Monday, October 1, 2018

DoD Not Making Sufficient Progress in Reducing Headquarters Costs

The Fiscal Year 2016 NDAA (National Defense Authorization Act) required the Defense Department to implement a plan to achieve not less than $10 billion in cost savings from headquarters, administrative, and support activities by 2019 and also required the Department to submit progress reports with its fiscal years 2017, 2018, and 2019 budget requests.

Recently, the GAO (Government Accountability Office) published a report on its observations of how the Defense Department is meeting its requirement. The GAO found that the Department has not fully met these requirements. Specifically, GAO reported:

  • DoD has not fully met the requirement to save $10 billion by fiscal year 2019 (FY 2019 started today). DoD reported that it has identified $9.2 billion of the required $10 billion in cost savings but that figure is highly suspect in that DoD does not have a reliable cost estimate to support these estimated savings
  • DoD was required to submit its first progress report when it submitted its fiscal year 2017 budget request in February 2016. However, DoD did not submit the estimate until May 2018, more than two years late.
  • GAO found inconsistencies in DoD's May 2018 progress report that raise additional questions about the accuracy of its cost savings estimates. For example, in some sections, DoD refers to $5.3 billion i n savings whereas in other sections it refers to $8.25 billion in savings for the same period. DoD offers no explanation as to why the figures differ.

These DoD studies are probably just smoke and mirrors as the Department stated that its figures were not auditable. GAO couldn't figure out whether the cost savings estimates were any good and decided not to make any recommendations. That made things easy for the Defense Department as the Department simply said "no comment" when presented with a copy of the report.

The full GAO report is available here.

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