DEFENSE 

HEADQUARTERS

Further Efforts to 

Examine Resource 

Needs and Improve 

Data Could Provide 

Additional 

Opportunities for Cost 

Savings

Report to Congressional Committees

March 2012

GAO-12-345

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-345, a report to 

congressional committees 

March 2012 

DEFENSE HEADQUARTERS 

Further Efforts to Examine Resource Needs and 

Improve Data Could Provide Additional

Opportunities for Cost Savings

Why GAO Did This Study

The Department of Defense’s (DOD) 

headquarters and support

organizations have grown since 2001, 

including increases in spending, staff, 

and numbers of senior executives and 

the proliferation of management layers. 

In 2010, the Secretary of Defense 

directed DOD to undertake a 

departmentwide initiative to reduce 

excess overhead costs. In response to 

a mandate, GAO evaluated the extent 

to which DOD (1) examined its 

headquarters resources for efficiencies 

and (2) has complete and reliable 

headquarters information available for 

use in making efficiency decisions. For 

this review, GAO analyzed documents 

and interviewed officials regarding 

DOD’s headquarters resources and 

information. 

What GAO Recommends

GAO recommends that DOD continue 

to examine opportunities to consolidate 

organizations and centralize functions 

and services and revise DOD 

Instruction 5100.73 to include all 

headquarters organizations, specify 

how contractors performing 

headquarters functions will be 

identified and included in reporting, 

clarify how components are to compile 

information needed to respond to 

headquarters reporting requirements, 

and establish time frames for 

implementing these actions. DOD 

concurred with GAO’s first 

recommendation and partially 

concurred with GAO’s second 

recommendation.

What GAO Found

The Department of Defense (DOD) has taken some steps to examine its 

headquarters resources for efficiencies, but additional opportunities for cost savings 

may exist by further consolidating organizations and centralizing functions. For 

purposes of the Secretary of Defense’s efficiency initiative, DOD components were 

asked to focus in particular on headquarters and administrative functions, support 

activities, and other overhead in their portfolios. DOD’s fiscal year 2012 budget 

request included several efficiencies related to headquarters organizations or 

personnel. GAO found that these efficiencies generally fell into two categories: (1) 

consolidating or eliminating organizations based on geographic proximity or span of 

control and (2) centralizing overlapping functions and services. The DOD efficiencies 

that GAO reviewed to reduce headquarters resources are expected by DOD to save 

about $2.9 billion through fiscal year 2016, less than 2 percent of the $178 billion in 

savings DOD projected departmentwide. GAO’s work indicates that DOD may be 

able to find additional efficiencies by further examining opportunities to consolidate 

organizations or centralize functions at headquarters. DOD may not have identified all 

areas where reductions in headquarters personnel and operating costs could be 

achieved because the department was working quickly to identify savings in the fiscal 

year 2012 budget and used a top-down approach that identified several targets of 

opportunity to reduce costs, including headquarters organizations, but left limited time 

for a detailed data-driven analysis. In February 2012, DOD proposed $61 billion in 

additional savings over fiscal years 2013 to 2017, but provided limited information as 

to what portions of these savings were specific to headquarters. Without systematic 

efforts to reexamine its headquarters resources on a more comprehensive basis, 

DOD may miss opportunities to shift resources away from overhead. 

An underlying challenge facing DOD is that it does not have complete and reliable

headquarters information available for use in making efficiency assessments and 

decisions. According to GAO’s internal control standards, an agency must have 

relevant, reliable, and timely information in order to run and control its operations. 

DOD Instruction 5100.73 guides the identification and reporting of headquarters 

information. However, GAO found that this instruction is outdated and does not

identify all headquarters organizations, such as component command headquarters 

at U.S. Africa Command and certain Marine Corps headquarters. Also, although 

some of the services and functions performed by contractors could be considered as 

headquarters activities, the instruction does not address the tracking of contractors 

that perform these functions. DOD has delayed updating the instruction to allow time 

for components to adjust to the statutory changes enacted by Congress in 2009 that 

created new headquarters reporting requirements. According to DOD officials, everchanging statutory reporting requirements have contributed to DOD’s failure to report 

to Congress about the numbers of headquarters personnel. As the department did 

not have reliable headquarters data, DOD compiled related information from other 

sources to inform its 2010 efficiency initiative. Because of the short timelines given to 

identify efficiencies and limitations on the sharing of information, this information was 

not validated before decisions were made. As a result, some of the information used 

to identify headquarters-related efficiencies was inaccurate and some adjustments in 

resource allocations will have to be made during implementation to achieve planned 

savings. Looking to the future, until DOD has updated its instruction to ensure that it 

has complete and reliable headquarters data, the department will not have the 

information it needs, which could affect its efforts to direct resources to its main 

priorities during future budget deliberations. 

View GAO-12-345. For more information, 

contact John Pendleton at (404) 679-1816 or 

pendletonj@gao.gov. 
Page i GAO-12-345 Defense Headquarters

Letter 1 

Background 5

DOD’s Efficiencies Include Headquarters-Related Reductions, but 

Additional Opportunities for Cost Savings May Exist 7

Lack of Complete and Reliable Headquarters Information Hinders 

Efforts to Identify and Implement Efficiencies 13

Conclusions 17

Recommendations for Executive Action 17

Agency Comments and Our Evaluation 18

Appendix I Scope and Methodology 25

Appendix II Descriptions of Headquarters-Related Efficiency Initiatives 29

Appendix III Examples of DOD’s Headquarters Organizations 35

Appendix IV Comments from the Department of Defense 41

Appendix V GAO Contact and Staff Acknowledgments 44

Tables

Table 1: DOD Efficiency Initiatives and Projected Savings Planned 

for Fiscal Years 2012 through 2016 6

Table 2: Examples of Headquarters-Related Efficiency Initiatives 

DOD Is Implementing and DOD’s Estimate of Personnel 

and Cost Savings 8

Figures

Figure 1: Examples of DOD’s Headquarters Organizations 3

Contents
Page ii GAO-12-345 Defense Headquarters

Figure 2: Examples of Headquarters-Related Efficiency Initiatives 

DOD Is Implementing by Consolidating or Eliminating 

Organizations Based on Geographic Proximity or Span of 

Control 10

Figure 3: Examples of Headquarters-Related Efficiency Initiatives 

DOD Is Implementing by Centralizing Overlapping 

Functions and Services 11

Figure 4: Department of the Air Force 35

Figure 5: Department of the Army 36

Figure 6: Department of the Navy 37

Figure 7: Office of the Secretary of Defense 38

Figure 8: Unified Combatant Commands 39

Figure 9: The Joint Chiefs of Staff 40

Abbreviation

DOD Department of Defense.

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-12-345 Defense Headquarters

United States Government Accountability Office 

Washington, DC 20548

March 21, 2012

Congressional Committees

In 2010, the Secretary of Defense expressed concerns about the 

dramatic growth in the Department of Defense’s (DOD) headquarters and 

support organizations that had occurred since 2001, including increases 

in spending, staff, and numbers of senior executives and the proliferation 

of management layers. In 2010, the Secretary of Defense also directed 

DOD to undertake a departmentwide initiative to assess how the 

department is staffed, organized, and operated, with the goal of reducing 

excess overhead costs and reinvesting these savings toward sustainment 

of DOD’s current force structure and modernizing its weapons portfolio. 

This effort identified efficiency initiatives totaling about $178 billion in 

projected savings across the military departments and other DOD 

components from fiscal year 2012 through fiscal year 2016, about 

$24.1 billion of which is estimated to be achieved in fiscal year 2012. 

DOD’s efficiency initiatives included a broad range of efforts, such as 

holding the civilian workforce at fiscal year 2010 levels; reducing the 

numbers of senior leaders, both officer and civilian; and reducing reliance 

on service support contractors. Some headquarters were planned to be 

closed and their missions and functions absorbed in other organizations, 

while others were reorganized. More recently, in January 2012, the 

administration released strategic guidance to direct defense priorities and 

spending over the coming decade. It lays out several principles to guide 

the development of DOD’s force structure, such as reducing DOD’s cost 

of doing business by finding further efficiencies in headquarters and other 

overhead.

DOD has multiple layers of headquarters management with complex, 

overlapping relationships. Such layers include, but are not limited to, the 

Office of the Secretary of Defense, the Joint Staff, and portions of the 

military departments, defense agencies, and DOD field activities. In DOD 

Instruction 5100.73, Major DOD Headquarters Activities, DOD defines 

those headquarters whose primary mission is to manage or command the 

programs and operations of DOD and its components, and their major 

military units, organizations, or agencies as major DOD headquarters 

 
 

Page 2 GAO-12-345 Defense Headquarters

activities.1 These headquarters are primarily responsible for overseeing, 

directing, and controlling subordinate organizations or units; these 

responsibilities include developing guidance, reviewing performance, 

allocating resources, conducting mid-to long-range budgeting, and, in the 

case of combatant headquarters, planning for the employment of U.S. 

military forces. See figure 1 for examples of DOD’s multiple layers of 

headquarters organizations.

 

1

Department of Defense Instruction 5100.73, Major DOD Headquarters Activities (Dec. 1, 

2007).
Page  GAO-12-345 Defense Headquarters

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their functions, or their legal or command 

and control relationships. In some organizations only the headquarters is considered a major DOD headquarters activity, while in 

other organizations only some personnel perform major DOD headquarters activities’ functions.

Figure 1: Examples of DOD’s Headquarters Organizations

Source: GAO analysis of DOD data.

Secretary

of Defense

Deputy Secretary

of Defense

Office of the 

Secretary of Defense

Joint Chiefs

of Staff 

Military

departments

Unified combatant 

commands

Interactivity instructions

Click on a gray box to expand the selection. Click the “x” to clear. See appendix III for the non-interactive version. 
 

Page 4 GAO-12-345 Defense Headquarters

Our prior work has shown that DOD has long-standing challenges 

identifying headquarters-related personnel and operating costs, which 

can affect DOD’s ability to manage its resources. For example, in October 

1997, we reported that the number of personnel and costs associated 

with major DOD headquarters activities were significantly higher than 

DOD reported to Congress because of inconsistencies in how DOD 

tracked major DOD headquarters activity data.2 In subsequent work in 

February 1999 and September 2000, we reported that DOD continued to 

have problems accurately accounting for personnel and there were 

inconsistencies in how DOD was designating positions as headquarters.3

A statutory mandate directs us to conduct routine investigations to identify 

federal programs, agencies, offices, and initiatives with duplicative goals 

and activities within departments and governmentwide.

In response, we made a number of recommendations to improve the 

accuracy of DOD’s headquarters-related resources, to which DOD 

generally agreed. 

4

To conduct this work, we selected and assessed DOD efficiency

initiatives related to headquarters based on our analysis of information 

included with DOD’s fiscal year 2012 budget request and the Secretary of 

Defense’s Track Four Efficiency Initiatives Decisions memo. We selected 

efficiency initiatives affecting components within the military departments 

and the Office of the Secretary of Defense as well as the defense 

agencies, the DOD field activities, and the combatant commands. We did 

not include some headquarters-related efficiency initiatives within the 

scope of our review. For example, we did not include the 

In response to 

this mandate, this report evaluates the extent to which DOD (1) examined 

its headquarters resources for efficiencies and (2) has complete and 

reliable headquarters information available for use in making efficiency 

decisions. 

 

2

GAO, Defense Headquarters: Total Personnel and Costs Are Significantly Higher Than 

Reported to Congress, GAO/NSIAD-98-25 (Washington, D.C.: Oct. 30, 1997).

3

GAO, Defense Headquarters: Status of Efforts to Reduce Headquarters Personnel,

GAO/NSIAD-99-45 (Washington, D.C.: Feb. 17, 1999), and Defense Headquarters: Status 

of Efforts to Redefine and Reduce Headquarters Staff, GAO/NSIAD-00-224 (Washington, 

D.C.: Sept. 6, 2000).

4

Pub. L. No. 111-139, § 21 (2010). 
 

Page 5 GAO-12-345 Defense Headquarters

disestablishment of Joint Forces Command because we have ongoing 

work examining this efficiency initiative. To assess the extent to which 

DOD examined its headquarters resources for efficiencies we obtained 

and analyzed documentary and testimonial evidence on selected 

headquarters-related efficiency initiatives announced by DOD, including 

the analysis conducted to identify headquarters-related resources and the 

approach taken to develop headquarters-related efficiency initiatives. To 

assess the extent to which DOD has complete and reliable headquarters 

information available for use in making efficiency decisions, we obtained 

and analyzed documentary and testimonial evidence from DOD 

components detailing the policies and procedures, as well as roles and 

responsibilities, for tracking and reporting headquarters personnel and 

operating costs. We also obtained and analyzed documentary and 

testimonial evidence on the processes and data DOD components used 

to identify their headquarters-related resources when developing selected 

headquarters-related efficiency initiatives. For details on our scope and 

methodology, see appendix I. 

We conducted this performance audit from September 2010 to March 

2012 in accordance with generally accepted government auditing 

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

obtain sufficient, appropriate evidence to provide a reasonable basis for 

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

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

In September 2011, we reported on DOD’s approach to examining itself 

for efficiencies, including the parameters used to guide the Secretary of 

Defense’s efficiency initiative.5

 

5

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

Be Shared Governmentwide, 

The initiative targeted both shorter and 

longer-term improvements in a wide range of areas across the 

department, including its organizational structure, business practices, and 

modernization programs, and instituted reductions to its personnel levels. 

As part of its fiscal year 2012 budget request, DOD projected savings of 

$178 billion to be realized over a 5-year period beginning in fiscal year 

2012, as shown in table 1.

GAO-11-908 (Washington, D.C: Sept. 30, 2011).

Background
 

Page 6 GAO-12-345 Defense Headquarters

Table 1: DOD Efficiency Initiatives and Projected Savings Planned for Fiscal Years 

2012 through 2016

Dollars in millions

DOD efficiency initiatives

Fiscal year 

2012 

savings

Fiscal years 

2012-2016 

savings

Army efficiency initiatives 2,665 29,540

Navy efficiency initiatives 4,302 35,070 

Air Force efficiency initiatives 3,384 33,284

Special Operations Command efficiency initiatives 389 2,280

Civilian workforce freeze 2,510 13,277

Defense agency, Office of Secretary of Defense and 

combatant command baseline review

1,334 11,237

Health system reforms 179 6,901

Service support contracts reduction 812 5,696

Joint Forces Command disestablishment 292 1,870

Reports, studies, boards and commissions reduction 275 1,249

Intelligence Community review 41 372

Business Transformation Agency disestablishment 98 337

Civilian Senior Executive position reduction (4) 111

Assistant Secretary of Defense (Networks and 

Information Integration) and Joint Staff J6 (Command, 

Control, Communications, and Computer Systems) 

disestablishment

13 65

General/flag officer reduction - 11

Economic and other adjustments (includes General 

Schedule pay freeze in fiscal year 2012)

7,841 37,141

Total 24,131 178,441

Source: Department of Defense Efficiency Initiatives Fiscal Year 2012 Budget Estimates. 

Notes: DOD calculated these efficiencies by comparing the fiscal year 2011 President’s Budget 

request to the fiscal year 2012 President’s Budget request. While DOD is reporting these projected 

savings, we did not independently verify this information, including whether DOD’s projections 

reflected cost savings or cost avoidances. 

Of the $178 billion in projected savings proposed by the department, 

$100 billion identified by the military departments and Special Operations 

Command was reinvested in high-priority needs and the remaining 

$78 billion was reduced from DOD’s budget from fiscal years 2012 

through 2016. This reflects a 2.6 percent reduction from DOD’s fiscal year 

2011 budget submission over the same period. Some of these savings 

and reductions were from headquarters-related resources, such as 

personnel and operating costs.
 

Page 7 GAO-12-345 Defense Headquarters

DOD Instruction 5100.73 establishes a system to identify and manage the 

number and size of major DOD headquarters activities. As previously 

stated, the instruction defines major DOD headquarters activities as those 

headquarters whose primary mission is to manage or command the 

programs and operations of DOD and its components and their major 

military units, organizations, or agencies.6 Since the mid-1980s, Congress 

has enacted statutory limits on the number of major DOD headquarters 

activity personnel, to include those in the Office of the Secretary of 

Defense; the headquarters of the combatant commands; the Office of the 

Secretary of the Army and the Army Staff; the Office of the Secretary of 

the Air Force and the Air Staff; the Office of the Secretary of the Navy, the 

Office of the Chief of Naval Operations, and the Headquarters, Marine 

Corps; and the headquarters of the defense agencies and DOD field 

activities.7

DOD has taken some steps to examine its headquarters resources for 

efficiencies, but additional opportunities for cost savings may exist by 

further consolidating organizations and centralizing functions. For the 

purposes of the Secretary of Defense’s efficiency initiative, DOD 

components, including the military departments, were asked to focus in 

particular on headquarters and administrative functions, support activities, 

and other overhead in their portfolios. DOD’s fiscal year 2012 budget 

request, describing its planned efficiency initiatives for fiscal years 2012 

to 2016, included several initiatives related to headquarters organizations 

or personnel. Two organizations, Joint Forces Command and the 

Business Transformation Agency, were disestablished and some of their 

functions were absorbed in other organizations. DOD estimated that 

closing these two organizations would save approximately $2.2 billion 

In addition, Congress has enacted various reporting 

requirements related to major DOD headquarters activity personnel. As 

previously stated, our prior work has shown that DOD has encountered 

challenges both in identifying major DOD headquarters activity personnel 

and in reporting this information to Congress.

 

6

Department of Defense Instruction 5100.73, Major DOD Headquarters Activities. 

7

Applicable limits to major DOD headquarters personnel are included in sections 143, 194, 

3014, 5014, and 8014 of Title 10 of the U.S. Code. In some circumstances, statutory 

waivers, exceptions, exemptions, and authorities to adjust those limits may apply. For 

example, acquisition personnel hired under an expedited hiring authority are exempt from 

the statutory baseline personnel limitations, established under the previously mentioned 

sections of Title 10. 

DOD’s Efficiencies 

Include HeadquartersRelated Reductions, 

but Additional 

Opportunities for 

Cost Savings May 

Exist
 

Page 8 GAO-12-345 Defense Headquarters

through fiscal year 2016. Table 2 provides other examples of 

headquarters-related efficiency initiatives DOD is implementing in the 

military departments and in other DOD components that we reviewed. 

See appendix II for a further description of these headquarters-related 

efficiency initiatives.

Table 2: Examples of Headquarters-Related Efficiency Initiatives DOD Is Implementing and DOD’s Estimate of Personnel and 

Cost Savings

DOD component Examples of efficiencies DOD is implementing Estimated personnel and cost savings

Navy Merging the U.S. Fleet Forces Command and U.S. 

2nd Fleet staff because the missions of the two 

organizations were found to have converged over 

time, an integrated staff could better adapt to 

changing missions, and doing so would eliminate 

redundant personnel.

Eliminated 344 military positions for 

estimated savings of $10.5 million in fiscal 

year 2012 and expected cumulative savings 

of $100.8 million by fiscal year 2016.

Reducing fleet shore personnel at U.S. Pacific 

Fleet and U.S. Fleet Forces Command based on 

the finding that more effective training has 

decreased shore manpower needs and personnel 

could be moved to higher-priority missions.

Reduced fleet shore military personnel by 5 

percent for estimated savings of $88.3 million 

for fiscal year 2012 and expected cumulative 

savings of $858.1 million by fiscal year 2016.

Air Force Removing Air Force installation service support 

functions, such as civil engineering, environmental 

quality and planning programs, real property 

programs, and family support services, among 

others, from commands and centralizing them at 

field operating agencies or Air Force headquarters.

Expected to eliminate 36 positions for an 

estimated savings of $2.4 million in fiscal year 

2012 and expected cumulative savings of 

$148.1 million and 354 positions by fiscal 

year 2016.

Consolidate two air and space operations centers 

and two numbered air forces with other Air Force 

commands by merging them to achieve greater 

oversight and reduce layers of headquarters 

management.

Eliminated three headquarters organizations 

and associated support staff removing 256 

positions for an estimated savings of 

$4.8 million for fiscal year 2012 and total 

estimated savings of $143.7 million by fiscal 

year 2016.

Army Streamlining installation management services and 

programs.

Reducing, eliminating, and rescoping 

services and programs across the Army’s 

installations, with an estimated savings of 

$1.1 billion for fiscal years 2012 to 2016. 

Office of the Secretary of 

Defense

Consolidating the Office of the Secretary of 

Defense for Policy’s technical support and 

administrative and enterprise services by reducing 

contractors. 

Reduction of 110 contractor personnel for an 

estimated savings of $14.6 million in fiscal 

year 2012 and expected cumulative savings 

of $77.7 million by fiscal year 2016. 

Defense agency Eliminating paper leave and earning statements, 

reducing manual processing through increase in 

electronic commerce, and eliminating contract and 

civilian personnel at Defense Finance and 

Accounting Service.

Elimination of 227 contract personnel and 6 

civilian positions in combination with other 

efficiency initiatives for an estimated savings 

of $41.3 million in fiscal year 2012 and 

expected cumulative savings of 

$206.5 million from fiscal year 2012 to 2016. 
 

Page 9 GAO-12-345 Defense Headquarters

DOD component Examples of efficiencies DOD is implementing Estimated personnel and cost savings

DOD field activity Consolidate Washington Headquarters Service 

from 12 to 8 organizational elements by merging 

directorates that perform similar services and 

functions and eliminating lower-priority missions. 

Elimination of 52 civilian positions for an 

estimated savings of $7.2 million for fiscal 

year 2012 and expected cumulative savings 

of $57 million for fiscal years 2012 to 2016.

Combatant commands Reducing lower priority missions, consolidating 

staff functions at U.S. Northern Command and 

North American Aerospace Defense Command, 

eliminating support billets and reducing reliance on 

service support contractors. 

Elimination of 13 support positions for an 

estimated savings of $12.6 million for fiscal 

year 2012 and expected cumulative savings 

of $87.8 million from fiscal year 2012 to 2016. 

Eliminating positions and reducing expenditures at 

headquarters by 10 percent at U.S. European 

Command by removing resources from lowerpriority missions and programs. 

Elimination of 86 military and civilian positions 

for an estimated saving of $17 million in fiscal 

year 2012 and $84.8 million by fiscal year 

2016. 

Source: GAO analysis of DOD data.

In compiling and comparing the headquarters-related efficiency initiatives 

from across the department, we found that the approach that was taken 

and level of detail differed markedly across the various DOD components. 

For instance, some DOD components focused on specific organizations 

and provided detail about planned actions, while others promised 

significant reductions but provided only broad descriptions of what is 

planned to achieve them. For example, the Navy provided detailed 

information on the number of positions that will be eliminated and 

estimated cost savings for the Navy’s merger of U.S. Fleet Forces 

Command and U.S. 2nd Fleet staff. In contrast, the Army planned more 

than $1 billion in savings by streamlining its installation management 

services and programs but did not specify how this will be achieved.

In reviewing these headquarters-related efficiency initiatives, however, we 

found that they generally fell into two categories: (1) consolidating or 

eliminating organizations based on geographic proximity or span of 

control, and (2) centralizing overlapping functions and services (see figs. 

2 and 3).8

 

8

Span of control refers to the number of subordinates or activities under the control of a 

single commander.
 

Page 10 GAO-12-345 Defense Headquarters

Figure 2: Examples of Headquarters-Related Efficiency Initiatives DOD Is 

Implementing by Consolidating or Eliminating Organizations Based on Geographic 

Proximity or Span of Control
 

Page 11 GAO-12-345 Defense Headquarters

Figure 3: Examples of Headquarters-Related Efficiency Initiatives DOD Is 

Implementing by Centralizing Overlapping Functions and Services

The DOD efficiencies that GAO reviewed to reduce headquarters 

resources are expected by DOD to save about $2.9 billion through fiscal 

year 2016, less than 2 percent of the $178 billion in savings DOD 

projected departmentwide. Our work indicates that DOD may be able to 

find additional efficiencies by further examining opportunities to 

consolidate organizations or centralize functions at headquarters. In its 

January 2012 strategic guidance, DOD recognized that it would need to 

find further efficiencies in headquarters and other overhead in order to 

meet the demands of the new strategy. To achieve these efficiencies, 

DOD could consider a number of different options, including reducing 

organizational layers, consolidating administrative offices, and simplifying 

management processes. However, the department does not have a 

definition of what constitutes overhead or standards for assessing 

headquarters resources. Given the size and complexity of the 

department, setting common standards would be difficult. Nonetheless, 

DOD officials we spoke with recognized that additional efficiencies could 

be achieved by further examination of headquarters resources. The 
 

Page 12 GAO-12-345 Defense Headquarters

following are examples of areas that officials said DOD was considering 

for potential efficiencies. 

• According to Navy officials, the Deputy Under Secretary of the Navy is 

having ongoing discussions with Navy components and conducting 

analysis to identify potential future efficiencies, such as consolidating 

or streamlining facilities management services and functions provided 

at various Navy installations. Officials commented that these issues 

are complicated and that as of December 2011, the estimates of the 

savings had not been determined.

• The Army is, among other things, implementing and integrating 

previous efforts approved by the Secretary of Army, such as planning 

to optimize materiel development and sustainment by eliminating 

overlapping or redundant responsibilities between the Army’s program 

executive offices and the Army Materiel Command. The Army expects 

this effort to include reductions in personnel for an estimated annual 

savings of $3 billion by the end of fiscal year 2015.

• The Air Force is currently examining opportunities to provide better 

command and control over air and space operations centers. As of 

December 2011, Air Force officials could not provide further details 

regarding this effort because decisions were still pending.

• Defense Finance and Accounting Service officials are examining 

travel and supplies, postage and printing, and other areas to identify 

additional savings, which it estimates at $63 million by fiscal year 

2017.

DOD may not have identified all areas where reductions in headquarters 

personnel and operating costs could be achieved because, according to 

DOD officials, the department was working quickly to identify savings in 

the fiscal year 2012 budget. To accomplish this quickly, DOD used a topdown approach that identified several targets of opportunity to reduce 

costs, including headquarters organizations, but left limited time for a 

detailed data-driven analysis. In February 2012, in DOD’s fiscal year 2013 

budget request, the department proposed an additional $61 billion in 

savings from fiscal years 2013 to 2017 through reductions in overhead 

and support requirements, and improved business practices. However, it 

provided limited information as to what portions of these savings were 

specific to headquarters and how they would be achieved. Without 

systematic efforts to reexamine its headquarters resources on a more 

comprehensive basis, DOD may miss opportunities to shift resources 

away from overhead.
 

Page 13 GAO-12-345 Defense Headquarters

DOD does not have complete and reliable major DOD headquarters 

activity data available for use in making efficiency assessments and 

decisions because the department continues to have challenges in 

identifying and tracking personnel and other resources devoted to

headquarters. According to our internal control standards, an agency 

must have relevant, reliable, and timely information in order to run and 

control its operations.9 In reviewing DOD’s guiding instruction we found 

that it does not identify all current major DOD headquarters activity 

organizations or address the tracking of contractors that perform 

headquarters functions. DOD officials stated that they have delayed 

updating the instruction to allow time for components to adjust to the 

statutory changes enacted by Congress in 2009 that created new

reporting requirements for major DOD headquarters activity personnel. 

According to DOD officials, the ever-changing statutory reporting 

requirements have contributed to DOD’s failure to report to Congress 

about the numbers of headquarters personnel. As the department did not 

have reliable major DOD headquarters activity data, DOD gathered 

information from multiple sources to compile headquarters-related 

information for the Secretary of Defense’s 2010 efficiency initiative. Some 

of the information DOD compiled to identify headquarters-related 

efficiency initiatives was inaccurate, and as a result, some adjustments 

will need to be made during implementation to achieve planned savings. 

Without a proper accounting of headquarters personnel and operating 

costs, to include contractors, DOD will not have complete and reliable 

information on the universe of headquarters resources. Complete and 

reliable headquarters information will be even more important in 

supporting an examination of DOD resources in light of changes in DOD’s 

strategic priorities for the next decade. 

According to our internal control standards, an agency must have 

relevant, reliable, and timely information in order to run and control its 

operations. This information is required to develop external reporting and 

to make operating decisions, monitor performance, and allocate 

resources. Moreover, we have reported that accurate, timely, and useful 

 

9

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

Lack of Complete and 

Reliable Headquarters 

Information Hinders 

Efforts to Identify and 

Implement 

Efficiencies

The DOD Instruction Does 

Not Include All Major DOD 

Headquarters Activity 

Organizations or Address 

Tracking of Contractors 
 

Page 14 GAO-12-345 Defense Headquarters

financial management information is essential for sound management 

analysis, decision making, and reporting within DOD.10

DOD Instruction 5100.73, Major DOD Headquarters Activities, establishes

a system to identify and manage the number and size of major DOD 

headquarters activities. The Director of Administration and Management, 

within the Office of the Secretary of Defense, is responsible for issuing 

guidance, as required, and maintaining the list of major DOD 

headquarters activity organizations. However, significant revisions to the 

instruction have not been made since 2007 and the instruction does not 

identify all current major DOD headquarters activity organizations. For 

example, Navy officials noted several Marine Corps components, which 

are parallel to Navy components in the major DOD headquarters activity 

functions they perform, are not included in the instruction. Also, the 

instruction does not reflect the component command headquarters of the 

Departments of Navy and Air Force at U.S. Africa Command, which were 

established in October 2008 and October 2009, respectively, and would 

likely be considered major DOD headquarters activities. 

 

Additionally, the instruction does not explicitly address how and to what 

extent the thousands of contractors who work at headquarters around 

DOD should be included as part of its major DOD headquarters activity 

data. DOD has increasingly relied on contractors to provide a range of 

services at headquarters, such as management and administrative 

support, information technology, and base operations support.11

 

10GAO, High-Risk Series: An Update, 

Some of 

the services and functions performed by contractors could be considered 

part of major DOD headquarters activities. Our work over the past decade 

on DOD’s contracting activities has noted the need for DOD to obtain 

better data on its contracted services and personnel to enable it to make 

more informed management decisions, ensure departmentwide goals and 

objectives are achieved, and have the resources to achieve desired 

GAO-11-278 (Washington, D.C.: February 2011).

11Headquarters-related activities performed by contractors would not include activities 

classified as inherently governmental functions that must be performed by federal 

employees. Examples of inherently governmental functions, set out in subpart 7.503 of the 

Federal Acquisition Regulation, include the direct conduct of criminal investigations, the 

conduct of foreign relations, the direction and control of intelligence and 

counterintelligence operations, the determination of agency policy, and the determination 

of federal program priorities for budget requests. 
 

Page 15 GAO-12-345 Defense Headquarters

outcomes, which could include reducing overhead. In January 2011, we 

reported that further action was needed by DOD to better implement its 

requirements for conducting an inventory of its service contractor 

activities and made two recommendations, including that DOD develop a 

plan of action to collect manpower data from contractors.12

The root of the problem is that DOD Instruction 5100.73, which guides the 

identification and reporting of headquarters information, is outdated. DOD 

officials stated that they have delayed updating the instruction to allow 

time for components to adjust to the statutory changes enacted by 

Congress in 2009 that created new reporting requirements for major DOD 

headquarters activity personnel. According to DOD officials, the everchanging statutory reporting requirements have contributed to DOD’s 

failure to report to Congress about the numbers of headquarters 

personnel. DOD is required to report major DOD headquarters activities 

annually in the Defense Manpower Requirements Report, which is to be 

submitted to Congress no later than 45 days after the President’s 

budget.

In response to 

GAO’s report, DOD has outlined its approach for collecting these data, 

but does not anticipate complete reporting until 2016.

13

 

12GAO, Defense Acquisitions: Further Action Needed to Better Implement Requirements 

for Conducting Inventory of Service Contract Activities, 

Specifically, DOD is to report the number of military and civilian 

personnel assigned to major DOD headquarters activities in the 

preceding fiscal year and estimates of such numbers for the current and 

subsequent fiscal year. It must also include a summary of the 

replacement of contract work years providing support to major DOD 

headquarters activities with military or civilian personnel during the 

preceding fiscal year, including an estimate of the number of contract 

work years associated with the replacement of contracts performing 

inherently governmental or exempt functions. DOD must also report on 

the plan for continued review of contract personnel supporting major DOD 

headquarters activities for possible conversion to military or civilian 

positions in accordance with other legal requirements. Additionally, DOD 

GAO-11-192 (Washington, D.C.: 

Jan. 14, 2011). 

13National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, §1109 

(2009), codified at 10 U.S.C. §115a. The Defense Manpower Requirements Report is an 

annual report to Congress that provides DOD’s manpower requirements, to include those 

for military personnel and civilians, as reflected in the President’s budget request for the 

current fiscal year.
 

Page 16 GAO-12-345 Defense Headquarters

must report the amount of any adjustment in personnel limits made by the 

Secretary of Defense or the secretary of a military department and, for

each adjustment made pursuant to section 1111(b)(2) of the fiscal year 

2009 National Defense Authorization Act, the purpose of the 

adjustment.14

As the department did not have reliable major DOD headquarters activity 

data, DOD gathered information from multiple sources to compile 

headquarters-related information for the Secretary of Defense’s 2010 

efficiency initiative. The military departments used existing budget review 

processes to identify potential efficiency initiatives for fiscal years 2012 to 

2016, while the Secretary of Defense established a temporary task force, 

chaired by his Chief of Staff, to identify specific areas in which immediate 

action could be taken departmentwide, such as holding the civilian 

workforce at fiscal year 2010 levels. Because of the short timelines given 

to identify efficiencies and limitations on the sharing of information 

imposed on personnel by DOD to prevent disclosure of the decisions, this 

information was not validated with the DOD officials responsible for 

implementing the decisions to ensure that it was accurate. As a result, 

some information used to identify headquarters-related efficiency 

initiatives was inaccurate and some adjustments in resource allocations 

will have to be made during implementation to achieve planned savings. 

DOD officials are aware of the reporting requirements and 

expect to report some major DOD headquarters activity data to Congress 

in the fiscal year 2012 Defense Manpower Requirements Report; 

however, it is unclear what information will be included in the report.

Some of the implementation challenges that resulted from inaccurate 

information were significant, involving hundreds of millions of dollars. The 

most prominent example we found was an Air Force efficiency initiative to 

consolidate installation support services, such as environmental quality 

and civil engineering services, real property programs and services, 

vehicle and fuel management, operational contracting, security forces, 

and some family services, at field operating agencies and Air Force 

 

14Section 1111 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 

2009, Pub. L. No. 110-417 (2008), allows for the adjustment of statutory personnel limits 

to fill a gap in DOD’s civilian workforce identified by the Secretary of Defense in a strategic 

human capital plan submitted to Congress or to accommodate increases in workload or 

modify the type of personnel required to accomplish work for purposes specified in section 

1111(c) of the act. 

Some Information DOD 

Used to Identify 

Headquarters-Related 

Efficiency Initiatives Was

Inaccurate and Some 

Resource Adjustments Will 

Be Made during 

Implementation
 

Page 17 GAO-12-345 Defense Headquarters

headquarters. When initially developed in July 2010 as part of its 

preparations for the fiscal year 2012 budget, the initiative was estimated 

to save $685 million by eliminating 1,371 positions by fiscal year 2016.

However, according to an Air Force official, the initial savings estimate 

was developed at senior levels on an extremely short time line and 

proved overly optimistic. According to Air Force officials, in December 

2010, after further analysis by the Air Force staff was completed, the 

estimate was revised to a savings of $148.1 million by eliminating 354 

positions by fiscal year 2016. Air Force officials told us that they now have 

to reduce operating costs or personnel from other functional areas to 

make up the $537 million difference in savings and the 1,017 difference in 

personnel reductions estimated as part of DOD’s fiscal year 2012 budget. 

In other examples, we found DOD components had overestimated the 

number of personnel or incorrectly identified the amount of contractorrelated resources at affected organizations, potentially affecting estimated 

savings.

With the long-term fiscal challenges facing the nation, additional efforts to 

find cost savings at DOD will likely be necessary. As DOD considers its 

future resources and the key military capabilities it will need to meet its 

new strategic priorities, the department will need to consider further 

efficiencies in overhead, such as personnel and operating costs at DOD 

headquarters. While DOD has taken some steps to trim its headquarters, 

these initial efforts were uneven across the department and modest in 

contrast to the defense budget. The savings DOD projected over 5 years 

from the headquarters reductions taken to date represent a small fraction 

of the defense budget over the same period. Additional headquartersrelated efficiencies may be identified by further examining opportunities to 

consolidate organizations or centralize functions. To ensure that 

appropriate levels of resources are applied to overhead, it is critical for 

DOD to have complete and reliable information to use to inform its 

decision-making and prioritize its resources. Without updating its guiding 

instruction to ensure that it has complete and reliable data on 

headquarters personnel and operating costs, DOD will not have the 

information it needs, which could affect its efforts to direct resources 

toward its main priorities.

We recommend that the Secretary of Defense take the following two 

actions.

To further DOD’s efforts to reduce overhead-related costs in light of the 

recent changes in DOD’s strategic priorities, we recommend that the 

Conclusions

Recommendations for 

Executive Action
 

Page 18 GAO-12-345 Defense Headquarters

Secretary of Defense direct the secretaries of the military departments 

and the heads of the DOD components to continue to examine 

opportunities to consolidate or eliminate military commands that are 

geographically close or have similar missions, and to seek further 

opportunities to centralize administrative and command support services, 

functions, or programs.

To improve DOD’s ability to identify how many headquarters personnel it 

has, including military, civilian and contractor personnel, and improve the 

information Congress and DOD need to ensure that headquarters 

organizations are appropriately sized and overhead positions are reduced 

to the extent possible, we recommend that the Secretary of Defense 

direct the Director of Administration and Management, in consultation with 

the Under Secretary of Defense for Personnel and Readiness, to revise 

DOD Instruction 5100.73, Major DOD Headquarters Activities, to

• include all major DOD headquarters activity organizations,

• specify how contractors performing major DOD headquarters activity 

functions will be identified and included in headquarters reporting,

• clarify how components are to compile the major DOD headquarters 

activities information needed to respond to the reporting requirements 

in section 1109 of the fiscal year 2010 National Defense Authorization 

Act, and

• establish time frames for implementing the actions above to improve 

tracking and reporting headquarters resources.

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

recommendation and partially concurred with our second 

recommendation. DOD’s comments are reprinted in their entirety in 

appendix IV. DOD also provided technical comments, which we 

incorporated into the report as appropriate.

DOD fully concurred with our recommendation that the Secretary of 

Defense direct the secretaries of the military departments and the heads 

of the DOD components to continue to examine opportunities to 

consolidate or eliminate military commands that are geographically close 

or have similar missions, and to seek further opportunities to centralize 

administrative and command support services, functions, or programs. In 

its comments, DOD stated that it would continue to assess its 

organizational structure and personnel to optimize output and eliminate 

inefficiencies.

Agency Comments 

and Our Evaluation
 

Page 19 GAO-12-345 Defense Headquarters

DOD partially agreed with our second recommendation that the Secretary 

of Defense direct the Director of Administration and Management, in 

consultation with the Under Secretary of Defense for Personnel and 

Readiness, to revise DOD Instruction 5100.73, Major DOD Headquarters 

Activities, to (1) include all major DOD headquarters activity 

organizations, (2) specify how contractors performing major DOD 

headquarters activity functions will be identified and included in 

headquarters reporting, (3) clarify how components are to compile the 

major DOD headquarters activities information needed to respond to the 

reporting requirements in section 1109 of the fiscal year 2010 National 

Defense Authorization Act, and (4) establish time frames for implementing 

the actions above to improve tracking and reporting of headquarters 

resources. In its written comments, DOD stated that it concurs with the 

intent of this recommendation and supports the refinement and update of 

DOD Instruction 5100.73, Major DOD Headquarters Activities. It then 

separately addressed three elements of our recommendation—including 

all major DOD headquarters activity organizations, reporting on 

contractors performing major DOD headquarters activities, and clarifying 

how components are to compile these data to respond to reporting 

requirements.

With regard to including all major DOD headquarters activity 

organizations in the instruction, DOD stated that the department uses the 

designation of major DOD headquarters activities in DOD Instruction 

5100.73 to identify and manage the size of organizations in order to 

comply with statutory limitations, not as a tool to manage the 

organizational efficiency of the department or its components. It further 

stated that shortcomings in the instruction have limited impact on the 

management of the department. As we noted in our report, the purpose of 

the instruction is to establish a system to identify and manage the number 

and size of major DOD headquarters activities, and the guidance does 

address statutory limitations. However, the instruction certainly has 

implications for the management of the department that extend beyond 

the need to comply with relevant statutory limits. For example, the 

instruction directs the department to take certain steps, including 

maintaining an approved list of major DOD headquarters activities, in 

order to provide a framework for implementing the DOD policy that major 

DOD headquarters activities shall be organized and staffed in a manner 

that permits the effective accomplishment of assigned responsibilities with 

a minimum number of personnel. Additionally, the department expressed 

concerns about revising the definition of major DOD headquarters 

activities in DOD Instruction 5100.73 because there are references to that 

definition in statute. However, we did not recommend that the department 
 

Page 20 GAO-12-345 Defense Headquarters

revise the definition. As noted by the department, section 194 of Title 10 

of the United States Code sets out limitations on military and civilian 

personnel involved in management headquarters activities or 

management headquarters support activities of the defense agencies and 

the DOD field activities. The statute specifies that the terms “management 

headquarters activities” and “management headquarters support 

activities” are to be defined as those terms were defined in the January 7, 

1985, version of DOD Directive 5100.73. Our recommendation is not 

aimed at revisions to the definition; rather, as explained in our report, the 

recommendation is based on the fact that the list of major DOD 

headquarters activities found in enclosure 4 of the instruction is outdated. 

As such, we disagree with the assertion that updating the guidance 

consistent with our recommendations would in any way threaten the 

“foundational basis” prescribed by Title 10 or require statutory relief. 

Furthermore, we note that in addition to the administrative change from 

directive to instruction in 2009 mentioned by the department, other 

revisions have been made to the guidance since 1985, including changes 

made in 1999 revising the way the definitions of management 

headquarters activities, management headquarters support activities, and 

other terminology are presented.

With regard to specifying how contractors performing major DOD 

headquarters activity functions will be identified and included in 

headquarters reporting, DOD stated that it submitted a plan to the 

congressional defense committees in November 2011 for its Inventory of 

Contracts for Services that established both near-term and long-term 

actions needed to improve overall visibility and accountability of all 

contracted services, including those performed in support of major DOD 

headquarters activities. This plan and subsequent guidance issued in 

December 2011 describe the steps being taken to account for the level of 

effort of contracted support, based on the activity requiring the service. 

DOD also noted that aligning contract support with the requiring activity, 

as opposed to contracting activity, will ensure that the department can 

reflect contractor full-time equivalents, based on direct labor hours 

collected from contractors, supporting major DOD headquarters activities. 

While we support DOD efforts to improve visibility and accountability of 

contracted services, particularly those supporting major DOD 

headquarters activities, as noted in our report, DOD does not anticipate 

complete reporting on contractor manpower data until 2016. We continue 

to believe that DOD should make it a priority to obtain better data on its 

contracted services and personnel to enable it to make more informed 

management decisions, ensure departmentwide goals and objectives are 
 

Page 21 GAO-12-345 Defense Headquarters

achieved, and have the resources to achieve desired outcomes, which 

could include reducing overhead.

With regard to clarifying how components are to compile information 

needed to respond to the reporting requirements for major DOD 

headquarters activity of Section 1109 of the fiscal year 2010 National 

Defense Authorization Act, DOD stated that it has incorporated this 

requirement into the Defense Manpower Requirements Report. The 

department stated that the DOD components reported aggregate civilian 

and military data for inclusion in the fiscal year 2012 Defense Manpower 

Requirements Report that will be included in the fiscal year 2013 report

as well. The department also stated that a more accurate reflection of 

major DOD headquarters activity data is being incorporated into the 

annual Inherently Governmental and Commercial Activities Inventory. It 

further noted that the inventory guidance issued in October 2011 included 

the major DOD headquarters activity requirement and the fiscal year 2012 

inventory will include these data. In its written comments, DOD stated that 

this revision will provide greater analytic capability for DOD function 

codes, manpower mix criteria, location of services, and specific 

unit/organization of billets designated as major DOD headquarters 

activities. Again, we support DOD’s efforts to include major DOD 

headquarters activity data in the Inherently Governmental and 

Commercial Activities Inventory, but note that DOD did not provide a time

frame for when the fiscal year 2012 inventory would be issued. Further, 

while DOD noted that it will include aggregate civilian and military data in 

the fiscal year 2012 and fiscal year 2013 Defense Manpower 

Requirements Report, neither of these reports has been issued, and we 

are therefore unable to determine whether the data were included. 

Despite DOD’s concerns, we continue to believe that it is important for 

DOD to take actions to revise the instruction to include all major DOD 

headquarters activity organizations, specify how contractors will be 

identified and included in headquarters reporting, and clarify how 

components are to report this information as well as establish time frames 

for implementing these actions to improve tracking and reporting of 

headquarters resources.

We are sending copies of this report to interested congressional 

committees, the Secretary of Defense, the Under Secretary of Defense 

for Personnel and Readiness, the Director of Administration and 

Management, the Deputy Chief Management Officer, and the secretaries 
 

Page 22 GAO-12-345 Defense Headquarters

of the military departments. In addition, this report is available at no 

charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (404) 679-1816 or pendletonj@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix V.

John Pendleton, Director

Defense Capabilities and Management
 

Page 23 GAO-12-345 Defense Headquarters

List of Committees

The Honorable Carl Levin

Chairman

The Honorable John McCain

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Kent Conrad

Chairman

The Honorable Jeff Sessions

Ranking Member

Committee on the Budget

United States Senate

The Honorable Daniel K. Inouye

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Paul Ryan

Chairman

The Honorable Chris Van Hollen, Jr.

Ranking Member

Committee on the Budget

House of Representatives
 

Page 24 GAO-12-345 Defense Headquarters

The Honorable C.W. Bill Young

Chairman

The Honorable Norman D. Dicks

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Scope and Methodology

Page 25 GAO-12-345 Defense Headquarters

We conducted this work in response to a statutory mandate that directed 

us to conduct routine investigations to identify federal programs, 

agencies, offices, and initiatives with duplicative goals and activities within 

departments and governmentwide.1

To conduct this work, we selected and assessed DOD efficiency 

initiatives related to headquarters based on our analysis of information 

included with DOD’s fiscal year 2012 budget request and the Secretary of 

Defense’s Track Four Efficiency Initiatives Decisions memo. We used the 

Department of Defense Efficiency Initiatives Fiscal Year 2012 Budget 

Estimates justification book to select two efficiency initiatives affecting 

each of the military departments based on their relevancy to 

headquarters. Using this sample of headquarters-related efficiency 

initiatives, we chose to interview components responsible for 

implementing the selected efficiency initiatives based on the amount of 

savings they are responsible for achieving. We used the Secretary of 

Defense’s Track Four Efficiency Initiatives Decisions memo to select two 

combatant commands and one organization from each of the following: 

the Office of Secretary of Defense, the defense agencies, and the DOD 

field activities. We selected organizations rather than specific efficiency 

initiatives because their estimated personnel and cost savings reflected 

several DOD efficiency initiatives, including the defense agency, Office of 

Secretary of Defense, and combatant command baseline review and the 

service support contracts reduction. We selected the organizations based

on the amount of estimated personnel cuts and savings they were 

responsible for achieving. The efficiency initiatives and organizations we 

selected are further discussed in appendix II.

This report evaluated the extent to 

which the Department of Defense (DOD) (1) examined its headquarters 

resources for efficiencies and (2) has complete and reliable headquarters 

information available for use in making efficiency decisions.

To assess the extent to which DOD examined its headquarters resources

for efficiencies, we obtained and analyzed documentary and testimonial 

evidence on selected headquarters-related efficiency initiatives 

announced by DOD, including the analysis conducted to identify 

headquarters-related resources and the approach taken to develop 

headquarters-related efficiency initiatives. To assess the extent to which 

 

1

Pub. L. No. 111-139, § 21 (2010). 

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

Page 26 GAO-12-345 Defense Headquarters

DOD has complete and reliable headquarters information available for 

use in making efficiency decisions, we obtained and analyzed 

documentary and testimonial evidence from DOD components detailing 

the policies and procedures, as well as roles and responsibilities, for 

tracking and reporting headquarters personnel and operating costs, such 

as DOD Instruction 5100.73, Major DOD Headquarters Activities.

2

In addition to conducting interviews with the components responsible for 

executing selected efficiency initiatives, we collected documentary and 

testimonial evidence from the military department’s deputy chief 

management offices, financial management and budget offices, and other 

DOD components that were involved in developing the efficiency 

initiatives directed by the Secretary of Defense and included as part of 

DOD’s fiscal year 2012 budget request. We interviewed officials, and 

where appropriate obtained documentation, at the organizations listed 

below: 

We 

also obtained and analyzed documentary and testimonial evidence on the 

processes and data DOD components used to identify their headquartersrelated resources when developing selected headquarters-related 

efficiencies.

Office of Secretary of Defense

• Office of the Director of Cost Assessment and Program Evaluation

• Office of the Under Secretary of Defense for Policy

• Office of the Director of Administration and Management

• Office of the Under Secretary of Defense for Personnel and 

Readiness

• Office of the Under Secretary of Defense (Comptroller)

Joint Staff

• Manpower and Personnel Division 

Combatant commands

• U.S. European Command

U.S. Northern Command 

 

2

Department of Defense Instruction 5100.73, Major DOD Headquarters Activities (Dec. 1, 

2007).
Appendix I: Scope and Methodology

Page 27 GAO-12-345 Defense Headquarters

Defense agency

• Defense Finance and Accounting Services

DOD field activity

• Washington Headquarters Services 

Department of the Air Force

• Office of the Under Secretary of the Air Force, Deputy Chief 

Management Officer

• Office of the Deputy Chief of Staff for Logistics, Installations and 

Mission Support

• Office of the Deputy Chief of Staff for Manpower, Personnel and 

Services, Directorate of Manpower, Organization and Resources

• U.S. Air Forces in Europe

• Air Combat Command

• Air Education and Training Command

• First Air Force (Air Forces North) 

• Third Air Force (Air Forces Europe)

• Air Force Real Property Agency

• Air Force Services Agency

• Air Force Center for Engineering and the Environment

Department of the Army

• Office of Deputy Under Secretary of the Army

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

and Comptroller), Office of the Director, Army Budget

• Office of the Assistant Chief of Staff for Installation Management

• U.S. Army Installation Management Command, Headquarters

• U.S. Army Installation Management Command, Atlantic Region

• Office of the Deputy Chief of Staff for Programs, Directorate of 

Program, Analysis, and Evaluation

• Office of the Deputy Chief of Staff for Personnel, Directorate of Plans 

and Resources

• Office of the Assistant Secretary of the Army for Manpower and 

Reserve Affairs

• U.S. Army Europe

• U.S. Army North

Department of the Navy

• Office of the Deputy Under Secretary of the Navy, Deputy Chief 

Management Officer
Appendix I: Scope and Methodology

Page 28 GAO-12-345 Defense Headquarters

• Office of the Deputy Chief of Naval Operations (Manpower, 

Personnel, Education and Training)

• Office of the Deputy Chief of Naval Operations (Integration of 

Capabilities and Resources)

• Office of the Assistant Secretary of the Navy (Financial Management 

and Comptroller), Office of Budget

• Headquarters, Marine Corps

• U.S. Marine Forces Europe

• U.S. Naval Forces Europe

• U.S. Fleet Forces Command

• Naval Air Systems Command

• Navy Reserve Force Command

• U.S. Pacific Fleet

We conducted this performance audit from September 2010 to March 

2012 in accordance with generally accepted government auditing 

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

obtain sufficient, appropriate evidence to provide a reasonable basis for 

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

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 29 GAO-12-345 Defense Headquarters

For this review, we selected and assessed headquarters-related 

efficiency initiatives specific to the military departments as well as 

organizations affected by DOD-wide efficiency initiatives, discussed in 

detail below. The efficiency initiatives we reviewed did not include all the 

headquarters-related efficiency initiatives DOD has announced. We 

chose to review the efficiency initiatives based on the organizations 

affected as well as the estimated number of personnel and the amount of 

cost savings involved.

As part of the Secretary of Defense’s efficiency initiative, the military 

departments and Special Operations Command were instructed to find at 

least $100 billion in savings from fiscal years 2012 to 2016 that could be 

reinvested in force structure and modernization efforts, starting with the 

fiscal year 2012 budget. Some of these initiatives included reductions to 

headquarters personnel and operating costs, as shown below.

Under this Navy initiative, U.S. 2nd Fleet was disestablished and its staff 

was merged into U.S. Fleet Forces Command. Prior to this merger, U.S. 

2nd Fleet was responsible for training, certifying, and providing maritime 

forces to respond to global contingencies while U.S. Fleet Forces 

Command served to provide operational and planning support to the 

combatant commanders and worked with U.S. Pacific Fleet to organize, 

man, train, maintain, and equip Navy forces. The Navy found that the 

missions of the two organizations had converged over time, and decided 

that an integrated staff could better adapt to changing missions than two 

separate staffs and the merger could eliminate redundant personnel. As a 

result of the merger, U.S. Fleet Forces Command now assumes both its 

previous responsibilities as well as U.S. 2nd Fleet’s former missions. The 

efficiency initiative eliminated one Navy flag officer at the rank of vice 

admiral, 160 active component positions, and 184 reserve component 

positions. The consolidation resulted in estimated savings of $10.5 million 

in fiscal year 2012, with expected cumulative savings of $100.8 million by 

fiscal year 2016. The consolidation began in May 2011 and was 

functionally completed on September 30, 2011.

Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives

Military Departments’ 

Efficiency Initiatives

Department of the Navy: 

Merging U.S. Fleet Forces 

Command and U.S. 2nd 

Fleet Staff
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 30 GAO-12-345 Defense Headquarters

Under this Navy initiative, shore military positions at both U.S. Pacific 

Fleet and U.S. Fleet Forces Command were eliminated and personnel 

associated with these positions were redirected to higher-priority 

missions, including filling personnel shortages of operational ships at sea. 

Navy officials stated that new capabilities and systems on operational 

ships, such as ballistic missile defense, have led to increased manpower 

requirements at sea. Additionally, more effective training has decreased 

shore manpower needs, freeing up manpower for operational ships at 

sea. The associated funding for the reduced shore military positions, 

$88.3 million, has been removed from the budget for fiscal year 2012. 

From fiscal years 2012 to 2016, the expected cumulative savings is 

$858.1 million. 

This is an Air Force initiative to consolidate installation support services at 

Air Force headquarters and field operating agencies, which are Air Force 

components that perform specialized activities in support of Air Forcewide missions. To achieve the estimated personnel and cost savings, the 

Air Force is consolidating environmental quality and civil engineering 

services, real property programs and services, vehicle and fuel 

management, operational contracting, security forces, and some family 

services by shifting positions from major command staffs that provide 

these services to field operating agencies or Air Force headquarters and 

eliminating others. Planning for the implementation of this initiative is still 

underway and implementation will be phased from fiscal years 2012 to 

2016. When initially developed in July 2010 as part of the Air Force’s 

preparations for the fiscal year 2012 budget, the initiative was estimated 

to save $685 million and eliminate 1,371 positions by fiscal year 2016. 

However in December 2010, after further analysis was completed, the 

estimate was revised to eliminate 354 positions by fiscal year 2016 along 

with a savings of $2.4 million in fiscal year 2012 and $148.1 million by 

fiscal year 2016. The Air Force may now have to reduce operating costs 

or personnel from other functional areas to make up the $537 million 

difference in savings estimated as part of DOD’s fiscal year 2012 budget.

This is an Air Force initiative to consolidate air and space operations 

centers in Europe and in the continental U.S. and to inactivate numbered 

air forces. Numbered air forces provide operational leadership to 

subordinate units, such as wings, or are designated as component 

numbered air forces that perform operational and warfighting missions for 

U.S. combatant commanders. Air and space operations centers provide 

command and control of Air Force operations and coordinate with other 

Department of the Navy: 

Reducing Fleet Shore 

Command Personnel by 5 

Percent at U.S. Pacific 

Fleet and U.S. Fleet Forces 

Command 

Department of the Air 

Force: Consolidating 

Installation Support 

Services at Field Operating 

Agencies and Air Force 

Headquarters

Department of the Air 

Force: Consolidating Air 

and Space Operations 

Centers and Numbered Air 

Forces 
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 31 GAO-12-345 Defense Headquarters

components and military services. The Air Force consolidated the 617th 

Air and Space Operations Center, which supports U.S. Africa Command, 

with the 603rd Air and Space Operations Center, which supports U.S. 

European Command, resulting in the elimination of 55 positions and one 

headquarters organization, resulting in a savings of $4.2 million in fiscal 

year 2012 and a cumulative savings of $37.8 million from fiscal years 

2012 to 2016. The consolidation was completed on October 1, 2011. Air 

Force officials stated that the transition has gone smoothly because 

personnel in these organizations had practiced being integrated while 

executing military operations in Libya as part of Operation Odyssey 

Dawn. The merged organizations will now provide operational and 

command and control support to both combatant commands. The Air 

Force planned to consolidate the 601st and 612th Air and Space 

Operations Centers, supporting U.S. Northern Command and U.S. 

Southern Command, respectively; however, this was formally halted on 

August 30, 2011, by Air Force officials in favor of developing an Air Forcewide solution to provide more effective operational command and control. 

As of December 2011, Air Force officials could not provide further details 

regarding this solution because decisions were still pending. The Third Air 

Force (Air Forces Europe) and the 17th Air Force (Air Forces Africa) are 

also being consolidated with the headquarters of U.S. Air Forces in 

Europe, thereby eliminating one headquarters organization and 183 

positions for a cumulative savings of $95.1 million from fiscal years 2012 

to 2016. This effort is estimated to be completed by May 2012. The 19th

Air Force, which supports Air Education and Training Command, will be 

consolidated with the command’s headquarters, thereby eliminating 18 

positions and saving $0.6 million in fiscal year 2012 with cumulative 

savings of $10.8 million by fiscal year 2016. This initiative is to be 

completed by June 2012. Although Air Education and Training Command 

has identified 18 positions to be eliminated, this effort was initially 

designed to eliminate 40 positions. Air Education and Training Command 

has informed Air Force leadership that some of these personnel were 

performing safety- and compliance-related inspections and could not be 

eliminated; therefore Air Force leadership is considering adjusting the 

number of positions that may be removed.

This is an Army initiative to reduce, eliminate and re-scope services and 

programs across the Army’s installations, with an estimated cumulative 

savings of $1.1 billion ($456 million in fiscal year 2015 and $667 million in 

fiscal year 2016). Services and programs to be reviewed include human 

resources, information technology, logistics, public works, and security, 

and other services provided on Army installations. On August 29, 2011, 

Department of the Army: 

Streamlining Installation 

Management Services and 

Programs
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 32 GAO-12-345 Defense Headquarters

the Army established the Installation Management Reform Task Force—

which includes representatives of the Army commands and organizations, 

such as the Army Installation Management Command—to assist in 

streamlining installation management and reducing overhead costs, 

among other things. Specifically, the representatives of the task force are 

responsible for conducting a detailed analysis of the services provided on 

Army installations. In September 2011, the Army began its holistic review 

of installation services and infrastructure costs to evaluate opportunities 

to develop efficiencies, among other things. Army commands, such as the 

Installation Management Command, were directed to seek ways to 

reduce shared contracted services or eliminate services and programs 

perceived to be of little value to reduce costs. They are also looking at the 

effects of reduced population (both military and civilians) on the demands 

for installation services. According to officials at the Office of Assistant 

Chief of Staff for Installation Management, the office leading this 

efficiency initiative, they are in the early stages of identifying the services 

and programs to be reduced, eliminated, or re-scoped, and the effort is 

scheduled to be executed in fiscal year 2015 and fiscal year 2016.

As part of DOD’s efficiency initiative, the Secretary of Defense directed a 

series of initiatives designed to reduce duplication, overhead, and excess 

across the department. For example, the Secretary directed components 

of the Office of the Secretary of Defense, the Joint Staff, combatant 

commands, the defense agencies, and DOD field activities to conduct 

baseline reviews of how they use personnel and budgetary resources to 

carry out their missions in order to rebalance resources. This and other 

departmentwide efforts were projected to yield about $78 billion in 

savings through fiscal year 2016. The efficiencies for the components 

discussed below originate from both the baseline reviews and other 

departmentwide efficiency initiatives.

The Office of the Under Secretary of Defense for Policy is a component of 

the Office of the Secretary of Defense that advises the Secretary of 

Defense on the formulation of national security and defense policy. To 

identify efficiencies, the Office of the Under Secretary of Defense for 

Policy conducted a study that found its ratio of administrative support to 

senior executives was 3 to 1, which was above the industry standard; it 

therefore determined that it could make reductions in administrative 

overhead. The Office of the Under Secretary of Defense for Policy cut 68 

technical support contractors and 42 administrative support contractors 

for an estimated savings of $14.6 million in fiscal year 2012, and 

Defense-wide 

Efficiency Initiatives 

Office of the Under 

Secretary of Defense for 

Policy
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 33 GAO-12-345 Defense Headquarters

expected cumulative savings of $77.7 million from fiscal years 2012 to 

2016. Officials with the Office of the Under Secretary of Defense for 

Policy stated that the component is on target to meet all directed 

initiatives.

The Defense Finance and Accounting Service is a defense agency that 

provides finance and accounting services for the DOD civilians and 

military members. It is enacting several efficiencies and plans to eliminate 

227 contractor positions and six civilian positions. Additionally, it is 

planning to eliminate paper leave and earning statements that it provides 

to DOD personnel and reduce manual processing of transactions by 

increasing electronic commerce to pay for contractor mission support.

The associated savings for these initiatives, $41.3 million, has been 

removed from the budget for fiscal year 2012. From fiscal years 2012 to 

2016, the expected cumulative savings is $206.5 million. Although the 

associated funding of $41.3 million has been removed for fiscal year 

2012, officials said that 100 percent elimination of paper leave and 

earning statements and increase in e-commerce transactions depend on 

the demands of the agency’s customers.

The Washington Headquarters Services is a field activity organization that 

supplies administrative support services across the department, such as 

information technology, facilities management, and human resources. 

According to Washington Headquarters Service officials, they identified 

the efficiencies by focusing on critical services and devolving noncritical 

and completed missions. The Washington Headquarters Services 

reduced the number of organizational elements it has from 12 to 8 by 

merging directorates that performed similar services and functions. It 

combined its Information Technology Management and Office of the 

Secretary of Defense Networks directorates to form the Enterprise 

Information Technology Services directorate. The former directorates of 

Defense Facilities and Pentagon Renovation were combined to form 

Facilities Services, while three directorates that performed similar 

administrative functions were consolidated to form the Enterprise 

Management directorate. Through these efforts, Washington 

Headquarters Services will eliminate a total of 52 civilian positions and 

generate an estimated savings of $7.2 million for fiscal year 2012 and an 

expected cumulative savings of $57 million from fiscal years 2012 to 

2016. Officials said the associated funding has been removed for fiscal 

year 2012 and, as of January 2012, 50 of the 52 civilian positions have 

been removed.

Defense Finance and 

Accounting Service 

Washington Headquarters 

Services
Appendix II: Descriptions of HeadquartersRelated Efficiency Initiatives 

Page 34 GAO-12-345 Defense Headquarters

U.S. Northern Command is a unified combatant command whose mission 

is to conduct homeland defense, civil support, and security cooperation. 

U.S. Northern Command is implementing several efficiencies, to include 

eliminating lower-priority functions, consolidating U.S. Northern 

Command’s and North American Aerospace Defense Command’s staff 

functions, eliminating 13 additional support billets, and reducing reliance 

on service support contractors. According to officials, these actions have 

resulted in an estimated savings of $12.6 million for fiscal year 2012 and 

expected cumulative savings of $87.8 million from fiscal years 2012 to 

2016. To achieve the efficiencies, U.S. Northern Command reviewed lowpriority tasks and eliminated manpower and other associated costs such 

as supplies and computer support. Officials said civilian positions have 

been eliminated and phased contract reductions will be complete by 

September 2013.

U.S. European Command is a unified combatant command whose 

mission is to conduct military operations, international military 

engagement, and interagency partnering to enhance U.S. and 

transatlantic security. U.S. European Command has implemented several 

efficiencies to achieve savings. The command reorganized its 

headquarters to promote interagency cooperation by realigning staff and 

reduced headquarters manpower and expenditures by 10 percent by 

realigning resources to higher-priority missions. These actions were 

estimated to eliminate 86 military and civilian positions and save 

$17 million in fiscal year 2012, with expected cumulative savings of 

$84.8 million by fiscal year 2016. According to officials, U.S. European 

Command has already completed the reorganization of its headquarters, 

and the funding for the eliminated positions has been removed from the 

fiscal year 2012 budget.

U.S. Northern Command

U.S. European Command
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 35 GAO-12-345 Defense Headquarters

Figures 4 through 9 contain the information on DOD headquarters 

organizations presented in noninteractive format.

Figure 4: Department of the Air Force

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 

Appendix III: Examples of DOD’s 

Headquarters Organizations
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 36 GAO-12-345 Defense Headquarters

Figure 5: Department of the Army

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 37 GAO-12-345 Defense Headquarters

Figure 6: Department of the Navy

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 38 GAO-12-345 Defense Headquarters

Figure 7: Office of the Secretary of Defense

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 39 GAO-12-345 Defense Headquarters

Figure 8: Unified Combatant Commands

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 
Appendix III: Examples of DOD’s Headquarters 

Organizations

Page 40 GAO-12-345 Defense Headquarters

Figure 9: The Joint Chiefs of Staff

Notes: Graphic is for illustrative purposes only; it is not intended to depict all organizations, their 

functions, or their legal or command and control relationships. In some organizations only the 

headquarters is considered a major DOD headquarters activity, while in other organizations only 

some personnel perform major DOD headquarters activities’ functions. 
Appendix IV: Comments from the Department 

of Defense

Page 41 GAO-12-345 Defense Headquarters

Appendix IV: Comments from the 

Department of Defense
Appendix IV: Comments from the Department 

of Defense

Page 42 GAO-12-345 Defense Headquarters
Appendix IV: Comments from the Department 

of Defense

Page 43 GAO-12-345 Defense Headquarters
Appendix V: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-12-345 Defense Headquarters

John Pendleton, (404) 679-1816 or pendletonj@gao.gov

In addition to the contact named above, Patricia Lentini, Assistant 

Director; Erin Behrmann; Pat Bohan; Grace Coleman; Richard Geiger; 

Jeffrey Hubbard; Cynthia Saunders; John Van Schaik; Angela Watson; K. 

Nicole Willems and Weifei Zheng made key contributions to this report.

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(351629)
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