Number of Headquarters Personnel Are Significantly Higher Than DOD Reports

The total number of personnel associated with DOD’s management headquarters and headquarters support activities are significantly higher than DOD has reported to Congress. However, DOD does not report personnel at most of its noncombat organizations that are directly subordinate to management headquarters. In our review of selected subordinate noncombat organizations, we found that almost three-fourths of the organizations were primarily performing management or management support functions and should have been reported to Congress by DOD, using the criteria in DOD Directive 5100.73. DOD’s Cost Data Are Unreliable

DOD reported a 19-percent decrease in management headquarters and headquarters support costs—from $5.3 billion to $4.3 billion—during fiscal years 1985-96, using constant 1997 dollars and PB-22 data. Headquarters Personnel and Costs Are Understated for Several Reasons

DOD’s management headquarters and headquarters support personnel and cost data are understated for several reasons. Sustained criticism from Congress about the size of DOD’s headquarters has been a disincentive for DOD to accurately report the number of such personnel and their related costs. Second, many DOD officials believe that they are required to report only personnel that make policy, allocate resources, or plan for the future, even though DOD Directive 5100.73 requires that headquarters support personnel be reported. Third, the directive’s criteria for analyzing organizations to determine whether they should be included in budget exhibits on management headquarters are complicated. Challenges Remain in Reducing Size of DOD Headquarters

DOD faces challenges in reducing the size of its management headquarters and headquarters support activities. While DOD wants to reduce the size and cost of its management headquarters to reallocate funds to other areas, it has not determined the scope of future reductions or developed a detailed plan for making the reductions. Determining whether and how much to reduce management headquarters is difficult because DOD has no generally accepted staffing standards to objectively size a management headquarters. Furthermore, DOD officials have a range of views on whether and how to reduce management headquarters further—some advocate significant reductions while others have no plans to reduce. DOD and Congress cannot rely on the data to determine trends in headquarters and help them make informed decisions about whether headquarters are appropriately sized. However, OSD/DA&M did not review the numbered air forces. Objectives, Scope, and Methodology

Our objectives were to determine (1) the accuracy and reliability of DOD’s reported data on management headquarters and headquarters support personnel and costs, (2) reasons that data on personnel and costs could be inaccurate, and (3) DOD’s plans to reduce the size of its management headquarters and headquarters support activities.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) program to account for its management headquarters and headquarters support activities, focusing on: (1) the accuracy and reliability of DOD's reported data on management headquarters and headquarters support personnel and costs; (2) reasons that data on personnel and costs could be inaccurate; and (3) DOD's plans to reduce the size of its management headquarters and headquarters support activities.

What GAO Found

GAO noted that: (1) DOD's annual budget exhibits to Congress on management headquarters and headquarters support are unreliable because the number of personnel and costs are significantly higher than reported; (2) neither DOD nor Congress can determine trends in headquarters personnel and costs to help them make informed decisions about the appropriate size of headquarters; (3) during fiscal years (FY) 1985-86, DOD reported steady decreases in its management headquarters and headquarters support personnel, however, these data did not include personnel at most of DOD's noncombat organizations that are subordinate to management headquarters; (4) in a review of selected subordinate organizations, GAO found that almost three-fourths were primarily performing management or headquarters support functions and should have been reported to Congress by DOD; (5) DOD's headquarters costs are also significantly higher than reported to Congress; (6) DOD's data indicate that management headquarters and headquarters support costs decreased from $5.3 billion to $4.3 billion in constant 1997 dollars during FY 1985-86, however, DOD's reported data did not include all costs; (7) DOD's reported headquarters personnel and cost data are understated for several reasons: (a) sustained criticism from Congress about the size of DOD's headquarters has been a disincentive; (b) many DOD officials believe that they are required to report only personnel that make policy, allocate resources, or plan for the future; (c) the criteria for determining whether organizations should be included in management headquarters are complicated; and (d) oversight has been limited; (8) DOD faces challenges in reducing the size of its headquarters; (9) DOD has not determined the scope of future reductions or developed a detailed plan for making the reductions; (10) DOD is examining the effects of a possible 15-percent reduction in management headquarters and support personnel during FY 1998-2003; (11) a Defense Reform Task Force is assessing the missions, functions, and size of the Office of the Secretary of Defense and other headquarters; (12) determining whether and how much to reduce management headquarters is difficult because DOD has no generally accepted staffing standards; and (13) DOD officials have a range of views on whether and how to reduce management headquarters, some advocating reduction while others have no plans for reduction.