DOD Civilian and Contractor Workforces: Additional Cost Savings Data and Efficiencies Plan Are Needed
Published: 2016-10-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: With long-term fiscal challenges likely to continue, DOD must operate strategically and efficiently, to include cost-effective management of its human capital. Section 955 of the NDAA for FY 2013 requires DOD to, among other things, develop and implement a plan to achieve savings in total funding for civilian and contracted services workforces from FYs 2012 through 2017. Section 955 also includes a provision that GAO review the section 955 status reports DOD submits to Congress to determine whether the required savings are being achieved and the plan is being implemented consistently with workforce-management laws.
This report addresses the extent to which DOD's February 2016 status report demonstrates DOD's (1) achievement of savings and (2) development and implementation of its efficiencies plan that is consistent with workforce management laws in FY 2015. GAO reviewed DOD's report and interviewed DOD officials.
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) did not report all required data on military, civilian, and contracted services workforces in its February 2016 report that would demonstrate savings, as required by section 955 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013, and it estimates that by FY 2017 it will meet savings for the civilian workforce but not for contracted services. Section 955 requires DOD to submit annual reports in FYs 2015—2018 that include the costs of civilian and contracted services workforces from FYs 2012—2017, among other items. See the table for DOD's February 2016 compliance with selected reporting requirements.
Officials stated that DOD interpreted section 955 as requiring DOD to report civilian savings achieved when comparing costs from FY 2012 to FY 2017, and not each year in between. Further, officials stated that DOD did not include full-time equivalents (FTEs) for contracted services in the report as required because they were unable to provide an accurate number. In December 2015 GAO recommended that DOD include costs savings for civilian personnel in its reports, and DOD concurred. Without including these cost data, Congress may not know whether DOD is on track to meet the mandated savings.
DOD has not developed and implemented an efficiencies plan for reducing the civilian and contracted services workforces, and DOD did not demonstrate how its reductions are consistent with workforce management laws in its February 2016 status report. Section 955 requires DOD to develop an efficiencies plan to reduce civilian personnel and costs for FYs 2012—2017, and for each FY through 2018 to submit a report that describes the implementation of the efficiencies plan. Furthermore, section 955 allows for DOD to grant civilian and contractor workforce exclusions from section 955 required reductions for areas identified as critical. For example, DOD reported that it excluded about 538,000 of 776,000 civilian FTEs. However, its reports do not provide a description indicating why these exclusions were chosen. In December 2015 GAO recommended that DOD include a comprehensive description of the efficiencies plan to achieve savings, and DOD concurred. Without an efficiencies plan, including an explanation of its exclusions, DOD has not provided Congress with information on how the department will achieve required savings.
section_title: What GAO Recommends
paragraphs: GAO previously recommended that DOD fully address ongoing section 955 requirements, such as including an efficiencies plan, among other things, in its subsequent reports. DOD agreed but has not yet implemented them. GAO is not making any new recommendations, but believes fully implementing the previous ones would better inform Congress. In comments, DOD stated it had implemented GAO's previous recommendations. DOD has taken some action, but GAO disagrees the recommendations have been fully implemented, as discussed in this report.

section_title: Letter
paragraphs: The Department of Defense (DOD) is one of the nation’s largest  employers, reporting that it has a total workforce of approximately 2  million active-duty and reserve military personnel, approximately 742,000  full-time equivalent (FTE) civilian personnel, and approximately 641,000  FTEs for contracted services. As military operations in Iraq were  concluded and those in Afghanistan were drawing down, DOD included in  its fiscal year 2013 budget submission a proposed 5 percent reduction in  military end strength over a 5-year period. In addition, given the fiscal  challenges facing the federal government, DOD has undertaken efforts to  achieve efficiencies in its operations over the past several years, to  include slowing the growth of and reducing spending on contracted  services.
Citing the need to balance civilian and contracted services personnel with  declines in military end strength, Section 955 of the National Defense  Authorization Act (NDAA) for Fiscal Year 2013 required the Secretary of  Defense to, among other things, develop and implement an efficiencies  plan to achieve savings in the total funding for the civilian and contracted  services that are not less, as a percentage, than the savings in funding for  basic military personnel pay resulting from reductions in military end  strengths from fiscal years 2012 through 2017. Section 955 also requires  the Secretary of Defense to issue a series of reports on DOD’s  implementation of that plan in the previous fiscal year, and includes a  provision that we review each of the reports DOD submits to Congress to  determine whether the required savings in the civilian and contracted  services are being achieved and whether the plan is being implemented  in a manner consistent with sourcing and workforce-management laws. In  December 2015 we reported that DOD’s initial report and its initial status  update did not fully address most statutory requirements identified in  section 955 of the NDAA for Fiscal Year 2013. We found that although  DOD reported reductions in its civilian FTEs, it did not report estimated  cost savings associated with its reductions, and our analysis indicated  that DOD may not achieve the savings required by section 955. We made  a number of recommendations for information to be included in future  status reports, with which DOD concurred, as discussed later in the  report.
In February 2016 DOD submitted its third report to Congress. This report  addresses the extent to which DOD’s February 2016 status report  demonstrates (1) DOD’s achievement of savings, as required by section  955 of fiscal year 2013 NDAA; and (2) DOD’s development and  implementation of its efficiencies plan that is consistent with workforce  management laws in fiscal year 2015, as required by section 955 of fiscal  year 2013 NDAA.
To determine the extent to which DOD’s February 2016 status report  demonstrates DOD’s achievement of savings, as required by section 955,  we reviewed section 955 to identify what levels of savings are required.  We then assessed DOD’s February 2016 status report to identify what  savings information was included in its report. We compared information  regarding DOD’s actual and estimated fiscal years 2012—2017  reductions in military basic pay against (1) DOD’s actual and projected  civilian workforce cost and full-time equivalent reductions from fiscal  years 2012—2017; and (2) DOD’s actual and projected contracted  services cost reductions from fiscal years 2012—2017, to determine  whether DOD is meeting its requirements. We also assessed the  methodology by which DOD calculated its estimated civilian workforce  savings. We reviewed our December 2015 report that used workforce  data and discussed the reliability of the data with Office of the Under  Secretary of Defense (OUSD) (Comptroller) officials. We determined that  these data were sufficiently reliable for the purpose of reporting on and  analyzing reductions to the civilian workforces.
To determine the extent to which DOD’s February 2016 report  demonstrates DOD’s development and implementation of its efficiencies  plan in fiscal year 2015, we reviewed section 955 of the fiscal year 2013  NDAA to identify requirements for DOD’s report. We reviewed and  analyzed DOD’s February 2016 status report to determine how, if at all, it  demonstrates that DOD has implemented an efficiencies plan. We  interviewed military department officials to determine the types of  guidance they received from the Office of the Secretary of Defense, if  any, and the extent to which they established their own guidance on  developing and implementing DOD’s plan required by section 955. We  also reviewed DOD’s February 2016 status report to determine which  workforces DOD has identified as being excluded from reduction  requirements, the basis for such exclusions, and how the report  demonstrates that reductions are consistent with workforce management  laws. For both objectives, we identified actions taken, if any, in response  to our 2015 report.
We conducted this performance audit from February 2016 to October  2016 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
subsections: section_title: Section 955 Statutory Requirements and Responsible DOD Offices
paragraphs: In January 2013, the NDAA for Fiscal Year 2013 was enacted into law.  Section 955 of the act required the Secretary of Defense to: develop and implement a plan to achieve savings in the total funding  for civilian and contractor workforces that are not less, as a  percentage, than savings in funding for basic military personnel pay  resulting from reductions in military end strengths from fiscal years  2012 through 2017; ensure that the plan is consistent with policies and procedures  required by 10 U.S.C. § 129a, and ensure that the savings are not  achieved through unjustified transfers of functions between or among  the military, civilian, and service contractor personnel workforces of  DOD, consistent with authorities available to the department under  sections 129a, 2330a, 2461, and 2463 of Title 10 of the United States  Code; provide status reports describing the implementation of the plan in the  prior year as part of the budget submitted by the President to  Congress for each of fiscal years 2015 through 2018; and  in each status report, provide a summary of savings achieved through  personnel reductions and the number of military, civilian, and  contractor personnel reduced in the prior fiscal year; and in each  status report include an explanation where any savings fall short of  the annual target.
Further, section 955 gives DOD authority to exclude certain civilian and  contractor workforces from reporting required reductions. These  exclusions are to be related to functions identified as core or critical to the  mission of the department. For example, in DOD’s initial and subsequent  status reports, DOD excluded the acquisition workforce, its cyber  workforce, and medical workforce, among others.
DOD’s reports were developed by the OUSD (Comptroller), which is the  department’s principal advisor on budgetary and financial matters and is  responsible for directing the development and overseeing the execution  of DOD’s annual budget.
section_title: GAO’s Prior Assessment of DOD’s Reports
paragraphs: In December 2015 we reported that for DOD’s initial report submitted to  Congress in September 2014 and its first status report submitted in  February 2015, DOD did not fully address most statutory requirements  identified in section 955 of the NDAA for Fiscal Year 2013. Section 955  has six requirements, and we reported that DOD had partially addressed  three requirements and did not address the other three requirements. For  example, DOD’s September 2014 report to Congress partially addressed  the requirement to develop and implement a plan for achieving savings by  outlining reductions in its civilian and contracted services workforces, but  DOD did not describe a process for implementing the planned reductions.  Also, DOD did not address the savings that the department intended to  achieve through reductions in the number of military, civilian, and  contracted services personnel. Instead, the report outlined reductions in  full-time equivalent positions, and it did not outline savings in funding for  the contracted services workforce beyond fiscal year 2015. See table 1  for our previous assessment of statutory requirements addressed in  DOD’s September 2014 and February 2015 reports on section 955 of the  NDAA for Fiscal Year 2013.
Based on our December 2015 assessment of DOD’s requirements, we  made a number of recommendations for information to be included in  status reports to be submitted in fiscal years 2017 and 2018. These  recommendations are intended to help ensure that Congress has the  necessary information to provide effective oversight over DOD’s  workforces and they include providing additional cost savings data and an  efficiencies plan, among others. DOD concurred with all of our  recommendations and stated that it would take action in its future reports.
section_title: DOD’s February 2016 Status Report Does Not Contain All Required Savings Data, and DOD Reported It Will Not Meet Its Contracted Services Reduction Requirement
subsections: section_title: DOD’s Report Does Not Contain All Required Data on Workforce Reductions
paragraphs: DOD’s February 2016 status report presents some, but not all, savings  data for the military, civilian, and contracted services workforces. Section  955 of the fiscal year 2013 NDAA requires DOD to achieve savings in  the total funding for the civilian and contract services workforces from  fiscal year 2012 through 2017 that are not less, as a percentage of the  funding for basic military personnel pay achieved from reductions in  military end strengths over the same time.
Further, section 955 requires DOD to submit with its annual budget  submission an annual status report in fiscal years 2015 through 2018.  DOD’s status reports are to include a summary of the savings achieved in  the prior fiscal year, in both costs and numbers of personnel, for military,  civilian, and contracted services personnel. Section 955 also provides  DOD with the authority to grant exclusions to civilian workforces identified  as core or critical to the mission. See table 2 for a summary of DOD’s  compliance with selected section 955 reporting requirements.
DOD’s February 2016 status report includes actual military average end  strength and civilian workforce full-time equivalent savings data for fiscal  years 2012 through 2015, or the most current actual data, but it does not  include fiscal years 2013 through 2015 cost savings data for the military  and civilian workforces. DOD’s status report also includes actual  contracted services cost data from fiscal years 2012 through 2015, but it  does not include contracted services personnel data for any of the fiscal  years. See table 3 for DOD reported military, civilian, and contracted  services savings from fiscal years 2012 through 2015.
subsections: section_title: Fiscal Year 2012 237,954
paragraphs: Officials stated that DOD did not include civilian and military workforce  costs for fiscal year 2015 because DOD interpreted the statute as  requiring them only to report the civilian cost savings achieved when  comparing costs from fiscal year 2012 to fiscal year 2017, and not each  fiscal year in between. Further, officials stated that they did not include  contractor full-time equivalent data for fiscal years 2012 through 2015  because, for section 955 and budget purposes, DOD does not measure  contracted services by contractor full-time equivalency. The department  did report contractor full-time equivalents in its annual Inventory of  Contracted Services, which provides data on contract service execution.  Officials stated that the department continues to institutionalize the  capabilities associated with the Enterprise-wide Contractor Manpower  Reporting Application (ECMRA) across all its components, and which will  continue to improve reporting of contractor full-time equivalents for the  prior fiscal year. For the budget years, officials stated the DOD will  continue to measure dollar amounts budgeted for the contracted services.  We reported in November 2015 that DOD continues to face challenges in  implementing its ECMRA system. According to DOD officials,  implementation of the system began in 2011, but it has yet to be fully  institutionalized, and officials were unable to provide a final  implementation date. Further, officials stated that DOD did not include  full-time equivalents (FTEs) for contracted services in the section 955  report because they were unable to provide an accurate number.
We recommended in December 2015 that DOD include in its status  reports the costs in civilian personnel and military basic pay for fiscal  years 2012 through 2017. DOD concurred with that recommendation, and  partially implemented it in its February 2016 status report. In that status  update DOD compared costs from fiscal year 2012 with those estimated  to be achieved in fiscal year 2017, but it did not include costs associated  with reductions for each fiscal year from 2012 through 2017. Furthermore,  although DOD included full-time equivalent data from fiscal years 2012  through 2015, we have reported that reductions in full-time equivalents  may not be a reliable measure of the costs of the civilian workforce. For  example, while FTE’s may go down, costs may go up due to a variety of  factors, including annual automatic pay increases. Without DOD’s fully  implementing the recommendation to include cost savings information for  the prior fiscal year, as required by section 955, Congress may not know  whether DOD is on track to meet its reduction requirements. As such, we  believe our previous recommendation is still valid.
section_title: DOD Estimates That It Will Meet Civilian Personnel Savings Requirements in Fiscal Year 2017, but That It Will Not Achieve Contracted Services Cost Savings Requirements
paragraphs: DOD estimates that it will meet its statutory requirement to reduce civilian  personnel costs in fiscal year 2017, but that it will not meet its  requirement to reduce contracted services costs. Section 955 of the  Fiscal Year NDAA states that DOD must reduce its civilian and contractor  workforces costs for fiscal years 2012 through 2017 at a rate that is not  less, as a percentage of such funding, than the reduction in military  personnel basic pay costs.
DOD reports that it will reduce military personnel costs by 6.4 percent  from fiscal year 2012 through fiscal year 2017, and it estimates that it will  reduce civilian personnel costs by 7.1 percent over the same time period.  However, DOD does not account for exclusions in its civilian workforce  savings calculation, as it uses the average full-time equivalent pay across  the civilian workforce. As noted above, section 955 gives DOD the  authority to exclude segments of the civilian workforce from the required  reductions. DOD excluded approximately 71.6 percent, or about 530,000,  of its civilian workforce from the reductions required by statute in fiscal  year 2017. These exclusions include workforces in the areas of  acquisition, cyber, medical, and safety and security, among others.  Because DOD excluded segments of the civilian workforce that may not  cost the same as the average full-time equivalent position, its cost  estimation calculations may not reflect actual savings. For example, DOD  excluded nearly 140,000 civilian acquisition personnel and nearly 60,000  civilian medical personnel in fiscal year 2017. As mentioned above, DOD  did not include actual civilian workforce savings from fiscal years 2012  through 2015, and officials noted that even if DOD had included actual  civilian personnel cost savings, it would only be an estimation based on  their calculation. The officials said that DOD does not have the ability to  identify savings for the applicable workforce because of broader  limitations inherent in the department’s accounting methodology. For  example, the officials stated that the exclusion categories are not part of  DOD’s accounting structure and therefore DOD does not have the ability  to report specific positions excluded and their associated costs. The  officials stated that DOD had held internal discussions regarding changes  necessary to the accounting structure that would allow the department to  meet various reporting requirements, but it was determined that a solution  would be too burdensome to implement in a timely manner without  significant costs.
DOD also reported that it will reduce contracted services costs by 5  percent over the time period, a percentage that does not meet the  required amount of reductions of not less, as a percentage of funding,  than the reductions in basic military pay—which is 6.4 percent. Section  955 requires that in any case in which savings fall short of the annual  target, the report shall include an explanation of the reasons for such a  shortfall. DOD reported that although the department has significantly  decreased advisory and assistance and other contracted services from  the fiscal year 2012 level, there have been increases in equipment  maintenance contracts as the department repairs and maintains its  equipment in order to maintain its global presence, which is why DOD did  not meet the contracted services reduction requirement. See table 4 for  DOD’s military, civilian, and contracted services actual and estimated  reductions.
We previously recommended that DOD provide an explanation for any  shortfall in its reduction for the civilian and contracted services  workforces, as well as a description of actions DOD is taking to achieve  the required savings. DOD concurred with our recommendation. While  DOD did provide an explanation in its February 2016 status report for its  shortfall in estimated contracted services reductions, it did not provide a  description of actions it is taking to achieve the required savings. We  continue to believe that our previous recommendation is valid and should  be fully implemented.
section_title: DOD Has Not Developed an Efficiencies Plan as Required by Section 955 of the Fiscal Year 2013 NDAA
subsections: section_title: DOD’s Report Does Not Include an Efficiencies Plan for Achieving Reductions
paragraphs: DOD’s February 2016 status report does not include an efficiencies plan  for reducing its civilian and contracted services workforces in fiscal year  2015. Section 955 of the fiscal year 2013 NDAA required DOD to develop  an efficiencies plan in order to reduce total funding for the civilian and  contractor workforce from fiscal year 2012 through fiscal year 2017 at a  rate not less, in percentage terms, than the savings in funding for basic  military personnel pay achieved from reductions in military end strengths  over the same period. The plan was to be developed within 90 days of the  enactment of the NDAA, which would have been April 4, 2013. We have  previously reported that DOD’s first two reports from September 2014 and  February 2015 do not include a comprehensive description of the  efficiencies plan for reductions that would provide congressional decision  makers with information on how the department will achieve required  savings.
Further, section 955 requires DOD to submit status reports each fiscal  year through 2018 that describes the implementation of the efficiencies  plan to reduce costs for the civilian and contracted services workforces,  and any modifications to the plan required due to changing  circumstances. DOD’s February 2016 report does not include a  description of the implementation of an efficiencies plan in fiscal year  2015 for achieving required reductions, as required by section 955.  Section 955 states that in the development and implementation of the  efficiencies plan, DOD may exclude certain civilian and contractor  workforces from reporting required reductions. These exclusions are to be  related to functions identified as core or critical to the mission of the  department. DOD excluded approximately 538,000 civilian full-time  equivalents of its approximately 776,000 civilian full-time equivalents from  required reductions for fiscal year 2012. These exclusions have been in  place since DOD’s first report in February 2014. However, while its  February 2016 report states that the civilian workforce exclusions were  selected because they are critical to the mission of the department, it  does not describe how this criticality selection was determined, or  whether DOD has assessed the need for changing the workforces it  excludes, and officials stated that the department’s rationale is not  included in other documents. According to OUSD (Comptroller) and  military department officials, the exclusions were decided upon during  discussions by OUSD (Comptroller) and the military departments prior to  DOD’s first report, in February 2014. Without a comprehensive  description of an efficiencies plan, including an explanation indicating how  exclusions were determined, DOD cannot provide congressional decision  makers with full information on their approach, or show how the  department will achieve required savings on the non-excluded workforce.
We previously recommended that DOD include a comprehensive  description of an efficiencies plan to achieve savings for the civilian  workforce and contracted services workforces for fiscal year 2012 through  2017. DOD concurred with our recommendation. Without including a  comprehensive plan, DOD cannot provide congressional decision makers  with complete information on how the department will achieve required  savings. Further, we previously recommended that status reports  included in the President’s budget request for fiscal years 2017 and 2018  should describe the implementation of the plan in the prior year. DOD  concurred with our recommendation. Without a description of the  implementation of the plan in the prior year, DOD cannot provide  congressional decision makers with information regarding decisions it has  made in order to achieve its goal, such as which workforces it has  excluded. We continue to believe that these recommendations are valid  and should be fully implemented.
section_title: DOD’s Status Report Did Not Demonstrate How Civilian and Contractor Reductions Are Consistent with Workforce Management Laws
paragraphs: DOD’s February 2016 status report refers to elements present in  workforce management laws, but it does not explain how savings are  being achieved in a manner consistent with workforce management laws.  Section 955 of the fiscal year 2013 NDAA states that the required plan  shall be consistent with workforce management laws under section 129a  of Title 10 of the U.S. Code. Section 129 of Title 10 outlines certain  restrictions on DOD’s management of civilian personnel, including a  requirement that the number of civilian personnel shall be managed solely  on the basis of and consistent with total-force management policies and  procedures established under section 129a, workload requirements, and  funds made available to the department each fiscal year. Section 129a of  Title 10 governs DOD’s general policy for total-force management, and  requires the Secretary of Defense to establish policies and procedures for  determining the most appropriate and cost-efficient mix of military,  civilian, and contractor personnel to perform the mission of the  department, among other things. DOD’s February 2016 status report  references its Strategic Workforce Plan, which we reported in July 2014  did not meet the statutory requirement to include an assessment of the  appropriate mix of military, civilian, and contractor personnel  capabilities, and states that in August 2016 the Deputy Secretary of  Defense directed a manpower review to measure DOD’s compliance level  with workforce management laws and other statutory requirements;  however, it does not provide the level of detail needed to determine  whether DOD’s method for achieving reductions is consistent with  workforce management laws.
We previously recommended that DOD include a description  demonstrating that the plan is consistent with policies and procedures  implementing workforce-management laws and steps that the department  is taking to ensure that no unjustified transfers between workforces take  place as part of the implementing plan. DOD concurred with our  recommendation but stated that the department’s plans to date are  consistent with and reflect workforce shaping and workload sourcing  requirements, as well as other criteria pertaining to manpower  requirement, such as risk mitigation. DOD also stated that the Office of  the Secretary of Personnel and Readiness remains actively engaged in  decisions affecting the workforce; that the department’s Planning,  Programming, Budgeting and Execution System process helps to ensure  that there are no unjustified transfers between workforces; and that any  changes are made in accordance with workforce management laws. DOD  included similar language in its February 2016 status report. However, as  mentioned above, the description lacks an explanation demonstrating  how the department’s reductions are consistent with workforce  management laws. Without this explanation, decision makers and  Congress will not be able to determine whether DOD’s actions are  consistent with policies and procedures for implementing workforce- management laws, and whether DOD is taking steps to ensure that no  unjustified transfers between workforces take place as part of the  implementing plan. We continue to believe that our previous  recommendation is valid.
section_title: Agency Comments and Our Evaluation
paragraphs: We are not making any new recommendations in this report and believe  that DOD’s fully implementing the previous recommendations is needed  to better inform the Congress. We provided a draft of this report to DOD  for review and comment. In its written comments, DOD noted that we are  not making new recommendations and stated that it has implemented the  recommendations from our December 2015 report. Although DOD has  taken some action in response to our December 2015 report, we disagree  that the recommendations have been fully implemented, as summarized  below. DOD’s comments are reprinted in appendix II.
In response to the recommendation in our December 2015 report to  include a comprehensive description of a plan to achieve savings for the  civilian workforce and contracted services workforces for fiscal year (FY)  2012 through 2017, DOD stated in its written comments that it included a  section that describes its plan, guidance, and implementation in its  February 2016 status report. DOD also stated that it continues to conform  to the principles and tenets of Strategic Workforce Planning and  continues to conform to the plan prescribed in the department’s Planning,  Programming, Budgeting, and Execution processes. DOD’s February  2016 report does reference its Strategic Workforce Plan and its Planning,  Programming, Budgeting, and Execution processes, however it does not  include a comprehensive description of an implementation plan that DOD  would use to achieve the congressionally mandated financial savings.  Without a comprehensive description of such a plan, congressional  decision makers do not have complete information on how the  department will achieve required section 955 savings.
In response to the recommendation in our December 2015 report to  include a description demonstrating that the plan is consistent with  policies and procedures implementing workforce-management laws and  steps that the department is taking to ensure that no unjustified transfers  between workforces take place as part of the implementing plan, DOD  stated in its written comments that its February 2016 status report  references DOD’s Strategic Workforce Plan, which outlines workforce  management laws that the department follows. It also states it has taken  actions outside of the February 2016 report to ensure that the department  remains in compliance with section 955 and other statutory requirements.  However, we reported in July 2014 that DOD’s Strategic Workforce Plan  for fiscal years 2013-2018 lacked required elements under section 115b  of Title 10 of the U.S. Code. Specifically, we found that the Strategic  Workforce Plan did not address all statutory reporting requirements, such  as the requirement to include an assessment of the appropriate mix of  military, civilian, and contractor personnel capabilities. In May 2013, we  recommended that DOD determine the appropriate workforce mix and as  of August 2016, DOD had not yet done so. Moreover, as we state in our  report, DOD’s February 2016 status report does not provide the level of  detail or an explanation needed to enable decision makers or Congress to  determine whether DOD’s method for achieving reductions is consistent  with workforce management laws.
In response to the recommendation in our December 2015 report that  status reports included in the President’s budget request for FY 2017 and  2018 should describe the implementation of the plan in the prior year,  DOD stated in its written comments that its February 2016 report timeline  covered FY 2012 to FY 2021 and therefore implemented the  recommendation. However, while DOD included numbers of reductions in  the civilian and military workforces for the previous fiscal year, it did not  include a description of how it is implementing its plan. For example,  section 955 requires DOD to submit status reports each fiscal year  through 2018 that describe the implementation of the efficiencies plan to  reduce costs for the civilian and contracted service workforces, and states  that in the development and implementation of the efficiencies plan, DOD  may exclude certain civilian and contractor workforces from reporting  required reductions. DOD excluded approximately 538,000 civilian full- time equivalents of its approximately 776,000 civilian full-time equivalents  from required reductions for fiscal year 2012. While its report states that  the civilian workforce exclusions were selected because they are critical  to the mission of the department, it does not describe how this criticality  selection was determined, or whether DOD has assessed the need for  changing the workforces it excludes.
In response to the recommendation in our December 2015 report to  include in its status reports the costs in civilian personnel and military  basic pay for fiscal years 2012 through 2017, DOD stated in its written  comments that it included in its February 2016 status report the number  and cost of military and civilian personnel reduced. As we discuss in our  report, DOD partially implemented the recommendation in its 2016 status  report and included the actual and estimated numbers of military and  civilian full-time equivalent reductions, and the costs associated with the  workforces in FY 2012 and FY 2017. However, DOD did not include the  costs associated with the workforces for each fiscal year in between, as  we recommended. Therefore, DOD has not yet fully implemented the  recommendation.
In response to the recommendation in our December 2015 report to  provide an explanation for any shortfall in its reduction for the civilian and  contracted services workforces, as well as a description of actions DOD is  taking to achieve the required savings, DOD stated in its written  comments it has met its civilian personnel cost reduction requirement,  and thus no explanation of any shortfall was required. In its February  2016 report DOD partially implemented our recommendation by providing  an explanation for estimated shortfalls for contracted services. In addition,  as we state in our report, DOD is estimating that it is on track to meet its  civilian personnel cost savings requirement in fiscal year 2017 and thus  did not need to include a description of any shortfalls. However, our  recommendation also was to include a description of the specific actions  DOD is taking to achieve the required savings.  DOD did not include such  a description in its February 2016 report and therefore DOD has not yet  fully implemented our recommendation.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Under Secretary of Defense  (Comptroller); and the Under Secretary of Defense (Personnel and  Readiness). 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  me 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 key contributions to this report  are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of our review were to evaluate the extent to which DOD’s  February 2016 status report demonstrates (1) DOD’s achievement of  savings, as required by section 955 of the Fiscal Year 2013 National  Defense Authorization Act (NDAA); and (2) DOD’s development and  implementation of its efficiencies plan that is consistent with workforce  management laws in fiscal year 2015, as required by section 955 of the  Fiscal Year 2013 NDAA.
To determine the extent to which DOD’s February 2016 status report  demonstrates DOD’s achievement of savings, as required by section 955,  we reviewed section 955 to determine what information is required to be  reported and what levels of savings are required. We then assessed  DOD’s February 2016 status report to determine what savings information  were included in its report for the civilian and contracted services  workforces. We compared savings information included against  information requirements in section 955. We also compared DOD’s actual  and projected fiscal years 2012 through 2017 reductions in military basic  pay against information included in DOD’s February 2016 status report on  (1) DOD’s actual and projected civilian workforce cost and full-time  equivalent reductions from fiscal years 2012 through 2017; and (2) DOD’s  actual and projected contracted services cost reductions from fiscal years  2012 through 2017. We also assessed the methodology for how DOD  calculated its actual and estimated civilian workforce savings to determine  whether DOD’s calculations accounted for exclusions to its workforce  reductions requirements. We reviewed our December 2015 report that  used workforce data and discussed the reliability of the data with OUSD  (Comptroller) officials. We determined that these data were sufficiently  reliable for the purpose of reporting on and analyzing reductions to the  civilian workforces.
To determine the extent to which DOD’s February 2016 report  demonstrates DOD’s development and implementation of its efficiencies  plan that is consistent with workforce management laws in fiscal year  2015, as required by section 955 of the Fiscal Year 2013 NDAA, we  reviewed section 955 of the Fiscal Year 2013 NDAA to identify  requirements for DOD’s report. We reviewed and analyzed DOD’s  February 2016 status report to determine how, if at all, it demonstrated  the implementation of an efficiencies plan. We interviewed officials from  the Departments of the Army, Navy, and Air Force to determine the types  of guidance they received from OSD, if any, and the extent to which they  established their own guidance on developing and implementing DOD’s  plan required by section 955. We also reviewed DOD’s February 2016  status report to determine whether DOD excluded workforces from the  civilian and contractor workforce reduction requirement. We interviewed  Office of the Under Secretary of Defense (Comptroller) officials and  officials from the Departments of the Army, Navy, and Air Force to gain  an understanding of how these workforces were excluded, the basis for  such exclusions, and when the exclusions were identified. We spoke with  officials from the Office of the Under Secretary of Defense (Comptroller)  and officials from the Departments of the Army, Navy, and Air Force  regarding what guidance was provided for the exclusions and how the  process took place in order to determine the exclusions. Further, we  requested documentation on the process that took place in order to  determine such exclusions. To determine the extent to which DOD’s  February 2016 report demonstrates that its reductions are consistent with  workforce management laws as required by section 955 we reviewed  DOD’s February 2016 status report and materials listed in the report and  interviewed officials at OUSD. We determined that the level of detail  included in DOD’s February 2016 report were not sufficient to conclude  whether or not DOD was in compliance with workforce management laws.  For both objectives, we identified actions taken, if any, in response to our  2015 report.
We conducted this performance audit from February 2016 to October  2016 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.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Vincent Balloon, Assistant  Director; Timothy Carr, Michael Silver, Norris “Traye” Smith, Sabrina  Streagle, Guiovany Venegas, and Cheryl Weissman made key  contributions to this report.
section_title: Related GAO Products