QUESTIONS SUBMITTED BY MR. SPENCE OSD REORGANIZATION Mr. SPENCE. How will DoD implement the 25 percent reduction in OSD staff mandated by Congress? Will certain offices or functions be targeted, or will across the board cuts be made? Dr. WHITE. Former Deputy Secretary of Defense John Deutch directed, and the Department has been implementing, a 5 percent per annum civilian reduction in the OSD staff and associated activities for the period FY 1996 through FY 2001. However, Secretary Cohen and I believe that a different approach is required. In accordance with Section 901 of the National Defense Authorization Act for FY 1996, we are currently conducting a thorough review of the overall roles, missions, functions, relationships and organizational structure of OSD with a view toward reengineering the organization in a manner that will reduce its size and, at the same time, increase its effectiveness. We intend to make reductions based on the results of this review, rather than using across the board cuts. Mr. SPENCE. What options has DoD examined for restructuring and reducing the size of OSD? Dr. WHITE. We are considering all available options, to include fundamental changes in the roles, missions, functions, relationships and structure of the OSD staff. In general, we are looking to divert the organization away from operational and program management activities and to refocus its efforts more exclusively on corporate level matters, such as policy evaluation and development, long range planning, and providing advice and assistance to the Secretary and Deputy Secretary of Defense. Traditional streamlining measures, however, have not been ruled out. For example, we are also looking for ways to consolidate related functions, reduce overhead, eliminate obsolete or marginal functions, transfer out functions that can be performed at lower organizational echelons, and do away with excessive layering, duplication, overlap, and fragmentation. Mr. SPENCE. To what extent has DoD's study of OSD identified redundancies between the functions of personnel assigned to the JCS and OSD? Dr. WHITE. I cannot answer that question at this point, because the study has yet to be completed. I can say, however, that this is an issue we are examining very carefully. We can no longer afford redundancies between OSD and other DoD headquarters organizations, whether with the Joint Staff or the Services. Mr. SPENCE. The Commission on Roles and Missions recommended realigning or consolidating certain functions currently divided between the Offices of the Comptroller and the Under Secretary of Defense for Policy. In addition, the report recommended portions of the Office of the Under Secretary of Defense for Policy should be organized along mission lines in order to improve DoD's "responsiveness to new and evolving missions." Are these recommendations being pursued? Dr. WHITE. These, as well as other recommendations of the CORM, are being carefully considered as part of our ongoing OSD review. Mr. SPENCE. How are OSD personnel requirements generated? Dr. WHITE. In general, OSD personnel requirements are derived from the functions and responsibilities of the Secretary of Defense as prescribed in Title 10, U.S.C. Additional requirements are generated based on Administration goals, Secretary of Defense priorities, Congressional mandates, codified legislative requirements, and emerging national security requirements. When new requirements cannot be met within their authorized ceilings, the OSD principal staff officials propose incremental changes to programmed strength. These are reviewed at the staff level and forwarded to the Deputy Secretary of Defense for determination, either during the PPBS process or as an out-of-cycle change. Currently, because of the reductions mandated by the National Defense Authorization Act for FY 1997, OSD principal staff officials have been directed to perform their assigned functions within their authorized ceilings. Mr. SPENCE. The Commission on Roles and Missions weighed the consolidation of the secretariat and service staffs and ultimately recommended the integration of their functions to reduce friction and cumbersome management processes. Is this being pursued? Dr. WHITE. Secretary Cohen and I plan to conduct an in-depth review of the secretariats and service staffs, in compliance with Section 904 of the National Defense Authorization Act for FY 1997. However, we are currently concentrating on our study of the OSD staff, which should be completed within the next several weeks. A number of the key issues being addressed in this study (such as the appropriate role of the OSD staff in the DoD management process and in the oversight of Departmental level operating organizations) impact directly on the military service headquarters. Accordingly, we view the review of the secretariats and service staffs as a logical follow-on effort, the thrust of which will be determined by the decisions made regarding the roles, missions, size, and organizational structure of the OSD staff. DEFENSE INFRASTRUCTURE REFORM Mr. SPENCE. The Department's fiscal year 1998-2002 spending plan is, in part, reliant on $5 billion in savings from infrastructure efficiencies. How firm are these savings projections? Is there risk associated with these projections? Does the Department have a contingency plan if these anticipated savings do not materialize? Dr. WHITE. The savings projections are accurate and represent a good baseline for infrastructure efficiencies. There is, however, some degree of risk associated with achieving the identified savings, primarily dependent on the level of difficulty. Our assessment indicates that cost savings ranging between $1.4B and $1.6B are do-able with minimal risk. There are no significant political or technical impediments. Cost savings ranging between $3.7B and $4.6B involves a moderate risk. They will be more difficult to obtain due to mild opposition and/or minor unresolved technical problems. Savings between $5.6B-$6.2B will be very difficult to achieve because of either strong opposition or serious technical problems. Anticipated savings in this range involve a high risk. In the event the anticipated savings do not materialize, contingency plans would be Service-specific. We are expecting the budget to remain at $250B. If no savings accrue, the tooth to tail would remain the same, hence status quo would continue. However, every effort will be made to remove constraints, whether they be legislative, policy, etc. Mr. SPENCE. In 1988, the DoD Inspector General issued a report to the Secretary of Defense titled, "Review of Unified and Specified Command Headquarters." The report concluded that DoD's annual report to Congress on the number of headquarters personnel significantly understated the true size and cost of the management function. How confident are you in the accuracy and completeness of the management headquarters numbers reported by DoD to the Congress today? Dr. WHITE. The Department believes the management headquarters numbers are reasonably accurate. The Department does not have the resources to audit the numbers. We are trying our best to keep the reporting system up to date. For example, the Department just revised DoD Directive 5100.73, "Department of defense Management Headquarters and Headquarters Support Activities," which provide guidance for the reporting of management headquarters numbers in the President's Budget Exhibit 22. Mr. SPENCE. In 1985, DoD reported about 77,000 military and civilian personnel performing management and management support functions. For 1997, the estimate is 53,000-a decrease of about 30 percent, or 2.5 percent per year. Some of the decrease, however, may have occurred as a result of reclassification. To what extent does the trend represent real reductions in personnel? How was this 30-percent decrease achieved? Did OSD provide guidance or establish goals for reducing headquarters organizations, or did each of the Services and defense-wide agencies develop their own goals? Dr. WHITE. Real reductions have been achieved. Some of these reductions have been actual end strength reductions. Additionally, a good number of reductions have come from realignments and transfers of functions from headquarters activities to operational activities. Finally, a minimal number of reductions have come from reclassifications when missions have changed. The Department continues to program reductions in management headquarters through FỶ 1999, and this issue is under continuing study by the QDR. Mr. SPENCE. During 1985-1997, DoD reported that headquarters staffs and headquarters support personnel at the military services' commands decreased 40 percent while personnel at defense agency headquarters increase 35 percent. Of course, during the period, Congress authorized the creation of additional defense agencies to centrally manage certain functions in a more efficient manner. What are your plans with respect to the future number and size of defense agencies, including their headquarters elements? Dr. WHITE. The Department is always interested in improving productivity and increasing efficiency. Occasionally, the Defense Agencies suffer from "bad press" because of perceived growth. But this growth is the result of major program transfers from the Military Departments and significant savings made at the time of the transfers. To look at Defense Agency growth without looking at corresponding reductions in the Military Departments is only looking at part of the story. The QDR is specifically looking at future number and size of defense agencies. Mr. SPENCE. The National Defense Authorization Act for FY 1996 contained requirements for DoD to report on many infrastructure issues subject to reform. The committee has not yet received reports regarding measures to transportation infrastructure and overhead, results of a pilot program to improve travel administration and processing, or plans to outsource certain payroll, accounting and finance functions. What is the status of these reports and when can the committee expect to receive these reports? Dr. WHITE. As indicated in the attached transmittal letter, the Defense Transportation Reengineering Report was forwarded to the Congress on December 16, 1996 by the Deputy Under Secretary of Defense (Logistics). The report on payroll, finance and accounting functions of the Department is undergoing final review and will be provided upon completion of that review. Section 356 of the FY 1996 National Defense Authorization Act directed DoD to conduct tests to evaluate options to improve the DoD travel process, and submit a report on the implementation of the program. The tests are now complete and data from the various pilot sites are being collected and analyzed, which is expected to take several weeks to complete. The final report to the Congress is planned for the end of June 1997. OFFICE OF THE UNDER SECRETARY OF DEFENSE, Hon. FLOYD D. SPENCE, DEAR MR. CHAIRMAN: This letter transmits to Congress the enclosed Defense Transportation Reengineering Report. This report is forwarded in response to the FY 96 Defense Appropriation and Authorization Conference Reports which requested the Secretary of Defense report on initiatives undertaken to streamline infrastructure, consolidate component command structure and reduce overhead in the Defense Transportation System. As noted in the enclosure, General Kross, Commander in Chief, U.S. Transportation Command is aggressively pursuing efficiencies through reeingineering and streamlining. I will continue to monitor and support these efforts. Sincerely, Enclosure. JOHN F. PHILLIPS, Deputy Under Secretary of Defense (Logistics). Mr. SPENCE. The Department's plan states that you are on track for reducing acquisition personnel by 30,000 in two years. Of the cuts already made, which organizations have they come from? Which job series do they represent? Secretary KAMINSKI. In the first twelve months of the reduction period for section 906(d), i.e., during FY 96, the Department reduced the number of covered people by 23,802. The acquisition organizations covered by this mandate and the changes in numbers of people within each one reported to the Defense Manpower Data Center are as follows: The same data analyzed by job group and military/civilian status: Military officers - 5,644 - 12,333 - 2,674 -3,151 - 23,802 - 1,184 Military enlisted Civilian non-exempt blue collar Civilian white collar - 2,988 - 6,308 - 13,322 Total Breakout of the civilian white collar changes by occupational group: Engineering And Architecture Administrative, Clerical And Office Serv - 23,802 -4,158 - 2,722 - 1,521 - 1,255 - 993 - 709 - 509 - 422 -421 |