiscal year 1997, the Department of the Navy had 2,267 total personnel

in the Navy Secretariat, the Office of the Chief of Naval Operations

(OPNAV), and Headquarters, Marine Corps and 13,863 personnel in 64

organizations subordinate to these three organizations. We reviewed four

of these subordinate organizations, using the criteria in DOD Directive

5100.73, and found that all personnel in three organizations—the Naval

Center for Cost Analysis, the Legal Services Support Group, and the Navy

International Programs Office—with a total of 312 personnel, should have

been reported to Congress by the Navy as management headquarters or

headquarters support but were not. In addition, the Navy should have

reported a portion of the Naval Information Systems Management Center

(67 personnel, or 48 percent) as headquarters support.

Naval Center for Cost

Analysis

The Naval Center for Cost Analysis, with 52 personnel, prepares cost

estimates of the resources required to develop, procure, and operate

systems and forces in support of Navy planning, programming, budgeting,

and acquisition management. Most personnel are operation research

analysts. Operations analysis and cost analysis are headquarters support

functions listed in DOD Directive 5100.73. The Center’s customers include

the Assistant Secretary of the Navy (Research, Development, and

Acquisition), the Assistant Secretary of the Navy (Financial Management

and Comptroller), OPNAV, and the Navy’s Chief Information Officer, all

management headquarters officials/organizations. The Center is located in

Arlington, Virginia, near the Pentagon, and it reports to the Assistant

Secretary of the Navy (Financial Management and Comptroller). It was

created in 1985 to implement legislation mandating the Navy to create a

cost-estimating organization independent of the Navy’s research,

development, and acquisition organization.

Legal Services Support

Group

The Legal Services Support Group, with 91 personnel, provides legal

services throughout the Navy, including all Offices of Counsel and their

client headquarters and field activities, in the areas of litigation,

environmental law, and the Freedom of Information Act. It handles

significant cases of interest to the General Counsel, including contract

claims litigation over $400,000, civil personnel litigation, and federal

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Appendix II 

Subordinate Noncombat Organizations

environmental litigation. The Group reports to the Navy’s General

Counsel.

Although a document establishing the Group in 1989 stated that it is a

“nonmanagement headquarters shore activity,” there are indicators that

the organization exists only on paper and is, in fact, not distinct from the

General Counsel office. For example, the Group’s Director is also an

Associate General Counsel—a dual-hat relationship in which he is counted

as management headquarters (as part of the Secretariat) while his staff are

not counted as management headquarters or headquarters support. In a

hand-drawn organization chart prepared by the Group’s Director—no

official chart exists—the Group’s personnel, all of whom are civilian

attorneys, are interspersed within components of the General Counsel’s

office. Most personnel are located in Arlington, Virginia, near the

Pentagon. Furthermore, the Naval Litigation Office, the forerunner of the

Legal Services Support Group, was transferred from a management

headquarters activity to a nonmanagement activity without any apparent

change in its duties, missions, or functions, according to Navy documents.

Navy International

Programs Office

The Navy International Programs Office, with 169 personnel, implements

departmental policies and manages international efforts concerning

research, development, and acquisition for the Navy, according to its

mission statement. In our view, this office should have reported all of its

personnel as management headquarters or headquarters support because

most of the effort in four of its five directorates3

 was for functions covered

by DOD Directive 5100.73, such as security, data automation, facilities,

financial management, and policy-making.

Naval Information Systems

Management Center

The Naval Information Systems Management Center had 139 personnel at

the time of our review. The Center will be disestablished by

September 1997, according to Navy officials, because the Navy is creating

a chief information officer organization as required by the fiscal year 1996

DOD Authorization Act. According to its purpose and mission statement,

the Center performs shore activities assigned by the Assistant Secretary of

the Navy (Research, Development, and Acquisition). The Assistant

Secretary is the Center’s primary customer, according to officials. Created

in 1991 and described as a “management support activity,” the Center

consolidated information technology functions centering on acquisition,

3

The Arms Control Directorate, with 12 government personnel, has an operational mission to prepare

Navy facilities for foreign inspections under various arms control agreements.

Page 37 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

management oversight, software development, policy-making, and

information security.

The Center’s efforts, with the exception of the Contracting Directorate,

met the criteria of the data automation headquarters support function

defined in DOD Directive 5100.73. The Contracting Directorate, with 72

personnel, supported the Navy Department as a whole and not just

management headquarters. Contracting is not a headquarters support

function listed in DOD’s directive. However, under the methodology in

DOD’s directive, the 67 personnel outside of the Contracting Directorate

that performed headquarters support functions should have been reported

on the Navy’s PB-22 exhibit.

Air Force Secretariat

and Air Staff

For fiscal year 1997, the Air Force had 2,460 personnel in the Air Force

Secretariat and the Air Staff and 20,592 personnel in 40 direct reporting

units and field operating activities that are subordinate to the Secretariat

and the Air Staff. We reviewed five activities, using the criteria in DOD

Directive 5100.73, and found that three activities—the Air Force Studies

and Analysis Agency, the Air Force Medical Operations Agency, and the

497th Intelligence Group—with a total of 510 personnel, should have been

reported by the Air Force to Congress as management headquarters or

headquarters support activities but were not. The 11th Wing and the Air

Force Frequency Management Agency are properly classified as a

nonmanagement headquarters under the DOD directive.4

 Air Force officials

did not agree with our assessment that three field operating agencies

should be classified as headquarters support organizations.

Air Force Studies and

Analysis Agency

The Air Force Studies and Analysis Agency has 132 personnel located in

the Pentagon. It reports to the Deputy Chief of Staff for Plans and

Operations. The agency primarily does modeling and simulation studies of

air superiority, ground superiority, nuclear superiority, and campaign

activities. This function is part of the operational analysis headquarters

support function defined in DOD Directive 5100.73. Furthermore, its

4

The 11th Wing administers the Air Force Band, the Air Force Honor Guard, and the Arlington National

Cemetery Chaplaincy; operates Bolling Air Force Base; and supports the Air Force Secretariat, the Air

Staff, designated Air Force field operating activities, and other organizations. We found that 415

personnel are located in the Pentagon primarily to support the Air Staff and the Secretariat with the

following functions: chaplain, security police, supply, transportation, civil engineering,

inspection/audit, communications/computer, contracting, medical, comptroller, operations, plans,

programming, personnel, manpower, and legal. Because the Wing has 2,195 personnel, this level of

headquarters support is less than 25 percent of the Wing’s work and under DOD Directive 5100.73, the

Air Force is not required to report these personnel on its PB-22 exhibit.

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Appendix II 

Subordinate Noncombat Organizations

customers are management headquarters. A 1997 study plan for the

Agency indicated that 35 of its 40 studies had DOD management

headquarters as its customers, for example, OSD, the Joint Staff, and the Air

Staff.

The Air Force redesignated the Agency in 1991. In 1984, its predecessor—a

direct reporting unit to the Chief of Staff of the Air Force—was created in

an apparent response to mandated reductions in management

headquarters personnel. According to an Air Force document, the unit was

created to “draw down” the size of the Air Staff by 162 personnel, but it

stated “there will be no changes in administrative, manpower, personnel,

and budget support as currently provided” and “there will be no ‘real

change’ in the Air Staff status for the [Agency].” The Air Force’s

reclassification of these positions from management headquarters to

nonmanagement headquarters became effective in September 1984, the

deadline for a congressional provision to reduce DOD management

headquarters by 5 percent.

Air Force Medical

Operations Agency

The Air Force Medical Operations Agency has 73 personnel who are

classified as medical services management, according to its unit manning

document. The Agency develops policies and programs to improve

aerospace medicine, preventive medicine, and clinical health services for

the Air Force. The Agency’s divisions perform many management

headquarters or headquarters support functions included under medical

services, a headquarters support function defined in DOD

Directive 5100.73. The Agency’s primary customers are the Surgeon

General of the Air Force (to whom its director reports), the Chief of Staff

of the Air Force, the Air Staff, and the Office of the Assistant Secretary of

Defense for Health Affairs—all of which are headquarters officials or

organizations. The Air Force created the Agency in July 1992 by

transferring a directorate from the Surgeon General’s office to the new

Agency.

497th Intelligence Group The 497th Intelligence Group, headquartered at Bolling Air Force Base,

Washington, D.C., has 305 personnel. According to its master plan, its

mission is “intelligence infrastructure and services (security, weapons

system support, automation, and information operations) to defense

community users worldwide.” The unit’s history states that the Group has

a unique role of providing planning, policy implementation, and functional

management support to the Air Staff and other DOD customers in

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Appendix II 

Subordinate Noncombat Organizations

Washington, D.C., and around the world. Our analysis shows that over

50 percent of the Group’s effort is for headquarters support functions,

such as security, acquisition, and data automation support, as defined in

DOD Directive 5100.73; therefore, under the directive, all of its personnel

should have been reported on the Air Force’s PB-22 exhibit.

U.S. Atlantic

Command

For fiscal year 1997, the U.S. Atlantic Command (USACOM) had 501

personnel in its headquarters and 1,097 personnel in 13 noncombat

activities subordinate to USACOM headquarters. We reviewed three of these

activities, using the criteria in DOD Directive 5100.73, and found the

Information Systems Support Group, with 117 personnel, and a portion of

the Atlantic Intelligence Command, with 152 personnel, should be

reported to Congress by DOD as headquarters support but were not. The

Cruise Missile Support Activity is properly classified as a nonmanagement

headquarters activity under the DOD directive. USACOM officials agreed that

the Information Systems Support Group should be reported as a

headquarters support activity, and one official noted that the Joint Staff

had removed the Group from reporting under DOD’s headquarters tracking

program. An Atlantic Intelligence Command official said that the

Intelligence Command is not a management headquarters because it does

not create policy, review and evaluate programs, or conduct long-range

planning. However, he agreed that the Intelligence Command provides

intelligence services directly to management headquarters, which is a

headquarters support function covered by DOD Directive 5100.73.

Information Systems

Support Group

All of the 117 personnel in the Information Systems Support Group should

be reported as headquarters support because more than 50 percent of the

group’s effort is to provide automated data processing support to a

management headquarters, a support function covered by DOD

Directive 5100.73. The Group provides analysis, programming, installation,

and other technical support services to satisfy information system

requirements of USACOM staff and subordinate commands; 24-hour

operations and management of various computer systems, including the

local area network at USACOM headquarters; and an inventory of automated

data processing equipment under USACOM’s Command, Control,

Communication, and Computer System Directorate at headquarters.

According to a Group official, USACOM could not function without the

computer support provided by the Group.

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Appendix II 

Subordinate Noncombat Organizations

The Group’s personnel are collocated with headquarters personnel, and a

USACOM headquarters official is “dual-hatted” as the Group’s commander.

Furthermore, these personnel were previously classified as management

headquarters until 1992. All of these conditions are indicators of possible

headquarters support activity, according to OSD/DA&M officials.

Atlantic Intelligence

Command

At least 152, or 27 percent, of the Atlantic Intelligence Command’s 572

personnel for fiscal year 1997 should be reported by DOD as management

headquarters and/or headquarters support because they provide integral

support to USACOM’s Directorate of Intelligence by working there. In some

Directorate of Intelligence divisions, the Atlantic Intelligence Command

provides all of the personnel. For example, 78 personnel from the Atlantic

Intelligence Command work in the Current Intelligence and Current

Analysis Divisions in USACOM’s Directorate of Intelligence.

The Atlantic Intelligence Command serves as USACOM’s Joint Intelligence

Center and, as such, provides tailored, on-demand, integrated intelligence

products, services, and training for USACOM and manages its theater

intelligence production program in support of national and theater

requirements. The Intelligence Center’s primary customers are USACOM and

other unified commands, which are management headquarters, and the

service component commands and their units, such as the Air Combat

Command, a management headquarters. Under DOD Directive 5100.73,

management of intelligence collection, analysis, production, and

evaluation programs, and intelligence services provided directly to a

management headquarters activity are covered functions.

U.S. Army Training

and Doctrine

Command

For fiscal year 1997, the U.S. Army Training and Doctrine Command

(TRADOC) had 919 personnel in its headquarters and 1,393 personnel in 13

field operating activities subordinate to TRADOC headquarters. We reviewed

four of these activities, using the criteria in DOD Directive 5100.73, and

found that all personnel in three activities—the Training Operations

Management Activity, the Training Development and Analysis Activity, and

the Internal Review and Audit Compliance Activity—with a total of 112

personnel, should have been reported to Congress by the Army as

management headquarters or headquarters support but were not. In

addition, the Army should have reported a portion of the Combat

Developments Field Operating Activity (52 personnel, or 26 percent) as

headquarters support. TRADOC officials believe these field operating

activities were properly classified as nonmanagement headquarters,

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Appendix II 

Subordinate Noncombat Organizations

although they stated that the definition of management and headquarters

support in DOD Directive 5100.73 needs to be clarified because it is open to

interpretation.

Training Operations

Management Activity

The Training Operations Management Activity has 42 personnel collocated

with TRADOC headquarters personnel. It plans, coordinates, and oversees all

of the Army’s training courses conducted by centers and schools in the

Total Army School System and is involved in curriculum development and

review, a headquarters support function under DOD Directive 5100.73. The

Activity oversees the documenting, programming, scheduling, equipment

management, ammunition management, support systems management,

and training for courses; according to a TRADOC official, it is the link

between TRADOC headquarters and subordinate centers and schools. The

Activity supports TRADOC headquarters and the Army by assessing the

schools’ capabilities to meet training requirements and by working within

TRADOC headquarters to resolve problems at centers and schools.

Training Development and

Analysis Activity

The Training Development and Analysis Activity, with 59 personnel,

develops concepts, strategies, and guidance for current and future

training; develops and reviews curricula; researches technology and

initiatives for future training concepts; focuses on TRADOC-identified

training problems; and develops technology-based solutions for TRADOC’s

Training Directorate. This Activity is collocated with TRADOC’s

headquarters, and part of it was previously reported as management

headquarters. In addition, DOD Directive 5100.73 cites training and

education as headquarters support functions.

Internal Review and Audit

Compliance Activity

The Internal Review and Audit Compliance Activity, with 11 personnel,

provides internal review and audit compliance services to TRADOC

headquarters, the Reserve Officer Training Command Cadet Command,

and the Army Training Support Center. Personnel from these offices were

combined to create this field operating activity; previously, 9 of the 11

personnel were counted as part of TRADOC’s headquarters. The inspection

and evaluation of management headquarters activities and subordinate

units is a headquarters support function, as is the management of audit

programs, under the criteria in DOD Directive 5100.73.

Combat Developments

Field Operating Activity

The Combat Developments Field Operating Activity, with 201 personnel, is

responsible for coordinating and integrating delivery for approved combat

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Subordinate Noncombat Organizations

development requirement documents that support the development and

fielding of materiel systems; conducting special experiments and studies;

and managing the changes to current force designs used across the Army.

The Activity’s primary customer is TRADOC’s Combat Developments

Directorate, and in fiscal year 1994, over 100 personnel were transferred

from this headquarters Directorate to the Activity. Today, most personnel

assigned to the Activity are collocated with TRADOC headquarters

personnel. Both collocation with headquarters and transfers of personnel

from headquarters are indicators of possible headquarters support activity,

according to OSD/DA&M officials.

According to DOD Directive 5100.73, the development and analysis of

strategic, defensive, and tactical operations—including planning and

requirements—provided directly to a management headquarters is a

headquarters support function. Also, if an organization devotes more than

25 percent, but less than 50 percent, of its efforts to management

headquarters support, then this portion of the organization’s personnel

should be included in the program. The Activity’s records show 52

personnel within four divisions performing some management

headquarters functions directly for management headquarters activities.

These personnel accounted for 26 percent of the total personnel assigned

to the Activity.

U.S. Army Forces

Command

For fiscal year 1997, the U.S. Army Forces Command (FORSCOM) had 1,582

personnel in its headquarters5

 and 293 personnel in one field operating

activity. A recent headquarters restructuring led FORSCOM to eliminate all

but one of its field operating activities; the remaining organization is the

FORSCOM Field Support Activity. This Activity should have been reported by

the Army to Congress as a headquarters support activity but was not.

FORSCOM officials did not dispute our evidence concerning the Activity, and

they took no position on our conclusion that the Activity is merely an

extension of FORSCOM headquarters and should be reported to Congress

under the criteria in DOD Directive 5100.73. However, they did say that

perhaps they were interpreting the directive incorrectly. We also reviewed

the Army Signal Command, a new organization under FORSCOM created

when the Army abolished the Information Systems Command. Although

the Army previously reported the Information Systems Command, a major

command, as a management headquarters, the Army Signal Command is

not reported on the Army’s PB-22 exhibit.

5

However, 468 of these positions are not available to FORSCOM because they are being withheld by

the Army, according to FORSCOM officials.

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FORSCOM Field Support

Activity

Since 1973, FORSCOM headquarters has had multiple field operating

activities that have totaled more than 200 military and civilian personnel

annually. However, a recent headquarters restructuring led FORSCOM to

eliminate all but one of its field operating activities. The remaining

organization is the FORSCOM Field Support Activity, with 293 military and

civilian personnel in fiscal year 1997. None of these personnel are reported

to the Congress as management headquarters or headquarters support

personnel.

This Activity is not a discrete organization separate from headquarters.

Activity personnel work in the headquarters building and are assigned to

the same directorates, and many possess the same job series and grade

levels as personnel designated as FORSCOM headquarters staff. For example,

the Activity has 46 personnel identified as management analysts and 20 as

logistics management specialists within its various work centers.

Individual headquarters directors decided which positions were

categorized as headquarters and which were counted in the Activity for

each functional area. Furthermore, the head of the Activity is FORSCOM’s

Chief of Staff—a headquarters official; other managers in the Activity

(two-star generals) are also dual-hatted as headquarters directors.

According to OSD/DA&M officials, these conditions are indicators that an

organization is performing management support functions.

During our audit, FORSCOM requested that the Army increase its

management headquarters personnel ceiling by 100 to allow it to count

some, but not all, Field Support Activity personnel as management

headquarters. FORSCOM based its request on a recent FORSCOM headquarters

restructuring that combined tasks, functions, and missions in a way that

may have “clouded” the distinction between management headquarters

and nonmanagement headquarters work, according to officials. The Army

has not approved FORSCOM’s request because of pending legislation that

would reduce DOD management headquarters personnel, according to a

FORSCOM official.

Army Signal Command On September 16, 1996, the Army eliminated a major command when it

transitioned its Information Systems Command to the Army Signal

Command, a new subordinate command. The Army Signal Command

operates several signal brigades and battalions worldwide. The Army does

not report the Army Signal Command as a management headquarters,

unlike its predecessor, because it is not a major command and all previous

Page 44 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

management headquarters functions were transferred to FORSCOM and

other Army commands, according to an Army official.

The Army’s restructuring reduced the size of the Command’s headquarters

from 554 to 393 personnel by transferring several functions, such as

publications and printing, engineering, acquisition, software development,

and data processing, to other Army commands. While the new Command

is more operationally oriented, more than two-thirds of its headquarters

personnel are civilians. According to FORSCOM officials, civilians typically

do not deploy; moreover, the Command has yet to determine the number

that would. The Command continues to perform some headquarters

support functions described in DOD Directive 5100.73. For example, it

inspects and audits subordinate units, assesses training, and evaluates and

monitors unit readiness. Moreover, neither the Army nor OSD have done a

detailed analysis to determine the percentage of personnel that perform

either management or management support functions. Without such an

analysis, we believe it is questionable to exclude the Army Signal

Command headquarters from the Army’s PB-22 exhibit. Command officials

agree that the Command continues to perform many of the same activities

as when the Army reported it as a management headquarters, but they did

not agree that the Command should be reported to Congress as a

management headquarters or headquarters support activity.

Commander in Chief,

U.S. Atlantic Fleet

For fiscal year 1997, the Commander in Chief, U.S. Atlantic Fleet

(CINCLANTFLT) staff had 542 personnel in its headquarters and an additional

5,902 personnel in 25 direct reporting units subordinate to CINCLANTFLT. We

reviewed two of these activities, using the criteria in DOD Directive 5100.73,

and found that one of them—the Naval Shores Activities—with seven

personnel, should have been reported by the Navy to Congress as a

headquarters support activity but was not. CINCLANTFLT’s Manpower

Analysis Team was properly classified as a nonmanagement headquarters

because its primary customers are nonmanagement headquarters shore

activities. Some officials involved with the Naval Shore Activities believed

it was not management headquarters because it does not control any

resources and provides direct support to nonmanagement headquarters

activities. However, other CINCLANTFLT officials involved with DOD’s

management headquarters program agreed that an error had occurred in

classifying the activity as nonmanagement headquarters. They did not

know why these personnel were not included in CINCLANTFLT’s

headquarters totals, but they believe that they should have been.

Page 45 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

Naval Shore Activities The Naval Shore Activities organization has seven personnel, some of

which are dual-hatted in positions at CINCLANTFLT headquarters. All

personnel are collocated with headquarters personnel and the Activities’

funding is contained in a line item in DOD’s Future Years Defense Program

(FYDP) reserved for management headquarters activities. The Chief of

Naval Operations notice establishing this organization in 1994 specifically

created it as a management headquarters activity to coordinate shore

activity support to operating forces, other naval activities, and tenant

commands; command assigned shore installations; and perform other

functions as directed by higher authority. This organization is being

disestablished as of October 1, 1997.

Air Combat Command For fiscal year 1997, the Air Combat Command had 2,284 personnel in its

headquarters and 1,829 personnel in 16 field operating activities

subordinate to Command headquarters. We reviewed five of the activities,

using the criteria in DOD Directive 5100.73, and found that two—the

Studies and Analyses Squadron and the Quality and Management

Innovation Squadron—with 121 personnel, should have been reported by

the Air Force to Congress as headquarters support organizations but were

not. Three activities—the Logistics Support Group/Maintenance Support

Office, the Civil Engineering Squadron, and the Intelligence

Squadron—were properly classified as nonmanagement headquarters

activities because their primary efforts were not headquarters support

and/or their customers are mainly nonheadquarters organizations.

Command officials agreed that the Studies and Analyses Squadron

performed headquarters support functions as defined by DOD

Directive 5100.73; thus, it should have been reported by the Air Force on

its PB-22 exhibit. They did not agree that the Quality and Management

Innovation Squadron provided headquarters support under the criteria in

the DOD directive because they said that most of its effort was for bases

and wings, not the headquarters.

Studies and Analyses

Squadron

The Studies and Analyses Squadron, with 71 personnel, provides the Air

Combat Command and Air Force senior leaders with analyses to support

their decision-making. The Squadron uses simulation, modeling, and other

analytical tools to provide specialized technical information to its

customers—80 percent of whom are at the Command’s headquarters,

according to the Squadron’s statistics. The Air Force activated the

Squadron in 1994 as a result of the Air Force’s reengineering efforts;

previously, this function had been classified as a management

Page 46 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

headquarters activity. Furthermore, the Squadron is collocated with the

Command’s headquarters. Both reclassification and collocation are

indicators of possible headquarters support activity, according to OSD/DA&M

officials.

Quality and Management

Innovation Squadron

In October 1996, the Air Force merged the Air Combat Command’s

Management Engineering Flight, a field operating activity, with the

Directorate of Quality Improvement, a headquarters unit that provided

quality assurance evaluations for the Command. The Quality and

Management Innovation Squadron, which resulted from the merger, has 50

personnel to provide quality innovation and manpower engineering

services to improve the Command’s processes and achieve efficiencies.

The Squadron’s primary customers are the Command’s headquarters,

wings, and units. Like the Studies and Analyses Squadron, this Squadron is

collocated with Command headquarters; furthermore, 40 percent of its

personnel were part of the headquarters until October 1996. According to

DOD Directive 5100.73, management analysis and management engineering

functions, including the analysis of systems, procedures, organizations,

methods, and techniques and the development or maintenance of work

measurement systems, are headquarters support functions. And although

“quality management” is not specifically listed among the 33 headquarters

support functions in DOD Directive 5100.73, OSD/DA&M officials told us that

the list is not exclusive; that is, as new disciplines are developed, such as

information management or quality management, these disciplines can be

considered in analyzing organizations for compliance with the directive.

Air Education and

Training Command

For fiscal year 1997, the Air Force’s Air Education and Training Command

had 1,206 personnel in its headquarters and 692 personnel in nine field

operating activities subordinate to its headquarters. We reviewed all nine

of these activities, using the criteria in DOD Directive 5100.73, and found

that six—the Studies and Analysis Squadron, the Quality Management and

Innovation Flight, the Computer Systems Support Squadron, the Training

Support Squadron, the Air Operations Squadron, and the Civil Engineering

Flight—with a total of 456 personnel, should have been reported to

Congress by the Air Force as management headquarters or headquarters

support but were not. Three activities—the Occupational Measurement

Squadron, the Contracting Squadron, and the Program Management

Flight—were properly classified as nonmanagement headquarters because

these activities have significant Air Force or DOD-wide missions that are

not considered management headquarters or headquarters support under

Page 47 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

DOD Directive 5100.73. Command officials do not believe that any of the

personnel assigned to their field operating activities should be reported as

management headquarters or headquarters support because they do not

develop policy, prepare plans, or allocate resources. However, Command

officials acknowledged that the Command’s field operating activities do

perform some of the management support functions listed in DOD Directive

5100.73.

Studies and Analysis

Squadron

The Studies and Analysis Squadron, with 56 personnel, conducts studies

and tests at the direction of Air Education and Training Command

headquarters to support decisionmaking at headquarters. The Squadron

plans, executes, and reports on the tests of new and modified training

systems. Previous projects included a study of basic military training and

an economic analysis of the costs and benefits of an advanced training

system for the Command’s technical training. The Squadron’s staff

includes specialists in regression analysis, modeling and simulation, and

electrical engineering analysis. As defined by DOD Directive 5100.73,

professional, technical, or logistical support to a headquarters is a

headquarters support function.

Quality Management and

Innovation Flight

The Quality Management and Innovation Flight, with 21 personnel,

provides Air Education and Training Command headquarters with quality

management principles, management engineering activities, and

productivity programs to improve the Command’s mission performance,

planning, and resource use. The Flight’s specific responsibilities include

facilitating the Command’s strategic planning for quality, conducting unit

self assessments, training quality management trainers at the subordinate

units, and managing the Command’s suggestion program. Moreover, the

Flight commander said that, until January 1997, the eight personnel with

quality management duties were attached to the Command Group within

the headquarters. The remaining 13 personnel perform management

engineering functions. The DOD directive identifies strategic planning and

management engineering and analysis as management support functions,

and OSD/DA&M officials said that quality management is also a management

support function. Further, the transfer of personnel and functions from a

headquarters to a subordinate organization is an indicator of possible

management support activity, according to OSD/DA&M officials.

Computer Systems

Support Squadron

The Computer Systems Support Squadron, with 148 personnel, is the

central design activity for the Command’s computer systems, and it

Page 48 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

operates the headquarters computer network. This Squadron establishes

the Command’s software policy and standards and manages its radio

frequency spectrum, land mobile radios, and cellular telephones.

Furthermore, the Squadron conducts business process analyses to support

the Command’s current and future automation requirements. Computer

support to headquarters, including data standardization and computer

systems policy development, is considered a management support

function, according to the DOD directive.

Training Support Squadron The Training Support Squadron, with 89 personnel, develops training

syllabi and courseware for both Command aircraft and undergraduate

flight training and manages the Command’s Graduate Evaluation Program.

DOD Directive 5100.73 identifies the management of training and

educational programs and curriculum development and review as

management headquarters or headquarters support functions.

Air Operations Squadron The Air Operations Squadron, with 77 personnel, is under the Operations

Directorate and provides operational and readiness support, including

crisis response, unit/individual deployments, contingency operations, and

intelligence support to its headquarters, functions covered under DOD’s

directive. For example, the Squadron provides policy and procedures for

conducting and evaluating headquarters deployment exercises, and its

personnel collect and analyze readiness data on the Command’s

subordinate units.

Civil Engineering Flight The Civil Engineering Flight, with 65 personnel, manages the Command’s

military construction, base realignment and closure programs, military

family housing, and environmental projects, and it has specialized

engineering and technical capabilities not found at base-level engineering

squadrons. The Flight has design and construction management

responsibilities and must approve all minor construction projects over

$450,000. The management of engineering programs, including design

development and review and technical review of construction, is a

headquarters support function according to DOD’s directive. Furthermore,

Flight officials have determined that six personnel are performing

headquarters support functions and should be transferred to Command

headquarters. Although officials said the headquarters does not currently

have the positions to allow this transfer, it would merely be a paper

change because the Flight is collocated and fully integrated with the

Page 49 GAO/NSIAD-98-25 Defense Headquarters
Appendix II 

Subordinate Noncombat Organizations

Engineering Directorate branches it supports in headquarters. According

to Command officials, the Flight is integrated with headquarters to save

management overhead and to promote efficiency and effectiveness.

Page 50 GAO/NSIAD-98-25 Defense Headquarters
Appendix III 

Numbered Air Forces

The Air Force has 16 active duty numbered air forces assigned to 6 of its 8

major commands. The Air Combat Command and the Pacific Air Forces

have four numbered air forces each, while the Air Education and Training

Command, the Air Force Space Command, the Air Mobility Command, and

U.S. Air Forces Europe have two each. The Air Force Materiel Command

and the Air Force Special Operations Command do not have any

numbered air forces.

The 12th Air Force is the Air Force component command for the U.S.

Southern Command, a unified command; as such, its principal mission is

to ensure that its units can fulfill their military missions, including antidrug

missions in the Southern Command’s area of responsibility. However, the

organizing, training, and equipping of assigned active wings is the

responsibility of the Air Combat Command—the parent organization of the

12th Air Force. The 19th Air Force was reactivated in 1993 when the Air

Education and Training Command was established. The 19th Air Force is

responsible for almost all Air Force flight instruction, both general

undergraduate, and specialized flight training for fighter, airlift, and tanker

aircraft. It only has a training mission; its headquarters does not deploy for

military operations.

The 12th and 19th Air Forces are organized differently because of their

different missions and functions. The 12th Air Force headquarters contains

a command group and four divisions. In addition, the 12th Air Force has

850 personnel in two squadrons and two groups that are designated as the

Air Force’s air component to the Southern Command. These 850 personnel

are not considered part of the 12th Air Force headquarters. The 19th Air

Force does not have this type of structure because it does not support a

unified command. These two numbered air forces also have other

organizational differences. For example, unlike the 12th Air Force

headquarters, the 19th Air Force headquarters does not have an inspector

general division, a manpower office, a Latin American Affairs office, a

command historian, or protocol or public affairs officials.

Review Results In 1992, the Secretary of the Air Force asked OSD/DA&M to exclude about

2,000 personnel in the numbered air force headquarters from the Air

Force’s management headquarters total. The Air Force provided

documentation to OSD/DA&M concerning its plans to reorganize and reorient

these headquarters into operational organizations. Management and

administration functions that had been mixed among combat-oriented

functions would be eliminated or realigned, according to the Air Force.

Page 51 GAO/NSIAD-98-25 Defense Headquarters
Appendix III 

Numbered Air Forces

The Air Force’s planned actions came as Congress mandated reductions in

DOD management headquarters during fiscal years 1991-95.1

In 1992, OSD/DA&M approved the exclusion of numbered air forces from

reporting under DOD’s management headquarters program, subject to a

review by OSD/DA&M in fiscal year 1993. However, OSD/DA&M did not review

the numbered air forces. Starting with fiscal year 1993, the Air Force no

longer reported numbered air forces headquarters personnel on its PB-22

exhibits sent to Congress. Yet, our review of the 12th and 19th Air Forces

showed that the Air Force did not fully implement its planned

reorganization and that numbered air forces continue to perform some

management headquarters and headquarters support functions covered by

DOD Directive 5100.73.

12th Air Force The 12th Air Force headquarters, with 110 personnel, performs some

management functions that, according to the Air Force’s restructuring

plan, were to be transferred to major commands or wings. For example,

the plan said that numbered air force inspection functions were to be

transferred to major commands. Yet, 12th Air Force headquarters has a

30-person inspector general office with responsibilities that include

monitoring the operational readiness of subordinate guard and reserve

units—a headquarters support function specifically listed in DOD

Directive 5100.73. Additionally, the 12th Air Force headquarters has a

two-person history office, a three-person manpower office, a protocol

official, and a public affairs official. The proposed reorganization plan said

that these functions would be transferred in their entirety to wings or

major commands. Furthermore, the 12th Air Force headquarters has a

Latin American Affairs office with 11 personnel responsible for managing

an exchange program with Latin air forces. In sum, 48 of 110 headquarters

personnel perform management or headquarters support functions.

19th Air Force The 19th Air Force headquarters, with 99 personnel, oversees the Air

Education and Training Command’s flying training program and assesses

compliance with the Command’s training policies and directives.

Headquarters support functions listed in DOD Directive 5100.73 and

performed by the 19th Air Force include analyzing training results and

overseeing unit readiness. In addition, its logistics branch, with seven

personnel, manages the munitions and weapons program for the entire

Command. This branch’s responsibilities include providing guidance and

1

National Defense Authorization Act for Fiscal Year 1991, sec. 906 (P.L. 101-510).

Page 52 GAO/NSIAD-98-25 Defense Headquarters
Appendix III 

Numbered Air Forces

written direction to all munitions and weapons elements within the

Command, consolidating and estimating munitions requirements, and

representing the Command. The Command’s Logistics Directorate is

discussing the transfer of this function from the 19th Air Force to the

Command’s headquarters, according to a 19th Air Force official.

Page 53 GAO/NSIAD-98-25 Defense Headquarters
Appendix IV 

Objectives, Scope, and Methodology

Our objectives were to determine (1) the accuracy and reliability of DOD’s

reported data on management headquarters and headquarters support

personnel and costs, (2) reasons that data on personnel and costs could be

inaccurate, and (3) DOD’s plans to reduce the size of its management

headquarters and headquarters support activities.

To determine the accuracy and reliability of certain PB-22 cost data and

the completeness of personnel data reported under DOD Directive 5100.73,

we selected 10 headquarters to review. We chose organizations from the

following categories: Defense-wide headquarters, military department

headquarters, and unified command headquarters. Given congressional

interest in headquarters in the Washington, D.C., area, we included four of

these organizations in our review. To minimize travel costs, we also

selected DOD organizations near our available GAO staff in Norfolk, Virginia,

and Atlanta, Georgia. The headquarters we reviewed were

• Office of the Secretary of Defense, Pentagon, Arlington, Virginia;

• Army Secretariat and Army Staff, Pentagon, Arlington, Virginia;

• Navy Secretariat and OPNAV, Pentagon, Arlington, Virginia;1

• Air Force Secretariat and Air Staff, Pentagon, Arlington, Virginia;

• U.S. Atlantic Command, Norfolk, Virginia;

• Navy’s Commander in Chief, Atlantic Fleet, Norfolk, Virginia;

• U.S. Army Training and Doctrine Command, Fort Monroe, Virginia;

• Air Combat Command, Langley Air Force Base, Virginia;

• U.S. Army Forces Command, Fort McPherson, Georgia; and

• Air Education and Training Command, Randolph Air Force Base, Texas

In addition to these headquarters, we visited two numbered air forces

because our review of DOD records indicated these organizations had been

reported as management headquarters, and after a reorganization in the

early 1990s, questions remained about the extent of management and

headquarters support functions continuing at these organizations. We

visited the 12th Air Force, Davis-Monthan Air Force Base, Arizona, and the

19th Air Force, collocated with the Air Education and Training Command.

As part of our FORSCOM review, we visited one of its subordinate

commands, the Army Signal Command, Fort Huachuca, Arizona. This

Command had been reported as a management headquarters when it was

an independent major command, the Information Systems Command.

At each of the 10 headquarters organizations we audited, we judgmentally

selected subordinate noncombat organizations to review. We selected

1

Due to time constraints, we did not review Headquarters, Marine Corps.

Page 54 GAO/NSIAD-98-25 Defense Headquarters
Appendix IV 

Objectives, Scope, and Methodology

organizations based on a variety of factors, including the organizations’

names, missions, and functions, and conditions that OSD/DA&M officials

agreed may indicate that an organization is providing management

support. These indicators, also called “red flags” by OSD/DA&M, are

headquarters officials serving additional duty as senior officials in the

subordinate organization (called “dual hatting”), transfer of personnel

from headquarters to create or augment subordinate organizations, diverse

functions that mirror headquarters functions, and collocation of the

subordinate organization with its headquarters. Although the presence of

one or more of these indicators is not conclusive, it led us to perform the

analysis called for in DOD Directive 5100.73. In general, our analysis

involved reviewing mission and functions documents, organizational

manning documents, and organizational history. We also discussed the

organization’s activities, products, services, customers, and relationship

with headquarters with cognizant officials in the subordinate organization

and in its headquarters. The primary disadvantage to this approach is that

our findings cannot be generalized to DOD as a whole or to entire types of

DOD organizations because we did not randomly sample the organizations

we reviewed. The primary advantage is that we obtained an in-depth

understanding of each organization reviewed, which gave us adequate

information to judge compliance with DOD Directive 5100.73.

Both the FYDP and PB-22 exhibits contain errors that make them unreliable

for assessing the resources expended by DOD for management

headquarters and headquarters support activities. According to DOD

Directive 5100.73, program elements (or line items) in the FYDP that end in

“98” are reserved exclusively to account for personnel and costs of DOD’s

management headquarters and headquarters support activities. In the FYDP,

we found costs in “98” program elements that were not related to

management headquarters. An official in the Office of the Under Secretary

of Defense (Comptroller), who performed her own analysis of these

program elements, also found costs unrelated to management

headquarters, particularly in Navy and Defense-wide program elements.

For PB-22 cost data, we performed a limited check of the data’s accuracy

for one fiscal year by comparing the PB-22 data with financial records at

the headquarters spending the money. As discussed previously, at many

headquarters we found significant discrepancies between costs reported

on the PB-22 exhibits and costs incurred by headquarters. With respect to

PB-22 personnel data, OSD/DA&M acknowledged that these exhibits contain

errors. For example, in the Defense-wide PB-22 exhibit prepared for the

President’s budget for fiscal year 1998, OSD did not report the headquarters

of five defense agencies that it agrees should have been reported. For the

Page 55 GAO/NSIAD-98-25 Defense Headquarters
Appendix IV 

Objectives, Scope, and Methodology

personnel numbers that were reported on the PB-22 exhibits, we did not

independently verify their accuracy.

To determine past and projected trends in DOD’s management headquarters

personnel and costs, as reported by DOD, we used annual PB-22 exhibits

prepared by OSD and the military departments and submitted to Congress.

For management headquarters data beyond fiscal year 1999, we used DOD’s

1998-2003 FYDP.

To obtain information on plans to reduce the size of DOD’s management

headquarters, we interviewed officials in the 10 headquarters

organizations we audited and OSD and military service officials who are

involved with studies of management headquarters, such as the study

called for by the Quadrennial Defense Review report.

We performed our review from October 1996 to August 1997 in accordance

with generally accepted government auditing standards.

Page 56 GAO/NSIAD-98-25 Defense Headquarters
Appendix V 

Comments From the Department of Defense

Page 57 GAO/NSIAD-98-25 Defense Headquarters
Appendix V 

Comments From the Department of Defense

Page 58 GAO/NSIAD-98-25 Defense Headquarters
Appendix VI 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Janet St. Laurent, Assistant Director

Douglas M. Horner, Evaluator in Charge

Arnett Sanders, Senior Evaluator

Atlanta Field Office Leo B. Sullivan, Jr., Senior Evaluator

Frank C. Smith, Senior Evaluator

Norfolk Field Office Joseph A. Rutecki, Senior Evaluator

Carleen C. Bennett, Senior Evaluator

(701105) Page 59 GAO/NSIAD-98-25 Defense Headquarters
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