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Force Structure: Army's Efforts to Improve Efficiency of Institutional Forces Have Produced Few Results (Letter Report, 02/26/98, GAO/NSIAD-98-65).

Pursuant to a legislative requirement, GAO reviewed the extent to which
the Army has: (1) taken corrective action to resolve its material
weakness in determining institutional personnel requirements; and (2)
identified opportunities to reduce personnel and realize savings through
its Force XXI Institutional Redesign Effort.

GAO noted that: (1) the Army developed a corrective action plan to
resolve its material weakness in determining institutional personnel
requirements but may have difficulty achieving the plan's completion
date; (2) two critical subplans have been developed, one that implements
a new costing system and another that develops a new computer-based
methodology--the Army Workload Performance System; (3) without specific
steps and milestones for both of these efforts, the Army lacks the tools
it needs to ensure that the plan will be completed by December 1999; (4)
milestones for both efforts have slipped from original estimates, and in
the case of the computer-based methodology, the Army has missed some of
its interim goals; (5) in addition, a plan initiative to ensure that
major commands use a 12-step methodology to analyze workload may not be
implemented on time unless more personnel are assigned to the office
responsible for this effort; (6) the Army's institutional redesign
effort has not resulted in a reduction in major command headquarters,
and the dollar and position savings identified are overstated; (7) one
redesign initiative resulted in the redesignation of a major command as
a subcommand; (8) however, the Army also created a new command resulting
in no net decrease in the number of commands; (9) also, the Army
transferred a command but did not recognize it to achieve efficiencies;
therefore, this effort produced virtually no decrease in the command's
9,000 positions; (10) the Army transferred about 2,800 active Army
positions from institutional to operational forces based on two
initiatives, but these initiatives did not produce the anticipated
savings, and personnel cuts had to be made elsewhere; (11) the Army's
efforts to establish workload-based requirements and redesign
institutional functions have produced few results; (12) Army personnel
trend data from 1992-2003 show that the Army has not been successful in
reducing the proportion of institutional to operating forces within the
active Army; (13) in addition, the Army does not currently have a
workload basis for allocating its personnel resources among
institutional organizations and ensuring that the highest priority
functions are funded first; (14) as a result, the Army may not have the
analysis it needs to efficiently allocate many of the institutional
positions that are programmed to be eliminated by fiscal year 2003 or
additional reductions mandated by the Quadrennial Defense Review; and
(15) without senior leadership attention, the Army's current initiatives
may not achieve meaningful and measurable changes.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-98-65
     TITLE:  Force Structure: Army's Efforts to Improve Efficiency of 
             Institutional Forces Have Produced Few Results
      DATE:  02/26/98
   SUBJECT:  Army personnel
             Strategic planning
             Military cost control
             Personnel management
             Military downsizing
             Human resources utilization
             Reductions in force
             Civilian employees
             Reengineering (management)
             Management information systems
IDENTIFIER:  DOD Quadrennial Defense Review
             Army Workload Performance System
             Army Force XXI Institutional Redesign
             
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Cover
================================================================ COVER


Report to Congressional Committees

February 1998

FORCE STRUCTURE - ARMY'S EFFORTS
TO IMPROVE EFFICIENCY OF
INSTITUTIONAL FORCES HAVE PRODUCED
FEW RESULTS

GAO/NSIAD-98-65

Force Structure

(701112)


Abbreviations
=============================================================== ABBREV

  AWPS - Army Workload Performance System
  DOD - Department of Defense
  TDA - Tables of Distribution and Allowances

Letter
=============================================================== LETTER


B-278197

February 26, 1998

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Floyd D.  Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on National Security
House of Representatives

The Fiscal Year 1996 National Defense Authorization Act requires that
we annually assess the Army's efforts to streamline infrastructure
activities and eliminate the inefficient use of personnel assigned to
these activities.\1 The Army refers to personnel assigned to
infrastructure activities as Tables of Distribution and Allowances
(TDA), or institutional personnel.  We fulfilled this mandate by
assessing the extent to which the Army has (1) taken corrective
action to resolve its material weakness in determining institutional
personnel requirements and (2) identified opportunities to reduce
personnel and realize savings through its Force XXI Institutional
Redesign effort.  We are also providing our views on whether these
initiatives are producing the results necessary for the Army to
improve the efficiency of its institutional workforce.  Our scope and
methodology are discussed in appendix I. 


--------------------
\1 The act requires that we report our findings and conclusions to
Congress by March 1 of each year from 1997 to 2002.  Our first report
issued under this legislative mandate was Force Structure:  Army
Support Forces Can Meet Two-Conflict Strategy With Some Risks
(GAO/NSIAD-97-66, Feb.  28, 1997). 


   BACKGROUND
------------------------------------------------------------ Letter :1

Institutional personnel are generally nondeployable military and
civilians who support Army infrastructure activities, such as
training, doctrine development, base operations, supply, and
maintenance.  One major exception is in the medical area, since some
personnel assigned to institutional positions are expected to deploy
in wartime.  A significant amount of the Army's personnel and budget
are devoted to institutional functions.  For example, the Army's
Program Objective Memorandum for fiscal year 1998 included about
132,000 active Army and about 247,000 civilian institutional
positions.  These positions represented about
27 percent of the total active Army and 100 percent of Army
civilians.  Funding for institutional personnel totals about $18
billion per year. 

Army institutional functions have received increasing scrutiny in
recent years because the Army has been unable to (1) support
personnel requirements based on workload and (2) ensure that these
functions are carried out in the most efficient and cost-effective
manner.  In addition, the Army continues to rely on its active
personnel to perform institutional functions despite shortfalls in
operational forces.  The Army Audit Agency reported in 1992 and 1994
that the Army did not know its workload and thus could neither
justify personnel needs and budgets nor improve productivity and
efficiency.\2 Our February 1997 report recommended that the Secretary
of the Army report to the Secretary of Defense, as a material
weakness under the Federal Managers' Financial Integrity Act, the
Army's long-standing problem with determining institutional personnel
requirements without an analysis of the workload.  The Army agreed
with the recommendation and prepared a plan, as required by the act,
to resolve the weakness.  The plan was approved by the Assistant
Secretary of the Army for Manpower and Reserve Affairs in October
1997.  All corrective actions detailed in this plan are to be
completed by December 1999. 

In January 1995, the Army began an effort to reengineer institutional
processes and redesign organizational structures so that the
institutional Army would effectively and efficiently develop,
generate, deploy, and sustain operational forces.  The Army's
reengineering principles include eliminating unnecessary layering of
functions and reducing the number of major headquarter commands.  The
Army stated that savings in active Army institutional positions are
to be reinvested in the operational forces.  The redesign effort,
referred to as Force XXI Institutional Redesign, is to be conducted
in three phases, with each phase examining different functions. 
Phase I was completed in March 1996, and phases II and III are
expected to be completed in March 1998 and March 2000, respectively. 
In May 1997, the Secretary of Defense announced the results of the
Quadrennial Defense Review, which included reducing 33,700 civilian
Army positions and some active Army positions.\3 According to Army
officials, these reductions would be in addition to the 13,000
positions already programmed between fiscal years 1998 and 2003 or
those resulting from phase I redesign efforts. 

In September 1997, the Deputy Secretary of Defense introduced DOD's
strategic plan to implement the Government Performance and Results
Act.  The plan contains six overall goals, including to ".  . 
.fundamentally reengineer the Department and achieve a 21st Century
infrastructure by reducing costs and eliminating unnecessary
expenditures while maintaining required military capabilities." Army
plans, such as the
Force XXI Institutional Redesign effort, are to be linked to the
overall goals in the strategic plan. 


--------------------
\2 Managing Workload, Organizations And Staffing, Army Audit Agency
(HQ 94-751, June 23, 1994) and Management Of Army Workload Of Tables
Of Distribution And Allowances Organizations, Army Audit Agency (HQ
92-T2, Jan.  21, 1992). 

\3 DOD stated in January 1998 that, under the Quadrennial Defense
Review, Army civilians would be reduced by 26,000 by fiscal year 2003
and 33,700 by fiscal year 2005. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The Army developed a corrective action plan to resolve its material
weakness in determining institutional personnel requirements but may
have difficulty achieving the plan's completion date.  Two critical
subplans have not been developed, one that implements a new costing
system and another that develops a new computer-based
methodology--the Army Workload Performance System.  Without specific
steps and milestones for both of these efforts, the Army lacks the
tools it needs to ensure that the plan will be completed by December
1999.  Milestones for both efforts have slipped from original
estimates, and in the case of the computer-based methodology, the
Army has missed some of its interim goals.  In addition, a plan
initiative to ensure that major commands use a 12-step methodology to
analyze workload may not be implemented on time unless more personnel
are assigned to the office responsible for this effort.  Currently,
personnel requirements programs at some major commands do not meet
Army 12-step criteria.  Until the costing system, computer-based
methodology, and 12-step methodology are fully developed and
integrated, the Army cannot be sure that it has the most efficient
and cost-effective workforce (active military, reserve, civilian, or
contractor) and that its institutional personnel requirements are
based on workload, as regulations require. 

The Army's institutional redesign effort has not resulted in a
reduction in major command headquarters, and the dollar and position
savings identified are overstated.  One redesign initiative resulted
in the redesignation of a major command as a subcommand.  However,
the Army also created a new command, resulting in no net decrease in
the number of commands.  Also, the Army transferred a command but did
not reorganize it to achieve efficiencies; therefore, this effort
produced virtually no decrease in the command's 9,000 positions. 
Further, the Army anticipated $1.7 billion in savings from phase I
efforts, but that amount will be at least $405 million less because
significant implementation costs for some initiatives were not
included in the Army's fiscal year 1998-2003 Program Objective
Memorandum.  Finally, the Army transferred about 2,800 active Army
positions from institutional to operational forces based on two
initiatives, but these initiatives did not produce the anticipated
savings, and personnel cuts had to be made elsewhere.  Even though
the Army has appointed an executive agent for redesign assessments,
no single office systematically manages and monitors redesign
results.  Thus, the Army does not know the status of specific
initiatives, dollar savings, implementation costs, or progress in
reducing institutional positions.  Shortfalls in dollars and spaces
add risk that the Army may not be able to provide adequate resources
for all of its programs. 

Overall, the Army's efforts to establish workload-based requirements
and redesign institutional functions have produced few results.  Army
personnel trend data from 1992 to 2003 show that the Army has not
been successful in reducing the proportion of institutional to
operating forces within the active Army.  In addition, the Army does
not currently have a workload basis for allocating its personnel
resources among institutional organizations and ensuring that the
highest priority functions are funded first.  As a result, the Army
may not have the analysis it needs to efficiently allocate many of
the institutional positions that are programmed to be eliminated by
fiscal year 2003 or additional reductions mandated by the Quadrennial
Defense Review.  Further, the Army's lack of progress in identifying
efficiencies means that some active Army personnel are not available
to fill shortages among operational forces, including deployable
support forces, which have historically been underresourced.  Without
senior leadership attention, the Army's current initiatives may not
achieve meaningful and measurable change. 


   THE ARMY MAY HAVE DIFFICULTY
   ACHIEVING MATERIAL WEAKNESS
   PLAN'S COMPLETION DATE
------------------------------------------------------------ Letter :3

The Army has made some progress by developing a material weakness
plan, but it may have difficulty achieving the plan's December 1999
completion date for the following three reasons.  First, Army
commands are not fully implementing the required 12-step methodology,
and the Army has acknowledged that staffing levels for oversight
reviews to ensure compliance are insufficient.  Second, as of October
1997, critical subplans outlining how the Army intends to meet its
milestones had not been developed for the costing system and the
computer-based methodology.  The Army's progress in implementing the
computer-based methodology during its initial pilot test has been
slower than the Army has estimated.  Last, milestones for critical
portions of the plan have slipped from original estimates, even
though the plan's overall completion date has remained the same. 
Delays in implementing the plan's corrective actions could result in
further reductions of institutional personnel without the benefits of
workload analysis and assessments of risks and tradeoffs. 


      ARMY INSTITUTIONAL WORKFORCE
      REQUIREMENTS ARE NOT BASED
      ON WORKLOAD
---------------------------------------------------------- Letter :3.1

Army regulations require that the institutional workforce be based on
workload.  However, our February 1997 report concluded that the Army
cannot identify and prioritize its institutional workload and
therefore does not have an analytical basis for assigning
institutional personnel or assurance that it has the minimum
workforce for accomplishing institutional missions.  The material
weakness plan acknowledges this problem, stating that ".  . 
.managers at all levels do not have the information needed to improve
work performance, improve organizational efficiency, and determine
and support staffing needs, manpower budgets, and personnel
reductions."

The Army's plan contains some logical steps to correct this material
weakness,\4

including the Army's two near-term solutions to identifying the
number of institutional positions based on an analysis of the
workload.  These solutions are a computer system for depots and
arsenals, called the Army Workload Performance System (AWPS), and the
12-step methodology analysis for major commands.  AWPS was developed
to integrate workload and workforce information so depot managers can
project the workforce needed to accomplish various levels of
workload.  The 12-step methodology was developed to link personnel to
workload, reduce the cost of accomplishing work, and help managers
make choices as they balance personnel and workload.  The Army plans
to integrate the workload and workforce information provided by the
12-step methodology and AWPS with the Civilian Manpower Integrated
Costing System.  According to Army officials, the Army will not be
able to successfully link workload and workforce to the budget
without the integration of these three elements.\5 For this reason,
our review primarily focused on these initiatives. 


--------------------
\4 The plan's corrective actions include linking the civilian
workforce to the budget; updating the Army's personnel regulation to
establish a new workload-based methodology as the Army standard
(draft Army Regulation 570-4); certifying major commands'
requirements processes; performing quality assurance reviews of
commands' requirements determination studies; and implementing a new
computer system at Army depots, arsenals, and ammunition plants. 

\5 In the long term, the Army would like to integrate its
institutional forces into its requirements process for operational
forces, known as Total Army Analysis.  Our February 1997 report
discusses the Total Army Analysis process. 


      COMMANDS ARE NOT FULLY
      IMPLEMENTING THE 12-STEP
      METHOD
---------------------------------------------------------- Letter :3.2

Although the Army established the 12-step methodology in April 1996
as the standard process for determining institutional requirements,
commands' requirements programs fall short of what the Army expects. 
(See app.  II for a list of Army major commands.) The 12-step method
includes analyses of missions and functions, opportunities to improve
processes, workload drivers, workforce options (including civilian
versus military and contracting versus in-house), and organizational
structure.  Figure 1 shows the components of the 12-step method. 
Even though Army commands will continue to have some flexibility in
creating their own requirements program, they will be required to
perform all of the analyses included in the 12-step method. 
According to draft Army Regulation 570-4, although specific processes
for determining requirements can vary, all processes must be approved
by Army headquarters and have a common conceptual framework that
consists of the 12-step analyses. 

   Figure 1:  12-Step Methodology

   (See figure in printed
   edition.)

Source:  Army. 

Currently, the Army has no formal review process for determining
whether major commands are using the 12-step methodology.  Our review
of requirements programs at three major commands (Army Materiel
Command, Training and Doctrine Command, and Forces Command) found
that the programs differ substantially in coverage and content and do
not include all of the 12-step analyses. 

The Army Materiel Command's review did not systematically analyze
labor sources (steps 4 and 9), such as examining the potential for
contracting out various functions.  Also, the Command did not perform
efficiency reviews (step 3) because it assumed that the organization
had already become efficient as a result of downsizing.  Further, the
Command did not consider customer satisfaction (step 7) as an element
of timeliness and quality of services or examine best practice
approaches (step 3).\6 Even though these steps were not performed,
the Command reported that it had validated 79,941 personnel of its
80,542 assigned end strength--more than 99 percent. 

The Training and Doctrine Command's process examines similar
functions across installations to look for best practices and
analyzes whether a particular installation is structured efficiently. 
However, the process does not include a decrement list (step 7),
which contains options of how a command may perform its mission by
merging, eliminating, or transferring functions if it receives fewer
positions than expected. 

The Forces Command's process examines functions at each installation. 
When this examination is completed, Command officials stated that
they would compare functions across installations.  As of November
1997, the Command had completed reviews at 3 of 11 installations and
had not compared similar functions across the installations to
perform the best practice analyses required in step 3.  According to
Command officials, Forces Command plans to examine best practices at
the conclusion of its individual installation reviews in September
1998. 


--------------------
\6 Efficiency reviews and best practice approaches are designed to
improve processes and structure efficient organizations for
accomplishing missions. 


      INSUFFICIENT STAFF COULD
      DELAY REQUIRED REVIEWS OF
      12-STEP APPROACH AND LIMIT
      ARMY'S MANAGEMENT OVERSIGHT
---------------------------------------------------------- Letter :3.3

The material weakness plan establishes procedures for the Office of
the Assistant Secretary of the Army for Manpower and Reserve Affairs
to review commands' requirements programs to ensure that they include
the 12-step analyses.  The Army's plan to review commands' compliance
with the 12-step method may be delayed if Manpower and Reserve
Affairs does not receive sufficient staff to conduct oversight
reviews.  According to a Manpower and Reserve Affairs official, the
office is to (1) certify commands' requirements programs and their
compliance with the 12 steps, (2) conduct quality assurance reviews
of commands' requirements studies, and (3) assist major commands by
conducting 12-step reviews on a contract basis.  According to the
plan, certification reviews are scheduled to start in March 1998, and
quality assurance reviews are scheduled to begin in June 1998.  To
successfully accomplish these tasks within the plan's time frames, a
Manpower and Reserve Affairs official estimated that at least 35
additional staff would be needed.  However, the material weakness
plan states that only nine staff would be hired.  The Assistant
Secretary stated that executing the plan would require more
resources.  The lack of staff could delay both the certification and
quality assurance reviews and prevent the Army from realizing the
full benefits of this approach. 

Staff from the Office of the Assistant Secretary of the Army for
Manpower and Reserve Affairs cited their review of air traffic
control operations as an example of how the Army expects to benefit
from proper application of the 12-step methodology.  At the beginning
of the study, these institutional positions totaled 2,238 at multiple
locations.  The study used the 12-step method to develop a workforce
model and recommended centralizing all tactical personnel in a single
battalion stationed at the Army's Aviation School at Fort Rucker,
Alabama.  The study concluded that this consolidation could save 226
military positions, which the Army could transfer to meet other
requirements, and $5.5 million annually in stationing and operating
costs. 


      SUBPLAN FOR IMPLEMENTING
      AWPS HAS NOT BEEN DEVELOPED
---------------------------------------------------------- Letter :3.4

AWPS is the Army's second solution for determining workload-based
institutional requirements, identifying opportunities to achieve
depot efficiencies, and linking workload, personnel, and dollars. 
AWPS consists of three modules--performance measurement control,
workload forecasting, and workforce forecasting--to determine
workload-based personnel requirements at the depots, arsenals, and
ammunition plants.  The performance measurement control module
compares actual to planned cost and schedule performance, thereby
allowing users to identify problem areas.  This module can identify
the work centers contributing to the most significant cost and
schedule variances.  The workload forecasting module stores project
data, labor expenditures, performance data, and scheduling
information by work center.  This module allows managers to compare
workload levels to available direct labor and analyze changes in
forecasted workload.  This comparison can reveal mismatches or
overloads before firm commitments are made to customers.  Finally,
the workforce forecasting module contains information on employee
skills and leave and attrition rates.  This information provides shop
and depot managers with an accurate picture of the overall number of
employees and the number that are available in each work center. 
Analyzing the workforce by skill groups allows depot commanders to
plan for the amount of work that can be handled and to consider
overtime, contracting, or reassigning workers among different work
centers. 

The Army has been developing AWPS since February 1996.  The
established goals for AWPS are (1) having all three modules
operational at all five depots by January 1998;\7 (2) operating a
supplementary module
(i.e., resource schedule and control) for supporting personnel
assignments to projects by fiscal year 2000; and (3) having all
modules on line and operational at depots, arsenals, and ammunition
facilities by fiscal
year 2000.  However, as of December 1997, the Office of the Assistant
Secretary of the Army for Manpower and Reserve Affairs had not
written the subplan for implementing AWPS or identified the specific
steps or milestones needed to achieve the goals.  Instead, the Army
has set short-term, interim steps as AWPS progresses.  For example,
in August 1997, the Army established specific steps for correcting
data errors between August 1997 and January 1998.  Without a detailed
implementation schedule, however, the Army lacks the tools it needs
to ensure that it can meet the milestones in the material weakness
plan.  For example, the Army's milestone for implementing AWPS at
arsenals and ammunition facilities has already changed from July to
December 1998.  Figure 2 shows the difference in milestones between
the June 1997 draft plan and the October 1997 approved plan. 

   Figure 2:  Milestones in the
   June 1997 Draft Plan and
   October 1997 Approved Plan

   (See figure in printed
   edition.)

Note:  The October 1997 approved plan contains no publication date
for Army Regulation 570-4. 


--------------------
\7 The five depots are Corpus Christi Army Depot in Texas, Anniston
Army Depot in Alabama, Red River Army Depot in Texas, Letterkenny
Army Depot in Pennsylvania, and Tobyhanna Army Depot in Pennsylvania. 


      IMPLEMENTATION OF AWPS HAS
      BEEN MORE DIFFICULT THAN
      ESTIMATED
---------------------------------------------------------- Letter :3.5

Implementation of AWPS at Corpus Christi Army Depot and other
locations has been more difficult than the Army originally estimated. 
For example, in response to our February 1997 report, DOD reported
that AWPS had been successfully tested at Corpus Christi Army Depot. 
Also, the Army expected the system to be operational at all five
depots by March 1997.  However, according to Industrial Operations
Command officials,\8 the Army must still test and validate two of the
three modules at Corpus Christi and correct data errors from feeder
systems.\9 Our review showed that, even though AWPS equipment and
software had been installed at all five depots, none of the three
modules is being fully used at any location, including Corpus
Christi. 

Army Materiel Command officials cited problems that could affect the
Army's ability to implement AWPS at the depots by December 1997. 
First, the performance measurement control module has been undergoing
testing and validation since March 1997 and was planned to be fully
operational by December 1997, assuming that the data errors would be
corrected.  As of August 1997, the Corpus Christi Army Depot was
correcting data errors and therefore was not using this module to
manage any depot work, not even work at the shop floor level as the
Army had originally claimed.  The other two modules are planned to be
operational by February 1998, assuming that the data errors are
corrected.  An unresolved problem in the workload forecasting module
is how to program work that will be started in one fiscal year and
completed during the following fiscal year.  The amount of repair
work assumed affects management decisions on planning and scheduling
the work and the workforce needed. 

Second, the Army states in its material weakness plan that AWPS
training at the five depots was to be completed by December 1997. 
However, as of November 1997, AWPS users were not fully trained, and
some training requirements were not yet defined.  Army officials
stated that training on the performance measurement control module
has been completed at the five depots.  However, Corpus Christi Army
Depot officials stated in August 1997 that 257 staff members at the
depot have been trained.  The depot employs approximately 1,500
personnel.  Although not all 1,500 personnel need further training,
depot and Industrial Operations Command officials agreed that
additional training is required to teach shop floor supervisors and
depot managers how to interpret AWPS data and how to use it to
identify work areas needing improvement.  Command officials stated
that training for the workforce forecasting module was to be
completed by December 1997, but training requirements for the
workload forecasting module have not yet been defined. 

Last, Industrial Operations Command officials told us that AWPS is
still an evolving concept and that corporate-level system
requirements are not yet defined.  For example, no final decision has
been made concerning whether this Command and the Army Materiel
Command will install the Decision Support System, which would enable
commands to examine data from subordinate units and help identify
processes that could be reengineered to improve performance.  In
December 1997, Army officials decided to add a material module to
monitor ordering and delivery of repair parts. 

According to Army officials, the Army could realize benefits once
AWPS is operational and system users are trained.  In July 1997, the
Assistant Secretary of the Army for Manpower and Reserve Affairs
stated that all depots and arsenals using AWPS will be able to match
workload requirements and personnel projections.  Thus, any personnel
reductions will be based on the knowledge of work that will not be
performed.  AWPS could also be used for setting performance goals,
such as reducing repair costs and cycle times, but Army officials
stated that they have no intentions of using AWPS for this purpose. 


--------------------
\8 The Industrial Operations Command is the headquarters command for
all Army maintenance depots, arsenals, and ammunition plants.  It is
a major subordinate command of the Army Materiel Command. 

\9 AWPS uses data from three feeder systems:  the Standard Depot
System, Army Time Attendance and Personnel System, and Headquarters
Accumulation System. 


      COSTING SYSTEM SUBPLAN HAS
      NOT BEEN DEVELOPED
---------------------------------------------------------- Letter :3.6

The Civilian Manpower Integrated Costing System will be the Army's
distributed, integrated database for costing institutional personnel
requirements and linking workload and workforce to the budget.  Army
officials expect this system to provide funding information for
various workload and workforce levels that the 12-step method and
AWPS project.  However, the subplan detailing the specific steps and
milestones for implementing the system has not been developed. 
Without the subplan, the Army has no mechanism to measure its
progress; therefore, managers will not know whether intervention is
necessary to meet milestones.  The system is essential for the Army
to effectively prioritize work to be funded and clearly identify work
remaining unfunded. 

The material weakness plan includes an October 1999 milestone for
implementing the Civilian Manpower Integrated Costing System at Army
headquarters and major commands and using the system to base
institutional budgets on workload analyses.  The plan only includes
one interim step, and the milestone for this action has slipped.  For
example, the milestone for implementing the system at Army
headquarters changed from May to December 1998.  Also, monitoring
progress is essential because offices other than Manpower and Reserve
Affairs are involved.  According to Manpower and Reserve Affairs
officials, the Financial Management and Comptroller's office is
developing part of the system.  The officials also stated that
successful implementation will require compatible equipment at major
commands and training the command's personnel how to use the system. 
However, milestones for these events are not identified. 


      DELAYED IMPLEMENTATION COULD
      HAMPER DOWNSIZING DECISIONS
---------------------------------------------------------- Letter :3.7

Delays in implementing the material weakness plan's corrective
actions could hamper the Army's efforts to efficiently allocate its
institutional resources.  The Army's workload analysis methods
(12-step and AWPS) could enhance future decisions affecting
institutional force structure.  The 12-step methodology includes an
analysis to structure organizations efficiently and assess whether
positions should be filled by military, civilian, or contractor
personnel.  Such information could be useful to managers in deciding
how to allocate reductions with the least effect on accomplishing
institutional missions.  The Army programmed reductions of 6,200
institutional positions during fiscal year 1998 and another 7,000
positions between fiscal year 1999 and 2003.  The Quadrennial Defense
Review mandates further reductions of 33,700 civilian positions and
some active Army positions.  Delayed implementation may result in
these planned reductions being made without the benefit of workload
analysis and assessments of risks and tradeoffs. 


   INSTITUTIONAL REDESIGN HAS NOT
   LIVED UP TO ITS POTENTIAL FOR
   REENGINEERING THE INSTITUTIONAL
   FORCE
------------------------------------------------------------ Letter :4

Force XXI Institutional Redesign is the Army's effort to reengineer
its processes and streamline its organizational structure.  It
includes consolidating major commands and realigning their missions
to more efficiently perform institutional functions.  The Army
defines reengineering as a ".  .  .fundamental rethinking and radical
redesign of business processes to achieve dramatic improvements in
critical, contemporary measures of performance." The Army Vice Chief
of Staff is responsible for reengineering Army processes and
organizations.  The Deputy Chief of Staff for Operations and Plans is
the executive agent for redesign assessments and is responsible for
performing day-to-day support functions.  Other Army headquarters
offices are responsible for conducting the assessments and
implementing approved initiatives. 

Even though redesign efforts began in January 1995, there has been no
net decrease in the number of major commands, and two of the redesign
studies have been canceled.  Also, the dollar and personnel savings
estimates are overstated.  The Army reported that redesign's phase I
initiatives would save $1.7 billion over 6 years and that
implementation would cost almost $27 million.  The savings estimates
are overstated because they do not include significant implementation
costs of at least $405 million.  Also, most of the 4,000 active Army
positions that were to be transferred from institutional to
operational forces were based on assumptions that may not occur.  In
addition, since no single office monitors the results of
institutional redesign efforts, the Army has no systematic way of
knowing the status of savings, implementation costs, or institutional
position transfers. 

The Army's redesign document, draft Pamphlet 100xx,\10

states that it is intended to provide a vision for redesigning the
institutional force and serve as the foundation for institutional
doctrine.  The pamphlet states general goals of improving
institutional force efficiencies but, other than proposing models for
reducing the number of major command headquarters, does not cite
specific, measurable performance goals.  However, the Government
Performance and Results Act requires federal agencies to identify
strategic goals and develop performance measures to gauge progress
toward achieving each goal.  The pamphlet is consistent with this
principle, stating that "clear performance measures should be
identified to gauge organizational progress."


--------------------
\10 Pamphlet 100xx has been in draft since June 1995 and, according
to Army officials, has been undergoing final editing since April
1997. 


      REDESIGN EFFORT HAS NOT
      RESULTED IN MAJOR
      ORGANIZATIONAL CHANGES OR
      EFFICIENCIES
---------------------------------------------------------- Letter :4.1

The Army's institutional redesign effort has not reduced the number
of major commands, even though redesign documents state that the Army
will strive to do so.  The redesign pamphlet introduces
organizational models that would reduce the Army's current 15-major
command structure to 8 or 3 major commands.  For example, the
three-command structure would manage the Army's core capabilities of
developing the force, generating and projecting the force, and
sustaining the force.  Army headquarters would retain responsibility
for directing and resourcing capabilities.  During redesign phase I,
the Army redesignated a major command--the Information Systems
Command--as a subcommand of Forces Command.  The Army also created a
new major command--the Space and Missile Defense Command.  Thus,
there has been no net decrease in the number of major commands. 

Some redesign transfer of functions from Army headquarters to major
commands have not yet resulted in significant efficiencies.  For
example, the Recruiting Command transferred intact from Army
headquarters to the Training and Doctrine Command in October 1997 as
a major subordinate command.  However, there has only been a decrease
of less than one-half of 1 percent in the Recruiting Command's
institutional positions.  According to Army data, the Recruiting
Command had 9,256 positions in fiscal year 1997, and the Army
projects 9,210 positions in fiscal year 1998.  The Army plans to
merge the Recruiting Command with the Training and Doctrine Command's
Cadet Command in October 1999, a move that the Army expects will
result in organizational efficiencies and fewer institutional
positions.  The Army plans to conduct a business process
reengineering study to determine the most effective and efficient
organization which is expected to result in fewer organizational
layers. 

The Army initially planned to examine the following seven areas
during phase II of the redesign effort:  installation management;
unit, joint, and interservice training; security and law enforcement;
financial management; medical and health; intelligence; and supply,
services, and materiel.  However, officials from the Deputy Chief of
Staff for Operations and Plans told us that the financial management
and supply, services, and materiel assessments have been canceled. 
According to these officials, the Financial Management and
Comptroller's office has chosen to use internal efforts to identify
financial management efficiencies, rather than complete an
institutional redesign assessment, because the Assistant Secretary of
the Army for Financial Management and Comptroller reports to the
Secretary of the Army and not the Army Vice Chief of Staff.  Further,
the officials said that the Army Materiel Command will not complete
the supply, services, and materiel assessment because the Command was
responding to the mandated Quadrennial Defense Review reductions. 

Pamphlet 100xx encourages outsourcing institutional functions.  A
recent Defense Science Board study and the Quadrennial Defense Review
also concluded that some institutional functions should be
contracted.  If the Army reduced its reliance on active military
institutional personnel, more military personnel would be available
for operational units, including deployable support units, which have
historically experienced shortfalls.\11 Although the number of Army
institutional positions has decreased since 1992, Army data show that
the proportion of active Army institutional to operational forces has
remained at about 29 percent and is projected to remain at this level
through fiscal year 2003, as shown in figure 3. 

   Figure 3:  Active Army
   Institutional Positions as a
   Percent of Operational Forces

   (See figure in printed
   edition.)

Source:  Army force structure database as of the fiscal year 1997
President's budget. 

In addition, the proportion of all active Army institutional
positions to the total number of institutional positions is projected
to increase slightly, from 34.2 percent in 1992 to 35.8 percent in
2003.  Table 1 compares the number of military and civilian
institutional positions in fiscal years 1992 and 2003. 



                                Table 1
                
                   Number of Active Army and Civilian
                Institutional Positions in Fiscal Years
                             1992 and 2003

                              Fiscal year 1992      Fiscal year 2003
                            --------------------  --------------------
                                 Total                 Total
                            institutio   Percent  institutio   Percent
                                   nal        of         nal        of
Category                     positions     total   positions     total
--------------------------  ----------  --------  ----------  --------
Active Army                    171,539      34.2     130,644      35.8
Civilian                       330,157      65.8     234,676      64.2
======================================================================
Total                          501,696       100     365,320       100
----------------------------------------------------------------------
Note:  The active Army category includes positions allocated to major
commands, headquarters, and joint and defense agencies.  Positions
for transients, trainees, holdees, and students are not included. 

Source:  Army force structure database as of the fiscal year 1997
President's budget. 


--------------------
\11 Force Structure:  Army Support Forces Can Meet Two-Conflict
Strategy With Some Risks (GAO/NSIAD-97-66, Feb.  28, 1997) and Peace
Operations:  Heavy Use of Key Capabilities May Affect Response to
Regional Conflicts (GAO/NSIAD-95-51, Mar.  8, 1995). 


      DOLLAR AND POSITION SAVINGS
      ARE NOT OCCURRING AS
      EXPECTED
---------------------------------------------------------- Letter :4.2

Phase I savings estimates are overstated because significant costs
are not included in the Army's 1998-2003 Program Objective Memorandum
and savings estimates are not definitive.  Specifically, the
memorandum included savings of $1.7 billion and almost $27 million in
implementation costs resulting from 107 institutional redesign
initiatives.\12 However, at least $405 million in implementation
costs were not included in the memorandum. 

The Army Program Analysis and Evaluation Office is to develop the
service's Program Objective Memorandum.  According to an official
from this office, limited cost data were included in the memorandum
because the offices responsible for the initiatives did not provide
cost data in a timely manner.  For example, the Army Program Analysis
and Evaluation Office did not include $69 million in implementation
costs for five logistics initiatives.  In addition, the Army Program
Analysis and Evaluation Office did not include implementation costs
for the Senior Reserve Officer's Training Corps initiative.  This
initiative proposed replacing the Senior Reserve Officer's Training
Corps active duty institutional personnel with a combination of
active, reserve, or contracted former military personnel.  The
Reserve Officer's Training Corps program is in place at 300 colleges
and enables students to graduate with a degree and receive an
officer's commission. 

In February 1996, the Deputy Chief of Staff for Operations and Plans
initially estimated that the Senior Reserve Officer Training Corps
initiative would cost $336 million over a 4-year period for
contracting retired personnel to replace all 2,100 active Army
personnel in the corps.  However, the Army's Program Objective
Memorandum did not include any of the implementation costs associated
with the hiring of contractor personnel to conduct the Senior Reserve
Officer's Training Corps program.  The Army's memorandum only
included implementation cost of $2 million for RAND to study the
concept of hiring contractor personnel.  Once implemented, the
initiative is expected to require a recurring operations and
maintenance cost of $40,000 per contractor per year.\13 For example,
if all 2,100 active Army personnel were replaced by contractors--in
general, retired officers--the Army would incur a cost of $84 million
per year. 

Additionally, the $1.7 billion savings estimate is not definitive
because two offices disagree on the savings anticipated.  The Deputy
Chief of Staff for Logistics is responsible for five logistics
initiatives, which represent
40 percent of the $1.7 billion phase I savings.  The Army Program
Analysis and Evaluation Office and the Office of the Deputy Chief of
Staff for Logistics identified savings that varied from $12 million
to $57 million per initiative, as shown in table 2, even though the
net difference amounted to approximately $13 million.  According to
the Army Program Analysis and Evaluation Office, the savings are also
included in the 1998-2003 Future Years Defense Program, but specific
initiatives and groupings (such as logistics-related initiatives)
cannot be tracked because they are combined with other Army efforts. 



                                Table 2
                
                 Differences in Phase I Implementation
                   Cost and Savings Data Between Army
                  Program Analysis and Evaluation and
                  Deputy Chief of Staff for Logistics
                                Offices

                         (Dollars in millions)

                                   Costs                Savings
                            --------------------  --------------------
Initiative                       PA&E     DCSLOG       PA&E     DCSLOG
--------------------------  ---------  ---------  ---------  ---------
Single stock fund                   0        $10     $429.7       $380
Standard Army retail                0        9.9       27.6         85
 supply system
Velocity management/                0          4      116.5       71.5
 order ship time
Integrated sustainment              0         45      103.6        142
 maintenance
Materiel management                 0          0        0.3         12
 privatization
======================================================================
Total                               0      $68.9     $677.7     $690.5
----------------------------------------------------------------------
Note:  PA&E--Program Analysis and Evaluation and DCSLOG--Deputy Chief
of Staff for Logistics. 

Source:  Army Program Analysis and Evaluation and Deputy Chief of
Staff for Logistics offices. 

According to the Principal Deputy Assistant Secretary of the Army for
Financial Management and Comptroller, the burden is on the major
command to identify a "substitute bill payer" if redesign savings
cannot be achieved, since the savings have already been included in
the fiscal
year 1998-2003 Program Objective Memorandum.  Officials from the Army
Program Analysis and Evaluation and Deputy Chief of Staff for
Operations and Plans offices concurred.  For example, the fiscal year
1998-2003 memorandum claimed savings of approximately $430 million
for the single stock fund initiative.  This effort is based on the
belief that a single stock fund eliminates duplicative materiel and
financial management functions.  However, the Army Materiel Command,
as the proponent for this initiative, claims that fiscal year 1998
projected savings of $30 million will not be realized because of
problems in implementing changes to financial systems.  The Principal
Deputy Assistant Secretary for Financial Management and Comptroller
told us that $30 million in savings will be realized in fiscal year
1998--either from this initiative or elsewhere. 

Phase I projected that 3,914 active Army positions could be
transferred from institutional to operational forces, but most of
these transfers were based on assumptions that may not occur.  Our
February 1997 report stated that many of the active Army space
transfers were based on initiatives that have not been fully tested
or approved; therefore, the savings were not assured.  As a result,
we recommended that the Secretary of the Army closely monitor the
military positions the Army planned to save from the redesign
initiatives and have a contingency plan in place in the event the
personnel savings do not materialize.  DOD concurred with this
recommendation. 

Officials from the Deputy Chief of Staff for Operations and Plans
stated that the 3,914 spaces were transferred from institutional to
operational forces, but most of the spaces did not come from the
phase I redesign initiatives.  Two initiatives, which account for
2,850, or 73 percent, of the 3,914 active Army spaces, will not
produce the projected number of spaces.  For example, the Senior
Reserve Officer's Training Corps initiative was expected to transfer
2,100 positions.  However, RAND currently estimates the initiative
will yield between 800 and 1,050 spaces because the Army decided not
to contract out all 2,100 spaces and is testing a combination of
active, reserve, and contract personnel. 

Additionally, the transfer of positions is also based on reducing
attrition.\14 The Army assumed reduced attrition would free 750
training and recruiting institutional positions.  If personnel stay
in the Army, then it would not need to recruit and train
replacements.  However, the Training and Doctrine Command currently
projects an increase in initial entry training requirements from
fiscal years 1998 to 1999 rather than a decrease.  Army headquarters
officials acknowledged that they could not explain how the 750 spaces
were calculated, and Command officials said that it was not involved
in deriving the 750 spaces. 


--------------------
\12 Phase I produced a total of 144 initiatives.  The remaining 37
initiatives are expected to be implemented later.  The initiatives
submitted to the Vice Chief of Staff for approval contained estimates
of dollar and position savings, both civilian and military.  Army
officials noted that the initiatives may also result in increased
effectiveness.  However, the officials did not provide any measures
of performance for increased effectiveness. 

\13 Since the contractors are retired officers, this cost represents
the difference between the contractor's active duty and retirement
salary. 

\14 Attrition is defined as a soldier leaving the Army before his or
her term of enlistment expires. 


      NO OFFICE MONITORS THE
      RESULTS OF REDESIGN EFFORTS
---------------------------------------------------------- Letter :4.3

Even though the Deputy Chief of Staff for Operations and Plans is the
executive agent for redesign assessments, there is no single office
that systematically manages and monitors redesign results. 
Therefore, at any given time, the Office of Operations and Plans does
not know the status of specific initiatives, dollar savings,
implementation costs, or progress in reducing institutional
positions.  In addition, any differences in projected costs and
savings have not been reconciled between the Army Program Analysis
and Evaluation and the Army offices responsible for specific
initiatives. 

The Assistant Secretary of the Army for Financial Management and
Comptroller is responsible for quarterly Army performance reviews. 
These reviews are for the Secretary of the Army, Army Chief of Staff,
and function chiefs to discuss problem areas.  However, the Office of
the Assistant Secretary states that institutional redesign
initiatives are monitored and discussed only if their implementation
or savings become jeopardized.  A Financial Management and
Comptroller written statement explains that none of the redesign
initiatives have been designated as topics to be monitored during the
quarterly reviews, including the Senior Reserve Officer's Training
Corps, which accounts for one-half the projected position transfers
and $336 million in unaccounted for implementation costs.  A
Financial Management and Comptroller official told us that some
quarterly reviews were canceled and never rescheduled and that
monitoring institutional redesign results would require an investment
of too many resources. 


      REDESIGN LACKS SPECIFIC
      PERFORMANCE GOALS
---------------------------------------------------------- Letter :4.4

Pamphlet 100xx discusses the need to achieve efficiencies in
performing institutional functions.  For example, the pamphlet states
that it is necessary to demonstrate that cost savings and/or
operational efficiencies will result from implementing redesign
initiatives.  However, beyond this overarching guidance, the Army has
not set specific, measurable, performance goals and assessed the
Army's progress in achieving them (e.g., program outcome
evaluations).  More recently, DOD guidance to the military services
for implementing the Government Performance and Results Act states
that the services should identify performance measures that
demonstrate how the services' plans, such as Army Force XXI, achieve
the goals of DOD's strategic plan. 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

A sound, analytically based methodology would help the Army to ensure
that its institutional force is efficiently organized and comprises
the minimum number of personnel.  Such a methodology is essential for
the Army to make data-based decisions on how to allocate resources
among institutional organizations, have assurance the highest
priority functions are funded, and be aware of the risks in not
funding some institutional functions.  The use of workload-based
criteria in implementing the programmed downsizing of 13,000
positions and Quadrennial Defense Review reductions could help the
Army minimize effects on its ability to perform institutional
functions and may help introduce more efficient organizations and
processes.  A smaller institutional force may also generate savings
the Army could apply to its modernization programs or its operational
forces. 

Although the Army has a plan to correct this material weakness, the
plan is incomplete, and the Army may have difficulty accomplishing
the corrective actions within established time frames.  The plan
provides a mechanism to ensure compliance with the Army's methodology
for determining institutional requirements.  However, if the plan's
certification and quality assurance milestones are extended due to
insufficient resources, the Army will be making reductions without
knowing if commands are performing the analyses required to make
sound decisions about staffing levels and reduce the cost of
accomplishing institutional functions. 

The Army's plan is to simultaneously develop workload approaches
(12-step method and AWPS) and a system to calculate the cost for
institutional positions.  Until all three efforts are completed and
integrated, the Army cannot be assured that it has the minimum
essential institutional force, and the Army's planning, programming,
budgeting, and execution system for institutional functions will not
be based on workload.  If key subplans remain undeveloped, the Army
has no method for assessing its progress toward meeting the plan's
current completion date of December 1999.  As a result, further
reductions or retention of institutional personnel may result without
the benefits of workload analysis and assessments of risks and
tradeoffs. 

Army oversight is necessary to ensure that Force XXI institutional
redesign results are achieved.  To date, the Army has not identified
specific, measurable redesign goals, even though its own guidance
acknowledges the importance of doing so.  Army documents include
general goals for improving institutional efficiency but, other than
reducing the number of major commands, do not specify measures to
achieve efficiencies.  Without measurable performance goals, it may
be difficult for the Army to know when its vision for the
institutional force, as stated in Pamphlet 100xx, is achieved. 
Further, savings will be less than projected.  In fact, the Army may
not know the source of the savings because no single office monitors
the status of redesign initiatives or their implementation costs. 

The Force XXI redesign concept includes proposals to reduce the
number of major commands and realign their functions.  Since the
12-step methodology includes analyses of how to structure and staff
organizations efficiently, the Army could coordinate implementing
major command realignments with the 12-step analysis techniques. 
Such coordination could result in institutional efficiencies, which
would provide the Army an opportunity to transfer military
institutional personnel to fill shortfalls in support forces.  This
transfer would increase the proportion of Army resources devoted to
missions and decrease the proportion devoted to infrastructure. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

To improve the Army's ability to accurately project institutional
requirements, allocate institutional personnel, and make informed,
analysis-based decisions on risks and tradeoffs, we recommend that
the Secretary of the Army complete subplans of the material weakness
plan, modify milestones to accurately reflect available resources to
accomplish corrective actions, and closely monitor results. 

To improve the Army's ability to accurately project institutional
requirements derived from AWPS, we recommend that the Secretary of
the Army direct the Assistant Secretary for Manpower and Reserve
Affairs to develop a long-range master plan to implement AWPS,
including milestones and definitions of corporate-level requirements. 

To improve the Army's ability to make informed, analysis-based
decisions on benefits, risks, and tradeoffs in realigning major
command organizations and functions, we recommend that the Secretary
of the Army require that workload-based analyses, such as the 12-step
methodology, be used to demonstrate the benefits, risks, and
tradeoffs of Force XXI institutional redesign decisions. 

To improve the Army's ability to oversee reforms for increasing the
effectiveness and efficiency of its institutional force, we recommend
that the Secretary of the Army assign a single office the
responsibility to provide management and oversight of the
institutional redesign process to include identifying clear,
specific, and measurable performance goals; publishing these goals in
a final version of Pamphlet 100xx; monitoring savings and
implementation costs; and periodically reporting results achieved
along with the stated goals and projections of the initiatives'
savings and implementation costs. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In written comments on a draft of this report, DOD generally
concurred with the report and all recommendations.  DOD also stated
that it will request that the Army take appropriate action to
implement our recommendations.  DOD's comments are reprinted in their
entirety in appendix III. 


---------------------------------------------------------- Letter :7.1

We are providing copies of this report to the Secretaries of Defense
and the Army, other appropriate congressional committees, and the
Director of the Office of Management and Budget.  We will also
provide copies to other interested parties on request. 

Please contact me at (202) 512-3504 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix IV. 

Sincerely yours,

Richard Davis
Director, National Security
 Analysis


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To determine the extent to which the Army addressed its historical
weakness in determining institutional requirements, we compared the
June 1997 draft material weakness plan to the October 1997 approved
plan to identify changes in milestones, progress in subplans'
development, and the intent to administer and monitor the plan.  We
also examined Army and Department of Defense (DOD) guidance and
regulations regarding implementation of workload-based systems and
processes, such as the 12-step method and the Army Workload and
Performance System (AWPS). 

We obtained documentation and interviewed knowledgeable Army
officials from Army Headquarters, Office of the Assistant Secretary
of the Army for Manpower and Reserve Affairs, and the Deputy Chief of
Staff for Operations and Plans--Directorate of Force Programs,
Washington, D.C.; and the Industrial Operations Command, Rock Island,
Illinois.  We observed pilot testing of AWPS at the Corpus Christi
Army Depot, Texas.  We also analyzed documents and held discussions
regarding AWPS system implementation, status of training, management
of depot workload, systems requirements, and the lack of updated
project schedules. 

We obtained relevant documentation on existing requirements
determination processes at Forces Command, Fort McPherson, Georgia;
the Army Training and Doctrine Command, Fort Monroe, Virginia; the
Army Materiel Command, Alexandria, Virginia; and the Management
Engineering Activity, Huntsville, Alabama, which performed the Army
Materiel Command's requirements assessments.  The three major
commands account for 43 percent of the civilian institutional
workforce and 47 percent of the military institutional workforce.  We
compared each of the command's processes with the 12-step method to
identify compliance and program differences.  We also assessed the
use of the requirements determination processes in budget formulation
and execution at Army Headquarters and the major commands. 

To assess the extent to which the Army's streamlining initiatives
identified opportunities to reduce Army personnel devoted to
institutional functions and realize savings, we reviewed streamlining
guidance and interviewed knowledgeable officials from the Office of
the Assistant Secretary of the Army for Manpower and Reserve Affairs;
the Directorate of Force Programs within the Deputy Chief of Staff
for Operations and Plans; the Assistant Secretary of the Army for
Financial Management and Comptroller; the Deputy Chief of Staff for
Logistics; Forces Command; Training and Doctrine Command; and Army
Materiel Command.  During discussions with the officials, we obtained
documentation describing each initiative, estimated implementation
costs, and dollar and personnel savings for the 107 fiscal year
1998-2003 institutional redesign initiatives.  We also obtained
documentation and discussed military position transfers from
institutional to operational forces.  However, our assessment focused
on those initiatives that represented the largest percentage of the
phase I redesign savings. 

Officials from the Army's Office of Program Analysis and Evaluation
provided documentation of the dollar savings included in the
1998-2003 Program Objective Memorandum and validated our analysis of
those numbers.  The Office of the Assistant Secretary of the Army for
Manpower and Reserve Affairs validated the personnel savings. 

To identify the distribution of active Army and civilian
institutional personnel and analyze institutional trends, we obtained
the number of institutional positions from fiscal years 1992 to 2003
from the Army Force Management and Support Agency's Structure and
Manpower Allocation System database.  We did not conduct a full
reliability assessment because the data used in the report are for
background and context and are not vital to audit results.  However,
Army officials explained the imbedded system edits they rely on to
detect data errors and protect data integrity.  Additionally, we
independently corroborated the numbers at two commands.  On the basis
of our comparisons and the description of the database's system
edits, we were satisfied that these data are the best available and
that they accurately support our statements on institutional
composition and trends. 

We conducted our review from April to December 1997 in accordance
with generally accepted government auditing standards. 


ARMY MAJOR COMMANDS
========================================================== Appendix II

  -- Army Materiel Command

  -- Training and Doctrine Command

  -- Forces Command

  -- Medical Command

  -- Corps of Engineers

  -- Space and Missile Defense Command

  -- Special Operations Command

  -- Military Traffic Management Command

  -- Criminal Investigations Command

  -- Intelligence and Security Command

  -- Military District of Washington

  -- U.S.  Army, Europe

  -- U.S.  Army, Pacific

  -- Eighth U.S.  Army

  -- U.S.  Army, South




(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II



(See figure in printed edition.)

Now on p.  24. 

Now on p.  24. 

Now on p.  24. 



(See figure in printed edition.)

Now on p.  24. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Gwendolyn R.  Jaffe, Assistant Director
Irene A.  Robertson, Senior Evaluator
Vincent C.  Truett, Senior Evaluator

NORFOLK FIELD OFFICE

Brenda M.  Waterfield, Evaluator-in-Charge
Jeanett H.  Reid, Evaluator

*** End of document. ***





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