Laboratory participants reported little success in addressing 9 of the top 10 cost drivers identified by Coopers & Lybrand, with the majority of the projected savings expected to come from changes in the contractors’ quality assurance systems. On other projects, differences in views between DOD and contractor personnel on the merits of certain oversight requirements slowed down or otherwise limited opportunities to make meaningful changes. Coordinating and obtaining approval for proposed changes among multiple customers—while generally not precluding a project from being pursued—also tended to be difficult. Further, DCMC officials told us that the reinvention laboratory, a joint DCMC/DCAA initiative, tended not to get the highest level of support from other components within DOD and from service components. However, these waivers—which DOD estimates could result in cost avoidances of about $2.3 million annually—account for only a small portion of the laboratory’s potential cost reductions. Lessons Learned From Laboratory Experiences

On October 30, 1996, DOD announced it was in the process of ending the reinvention laboratory. These officials noted that many of the lessons learned from the reinvention laboratory are being employed in the Single Process Initiative, including the use of management councils, the designation of senior service officials to facilitate the review and approval of proposals, the establishment of a 120-day goal to have proposals approved, and an improved mechanism for processing waiver requests. Overall, DOD officials believe that these factors will allow proposals submitted under the initiative to be reviewed and approved in a timely fashion. Additionally, DOD officials noted that while the reinvention laboratory was limited to only 10 participants, participation in the Single Process Initiative is open to all DOD contractors. Given the broader base of potential participants and the more structured approach to reviewing and approving proposals, DOD officials believe the initiative will provide a more effective means for addressing many of the technically oriented issues such as manufacturing and quality assurance processes. From a budgetary perspective, the laboratory’s results, as well as our discussions with contractor and DOD officials, suggest that caution must be exercised in estimating cost reductions that can be achieved from oversight reform initiatives and using those reductions for budgetary purposes. DOD officials noted that it may be some time before it is known whether the remaining projects will be approved and implemented. Further, according to DOD and laboratory participants, implementation costs may partially offset cost reductions from proposed changes. Overall, while the laboratory results highlight the challenges faced by DOD, the results should not deter DOD from continuing its efforts to reduce nonvalue added oversight requirements. Rather, the reinvention laboratory suggests that continued commitment by senior DOD leadership is needed to make meaningful changes in DOD’s culture and processes. Scope and Methodology

To determine the laboratory’s success in effecting changes to DOD oversight requirements and reducing oversight costs, and to identify any obstacles to achieving these benefits, we reviewed the laboratory’s December 1995 and July 1996 status reports and pertinent supporting documentation.
Why GAO Did This Study

GAO reviewed the Department of Defense's (DOD) Reducing Oversight Costs reinvention laboratory, focusing on: (1) the laboratory's success in effecting changes to DOD oversight requirements and reducing oversight costs; (2) any obstacles to achieving these benefits; and (3) lessons learned from laboratory experiences.

What GAO Found

GAO found that: (1) overall, the reinvention laboratory has made only limited progress in implementing changes to reduce contractors' costs of complying with government regulations and oversight requirements; (2) laboratory participants reported little success in addressing 9 of the top 10 cost drivers; (3) several factors, according to DOD and contractor officials, limited the ability of laboratory participants to make changes and achieve significant cost reductions; (4) DOD officials noted that on a more general level the reinvention laboratory tended not to get the highest level of support from other components within DOD and from service components; (5) other factors tended to affect specific projects, including statutory and non-DOD regulatory requirements, disagreements between DOD and contractor personnel on the value of certain oversight requirements, and difficulties in coordinating and obtaining approval for proposed changes where multiple customers were involved; (6) while the laboratory results highlight the challenges faced by DOD, the results should not deter DOD from continuing its efforts to reduce nonvalue added oversight requirements; (7) the lessons learned from the reinvention laboratory suggest that DOD leadership needs to continue support of oversight reform; (8) while DOD is in the process of closing the reinvention laboratory, DOD officials noted that many of the lessons learned have been reflected in structuring its Single Process Initiative; (9) DOD officials noted that the initiative is open to all defense contractors and believe that it will provide a more effective means for addressing many of the technically oriented issues such as manufacturing and quality assurance processes; (10) DOD officials cited the use of management councils as a key element in the initiative, as well as using a more structured approach to reviewing and approving projects and designating senior DOD and service officials to serve as facilitators; (11) DOD anticipates that proposals submitted under the Single Process Initiative will be reviewed and approved in a more timely fashion; (12) from a budgetary perspective, the laboratory results also suggest that caution must be used in estimating cost reductions from oversight reform; (13) only a small portion of the projected potential cost reductions from laboratory projects had been realized as of July 31, 1996; and (14) DOD officials noted that it may be some time before it is known whether the remaining projects will be approved and implemented, and many of the projects may incur implementation costs that would partially offset cost reductions in the near term.