Despite improvements, DoD is still top offender on GAO High-Risk List

The government’s highest risk department is making improvements, but still has miles to go before it gets off the Government Accountability Office’s radar.

The Defense Department once again makes up a sizeable chunk of the GAO’s High-Risk List and is the most represented government department on the list.

Despite having some programs on the list for more than two decades, DoD is making headway in the realms of supply chain management and weapons system acquisition.

But DoD isn’t out of hot water yet. The Feb. 15 report still gives low marks, even for a list of bruised programs, to the department’s base management, its ability to weed out duplicative offices and the auditability of DoD’s finances.

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At the end of 2015, Comptroller General Gene Dodaro sent a letter to DoD urging the Defense Secretary to take meaningful action on open GAO recommendations.

“DoD has about half of the government’s discretionary spending and so they get a lot of our attention, but they also have one of the lower response rates in terms of implementing our recommendations. It’s on the order of 60 percent instead of the 80 percent rate we see in the broader government,” Dodaro said. “Part of the issue is that the problems we identify require multiple components of the Defense Department to work together. Many of our recommendations on overlap, duplication and fragmentation have to do with components of DoD itself rather than across government. It’s a very large operation.”

DoD infrastructure is marking its 20th year on the High-Risk List. Since the last report in 2015, DoD only made some improvements to reduce unneeded bases and make them more efficient.

Shoring up problems for DoD’s more than 562,000 facilities is no small feat, but GAO states DoD needs to commit to improving the process for identifying how much it will cost to close unneeded infrastructure.

The Pentagon also needs to create goals for savings and efficiencies stemming from the consolidation of bases. That includes improving the accuracy of data from previous base realignment and closures (BRAC) and establishing better targets for future BRAC rounds.

DoD has been pleading with Congress to authorize another round of BRAC. The last round was approved in 2005, but Congress is skeptical about the savings DoD realized from the venture.

GAO is concerned about more recent issues plaguing DoD as well. The baby of the Pentagon’s high-risk problems is the approach to “business transformation,” an obstacle that has been on the list for 12 years.

GAO stated DoD needs additional steps to address long-standing weaknesses in DoD’s business operations.

“Weaknesses in these areas adversely affect DOD’s efficiency and effectiveness, and render its operations vulnerable to waste, fraud, and abuse. DOD’s overall approach to transforming these business operations is inextricably linked to DOD’s ability to perform its overall mission, directly affecting the readiness and capabilities of U.S. military forces,” the report stated.

GAO stated DoD needs to hold business function leaders accountable for diagnosing performance problems. The Pentagon needs to develop an action plan to address root problems in performance, like personnel, systems and processes.

GAO also wants DoD to conduct frequent and regular data-driven performance review using established measures.

The department made some progress in the past two years in this realm, however.

“Since 2014, and in part to respond to congressional direction, DOD has undertaken initiatives intended to improve the efficiency of its business processes, but DOD has not been able to demonstrate clear results associated with these initiatives, as well as sustained attention and focus consistently across the business functions,” the report stated.

But not all is bad news for the DoD’s compliance with GAO recommendations.

GAO saved special praise for the Pentagon’s work on supply chain management. DoD has a problem with junk, in that it has too much of it. The department manages 4.9 million “secondary” items like spare parts with a value of $91 billion.

GAO stated DoD reduced excess items caused by requirement changes or items categorized for disposal. That caused the value of excess inventory to decrease from $1.3 billion to $701 million over six years.

“Since fiscal year 2010, DOD has demonstrated sustained progress sufficient to remove the inventory management area from the supply chain management high-risk category,” the report stated. DoD also revised policy and guidance around inventory management and addressed demand forecasting weaknesses in the needs for certain items.