DEFENSE BUSINESS 

TRANSFORMATION

Improvements Made 

but Additional Steps 

Needed to Strengthen 

Strategic Planning and 

Assess Progress

Report to Congressional Committees

February 2013

GAO-13-267

United States Government Accountability Office

GAO
 United States Government Accountability Office 

Highlights of GAO-13-267, a report to 

congressional committees 

February 2013 

DEFENSE BUSINESS TRANSFORMATION

Improvements Made but Additional Steps Needed to 

Strengthen Strategic Planning and Assess Progress 

Why GAO Did This Study 

DOD spends billions of dollars each 

year to maintain key business 

operations intended to support the 

warfighter. In 2005, GAO identified 

DOD’s approach to business 

transformation as high-risk because 

DOD had not established management 

responsibility, accountability, and 

control over business transformationrelated activities and resources, and it 

lacked a plan with specific goals, 

measures, and mechanisms to monitor 

progress. GAO previously reported that 

DOD has taken steps to develop a 

management approach. This report 

addresses DOD’s progress in (1) 

incorporating key strategic planning 

elements into its transformation plan; 

and (2) developing and implementing 

an approach for assessing DOD-wide 

progress toward business goals. GAO 

analyzed relevant DOD documents, 

reviewed prior and ongoing GAO work; 

and interviewed DOD officials. 

What GAO Recommends 

GAO recommends that DOD add 

information to its SMP, such as a 

description of key challenges and 

context for why goals were chosen. 

GAO also recommends that DOD 

further define its performance 

management approach. DOD partially 

concurred with our first recommendation 

and concurred with our second 

recommendation. DOD stated that it 

would add information to the SMP as 

appropriate, and continue to improve 

and institutionalize DBC operations. As 

part of these efforts, GAO believes that 

DOD needs to identify specific steps it 

will take to integrate and regularly 

review performance data from various 

sources to assess progress towards its 

business goals. 

What GAO Found 

The Department of Defense (DOD) has improved its Strategic Management Plan 

(SMP) by including additional strategic planning elements that were lacking from 

previous plans; however, the fiscal year 2012-2013 SMP still needs to 

incorporate some key information that would make it more useful for DOD 

decision makers as a guide for implementing business transformation efforts and 

for measuring progress. Improvements in the SMP include links between its 

business goals and DOD-wide goals, as well as milestone or target data that 

would enable DOD to better measure performance and assess progress in 

achieving SMP goals. However, the SMP does not fully describe the specific 

challenges the goals are intended to address and what the root causes of those 

challenges are. For example, the SMP states that the goal on strengthening 

DOD’s acquisition processes is aimed at obtaining greater efficiency and 

productivity in defense spending, but the accompanying narrative does not 

describe what is causing acquisition-related cost growth and how the goal’s 

initiatives may address those causes. The SMP also lacks sufficient context for 

why business goals and strategies were chosen or changed from prior plans, 

such as whether sufficient progress had been made to warrant their removal. 

Also, the SMP includes performance measures that do not fully reflect core 

activities needed to assess progress for some business goals. For example, the 

SMP identifies measures related to planning for contractor support, but does not 

address other core activities such as those related to providing contractor 

oversight. Refining the SMP to include this key information could help DOD 

better prioritize and target its reform efforts to address the underlying causes of 

its systemic business challenges and to achieve results. 

DOD has broadly outlined a performance management approach for monitoring 

business transformation efforts, but has not used its governance structures to 

regularly review performance results or defined how these structures will 

routinely integrate various sources of performance data to assess departmentwide progress. DOD has established governance structures to help monitor 

progress, such as the Defense Business Council (DBC), established in June 

2012 to, among other things, review performance results to track progress 

against goals. However, the DBC has not regularly reviewed performance data 

and when reviews did occur, it did not have sufficient information to assess 

progress. For example, as of December 2012, the DBC had reviewed 

performance results only twice, and this information did not include data on all 

SMP measures, nor did it disclose the reasons why certain measures were at 

risk of missing quarterly targets. Also, these results provide only a partial picture 

of performance for any given business area. For example, for the area of 

operational energy efficiency, the SMP measures reviewed by the DBC covered 

only progress in reducing consumption, but not measures related to supply and 

security, which are key areas in DOD’s strategy for achieving operational energy 

efficiency. Better defining and implementing a more integrated approach to 

reviewing performance, such as including a broader range of performance 

information, will enhance DOD’s ability to assess progress toward its business 

View GAO-13-267. For more information, goals. 

contact Sharon Pickup at 202-512-9619 or 

pickups@gao.gov. 
Page i GAO-13-267 Defense Business Transformation

Letter 1 

Background 4

DOD’S Business Transformation Plan Has Improved but Still Lacks 

Some Key Information 6

DOD is Limited in Its Ability to Assess Department-wide Progress 

Toward Achieving Business Transformation Goals 17

Conclusions 25

Recommendations for Executive Action 25

Agency Comments and Our Evaluation 26

Appendix I Scope and Methodology 30

Appendix II Business Goals, Initiatives, and Measures in the 

Department of Defense’s (DOD) Fiscal Year 2012-2013 

Strategic Management Plan 32

Appendix III Comments from the Department of Defense 37

Appendix IV GAO Contact and Staff Acknowledgments 40

Table

Table 1: Business Goals from DOD’s Fiscal Year 2012-2013 

Strategic Management Plan (SMP) 6

Contents 
Page ii GAO-13-267 Defense Business Transformation

Abbreviations

CMO Chief Management Officer

DBC Defense Business Council

DCMO Deputy Chief Management Officer

DMAG Deputy’s Management Action Group

DOD Department of Defense

GPRA Government Performance and Results Act

QDR Quadrennial Defense Review

SMP Strategic Management Plan

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Page 1 GAO-13-267 Defense Business Transformation

United States Government Accountability Office 

Washington, DC 20548

February 12, 2013

Congressional Committees

The Department of Defense (DOD) spends billions of dollars each year to 

maintain key business operations intended to support the warfighter, 

including systems and processes related to the management of contracts, 

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

acquisition. We have designated a number of these areas as high risk 

because of their vulnerability to fraud, waste, abuse, and mismanagement 

and because of opportunities to achieve greater efficiencies and free up 

resources for higher-priority needs.1

In 2005, we identified DOD’s approach to business transformation as a 

high-risk area because (1) DOD had not established clear and specific 

management responsibility, accountability, and control over business 

transformation—related activities and applicable resources; and (2) DOD 

lacked a clear strategic and integrated plan for business transformation 

with specific goals, measures, and accountability mechanisms to monitor 

progress.2 Given the complexity and magnitude of the challenges facing 

DOD in improving business operations,3

Since 2005, both DOD and Congress have taken various actions to 

address DOD’s management of business transformation efforts. For 

example, in May 2007, DOD designated the Deputy Secretary of Defense 

as the CMO for DOD. Moreover, in the National Defense Authorization 

we reported the need for a chief 

management officer (CMO) with significant authority and experience to 

focus the necessary attention and sustain progress. We also 

recommended that DOD develop a comprehensive, integrated, and 

enterprise-wide transformation plan, supported by a strategic planning 

process.

 

1

GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011). 

2

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).

3

According to DOD Directive 5105.82, DOD defines its business operations as the 

policies, processes, information, and systems relating to the end-to-end financial, 

logistical, facility management, human capital, acquisition, administrative, and other such 

functions of the DOD that support the warfighter.
Page 2 GAO-13-267 Defense Business Transformation

Acts for Fiscal Year 20084 and Fiscal Year 2009,5

• codifying the Deputy Secretary of Defense as the CMO for DOD, 

Congress took steps 

that included

• creating a deputy chief management officer (DCMO) position, 

• requiring the secretaries of the military departments to designate the 

department under secretaries as CMOs, 

• requiring DOD to develop a strategic management plan (SMP), and

• requiring the secretary of each military department to establish a 

business transformation office and to develop business transformation 

plans.

Since 2005, we have reported periodically on DOD’s progress in 

implementing its management approach and developing a strategic plan 

for business transformation. For example, in January 2011, we reported 

that DOD had taken positive steps, including filling key positions, such as 

the DCMO and military department CMOs, and establishing governance 

structures, but had made limited progress in its strategic planning efforts. 

Specifically, in its 2009 update, DOD improved its initial SMP issued in 

2008, by identifying business priorities, but the plan still lacked several 

key elements such as including some measurable goals and funding 

priorities. We also reported that DOD was in the early stages of collecting 

performance data and had described a strategic planning process in its 

2009 plan update, but had still not set up internal mechanisms to 

implement this process.6

Since we last reported in January 2011, DOD issued another update to its 

plan, dated September 2011, which covers fiscal years 2012-2013. We 

 

4

Pub. L. No. 110-181, § 904 (2008).

5

Pub. L. No. 110-417, §§ 904, 908 (2008).

6

See GAO, Defense Business Transformation: DOD Needs to Take Additional Actions to 

Further Define Key Management Roles, Develop Measurable Goals, and Align Planning 

Efforts, GAO-11-181R (Washington, D.C.: Jan. 26, 2011); and Defense Business 

Transformation: Status of Department of Defense Efforts to Develop a Management 

Approach to Guide Business Transformation, GAO-09-272R (Washington, D.C.: 

Jan. 9, 2009).
Page 3 GAO-13-267 Defense Business Transformation 

performed this review under the authority of the Comptroller General to 

conduct evaluations on his own initiative. Our objectives for this report were 

to assess the extent to which DOD has taken additional steps to (1) 

incorporate key strategic planning elements into its business transformation 

plan; and (2) develop and implement an approach for assessing progress 

on a department-wide basis toward business transformation goals. 

To assess what additional steps DOD has taken to incorporate key 

strategic planning elements into its business transformation plan, we 

reviewed and analyzed relevant documents, such as DOD’s current 

Strategic Management Plan for fiscal year 2012-2013 and prior versions; 

DOD’s annual performance plans for fiscal years 2011 to 2013; and 

relevant DOD directives and memos. We assessed whether the fiscal year 

2012-2013 Strategic Management Plan included key elements that we 

have previously identified as needed for effective strategic planning. We 

also relied on prior and ongoing work we have conducted in individual DOD 

business areas in order to assess the extent to which the plan addresses 

key business-related challenges. To assess the extent to which DOD has 

developed an approach for assessing department-wide progress toward 

business transformation goals, we reviewed relevant documents and 

interviewed senior DOD officials about the department’s performance 

assessment approach and its related governance mechanisms for 

monitoring business transformation progress. For example, we reviewed 

DOD’s Strategic Management Plans; quarterly performance results; 

memorandums; directives; meeting agendas; and briefing documents. We 

evaluated the department’s performance assessment approach in light of 

roles and responsibilities laid out in DOD’s 2009 Strategic Management 

Plan and in the Government Performance and Results Act of 1993, as 

amended,7

 and in light of key practices in results-oriented management, as 

identified in our previous work. For both objectives, we interviewed the 

Deputy Secretary of Defense, the DOD DCMO, the military department 

CMOs and DCMOs; and officials from the offices of several Under 

Secretaries of Defense and business transformation offices within the 

military departments to obtain their perspectives on DOD’s efforts to further 

refine its plan and performance management approach and to achieve 

progress toward business transformation goals. 

 

7

The Government Performance and Results Act of 1993 (GPRA), Pub. L. No. 103-62 

(1993), as recently amended by the Government Performance and Results Modernization 

Act of 2010, Pub. L. No. 111-352 (2011). The relevant portions of GPRA, for purposes of 

this report, are codified in Title 31 of the United States Code. 
Page 4 GAO-13-267 Defense Business Transformation

We conducted this performance audit from February 2012 to February

2013 in accordance with generally accepted government auditing 

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

obtain sufficient, appropriate evidence to provide a reasonable basis for 

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

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. We discuss our scope 

and methodology in more detail in appendix I.

Since the designation of DOD’s approach to business transformation as a 

high-risk area in 2005, we have issued several reports that discuss the 

development of this approach and highlight key areas for improvement, 

particularly in the areas of strategic planning and performance 

management. With regard to strategic planning, our prior work has shown 

that implementing significant organizational change—such as DOD is 

attempting to do with business transformation—requires a 

comprehensive, integrated strategic plan that sets a clear direction and 

contains key elements, such as measurable performance goals and 

objectives, funding priorities that are linked to goals, and aligning of goals 

and measures with department-wide goals and cascading goals and 

measures to lower organizational levels.8 We have periodically reported 

on DOD’s progress in incorporating these elements into its Strategic 

Management Plan (SMP) and highlighted key areas for improvement. 

Specifically, in January 2009, we reported that DOD issued its first SMP 

in July 2008; however, the plan did not identify specific business areas, 

strategic goals, objectives, or performance measures.9 In January 2011, 

we reported that DOD updated its initial SMP in 2009.10

 

8

GAO, Military Training: DOD Needs a Strategic Plan and Better Inventory and 

Requirements Data to Guide Development of Language Skills and Regional Proficiency, 

DOD’s 2009 SMP 

identified priorities and reform initiatives but lacked several key elements, 

such as a description of the problems to be addressed, some measurable 

goals, and funding priorities. Accordingly, we recommended, in revising 

its SMP, that DOD ensure that the plan contains measurable goals and 

funding priorities linked to those goals. DOD concurred with our 

recommendation.

GAO-09-568 (Washington, D.C.: June 19, 2009); and GAO-11-181R. 

9

GAO-09-272R. 

10GAO-11-181R. 

Background
Page 5 GAO-13-267 Defense Business Transformation

With regard to developing a performance management approach to 

measure progress, we have identified several key management practices 

regarding the effective use of performance information. Specifically, we 

found that the full benefit of collecting performance information –-

improved decision making and results–- is only fully realized when this 

information is used to support management planning and decisionmaking functions.11 In January 2009, we reported on DOD’s continued 

progress in implementing its management framework for monitoring 

business transformation.12

In January 2011, we reported on additional steps DOD had taken to 

strengthen its management approach to monitoring business 

transformation.

We noted, for example, that DOD had issued 

directives broadly defining the responsibilities of the CMO and DCMO, 

established an office of the DCMO, designated an Assistant DCMO, 

established governance structures, and named CMOs or acting CMOs in 

the military departments. However, DOD had still not clearly defined the 

authority, roles, and relationships for some entities and positions, 

including the unique and shared responsibilities of various governance 

structures for monitoring business transformation progress, as well as 

decision-making authority for the DCMO, and the relationship between 

DOD’s DCMO and the military department CMOs.

13

 

11GAO, Results-Oriented Management: Strengthening Key Practices at FEMA and Interior 

Could Promote Greater Use of Performance Information,

For example, DOD filled key positions, such as the 

DCMO and military department CMOs; established entities, such as a 

governance board to identify business process improvements; and 

undertook various activities, such as issuing an updated SMP in July 2009, 

and announcing in May 2010 a department-wide effort to reduce overhead 

costs. We reported that DOD was in the early stages of measuring 

progress, and that, DOD had not set up internal mechanisms, such as 

procedures and milestones, by which it could reach consensus with the 

military departments and others on priorities, synchronize the development 

of plans with each other and the budget process, and guide efforts to 

monitor progress and take corrective action. Therefore, we recommended 

GAO-09-676 (Washington, D.C. 

Aug. 17, 2009); and Managing for Results: Enhancing Agency Use of Performance 

Information for Management Decision Making, GAO-05-927 (Washington, D.C.: Sept. 9, 

2005). 

12GAO-09-272R. 

13GAO-11-181R. 
Page 6 GAO-13-267 Defense Business Transformation

that DOD issue guidance to set up a strategic planning process with such 

internal mechanisms. DOD partially concurred with our recommendation, 

stating that the department was focused on using its existing governance 

bodies and planning cycles to accomplish these goals.

DOD has improved its SMP by including additional strategic planning 

elements previously recommended by GAO, but the SMP still lacks some 

key information that would make it more useful for DOD decision makers 

as a guide for targeting and implementing business transformation efforts, 

measuring progress, and positioning the department to achieve results in 

addressing longstanding business challenges.

In September 2011, DOD issued its fourth update to the SMP for fiscal 

years 2012 and 2013. This plan identifies seven overarching business 

goals, as shown in table 1.

Table 1: Business Goals from DOD’s Fiscal Year 2012-2013 Strategic Management 

Plan (SMP) 

Goal 1 Strengthen and right-size the DOD total workforce mix (military, civilian, and 

contracted support) to accomplish the DOD mission and sustain superior 

performance in a time of constrained resources

Goal 2 Strengthen DOD financial management to respond to warfighter needs and 

sustain public confidence through auditable financial statements

Goal 3 Build agile and secure information technology capabilities to enhance combat 

power and decision-making while optimizing value

Goal 4 Increase the buying power of the DOD acquisition system and processes, 

spanning requirements determination, development, procurement, and 

support to ensure that the force structure is modernized, recapitalized, and 

sustained within available resources

Goal 5 Increase operational and installation energy efficiency to lower risks to our 

warfighters, reduce costs, and improve energy security

Goal 6 Re-engineer/use end-to-end business processesa to reduce transaction times, 

drive down costs, and improve service

Goal 7 Create agile business operations that plan for, support, and sustain 

contingency missions

Source: DOD. 

a

According to DOD, end-to-end business processes are business processes that span core business 

areas, cutting across functional areas and organizations. There are 15 end-to-end business 

processes, such as Hire-to-Retire and Procure-to-Pay.

DOD’S Business 

Transformation Plan 

Has Improved but Still 

Lacks Some Key 

Information

DOD’s Fiscal Year 2012-

2013 SMP Reflects an 

Improvement over 

Previous SMPs
Page 7 GAO-13-267 Defense Business Transformation

Each of these goals has associated initiatives for achieving specific 

outcomes as well as measures for assessing progress. In addition, for 

each goal, DOD identified goal owners—senior leaders with 

responsibilities for ensuring success and reporting quarterly progress on 

SMP goals. The goal owners are the Under Secretary of Defense 

(Personnel and Readiness); Under Secretary of Defense (Acquisition, 

Technology, and Logistics); the Comptroller; DOD Chief Information 

Officer, and the DOD Deputy Chief Management Officer. See appendix II 

for a more-detailed overview of DOD’s fiscal year 2012-2013 SMP. DOD 

officials stated that they used a collaborative process to develop the fiscal 

year 2012-2013 SMP. According to DOD officials, the DCMO solicited 

input from across the department, including the offices of the Under 

Secretary of Defense for Personnel and Readiness; the Under Secretary 

of Defense for Acquisition, Technology and Logistics; the Comptroller; the 

DOD Chief Information Officer; and the military departments. The Under 

Secretaries identified the goals, initiatives, and measures to be included 

in the SMP. Military department officials stated that they provided input on 

the SMP goals and believe that these goals are consistent with the 

military departments’ business priorities.

Our analysis shows that the fiscal year 2012-2013 SMP now includes 

some key strategic planning elements that were lacking from previous 

plans. Specifically, as discussed below, we note that the fiscal year 2012-

2013 SMP aligns business goals to department-wide goals, links its 

business goals to other business-related plans, and contains improved 

performance measures.

The 2009 SMP did not clearly link its business goals with departmentwide goals because, at the time, the department was midway through its 

development of the 2010 Quadrennial Defense Review (QDR). However, 

the fiscal year 2012-2013 SMP now states how each business goal is 

linked to high-level departmental goals in the 2010 QDR. For example, 

the SMP links DOD’s business goal 1, “Strengthen the DOD Total 

Workforce Mix” with three of the QDR’s strategic goals: strategic goal 1, 

“Prevail in Today’s Wars”; strategic goal 3, “Prepare to Defeat 

Adversaries and Succeed in a Wide Range of Contingencies”; and 

strategic goal 4, “Preserve and Enhance the All-Volunteer Force.” These 

efforts are consistent with our prior work stating that performance goals 

should align with an agency’s long-term strategic goals and departmentSMP Goals Align to 

Department-wide Goals
Page 8 GAO-13-267 Defense Business Transformation

wide priorities in order to provide managers and staff with a road map 

showing how their work contributes to achieving strategic goals.14

In addition to the SMP, DOD has other strategic plans that support 

individual business areas. Linking SMP business goals to other strategic 

plans provides a more complete picture of DOD’s efforts in its various 

business areas. Although previous SMPs noted that DOD utilizes a family 

of plans to guide its business-related efforts and generally described the 

existence of such other departmental plans, they did not specifically 

identify these plans or link them to SMP business goals. The fiscal year 

2012-2013 SMP now identifies some plans and explicitly links them to 

some of the goals. For example, the description of the SMP business goal 

on DOD’s information technology management mentions DOD’s 

Information Technology Enterprise Strategy and Roadmap as the guide 

for achieving the initiatives associated with this business goal. Similarly, 

the narrative describing a business goal on increasing DOD’s operational 

and installation energy efficiency states that DOD’s recently published 

Operational Energy Strategy provides guidance for achieving operational 

energy efficiencies in support of this overarching SMP goal. As another 

example, the fiscal year 2012-2013 SMP goal on strengthening DOD 

financial management identifies the Financial Improvement and Audit 

Readiness Plan as providing the strategy and methodology to integrate, 

among other things, the department and components’ financial plans.

The fiscal year 2012-2013 SMP also includes some improvements to 

performance measures, specifically to include milestone or target data 

that would enable DOD to assess progress in achieving SMP goals. In 

our prior work, we found that 20 of the 76 performance measures in the 

2009 SMP, or 26 percent, contained target data. The fiscal year 2012-

2013 SMP improves upon this by providing milestones and target data for 

58 of its 62 performance measures, or 94 percent. For example, the 2009 

SMP calls for DOD to generally monitor the percent of Major Automated 

Information Systems that experienced cost and schedule increases per 

fiscal year. However, the fiscal year 2012-2013 SMP provides two 

measures that establish specific numerical targets by fiscal year for the 

number of “significant” and “critical” breaches for Major Automated 

 

14GAO, Defense Management: Tools for Measuring and Managing Defense Agency 

Performance Could Be Strengthened, GAO-04-919 (Washington, D.C.: Sept. 13, 2004).

SMP Identifies Other BusinessRelated Plans 

SMP Contains Performance 

Measures with Milestones and 

Target Data 
Page 9 GAO-13-267 Defense Business Transformation

Information Systems.15 Such milestone or target data is useful because it 

facilitates future assessments of whether overall goals and objectives are 

being achieved.

While DOD has made some improvements to the fiscal year 2012-2013 

SMP, it still lacks some key information, including (1) a description of key 

challenges and underlying root causes of systemic weaknesses the plan 

is intended to address; (2) sufficient context explaining why business 

goals and strategies in the current plan were chosen, and why those from 

prior SMPs were not included; (3) performance measures that fully reflect 

core activities needed to assess progress; and (4) funding priorities linked 

to goals. Until DOD takes steps to address these issues, it may not be 

fully focused on addressing the underlying causes that are contributing to 

its business challenges.

The fiscal year 2012-2013 SMP does not fully describe the specific 

challenges that DOD’s business goals are intended to address and what 

the root causes of those challenges are. Such information would establish 

a clear and common understanding of the systemic weaknesses the SMP 

is trying to address, and could allow the SMP to serve as a basis for 

establishing priorities to reform business operations and address any 

gaps. We found that the seven business goals in the SMP varied in the 

extent to which they described the scope of challenges and root causes 

of systemic weaknesses being addressed. For example:

• According to the fiscal year 2012-2013 SMP, the business goal on 

strengthening DOD’s acquisition processes is aimed at obtaining 

greater efficiency and productivity in defense spending, but the SMP 

narrative accompanying this goal does not provide any information on 

what is causing the cost growth for DOD’s major defense acquisition 

programs or on how the goal’s initiatives may address those causes. 

Our work has shown that many factors contribute to cost growth, 

 

15According to the fiscal year 2012-2013 SMP, a significant breach is defined as equal to 

or greater than 15 percent of the Acquisition Program Baseline total cost or with schedule 

slippages greater than 6 months. A critical breach is defined as equal to or greater than 25 

percent of the Acquisition Program Baseline total cost or with schedule slippages greater 

than 1 year.

DOD’s SMP Continues to 

Lack Some Key 

Information Needed to 

Provide Strategic Direction 

For Department-wide 

Business Transformation 

Efforts

SMP Does Not Describe Scope 

of Business Transformation 

Challenges for Some Goals and 

Initiatives
Page 10 GAO-13-267 Defense Business Transformation

including the lack of well-defined requirements and sufficient 

information on technology at key points in the acquisition process.16

• In addition, the fiscal year 2012-2013 SMP narrative for the business 

goal on building agile and secure information technology capabilities 

states that the department must provide a synchronized and 

responsive capability for the DOD information enterprise, but does not 

describe the challenges to be addressed. Our work has shown that 

such challenges include that the department lacks a reliable, 

comprehensive inventory of all defense business systems, and has 

not fully defined and established a family of business system 

modernization management controls that is vital to ensuring that its 

business system investments are the right solutions for addressing its 

business needs and that its business system investments are 

managed to produce expected capabilities efficiently and costeffectively.17

• The fiscal year 2012-2013 SMP also includes a business goal to 

reengineer and use business processes to reduce transaction times, 

drive down costs, and improve services. Associated with this goal is 

an initiative to “improve the supply chain end-to-end process” as well 

as measures that relate to the percentage of filling orders and 

customer wait time. However, the narrative describing the goal does 

not discuss the supply chain, including what aspects of the process 

need improvement. Our work has shown that deficiencies exist in 

several areas of the supply chain, such as materiel distribution, 

requirements forecasting, and asset visibility.18

 

16GAO, Defense Management: Guidance and Progress Measures Are Needed to Realize 

Benefits from Changes in DOD’s Joint Requirements Process, GAO-12-339 (Washington, 

D.C.: Feb. 24, 2012); and Defense Acquisitions: Strong Leadership Is Key to Planning and 

Executing Stable Weapons Programs, GAO-10-522 (Washington, D.C.: May 6, 2010).

17GAO, DOD Business Systems Modernization: Governance Mechanisms for 

Implementing Management Controls Need to Be Improved, GAO-12-685 (Washington, 

D.C.: June 1, 2012); and GAO-11-278. 

18GAO, Defense Logistics: DOD Has Taken Actions to Improve Some Segments of the 

Materiel Distribution System, GAO-12-883R (Washington, D.C.: Aug. 3, 2012); Defense 

Logistics: Improvements Needed to Enhance DOD’s Management Approach and 

Implementation of Item Unique Identification Technology, GAO-12-482 (Washington, D.C.: 

May 3, 2012); and Defense Inventory: Defense Logistics Agency Needs to Expand on 

Efforts to More Effectively Manage Spare Parts, GAO-10-469 (Washington, D.C.: 

May 11, 2010).
Page 11 GAO-13-267 Defense Business Transformation

• The plan includes a business goal to create agile business operations 

that plan for, support, and sustain contingency missions. This goal 

includes an initiative to “institutionalize operational contract support.” 

However, the plan does not explain the challenges DOD is 

encountering in the area of operational contract support and what 

aspects of this area need to be addressed. Our work has shown that 

such challenges include insufficient capacity to oversee contractors 

and inadequate planning for contractor support during contingency 

operations.19

With additional information on the scope and root causes of challenges, 

DOD would more effectively communicate business priorities and focus 

initiatives to ensure that the department is addressing long-term systemic 

challenges in business areas. Moreover, without a description of key 

business challenges, the department cannot be assured that it has 

identified the appropriate initiatives and performance measures to assess 

progress in addressing those challenges.

Further, the plan does not address the challenges 

confronted by DOD in other contract management–related areas, 

including how DOD acquires services, ensuring the appropriate use of 

contracting approaches, and enhancing the capacity of the acquisition 

workforce.

The fiscal year 2012-2013 SMP does not include sufficient context 

explaining the basis for selecting the seven overarching business goals, 

such as why these goals were considered high priorities for DOD. 

According to guidance from the Office of Management and Budget (OMB) 

on developing agency strategic plans, plans should provide sufficient 

context to explain the basis for why specific goals and strategies are 

 

19GAO, Iraq and Afghanistan: DOD, State, and USAID Face Continued Challenges in 

Tracking Contracts, Assistance Instruments, and Associated Personnel, GAO-11-1 

(Washington, D.C.: Oct. 1, 2010); Warfighter Support: Cultural Change Needed to 

Improve How DOD Plans for and Manages Operational Contract Support, GAO-10-829T 

(Washington, D.C.: June 29, 2010); and Warfighter Support: DOD Needs to Improve Its 

Planning for Using Contractors to Support Future Military Operations, GAO-10-472 

(Washington, D.C.: Mar. 30, 2010).

SMP Does Not Always Provide 

Sufficient Context for Business 

Goals
Page 12 GAO-13-267 Defense Business Transformation

chosen.20 However, some business goals and strategies have changed 

with each SMP without any context for why these changes have occurred, 

such as whether sufficient progress has been made to warrant the 

changes. For example, prior SMPs included goals that addressed the 

business area of support infrastructure management, which includes the 

maintenance, support, and disposal of installation facilities. DOD’s 

infrastructure is critical to maintaining military readiness, with the cost to 

build and maintain this infrastructure representing a significant financial 

commitment. The 2009 SMP contained an objective on improving real 

property installation management under the financial management goal. 

The 2011 SMP contained the same objective, but placed it under its goal 

on reforming the DOD acquisition and support processes. However, the 

fiscal year 2012-2013 SMP no longer lists a goal or objective related to 

support infrastructure and does not explain why the area has been 

removed, such as any assessment done on progress in the area to justify 

its removal. Support infrastructure management has been on GAO’s highrisk list since 1997. Moreover, we have recently reported that DOD 

continues to face significant challenges in this area, specifically in 

reducing excess facilities and in achieving efficiencies and cost savings in 

implementing joint bases and common support base standards.21 Without 

sufficient context on why this area has been removed despite ongoing 

challenges, it is unclear whether DOD believes that support 

infrastructure—related objectives in the prior SMPs were achieved, or 

whether its priorities have changed. Moreover, without clear criteria for 

removing or changing key goals, particularly those related to high-risk 

areas, it may be difficult for DOD to demonstrate tangible results.

 

20Office of Management and Budget, Performance Improvement Guidance: Management 

Responsibilities and Government Performance and Results Act Documents,

Memorandum M-10-24 (June 25, 2010). According to this memorandum, providing 

sufficient context is an important strategic planning element that should be included in 

Government Performance and Results Act (GPRA) documents to make them more useful 

to agency leadership, managers, and employees. While GPRA does not directly apply to 

the SMP, our prior work has identified many of GPRA’s requirements as the foundation for 

effective strategic planning.

21GAO, Excess Facilities: DOD Needs More Complete Information and a Strategy to 

Guide Its Future Disposal Efforts, GAO-11-814 (Washington, D.C.: May 3, 2012); and 

DOD Joint Bases: Management Improvements Needed to Achieve Greater Efficiencies, 

GAO-13-134 (Washington, D.C.: Nov. 15, 2012).
Page 13 GAO-13-267 Defense Business Transformation

Similarly, the fiscal year 2012-2013 SMP does not discuss the military 

departments’ business priorities and how they link to the SMP’s business 

goals. Previous SMPs included information on each of the military 

departments’ top priorities, which, they stated, were aimed at achieving 

integrated management of business operations. The military departments 

play a key role in DOD’s efforts to transform its business operations, 

representing a significant portion of DOD’s organization and resources. 

The Under Secretary of each military department serves as its CMO with 

primary responsibility for business operations and for developing and 

executing a business transformation plan for that military department. The 

Army and Navy have business transformation plans, and Air Force 

officials stated that they have a draft business transformation plan. Given 

these responsibilities, it is important that DOD’s plan outline the expected 

contribution of the military departments and the accountability of their 

CMOs in achieving department-wide business goals. However, the fiscal 

year 2012-2013 SMP does not discuss the military departments’ 

business-related priorities or explain why this information is no longer 

included. In the absence of such information, DOD decision makers lack 

context to fully understand how the military departments’ business-related 

activities contribute to department-wide business transformation efforts.

The fiscal year 2012-2013 SMP includes performance measures that, in 

many cases, do not fully reflect core activities that are needed to address 

longstanding challenges and assess progress against DOD’s business 

goals. While the SMP does not need to include all possible business 

transformation measures, our prior work has shown that performance 

measures should focus on core activities that would help managers 

assess whether they are achieving organizational goals.22

• The fiscal year 2012-2013 SMP includes one initiative on improving 

the supply chain end-to-end process. The performance measures 

associated with this initiative focus on customer wait time and delivery 

of the right part to the customer on time, in the correct quantity, and 

with no material deficiencies (typically referred to as perfect order 

fulfillment). While these are important performance measures, other 

issues that we have identified as focus areas for improvement in 

However, we 

identified several examples where DOD’s measures do not address some 

key challenges.

 

22GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing Season 

Performance Measures, GAO-03-143, (Washington, D.C.: Nov. 22, 2002).

SMP Performance Measures Do 

Not Fully Reflect Core 

Activities Needed to Assess 

Progress
Page 14 GAO-13-267 Defense Business Transformation

GAO’s supply chain management high-risk area, such as asset 

visibility and requirements forecasting, are not fully addressed by 

these performance measures. We have previously reported that, 

although performance measures monitoring customer wait time and 

perfect order fulfillment allow DOD to track many aspects of supply 

chain performance, these measures do not allow DOD to assess the 

overall effectiveness and efficiency of the supply chain across the 

enterprise.23 Additionally, we have reported that these measures are 

limited in their ability to guide the department’s improvement efforts 

for supply chain management, specifically the focus areas for 

improvement—requirements forecasting, materiel distribution, and 

asset visibility—in GAO’s supply chain high-risk area.24 Customer wait 

time, for example, could fail to accurately measure the impact of 

supply chain management improvement initiatives, as this measure is 

influenced by many external factors. Further, our work demonstrates 

that DOD continues to face other problems in supply chain 

management.25 For example, in the area of asset visibility, DOD has 

incomplete data on the number of items in its inventory that qualify for 

marking with Item Unique Identification technology26 labels and lacks 

assurance that contractors are sufficiently marking newly-acquired 

items.27 We have also reported on a number of challenges regarding 

DOD’s ability to accurately forecast inventory needs.28

 

23GAO, Defense Logistics: DOD Needs to Take Additional Actions to Address Challenges 

in Supply Chain Management, 

Although DOD 

has a separate inventory management improvement plan, none of the 

measures for this area are included in the SMP.

GAO-11-569 (Washington, D.C.: July 28, 2011).

24GAO, DOD’s High-Risk Areas: Progress Made Implementing Supply Chain Management 

Recommendations, but Full Extent of Improvement Unknown, GAO-07-234 (Washington, 

D.C.: Jan. 17, 2007).

25 GAO-12-883R; GAO-12-482; and Defense Inventory: Actions Underway to Implement 

Improvement Plan, but Steps Needed to Enhance Efforts, GAO-12-493 (Washington, 

D.C.: May 3, 2012).

26Item Unique Identification technology allows DOD to assign a unique number to an 

individual item and then use that unique number to manage that item in a variety of 

logistics processes.

27GAO-12-482. 

28GAO, Defense Inventory: Defense Logistics Agency Needs to Expand on Efforts to More 

Effectively Manage Spare Parts, GAO-10-469 (Washington, D.C.: May 11, 2010).
Page 15 GAO-13-267 Defense Business Transformation

• The fiscal year 2012-2013 SMP’s performance measures for DOD’s 

workforce-related goal also do not fully address core elements of 

DOD’s workforce, such as civilian and contractor components of the 

total workforce. For example, the SMP contains a goal on 

strengthening and right-sizing the DOD total workforce mix, and a 

related initiative to recruit and retain the right quality skilled personnel 

to meet mission requirements. The plan includes measures related to 

DOD’s progress in recruiting sufficient numbers of military personnel 

against prescribed end-strength goals and the percentage of military 

recruits that have high school diplomas and meet other criteria. 

However, the plan does not include additional measures to assess 

whether DOD is recruiting and retaining civilian staff with the right mix 

of skills and competencies, such as financial management and 

acquisition skills. Our past work has shown that this is an important 

challenge and that DOD has not yet fully completed statutorily

mandated gap assessments of its skills and competencies needed to 

develop the right recruiting and retention goals.29 Further, the fiscal 

year 2012-2013 SMP does not have measures for evaluating any 

aspect of the contractor workforce or any aspect of the civilian 

workforce beyond the Civilian Expeditionary Workforce.30

• In the area of operational contract support, the fiscal year 2012-2013 

SMP identifies some measures related to planning for contractor 

support, including the percent of geographic combatant command 

plans that have been reviewed and analyzed with regard to 

determining the nature of contractor support that may be needed in 

future contingencies, but does not address other challenges that 

affect DOD’s contingency operations, including the lack of trained 

contract oversight personnel.

Therefore, 

the plan does not have a balanced set of measures to help address 

whether DOD has the core activities needed to assess progress 

toward strengthening and right-sizing DOD military, civilian, and 

contractor personnel who constitute the total workforce.

31

 

29 GAO, Human Capital: DOD Needs Complete Assessments to Improve Future Civilian 

Strategic Workforce Plans, GAO-12-1014 (Washington, D.C.: Sept. 27, 2012).

30DOD established the Civilian Expeditionary Workforce in January 2009 to serve as a 

source for deployable civilians.

31GAO-10-829T. 
Page 16 GAO-13-267 Defense Business Transformation

We previously reported that DOD’s 2009 SMP did not identify funding 

priorities or resources needed to achieve goals, and therefore, we 

recommended that the revised SMP contain funding priorities linked to 

goals.32

Further refining the SMP to include key information—such as a 

description of the scope of key business challenges, sufficient context for

its goals, improved performance measures, and funding priorities—would 

more effectively assist DOD decision makers in targeting reform efforts to 

address systemic business challenges and in making investment 

decisions that reflect business priorities. DOD officials acknowledged that 

the SMP lacks some key information, but stated that the SMP is still 

maturing and that they will address these limitations in future refinements 

of the SMP. For example, the military department CMOs agreed that the 

next SMP should clarify the linkage between the business priorities of the 

military departments and DOD as a whole. Also, with regard to 

performance measures, officials from the office of the DCMO stated that, 

in developing the SMP, they recognized that the performance measures 

did not represent the complete scope of measures needed to assess 

progress against business goals. Officials from the office of the DCMO 

stated they will rely on continuous collaboration with the Under 

Secretaries of Defense and the military departments to further refine 

performance measures that more fully address business goal challenges 

and include these refined measures in future SMPs.

However, the fiscal year 2012-2013 SMP does not discuss 

resource needs or funding priorities among the business goals and 

initiatives. Our prior work has shown that agencies are successful in 

achieving business management transformation when they strive to 

establish strategic plans that prioritize initiatives and resources. The SMP 

lists key initiatives for achieving each business goal, but it does not 

discuss resource needs or prioritize initiatives so that activities can be 

linked to funding decisions. Rather, the SMP contains a general 

statement that DOD reviews and approves plans and budgets for 

business operations through the department’s established budget cycle. 

Without including a description of funding priorities or resource needs, 

DOD decision makers cannot be assured that they are developing plans 

and budget requests that reflect business priorities. Therefore, we 

continue to believe that our prior recommendation to include this 

information has merit.

 

32GAO-11-181R. 

SMP Does Not Include Funding 

Priorities
Page 17 GAO-13-267 Defense Business Transformation

DOD has broadly outlined a performance management approach for 

business transformation and begun to collect performance information, 

but has not fully demonstrated how its governance structures will use 

available performance information from various sources to assess 

department-wide progress against business goals.

DOD has assigned performance responsibilities and broadly outlined its 

performance management approach, including steps for setting 

performance targets, reporting and assessing performance data, and 

taking corrective action. Under GPRA, the Deputy Secretary of Defense, 

as CMO, is responsible for improving the management and performance 

of the agency.33 GPRA also gives the DCMO responsibility for advising 

and assisting the CMO in areas like goal-setting, planning, and 

performance measurement.34

DOD has also identified key steps and various governance structures that 

are a part of its performance management approach to advance business 

initiatives throughout the department. The 2009 SMP outlined six steps 

reflecting key decision points within DOD’s performance management 

approach: planning; setting targets; cascading measures so that they 

align to a common set of priorities; aligning processes; assessing and 

In addition, the 2009 SMP generally 

describes the performance management roles and responsibilities of the 

CMO and DCMO. The CMO is to define performance goals for business 

operations and review progress periodically against those goals, and the 

DCMO is to advise the CMO on performance goals and measures, and to 

assess progress.

 

3331 U.S.C. §1123. GPRA states that, at each agency, the deputy head of agency, or 

equivalent, shall be the chief operating officer of the agency. The CMO serves as the chief 

operating officer of DOD for purposes of GPRA.

3431 U.S.C. §1124. GPRA states that, at each agency, the head of the agency, in 

consultation with the agency chief operating officer, shall designate a senior executive of 

the agency as the agency performance improvement officer. The DCMO serves as the 

agency performance improvement officer for purposes of GPRA. For general information 

on the roles and responsibilities of the CMO and DCMO, see DOD Directive 5105.02, 

Deputy Secretary of Defense (Oct. 18, 2011) and DOD Directive 5105.82, Deputy Chief 

Management Officer (DCMO) of the Department of Defense (Oct. 17, 2008).

DOD is Limited in Its 

Ability to Assess 

Department-wide 

Progress Toward 

Achieving Business 

Transformation Goals

DOD Has Broadly Outlined 

a Performance 

Management Approach
Page 18 GAO-13-267 Defense Business Transformation

reporting results; and taking corrective action. In this plan, DOD listed the 

governance structures that are, among other things, responsible for 

assessing and monitoring progress being made toward achieving the 

department’s business goals. For example, the plan identified the 

Defense Business Systems Management Committee as a key seniorlevel board for assisting the CMO in his performance management 

responsibilities.35

Following the issuance of the fiscal year 2012-2013 SMP, DOD 

established two governance structures that are intended, in part, to 

monitor business transformation progress. Specifically, in October 2011, 

the Deputy Secretary of Defense established the Deputy’s Management 

Action Group (DMAG);

The fiscal year 2012-2013 SMP further outlined this 

performance management approach by identifying governance structures 

associated with each goal that, combined with the Defense Business 

Systems Management Committee, will form the mechanism through 

which DOD leaders review business priorities. For example, the plan 

states that DOD will use governance structures, such as the Senior 

Readiness Oversight Council, to help oversee and monitor progress 

toward achieving the goal on strengthening the DOD workforce.

36

 

35DOD established the Defense Business Systems Management Committee under the 

authority of section 332 of the Ronald W. Reagan National Defense Authorization Act for 

Fiscal Year 2005 and 10 U.S.C. §186, which required the department to set up a 

committee to review and approve major updates of the defense business enterprise 

architecture and to ensure that the obligation of funds for defense systems modernization 

is consistent with the criteria set out in 10 U.S.C. § 2222. 

a senior-level forum that meets several times a 

month to discuss various department-wide management issues. 

According to the memorandum establishing the DMAG, the Deputy 

Secretary of Defense will use the DMAG to develop a common 

management approach to disparate topics and processes to ensure that 

management actions are synchronized and fully coordinated across the 

defense enterprise. In addition, DOD established the Defense Business 

Council (DBC), which is chaired by the DCMO and began meeting in 

36Deputy Secretary of Defense Memorandum, Management Process for the Deputy 

Secretary of Defense (Oct. 6, 2011).
Page 19 GAO-13-267 Defense Business Transformation

June 2012.37 According to the DBC’s charter, which was issued in 

October 2012, the DBC will recommend certification of business systems 

investments and is also responsible, among other things, for improving 

the department’s business activities and management structures.38 In 

addition, officials from the Office of the DCMO stated that the DBC, rather 

than the Defense Business Systems Management Committee, will now 

serve as the primary forum for reviewing SMP quarterly performance 

results and discussing business-related performance topics.

The Office of the DCMO has a process in place whereby goal owners 

responsible for implementing SMP goals report progress on SMP 

measures on a quarterly basis. For example, the Under Secretary of 

Defense for Personnel and Readiness is responsible for ensuring the 

success of the SMP goal related to strengthening the DOD total 

workforce mix. In order to assess progress toward this goal, the Under 

Secretary of Defense for Personnel and Readiness reports quarterly to 

the Office of the DCMO on the status of the 10 measures associated with 

the goal.

In addition to collecting SMP performance information, DOD has set up 

procedures and assigned responsibility for collecting and reporting 

business –related performance information related to other plans for 

specific business areas, the department’s annual performance plan, 

agency priority goals, and numerous business reform activities as 

described below.

 

37The DBC members are: Deputy Chief Management Officer; Assistant Secretary of 

Defense (Acquisition); Assistant Secretary of Defense (Logistics & Materiel Readiness); 

Deputy Under Secretary of Defense (Installations & Environment); Director, Defense 

Procurement and Acquisition Policy; Deputy Chief Financial Officer; Deputy Comptroller 

(Programs/Budgets); Director, Personnel and Readiness Information Management, Office 

of the Under Secretary of Defense (Personnel & Readiness); Director of Intelligence, 

Surveillance, and Reconnaissance Programs, Office of the Under Secretary of Defense 

(Intelligence); Chief Operating Officer, Office of the Under Secretary of Defense (Policy); 

Office of Joint Chiefs of Staff (J6); Deputy DOD Chief Information Officer; the Department 

of the Army DCMO; Department of the Navy DCMO; Department of the Air Force DCMO; 

Comptroller and Director of Administration and Management (National Guard Bureau); 

Deputy Director, Program Evaluation (Cost Assessment and Program Evaluation); Office 

of the General Counsel; and the Director, Office of Business Transformation (Army).

38 Deputy Chief Management Officer Memorandum, Defense Business Council 

(Oct. 18, 2012).

DOD Is Collecting and 

Reporting BusinessRelated Performance 

Information and 

Undertaking Various 

Business-Related Reform 

Activities
Page 20 GAO-13-267 Defense Business Transformation

• DOD collects and reports performance information on other businessrelated plans, which may contain additional measures beyond those 

included in the SMP. For example, the Under Secretaries of Defense 

for Acquisition, Technology, and Logistics and the Comptroller 

respectively collect performance data on measures from separate 

business-related plans, such as the Logistics Strategic Plan and the 

Financial Improvement and Audit Readiness Plan. Similarly, the 

military departments collect information on the business priorities 

outlined in their respective business transformation or departmental 

plans.

• DOD also collects and reports business-related performance 

information as part of its annual performance plan—a plan called for 

by GPRA,39

performance plans

which requires federal agencies to, among other things, 

prepare annual that establish objective, 

quantifiable, and measurable goals for the upcoming fiscal year; 

describe how those goals contribute to the agency’s long-term 

strategic goals; as well as provide the indicators the agency will use to 

measure performance against the goals. The Office of the Secretary 

of Defense Principal Staff Assistants,40

• The Under Secretaries of Defense also report quarterly on progress 

toward achieving DOD’s five agency priority goals. GPRA, as 

amended, requires the heads of certain executive agencies to identify 

a subset of the performance goals from their agency performance 

plan as “agency priority goals.”

which include the Under 

Secretaries of Defense, collect and report quarterly on progress on 

measures for the department’s five strategic goals, one of which 

focuses on reforming DOD’s business and support functions.

41

 

3931 U.S.C. §1115.

These goals are intended to reflect 

the highest priorities of the agency. In addition, the “agency priority 

goals” are required to have ambitious targets that can be achieved 

within a 2-year period and are to have clearly defined quarterly 

40The Office of the Secretary of Defense Principal Staff Assistants are the Under 

Secretaries of Defense; the Assistant Secretaries of Defense; the Director, Operational 

Test and Evaluation; the General Counsel of the Department of Defense; the Inspector 

General of the Department of Defense; and the Office of the Secretary of Defense 

Directors or equivalents who report directly to the Secretary of Defense or the Deputy 

Secretary of Defense.

4131 U.S.C. §1120.
Page 21 GAO-13-267 Defense Business Transformation

milestones. According to DOD, these goals are intended to reflect 

priorities or near-term improvements that advance progress toward 

the longer-term outcomes identified in DOD’s performance plan. For 

example, DOD has a priority goal on audit readiness that sets a 

specific near-term milestone for improving the accuracy and reliability 

of the department’s recorded appropriated funds, which supports 

DOD’s broader performance plan goal of reforming the business and 

support functions of the department.

In addition, at any given time, DOD is undertaking and monitoring 

implementation of various reform activities across the department in order 

to improve business operations. For example, the Under Secretary of 

Defense for Acquisition, Technology and Logistics has multiple efforts 

underway to improve the department’s acquisition processes known as 

the Better Buying Power initiative. Similarly, the military departments have 

specific initiatives aimed at improving acquisition processes, enhancing 

financial auditability, and consolidating information technology 

investments. Further, the Office of the DCMO has taken steps to 

standardize approaches, such as establishing a new process for 

overseeing defense business system investments, collaborating with the 

Deputy Chief Financial Officer to develop guidance on improved financial 

information, and working with some combatant commands to improve 

visibility of contract information.
Page 22 GAO-13-267 Defense Business Transformation

According to its charter, the DBC is responsible for, among other things, 

overseeing DOD’s performance management programs.42 More 

specifically, the charter states that the DBC is to review DOD’s 

performance results to track progress against strategic goals and hold 

department leaders accountable for results. The DBC can also raise 

business and performance management issues to the DMAG as 

necessary. Our prior work has shown that management can promote the 

use of performance information by leading frequent, regular performancereview meetings to discuss progress made toward achievement of 

results, which can assist in identifying performance problems and in 

developing corrective actions.43

As discussed above, DOD collects performance information on SMP 

measures as well as from a variety of other sources. However, DOD has 

not used its governance structures to regularly review performance 

information or demonstrated how these structures will routinely integrate 

various sources of performance information to assess department-wide 

progress towards business goals. For example, DOD has assigned 

responsibility to the DBC to review performance results and track 

progress. As of December 2012, the Office of the DCMO has provided 

performance information to the DBC on two occasions. This information 

was focused on results related to the SMP and the annual performance 

plan. Specifically, in October 2012, the DBC reviewed summary 

information on third quarter of fiscal year 2012 performance results 

related to the SMP and DOD’s annual performance plan. With regard to 

the SMP, the summary information consisted of a slide that indicated that, 

of the 61 performance measures in the fiscal year 2012-2013 SMP, 31 

were on track, 11 were at risk of not meeting their targets, and 19 

measures were either unavailable or only reported annually. In addition, 

the slide named the SMP measures at risk of not meeting quarterly 

targets or not being reported by goal owners. This information did not 

include a discussion of why the SMP measures were at risk or 

According to DOD officials, the DBC will 

serve as the primary forum for discussing business related performance 

topics and for reviewing SMP quarterly results, and as necessary will 

raise issues to the DMAG for higher level review and action.

 

42Deputy Chief Management Officer Memorandum, Defense Business Council.

43GAO, Results-Oriented Management: Strengthening Key Practices at FEMA and Interior 

Could Promote Greater Use of Performance Information, GAO-09-676 (Washington, D.C.: 

Aug. 17, 2009).

DOD Has Not Fully 

Demonstrated How its 

Governance Structures 

Will Routinely Integrate 

Performance Information 

to Assess Departmentwide Progress against 

Business Goals and 

Achieve Measurable 

Results
Page 23 GAO-13-267 Defense Business Transformation 

unavailable. Similarly, with regard to the department’s annual 

performance plan, the DBC was provided with a slide that indicated that, 

of the 23 performance measures in the fiscal year 2012 annual 

performance plan related to the plan’s goal to reform business and 

support functions, 14 were on track and 9 were at risk of not meeting their 

targets. Prior to the establishment of the DBC, DOD relied on the Defense 

Business Systems Management Committee to review SMP performance 

information. The Defense Business Systems Management Committee 

reviewed SMP quarterly performance three times in fiscal year 2010 and 

twice in fiscal year 2011. 

The performance information provided to the DBC provides a partial 

picture of the department’s performance in various business areas, 

limiting the ability of DOD to assess overall progress towards business 

goals. For example: 

 Operational contract support: The fiscal year 2012-2013 SMP 

includes two measures related to its initiative on institutionalizing 

operational contract support. The third quarter fiscal year 2012 

performance results briefed to the DBC indicate that these measures 

are on track to meet their targets. However, the measures provide a 

partial picture of the department’s ongoing efforts to improve this 

business area. According to an official from the Office of the Under 

Secretary of Defense for Acquisition, Logistics, and Technology 

responsible for this initiative, the two measures reflect an important 

aspect of DOD’s work in the area of operational contract support, but 

there are other issues that DOD needs to address in this area that the 

measures do not cover. For example, one of the measures pertains to 

the extent to which a particular database captures contract 

information; however, according to the official, this database captures 

only a subset of DOD’s contractors, and DOD is currently using an 

additional system that is not mentioned in the SMP. Further, this 

official stated that there are a number of other efforts underway to 

improve operational contract support and that the measures in the 

SMP were intended to be a starting point for tracking progress in this 

business area. As a result, although the performance results briefed 

to the DBC indicate that the operational contract support initiative is 

on track, they do not address the department’s progress or potential 

challenges regarding other ongoing efforts that affect operational 

contract support. 
Page 24 GAO-13-267 Defense Business Transformation

• Operational and installation energy efficiency: The fiscal year 2012-

2013 SMP includes seven measures related to its goal on increasing 

operational and installation energy efficiency. In the third quarter fiscal 

year 2012 performance results briefed to the DBC, two of these 

measures were reported as being at risk of not meeting quarterly 

targets. According to officials from the Office of the Under Secretary of 

Defense for Acquisition, Logistics, and Technology —the goal owner 

responsible for operational and installation energy efficiency —these 

two measures only reflect a subset of the department’s overall efforts 

to improve operational energy efficiency. For example, according to 

the officials, there is an Operational Energy Strategy and an 

Operational Energy Implementation Plan that lay out the department’s 

approach to utilizing energy resources; however, the fiscal year 2012-

2013 SMP measures only cover a portion of what is outlined in the 

Operational Energy Strategy. Specifically, the fiscal year 2012-2013 

SMP addresses reducing operational energy consumption, but does 

not address issues related to operational energy supply and 

operational energy security, which are included in the Operational 

Energy Strategy. As a result, the performance results briefed to the 

DBC do not provide sufficient information to assess the department’s 

progress on ongoing efforts that affect operational energy efficiency.

• Supply chain management: Both the fiscal year 2012-2013 SMP and 

the department’s annual performance plan include four measures 

related to improving the supply chain process. The third-quarter fiscal 

year 2012 performance results briefed to the DBC indicated that these 

four measures were on track to meet their targets. In addition, the 

department’s annual performance plan contains two measures related 

to inventory management, but, according to fourth-quarter fiscal year 

2012 performance results on the annual performance plan, no 

information is available on these two measures until March 2013. 

However, as discussed earlier, these measures do not fully address 

the focus areas for improvement in GAO’s supply chain high-risk area, 

such as some aspects of asset visibility and requirements forecasting, 

and our work demonstrates that DOD continues to face problems in 

supply chain management. DOD has a number of efforts underway to 

improve supply chain management, including efforts undertaken 

under separate business-related plans such as the Logistics Strategic 

Plan. Information on the department’s progress under these efforts 

may not be fully reflected in the measures provided to the DBC, 

potentially limiting the department’s understanding of other challenges 

in supply chain management.
Page 25 GAO-13-267 Defense Business Transformation

Without integrating performance information from a broader range of 

sources to provide a more comprehensive picture of the department’s 

performance across key business areas and regularly reviewing this 

integrated information, DOD cannot be assured that it is well-positioned to 

assess the overall impact of its efforts to achieve business transformation.

DOD business operations, such as management of finances, the supply 

chain, support infrastructure, and weapon systems acquisition provide 

essential support to the warfighter. Longstanding management 

weaknesses related to these business operations adversely affect DOD’s 

efficiency and effectiveness and hinder its ability to free up resources for 

higher-priority needs. DOD has clearly taken steps to improve its 

management approach to business transformation, including further 

refining its SMP and collecting and reporting business-related 

performance information. However, additional information is needed in 

the plan to set strategic direction and therefore make it a more useful tool 

for decisionmakers as they target and implement reform initiatives.

Furthermore, developing a performance management approach that 

enables DOD to integrate and assess business-related performance 

information in a holistic manner will further enhance DOD’s ability to 

strategically focus the department’s transformation efforts on the highest 

priority areas, assess department-wide progress against business goals, 

take corrective action to stay on course, and ultimately demonstrate 

tangible improvements in key business areas, including those that we 

have designated as high risk.

To enhance DOD’s ability to set strategic direction for its business 

transformation efforts, better assess overall progress toward business 

transformation goals, and take any necessary corrective actions, we 

recommend that the Secretary of Defense direct the Deputy Secretary of 

Defense, in his capacity as the Chief Management Officer (CMO), to take 

the following actions:

• Ensure that the SMP includes a description of the key business 

transformation challenges to be addressed, sufficient context for why 

specific goals and strategies were chosen, and measures to address 

core activities.

• Further define DOD’s performance management approach, by 

outlining elements such as how it will consider the various sources of 

performance information along with SMP performance results to 

Conclusions

Recommendations for 

Executive Action
Page 26 GAO-13-267 Defense Business Transformation

monitor progress in achieving business goals and identify corrective 

actions and ensure this information is reviewed on a regular basis.

In written comments on a draft of this report, DOD partially concurred with 

our first recommendation and concurred with our second 

recommendation. The full text of DOD’s written comments is reprinted in 

appendix III. 

In its overall comments, DOD stated the department appreciates our 

recognition of the significant progress that has been made since first 

designating the DOD Approach to Business Transformation as a high-risk 

area in 2005. DOD noted that, at that time, we stated we made the 

designation because “DOD had not established management 

responsibility, accountability, and control over business transformationrelated activities and resources, and it lacked a plan for business 

transformation with specific goals, measures, and mechanisms to monitor 

progress.” DOD added that, while the department recognizes that more 

work is needed to fully mature the SMP and its performance management 

system, it believes that it has fully remediated each of these original root 

causes. We will be providing our assessment of the department’s 

progress in strengthening its approach to business transformation in the 

upcoming update to our high-risk series. 

DOD partially concurred with our first recommendation that the Secretary 

of Defense direct the Deputy Secretary of Defense to ensure that the 

SMP includes a description of the key business transformation challenges 

to be addressed, sufficient context for why specific goals and strategies 

were chosen, and measures to address core activities. In its comments, 

DOD stated that future releases of the SMP will include this information. 

However, DOD expressed concern that we appear to advocate for an 

expansive vision of the SMP that misunderstands the broader 

management framework surrounding it, and made a number of 

observations about our report. DOD stated that the SMP, and the 

subsequent tracking of the department’s performance against it, is not 

intended to capture every important business improvement activity. 

Rather, DOD stated, the SMP exists within the context of a broader family 

of plans that supports and aligns to the SMP’s highest-level business 

goals. It also noted that, while performance measures can be improved, it 

is important to acknowledge that even an improved SMP will include only 

a small set of measures and that other important measures will continue 

to be managed through the department’s established management 

framework. 

Agency Comments 

and Our Evaluation
Page 27 GAO-13-267 Defense Business Transformation

We agree that the SMP is part of DOD’s broader management approach. 

For example, our report recognizes that DOD utilizes a broader family of 

plans to guide its business transformation, and that the SMP showed 

improvement by linking to some of these plans. We also agree that the 

SMP will include a smaller set of measures than those used by various 

organizations throughout the department. For example, our report 

recognizes that DOD collects and reports progress against other business 

related plans, which may contain additional measures beyond those 

included in the SMP. While we agree the SMP does not need to include 

all possible measures, our prior work has shown that performance 

measures should focus on core activities that would help managers 

assess whether they are achieving organizational goals. However, we 

identified several examples where DOD’s measures in the SMP do not 

address core activities in some key business areas, such as asset 

visibility and requirements forecasting for the supply chain management 

area, and the availability of trained contract oversight personnel for the 

operational contract support area. To focus attention on those activities 

that are needed to address longstanding challenges and help DOD 

assess progress against its goals, we continue to believe that measures 

included in the SMP should reflect the core activities of the department’s 

business goals.

Further, DOD concurred with our second recommendation that the 

Secretary of Defense direct the Deputy Secretary of Defense to further 

define DOD’s performance management approach by outlining elements 

such as how it will consider the various sources of performance 

information along with SMP performance results to monitor progress in 

achieving business goals and identify corrective actions, and ensure that 

this information is reviewed on a regular basis. In its comments, DOD 

stated that the department will continue to improve and institutionalize 

operations of the Defense Business Council to provide unified direction 

and leadership to efficiently and effectively manage the DOD business 

mission area. As part of these efforts, GAO believes that DOD needs to 

identify specific steps it will take to integrate and regularly review various 

sources of performance information along with the SMP performance 

results to monitor progress and identify corrective actions. Without 

integrating performance information from a broader range of sources to 

provide a more comprehensive picture of the department’s performance 

across key business areas and regularly reviewing this integrated 

information, DOD cannot be assured that it is well-positioned to assess 

the overall impact of its business transformation efforts.
Page 28 GAO-13-267 Defense Business Transformation

We are sending copies of this report to the appropriate congressional 

committees. We are also sending copies to the Secretary of Defense, the 

Deputy Secretary of Defense, the DOD Deputy Chief Management Officer

(DCMO), and the Under Secretaries of the Army, Navy, and Air Force. In 

addition, the report will also be available on our website at 

http://www.gao.gov. If you or your staff have questions about this report, 

please contact me at (202)-512-9619 or pickups@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Key contributors to this report are 

listed in appendix IV.

Sharon L. Pickup

Director

Defense Capabilities and Management
Page 29 GAO-13-267 Defense Business Transformation

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Tom Carper

Chairman

The Honorable Tom Coburn

Ranking Member

Committee on Homeland Security 

and Governmental Affairs

United States Senate

The Honorable Howard P. McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Darrell E. Issa

Chairman

The Honorable Elijah Cummings

Ranking Member

Committee on Oversight 

and Government Reform

House of Representatives
Appendix I: Scope and Methodology

Page 30 GAO-13-267 Defense Business Transformation

To assess what additional steps the Department of Defense (DOD) has 

taken to incorporate key strategic planning elements into its business 

transformation plan, we evaluated relevant documentation and 

interviewed knowledgeable officials. Specifically, we reviewed DOD’s 

Fiscal Year 2012-2013 Strategic Management Plan, as well as DOD’s 

previous Strategic Management Plans for 2008, 2009, and Fiscal Year 

2011. We assessed whether the Fiscal Year 2012-2013 Strategic 

Management Plan included key elements that we have previously 

identified as needed for effective strategic planning, such as alignment 

with higher- and lower-level organizational plans, successful performance 

measures, inclusion of funding priorities, description of the scope of the 

problem, and inclusion of sufficient context. In assessing this plan, we 

also relied on prior and ongoing work we have conducted in individual 

DOD business areas, namely, DOD workforce management, financial 

management, business systems modernization, supply chain 

management, energy efficiency, support infrastructure management, 

weapon systems acquisition, and contract management. In addition, we 

reviewed other DOD documentation, such as the 2010 Quadrennial 

Defense Review; DOD’s annual performance plans for fiscal years 2011, 

2012, and 2013; DOD’s annual reports on business transformation to 

Congress; and relevant DOD directives and memos. We also reviewed 

strategic planning documents and annual reports to Congress issued by 

the business transformation offices of the Army, Navy, and Air Force. 

To assess the extent to which DOD has developed an approach for 

assessing department-wide progress toward business transformation 

goals, we reviewed relevant documents and interviewed senior DOD 

officials about the department’s performance assessment approach and 

its related governance mechanisms for monitoring business 

transformation progress. Specifically, we reviewed DOD’s Strategic 

Management Plans for 2009 and Fiscal Years 2012-2013; DOD’s annual 

performance plans for fiscal years 2011, 2012, and 2013; DOD’s quarterly 

performance results for these performance plans and for the Strategic 

Management Plan for fiscal years 2011 and 2012; DOD memos and 

directives; DOD guidance, meeting agendas, and briefing documents 

related to the Defense Business Systems Management Committee, the 

Defense Business Council, and the Deputy’s Management Action Group; 

and other business-related strategic plans, such as the Logistics Strategic 

Plan and the Defense Installations Strategic Plan. We also evaluated the 

department’s performance assessment approach in light of roles and 

responsibilities laid out in DOD’s 2009 Strategic Management Plan and in 

the Government Performance and Results Act Modernization Act of 1993, 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 31 GAO-13-267 Defense Business Transformation

as amended, and in light of key practices in results-oriented 

management, as identified in our previous work. 

We visited or contacted the following organizations during our review:

• Office of the Deputy Secretary of Defense;

• Office of the Deputy Chief Management Officer;

• Office of the Under Secretary of Defense (Acquisition, Technology 

and Logistics);

• Office of the Under Secretary of Defense (Personnel and Readiness);

• Office of the Under Secretary of Defense (Comptroller) / Chief 

Financial Officer;

• Office of the Chief Information Officer;

• Offices of the Chief Management Officers and Deputy Chief 

Management Officers of the departments of the Army, Navy, and Air 

Force; and

• Business Transformation Offices within the departments of the Army, 

Navy, and Air Force.

We conducted this performance audit from February 2012 through 

February 2013 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.
Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s 

(DOD) Fiscal Year 2012-2013 Strategic 

Management Plan

Page 32 GAO-13-267 Defense Business Transformation

Business Goal 1: Strengthen and right-size the Department of Defense (DOD) Total Workforce mix (military, civilian, and 

contracted support) to accomplish the DOD mission and sustain superior performance in a time of constrained resources 

Initiatives Measuresa

• Recruit and retain the right-quality skilled personnel to meet 

mission requirements

• Percent variance (3% to 0%) in Active Component end-strength

• Percent variance (3% to -3%) in Reserve Component end-strength

• Percent of Tier 1 (High School Diploma Graduates) non-prior 

service Active Component accessions

• Percent of Tier 1 (High School Diploma Graduates) non-prior 

service Reserve Component accessions

• Percent of Category I-IIIA non-prior service Active Component 

accessions

• Percent of Category I-IIIA non-prior service Reserve Component 

accessions

• Percent of Category IV non-prior service Active Component 

accessions

• Percent of Category IV non-prior service Reserve Component 

accessions

• Improve the readiness of the Civilian Expeditionary 

Workforce 

• Percent of Emergency-Essential and Non-Combat Essential 

Civilian Expeditionary Workforce employees qualified as “ready”, 

per the Civilian Expeditionary Workforce Readiness Index

• Increase the number of Special Forces personnel • Cumulative percent increase in DOD Special Forces and Navy 

SEAL personnel achieved

• Develop and institutionalize a transparent, systemic, 

decision-making process to appropriately balance the DOD 

Total Workforce to ensure mission readiness

• Develop the initiative, milestones, and measures, and provide to 

the DOD Deputy Chief Management Officer not later than 

September 30, 2011

Business Goal 2: Strengthen DOD Financial Management to respond to warfighter needs and sustain public confidence 

through auditable financial statements

Initiatives Measures

• Execute the Financial Improvement and Audit Readiness 

(FIAR) strategy and plans to achieve audit readiness by FY 

2017

• Percent DOD Statement of Budgetary Resources 

Appropriations Received validated

• Percent of DOD Funds Balance with Treasury validated

• Percent of DOD Statement of Budgetary Resources validated

• Percent of DOD mission-critical assets (Real Property, Military 

Equipment, General Equipment, Operating Materials and 

Supplies, and Inventory Balances) validated for existence and 

completeness

• By fiscal year 2012, once detailed supporting documentation is 

finalized, the DOD will ensure processing of Joint Urgent 

Operational Needs reprogrammings to meet a goal of approval 

within 2 congressional calendar months

• None provided

• By fiscal year 2012, DOD will achieve a commercial payment 

improper payment of 0.11 percent or less

• None provided

Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s (DOD) 

Fiscal Year 2012-2013 Strategic Management Plan 
Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s 

(DOD) Fiscal Year 2012-2013 Strategic 

Management Plan

Page 33 GAO-13-267 Defense Business Transformation

• By fiscal year 2013, the DOD will complete 16 interim 

milestones, which include validations of entities where 

Enterprise Resource Planning systems have been integrated, 

Major Defense Acquisition Programs, Fund Balance with 

Treasury Reconciliations, and Existence, and Completeness

• None provided

Business Goal 3: Build agile and secure information technology (IT) capabilities to enhance combat power and decisionmaking while optimizing value

Initiatives Measures

• Execute the DOD IT Enterprise Strategy and Roadmap • Reduce data centers by 18 percent in fourth quarter of fiscal 

year 2012 and an additional 12 percent in fourth quarter of 

fiscal year 2013

• Reduce networks by 10 percent in fourth quarter of fiscal year 

212 and an additional 10 percent in fourth quarter of fiscal year 

2013

• Percentage of services transitioned to, or designed as, 

Enterprise Services

• Strengthen the oversight of IT investments • Percentage of component networks compliance with resilient 

network architecture and standards by all new investments and 

technology refresh activities by fourth quarter of fiscal year 2015

• Integrate cyber security across the DOD Information Enterprise • Create and maintain strong boundary defenses across DOD 

NIPRNet Perimeter

• NIPRNet Hardening allowing robust protection capabilities

• Enforce Cryptographic Logon with PKI Hardware Tokens on 

SIPRNet

• Reduce time to effect DOD network configuration changes

• Develop long-term strategy to provide for and protect mission 

critical access to radio frequency spectrum

• None provided

Business Goal 4: Increase the buying power of the DOD acquisition system and processes, spanning requirements 

determination, development, procurement, and support to ensure that the force structure is modernized, recapitalized, and 

sustained within available resources

Initiatives Measures

• Implement and enforce affordability-based constraints on 

program acquisition and sustainment costs

• Mandate affordability as a requirement. Establish an 

affordability target as a Key Performance Parameter equivalent 

for all Acquisition Category I programs
Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s 

(DOD) Fiscal Year 2012-2013 Strategic 

Management Plan

Page 34 GAO-13-267 Defense Business Transformation

• Improve acquisition processes to reduce costs and improve 

productivity for major defense acquisition programs, major 

automated information systems, and services

• Drive productivity by establishing “Should Cost” targets as 

management tools for all Acquisition Category I programs

• Ensure service contracts that exceed $1 billion contain contract 

provisions to achieve productivity improvements and cost 

efficiencies throughout the contract term

• Make production rates economical and hold them stable

• Percent of enterprise level IT software and hardware national 

security and business systems deployed within 18 months of 

the capability business cases approval

• Number of Major Automated Information System “significant” 

breaches (equal to or greater than 15% of Acquisition Program 

Baseline total cost or with schedule slippages greater than 6 

months)

• Number of Major Automated Information System “critical” 

breaches (equal to or greater than 25% of Acquisition Program 

Baseline total cost or with schedule slippages of one year or 

more)

• Increase the use of competition to control costs of goods and 

services 

• Percentage of contract obligations that are competitively 

awarded

• Competitive strategy to be provided as part of each Acquisition 

Category program’s milestone acquisition strategy

• Improve the Department’s rate of successful execution of 

buying plans reflected in the Future Years Defense Program

• Increase the percentage of Major Defense Acquisition Program 

items procured relative to the quantities requested over the 

previous year

• Increase the return on investment on science and technology 

spending

• Percent of completing demonstration programs transitioning 

each year

• Identify and preserve essential capabilities in the U.S. defense 

industrial base

• Complete first phase of Sector-by-Sector Tier-by-Tier effort

• Identify and correct high visibility deficiencies in supplier base 

for critical weapon system components

• Create a clearing house and repository of industrial base 

analyses for the Department and make it available to all 

services and organizations to reduce redundant efforts and 

establish best practices

• Provide incentives to industry to seek economies that drive 

down DOD procurement and life-cycle costs

• Include the incentive strategy behind the fee strategy in all 

acquisition strategies for all Acquisition Category 1D programs 

tying incentives to production and sustainment cost control

• Increase the percentage of all efforts using Fixed Price 

Incentive Firm Target contracts that are moving from 

development to production and low-rate to full-rate production 

over the previous year’s percentage

• Increase the productivity of each military department’s 

acquisition system

• Demonstrate progress at reversing the trend to increasing unit 

costs in procured end items
Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s 

(DOD) Fiscal Year 2012-2013 Strategic 

Management Plan

Page 35 GAO-13-267 Defense Business Transformation

Business Goal 5: Increase operational and installation energy efficiency to lower risks to our warfighters, reduce costs, and 

improve energy security

Initiatives Measures

• Improve DOD’s capability to measure and verify individual 

facility energy use

• Increase the number of facilities with installed meters

• Improve timeliness and accuracy of DOD’s facility energy 

business decisions by exposing effective data to every 

authorized user in an automated and integrated manner

• Percent of enterprise energy systems fully utilizing the first 

module of the Enterprise Energy Information Management 

solution

• Reduce the risk from potential disruptions to the commercial 

grid to improve the energy security of installations

• Define and begin reporting standards for the following important 

energy security attributes:

• (1) Contingency of operational planning (fiscal year 2012);

• (2) Building design considerations (fiscal year 2012);

• (3) Metering (fiscal year 2012);

• (4) Smart grid systems and load management (fiscal year 

2013);

• (5) On-site generation (generators, renewables, etc.) (fiscal 

year 2013);

• (6) Microgrid and system islanding (fiscal year 2013).

• Pursue DOD procurement or lease of plug-in electric vehicles 

for non-tactical fleet

• Numbers of leased/purchased plug-in electric vehicles and 

charging stations

• Expand the use of third party financing for energy projects • Percentage of third party financed energy efficiency and 

renewable energy projects based on the DOD FY 2010 

baseline

• Effectively manage Operational Energy use to reduce 

consumption

• Establish an operational energy baseline for DOD based on 

credible, verifiable point-of-use data

• Establish and execute numerical energy reduction targets and 

timelines through rigorous data analysis and simulation efforts

Business Goal 6: Re-engineer/use end-to-end business processes to reduce transaction times, drive down costs, and 

improve service

• Initiatives • Measures

• Improve the supply chain end-to-end process • Perfect Order Fulfillment percentage for Defense Logistics 

Agency-stocked items

• Army Customer Wait Time

• Navy Customer Wait Time

• Air Force Customer Wait Time

• Improve the cycle time to hire civilian employees • Number of days for external civilian hiring (end-to-end timeline)

• Reduce support process transaction time at all levels • None provided
Appendix II: Business Goals, Initiatives, and 

Measures in the Department of Defense’s 

(DOD) Fiscal Year 2012-2013 Strategic 

Management Plan

Page 36 GAO-13-267 Defense Business Transformation

• Improve business operations through optimal use of defense 

business systems and the Business Enterprise Architecture

• Percentage of Defense Business Systems/Services 

represented in both the DOD Information Technology Portfolio 

Repository and the Business Enterprise Architecture

• Percentage of Defense Business Systems/Services 

represented in both the Select and Native Programming Data 

Input System – Information Technology and the Business 

Enterprise Architecture

• Percentage of Defense Business Systems/Services reporting to 

the Office of Management and Budget through the Business 

Enterprise Architecture

• Complete mapping of end-to-end processes (“Hire-to-Retire”

and “Procure-to-Pay” in fiscal year 2012-2013)

• Complete mapping of “Hire-to-Retire” and “Procure-to-Pay” endto-end processes by end of fiscal year 2012; Determine 

processes outcome measure to monitor process improvement; 

Establish performance reporting processes

• Determine next 2 end-to-end business processes to be 

completed by June 2013 and establish timelines for spirals of 

completion in fiscal year 2013

• Complete mapping of both selected end-to-end business 

processes, determine processes outcome measures to monitor 

process improvement; establish performance reporting 

processes

• Determine next 2 end-to-end business processes to be 

completed by end of fiscal year 2014 and establish timelines for 

spirals of completion in fiscal year 2014

Business Goal 7: Create agile business operations that plan for, support, and sustain contingency missions

Initiatives Measures

• Institutionalize operational contract support • Percent of geographic combatant command plans that have 

been reviewed/analyzed for Overseas Contingency Support 

Equities

• Percent of contracts and contractor population properly 

registered in the Synchronized Pre-Deployment and 

Operational Tracker

• Establish complete visibility on contingency business operations 

to achieve accountability and build a comprehensive common 

operating picture

• Percentage of system traceability for all DOD funds obligated in 

theater, electronically capturing DOD approved and funded 

requirements, obligations, entitlements, and disbursements

• Adapt business processes to include operational criteria in 

order to execute the Commander of the NATO International 

Security Assistance Force/U.S. Forces-Afghanistan campaign 

plan

• Percentage of Afghan host nation vendors that are vetted and 

have with available past-performance information at contract 

close-out

Source: DOD. 

a

DOD’s Fiscal Year 2012-2013 Strategic Management Plan also contains milestone data for many of 

the measures, but we did not include milestone data in this table. 
Appendix III: Comments from the Department 

of Defense

Page 37 GAO-13-267 Defense Business Transformation

Appendix III: Comments from the 

Department of Defense

Note: Page numbers in 

the draft report may differ 

from those in this report.
Appendix III: Comments from the Department 

of Defense

Page 38 GAO-13-267 Defense Business Transformation
Appendix III: Comments from the Department 

of Defense

Page 39 GAO-13-267 Defense Business Transformation
Page 40 GAO-13-267 Defense Business Transformation

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

In addition to the contact named above, James A. Reynolds, Assistant 

Director; Gabrielle A. Carrington; Laurie Choi; Grace Coleman; Aimee 

Elivert; Michael Silver; and Nicole Willems made key contributions to this 

report.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Acknowledgments

(351703)
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