The Government Accountability Office (GAO) said in a Nov. 5 report that the Department of Defense (DoD) has made progress in establishing valid and reliable cost baselines for its enterprise business operations, but still needs to refine and formalize its reform efforts.
The Pentagon, GAO said, has reportedly saved “$37 billion from its reform efforts and a Defense-Wide Review to better align resources.” It said those savings are largely reflected in its budget materials, but that the savings have not been well documented, or consistent with DoD’s definition of reform.
“Without processes to standardize development and documentation of savings and to consistently identify reform savings based on reform definitions, decision makers may lack reliable information on DOD’s estimated reform savings,” GAO wrote.
According to the report, DoD had limited information on the analysis underlying its savings estimates – such as economic assumptions, alternative options, and any costs of taking the actions to realize savings – and because of that limited information GAO was unable to determine the analysis quality that led to DoD’s savings decisions. Additionally, some cost savings initiatives were not clearly aligned with DoD’s definitions of reform, and DoD may have overstated savings from reform efforts rather than other sources of savings, like cost avoidance, GAO said.
To address refining and formalizing its reform efforts, GAO made three recommendations, all of which DoD concurred with. The recommendations include:
- Ensure that the Chief Marketing Officer, Under Secretary of Defense (Comptroller), and Director of the Office of Cost Assessment and Program Evaluation establish a formal process to standardize the development and documentation of cost savings and incorporate department-wide guidance and best practices for economic analysis.
- Clarify DoD’s definitions of reform and consistently report reform savings based on those definitions; and
- Institutionalize formal policies or agreements as they relate to DoD reform and efficiency collaboration efforts.