DOD Has Initiated the Process to Determine DHA Personnel Requirements, but Cannot Determine the Effect of the DHA’s Establishment on MHS Administrative and Headquarters Personnel Levels

DOD has initiated a process for assessing the personnel requirements of  the DHA, but it continues to operate without information that would allow it  to determine the effect of the DHA’s establishment on the number of  headquarters and administrative personnel in the MHS. However, the DHA has just begun its  personnel requirements assessment, and DOD does not have a baseline  estimate of MHS administrative and headquarters personnel levels that  existed before the DHA was established. DOD Has Initiated a Process for Assessing the DHA’s Personnel Requirements, but This Process Has Been Delayed and Does Not Have a Detailed Timeline for Completion

DOD has initiated the process of assessing personnel requirements for  the DHA, but this analysis will not be finished by the DHA’s proposed full  operating capability in October 2015, and does not include a finalized  timeline for its completion. According to DHA officials, the assessment will  not be completed until September 2016. DOD concurred with the recommendation but  has not yet implemented it. DOD Has Developed a Business Case Analysis Approach to Help Achieve Cost Savings in Eight of the Ten Shared Services but Has Not Taken Fundamental Steps for the Remaining Two

DOD has developed a business case analysis approach to help achieve  cost savings and has applied this approach to eight of its ten shared  services; DOD has not, however, developed comprehensive business  case analyses for the remaining two shared services—Public Health and  Medical Education and Training. In November 2013, we highlighted concerns regarding the  basis of cost savings estimates and the potential impact of  implementation costs on the DHA’s shared service projects. In November 2013, we reported that, while the information in DOD’s  implementation plans generally reflected key characteristics of business  case analyses, DOD did not present sufficient information to explain the  basis for its cost-savings estimates. By sustaining its current  approach to shared services, DOD can help ensure it has a framework to  help it achieve cost savings. The DHA Has Made Progress in Developing Performance Measures to Assess Shared Services, but These Measures Do Not Fully Demonstrate Key Attributes of Successful Performance Measures

The DHA has made progress in developing measures to assess the  progress of its ten shared services toward achieving their respective  goals; however, these measures continue to not fully demonstrate key  elements that can contribute to success in assessing performance. Since our November 2013 review, DHA has made progress in developing  performance measures to assess its shared services. Specifically, all ten  shared services have measures that demonstrate at least some of these  attributes; however, collectively, they do not demonstrate all of the  attributes, as we had previously recommended. Clarity. Measurable Target. DOD’s further development of performance measures for the ten DHA  shared service projects shows progress toward addressing our prior  recommendation—to develop and present to Congress performance  measures that fully exhibit those key attributes identified in our prior work. Further, the DHA has made  significant improvements to its approach to achieving cost savings  through shared services. Recommendations for Executive Action

To provide decision makers with appropriate and more complete  information on the continuing implementation, management, and  oversight of the DHA, we recommend that the Secretary of Defense direct  the Assistant Secretary of Defense (Health Affairs) to take the following  five actions:
Develop a timeline for completion of the personnel requirements  assessment that includes milestones and interim steps;
Develop a comprehensive requirements assessment process that  accounts for needed future skills through the consideration of potential  organizational changes and helps ensure appropriate consideration of  workforce composition through the determination of the final status of  military personnel within the DHA;
Develop a plan for reassessing and revalidating personnel  requirements as the missions and needs of the DHA evolve over time;
Develop information concerning the number and cost of administrative  and headquarters personnel within the MHS and provide this  information as an annual exhibit in the President’s budget; and
Determine the future of the Public Health and Medical Education and  Training shared services by either identifying common functions to  consolidate to achieve cost savings or by developing a justification for  the transfer of these functions from the military services to the DHA  that is not premised on cost savings. In concurring with our recommendation that DOD develop a timeline for  completion of the personnel requirements assessment that includes  milestones and interim steps, DOD stated that it had developed a project  plan to track progress in this area. Therefore, we  continue to believe that our recommendation is valid. GAO-10-696.
Why GAO Did This Study

In 2013, DOD created the DHA to provide administrative support for the services' respective medical programs and combine common “shared” services to achieve cost savings. House Report 113-446 included a provision that GAO review DOD's progress in implementing the DHA. This report addresses the extent to which DOD has made progress in (1) assessing the personnel requirements of the DHA and its effect on MHS personnel levels; (2) developing an approach to achieving cost savings through shared services; and (3) fully developing performance measures to assess its shared services.
GAO reviewed DOD's personnel requirements assessment process, business case analyses, and performance measures for the DHA's shared services. GAO compared this information with key management practices and DOD guidance. Additionally, GAO interviewed officials from the DHA and the military services.

What GAO Found

Nearly 2 years after the creation of the Defense Health Agency (DHA), the Department of Defense (DOD) has made progress toward completing its implementation process, but has not addressed issues related to GAO's past recommendations regarding personnel requirements, an approach to cost savings, and performance measures.
Personnel - The DHA has initiated the process of assessing personnel requirements, but this process has been delayed, does not have a detailed timeline for completion with milestones and interim steps, and is not comprehensive. It does not address key issues—such as the effect of possible personnel growth in the DHA and workforce composition issues. DOD cannot determine the DHA's effect on the Military Heath System's (MHS) administrative and headquarters staff levels because (1) the DHA has not completed the personnel requirements assessment process and (2) it has not, as GAO recommended in November 2013, developed a baseline estimate of personnel in the MHS before the DHA was created. DOD stated that the requirements assessment process will not be completed until September 2016. Further, although DOD does not plan to develop a baseline estimate and is not tracking personnel-related savings, DOD can take steps that would contribute to the development of comprehensive personnel information, such as including information concerning the number and cost of administrative and headquarters personnel within the MHS in annual budget documents.
Approach to help achieve cost savings - The DHA has developed a business case analysis approach to help it achieve cost savings for 8 of its 10 DHA shared services. This approach largely addresses GAO's November 2013 recommendations that DOD provide more information on its cost savings estimates and monitor implementation costs. However, the DHA has not developed comprehensive business case analyses for 2 shared services—Public Health, and Medical Education and Training. Specifically, the DHA has proposed the transfer of their functions from the military services, but has not identified common functions to consolidate in order to achieve cost savings, which is the primary purpose of establishing shared services.
Performance measures – The DHA has made progress in developing measures to assess the progress of its10 shared services toward achieving their respective goals; however, these measures do not demonstrate some key elements that GAO has found can contribute to success in assessing performance, such as clarity, measurable targets, and baseline data. Specifically, all 10 DHA shared services have measures that demonstrate at least some of these attributes; however, collectively, they do not demonstrate all of the attributes, as GAO recommended in November 2013. These key attributes can help ensure that DOD officials have the information necessary to measure progress toward achieving the stated goals of the shared services. While DOD has made progress in the development of these performance measures, GAO's November 2013 recommendation that DOD develop performance measures that fully exhibit those key attributes is valid and should be completely implemented.

What GAO Recommends

In addition to GAO's prior recommendations, GAO is making a number of recommendations related to the DHA's personnel requirements and approach to achieving cost savings. DOD concurred with all but one recommendation to develop a plan for reassessing its personnel requirements, partially concurring and citing existing guidance. GAO continues to believe that current guidance in this area is insufficient, and that DOD would benefit from a plan for reassessing its personnel needs as the DHA's missions and needs evolve.