	Background

The Office of Personnel Management (OPM) has identified two different  kinds of furloughs—an administrative furlough, which is a planned event  by an agency designed to absorb reductions necessitated by downsizing,  reduced funding, lack of work, or other budget situation other than a lapse  in appropriations, and a shutdown furlough, which results from a lapse in  appropriations. In addition, in January  2013, DOD reduced its spending to prepare for a potential sequestration,  a process of automatic, largely across-the-board spending reductions  under which budgetary resources are permanently canceled to enforce  certain budget policy goals. DOD Implemented a 6-Day Administrative Furlough of Its Civilian Personnel and Reported Approximately $1 Billion in Savings

		DOD Issued Guidance Directing the Implementation of an Administrative Furlough of Its Civilian Personnel

On May 14, 2013, the Secretary of Defense, in an effort to minimize  adverse affects on military readiness, issued a memorandum that  directed a furlough of most of its civilian personnel in response to major  budgetary shortfalls from the sequestration. The  memorandum listed categories of exceptions to the furlough, including  personnel assigned to a combat zone, those necessary to protect the  safety of life and property, and Navy shipyard employees. The Assistant Secretary of Defense for Readiness and Force  Management issued clarifying guidance throughout the planning and  implementation of the furlough that, among other things, provided  standard templates for the proposal and decision notice letters to prepare  and issue to civilian employees.provide clarification on the use of leave without pay during the time of the   In addition, guidance was issued to  furlough; to help ensure that borrowed military personnel were not used to  compensate for work resulting from the furlough; and to prohibit  contracted support from being assigned or permitted to perform additional  work or duties to compensate for workload or productivity loss resulting  from the furlough. On August 6, 2013, the Secretary of Defense issued a memorandum  reducing the number of furlough days from 11 to 6 days for most civilians. DOD Reported Cost Savings of Approximately $1 Billion from the Administrative Furlough

As a result of DOD furloughing 624,404 civilians, the Office of the  Comptroller reported that the department saved approximately $1 billion  from the furlough. DOD Did Not Use Comprehensive and Updated Information on Estimated Cost Savings to Inform Its Decisions

DOD developed an estimated cost-savings for the furlough to assist in  planning efforts to meet sequestration cost-reduction targets; however,  DOD did not exclude pay for those excepted from the furlough and did not  update its estimate throughout the furlough period as more information  became available, such as real-time cost savings and when subsequent  decisions were made to reduce the number of furlough days. Further the per person per  day cost savings effects the total estimated savings. Officials we interviewed also described specific impacts that they believe  can be attributed to the furlough, such as decline in civilian morale,  attrition, mission delays, inconsistencies and clarification issues with the  furlough guidance, and impacts on servicemembers’ morale. Further, DOD civilians filed  over 32,000 appeals to the Merit Systems Protection Board related to the  furlough in 2013. The following are examples of impacts reported by officials at the  locations we visited that they believe can be linked to the implementation  of the furlough:
Decline in Morale—Officials at all three sites stated that civilian  morale declined due to the civilian workforce furlough that resulted in  a 20 percent reduction in pay per week for 6 weeks. Further, because DOD only had 1 week’s worth  of civilian payroll data at the time it reduced the number of furlough days,  it did not track cost savings in real time. While DOD was able to mitigate the furlough as a result  of transfer and reprogramming actions, DOD may face future furloughs  where it may be limited in how much funding is available to transfer and  reprogram and the length of a potential furlough period may be longer,  thus having comprehensive, up-to-date information for decision makers  would be important. Recommendation for Executive Action

To help ensure that DOD is better informed in its decision-making  processes, we recommend that the Secretary of Defense direct the Under  Secretary of Defense (Comptroller) and the Under Secretary of Defense  for Personnel and Readiness to utilize comprehensive and up-to-date  furlough cost-savings information as it becomes available in the event  that DOD decides to implement another administrative furlough in the  future. DOD stated that it had several  concerns with the findings in the report. As we stated  in the report, DOD calculated a cost estimated savings of $300  per person per day and used this estimate in discussions including  the initial decision to furlough until it decided to reduce the number  of furlough days from 11 to 6 days even though additional  information was available regarding which civilians DOD  excepted, as the exceptions decision was made 3 months earlier. However, DOD did not initially include or update the estimated  savings per person per day of $300 to account for the 142,602  civilians that were excepted from the furlough. Key contributors to this report are listed in  appendix V.

Appendix I: Objectives, Scope and Methodology

This report: (1) examines how the Department of Defense (DOD)  implemented its civilian workforce furloughs and any reported cost  savings, (2) examines the extent to which DOD utilized up-to-date cost- savings information in the planning and implementation of civilian  workforce furloughs, and (3) identifies any reported examples of impacts  that resulted from the DOD civilian workforce furloughs.
Why GAO Did This Study

In March 2013, DOD's discretionary budget was reduced by $37 billion as a result of sequestration—across-the-board spending reductions to enforce certain budget policy goals. In response, the Secretary of Defense implemented an administrative furlough, among other things by placing most of DOD's civilian personnel in a temporary nonduty, nonpay status. An administrative furlough is a planned event by an agency to absorb reductions due to budget situations other than a lapse in appropriations.
GAO was mandated to review DOD's implementation of its administrative furlough. This report (1) examined how DOD implemented its furloughs and any reported cost savings, (2) examined the extent to which DOD utilized up-to-date cost-savings information in the planning and implementation of furloughs, and (3) identified any reported examples of impacts that resulted from the furloughs. GAO reviewed DOD furlough guidance, interviewed officials, and conducted visits at selected sites that were selected to represent different categories of furlough exceptions and potential sequestration impacts, among other things.

What GAO Found

In January 2013, the Department of Defense (DOD) instructed components to plan for the possibility of up to a 22-day administrative furlough of civilian personnel. On May 14, 2013, the Secretary of Defense issued a memorandum directing up to an 11-day furlough of most of DOD's civilians, and on August 6, 2013, reduced the number of furlough days to 6, resulting in a cost savings of about $1 billion from civilian pay, excluding implementation costs. DOD officials stated the decision to reduce the number of furlough days was due to DOD gaining greater flexibility from fund transfers and reprogrammings that occurred towards the end of the fiscal year. DOD identified categories of furlough exceptions for personnel including those assigned to a combat zone and those necessary to protect safety of life and property. Clarifying guidance was issued to help ensure that borrowed military personnel were not used to compensate for work resulting from the furlough, and to prohibit contracted support from being assigned or permitted to perform additional work or duties to compensate for workload or productivity loss resulting from the furlough. Ultimately, DOD furloughed 624,404 civilians and excepted 142,602 civilians for 6 days.
DOD developed its initial estimated cost savings for the furlough without excluding pay for those excepted from the furlough and did not update its estimate throughout the furlough period as more information became available, such as real-time cost savings and when subsequent decisions were made to reduce the number of furlough days. The initial estimated cost savings were calculated at $300 per person per furlough day, totaling about $2.1 billion for 11 furlough days. When DOD reduced the furlough from 11 to 6 days, the estimated cost savings were reduced by about $900 million. However, the estimated savings per person per day was not updated to reflect actual payroll reductions, in part because, according to DOD officials, there was only 1 week's worth of payroll data available at the time the decision was made. While officials stated that the estimated savings per person per day was not updated because they thought it was sufficient for their purposes and that the decision to reduce the number of furlough days was primarily based on funding received from transfers and reprogramming actions, the determination of exceptions was made 3 months earlier. If this initial estimate had been updated it may have provided more-comprehensive information for DOD officials to consider regarding the length of the furlough and DOD's cost-savings estimate. As DOD continues to face budgetary uncertainty, and in the event of a future furlough, having comprehensive and updated cost information may help better inform decision makers.
Officials at selected sites GAO visited noted a number of actions taken to prepare for the furlough and described impacts of the furlough, such as decline in morale, mission delays, and inconsistencies and clarification issues with the furlough guidance. However, attributing these impacts directly to the furlough is difficult given other factors, such as a civilian hiring freeze and pay freeze that may also have contributed to declining morale. For example, satisfaction with the organization had declined from 63 percent in 2010 to 55 percent in 2013. Furthermore, a longer term impact may result from DOD civilians filing over 32,000 appeals related to the administrative furlough in 2013, most of which have not yet been resolved.

What GAO Recommends

GAO recommends that DOD update and utilize its furlough cost-savings information as it becomes available in the event that it decides to implement another administrative furlough in the future. DOD partially concurred. GAO continues to believe the findings and recommendation are valid, as discussed in the report.