[Senate Hearing 109-172]
[From the U.S. Government Publishing Office]
S. Hrg. 109-172
WAGING WAR ON WASTE: AN EXAMINATION OF DOD'S BUSINESS PRACTICES
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HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
THE FEDERAL WORKFORCE AND THE DISTRICT
OF COLUMBIA SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
APRIL 28, 2005
__________
Printed for the use of the
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Amy B. Newhouse, Chief Clerk
OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
GEORGE V. VOINOVICH, Ohio, Chairman
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
NORM COLEMAN, Minnesota CARL LEVIN, Michigan
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Andrew Richardson, Staff Director
Richard J. Kessler, Minority Staff Director
Nanci E. Langley, Minority Deputy Staff Director
Tara E. Baird, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Voinovich............................................ 1
Senator Akaka................................................ 3
Senator Lautenberg........................................... 5
Senator Levin................................................ 20
WITNESSES
Thursday, April 28, 2005
Hon. David M. Walker, Comptroller General, U.S. Government
Accountability Office.......................................... 7
Hon. Clay Johnson, III, Deputy Director for Management, Office of
Management and Budget.......................................... 10
Bradley M. Berkson, Acting Deputy Under Secretary for Logistics
and Materiel Readiness, U.S. Department of Defense............. 11
Alphabetical List of Witnesses
Berkson, Bradley M.:
Testimony.................................................... 11
Prepared statement........................................... 71
Johnson, Hon. Clay, III:
Testimony.................................................... 10
Prepared statement........................................... 68
Walker, Hon. David M.:
Testimony.................................................... 7
Prepared statement........................................... 33
APPENDIX
Responses to questions for the Record from:
Mr. Walker................................................... 92
Mr. Johnson.................................................. 95
Mr. Berkson.................................................. 96
Charts submitted by Mr. Berkson:
Focus on continuous improvement (Maintenance Cycle Time Days) 104
Performance Based Logistics (PBL) proven in the Global War on
Terrorism.................................................. 105
IRAQ Air Shipments Cycletime................................. 106
WAGING WAR ON WASTE: AN EXAMINATION OF DOD'S BUSINESS PRACTICES
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THURSDAY, APRIL 28, 2005
U.S. Senate,
Oversight of Government Management, the Federal
Workforce and the District of Columbia Subcommittee,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:09 p.m., in
room SD-562, Dirksen Senate Office Building, Hon. George V.
Voinovich, Chairman of the Subcommittee, presiding.
Present: Senators Voinovich, Akaka, Levin, and Lautenberg.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. The hearing will please come to order.
The Subcommittee on Oversight of Government Management will be
in order.
Good afternoon, and thank you all for coming. This
afternoon's hearing is entitled ``Waging War On Waste: An
Examination of the Department of Defense's Business
Practices.''
The rules of this Committee give the Subcommittee
jurisdiction over the management, efficiency, and
effectiveness, and economy of all departments, agencies, and
programs of the Federal Government.
I will never forget what my predecessor in the Senate John
Glenn said, ``If you can get on Governmental Affairs, George,
do it, because it means that you can meddle in anything you
want to.''
It is pursuant to this broad oversight jurisdiction that
this Subcommittee is holding the first of what will be a series
of oversight hearings on the programs and operations of the
Department of Defense that have been designated as high risk by
the Government Accountability Office. High-risk programs and
operations are considered especially vulnerable to waste and
mismanagement.
This past January, GAO designated eight areas of DOD as
high risk. Many of these problem areas were first identified in
the 1990's. In addition, there are six government-wide high-
risk areas that DOD shares with all Federal agencies.
Today's hearing focuses specifically on a new area
designated by GAO--DOD's approach to business transformation.
This high-risk area impacts many facets of the Department's
business systems and program areas, including business systems
modernization, support infrastructure management, financial
management, weapon systems acquisitions, contract management,
and supply chain management. In other words, improvements in
this high-risk area are essential to ensure that the Department
manages its people, systems, and programs in an efficient
manner.
We are holding this hearing because these high-risk areas
and the resources and management efforts they consume degrades
the ability of our Armed Forces to perform their missions as
effectively as possible. We are holding this hearing because
the men and women serving abroad and fighting for our freedom
and interests deserve the best support possible from the
agencies responsible for those missions.
I think there would be a universal agreement that, despite
our current best efforts, we need to do better. Let me also say
at the onset that we are all in this together. We are all
interested in reducing inefficiency at the Department of
Defense and providing the best possible support.
As I mentioned at the Subcommittee's hearing on the high-
risk list in February, I intend to address the management
challenges confronting the Department of Defense in a manner
similar to how we have addressed the Federal Government's human
capital challenges. In fact, the management challenges at DOD
remind me of the government's human capital challenges in a key
respect. It is a case of good people caught in a flawed system.
At DOD, these challenges are exacerbated by the enormous scope
of its operations involving millions of people spanning the
globe.
The Subcommittee will examine and explore the management
challenges at DOD. Once we have a firm grasp on the challenges,
I will work with Senator Akaka, Senator Collins, and all other
interested parties in trying to find solutions.
Legislation may be required. Indeed, just last week,
Senator Akaka and I joined Senator Ensign in introducing S.
780, which would establish the Deputy Secretary of Defense for
Management at the Department of Defense. Other solutions may
require new approaches to doing business and can be done
internally by the Executive Branch of government.
When the Secretary of Defense Rumsfeld began his efforts to
transform the Department of Defense, he meant far more than
just the way the Armed Forces fight in the field. He also meant
the way the Pentagon itself works on a daily basis. Ironically,
Secretary Rumsfeld began his own campaign to transform the
defense bureaucracy on September 10, 2001. At a speech at the
Pentagon, Secretary Rumsfeld stated, ``The modernization of the
Department of Defense is a matter of urgency. In fact, it is a
matter of life and death, ultimately, every American's.''
He went on to say, ``This effort will succeed because it
must. We really have no choice. It is not in the end about
business practices, nor is the goal to improve figures on the
bottom line. It's really about the security of the United
States of America. Our job is defending America, and if we
cannot change the way we do business, then we cannot do our job
well, and we must.''
In our invitation letter to the Secretary, Senator Akaka
and I asked for DOD's response to GAO's assessment, as well as
an outline of DOD's comprehensive plan to address these
challenges. We also wanted to learn the Department's views on
establishing a nonpolitical chief management officer to oversee
the Department's operations.
Based upon the testimony of Under Secretary Wynne before
the Armed Services Committee on April 13, DOD is opposed to the
idea. As this concept has not yet been fully explored, this
strikes me as a little premature in terms of their judgment.
It is my hope that, through oversight, we can affect
positive change for the Department of Defense so that the men
and women who defend our Nation can get the best possible
support.
I now yield to Senator Akaka. Quite frankly, he is far more
familiar with these issues than I am, due to his service on the
Armed Services Committee, where he is the Ranking Member of the
Readiness and Management Support Subcommittee.
Senator Akaka, I thank you for your leadership. And it is
just wonderful that the two of us are involved in this
Subcommittee, particularly on this subject.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman.
Again, I say it is a pleasure working with you to increase
government efficiency through the oversight of government
operations in high-risk programs. And I also want to say it is
good to see our witnesses again, as they have really helped to
shape what we are doing here.
As you know, 2 weeks ago, the Armed Services Readiness
Subcommittee held a hearing on management weaknesses at DOD. As
that panel's Ranking Member, I had the opportunity to discuss
with Comptroller General Walker and DOD officials the problems
facing the Department. At that hearing, I reiterated my
disappointment that out of 25 high-risk areas on the year 2005
list, 8 are unique to DOD, and 6 are government-wide areas that
apply to DOD.
I sincerely appreciate Senator Voinovich's interest in
working on this issue by adding DOD's management challenges to
the portfolio of this Subcommittee. I am proud to join you, Mr.
Chairman, in this effort because I believe we are at a
crossroads with the Department of Defense, given the growing
deficit and the costs associated with the war in Iraq.
GAO has long pointed to the billions of taxpayer dollars
wasted annually because of systemic weaknesses in DOD's
business operations. Every extra tax dollar that DOD spends on
business systems is one less dollar for our war fighters.
Today's hearing, which builds upon both our February
hearing and this month's Armed Services Readiness Subcommittee
hearing, keeps the pressure on DOD to resolve its long-standing
financial and business management problems. Until DOD drops its
cultural resistance to change and addresses the lack of
sustained leadership within the Department, we will continue to
see DOD occupying the bulk of the high-risk list.
To deal with these challenges at DOD, the Readiness
Subcommittee has enacted legislation addressing several of the
DOD high-risk areas. For example, after DOD failed to have a
promised enterprise architecture blueprint for its business
systems in place by March 2003, we required the Department to
develop and implement a new financial management architecture
and transition plan by early 2004. I am troubled that there is
no plan today, despite statutory requirements.
To improve efficiencies across the more than 4,000 non-
integrated and duplicative business systems, the Fiscal Year
2005 Defense Authorization Act placed conditions on the
obligation of funds for defense business systems modernization,
which included approval requirements and accountability for
purchases over $1 million.
As I noted, the barriers to DOD's business transformation
are long-standing and deep-rooted. But there is progress. In
addressing congressional mandates, and as Mr. Berkson will
testify, DOD has taken steps toward improvement. For example,
in May 2003, DOD established the Business Management
Modernization Program Committee.
However, despite these efforts, there continues to be an
overall lack of progress in DOD's business transformation
efforts. Wheels are turning without much forward movement. The
lack of sustained leadership and commitment to business
transformation is why I worked with Senator Ensign, the
Chairman of the Readiness Subcommittee, and with you, Chairman
Voinovich, on a legislative proposal recommended by the
Comptroller General to establish the position of chief
management officer, a CMO, within DOD.
I am hopeful our measure, S. 780, will be included in this
year's DOD authorization bill. This new position will create a
Level 2 deputy secretary, who will be responsible for business
operations at DOD, including planning and budgeting,
acquisitions, logistics, financial management, and human
resources and personnel. The CMO would also be responsible for
developing and implementing a department-wide strategic plan
for business reform.
Our bill does not add another layer of bureaucracy at DOD.
Rather, it divides the responsibilities of the existing deputy
secretary between policy and management so that both areas
receive adequate attention. DOD needs one person whose term of
office overlaps administrations and who will be accountable and
responsible for leading change. Without one person in charge of
overall business transformation within DOD, I fear the
Department's programs will remain on GAO's high-risk list for
many years to come.
Our war fighters are supported through the various
management systems within DOD. We can no longer afford a
fragmented and half-hearted approach to DOD business
transformation. No less than the security of our Nation depends
upon it.
Our growing deficit puts us on an unsustainable fiscal path
that will damage our national security, as General Walker
observes in his testimony. This is not a partisan issue, and it
can only be resolved by bipartisan cooperation.
I want to again commend Chairman Voinovich for his efforts.
We intend to do everything we can to ensure DOD solves these
management problems. I look forward, Mr. Chairman, to the
testimony of our distinguished witnesses, and I thank you for
having this hearing.
Senator Voinovich. Senator Lautenberg, I want to thank you
very much for being here today and I am looking forward to your
statement.
OPENING STATEMENT OF SENATOR LAUTENBERG
Senator Lautenberg. Thanks very much, Mr. Chairman. It is a
pleasure to work with you and Senator Akaka. In particular, you
have established a reputation for getting to the bottom of
things in your term as mayor, governor, and U.S. Senator. We
greatly admire that quality.
Two weeks ago, Comptroller General Walker told the Senate
Subcommittee that the DOD, the Department of Defense, can't
account for tens of millions of dollars that it spent in Iraq,
Afghanistan, and elsewhere in the U.S. war on terrorism. And I
quote you here, General Walker, trying to figure out where the
money went is ``like pulling teeth.''
This isn't, unfortunately, anything new. For years, the
Government Accountability Office has reported that DOD
squanders billions of taxpayer dollars through waste, fraud,
and abuse, and poor management. Now this would be a serious
matter for any part of our government. It is especially serious
in this case because the Department of Defense is the Federal
Government's largest purchaser.
Now reference was made to Secretary Rumsfeld's speech on
September 10, 2001, the day before the great American tragedy
took place. Secretary Rumsfeld then said that he never saw an
organization that couldn't save 5 percent of its budget with
better management. In DOD's case, that comes to $21 billion. So
we should all be concerned about management practices at the
Pentagon.
Now I am especially concerned about several sweetheart
contracts that were given to the Halliburton Company. They had
been the beneficiary of a $2.5 billion no-bid contract and a
cost-plus contract that actually provides an incentive to waste
taxpayer dollars.
Now under this cost-plus arrangement, also known as LOGCAP,
Halliburton gets reimbursed for every dime that it spends. And
then, on top of that, it gets a calculated percentage for
profit. And that is why Halliburton didn't hesitate to pay
$1.50 for a can of soda. After all, it wasn't their money. And
that is why they overcharged taxpayers more than $27 million
for meals that were never even served to our troops. After all,
it wasn't their money.
And that is why they overcharged the Army $61 million for
gasoline delivered to Iraq. Once again, it wasn't their money.
It came out of the pockets of American taxpayers.
Now, Mr. Chairman, I understand that cost-plus contracts
are sometimes justified by special circumstances. When that is
the case, the contractor must account for every dollar spent.
And Halliburton hasn't done that.
Army auditors wanted to withhold payments from Halliburton
because it couldn't account for how it spent hundreds of
millions in taxpayer dollars. But as it always seems to do, the
Pentagon gives Halliburton special treatment, waiving the
requirement for accountability.
Now we saw something in the newspapers just a couple of
days ago about four Marines who had been in combat, and they
were brave, loyal troopers. But they pointed out that lack of
proper armor on the Humvees was responsible for the deaths of
their colleagues because the armor was not only inadequate, it
also was too short to really protect them. So the head wounds
that came from shrapnel killed four of their colleagues.
Families in this country are giving their sons and
daughters, husbands and wives. And when they see this
profligate spending, when they couldn't get the equipment they
want, they are justifiably complaining about the lack of
appropriate protections for themselves. The American people
want to get to the bottom of these contracts, and allegations
that they are not available turn out to be truths.
The public wants to know whether Halliburton or any other
company is engaged in war profiteering. Yet no Senate committee
has held a bipartisan hearing about these specific allegations
of waste, fraud, and abuse.
Mr. Chairman, once again, I thank you for convening this
hearing today. And I hope that when the full Committee holds a
hearing in the future that one of the things that they will
focus on, Halliburton and its contracts. Not because I want to
pick on Halliburton, but because they are the most glaring
example of unaccountability.
And coming from the corporate world, as I have, and good
sense, as my colleagues here have, you just can't favor anybody
to that extent and then complain about waste.
Thanks, Mr. Chairman.
Senator Voinovich. Thank you, Senator Lautenberg.
Today, we have a distinguished panel of witnesses before
us. The Hon. David Walker is Comptroller of the United States.
I understand you have just flown back from Indonesia to make
this hearing. I thank you for your efforts.
Mr. Walker has been sounding the alarm from GAO and
conducting valuable evaluations of DOD's business practices for
some time.
Joining him is the Hon. Clay Johnson, Deputy Director for
Management at the Office of Budget and Management. Mr. Johnson
is the leading the charge at OMB on addressing DOD's management
challenges.
Mr. Johnson, I commend you and the Bush Administration for
the no-nonsense approach you have taken to management issues.
The President's management agenda is the most comprehensive
results-oriented program that I have seen of any administration
during my years in public service. I tell many people that this
is one of the Administration's most overlooked achievements,
and I believe it will be one of the Bush Administration's
greatest legacies.
I would like to state that there are a lot of issues that
we are getting into today that, quite frankly, we just haven't
bothered with. There is a tendency sometimes to just do
nothing. If we do nothing, then we will never see change within
the DOD.
I had Steve Perry in my office yesterday from General
Services Administration. He was talking about pay-for-
performance and how they have changed the attitude over there
in the Department in terms of their rating and so on. Quite
frankly, he was a yellow on where he was and a green on his
progress. So that people are being held accountable for the
things that they are doing. And that is something that we ought
to be doing, and I congratulate you for that.
Representing the Department of Defense is Bradley Berkson,
Acting Deputy Under Secretary of Defense for Logistics and
Materiel Readiness. Mr. Berkson, thank you for your service to
this country.
On Tuesday, I had the opportunity to meet Ken Krieg, the
President's nominee for the Under Secretary of Defense for
Acquisition, Technology, and Logistics. He began his service at
the Defense Department in July 2001, and it is admirable that
Mr. Krieg has decided to remain in public service.
One of the things that I appreciate is the fact that people
who have served in the first 4 years of the President's
Administration have stuck around because they have all this
knowledge and everything. And the fact that they are going to
stick around and continue, I think, is really important because
their contribution will be so much greater because of the time
that they have spent.
I understand that your office will play a role in reforming
the Department's business practices. I look forward to working
with both of you. When it comes to managing the Department of
Defense, we have to do better. I know you realize that. The
Secretary does. I applaud your efforts to address these
challenges, and we look forward to learning what you intend to
do.
If you will stand, it is the custom of this Subcommittee to
swear in the witnesses. Do you swear that the testimony you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you, God?
[Witnesses sworn.]
Senator Voinovich. Let the record show that they answered
in the affirmative. We will start with Mr. Walker.
TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Walker. Thank you, Mr. Chairman, and other Senators. It
is a pleasure to be back before this Subcommittee today to
discuss business transformation at the Department of Defense.
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\1\ The prepared statement of Mr. Walker appears in the Appendix on
page 33.
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At the outset, I would like to thank you, Mr. Chairman, and
all Members of this Subcommittee for your continued commitment
to engage in oversight of key management operations and issues,
including the Department of Defense.
Mr. Chairman, I would also like to commend you, Senator
Akaka, and Senator Ensign for your leadership and your
sponsorship of proposed legislation to establish a Deputy
Secretary of Defense for Management. Implementing a CMO
position, in our opinion, is critical to successfully
transforming DOD's business operations.
While DOD maintains military forces with unparalleled
capabilities, it continues to confront pervasive and decades-
old management problems related to business operations that
support these forces. These management problems cost the
American taxpayer billions of dollars a year.
DOD senior leadership is committed to transforming DOD's
business operations to correct these problems and has taken a
number of steps to begin this effort. We recognize that
overhauling the business operations of one of the largest and
most complex organizations in the world represents a daunting
challenge, and it is not a new challenge.
The extent of this challenge is further demonstrated by our
2005 high-risk list, which you touched on before, Mr. Chairman.
Counting the six government-wide high-risk areas, DOD has 14 of
25 high-risk areas, and several of these have been on the list
since the beginning.
Although OMB has worked closely with a number of agencies
that have high-risk areas historically, over several
administrations, OMB has been much less engaged with regard to
DOD. Quite candidly, Mr. Chairman, the Congress has been much
less engaged in oversight of DOD over many years as well. That
must change.
To his credit, Clay Johnson, OMB's Deputy Director for
Management, recently reaffirmed plans to re-engage with GAO on
the new high-risk list and to make as much progress as possible
in the second term of the Bush Administration. He is also
committed to working with DOD on a much more active basis to
help make sure that they put together a plan to address all
their high-risk areas. I think it is critically important that
they do so. In addition to OMB's engagement, it is critically
important that Congress stay on the case as well with regard to
these matters.
There are a number of institutional barriers to change at
DOD. DOD has begun several broad-based reform efforts to
transform its business operations over several decades. But to
date, there has been little tangible evidence of substantial
and sustained progress. Yes, there has been progress, but not
substantial enough and, clearly, not sustained.
We do not fault the ability or commitment of those
individuals who have been involved in these efforts over the
years, including those who are involved at the present point in
time. Our work has identified four underlying causes or
institutional barriers that we think represent real impediments
to long-term progress.
First, the lack of sustained leadership and accountability
for correcting problems. Mr. Chairman, the simple truth is that
nobody is in charge of business transformation at DOD. If there
was, I would want to know why they are not here today and why
they weren't at the hearing last week. Nobody is in charge of
overall business transformation at DOD.
Second, cultural resistance, service parochialism, and
stove-piped operations--or I call them hardened silos--that end
up reinforcing the status quo. The absence of a department-
level, results-oriented business culture that places values on
plans containing results-oriented goals and performance
measures, coupled with centralized monitoring processes,
inadequate incentives, and accountability mechanisms for
change, and historically inadequate oversight has led to our
current situation.
There are three key elements that we have noted in my
testimony--which I would respectfully request, Mr. Chairman, be
included in the record--that have to be addressed in order to
be successful. First, there has to be a plan. There is no
comprehensive strategic and integrated business transformation
plan at DOD, which sets priorities, has appropriate key
milestones, and puts individuals responsible for accomplishing
certain objectives within specified timeframes. To my
knowledge, there never has been one over decades. But there
clearly is not one now.
Second, there needs to be more centralized control over the
billions of dollars in systems investments. Third, DOD needs a
chief management official.
I want to conclude by talking about the chief management
officer position. I want to discuss what it would and would not
do, because there is some misinformation with regard to this
position. First, the CMO would be responsible and accountable
for overall business transformation, not for policy issues such
as military transformation.
This responsibility would involve planning, integrating,
and executing an overall business transformation plan. That is,
with all due respect, a full-time job that has never been
filled.
The CMO would not assume the responsibility of the under
secretaries of defense, the service secretaries, or other DOD
officials for day-to-day management of various business
activities. Quite candidly, the under secretaries and the
service secretaries have full-time jobs dealing with their day-
to-day responsibilities, and it is inappropriate to have a new
layer involved in discharging those responsibilities.
At the same time, the breadth and complexity of DOD's
management problems and the overall level that this has to be
addressed within the Department precludes the under
secretaries, such as the DOD comptroller and also the under
secretary for AT&L, for asserting the necessary authority over
selected players and processes while continuing to fill their
substantial day-to-day responsibilities.
Since the CMO and DOD managers would have clearly
delineated roles and responsibilities, creating a CMO would not
add another hierarchical layer to oversee day-to-day management
of the Department. As Senator Akaka mentioned your legislation
clearly delineates roles and responsibilities and makes it very
clear that this is not a new layer. It does, however, for the
first time, make somebody responsible and accountable for
business transformation.
Some say this concept was tried in the past and didn't
work. I would respectfully suggest that people need to go back
and read the legislation and the related legislative history.
Such an assertion compares apples and oranges.
Over 30 years ago, Secretary of Defense Mel Laird asked
Congress to establish an additional deputy secretary of defense
for many of the same reasons we are proposing now, and Congress
did so. But there were a number of substantive differences.
Your legislation clearly delineates responsibility and
authorities, makes it clear that it is not a new layer and
level, and focuses the individual full time on business
transformation. That past legislation did not do that. It did
not specify duties and responsibilities for the new position
thereby creating potential confusion and overlaps.
Second, unlike your legislation, which would provide for a
7-year term appointment, therefore, making sure that you had a
professional which had enough continuity to try to be able to
make real and sustainable progress. The past legislation did
not do that.
Therefore, in form, you may call it the same thing, but in
substance, it is very different. Mr. Chairman, I believe that
we have to focus on substance, not form.
In closing, I would like to quote two secretaries of
defense. The first quote, ``Management deficiencies that we
have all observed in the past have, in large measure, been due
to insufficient senior management attention to the affairs of
the Department of Defense. I am convinced that authorization
for an additional deputy secretary will provide the capability
for this necessary level of attention. At the same time, I
think it is particularly important that we do not increase the
layers of management within the department.''
That was Secretary Mel Laird, February 9, 1972--33 years
ago.
The second secretary of defense's quote. ``Our challenge is
to transform not just the way we deter and defend, but the way
we conduct our daily business. Let us make no mistake. The
modernization of the Department of Defense is a matter of some
urgency. In fact, it could be said that it is a matter of life
and death, ultimately, every American's. Every dollar
squandered on waste is one denied to the war fighter.''
That was Secretary of Defense Donald Rumsfeld, September
10, 2001. I strongly agree with both secretaries. How many more
years and decades will we have to continue to deal with the
status quo?
Mr. Chairman, as you and Senator Akaka mentioned before,
this is all about supporting the war fighter and recognizing
fiscal realities. The status quo is unacceptable and
unsustainable, and we appreciate your, and the Members of this
Subcommittee's, interest.
Thank you.
Senator Voinovich. Thank you, General Walker. Mr. Johnson.
TESTIMONY OF HON. CLAY JOHNSON, III,\1\ DEPUTY DIRECTOR FOR
MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET
Mr. Johnson. Mr. Chairman and Senators, thank you.
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\1\ The prepared statement of Mr. Johnson appears in the Appendix
on page 68.
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We are all working to make sure the Defense Secretary's
commitment to business transformation is translated into
demonstrable improvement in all of DOD's business operations.
OMB's experience is that management opportunities--normal
opportunities and super complex opportunities, like those at
DOD--get addressed 100 percent of the time when four things
exist.
There is top management commitment to solving the problem.
There is a clear picture of what needs to be accomplished.
There is a clear, aggressive action plan, like General Walker
talked about, for solving the problem. And there is a clear
definition of who is responsible overall, and who is supposed
to do what by when.
OMB's role in this is that we help ensure that these
elements exist so DOD, or any agency, can most assuredly get to
where it wants to be in the desired timeframe. We also help
agency leadership ensure that progress occurs as planned and
scheduled. In the case of the high-risk items, we also help
ensure that Congress and GAO are satisfied with the Agency's
plans and progress.
Mr. Chairman, I look forward to working with you and your
Subcommittee on these matters. You have a proven record of
getting more for the taxpayers' money, and that is what all of
us are focused on and capable of doing here.
Thank you.
Senator Voinovich. Thank you. Mr. Berkson.
TESTIMONY OF BRADLEY M. BERKSON,\1\ ACTING DEPUTY UNDER
SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS, U.S.
DEPARTMENT OF DEFENSE
Mr. Berkson. Chairman Voinovich, Senators, thank you for
the opportunity to appear before this Subcommittee and discuss
business transformation at the Department of Defense, and thank
you for your kind comments.
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\1\ The prepared statement of Mr. Berkson appears in the Appendix
on page 71.
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Since this is my first appearance before the Senate, I
would like to briefly describe to you my background and how it
is relevant to DOD business transformation.
I have been working on business transformation full time
since arriving at the DOD 2 years ago. I am currently serving
as Acting Deputy Under Secretary of Defense for Logistics and
Materiel Readiness. In this role, I am the senior DOD logistics
official. Logistics, by the way, is probably the largest
business operation at the Pentagon. I am engaged daily in
transforming our Nation's $129 billion DOD logistics and supply
chain enterprise.
I am an engineer by training. I earned an MBA from Harvard,
and I was a partner in McKinsey & Company, where I was serving
leading commercial enterprises around the globe on matters of
strategy, organization, finance, and business operations. I
have worked in the commercial sector from start-ups to the
world's largest corporations.
Mr. Chairman, you mentioned in the last hearing on this
subject the need for talent from the private sector that would
come into government and help ensure and accelerate
transformation. I hope my background had some of the qualities
that you would like to see.
I would like to frame the challenge of business
transformation within DOD. What has been most surprising to me
in coming from the commercial world to DOD is the dramatic
difference in scale and complexity. DOD has the world's largest
fleet of aircraft, but it is not an airline. We have the
largest fleet of ships, but are not a shipping company. We have
one of the largest fleets of trucks, and we are not a trucking
company. We have the largest fleet of ground vehicles, and we
are not a car rental company.
We are the second-largest operator of warehouse space, but
logistics is a supporting mission. In the private world, any
one of our programs, armories, depots, shipyards,
transportation modes, or logistics systems would be of
sufficient scale to compete in the global market.
A key point to note, though, is although we have world-
scale business operations, business is not our mission. In
every commercial forum in which I have ever served or worked
for, the business missions were primary, particularly finance.
For example, the mission of General Electric is to make money
for its stockholders. It does so by aligning its business
operations, personnel, and capabilities to maximize its
financial performance.
As I understand it, the mission of the Department of
Defense is to defend the United States of America from its
enemies. The job of the secretary of defense is to see that
that mission is accomplished. Business transformation is
necessary, but it is not sufficient for the secretary to be
successful in his duties.
When Secretary Rumsfeld announced his intentions to
transform the Department of Defense, I feel certain that
business transformation was central to that intent. Twenty-four
hours later, our country faced the most significant challenge
to its security in several decades, requiring complete
attention be focused on defending our country.
While he and our senior leadership have remained consistent
in driving their vision for transformation, the ability of the
Department of Defense to focus exclusively on fixing business
operations in the midst of our largest sustained military
campaign since Vietnam is problematic.
That said, I would like to show you what we have been doing
over there. The chart to my right depicts some of the results
of DOD business transformation. In this case, it is the cycle
time performance for the F404 engine.\1\ This is the engine on
the F-18 Superhornet.
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\1\ The chart entitled ``Focus on continuous improvement
(Maintenance Cycle Time Days)'' submitted by Mr. Berkson appears in the
Appendix on page 104.
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Overall cycle time for this engine has been reduced by an
order of magnitude. We have taken it from 85 to 5 days. This
was accomplished using Lean 6 Sigma. Lean 6 Sigma is a business
process improvement methodology widely used in industry, and it
has helped us to achieve dramatic performance improvements not
only in the F404, but in dozens of systems and locations from
Pearl Harbor to Warner Robins, from tank engines to radar
systems.
In my opinion, Lean 6 Sigma has the most potential of any
single initiative to transform the business operations of the
Department. We have plans within each of the services and at
OSD to accelerate and institutionalize it.
Another bold transformation is found in our performance-
based approach to buying.\2\ Historically, DOD has been a buyer
of parts and labor. This left us with the job of integrating
these and other production factors across the Department. Led
by us in logistics and materiel readiness, through performance-
based logistics, we are emphasizing the more valuable task of
managing outputs vice inputs.
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\2\ The chart entitled ``Performance Based Logistics (PBL) proven
in the Global War on Terrorism'' submitted by Mr. Berkson appears in
the Appendix on page 105.
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In the last 4 years, DOD has migrated over 100 systems to
performance-based contracts. The results of this can be seen in
the chart to my left. This chart shows the readiness of several
of our critical weapon systems in a PBL regime on the left and
under a traditional support approach on the right.
We have responded to suggested improvements from people,
from folks like Mr. Walker, not only by improving the
traditional approaches, like inventory management, but in
transformational ways, like eliminating the need for inventory.
The next chart shows our distribution cycle time to the CENTCOM
area of operations.\3\ This is for aerial shipments. It shows
that we have cut the time nearly in half.
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\3\ The chart entitled ``IRAQ Air Shipments Cycletime'' submitted
by Mr. Berkson appears in the Appendix on page 106.
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Using leading-edge technologies, like radio frequency
identification, or RFID, and unique identification, or UID, the
DOD is leading the world in applying these cutting-edge
technologies to its business operations.
In closing, Mr. Chairman, I would like to reiterate the
great strides we are making in transforming the business
operations of the DOD. We have daunting challenges in scale and
complexity. At the same time, we have an unswerving commitment
to mission accomplishment.
We are convinced that transforming the business operations
at DOD, as you are, are key to serving our war fighters and our
Nation. My colleagues and I are dedicated to making that
happen.
I invite you and your fellow Subcommittee Members to
receive our briefings on the business process changes we are
making, especially Lean 6 Sigma. I would also encourage you to
visit the locations and meet the people that have been making
it happen.
Thank you for the opportunity to testify, and I would be
happy to answer your questions.
Senator Voinovich. Thank you, Mr. Berkson.
General Walker, last month, the deputy secretary of defense
moved DOD's business transformation efforts from the under
secretary of defense comptroller to the under secretary of
defense for acquisitions, technology, and logistics. Do you
think that this organizational shift will create a clear and
accountable business transformation effort?
Mr. Walker. No, I don't think it is enough. There is a lot
of work that needs to be done in AT&L. There are high-risk
areas that deal with AT&L. It is true to say that some progress
has been made. There is no question about that. You have just
heard several examples of where progress has been made. But
much more work needs to be done.
As you know, AT&L is involved both on the policy side, as
well as on the operational management side, and there are major
challenges on both sides of the house dealing with AT&L. So I
believe you still need a chief management official. I don't
believe that the head of AT&L can do both jobs.
I believe it is important that, in addition to having a
person at the right level focus full time on business
transformation, they need to have a term appointment. You need
somebody who has a proven track record of success, who has the
requisite experience, who, if they do a good job, is going to
be there for at least 7 years.
I have been in the private sector for 21 years and
consulted all over the world on change management it takes 7-
plus years to achieve effective cultural transformation.
Namely, to make changes that will stick beyond the person who
started it.
We don't have anybody at DOD that long. It is going to take
more than 7 years at DOD, but we don't have a fighting chance
unless we have somebody with the right kind of track record
focused full time for a sustainable period in order to give us
a fighting chance of success.
Senator Voinovich. Could you point to some other agencies
where this concept has worked?
Mr. Walker. This is a relatively new concept. If you look
in the government, most of the presidential appointee positions
that exist with Senate confirmation are not term appointments.
There are some notable exceptions. The comptroller general of
the United States, my position, has a 15-year term appointment.
Believe me, that makes a huge difference in being able to
take on serious management challenges and to engage in a
fundamental transformation of an agency. I have been at GAO now
6\1/2\ years. I would respectfully suggest that we have engaged
in a fundamental transformation in that 6\1/2\ years. If I got
hit by a truck tomorrow, it is a different place today than it
was 6\1/2\ years ago.
But other than the comptroller general, then you go to what
other positions? The head of the FBI, which is 10 years. The
Federal Reserve is 14 years. There are very few term
appointments other than board positions like SEC commissioners.
Senator Voinovich. How about the Internal Revenue Service?
Mr. Walker. You are correct. Thank you, Mr. Chairman. The
commissioner of the Internal Revenue Service, I believe, has a
5-year appointment.
Mr. Johnson. Social Security is now term.
Mr. Walker. Social Security is now term. I think both of
those are very good examples. Thank you, Clay. Those are very
good examples because both of those jobs are not intended to be
policy jobs. As you know, tax policy is set by the Treasury
Department in conjunction with the White House and others. The
Internal Revenue commissioner is supposed to basically handle
tax administration.
The head of the Social Security Administration is supposed
to handle administration of Social Security's huge retirement
income, disability, and survivors benefits responsibilities.
They are not in policy positions.
So there are some analogies in government, Mr. Chairman.
Thank you, Clay, for mentioning that.
Senator Voinovich. Mr. Johnson, this afternoon, you
outlined a template for addressing DOD's supply chain
management challenges in your testimony. I commend you for your
efforts because this issue has been on the list since 1990.
Based on your testimony, it appears that the Administration
is taking what I would like to refer to it as a ``bottom-up
approach'' to solving DOD's business transformation efforts.
What steps will the Administration take to ensure that the
Department of Defense is taking also a ``top-down approach'' to
solve the overreaching high-risk area of business
transformation?
Mr. Johnson. Right. You talked about Ken Krieg earlier. I
have talked to Ken about this because it is one thing to look
at, how to tackle each one of the seven, but then with what
priority? All seven probably can't and shouldn't be tackled
with the same priority. Some are more important than others.
Some are more problematic. Some have huge costs associated with
them. All that needs to be looked at as a total.
And there is a change now taking place, as you know, with
the deputy secretary. And so, what Ken suggested we do is if
and when Secretary England is confirmed for being the deputy
secretary, that we then sit down with him and review this and
understand what he would recommend be the priorities and the
timeframes. Because we can agree on amongst ourselves and GAO
on a 3-year timeframe or a 6-year timeframe on some of these
things, but it should not be done without the consent and the
full participation of, today without a CMO, of the deputy
secretary.
So you talk about as soon as Gordon, if and when he is
confirmed for the position, gets in there and gets settled,
that we sit down and work out the corporate timeframes for
this. He has to be there to create an attitude and an approach
to business transformation.
One of the things that needs to be understood about a chief
management officer is that the most fantastically talented
chief management officer will be totally ineffective if the
secretary of defense and the President are not fully supportive
of management change to the Defense Department. No term, no set
of credentials can make a management officer effective at the
Defense Department, or any place else, if the head of that
Department or the President don't consider it to be a very high
priority. And so, it is important in this case that the deputy
be there and be involved, intimately involved, in setting the
timeframes and the priorities for overall business
transformation.
I think, as I understand it from Ken, and his suggestion to
Senator Ensign on the subject of a chief management officer is
that he be allowed a little time to get in there and survey the
situation. I think he had agreed totally that there needs to be
a person that is clearly in charge of this, and that is working
with the relevant under secretaries to drive their individual
initiatives. Let him have a chance to take a look at the
situation and come back and engage you all in a more
intelligent debate about the pros and cons of a chief
management officer.
Senator Voinovich. As I mentioned, I think that Mr. Krieg
has been with the current administration for 3\1/2\ years and
hopefully is going to stick around. But once a new
administration steps in, how do we keep the momentum going?
I would like to know that if we get things moving in the
DOD, and I leave this place, that there is somebody who will be
there to make sure that business transformation is
accomplished.
Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman.
Mr. Berkson, the GAO has testified previously that cultural
resistance to change and the lack of sustained leadership are
two underlying causes of DOD's inability to resolve its long-
standing financial and business management problems.
As you know, I joined with Senators Voinovich and Ensign in
introducing legislation establishing the position of chief
management officer. In your written testimony, you said that
the creation of this office would ``further remove the
Secretary of Defense from vital and timely information on the
workings of the department.''
In the absence of such a new position, who, in your
opinion, is responsible for creating and implementing the
business transformation plan at DOD?
Mr. Berkson. Senator, thank you for the question, and I
appreciate your comments.
In reaction to the notion of the cultural efforts and the
term efforts, I would also like to just also get us back to the
scale. At one point, we were talking about when an issue was
raised about separation of the military and the business side
of the Department of Defense. I will just give you it from
where I am working, Senator.
My job has been full time on business transformation for
the last 2 years. And if I look at what do I need, did I need
another supervisory role with expertise like a number of our
senior officials--Secretary Wynne, Secretary England, Ken
Krieg? I mean, Mr. Krieg actually hired me. So that requirement
for more bosses hasn't been what I have been missing.
To really get this done, you need fundamental
transformation across a $130 billion logistics enterprise and a
$450 billion overall enterprise. And my experience so far, in
doing this every day, has been actually driving the change down
to the workers, the managers, and the people who run shipyards,
the people who run depots, the people who run our distribution
warehouses. That is where the real business operations occur.
And transformation, in my experience so far there, has
really been about introducing and driving change in
transformation ways of thinking. Lean 6 Sigma is a
transformation way of thinking. Unique identification and RFID
is a transformation way of thinking.
We just had our first receipt of RFID. Radio frequency
identification tag was placed on by one of our suppliers and
received in a DLA distribution warehouse this week, using Wide-
Area Work Flow. I just picked off three of the major business
transformations we have been working on, and they are starting
to come together.
I agree that it takes a long time to do this. But the thing
that I am not sure of and I haven't seen is how another
supervisor in this role, given how complex and vast this
enterprise is, how that person would bring me something that
would allow me to do this.
If I look at what the real characteristics of the proposed
legislation, I think definitely we are looking at it and
considering it carefully. If I just tick off a few of the
things, a Level 2 with business experience who is third in
precedence. Currently, that describes for the business
operations, the under secretary of defense for acquisition,
technology, and logistics.
Under Title 10, he must have business experience. Or he or
she must have business experience. The chief business
operations of the Department of Defense, in my experience so
far, are in those acquisition, technology, and logistics
arenas. And the secretary has just designated and as the
Congress has designated a chairman for business transformation,
the BMM program. And again, now that Secretary Wynne and the
AT&L has that role by law, he is the third in the order of
precedence for all matters related to that.
So as I look at the structure of what is being proposed, I
try to understand how it is going to continue to move us down.
I know the intent is very strong, and we really want to
improve. And we are all desperately working to make that
happen, but I step back, and I have secondary questions.
One is I have a role that can do that. Another issue that I
would raise--these are my personal opinions--is that I ask what
does the AT&L do in the event that all the business operations
at the Defense Department, which he is currently responsible
for--acquisition, technology, logistics--are now superseded and
taken up to a level, and a level which, as I am hearing more
about it, which is not going to interact with the military.
In my experience, I am the chairman of the Joint Logistics
Board. So I have all of the joint logistics leadership in my
room when I am leading that board. That board is primarily made
up of three-star and four-star general officers and admirals in
our Nation's defense. They are the senior business leadership
who is driving a majority of our business operations.
The notion of separating the business from the military
operations in logistics at least, where I am familiar, is
something I cannot even imagine. Logistics in our operations is
a military maneuver. A convoy is a military operation. And the
notion of that separation is something that I struggle to
understand.
Senator Akaka. General Walker, do you have anything to add?
Mr. Walker. If I can, Senator. I thought your question was
who is in charge? The answer is nobody. Memos get issued from
time to time at DOD. I have seen plenty of them.
The problem is you don't solve problems with issuing memos,
and you can't take a command and control approach to the
civilian side of business transformation. I can show you memo
after memo after memo appointing somebody in charge. It's not
memos but results that count.
With all due respect, Management 101, you have to have
somebody who is in charge. You have to have, as Clay Johnson
said, committed and sustained leadership from the top. You have
to have a plan that clearly sets priorities and fixes
responsibility and accountability. You have to link
institutional unit and individual performance measurement and
rewards systems in order to make sure everybody is pulling in
the same direction in order to achieve the priorities within
the specified timeframes.
We also have to recognize these things are interrelated.
But my point is that none of these things have been done in 30-
plus years.
Senator Akaka. Mr. Chairman, may I ask Mr. Walker just one
more question to follow up on what he said?
Mr. Walker, the issue is span of control. Mr. Wynne has no
authority over financial systems, which are the responsibility
of the comptroller. He has no responsibility for personnel
systems, which are Dr. Chu's responsibility. Mr. Walker, would
you care to comment on that?
Mr. Walker. Thank you, Senator Akaka. You are exactly
right.
The fact of the matter is AT&L is right now the third-
ranking person. It is a Level 2 position. I would respectfully
suggest that the under secretary for AT&L has a full-time job
dealing with the logistical and acguistion transformation that
Brad has mentioned. Some progress has been made, no doubt about
it. But much remains to be done. That sounds like a typical GAO
report.
In addition to that, AT&L has to deal with a number of
high-risk areas and also is involved in the military
transformation side of the business in addition to the business
transformation side. Ordinarily there is no way that we are
going to be able to afford and sustain all the weapon systems
that are currently in the pipeline. It isn't going to happen.
So you are correct, Senator Akaka, in noting that in
Chairman Voinovich's, Senator Ensign's and your bill recognizes
that we need to take a more strategic and intergrated approach
crossing a number of different under secretaries of which AT&L
doesn't have responsibility and authority, as well as the
service secretaries and the military. Thank you.
Senator Akaka. Thank you, Mr. Chairman.
Senator Voinovich. Senator Lautenberg.
Senator Lautenberg. Thank you very much, Mr. Chairman.
There is a culture in the military, I think, that almost
defies the kind of control that we like to see. The war
fighters have their job, and they do it wonderfully. We want
them to pay attention to it.
But I see a difference in availability of materiel, when we
are budgeting, especially with these supplementals. I mean,
there frankly is not a lot of detail that is explored when we
do these things. Mr. Berkson, we are happy that you are here.
You bring a lot of experience. But I think there is another
look to be had at whether or not the business side of the thing
can be separated from the management side of the war fighters.
And I served on a hospital board. They never had a doctor
in charge, chairman of the board. And there are lots of
examples where the skilled person, the scientist, doesn't run
the company. Someone else runs the company, and those who are
assigned their responsibilities pick up from there.
Because, very frankly, Mr. Chairman, I am delighted that
you are holding this hearing because I think it triggers a kind
of thinking in our minds that doesn't go into the budgeting
process. Yes, there is an Armed Services Committee, and they
are diligent, and there are good people on the committee.
But I think it needs an intermediate step. You have
budgeting. You have reauthorization. You have appropriations.
And when it comes to the military and you see the stars. It
took me 3 years to make corporal. And when I used to see a
captain's bars, my knees used to knock, and you know, here we
sit among the stars. And it is transformational.
Here comes a guy with all these ribbons that he has earned
in his lifetime and his career, heroic medals, many of them,
and they make the case. And it is really kind of hard to say
no. It is hard to say, ``Hey, but how are you spending this
money?''
Mr. Chairman, I went full time in uniform in 1943, and I
drew KP on a train going from New Jersey to Camp Crowder,
Missouri, where I had basic training. And the worst guy in the
world to work for was the cook because he had very few people
to pick on. So he picked on those who were assigned KP duty,
and I was one of those.
And when we got to the end of the journey, we had these
full jars. I remember them. I think they are number 10 size.
But they are big ones with pickles and mustard and ketchup, and
he said, ``Throw them out.''
I said, ``Throw them out?'' I came from a poor family, and
we would have given anything to have a jar of pineapple that
size. And I said, ``Sarge, why are we throwing these away?'' He
said, ``Shut up and throw them away. Because you know what
happens if I get there, and I have got stuff left over? Do you
know how much I get the next time?''
Well, you don't have to be a mathematician to figure that
one out. And we have seen flagrant abuses in the contracting
side.
This high-risk list began, I believe, in 1990? In 1992,
contracting was listed as one of the worst parts of the DOD
expenditures or purchasing routine. And there were eight areas
of high risk listed then. And Mr. Berkson, you have a right to
be satisfied or at least encouraged with some of the progress
made, as demonstrated by your proofs here. But we still have
eight units, high-risk units listed as areas that need serious
attention, that are easily subjected to waste, fraud, and
abuse.
So I don't know when we catch up, but I think thought has
to be given to how the whole management process is done. A
four-star general may be a brilliant tactician, strategist in
fighting the battle, but that doesn't mean that he also ought
to be making the financial decisions. He ought to be making the
recommendations, but I think there ought to be some
intermediary step that should get a look.
We have lots of questions, and I appreciate the fact that
Senator Akaka and Senator Voinovich have asked some of the
questions. I am going to ask one here because you have heard me
talk about Halliburton, and I, for some time now, have wanted
to look at how Halliburton has managed its own money.
One question I have, Mr. Johnson--forgive me. I understand
that DOD recently decided to pay Halliburton in full for its
work, overruling Army auditors' recommendation that it be
penalized for overcharging on its contract. Do you, or perhaps
Mr. Berkson is the one that I should address this to. Do you
know why DOD overruled the Army auditors' recommendations?
Mr. Berkson. Sir, I would have to take that question for
the record. I am not familiar with it.
Senator Lautenberg. Well, I hope so. Was OMB, Mr. Johnson,
involved in this decision?
Mr. Johnson. I really know nothing about it. I can get back
to you on that.
Senator Lautenberg. Well, I would appreciate it. And Mr.
Walker, earlier this month, you said that in a Senate
subcommittee that DOD is unable to track how it spent tens of
millions of dollars in Iraq and Afghanistan and elsewhere in
the war against terror. I just heard you say a couple of
minutes ago that no one was responsible or no one in charge for
tracking these things?
Mr. Walker. There are persons in charge of tracking that.
What I said was that there is not a single person who is
responsible and accountable for overall business
transformation.
As you know, Senator Lautenberg, DOD's financial management
is one of the areas that has been on GAO's high-risk list for a
long time. There are interrelated problems here. I mean, DOD
has thousands of legacy systems that are non-integrated. In
many cases, you have to input a 16-digit code for a single
transaction, and you might have to enter the same transaction
into multiple systems.
The comptroller may have recently taken a step to make sure
that there is separate visibility over the use of supplemental
funds, such that, hopefully, you would be able to find out how
that pot of money was used in a more efficient manner than has
been the case in the past.
We are doing work, at the request of the Congress, to find
out how the supplemental funds were spent. It is very difficult
getting detailed records. Furthermore, a lot of costs are based
upon estimates rather than actual. We will be reporting later
this summer, but I expect that there will potentially be a
material difference between what we come up with and what has
been reported.
Senator Lautenberg. Colleagues, I just say this. That DOD
is the one place where if you make mistakes, it doesn't matter.
You can always get more money if you need it.
And once again, Mr. Chairman, I commend you for holding
this hearing, and I think follow-up is critical here. I thank
the witnesses.
Senator Voinovich. Thank you, Senator Lautenberg.
We are going to follow up, just like I did on reform of the
personnel system. I am going to devote 5\1/2\ years to this. We
are going to have a lot of hearings on DOD transformation. We
are going to stay on this.
I am really pleased that we have the Ranking Member today
with us and anxious to hear the questions he would like to ask
the witnesses.
It seems to me that we just can't keep going on like this.
We are talking about a $22 billion savings. Today, we have a
tight Federal budget and a rising deficit. A billion dollars
would make a big difference. This has got to stop.
Senator Levin.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you very much, Mr. Chairman. I think
half of our discretionary spending now is Department of Defense
spending.
First, let me thank you and commend you and Senator Akaka
for what you are doing here. This is not particularly glamorous
work, and that is an understatement.
I remember back in the early 1980's, when Bill Cohen and I
served as Chairman and Ranking Member of this Subcommittee, we
took on a lot of issues. We made some progress in some of those
issues--competition in contracting. We made progress in
inventory management. We used to have hundreds of warehouses
stocked with stuff, when we wanted just-in-time delivery to
replace it. We made some real progress there.
We made some real progress on commercial products, making
it easier to buy commercial products. But there is a whole area
of financial management which you have identified, where we did
not make much progress. Despite some efforts, we just have not
made progress.
And it is essential that there be Senators such as the two
of you who are just willing to sink your teeth into this
subject, and your determination to do this for 5\1/2\ years, or
whatever it takes, is as far as I am concerned not just music
to my ears, it should be music to the ears of every taxpayer in
this country. Because it takes Senators like you or Members of
Congress like you who will just take it on and not let it go.
And I am very appreciative of that.
Just a few questions, and I apologize that I couldn't get
here earlier. First, for you, Mr. Walker, I want to
congratulate the GAO. Without your efforts here, the task of
the few senators and members of Congress who are willing to
take on an unglamorous area would just be probably impossible.
They need your full assistance, and I know they have had it,
and they are going to continue to have it.
But shortly after the then-DOD comptroller Dov Zakheim was
confirmed, he came before the Armed Services Committee. He
testified that the Department would prepare a comprehensive
business enterprise architecture and transition plan to serve
as a blueprint for fixing the Department's ``systems and
business processes--now isolated from each other across the
functional areas--logistics, health care, accounting, finance,
and others.''
He promised to have that blueprint in place by March 2003.
And we went through this with the then-comptroller to press him
for the very type of blueprint which, you have so effectively
pointed out, does not exist.
Well, March 2003 obviously has come and gone. It is 2 years
later. DOD spent hundreds of millions of dollars on a contract
to develop a business enterprise architecture. So, Mr. Walker,
is it fair to say that more than 2 years after the date set by
Dr. Zakheim that we still do not have that blueprint that he
promised us?
Mr. Walker. We don't have it yet, Senator. My understanding
is they are working on it and trying to put something together
by the end of this fiscal year, but you may want to ask the DOD
witness.
Senator Levin. OK. I will do that in a moment. You, I
think, told the Armed Services Committee last year that the
Department had made no significant progress in addressing its
financial management problems. Is that still true?
Mr. Walker. They still do not have a comprehensive plan for
dealing with their financial management problems.
Senator Levin. All right. So now, Mr. Berkson, where is the
plan? Where is the beef? Where is the plan?
Mr. Berkson. On which aspect, Senator?
Senator Levin. Well, we were promised--I will read it to
you again--a comprehensive business enterprise architecture to
serve as a blueprint to fix the Department's--and I am quoting
Dr. Zakheim here--the Department's ``systems and business
processes--now isolated from each other across the functional
areas--logistics, health care, accounting, finance, and
others.''
Where is that architecture?
Mr. Berkson. OK. First of all, I want to take that question
for the record. I will tell you about my knowledge of where
that plan is. At this point, and I think pursuant to
legislation that described a new structure for the business
management modernization plan, they are currently developing
and, in fact, installed Mike Wynne as the vice chairman of a
group that will be actively reviewing all of the investments in
what is called, I think the term is, an investment review
board.
So all investments over $10 million, I think that is the
threshold, for IT systems, we are setting up the architecture
and the infrastructure and the efforts to manage that
consistent with the legislation. In doing that, there has also
been a transfer of that role, of driving that process from the
comptroller to the AT&L side. And there are a number of folks
that are in the midst of, and I think Mr. Wynne testified to
this as well, in the midst of redrafting and formulating how we
are going to proceed and go forward on that.
It is very challenging. In fact, again, this is my
experience in serving and seeing dozens and hundreds of these
implementations put in in different companies around the world.
Ours is, by far, the most challenging of any that I have ever
seen. And the team is at work and is, I think, putting a plan
together that will address that. And again, I need to take that
for the record because it is not exactly what I do.
Senator Levin. What is the time table?
Mr. Berkson. I think in order to be compliant with the
authorization act, that team and process is to be in place,
with regard to business systems approval of the investment
review board, by the end of the fiscal year is my
understanding.
Senator Levin. This fiscal year?
Mr. Berkson. My understanding is, again, according to the
act, we----
Senator Levin. Well, forget the act, putting the act aside
for a moment, how are you coming along? Will you meet that
deadline?
Mr. Berkson. The deadline for being compliant with the act?
Senator Levin. In the act. Assuming it is the end of the
fiscal year, will you meet that deadline?
Mr. Berkson. My understanding--again, it is not my area of
the Defense Department--is that they are working to meet that
deadline.
Senator Levin. Mr. Johnson, last year's defense
authorization act, this is what the Armed Services Committee
basically did. We told the Department to stop spending money on
financial audits.
And the reason for this was as follows. The GAO
consistently told us that there is a right way and a wrong way
to fix the Department's financial management problems. The
right way is to attack the problems at the root by fixing the
business systems that yield bad data. The wrong way is to
unleash an army of auditors to audit the system into
compliance, to try to audit the system into compliance but
without addressing the underlying systems' problems.
Now the DOD agreed with that assessment. The Department
told us last year, however, that it still wanted as much as $2
billion to try to achieve an auditable financial statement by
fiscal year 2007, which is before the Department is going to
address its underlying system problems. We responded by
prohibiting them from spending more money on financial audits
until they have a business enterprise architecture and
transition plan in place, which is the origin, I believe, of
what Mr. Berkson made reference to.
Now I understand, Mr. Johnson, that some of the pressure on
DOD to get an auditable financial statement as soon as possible
comes from OMB. Do you agree with the assessment that the right
way to fix DOD's financial management problems is to attack
them at the root, rather than just try to get a favorable audit
without fixing the underlying system problems?
Mr. Johnson. I do.
Senator Levin. Long question, short answer?
Mr. Johnson. And I don't think the 2007 goal came from us.
It was what I heard the very first time I met with Dov Zakheim.
And I had a meeting last week with Defense Comptroller Tina
Jonas, and they laid out exactly what you talked about, which
is the goal is not to get a clean audit.
The goal is to have an audit reflect the business practices
that are as they should be and that are creating the
disciplines within the Defense Department that will allow us to
address material weakness, that will allow us to get a clean
audit, or both are, in fact, the business practices that would
allow us to save money or improve service. That it is a
reflection of just what you said, improved disciplines,
improved method of operation, and it is not a clean audit for
the sake of a clean audit. So I agree totally with that. And
they do, too.
Mr. Walker. Clay Johnson is correct, 2007 was the DOD's
date. They don't have a plan to meet that date, and they don't
have a prayer to meet that date.
Mr. Johnson. They don't have a desire to meet that date.
Mr. Walker. Well, good thing. But they need a plan, just
like they need a plan for the other areas that we are talking
about. Furthermore, I think it is important to note some of the
words that you touched on.
There are assertions coming out of DOD saying that they
can't make progress in certain areas because the act is written
such that they can't spend money on things that they want to
address. To me, there is a fundamental difference between
financial management and financial auditing. Executive
leadership has an ongoing responsibility to assure that they
have appropriate controls in place, that they have appropriate
financial management systems in place, and that they
continuously improve those controls and systems.
That is different than spending a lot of money to try to
re-create the books and engage in work-around auditing
procedures or by doing preliminary audit assessments before you
have done the basic work. I think there may be some problems
with regard to nomenclature here. I think they need to be able
to make progress with regard to internal controls, and with
regard to improving financial management systems.
What they shouldn't be doing is spending money on audits or
work-around procedures or preaudit assessments before they have
layed the fundamental foundation.
Senator Levin. Thank you, Mr. Chairman. And the defense
authorization bill is being marked up in a few weeks. If you or
Senator Akaka or our witnesses have suggestions for any steps
that can be taken immediately that will move in the direction
that I know we all want to move, I am sure that Senator Warner
and I will be happy to consider any suggestions.
These are long-term solutions, not the next few week
solutions. But I just say that on the chance that there may be
something immediate which does need attention. And I also want
to assure you and Senator Akaka that both Senator Warner and I
are very open to any suggestions and recommendations that this
Subcommittee may have.
Senator Voinovich. I really appreciate that because you
have all of this history, and so does Senator Akaka. I have
very little.
And I think that if we can collaborate on some of these
things because part of the problem around here is you have the
authorization committee, then you have the appropriations
committee. And it is going to take, I think, in many instances,
appropriations and authorization to work together and team up
to get the kind of result that we would like to get.
I am going to have another round, if it is all right with
you, Senator Akaka?
Mr. Berkson, I have a question that has two parts. First,
on April 13, Under Secretary Wynne testified before the Senate
Armed Services Committee on readiness and management. In his
testimony, he said the acquisition, technology, and logistics
workforce fell from 149,439 employees in March 1998 to 134,000
employees in September 2004.
At the same time, the number of contract actions, over
100,000, increased from 101,663 in fiscal year 1998 to 160,338
in 2004. Could you describe the impact that these dynamics have
on AT&L's ability to manage its workload?
Mr. Berkson. Yes. Senator, I will have to, respectfully,
take that one for the record. The acquisition workforce is
outside of my domain. So I will have to get back with you on
that one.
Senator Voinovich. The Deputy Secretary of Defense moved
business transformation from the Under Secretary of Defense
Comptroller to the Under Secretary of Defense for AT&L. AT&L's
workforce is already operating with the resource limitations.
The question is do they have the ability to take this on?
Mr. Berkson. With regard to the place with which I would
want to have responsibility for business transformation, I
actually support and think it is very valuable to have the
acquisition, technology, and logistics under secretary driving
the business management modernization program.
The majority--again, as you look in commercial industry and
you look in our system--the majority of the business functions
and operations are in the AT&L portfolio. And to the extent
that we are trying to go beyond audits and we are trying to
improve processes and improve operations, the senior executive
leading those business operations should, in my opinion, be
actively responsible for the systems that support those.
So that migration is a very good move and, I think, will
actually improve the progress we make. And we will apply the
improvements we need to the places where the business
operations are most significant and most large scale.
Senator Voinovich. One thing you said earlier was that you
are trying to drive it down to where the people are that are
actually getting the work done. Is there any effort in the
Department to look at total quality management and empowering
the people in those agencies to come back with recommendations
on how they can do it better?
Or are we in the same area we have been for years, where
somebody comes in and says, ``This is the way you are going to
get the job done because some consultant told us this is the
way you are supposed to do it.''
Mr. Berkson. What has been most successful in business
process change, and TQM was a term that was popular and an
active program pursued over 10 years ago. What we have found to
be more successful in taking TQM and actually going on as it
has evolved--as you know, TQM drove concepts like 6 Sigma, GE's
program to minimize variance and get working on quality.
Quality and 6 Sigma are closely related. And then the Toyota
production system, which is Lean, has also driven a lot of
value. And we have combined those.
But what the most valuable force of application of those
has actually been directly from the working-level of the
Department, literally at the business operations. The example I
showed you where we went from 85 to 5 days is a group of
sailors out at the Lemoore Naval Air Station. Those sailors--
those aren't a kind of business gurus or consultants--and their
experiences in industry, a very strong and intelligent
commander came in from industry and realized how much value
these processes could have. And she took it upon herself to
make that happen at Lemoore.
And we have now dozens and dozens of cases where we have
started that business transformation literally from the ground
up, and we are essentially constructing a network now that
connects and provides resources so that those happen and can
accelerate, and best practices can be shared across the massive
scale we have.
So, it is an interesting concept. But the top-down, one has
to be very careful when you apply it. ``I am from the Office of
Secretary of Defense. I am here to help you'' is sometimes
helpful and necessary. But also it is often better to let many
of those changes start springing up and then feed them and grow
them and make them accelerate. And that is what we have found
so far.
These changes, as they are coming, and we have been putting
the vision out and providing resources and driving them, now we
are actually working at the working levels to create them and
make them happen.
Another one that we just have to be really clear on. There
seems to be this discussion that came up, some of the
discussion today. I have three air logistics centers. They are
the largest industrial operations of the Department of Defense.
I have three air logistics centers at Hill Air Force Base;
Ogden, Utah; and Oklahoma City. These are run by military
leaders. I have three NADEPs, naval aviation depots, again,
$500 million businesses--huge businesses. These are run by
military officers, 06s--captains, Navy captains. I have
probably a half dozen Army depots also run by 06s.
Our business operations are run by the military. So the
separation of the business from the military is very difficult.
And driving change, therefore, isn't something I just do as a
civilian workforce. I have to have every sailor, soldier,
airman, and marine in the logistics side capable as any GM
employee of driving change and working their team out and being
able to provide that kind of expertise at that level.
And again, the notion is I have to go work that right down
at the cold face, and I have to drive that change from there
and then accelerate it. And again, driving it from the top is,
again, we have a focus on it.
But I struggle in trying to figure out, as I have been
doing this, I can't separate the military from the civilian.
The change has to happen in a thousand different places around
the system. And to do that requires things--process changes,
Lean 6 Sigma, taking the next generation of TQM--and efforts
that have been done in the commercial sector and applying them
here.
So I think your hypothesis and your drive on a TQM as an
approach is right. I think I would suggest some alternatives.
But it has to be driven in these hundreds and thousands of
different locations where we are running the business.
Senator Voinovich. In Ohio, we have Wright-Patterson Air
Force Base and the materiel command in Dayton, Ohio.
One thing that bothers me is, we get general after general,
at the end of their career, taking over command. They are there
for 3 years and then leave. I don't understand why the military
moves these people around every 3 years.
I think we need to look at time commitment, when it comes
to reforming the DOD. We can't expect reform to happen when
turnover is so frequent.
Mr. Walker. Mr. Chairman, I think that is a good point. In
fact, I remember testifying several years ago before a Senate
Subcommittee of Armed Services regarding how much turnover
there is.
Starting from the secretary of defense, deputy secretary,
under secretary, all the way down to the program managers or
program directors. I mean, there is preprogrammed turnover in
the case of some of these critical positions, and it just
doesn't make sense to have preprogrammed turnover to the extent
that we currently have it.
I have to follow up on something that both Clay and Brad
said. You absolutely need committed and sustained leadership
when you are talking about transformation. Let's talk about one
of the most important transformation efforts going on at the
Department of Defense right now, NSPS, normally the National
Security Personnel System.
They are currently in the meet and confer period. I asked
this morning whether or not there are any PASs, presidential
appointees, with Senate confirmation--participating actively in
the face-to-face meetings among the meet and confer period. The
answer I was given was no. As a result, it is my understanding
that the president of AFGE, and other key unions, have not been
participating either.
This is the most probably fundamental transformation issue
on the civilian side that is going to happen in the Department
of Defense. I mean, how can you not have top people actively
and visibly engaged in these types of substantive discussions.
In my view, human capital is key to my successful
transformation effort?
I hope I am wrong on that, and I am going to follow up to
try to make sure. But I am very disappointed if that is the
case.
Senator Voinovich. I agree with you, Mr. Walker. NSPS is
the most important transformation effort going on within the
DOD. Having all parties involved with the process is
imperative.
I have received many complaints about the process and I
hope the DOD is listening. I spent time yesterday with Steve
Perry and stressed to him my support for NSPS but also my
concerns with involvement of all interested parties. I plan to
monitor the implementation.
Senator Akaka.
Senator Akaka. Thank you, Mr. Chairman.
After hearing the comments from General Walker, I can't
help but think of our Chairman and human capital, which is
rearing up as a huge problem for our country. And I know, Mr.
Chairman, we will certainly look at NSPS. We know if it is not
done correctly, we are going to be in trouble.
Let me follow up on something, Mr. Berkson, since we have
heard a response from General Walker, can you respond to Mr.
Walker's comments on NSPS?
Mr. Berkson. Unfortunately, no, sir. I am not involved in
the NSPS rollout. So I can't do it. I absolutely support and
know how important that a human capital change is, and I get
very parochial about it.
I need very high-performing business people. And if you
were to give me something, it probably wouldn't be another
boss. It would be 50, 100 people I could get in quickly to help
me go about the change in the Department at the various levels
that we can work. So I am clearly committed to making that
happen, and it is a very daunting personnel challenge.
Senator Akaka. Mr. Johnson.
Mr. Johnson. On NSPS, there is one person in charge, who is
talking about whether there should be a chief management
officer. Gordon England is the person that the secretary has
put in charge of the NSPS adoption process.
So if things are not working there, it is not because--or
if they are working there, it is because there is a very
capable person in charge. So what I suggest you do is ask
Gordon England because he is the one that is responsible for
that, and he is very involved in all of that.
I don't know about your particular claim was if someone
from the union was there, they cut them off. But whether there
are PAS people involved or not in individual meetings, I don't
know. But I do know there is a very well-regarded, high-ranking
PAS person in charge of the whole thing, and he is the one that
needs to be held accountable for whether it works or not.
Senator Akaka. Mr. Walker.
Mr. Walker. Senator Akaka, yes, it is my understanding that
Gordon England is responsible and accountable, he has been
deputized by the secretary for NSPS. He is a very capable
professional and an excellent choice by the President to
nominate as deputy secretary.
It is also my understanding that during this very critical
meet and confer period, that no PAS--not just Gordon England,
but any PAS--is involved in any meet and confer meetings
dealing.
I am hoping that is wrong, but that is what I was told this
morning. We are going to follow up and try to find out whether
or not that is accurate.
Mr. Johnson. But that is a process concern. The question
is, is it having an impact? But I mean, again, Gordon England
is the one to ask that.
Mr. Walker. I would respectfully suggest there are two
things you have to get right because if you don't get them
right, you fight a 2-front war. One, you have to get the policy
framework right. Two, you have to get the process right.
If you don't get both right, your odds of success change
dramatically. Process is important. You need to have top people
visibly involved. Not in every meeting, however, you are not
going to get the top labor leaders there if you don't have top
people from the Department there. They are going to delegate
it, too.
You are going to have people there who are not empowered to
make a decision, and this isn't negotiations. It is meet and
confer. But nonetheless, you have to have people who are
empowered to make decisions at some of the meetings. There is a
lot more details that it wouldn't be appropriate for a PAS to
be involved with.
Senator Akaka. Well, I really appreciate learning from your
experiences and having your wisdom. Mr. Berkson, I am asking
that you bring our concerns to Secretary Rumsfeld so he will be
aware of them.
Mr. Johnson, DOD, and you, have alluded to this DOD
business transformation requires a commitment from both the
Legislative and Executive Branches. Do you support creating a
chief management officer at DOD?
Mr. Johnson. Let me give you my personal opinion. It is
probably a pretty good idea. It is not a silver bullet. You can
put the kind of person that General Walker has suggested, put
them in a term, although I don't think the term buys you
anything. But again, that is my personal opinion. And it is
possible that you won't get the transformation that we all
want.
It has to be, as I mentioned earlier, a high priority for
the administration, for the President and the secretary.
Because if it is not, the most effective chief management
officer can be made to be ineffective.
For instance, I am in a specific management position that
has been created at OMB. This position has existed since 1990.
Some of the people in my position have been effective. More
than that have not.
So the presence of a management person in that at OMB has
not necessarily guaranteed that the Federal Government, the
Executive Branch would be as focused on management as I think
we are today. It is not a silver bullet.
Senator Akaka. General Walker.
Mr. Walker. I agree with Clay, but it is not a silver
bullet. You have to have the President's commitment. You have
to have the secretary of defense's commitment. You need more
OMB involvement. So I agree with that.
However, I would respectfully suggest that while it, in and
of itself, is not a silver bullet, having a CMO is essential if
you want to be successful.
Senator Akaka. Let me ask a final question, Mr. Chairman.
Mr. Johnson, today and at our February hearing, you pledged
your commitment to working more closely with DOD on addressing
the high-risk areas. And you heard Mr. Berkson say there is no
business modernization plan.
DOD needs help. So my question is what are your goals over
the next 3 years regarding DOD high-risk areas?
Mr. Johnson. Well, let me tell you what we have been doing
since the hearing in February. OMB, the people that work for
the DOD, the DOD branch, and GAO have been working on supply
chain management to figure out, get agreement on what a good
plan looks like, and we are very close.
We will be back to you within not days, not months, but in
a few weeks with a plan for that particular area as an example
of the level of detail--the clarity of the definition of
success, the specificity of due dates, the clarity about who is
responsible for doing what to whom by when--for you all to say
this is adequate or inadequate.
Then once there is agreement on that, the staff at DOD and
GAO and OMB are generally pleased with what we have. I think if
you would ask any of them, they would say there has been very
good working relationship between the three entities. We think
we are going to come to you in a couple of weeks with something
that you all will be impressed with.
Once there is agreement on that, or if there is not, then
we will get something to where we are in agreement on, and we
will go back and work with DOD and GAO to develop similar
templates, similar plans for the other six areas.
So then, all of a sudden now, there is a plan with all of
the clarities that I have talked about and all of the implied
accountabilities that I have talked about when you talk about
your next 5\1/2\ years, my suggestion to you is that is what
all your hearings be focused on is their adherence to those
plans.
And it shouldn't be a hearing upon the due date or a month
after the due date when the whole thing is supposed to be
finished. It ought to be with the kind of regularity that you
are talking about, where it is every 6 months or whatever. And
the same thing with OMB working with DOD on whether they are
adhering to the plan and accomplishing the subgoals that they
laid out for themselves.
So that is the approach we are taking. And that is the
approach we have taken with the one area. And it is very
important that it be to everybody's satisfaction, and we are
close to getting back to you with a proposed approach using one
of the seven areas as an example.
Senator Akaka. General Walker, Mr. Berkson's testimony
discusses the accomplishments of the Defense Acquisition
University. However, you testified that, and I am quoting,
``DOD also needs to have the right skills and capabilities in
its acquisition workforce to effectively implement best
practices and properly manage the goods and services it buys.''
You correctly point to DOD workforce reductions between
1989 and 2002 that resulted in a loss of skills and
competencies needed to ensure proper acquisition and
contracting. Do you believe this is an issue of insufficient
staff or improperly trained contract and auditing staff, or
both? And has GAO examined the training issue?
Mr. Walker. We believe that the acquisition workforce is
under significant stress. We believe that there are real issues
with regard to whether or not it is an adequate size. There are
clearly skills, imbalances, and succession planning
challenging.
The Defense Acquisition University does a good job. We have
partnered with the Defense Acquisition University on some areas
of mutual interest and concern. We have actually provided some
information and I think even co-instructed certain classes from
time to time. We have also taken some of their classes. It is a
quality organization.
But the workforce as a whole is part of the high-risk area
that deals with human capital at DOD. I might note that with
regard to Clay's comment, he is correct that we are trying to
work on a constructive basis with OMB and DOD to come up with a
model for one area, namely, supply chain management.
But I would respectfully suggest that DOD has 14 because it
has got 8 on its own and 6 that it shares with others in high
risk, and they need to have plans on all 14.
Senator Akaka. All right. Well, thank you very much, Mr.
Chairman.
Senator Voinovich. Thank you very much for your testimony.
Clay, I would like to stress to you the importance of
having everyone involved in implementing your plan to reform
the DOD's supply chain management process.
Mr. Johnson. Well, that has got to be a key part of that
plan, what is the plan.
Senator Voinovich. Yes. But the people that are doing the
work are the ones that should have input in driving the plan
and saying this is what we think needs to be done.
I have been visiting bases in Ohio and it has been a great
experience for me. About 8 years ago, Patterson Air Force base
in Springfield, Ohio was asked to put together an additional
training facility for F-16 pilots.
The reason why they have been successful is that team has
been working together. They worked it out. They talked about
it. They brought in the technology. It is an example of where
you have had a team together that can feed off each other. This
was their baby, they had a plan, and they were really proud of
what they were doing.
I would like to find out who decides that these people are
rotated every 3 years.
Mr. Walker. My son is in the Marine Corps. He is a Captain
and fought in Iraq.
That, my understanding, is long-standing policy to try to
be able to make sure that military officers get a broad range
of experience within a certain period of time in order to
position them for promotion to the next level.
I think that we need to relook at a number of the critical
positions, especially in the acquisitions area. The problem is
when you have preprogrammed turnover nobody is really
responsible and accountable. Everybody is focused on trying to
make sure nothing bad happens during their, in many cases, 2-
year or 3-year tours.
We are talking about weapon systems that, in some cases,
involve hundreds of billions of dollars.
Senator Voinovich. So the Joint Chiefs of Staff probably,
that is----
Mr. Walker. Well, no. It is a combined effort. Mr.
Chairman, I will provide more for the record because I know I
am under oath here. My understanding is that the desire for the
frequent turnover has come from the services. That is not
something that has come from the OSD or from the under
secretaries or even from the service secretaries.
It is something that the services have wanted to do, and I
think it is something that has been in existence for many
years. This needs to be relooked at.
Senator Voinovich. I want to thank all of you for
testifying today. This hearing is adjourned.
[Whereupon, at 3:59 p.m., the Subcommittee was adjourned.]
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