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 instruction also provides an approved list of major DOD headquarters activities, including the Offices of the Secretary of the Army and Army Staff; the Office of the Secretary of the Navy and Office of the Chief of Naval Operations; Headquarters, Marine Corps; and the Offices of the Secretary of the Air Force and Air Staff. All personnel working within these headquarters organizations are considered to be performing major headquarters activities functions. According to the instruction, other headquarters organizations include portions of the defense agencies, DOD field activities, and the combatant commands, along with their subordinate unified commands and respective service component commands. For example, according to DOD Instruction 5100.73, only personnel performing major headquarters activities functions in the Defense Information Systems Agency and Air Combat Command’s Intelligence Squadron would be considered headquarters, while personnel performing other functions would be excluded. Several DOD organizations have responsibilities related to major DOD headquarters activities, including those summarized below. The Office of the Deputy Chief Management Officer (ODCMO) is responsible for ensuring that DOD components are accurately identifying and accounting for major DOD headquarters activities, according to criteria established in DOD Instruction 5100.73. In addition, the Deputy Chief Management Officer has primary responsibility set forth under department guidance related to improving the efficiency and effectiveness of operations across DOD’s business functions, and is authorized by the Chief Management Officer to act as the Principal Staff Assistant to issue policy and guidance regarding matters relating to the management and improvement of DOD business operations. This has included responsibilities related to identifying and monitoring implementation of cost savings opportunities and efficiencies across DOD’s business areas. The Under Secretary of Defense for Personnel and Readiness, according to DOD Instruction 5100.73, is responsible for reviewing and issuing guidance over, and consolidating changes in, manpower authorizations and personnel levels for major DOD headquarters activities, among other things. In addition to these responsibilities, the Under Secretary of Defense for Personnel and Readiness also compiles the annual Defense Manpower Requirements Report, which provides DOD’s manpower requirements, to include manpower assigned to major headquarters activities, as reflected in the President’s budget request for the current fiscal year. The Under Secretary of Defense for Personnel and Readiness is also responsible for developing an annual guide for DOD components to use when compiling their IGCA Inventory submissions in response to statutory and regulatory reporting requirements. In addition, the Under Secretary of Defense for Personnel and Readiness shares responsibility—with the Under Secretary of Defense for Acquisition, Technology and Logistics and the Office of the Under Secretary of Defense (Comptroller)—for issuing guidance for compiling and reviewing the Inventory of Contracted Services. The Under Secretary of Defense for Personnel and Readiness in particular compiles the inventories prepared by the components. The heads of DOD components, including the Secretaries of the military departments, the Chairman of the Joint Chiefs of Staff, and the heads of other DOD components have responsibility, according to this instruction, for maintaining a management information system that identifies the number of personnel and total operating costs of major DOD headquarters activities, and reporting on these data to the Under Secretary of Defense (Comptroller). Since 2010, DOD has recognized that it must reduce the cost of doing business, including reducing the rate of growth in personnel costs and finding further efficiencies in overhead and headquarters, in its business practices, and in other support activities. Therefore, the department has pursued headquarters-related reduction efforts in recent years to realize cost savings. See appendix IV for additional details on these efforts. Since 2014, and in part to respond to congressional direction, DOD has undertaken initiatives intended to improve the efficiency of its business processes, which include headquarters organizations, and identify related cost savings, but it is unclear to what extent these initiatives will help the department achieve the savings it has identified. In May 2015, DOD concluded its Core Business Process Review, which was intended to apply lessons learned and information technology approaches from the commercial sector to the department’s six core business processes— management of human resources, healthcare, financial flow, acquisition and procurement, logistics and supply, and real property—in order to save money and resources while improving mission performance. Through this review, ODCMO identified $62 billion to $84 billion in potential cumulative savings opportunities across the six business processes for fiscal years 2016 through 2020. The review identified that these potential savings opportunities could be achieved through civilian personnel attrition and retirements to occur without replacements over the next 5 years, matching labor productivity in comparable industries or sectors, and improving core processes such as rationalizing organizational structures to reduce excessive layers, optimizing contracts, and using information technology to eliminate or reduce manual processes. According to ODCMO officials, DOD ultimately concluded that these potential savings opportunities could not entirely be achieved through these means. Nevertheless, ODCMO officials noted that DOD is already engaging in initiatives that, in effect, address the opportunities highlighted by the Core Business Process Review. The four department-led initiatives we reviewed that include headquarters organizations are concurrent and have varied scopes. Two of the initiatives are focused on OSD and its related organizations—one of these initiatives consists of a series of business process and systems reviews and the other initiative is a review focused on reducing the number of layers in OSD. A third initiative is focused specifically on contracted services requirements for DOD organizations outside the military departments known as the Fourth Estate. Finally, the fourth initiative—the review of the organization and responsibilities of DOD—is focused on updating or adjusting organizational relationships and authorities across the entire department, with a final report to possibly be issued later in 2016. The four initiatives were not completed, or their results were not available, in time for us to assess their effect, and therefore it is unclear to what extent they will contribute toward the savings identified by the Core Business Process Review. The initiatives are described in more detail below. In August 2014, DOD announced Business Process and Systems Reviews (BPSR), which, according to BPSR implementation guidance, are intended to review business processes and the supporting information technology systems within selected organizations in OSD and associated defense agencies and DOD field activities. The purpose of these BPSRs is to provide senior officials with information to clarify whether their organizations are aimed at departmental outcomes, to identify resources allocated to outcomes and any obstacles to achieving those outcomes, and to identify activities that might be improved or eliminated. As of April 2016, DOD had completed BPSRs for five of nine organizations. In some cases, organizations have taken steps to implement potential improvement and savings opportunities identified by the BPSRs. For example, as a result of a review of the ODCMO, the Deputy Secretary of Defense approved the implementation of a single service provider for the Pentagon’s information technology operations in May 2015. In other cases, it is unclear whether organizations have begun taking steps to implement the opportunities identified by the BPSR reviews. For example, the Office of the Assistant Secretary of Defense for Energy, Installations, and Environment identified a potential opportunity to reduce military construction costs by up to 3 percent through revisions to antiterrorism standards for DOD-owned buildings, but noted that this potential opportunity must first be subject to thorough analysis to fully appreciate its validity and return on investment. The department is currently working to complete BPSR reviews for four other organizations. According to ODCMO officials, DOD may conduct more BPSRs in the future but currently has no specific plans to do so once these four are completed. In July 2015, DOD announced an effort to reduce layers of management and staff—known as delayering—in the management structure of OSD and associated defense agencies and DOD field activities. According to OSD officials and DOD’s fiscal year 2017 budget request, the department intends to use this review to help respond to certain provisions in the National Defense Authorization Act for Fiscal Year 2016, namely, the 25 percent reduction to the headquarters baseline amount by fiscal year 2020 and the $10 billion in cost savings from headquarters, administrative, and support activities by fiscal year 2019. For this effort to reduce OSD organizational layers, the ODCMO has directed these organizations, with the support of an ODCMO team, to rationalize organizational layers and supervisory spans of control, as well as to identify redundant and obsolete workload and capture potential cost savings. ODCMO’s guidance to the organizations conducting the delayering reviews recommends, among other things, that the number of organizational layers in OSD should not be more than five, and that the capabilities and functional areas that have been historically assigned to an OSD organization will remain within the same organization, unless a functional assessment allows an opportunity for cross-organizational partnership and shared work activities. According to officials from ODCMO and the Office of the Under Secretary of Defense for Personnel and Readiness, the organizations have identified the civilian positions they intend to eliminate or restructure as part of the initiative. However, the results of the initiative are not yet publicly available. The Deputy Chief Management Officer stated that the department would issue a report, at an unspecified time, that will include the cost savings identified by this OSD Organizational Delayering initiative. According to the department’s budget request for fiscal year 2017, the objective of this OSD delayering review is to achieve $1.5 billion in cost savings from fiscal year 2018 through fiscal year 2021. Also in July 2015, DOD announced that it would seek to improve the outcomes of contracted services through standardized processes and governance structures. This initiative is intended, according to OSD officials, to help the department achieve the 25 percent headquarters reduction and the $10 billion in headquarters-related cost savings, which were directed by the National Defense Authorization Act for Fiscal Year 2016.