The concept of the COO/CMO position largely came out of the creation of performance-based organizations (PBO) in the federal government in the late 1990s and early in this decade. During that time, the administration and Congress renewed their focus on the need to restructure federal agencies and hold them accountable for achieving program results. To this end, three PBOs were established, which were modeled after the United Kingdom’s executive agencies. A PBO is a discrete departmental unit that is intended to transform the delivery of public services by having the organization commit to achieving specific measurable goals with targets for improvement in exchange for being allowed to operate without the constraints of certain rules and regulations to achieve these targets. The clearly defined performance goals are to be coupled with direct ties between the achievement of the goals and the pay and tenure of the head of the PBO, often referred to as the COO. The COO is appointed for a set term of typically 3 to 5 years, subject to an annual performance agreement, and is eligible for bonuses for improved organizational performance. With the backdrop of these PBOs and an ongoing focus on transforming organizational cultures in the federal government, we convened a roundtable of government leaders and management experts on September 9, 2002, to discuss the COO concept and how it might apply within selected federal departments and agencies. The intent of the roundtable was to generate ideas and to engage in an open dialogue on the possible application of the COO concept to selected federal departments and agencies. It was generally agreed at this roundtable discussion that the implementation of any approach should be determined within the context of the specific facts and circumstances that relate to each individual agency. Nonetheless, there was general agreement on the importance of the following actions for organizational transformation and management reform: Elevate attention on management issues and transformational change. Top leadership attention is essential to overcome organizations’ natural resistance to change, marshal the resources needed to implement change, and build and maintain the organizationwide commitment to new ways of doing business. Integrate various key management and transformation efforts. There needs to be a single point within agencies with the perspective and responsibility—as well as authority—to ensure the successful implementation of functional management and, if appropriate, transformational change efforts. Institutionalize accountability for addressing management issues and leading transformational change. The management weaknesses in some agencies are deeply entrenched and long-standing, and it can take at least 5 to 7 years of sustained attention and continuity to fully implement transformations and change management initiatives. In the time since the 2002 roundtable, legislative proposals have been introduced and are still pending in this Congress to establish CMO positions at DOD and DHS to help address transformation efforts at the two departments, both of which are responsible for various areas identified on our biennial update of high-risk programs. These legislative proposals differ somewhat in content but would essentially create a senior-level position to serve as a principal advisor to the secretary on matters related to the management of the department, including management integration and business transformation. Some of these legislative proposals also include specific provisions that spell out qualifications for the position, require a performance contract, and provide for a term appointment of 5 or 7 years. At the present time, no federal department has a COO/CMO-type position with all these characteristics. In August 2007, the proposal for the Undersecretary for Management position at DHS to become the CMO at an Executive Level II, but without a term appointment, was enacted into law. DOD issued a directive on September 18, 2007, that assigned CMO responsibilities to the current Deputy Secretary of Defense in addition to his other responsibilities. However, as I will discuss later in this statement, we do not believe that these actions go far enough. The heads of federal departments and selected agencies designate a COO, who is usually the deputy or another official with agencywide authority, to sit on the President’s Management Council. However, deputy secretaries and the other senior officials designated as COOs do not have all of the characteristics of a COO/CMO that I just described, including a term appointment and performance agreement. The council was created by President Clinton in 1993 in order to advise and assist the President and Vice President in ensuring that management reforms are implemented throughout the executive branch. The Deputy Director for Management of OMB chairs the council, and the council is responsible for improving overall executive branch management, including implementation of the President’s Management Agenda (PMA); coordinating management-related efforts to improve government throughout the executive branch and, as necessary, resolving specific interagency management issues; ensuring the adoption of new management practices in agencies throughout the executive branch; and identifying examples of, and providing mechanisms for, interagency exchange of information about best management practices. Because each agency has its own set of characteristics, challenges, and opportunities, the type of COO/CMO to be established in a federal agency should be determined within the context of the specific facts and circumstances surrounding that agency. Nevertheless, a number of criteria can be used to determine the type of COO/CMO position for an agency. These criteria are the agency’s history of organizational performance, such as the existence of long- standing management weaknesses and the failure rates of major projects or initiatives; degree of organizational change needed, such as the status of ongoing major transformational efforts and the challenge of reorganizing and integrating disparate organizational units or cultures; nature and complexity of mission, such as the range, risk, and scope of the agency’s mission; organizational size and structure, such as the number of employees, geographic dispersion of field offices, number of management layers, types of reporting relationships, and degree of centralization of decision making; and current leadership talent and focus, such as the extent of knowledge and the level of focus of the agency’s managers on management functions and change initiatives, and the number of political appointees in key positions. These five criteria are important for determining the appropriate type of COO/CMO position, which in turn can inform many other elements of the position, including roles and responsibilities, job qualifications, reporting relationships, and decision-making structures and processes. Based on these criteria, there could be several types of COO/CMO positions, including the following: The existing deputy position could carry out the integration and business transformation role. This type of COO/CMO might be appropriate in a relatively stable or small organization. A senior-level executive who reports to the deputy, such as a principal undersecretary for management, could be designated to integrate key management functions and lead business transformation efforts in the agency. This type of COO/CMO might be appropriate for a larger organization. A second deputy position could be created to bring strong focus to the integration and business transformation of the agency, while the other deputy position would be responsible for leading the operational policy and mission-related functions of the agency. For a large and complex organization undergoing a significant transformation to reform long- standing management problems, this might be the most appropriate type of COO/CMO. To address long-standing management and business transformation problems, we have long advocated that DOD and DHS could benefit from a senior-level COO/CMO position, with a term appointment of at least 5 to 7 years, and a performance agreement. We continue to identify DOD’s approach to business transformation and implementing and transforming DHS on GAO’s biennial high-risk list of programs. DOD dominates our list of agencies with high-risk programs designated as vulnerable to waste, fraud, and abuse of funds, bearing responsibility, in whole or in part, for 15 of 27 high-risk areas. While DOD has recently designated the current DOD Deputy Secretary as the CMO in addition to his other responsibilities, we believe this action does not go far enough to change the status quo and ensure sustainable success of the overall business transformation effort within the department. We recognize the commitment and elevated attention that the current Deputy Secretary of Defense and other senior leaders have clearly shown in addressing deficiencies in the department’s business operations. For example, the Deputy Secretary has overseen the creation of various business-related entities, such as the Defense Business Systems Management Committee and the Business Transformation Agency, and has been closely involved in monthly meetings of both the Defense Business Systems Management Committee and the Deputy’s Advisory Working Group, a group that provides departmentwide strategic direction on various issues. In our view, subsuming the duties within the responsibilities of the individual currently serving as the Deputy Secretary largely represents a continuation of the status quo and will not provide full-time attention or continuity as administrations change. While the Deputy Secretary may be at the right level, the substantial demands of the position make it exceedingly difficult for the incumbent to maintain the focus, oversight, and momentum needed to resolve business operational weaknesses, including the many high-risk areas within DOD. Furthermore, the assignment of CMO duties to an individual with a limited term in the position does not ensure continuity of effort or sustained success within and across administrations. We continue to believe a CMO position should be codified in statute as a separate position, at the right level, and with the appropriate term in office. In fact, consensus exists among GAO’s work and other studies (e.g. the Defense Business Board and the Institute for Defense Analysis),that DOD needs a full-time senior management official with a term appointment to provide focused and sustained leadership over business transformation efforts. Additionally, DHS is experiencing particularly significant challenges in integrating its disparate organizational cultures, and multiple management processes and systems, which make it an appropriate candidate for a COO/CMO as a second deputy position or alternatively as a principal undersecretary for management position. Designating the Undersecretary for Management at DHS as the CMO at an Executive Level II is a step in the right direction, but this change does not go far enough.