Defense Acquisition Workforce: The Air Force Needs to Evaluate Changes in Funding for Civilians Engaged in Space Acquisition
Published: 2013-07-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States and DOD depend on space assets to support national security, civil, and commercial activities. Having sufficient quantities of qualified personnel to acquire space assets--on which DOD expects to spend $8 billion in fiscal year 2013--is critical to DOD's ability to carry out its mission. Approximately 1,800 federal civilians at the Air Force SMC manage the acquisition of space systems. During fiscal year 2012, the Air Force implemented a pilot program that moved $187.1 million for SMC's acquisition civilian personnel from its O&M to its RDT&E appropriation.
GAO was mandated to review the Air Force pilot program. This report addresses (1) the extent to which the Air Force evaluated the impact of the pilot, and (2) the processes in place to manage realignment of the funds. GAO obtained and reviewed documentation of the pilot implementation; compared the implementation with established practices GAO has identified for implementing and evaluating pilot programs; and interviewed officials at the Air Force and DOD. GAO also reviewed applicable regulations and guidance about realigning funds and interviewed knowledgeable officials.
section_title: What GAO Found
paragraphs: The Air Force did not evaluate its pilot program that moved funding for Space and Missile Systems Center (SMC) acquisition civilian personnel from its 1-year Operation and Maintenance (O&M) appropriation to its 2-year Research, Development, Test, and Evaluation (RDT&E) appropriation. In addition, the Air Force is considering using this pilot program to inform funding changes for other sections of its civilian workforce. GAO's prior work has identified the following practices for implementing and evaluating pilot programs: (1) develop objectives that link to the goals of the pilot; (2) develop processes for monitoring the pilot; (3) develop and implement a data collection and analysis plan for evaluating the pilot; and (4) communicate evaluation results to stakeholders. When implementing the pilot program, the Air Force did not follow these practices, and primarily focused on ensuring that administrative changes were made accurately such as ensuring employees received pay on time. For example, while a variety of potential goals were identified for the pilot program by the Air Force in various documents; they were not clear or consistent. As a result, anecdotal opinions on the advantages or disadvantages of the pilot varied significantly. Air Force acquisition officials stated that the pilot program could protect the funding from general reductions, while conversely, Air Force financial management officials said that the pilot would not necessarily mean that space acquisition personnel would be excluded from general reductions to civilian personnel funding. Further, Office of the Under Secretary of Defense (Comptroller) officials stated that they are relying on the Air Force to report to them on the pilot's outcomes, but the Air Force has not completed a data collection plan to evaluate the pilot program and has not developed processes for monitoring the pilot program and communicating evaluation results to stakeholders. Without systematically evaluating the pilot program, the Air Force cannot determine if there is an advantage to expanding the pilot to other sections of the civilian workforce.
The Air Force used existing approval processes identified by DOD to realign funds appropriated for acquisition civilian personnel to other purposes. Following the move of SMC acquisition civilian personnel funding to its RDT&E appropriation, the Air Force determined that $29.5 million of the $187.1 million appropriated for SMC acquisition civilian personnel in fiscal year 2012 was unneeded due to the civilian hiring controls the Air Force began implementing in May 2011. The Air Force realigned these funds to other requirements. Specifically, the Air Force realigned $6.7 million to other programs within its RDT&E appropriation--including $5.7 million to the Small Business Innovative Research fund--and obtained prior approval from Congress to realign $22.8 million out of the RDT&E appropriation as part of an Omnibus Reprogramming request. The Omnibus Reprogramming request process does not identify where specific funds are to be realigned--instead the request identifies funding increases or decreases by individual program.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Air Force evaluate the pilot program, to determine the impact of moving funding for acquisition civilian personnel to the RDT&E appropriation, and the value of expanding this change to other Air Force civilian workforces. In written comments on a draft of this report, DOD concurred with all four recommendations.

section_title: Letter
paragraphs: The United States and the Department of Defense (DOD) depend on  space assets to support national security and civil and commercial  activities. The Air Force Space Command’s Space and Missile Systems  Center (SMC)—employing approximately 1,800 federal civilians— provides DOD with operational space and missile systems, launch  systems, and command and control infrastructure in support of global  military and national security operations. Prior to fiscal year 2012, funding  for SMC acquisition civilian personnel was provided from the Air Force  Operation and Maintenance (O&M) appropriation, along with funding for  most other Air Force civilian employees. According to an Air Force official,  about 89 percent of Air Force civilian personnel are directly funded from  its O&M appropriation, with 11 percent funded from its Research,  Development, Test, and Evaluation (RDT&E) appropriation.
During the budget formulation process for fiscal year 2012, the Air Force  requested that Congress approve a pilot program to move funding for  SMC’s acquisition civilian personnel from its O&M appropriation, which  typically has a 1-year period of availability, to its RDT&E appropriation,  which typically has a 2-year period of availability. The Air Force  characterized this move of $187.1 million as a pilot initiative, and has  stated that it is considering expanding this program to other acquisition  workforce communities, such as the acquisition civilian personnel at Air  Force Materiel Command. The Senate Report accompanying a proposed  bill for the Department of Defense Appropriations Act, 2013, mandated  GAO to report on the impacts of this move. In response to this mandate,  we determined (1) the extent to which the Air Force evaluated the impact  of moving funding for SMC acquisition civilian personnel from its O&M  appropriation to its RDT&E appropriation, and (2) the processes that are  in place to manage realignment of funds intended for acquisition civilian  personnel to other purposes.
To determine the extent to which the Air Force evaluated the impact of  the pilot program to move SMC acquisition civilian personnel funding from  its O&M appropriation to its RDT&E appropriation, we obtained and  reviewed documentation related to the process the Air Force used to  decide upon, plan for, and implement the pilot. We also interviewed  officials from the Office of the Under Secretary of Defense (Comptroller),  SMC, Space Command, Air Force Materiel Command, the office of the  Assistant Secretary of the Air Force for Acquisition, the office of the  Assistant Secretary of the Air Force for Financial Management and  Comptroller, and Air Force Manpower and Personnel to discuss the  decision to use a pilot program to move the SMC funding, as well as  obtain their views on the advantages and disadvantages of the pilot  program and the process used to decide upon, plan for, and implement  the pilot. We compared the Air Force implementation of the pilot program  with the following established management and evaluation practices GAO  has previously identified for implementing pilot programs: (1) developing  objectives that link to the goals of the pilot; (2) developing processes and  procedures for approving, reporting, and monitoring and providing  program support (3) developing and implementing a data collection and  analysis plan for evaluating the pilot; and (4) communicating evaluation  results to stakeholders.
To determine the processes in place to manage realignment of funds  intended for acquisition civilian personnel to other purposes, we reviewed  applicable law, guidance from the Office of Management and Budget  (OMB), the DOD Financial Management Regulation (FMR), and Air Force  guidance. We interviewed officials knowledgeable about the procedures  for realigning funds within and between appropriations at the Office of the  Under Secretary of Defense (Comptroller), the office of the Assistant  Secretary of the Air Force for Financial Management and Comptroller,  and SMC.
We conducted this performance audit from September 2012 to June 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.
subsections: section_title: Background
paragraphs: Having sufficient quantities of qualified personnel to design, oversee, and  acquire space assets—on which DOD expects to spend $8 billion in fiscal  year 2013—is critical to DOD’s ability to carry out its mission. Our prior  work—including our most recent update of our High-Risk Series— emphasizes that strategic human capital planning is critical to ensuring  DOD will be able to address future challenges, such as shortages of  trained acquisition personnel to oversee and manage contracts that have  become more expensive and increasingly complex. As DOD faces the  challenge of sustained budget constraints, including sequestration,  prioritizing needs and carefully allocating resources will have increased  importance.
GAO-12-747R. eroded in the years that followed the downsizing of the acquisition  workforce in the 1990s. DOD’s April 2010 acquisition workforce strategic  plan identified an objective to increase its acquisition workforce from  approximately 133,000 (as of September 2009) to 153,000 by fiscal year  2015.
subsections: section_title: DOD Acquisition Civilian Personnel Are Funded through Multiple Appropriations and Accounts
paragraphs: The type of account used to fund the defense acquisition workforce varies  across the military services. For example, according to an Army official,  funding for Army acquisition civilian personnel is in reimbursable  accounts, such as the Army Working Capital Fund, as well as its O&M  and RDT&E appropriations. According to a Navy official, funding for more  than half of Navy acquisition civilian personnel is managed through its  working capital fund, with others funded through a mix of its O&M and  RDT&E appropriations. Funding for other DOD civilian personnel is  generally located in the O&M appropriation.
In the Air Force prior to fiscal year 1988, acquisition civilian personnel,  including space acquisitions civilian personnel, were funded through its  RDT&E appropriation. According to Air Force officials, in fiscal year 1988,  the funding was moved to its O&M appropriation to add stability to the  annual funding cycle; to achieve more consistent treatment across the Air  Force; resolve reprogramming issues; and provide flexibility to move  funding in the year of budget execution. However, the officials stated that  around 2008, the Air Force began considering requesting congressional  approval to move the funding back to its RDT&E appropriation.  Concurrent with these discussions, in 2009, an assessment of the Air  Force acquisition process recommended the Air Force seek to move the  funding for acquisition civilian personnel to RDT&E to “reduce personnel  turbulence.” Also in 2009, the Air Force created an Acquisition  Improvement Plan, which outlined an effort to rebuild an Air Force  acquisition culture that delivers products and services as promised—on  time, within budget, and in compliance with all laws, policies and  regulations. The plan listed five initiatives and associated actions, with the  goal of addressing longstanding acquisition issues the Air Force  identified: (1) revitalize the acquisition workforce; (2) improve the  requirements generation process; (3) instill budget and financial  discipline; (4) improve Air Force major systems source selections; and (5)  establish clear lines of authority and accountability within acquisition  organizations.
Following the implementation of the Acquisition Improvement Plan, as  part of the budget process for fiscal year 2012 the Air Force requested  that Congress approve a pilot program to move funding for SMC  acquisition civilian personnel to its RDT&E appropriation. The pilot  program was implemented in fiscal year 2012, moving the funding for  1,559 acquisition civilian personnel positions at SMC to a new program  element in its RDT&E appropriation. The funding totaled about $187.1  million and the personnel included in the pilot program represented 73  different occupational series. The 10 occupational series with the most  employees included in the move—representing 79 percent of the relevant  population—are included in table 1.
The Air Force is also considering requesting that Congress approve a  move of funding for other acquisition workforce communities to its RDT&E  appropriation, specifically acquisition civilian personnel at the Air Force  Materiel Command. According to Air Force officials, this move would  include approximately 10,000 personnel and $1.2 billion of funding.
section_title: OMB Guidance and DOD Regulations Specify the Processes That Apply to Realigning Funds between Programs and Appropriations
paragraphs: The processes that manage realignment of funds within and among  appropriations are established by law, OMB guidance, and the DOD  Financial Management Regulation (FMR). The Antideficiency Act requires  that agencies prescribe, by regulation, a system of administrative control  of funds. OMB Circular A-11 specifies the funds control regulations that  must be present in each agency, and the DOD FMR outlines the  structure of these controls within DOD. Specifically, the DOD FMR  directs statutory and regulatory financial management requirements,  systems, and functions for all activities within DOD.
Congress recognizes that unforeseen requirements occur during the year  of budget execution, and permits the realignment of funds within certain  guidelines. Both statutory and regulatory rules govern realignment of  funds, and Congress typically provides DOD with authority to realign  funds between programs to manage resources when circumstances  change during the fiscal year through both transfers and  reprogrammings. A transfer of funds is shifting of all or part of the  budget authority in one appropriation or fund account to another, and  requires specific statutory authority.shifting of funds within an appropriation account for purposes other than   Reprogramming, by contrast, is the  those contemplated at the time of appropriation.guidance, all uses of DOD’s general transfer authority require prior  congressional approval, and the oversight of reprogramming actions  varies depending on the amount of funding realigned and the relevant  appropriations involved (see Figure 1).
DOD’s FMR specifies when prior approval must be obtained from the  congressional defense committees for reprogrammings or transfers.  Specifically, the FMR requires that prior approval must generally be  obtained when the realignment (1) increases the procurement quantity of  a major end item, (2) affects a congressional special interest item, (3)  involves the use of general transfer authority, (4) exceeds the monetary  thresholds established for each appropriation, (5) establishes new  programs, or (6) terminates appropriated programs. For reprogramming  of funds appropriated in the O&M budget, prior approval by the  congressional defense committees is required if there is a cumulative  increase or decrease greater than $15 million in a given budget activity.  For reprogramming of funds appropriated in the RDT&E budget, prior  approval by the congressional defense committees is required if there is a  cumulative increase or decrease greater than $10 million or more than 20  percent of the program base amount (i.e., the program element amount)– whichever is less. The DOD FMR requires that DOD obtain approval  from the congressional committees for reprogrammings above these  funding thresholds prior to implementation of the funding realignment.
Funding realignments that do not require prior congressional approval are  generally termed “below-threshold reprogrammings” and are usually  managed at the component level. Below-threshold reprogrammings  provide DOD components with the discretionary flexibility to realign— within prescribed funding limits—congressionally approved funding to  satisfy unforeseen, higher priority requirements.
section_title: The Air Force Did Not Evaluate the Impact of the Pilot Program
paragraphs: Department of Defense, Fiscal Year 2013 President’s Budget Submission: Air Force  Justification Book Volume 2, Research, Development, Test & Evaluation. Air Force Vol. II  – Part 2 (February 2012).
The planning, programming, budgeting, and execution system is a formal, systematic  structure DOD uses for making decisions on policy, strategy, and the development of  forces and capabilities to accomplish anticipated missions. The annual process produces  the Secretary of Defense’s Defense Planning and Programming Guidance, the 5-year  Program Objectives Memoranda, and 1-year Budget Estimate Submissions for the military  departments and defense agencies, and the DOD portion of the President’s Budget. general Air Force and congressional reductions to funding for  acquisition civilian personnel;  Identify the acquisition civilian personnel funding by placing it in a  single program element;
Align mission and acquisition civilian personnel funding in the same
Resource new acquisition missions immediately; and
Allow for funding flexibility so that RDT&E funding could be used to  hire additional civilian personnel if an urgent need arose, rather than  hiring additional contractors.
Further, when we asked Air Force officials at several different levels  within the organization what the goals were for the pilot program, they  cited goals that were different from those stated in the internal briefing.For example, officials at one office stated that the goals of the pilot  program were to make sure there was no negative impact to the  acquisition workforce (i.e., employee pay was not interrupted) and to  increase the transparency of decisions regarding funding of the  acquisition workforce, while other officials stated the goal was to increase  visibility of the acquisition civilian workforce so that—if directed by  Department leadership—the workforce could be more efficiently identified  and excluded from general funding reductions, such as hiring freezes or  furloughs. Yet other officials stated the goal of the pilot program was to  ensure that any future expansion of the effort to additional workforce  communities would be approved by the Office of the Secretary of Defense  and the Congress.
Further, the Air Force has not made plans to evaluate the outcome of the  pilot program. As a result, it remains unclear if the potential impacts cited  by Air Force officials during our review can be characterized as  advantages or disadvantages. For example, although the Air Force  internal briefing identified a goal to decrease general Air Force and  congressional reductions to acquisition civilian personnel funding, officials  did not develop a plan to evaluate whether or not moving this funding to  its RDT&E appropriation achieved this goal. Officials responsible for  managing the acquisition workforce believe that moving funding to its  RDT&E appropriation could prevent acquisition civilian personnel from  being subject to any general O&M reductions, thus allowing the  acquisition workforce to have more stable funding. However, Air Force  financial management officials told us that moving funding to its RDT&E  appropriation would not necessarily mean that space acquisition  personnel would be excluded from any general reductions to civilian  personnel funding, and SMC officials confirmed that SMC acquisition  civilian personnel funding has continued to be impacted by general  reductions following the pilot program. In another example, Air Force  officials told us that moving acquisition civilian personnel funding to a  specific program element in its RDT&E appropriation would increase the  visibility of both the funding and any decisions to realign the funding to  other purposes. Officials responsible for the acquisition workforce told us  that the additional visibility would improve their ability to manage funding  for the acquisition workforce, because the funding would be located in a  single program element in the RDT&E appropriation, and hence funding  decisions would be more informed. In contrast, Space Command officials  told us that the move of SMC acquisition personnel funding to RDT&E  has caused challenges for Space Command. Specifically, according to  agency officials, Space Command faced funding shortfalls in fiscal year  2012, but officials could not simply realign unobligated funds from the  SMC acquisition civilian personnel program element to alleviate these  shortfalls because such a realignment requires the prior approval of the  congressional defense committees.
Moreover, Air Force officials told us that RDT&E funding is generally  considered less flexible than O&M funding because of different  requirements for realigning the funding. For example, Air Force officials  stated that when SMC acquisition civilian personnel funding was located  in O&M, unobligated funds were generally available to be used for other  purposes within the same O&M activity—such as utilities and base  operations—subject to the required approval. The officials stated that  when the funding is located in RDT&E, it is more difficult to realign  unobligated funds because of the rules governing the realignment of  RDT&E funds, which are more likely to require additional steps and  authorizations prior to being able to use unobligated funds for other  purposes compared with when the funding is in O&M. The officials added  that the loss of flexibility in O&M funding may be a disadvantage for the  management of O&M budgets. However, moving funding to the RDT&E  appropriation may be an advantage for the acquisition community, who  might be able to use the unobligated funds for other RDT&E acquisition  priorities, if appropriate approvals are obtained.
As previously mentioned, the Air Force has expressed interest in  expanding the program to other civilian acquisition workforce  communities, such as the acquisition civilian personnel at Air Force  Materiel Command. Office of the Under Secretary of Defense  (Comptroller) officials told us that—while they do not have an opinion of  the pilot program—they are relying on the Air Force to report to them on  the pilot’s outcomes. However, because the Air Force did not establish  clear and consistent program objectives or a data collection plan to  evaluate the benefits of its pilot program, they were unable to evaluate  whether potential impacts resulting from the pilot were advantages or  disadvantages. Without establishing goals and completing a data  collection plan to evaluate the pilot program, the Air Force also has not  applied the remaining two established practices—developing processes  for approving, reporting, and monitoring the pilot program as well as  communicating evaluation results to stakeholders. As a result,  stakeholders within the Air Force, DOD, and Congress do not have the  necessary information to know if there is value in, or what would be  accomplished by, expanding the effort to other civilian workforce  communities.
section_title: The Air Force Used Existing Approval Processes Identified by DOD to Realign Funds Appropriated for Acquisition Civilian Personnel to Other Programs
paragraphs: Following the move of SMC acquisition civilian personnel funding to its  RDT&E appropriation, the Air Force did not obligate $29.5 million of the  $187.1 million appropriated for SMC acquisition civilian personnel in fiscal  year 2012, and Air Force officials told us that these funds were unneeded  due to the civilian hiring controls the Air Force began implementing in  May 2011. Some of these funds were realigned to other programs within  its RDT&E budget, while most were realigned to unspecified requirements  within its O&M and Overseas Contingency Operations budgets (see  figure 2).
Specifically, the Air Force used the following processes to realign SMC  acquisition civilian personnel funding to other purposes:
First, the Air Force realigned $6.7 million to other programs within its  RDT&E appropriation, including $5.7 million to the Small Business  Innovative Research fund.fund did not require congressional notification because it did not use  DOD’s general transfer authority and was used to address mandatory  spending requirements; the realignment of an additional $1 million to  other Air Force needs was below the $10 million threshold DOD has  identified for prior approval by the congressional defense committees.
The realignment of $5.7 million to this
Second, the Air Force included a request to realign $22.8 million out  of the RDT&E appropriation containing the SMC acquisition civilian  personnel funds in the Omnibus Reprogramming request submitted to  the congressional defense committees for prior approval on June 26,  2012. DOD’s Omnibus Reprogramming process consolidates various  reprogrammings and transfers, and typically uses the Department’s  general transfer authority to realign funding between appropriations  once prior approval of the congressional defense committees has  been obtained. The committees approved this request on August 21,  2012.
According to Air Force officials, the Omnibus Reprogramming request  process does not identify where specific funds are realigned to—instead  the request identifies funding increases or decreases by individual  program. The Omnibus Reprogramming request of June 26, 2012,  outlined $7.9 billion that DOD was requesting to realign to the O&M and  Overseas Contingency Operations appropriations.
The $157.6 million remaining in the SMC acquisition civilian program  element that was not realigned to other purposes was obligated for SMC  acquisition civilian personnel. Air Force officials explained that the  realigned funds were not needed for SMC acquisition civilian personnel  because fewer SMC acquisition civilian employees were hired than  expected due to the Air Force’s civilian hiring controls. SMC officials told  us that fiscal constraints will likely continue to impact hiring of acquisition  civilian personnel, but added that they have not adjusted their budget  request to reflect this. The Air Force has requested $192.3 million for  SMC acquisition civilian personnel funding in the fiscal year 2014 budget  request—a 22 percent increase over the $157.6 million obligated in fiscal  year 2012.
section_title: Conclusions
paragraphs: During a time of changing national security threats, challenging fiscal  realities, and continuing increases of weapon systems acquisition costs, it  is important that decision makers in DOD and the Air Force take a  strategic approach to managing their acquisition civilian workforce. When  making a decision about managing the workforce, decision makers  should consider and weigh tradeoffs, such as mitigating potential erosion  of the acquisition enterprise and maintaining flexibility in budgeting.  However, the Air Force did not consider the potential impact of moving  funds for SMC’s acquisition civilian personnel and did not follow  established practices we have identified for implementing and evaluating  pilot programs. As a result, the Air Force is unable to determine what  impacts the move may have on its acquisition enterprise or other Air  Force needs, and therefore does not know whether there are advantages  for the pilot program to be expanded to include other workforce  communities, such as the acquisition civilian personnel at Air Force  Materiel Command.
section_title: Recommendation for Executive Action
paragraphs: To determine the impact of moving funds for SMC acquisition civilian  personnel to the RDT&E appropriation, and whether this change should  be expanded to other acquisition civilian workforce communities, we  recommend that the Secretary of the Air Force direct the Assistant  Secretary of the Air Force for Acquisition, in conjunction with the Assistant  Secretary of the Air Force for Financial Management and Comptroller, to  take the following four actions:
Develop objectives that link to the goals of the pilot program.
Develop processes and procedures for approving, reporting, and  monitoring the pilot program.
Develop and implement a data collection and analysis plan for  evaluating pilot performance.
Communicate the evaluation results to stakeholders.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD concurred with our four  recommended actions (see app. I). In concurring with our  recommendations, DOD stated that the Air Force will evaluate the pilot  program to ensure any conversion places the control of the resources at  the appropriate level as they are vetted through the Air Force for  approval. The Air Force attached technical comments to its response,  which we have addressed in the report text, where applicable.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, and the Secretary of the Air Force.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  us at (202) 512-3604 or farrellb@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 major contributions to this report  are listed in appendix II.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: GAO Contact and Staff Acknowledgements
subsections: section_title: GAO Contact
section_title: Acknowledgements
paragraphs: In addition to the contact named above, Lori Atkinson, Assistant Director;  Bruce Brown; Foster Kerrison; and Amanda Manning made key  contributions to this report. Grace Coleman and Amie Steele assisted in  report development, and Michael Willems provided legal support.