	Background

Believing DOD’s efforts to reduce its infrastructure, including the size of its headquarters activities, lagged behind cuts in operational forces, Congress directed DOD to reduce positions in OSD, including Washington Headquarters Services and other defense support activities, by 25 percent from fiscal year 1994 levels by the end of fiscal year 1999. In the November 1997 Defense Reform Initiatives (DRI) report, the Secretary of Defense directed OSD to reduce the number of personnel. Temporary staff are not to be used to perform continuing office functions. OSD and Its Support Activities Expect to Have Over 25 Percent Fewer Personnel by the End of Fiscal Year 1999

DOD plans to cut 1,373 positions in OSD and its support activities by the end of fiscal year 1999. These reductions would be 2 percentage points more than the 25-percent cut mandated in the National Defense Authorization Act for Fiscal Year 1997. Although the number of positions has been reduced, civilian salary costs (in constant dollars) have not decreased. As of the end of fiscal year 1998, DOD had cut 1,123 positions, or 82 percent of the planned reductions—858 positions in OSD and 265 positions in Washington Headquarters Services (see table 2). Salary costs did not decline commensurate with the personnel reductions partly because many of the positions eliminated were vacant and annual civilian pay raises exceeded the inflation rate. DOD Does Not Have a Plan to Reduce Headquarters Activities by 25 Percent

DOD does not have a plan to reduce management headquarters and headquarters support personnel DOD-wide by 25 percent by the end of fiscal year 2002, as required by the National Defense Authorization Act for 1998. The act requires DOD to cut about 13,300 positions in its headquarters activities. In November 1998, the military departments proposed the establishment of a task force, chaired by the Under Secretary of the Army, to develop alternatives for reducing DOD’s headquarters structure. Recommendation

We recommend that the Secretary of Defense determine the number and purpose of all personnel temporarily assigned to OSD by other DOD components. V), DOD concurred with our recommendation and noted that it is developing a system to account for all personnel detailed to OSD from other DOD components. Specifically, DOD said the report does not include (1) the reason it requested relief from the 25-percent reduction required by the National Defense Authorization Act for Fiscal Year 1998 and (2) the principal reason civilian pay costs did not come down between fiscal year 1994 and 1998.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts to reduce the size and cost of its headquarters activities, focusing on DOD's: (1) efforts to reduce headquarters positions and associated costs in the Office of the Secretary of Defense (OSD) and Washington Headquarters Services, as required by the National Defense Authorization Act for Fiscal Year 1997; (2) efforts to reduce headquarters positions across DOD as required by the National Defense Authorization Act for Fiscal Year 1998; and (3) reporting of personnel on temporary assignment to OSD from other DOD components.

What GAO Found

GAO noted that: (1) to comply with the requirement in the National Defense Authorization Act for Fiscal Year 1997, DOD plans to reduce OSD and its support activities by about 1,373 positions, or 27 percent, from its fiscal year (FY) 1994 levels by the end of FY 1999; (2) as of the end of FY 1998, DOD had cut 1,123 positions; (3) the majority of the cuts were based on DOD's November 1997 Defense Reform Initiatives report, which recommended that some offices be reorganized and that operational and program management functions be transferred to other DOD activities; (4) although the positions in OSD and its support activities have been reduced, civilian salary costs have not decreased because many of the positions eliminated were vacant and annual civilian pay raises have exceeded the inflation rate; (5) DOD plans to eliminate the remaining 250 positions in FY 1999; (6) DOD may not be accurately accounting for all personnel assigned to OSD; (7) some personnel temporarily assigned to OSD by other DOD components are functioning more as permanent staff and are not being reported as OSD personnel; (8) DOD has plans to cut about 5,600 positions across its headquarters activities by the end of FY 2002; (9) this is less than half of 13,300 cuts required by the National Defense Authorization Act for Fiscal Year 1998; (10) according to OSD officials, DOD did not develop plans consistent with the legislation because the Secretary of Defense had sought relief from the 1998 legislative requirement; and (11) however, when Congress did not repeal the provision, the services proposed that a task force be established to develop alternatives for reducing the headquarters' structure.