United States General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-278197 February 26, 1998 The Honorable Strom Thurmond Chairman The Honorable Carl Levin Ranking Minority Member Committee on Armed Services United States Senate The Honorable Floyd D. Spence Chairman The Honorable Ike Skelton Ranking Minority Member Committee on National Security House of Representatives The Fiscal Year 1996 National Defense Authorization Act requires that we annually assess the Army's efforts to streamline infrastructure activities and eliminate the inefficient use of personnel assigned to these activities. [1] The Army refers to personnel assigned to infrastructure activities as Tables of Distribution and Allowances (TDA), or institutional personnel. We fulfilled this mandate by assessing the extent to which the Army has (1) taken corrective action to resolve its material weakness in determining institutional personnel requirements and (2) identified opportunities to reduce personnel and realize savings through its Force XXI Institutional Redesign effort. We are also providing our views on whether these initiatives are producing the results necessary for the Army to improve the efficiency of its institutional workforce. Our scope and methodology are discussed in appendix I. Background Institutional personnel are generally nondeployable military and civilians who support Army infrastructure activities, such as training, doctrine development, base operations, supply, and maintenance. One major exception is in the medical area, since some personnel assigned to institutional positions are expected to deploy in wartime. A significant amount of the Army's personnel and budget are devoted to institutional functions. For example, the Army's Program Objective Memorandum for fiscal year 1998 included about 132,000 active Army and about 247,000 civilian institutional positions. These positions represented about 27 percent of the total active Army and 100 percent of Army civilians. Funding for institutional personnel totals about $18 billion per year. Army institutional functions have received increasing scrutiny in recent years because the Army has been unable to (1) support personnel requirements based on workload and (2) ensure that these functions are carried out in the most efficient and cost-effective manner. In addition, the Army continues to rely on its active personnel to perform institutional functions despite shortfalls in operational forces. The Army Audit Agency reported in 1992 and 1994 that the Army did not know its workload and thus could neither justify personnel needs and budgets nor improve productivity and efficiency. [2] Our February 1997 report recommended that the Secretary of the Army report to the Secretary of Defense, as a material weakness under the Federal Managers' Financial Integrity Act, the Army's long-standing problem with determining institutional personnel requirements without an analysis of the workload. The Army agreed with the recommendation and prepared a plan, as required by the act, to resolve the weakness. The plan was approved by the Assistant Secretary of the Array for Manpower and Reserve Affairs in October 1997. All corrective actions detailed in this plan are to be completed by December 1999. In January 1995, the Army began an effort to re-engineer institutional processes and redesign organizational structures so that the institutional Army would effectively and efficiently develop, generate, deploy, and sustain operational forces. The Army's re-engineering principles include eliminating unnecessary layering of functions and reducing the number of major headquarter commands. The Army stated that savings in active Army institutional positions are to be reinvested in the operational forces. The redesign effort, referred to as Force XXI Institutional Redesign, is to be conducted in three phases, with each phase examining different functions. Phase I was completed in March 1996, and phases II and III are expected to be completed in March 1998 and March 2000, respectively. In May 1997, the Secretary of Defense announced the results of the Quadrennial Defense Review, which included reducing 33,700 civilian Army positions and some active Army positions. [3] According to Army officials, these reductions would be in addition to the 13,000 positions already programmed between fiscal years 1998 and 2003 or those resulting from phase I redesign efforts. In September 1997, the Deputy Secretary of Defense introduced DOD's strategic plan to implement the Government Performance and Results Act. The plan contains six overall goals, including to ". . fundamentally re-engineer the Department and achieve a 21st Century infrastructure by reducing costs and eliminating unnecessary expenditures while maintaining required military capabilities." Army plans, such as the Force XXI Institutional Redesign effort, are to be linked to the overall goals in the strategic plan. Results in Brief The Army developed a corrective action plan to resolve its material weakness in determining institutional personnel requirements but may have difficulty achieving the plan's completion date. Two critical subplans have not been developed, one that implements a new costing system and another that develops a new computer-based methodology-the Army Workload Performance System. Without specific steps and milestones for both of these efforts, the Army lacks the tools it needs to ensure that the plan will be completed by December 1999. Milestones for both efforts have slipped from original estimates, and in the case of the computer-based methodology, the Army has missed some of its interim goals. In addition, a plan initiative to ensure that major commands use a 12-step methodology to analyze workload may not be implemented on time unless more personnel are assigned to the office responsible for this effort. Currently, personnel requirements programs at some major commands do not meet Army 12-step criteria. Until the costing system, computer-based methodology, and 12-step methodology are fully developed and integrated, the Army cannot be sure that it has the most efficient and cost-effective workforce (active military, reserve, civilian, or contractor) and that its institutional personnel requirements are based on workload, as regulations require. The Army's institutional redesign effort has not resulted in a reduction in major command headquarters, and the dollar and position savings identified are overstated. One redesign initiative resulted in the redesignation of a major command as a subcommand. However, the Army also created a new command, resulting in no net decrease in the number of commands. Also, the Army transferred a command but did not reorganize it to achieve efficiencies; therefore, this effort produced virtually no decrease in the command's 9,000 positions. Further, the Army anticipated $1.7 billion in savings from phase I efforts, but that amount win be at least $405 million less because significant implementation costs for some initiatives were not included in the Army's fiscal year 1998-2003 Program Objective Memorandum. Finally, the Army transferred about 2,800 active Army positions from institutional to operational forces based on two initiatives, but these initiatives did not produce the anticipated savings, and personnel cuts had to be made elsewhere. Even though the Army has appointed an executive agent for redesign assessments, no single office systematically manages and monitors redesign results. Thus, the Army does not know the status of specific initiatives, dollar savings, implementation costs, or progress in reducing institutional positions. Shortfalls in dollars and spaces add risk that the Army may not be able to provide adequate resources for all of its programs. Overall, the Army's efforts to establish workload-based requirements and redesign institutional functions have produced few results. Army personnel trend data from 1992 to 2003 show that the Army has not been successful in reducing the proportion of institutional to operating forces within the active Army. In addition, the Army does not currently have a workload basis for allocating its personnel resources among institutional organizations and ensuring that the highest priority functions are funded first. As a result, the Army may not have the analysis it needs to efficiently allocate many of the institutional positions that are programmed to be eliminated by fiscal year 2003 or additional reductions mandated by the Quadrennial Defense Review. Further, the Army's lack of progress in identifying efficiencies means that some active Army personnel are not available to fill shortages among operational forces, including deployable support forces, which have historically been underresourced. Without senior leadership attention, the Army's current initiatives may not achieve meaningful and measurable change. Footnotes [1] The act requires that we report our findings and conclusions to Congress by March 1 of each year from 1997 to 2002. Our first report issued under this legislative mandate was Force Structure: Army Support Forces Can Meet Two-Conflict Strategy With Some Risks (GAO/NSIAD-97-66, Feb. 28, 1997). [2] Managing Workload, Organizations And Staffing, Army Audit Agency (HQ 94-751, June 23, 1994) and Management Of Army Workload Of Tables Of Distribution And Allowances Organizations, Army Audit Agency (HQ 92-T2, Jan. 21, 1992). [3] DOD stated in January 1998 that, under the Quadrennial Defense Review, Army civilians would be reduced by 26,000 by fiscal year 2003 and 33,700 by fiscal year 2005. Back to Table of Contents Force Structure US Army Back to GAO List of Issues Back to MagWeb Magazine List © Copyright 1998 by US GAO. This article appears in MagWeb.com (Magazine Web) on the Internet World Wide Web. Other articles from military history and related magazines are available at http://www.magweb.com