Congress creates new DoD Chief Management Officer, punts on role of CIO

The annual Defense authorization bill Congress sent to the President last week includes several provisions to redraw the Defense Department’s organizational chart, including one that creates a powerful new Chief Management Officer whose primary job will be overseeing and reforming DoD headquarters functions.

While the department already has a full-time position — the deputy chief management officer — to handle functions like business process reengineering and other management concerns, the new position will carry more stature in the Defense bureaucracy.

Perhaps most significantly, the new CMO will have independent authority to order the the secretaries of the Army, Navy and Air Force to implement reforms on matters like business transformation, business planning, performance management and information technology — powers the DCMO doesn’t have in its current role as an internal adviser to the deputy defense secretary.

Congress wants the new CMO to be something of an outsider. The bill requires him or her to be appointed “from private life,” to have experience running large, complex organizations and  to have been working outside the military for at least seven years.

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“Such an officer could provide greater oversight and management of the non-homogeneous organizations that comprise the department’s Fourth Estate,” lawmakers wrote in a report describing House-Senate negotiations on the final bill. The term “fourth estate” is defense jargon that generally refers to the office of the secretary of Defense and other organizations outside the four military services. “[But] the conferees also recognize that the department as a whole must be examined to provide the organizational and management agility and adaptability necessary to address longer-term national security challenges.”

The changes will not take effect in February 2018. Congress delayed their implementation to give the department time to draw up a report describing precisely how it would use the new CMO position, along with other organizational changes in the bill, like the abolition of the current undersecretary of Defense for acquisition, technology and logistics and the creation of two new undersecretaries, one for research and engineering and one for acquisition and support.

Robert Hale, who served as DoD’s comptroller and chief financial officer from 2009 to 2014, said that along with the added authority over the military services, the new chief management officer might help drive reforms by virtue of the fact that he or she will be a very senior official who’s focused full-time on business issues.

Under current law, the deputy secretary of Defense wears the CMO hat, among many others, and is the only official besides the Defense secretary who has the authority to give direction to both the “fourth estate” and the military services on business matters, but the deputy secretary’s portfolio of responsibilities is so vast that those issues sometimes take a backseat.

“The deputy tries to handle these activities, but frankly there’s just not enough time,” Hale said. “John Hamre, who used to be deputy years ago, used to say that his inbox grew by about a foot an hour. Now there will be somebody who’s only focusing on business processes. The CMO will still need the deputy’s authority in some cases, but he or she will have the time to try to make these things happen.”

But Hale said the requirement that the CMO come from the private sector was somewhat worrisome, considering the byzantine organizational and budgeting structure of the Pentagon as it exists today.

“I think private sector experience would be great, but the person needs to have some familiarity with the Department of Defense. It’s just too steep a learning curve — it’s too big an organization, too complex to come in with no Defense experience and expect to lead major change,” Hale said. “So I hope they can find somebody who has both some experience in DoD as well as leading large private organizations.”

The current leaders of the congressional defense committees have an intense interest in reducing what they view as wasteful spending within DoD’s business operations, particularly within its headquarters and other “back office” functions. Another provision of the bill placed new limits on the numbers of civilian and military personnel who can be assigned to OSD, the Joint Staff, and the senior staffs of each of the military services.

Several members have also expressed outrage stemming from an article in the Washington Post last week, which claimed that the Pentagon had “buried,” ignored and expunged from its website a 2015 Defense Business Board Report that found DoD could cut $125 billion from its support and logistics functions.

In fact, the report has been publicly available on the DBB’s website since its initial release, and far from hiding the report, Deputy Defense Secretary Robert Work described its findings in detail during public appearances in early 2015. Federal News Radio and other outlets reported on the board’s findings at the time.

Nonetheless, 31 members of the House Oversight and Government Reform Committee sent a letter to Defense Secretary Ashton Carter on Thursday, demanding answers on DoD’s business spending and the alleged cover up.

“The board members who conducted the study could not obtain a meeting with you to discuss the potential savings of $125 billion,” House members wrote. “Although you were busy dealing with ‘a long list of national security challenges,’ — something members do not doubt, we question why learning about potential savings that would be enough to cover the operational costs for 50 Army brigades or 3,000 F-35 Joint Strike Fighters, or 10 aircraft-carrier strike groups would not also be a priority.”

Congress has been clearly signaling its interest in creating more senior-level attention over business issues for at least two years, but has shown significant uncertainty about how to accomplish that objective.

In the 2016 Defense authorization bill, lawmakers created the new office of undersecretary of Defense for business management and information — a senior position that would serve as a hybrid chief information officer and chief management officer. It was set to take effect in early 2017 and DoD has been preparing to implement it, but Congress abolished it with the bill it passed last week, making the chief management officer a standalone function.

For the time being, the CIO position will remain as it was prior to the 2016 bill. The job, currently held by Terry Halvorsen, is a senior, non-Senate confirmed position that sets departmentwide IT policy, oversees the Defense Information Systems Agency and reports directly to the secretary of Defense on IT management and operations.

But under current DoD policy, the job also includes “network defense.” The same policy memo says U.S. Cyber Command is supposed to “secure, operate and defend and defend DoD information networks.” The undersecretary of Defense for acquisition, technology and logistics is in charge of IT systems that are large enough to be designated as “major automated” ones. The DCMO is in charge of business IT systems. Then there’s the position of Principal Cyber Advisor, which Congress created within the undersecretary of Defense for Intelligence in 2014.

DoD has taken some steps on its own to clarify and deconflict those roles and authorities, but House-Senate negotiators were understandably confused about who should be in charge of IT and cyber policy amid the rest of the organizational changes they made in this year’s NDAA, so they essentially punted to the department itself.

The bill orders DoD  to deliver a plan within the next 180 days on what the CIO’s future role and responsibilities should be and how to implement a more “optimized organizational structure” among all of the senior-level offices that currently have a hand in IT and cyber operations.

“This plan should include both business systems and national security systems and explore the responsibilities for cyber and space policy, information network defense, and the development of policies and standards governing information technology systems and related information security activities of the department.”