§ 129a, and to 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 an initial report including a comprehensive description of the  plan to achieve savings no later than 120 days after enactment of the  NDAA; 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; in each status report, provide a summary of savings achieved through  personnel reductions and the number of military, civilian, and  contractor personnel reduced; and  in each status report include an explanation where any savings fall  short of the annual target. DOD’s Reports and Roles and Responsibilities

DOD has submitted two reports to Congress in response to section 955. DOD’s Reports Did Not Fully Address Most of the Statutory Requirements

DOD’s September 2014 and February 2015 reports did not fully address  most statutory requirements related to the civilian and contractor  workforces. Specifically, of the six statutory requirements, DOD partially  addressed three statutory requirements and did not address three  statutory requirements. Achieving Required Cost Savings in Civilian Workforce Is Uncertain Due to Incomplete Reporting by DOD, and Planned Increases in Contract Workforce Spending Pose a Challenge to Achieving Required Savings DOD Has Made Civilian Personnel Reductions, but the Reductions May Not Achieve Required Savings

According to its section 955 reports, DOD has made civilian personnel  reductions; however, our analysis shows that the reductions may not  achieve the savings required by section 955. Section 955 requires DOD  to achieve savings in the cost of the civilian and contractor workforces  between fiscal year 2012 and fiscal year 2017 not less than the savings in  military basic pay, in percentage terms, resulting from reductions in  military end strength over the same period, and also requires DOD to  report on the savings achieved in each of its annual status reports. In its  reports, however, DOD provides information on reductions to civilian full- time equivalents (FTE), but does not report the civilian personnel costs  associated with the reductions, and as a result it is not clear whether its  reductions will achieve the savings required under section 955. Because  DOD’s focus has been on making and reporting FTE reductions, not cost  savings as required by 955, DOD and Congress do not have information  on the extent to which the reductions will achieve savings, and DOD may  risk falling short of the statutory requirement for cost savings in the civilian  workforce. DOD has not provided an  explanation of the reasons for the shortfall as required by section 955. Based on our analysis of DOD’s section 955 reports and related  documents, DOD would need to reduce its spending on the contractor  workforce by about $4.1 billion between fiscal year 2012 and fiscal year  2017 in order to match the approximately 7.0 percent level of reduction in  military average strength over the same period. If carried out, this will mean that about half the reduction to  contractor workforce spending through fiscal year 2017 that DOD has  identified as its goal remains to be made. In addition, the official stated that complying with spending  limitations under section 808 of the NDAA for Fiscal Year 2012, rather  than section 955, has been a main focus of their efforts to limit spending  on the contractor workforce in recent years. Without this information, however, it is uncertain whether DOD  will achieve the required section 955 savings in contractor spending or  whether Congress will have the information needed to have insight into  what additional actions are required to achieve this goal. The information to be included in future status  reports includes a comprehensive description of a plan to achieve savings for the  civilian workforce and contractor workforce for fiscal year 2012  through fiscal year 2017; a description demonstrating that the plan is consistent with policies  and procedures implementing workforce-management laws and steps  the department is taking to ensure that no unjustified transfers  between workforces take place as part of the implementing plan; status reports to be included in the President’s budget request for  fiscal years 2017 and 2018 describing the implementation of the plan  in the prior year; the cost of covered civilian personnel and military basic pay for fiscal  years 2012 through 2017, and an assessment of these costs in regard  to their compliance with the statutory requirements set forth in section  955; and an explanation for any shortfall in its reductions for the civilian and  contractor workforces, and a description of actions DOD is taking to  achieve the required savings. Appendix I: Scope and Methodology

To determine the extent to which the Department of Defense’s (DOD)  September 2014 and February 2015 reports met the requirements  specified in section 955 of the National Defense Authorization Act (NDAA)  for fiscal year 2013, we reviewed DOD instructions and other related  documentation to identify DOD’s efforts to address the statutory  requirements of section 955.
Why GAO Did This Study

With long-term fiscal challenges likely to continue, DOD must operate strategically and efficiently, including through cost-effective management of its human capital. Section 955 of the NDAA for Fiscal Year 2013 required DOD to, among other things, develop and implement a plan to achieve savings in the total funding for civilian and contractor workforces from fiscal years 2012 through 2017.
Section 955 also includes a provision that GAO review each of the Section 955 reports DOD submits to Congress to determine whether the required savings are being achieved and whether the plan is being implemented consistently with workforce-management laws.
This report addresses the extent to which (1) DOD, as shown in its September 2014 and February 2015 reports, is meeting the requirements specified in section 955 and (2) has achieved the cost savings required under section 955 and identified the savings in these reports. GAO reviewed the two reports DOD has submitted to Congress and supporting documents and interviewed cognizant officials.

What GAO Found

The Department of Defense's (DOD) September 2014 and February 2015 reports did not fully address most statutory requirements identified in section 955 of the National Defense Authorization Act (NDAA) for fiscal year 2013. Specifically, DOD partially addressed three statutory requirements and did not address three statutory 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 contractor workforces, but DOD does not describe a process for implementing the planned reductions. Also, DOD did not address savings the department intends to achieve through reductions in the number of military, civilian, and contractor personnel. Instead the report outlined reductions in full-time equivalent (FTE) positions, which may not equate to savings, and did not outline savings in funding for the contractor workforce beyond fiscal year 2015. Without this information, Congress has limited assurance on how the department will achieve required savings and whether the savings will be achieved in a manner that is consistent with workforce-management laws.
Moreover, according to its reports, DOD has made civilian personnel reductions; however, GAO's analysis indicates that the reductions may not achieve the savings required by section 955, and DOD has not provided an explanation of the reasons for the projected shortfall in achieved savings in the contractor workforce. Section 955 requires DOD to achieve savings in the cost of the civilian and contractor workforces between fiscal year 2012 and fiscal year 2017 at least as large in percentage terms as the savings in military basic pay resulting from reductions in military end strength over the same period. In its section 955 reports, DOD reports on reductions to civilian FTEs, but does not report the civilian personnel savings associated with the reductions. Civilian FTEs by themselves, however, may not be reliable measures of the cost of the civilian workforce. For instance, GAO's analysis shows that from fiscal years 2012 through 2016, civilian FTEs declined by 3.3 percent, but civilian personnel costs declined by only 0.9 percent adjusted for inflation. Because DOD's focus has been on making and reporting on FTE reductions, DOD and Congress lack information on the extent to which the reductions will achieve savings, and DOD may risk falling short of the statutory requirement for cost savings in the civilian workforce. In addition, in its fiscal year 2016 budget, DOD shows a planned increase in spending on the contractor workforce that, if carried out, will mean that about half the reduction to contractor workforce spending that DOD has identified as its goal through fiscal 2017 remains to be achieved. Further, GAO's analysis shows that DOD would need to reduce its spending on the contractor workforce by about $4.1 billion from fiscal year 2012 through fiscal year 2017 in order to match the approximately 7.0 percent reduction in military average strength over the same period. DOD has not provided an explanation of the reasons for the shortfall as required by section 955, in part because complying with other statutory requirements has been a main focus of DOD's efforts to limit spending on the contractor workforce. Without this information, it is uncertain whether DOD will achieve the required section 955 savings in contractor spending, which hinders Congress's insight into what additional actions are required to achieve this goal.

What GAO Recommends

GAO recommends that the Secretary of Defense fully address ongoing section 955 requirements in its next two status reports to Congress. DOD generally concurred with the recommendation.