[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                         [H.A.S.C. No. 112-147]
 
                   CIVILIAN WORKFORCE REQUIREMENTS--

                    NOW AND ACROSS THE FUTURE YEARS

                            DEFENSE PROGRAM

                               __________

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON READINESS

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             JULY 26, 2012

                                     
[GRAPHIC] [TIFF OMITTED] CONGRESS.#13




                       SUBCOMMITTEE ON READINESS


                  J. RANDY FORBES, Virginia, Chairman
MIKE ROGERS, Alabama                 MADELEINE Z. BORDALLO, Guam
JOE HECK, Nevada                     SILVESTRE REYES, Texas
AUSTIN SCOTT, Georgia                JOE COURTNEY, Connecticut
FRANK A. LoBIONDO, New Jersey        DAVE LOEBSACK, Iowa
CHRIS GIBSON, New York               LARRY KISSELL, North Carolina
VICKY HARTZLER, Missouri             BILL OWENS, New York
BOBBY SCHILLING, Illinois            TIM RYAN, Ohio
JON RUNYAN, New Jersey               COLLEEN HANABUSA, Hawaii
TIM GRIFFIN, Arkansas                JACKIE SPEIER, California
STEVEN PALAZZO, Mississippi
MARTHA ROBY, Alabama
                 Jamie Lynch, Professional Staff Member
               Vickie Plunkett, Professional Staff Member
                    Nicholas Rodman, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2012

                                                                   Page

Hearing:

Thursday, July 26, 2012, Civilian Workforce Requirements--Now and 
  Across the Future Years Defense Program........................     1

Appendix:

Thursday, July 26, 2012..........................................    33
                              ----------                              

                        THURSDAY, JULY 26, 2012
   CIVILIAN WORKFORCE REQUIREMENTS--NOW AND ACROSS THE FUTURE YEARS 
                            DEFENSE PROGRAM
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bordallo, Hon. Madeleine Z., a Delegate from Guam, Ranking 
  Member, Subcommittee on Readiness..............................     3
Forbes, Hon. J. Randy, a Representative from Virginia, Chairman, 
  Subcommittee on Readiness......................................     1

                               WITNESSES

Farrell, Brenda, Director, Defense Capabilities and Management, 
  Military and DOD Civilian Personnel Issues, U.S. Government 
  Accountability Office..........................................     7
Vollrath, Frederick E., Principal Deputy Assistant Defense 
  Secretary for Readiness and Force Management, U.S Department of 
  Defense........................................................     5

                                APPENDIX

Prepared Statements:

    Farrell, Brenda..............................................    50
    Forbes, Hon. J. Randy........................................    37
    Vollrath, Frederick E........................................    39

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    Mr. Forbes...................................................    73
    Mr. Palazzo..................................................    74
    Mr. Runyan...................................................    74

Questions Submitted by Members Post Hearing:

    Ms. Bordallo.................................................    84
    Mr. Forbes...................................................    79
    Ms. Hanabusa.................................................    98
    Mr. Loebsack.................................................    97
    Mr. Schilling................................................   100
    Ms. Speier...................................................    99
   CIVILIAN WORKFORCE REQUIREMENTS--NOW AND ACROSS THE FUTURE YEARS 
                            DEFENSE PROGRAM

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                                 Subcommittee on Readiness,
                           Washington, DC, Thursday, July 26, 2012.
    The subcommittee met, pursuant to call, at 1:00 p.m., in 
room 2212, Rayburn House Office Building, Hon. J. Randy Forbes 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. J. RANDY FORBES, A REPRESENTATIVE 
       FROM VIRGINIA, CHAIRMAN, SUBCOMMITTEE ON READINESS

    Mr. Forbes. I want to welcome all of our members and our 
distinguished witnesses to today's hearing that will focus on 
civilian workforce requirements now and across the future 
years' defense program.
    I particularly want to thank our witnesses for their 
patience during this series of votes, and we apologize to you 
for the delay.
    The civilian workforce provides an invaluable contribution 
to the DOD [Department of Defense] mission, both at home and 
abroad, frequently deploying to the combat zones alongside 
military and contractor personnel.
    I welcome this discussion today and the opportunity to 
better understand how the Department of Defense is forecasting 
its future workforce requirements and balancing the critical 
skills required across all components of its workforce.
    Additionally, I want to understand the impact of directed 
reductions.
    Right now, there are two possible reductions that could 
negatively impact the civilian workforce in the short term: 
sequestration, and the proposed Senate NDAA [National Defense 
Authorization Act] language.
    Let us start with the Senate committee-passed language that 
directs civilian and service contractor workforce reductions 
commensurate with military end-strength through fiscal year 
2017, which would be expected to be in excess of 5 percent.
    Based on the numbers provided in fiscal year 2013, simple 
math would suggest that more than 39,000 civilian full-time 
equivalents would be eliminated.
    Next, we have sequestration. Nobody wants it to happen, 
most especially not me. But we have been talking about it for a 
while and it appears that there is little to no planning 
associated with this legislative mandate.
    Assuming an exemption for military personnel, we calculate 
there would be an approximate 11.3 percent reduction across all 
other counts. Again, simple math would suggest that an 
additional 89,000 civilians would be eliminated.
    When you add the two figures, we are talking about more 
than 128,000 people. And informally, some in the Pentagon have 
indicated that sequestration alone could be as high as a 
quarter of the total civilian workforce or almost 200,000 
people.
    The result of any such cuts, particularly without 
analytical underpinning, would be long-term irreversible damage 
to the workforce. And let us not forget the costs that would 
have to be calculated to implement, and the sunk cost from the 
first quarter of the year.
    Fundamentally, I have opposed any effort without the 
necessary details that support the proposal.
    In the case of the Senate reductions and the mindless 
implementation of sequestration, both appear to lack any basis 
in fact or reason. That is why I believe the more prudent 
approach to managing the civilian and contractor workforce is 
to assess the requirement and then to shape the workforce to 
meet those decisions.
    I look forward to discussing all of these issues later in 
this hearing.
    So where does that leave us?
    Well, according to the statutory requirement in 10 U.S.C. 
1597 [Title 10 United States Code 1597], any involuntary 
reductions in force require notification both to Congress and 
the employee. So if sequestration were to take effect in 
January, DOD would be required to notify us at the end of 
September.
    In light of potential reductions, what generally concerns 
me is the Department of Defense is planning for its future 
workforce requirements and negotiating the appropriate balance 
among civilian contractor military personnel.
    Since 2001, GAO [Government Accountability Office] has 
listed Federal human capital management as a government-wide 
high-risk area because of the need to address current and 
emerging critical skill gaps that are undermining agencies' 
abilities to meet their vital missions.
    And we know that approximately 30 percent of the DOD 
workforce and 90 percent of its senior leaders, are eligible 
for retirement as early as 2015.
    I look forward to hearing about what analysis DOD has 
undertaken to identify and document critical skills and 
competencies required in each component of the workforce, 
particularly should directed reductions occur, and what 
recommendations GAO has for that DOD process.
    We were also recently notified that the Department just 
extended its civilian personnel cap through fiscal year 2018.
    Does that presume that budget is driving DOD workforce 
requirements or vice versa?
    And I look forward to clarification of how this cap is not 
in direct contradiction to the statutory requirement set forth 
in 10 U.S.C. 129 [Title 10 United States Code 129], which 
clearly precludes any constraint or limitation in terms of 
maximum number of employees.
    We, in Congress, and namely this subcommittee have 
exercised great oversight of civilian workforce issues to 
ensure DOD best plans for its requirements.
    Total force management in particular directs a holistic 
perspective of workforce requirements across civilian, 
military, and contractor personnel. However, I am not convinced 
that we even have perfect knowledge into our civilian 
requirements.
    I look forward to our discussions today and delving into 
these topics further. We need to exercise appropriate oversight 
of the process to ensure that sequestration, or other 
reductions, do not blindside our workforce. They deserve to 
know what lies ahead and it is our job to ensure the public is 
informed.
    Joining us today to discuss the DOD civilian workforce are 
two distinguished witnesses: Mr. Frederick Vollrath, Principal 
Deputy Assistant Secretary of Defense for Readiness and Force 
Management at the Department of Defense; and Ms. Brenda 
Farrell, Director of Defense Capabilities and Management at the 
U.S. Government Accountability Office.
    We thank you both for being here. We are looking forward to 
your testimony.
    I would now like to recognize my friend, the ranking 
member, Ms. Bordallo, for any remarks she may have.
    [The prepared statement of Mr. Forbes can be found in the 
Appendix on page 37.]

STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE FROM GUAM, 
           RANKING MEMBER, SUBCOMMITTEE ON READINESS

    Ms. Bordallo. Thank you very much, Mr. Chairman.
    And I welcome our witnesses today. And we appreciate your 
testimony before the subcommittee.
    The Department of Defense----
    Testing.
    The Department of Defense civilian personnel workforce 
provides a critical support to our warfighters. The civilian 
workforce is essential to making our country's military so 
effective.
    The civilian workforce provides experience. They provide 
expertise and continuity. I personally value continuity of 
staff within programs and offices at DOD.
    I cannot emphasize enough how important the civilian 
workforce is to our Nation's defense.
    Management of the civilian workforce is especially 
important in an era of austere budgets. Strategic human capital 
management is slowly evolving in the Department of Defense, but 
too slowly, in my opinion.
    Congress has made it very clear that we want requirements-
based management of the total force to include military, 
civilian, and contractor personnel. In fact, the National 
Defense Authorization Act for Fiscal Year 2006 called for DOD 
to develop a strategic plan for managing its civilian workforce 
to include analysis of any gaps in capability.
    As late as last year in the fiscal year 2012 NDAA, Congress 
further refined the requirements of this report to provide 
guidance for DOD in regard to total force management.
    The most current strategic workforce plan was submitted by 
DOD in March of this year. And GAO will complete its review of 
the most current plan by next month.
    Congress has provided the DOD the statutory tools necessary 
to shape the workforce, but it is going to take continued 
leadership on this matter to make sure that it is done right.
    Having clear requirements-based civilian personnel 
management in place avoids the pitfalls that come with 
arbitrarily cutting the workforce.
    I appreciate that Ms. Farrell, in her testimony, 
highlighted the risks associated with the last civilian 
workforce downsizing. And that was in 1990.
    Those cuts to personnel were void of any requirements-based 
decisions. And as such, DOD took significant risk with its 
civilian workforce, supporting certain capabilities.
    This was never more evident than in the downsizing of the 
acquisition workforce and the problems that DOD faced with 
acquisitions during the middle of the wars in Iraq and 
Afghanistan.
    In sequestration, cuts to civilian personnel would need to 
be requirements-based so that we don't assume more risks than 
is absolutely necessary. We know that the current budget 
situation will require the Department of Defense to downsize 
the civilian workforce. But this process must be rational and 
not arbitrary.
    As such, I hope that our witnesses this afternoon will 
touch on the Senate's proposed language in their version of 
this year's Defense Authorization Bill that calls for arbitrary 
cuts to the civilian workforce and what impact or risk is 
associated with this approach.
    I also hope that our witnesses can touch on the lessons 
learned from former Secretary Gates' efficiencies initiative, 
the impacts of which are still being felt in terms of caps on 
hiring and targeted civilian personnel reductions.
    What has been learned from these initiatives and having 
those lessons being incorporated into the revised strategic 
workforce plan?
    I am concerned that cuts to the civilian workforce have 
been focused on meeting budget targets rather than a 
comprehensive analysis of requirements and capabilities that 
need to be retained in DOD.
    Finally, before we see any further arbitrary cuts in the 
civilian workforce, it is imperative that the Department of 
Defense provide Congress with the inventory of contractor 
services that are supporting the Department.
    We need more information to make the difficult decisions 
that will be required with our current budget situation. Total 
force management is only successful when good planning, good 
information, and solid leadership are in place to manage human 
capital.
    And again, I look forward to this discussion with our 
witnesses.
    And I thank you, Mr. Chairman, for yielding this time.
    Mr. Forbes. Thank you for those remarks, Madeleine.
    And as we discussed prior to the hearing, I ask unanimous 
consent that it be made in order to depart from regular order, 
so that members may ask questions that follow the train of 
thought from the preceding member. I think this will provide a 
roundtable type forum and will enhance the dialogue on these 
very important issues.
    Without objection, that is so ordered.
    Now, Mr. Vollrath, we would love to hear your opening 
comments.

STATEMENT OF FREDERICK E. VOLLRATH, PRINCIPAL DEPUTY ASSISTANT 
   DEFENSE SECRETARY FOR READINESS AND FORCE MANAGEMENT, U.S 
                     DEPARTMENT OF DEFENSE

    Mr. Vollrath. Thank you.
    Good afternoon, Chairman Forbes, Ranking Member Bordallo, 
and other members of the subcommittee.
    Mr. Forbes. Mr. Vollrath, you might want to put that 
microphone up a little closer. Sometimes they are a little 
finicky.
    Thank you.
    Mr. Vollrath. Thank you.
    The civilian workforce must be addressed within the larger 
context, as you all have mentioned, of the Department's total 
force of the Active and Reserve military, the civilians and the 
contracted service.
    As we look to the future we must continue to strive to 
achieve the most effective, efficient, and appropriate mix of 
our workforce.
    The Department's current plans, reflected in the 
President's budget request for fiscal year 2013, represent a 
carefully coordinated approach that addresses operational 
needs, satisfies mission requirements and recognizes the fiscal 
constraints.
    Our future plans require us to align capabilities and costs 
for all elements of the total force. As discussed in greater 
detail in my written statement, these elements cannot be 
managed in isolation if we are to avoid the hollow force and 
unnecessary expense.
    Total force management is complex. It is a lifecycle 
process used to ensure the Department's capabilities are 
enabled by a mix of military, civilian, and contracted support 
to deliver the requisite readiness, while minimizing the costs.
    During this period of constrained defense budgets, the 
Department must ensure that a sufficient number of Federal 
civilian personnel are available to meet the support needs of 
our military forces.
    The Department must also prioritize and reduce less 
critical missions while we ensure that military and civilian 
personnel are performing all inherently governmental jobs, and 
that there are sufficient numbers to perform critical 
oversight, management, and readiness functions.
    The Department sourcing decisions must be made on the basis 
of law, cost, policy, and risk. And we are committed to 
ensuring those decisions are made consistent with title 10 
requirements regarding workforce management.
    To achieve these objectives, we must ensure decisionmakers 
have access to relevant information and data. We must also have 
the flexibility and tools necessary to appropriately align 
workload and balance the Department's workforce.
    In an effort to significantly reduce excess overhead costs 
and apply the savings to warfighting capability, force 
structure and modernization and readiness, the Department 
carried out a number of initiatives, beginning in fiscal year 
2011, including directing components to maintain civilian 
personnel at fiscal year 2010 levels.
    The fiscal year 2013 President's Budget Request reflects an 
objective and reasonable approach that decreases spending on 
all components of the total force. However, we recognize that 
we operate in a dynamic and changing environment, and therefore 
must retain the flexibility to adapt our workforce accordingly.
    The current budget request continues to fund the civilian 
workforce at fiscal year 2010 levels, with some exceptions.
    While we continue to deliver a flexible, responsive 
civilian workforce that mitigates risk and ensures continuity 
of operations; promotes the organic knowledge that we need to 
retain, and ensures mission requirements are met most cost-
effectively and efficiently; given the strategic direction of 
the Department, the planned reductions among the uniformed 
force; and in order to meet the requirements of the Budget 
Control Act, the funding for civilian positions is currently 
planned to decline by approximately 2 percent over the next 5 
fiscal years.
    We continue to assess whether further reductions and 
realignment of civilian personnel can be made in the context of 
adjustments to the total force and the new defense strategy. 
And we will keep this subcommittee informed of the results.
    The Department, however, is keenly aware that our civilian 
workforce is extremely talented and critical to success in 
meeting our strategic goals, performing key enabling functions 
for the operating force, and delivering vital services that 
support our uniformed men and women.
    Changes in the civilian workforce must be done in a way 
that preserves mission-essential skills and abilities over the 
long term, and in a manner that enables us to recruit and 
retain the most talented individuals.
    We also recognize the need to review and assess levels of 
contracted support in order to ensure appropriate and cost-
effective utilization of such support.
    Additionally, with the possibility of sequestration looming 
on the horizon, we cannot yet say precisely how bad the damage 
would be.
    But as Secretary Panetta noted earlier this year, it is 
clear that sequestration could risk hollowing out our force and 
reducing military options available to the Nation.
    In summary, the Department has programs in place to address 
our needs for an effective and appropriately resourced total 
force. We continue today to discuss GAO's observations on DOD's 
civilian personnel requirements.
    DOD's Federal civilian workforce consists of approximately 
783,000 personnel and performs a wide variety of duties, 
including cus on lifecycle management for the civilian 
workforce by integrating strategic workforce planning, 
competency management, and workforce professional development 
initiatives to ensure that plans support the development of a 
ready civilian workforce.
    Mr. Chairman, this concludes my statement.
    I thank you and the members of this subcommittee for the 
opportunity to address you and help work on the Nation's 
issues.
    I stand by for your questions, sir.
    [The prepared statement of Mr. Vollrath can be found in the 
Appendix on page 39.]
    Mr. Forbes. Thank you, Mr. Vollrath.
    Ms. Farrell.

STATEMENT OF BRENDA FARRELL, DIRECTOR, DEFENSE CAPABILITIES AND 
 MANAGEMENT, MILITARY AND DOD CIVILIAN PERSONNEL ISSUES, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Farrell. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Bordallo, members of the 
subcommittee, thank you for the opportunity to be here today to 
discuss GAO's observations on DOD's civilian personnel 
requirements.
    DOD's Federal civilian workforce consists of approximately 
783,000 personnel, and performs a wide variety of duties, 
including some traditionally performed by military personnel.
    In 2001, GAO placed strategic human capital management 
across the entire Federal Government on our high-risk list. And 
it remains there today.
    We did so because of the longstanding lack of leadership in 
the area, and in part because critical skill gaps could 
undermine agencies' abilities to accomplish their missions.
    With the long-term fiscal challenges facing the Nation, 
reductions to the civilian workforce may be considered to 
achieve cost savings. Human capital has remained a critical 
missing link in reforming and modernizing the Federal 
government's managing practices.
    GAO has observed that the Federal Government has often 
acted as if people were costs to be cut, rather than assets to 
be valued.
    My main message today is that strategic workforce planning 
is critical to help ensure that DOD has the right number of 
civilian personnel, with the right skills at the right time, to 
carry out their mission.
    My statement today is based on GAO's reports issued from 
March 1992 through June 2012.
    My written statement is divided into two parts. The first 
part addresses DOD's prior experience with civilian workforce 
downsizing.
    DOD's prior efforts in the 1990s were not oriented towards 
shaping the make-up of the force, resulting in significant 
imbalances in terms of shape, skills, and retirement 
eligibility.
    DOD's efforts in the 1990s to reduce its Federal civilian 
workforce levels below that of 1987 were hampered by incomplete 
data and a lack of a clear strategy for avoiding skill 
imbalances and other adverse effects of downsizing.
    For example, DOD used incomplete and inconsistent data 
related to workers, workload data, and projected force 
reductions. Further, DOD's approaches had unintended 
consequences.
    The use of voluntary attrition, hiring freezes, and 
financial separation incentives mitigated some adverse effects 
of workforce reductions, but were less oriented towards shaping 
the makeup of the civilian workforce.
    For DOD, this was especially true of its acquisition 
workforce. DOD was put on the verge of a retirement-driven 
talent drain in this workforce after 11 consecutive years of 
downsizing. Now, DOD is trying to rebuild that workforce.
    In 2001, we concluded that considering the enormous changes 
the DOD civilian workforce had undergone, and the external 
pressures and demands faced by the Department, taking a 
strategic approach to human capital would be crucial to 
organizational results.
    As I will discuss next, this is no less true today than it 
was in 2001.
    The second part of my written statement addresses DOD's 
current strategic human planning efforts.
    DOD has taken positive steps to identify its critical 
skills. In 2006 as noted earlier, Congress required DOD to have 
a strategic workforce plan that included specific elements.
    GAO has closely monitored DOD's efforts in this area. We 
have found that DOD has identified 22 mission-critical 
occupations, such as contracting, accounting, and information 
technology management that it identifies as critical skills. 
However, DOD has not conducted competency gap analyses for the 
majority of their mission-critical occupations.
    Gap analysis is critical to develop specific strategies to 
address the workforce needs for today and the future.
    For example, gap analysis enables a department to determine 
where they need to grow, and where they could possibly cut 
back.
    We remain concerned that DOD lacks critical information it 
needs to effectively plan for the workforce requirements.
    Mr. Chairman, the last point I wish to make is that DOD's 
workforce includes military personnel, Federal employees, and 
contractors. And changes made to one of these groups may impact 
the others.
    Thank you, that concludes my opening remarks.
    Be happy to take questions.
    [The prepared statement of Ms. Farrell can be found in the 
Appendix on page 50.]
    Mr. Forbes. Let me thank you both for your testimony, and 
also for your written statements, which we will make a part of 
the record.
    And, Mr. Vollrath, we are delighted to have you today.
    As I mentioned at the outset, you are the Principal Deputy 
Assistant Secretary of Defense for Readiness and Force 
Management at the Department of Defense. So you bring with you 
a great deal of responsibility on your shoulders and expertise. 
And we thank you for that.
    All of us are concerned about sequestration. We are 5 
months from that coming into place.
    And as I look at the statute, it says that the same 
percentage sequestration shall apply to all programs, projects, 
and activities within a budget account; with programs, projects 
and activities as delineated in the appropriation act or 
accompanying report for the relevant fiscal year covering that 
account; or for accounts not included in appropriation acts.
    Basically, we are talking about across-the-board cuts is 
essentially what we are looking at.
    Now, noting that sequestration is the current law, noting 
that we are about 5 months out from when that comes into play, 
what will be the impact on the civilian workforce when 
sequestration hits?
    Mr. Vollrath. Mr. Chairman, I wish I could give you a 
definitive answer, but I can't, because there are some 
decisions that could be made relative to the military 
workforce.
    And if sequestration were to be a fact, the civilian 
workforce money is in the O&M [Operations and Maintenance] 
account. And defense and other agencies could make decisions 
about where the priorities would be placed within that account.
    For example, other things that are affected would be things 
like fuel, training support dollars, et cetera.
    And so some decisions would have to be made as to where the 
priorities are placed. But they would also have to be relative 
to what the overall objective is if sequestration hit. We would 
have to make some decisions about priorities on national 
defense.
    Once those are made, we could begin to make reasoned 
decisions that would affect our civilian workforce, as well as 
the military. When that would happen, we clearly would have to 
take a look at the military, the support our civilian workforce 
provides to it, and then the impact of the contract services.
    There are the three moving parts. And so I can't answer the 
question with any direction. I wish I could. But there are that 
many moving parts to this problem.
    Mr. Forbes. Mr. Vollrath, we know that sequestration is the 
law. It is not just something that could happen. It is 
currently the law. Unless it is changed, it is going to be 
there no different than if we passed a budget.
    Can you tell me what specific steps you are taking now to 
prepare for it, to answer the questions that you say are a 
number of moving parts that need to be answered?
    Mr. Vollrath. The Secretary of Defense is still suggesting 
that this needs to be addressed. We need to work with Congress 
to understand what the impacts of this could be.
    I don't have details about that. I know that Deputy 
Secretary of Defense Carter is slated to appear before the 
Armed Services Committee on the first of August to address more 
robustly the potential impacts of sequestration.
    I do not have enough information to give you a 
straightforward answer.
    The implications, of course, if sequestration were to 
happen, are significant.
    First of all, when the decisions are made in terms of the 
impacts and where they are taken, if you translate that and 
bring it back into the Government civilian workforce, you 
mentioned that we have a certain legal requirement in terms of 
process to notify. We also have other things that we would have 
to deal with.
    We have our labor partners and contracts with them that we 
would have to work. On the contract for services side, there 
are contracts that we would have to adjust.
    And given the other authorities, okay, to reduce the 
workforce and shape it intelligently, we, for sure, would have 
to be back with you and other members of Congress to get some 
changes to the laws and internal to the Department of Defense 
on the policies in order to shape the force appropriately, so 
that we do, in fact, avoid the kinds of problems that were 
alluded to in the 1990s.
    I have to just tell you, I lived that dream in the 1990s of 
trying to downsize the force, take the peace dividend, and 
shape. And it was not, okay, an easy task then.
    It is not going to be an easy task under sequestration. 
That is for sure. That is for sure.
    Mr. Forbes. Mr. Vollrath, we heard Ms. Farrell say that the 
Department has been criticized for using incomplete data. And, 
as I recall, it was a lack of a comprehensive strategic plan in 
terms of the workforce.
    Can you walk me through the RIF [Reduction in Force] 
process and the timeliness requirements that are going to be 
required?
    Because, as you know, again, I come back to the fact 
sequestration is not just some pipe dream out there. It is the 
law. It is on the books. It is scheduled to take place in 
January.
    Can you tell me what the RIF process is, and kind of walk 
us through that and the timeliness generally of that?
    Mr. Vollrath. A normal RIF process would begin by an 
intelligent review of requirements. But in terms of timing and 
notification----
    Mr. Forbes. Let us start with the intelligent review of the 
requirements.
    How long would that take?
    Mr. Vollrath. I would estimate the best case would be at 
least 3 to 4 months. And I say that because an intelligent 
review has to be mission-based.
    Mr. Forbes. If it would take 3 to 4 months and we only have 
5 months, does it surprise you that we haven't started and 
undergone that process yet?
    Mr. Vollrath. No, because I don't think anybody has been 
able to come to grips yet with the severity of what 
sequestration means.
    Mr. Forbes. Is it your opinion that people in the 
Department of Defense do not understand that this is the law. 
And it is going to take place in January?
    Mr. Vollrath. Mr. Chairman, they understand that it is the 
law.
    Mr. Forbes. If it is the law, what I don't understand is, 
if it is going to take us a minimum of 4 months to do the 
analytical review, has anybody instructed you to begin that 
process or has anyone instructed you not to plan for 
sequestration?
    Mr. Vollrath. Neither.
    Mr. Forbes. Then why would your Department not have begun 
this analysis if you know it is scheduled to take place in 
January, and you know it is going to take 4 months at least to 
do the analysis before you even begin the process?
    Mr. Vollrath. Well, as the Secretary of Defense has said, 
he intends to continue to work with Congress to address the 
effects of sequestration. And I believe a much more robust 
discussion can be had around that question when the Deputy 
Secretary of Defense appears on the first of August.
    Mr. Forbes. Mr. Vollrath, I don't disagree that we need to 
have a robust discussion. We have been trying to have it for a 
year now.
    But you have heard the Senate say that they are not going 
to taking any action. You have heard the President say he would 
veto any action regarding sequestration.
    It is the law. It is coming.
    This is what is baffling me. If we had a budget that was 
coming on line with these kind of major cuts, I would think 
that your office would have already been doing some kind of 
analysis, so that they just don't hit us blindsided in January.
    And it baffles me that we have undergone no process at all 
to do the kind of analysis that Ms. Farrell says is crucial for 
us to do before these cuts take place.
    Is it because the Department of Defense just continues to 
just hope it is going to get changed?
    Mr. Vollrath. I don't believe that it is a hope that it 
gets changed. I believe there is a lot of work to try to 
address the problem.
    Mr. Forbes. Can you tell me any proposal that you have seen 
floating right now that would suggest that it is going to be 
addressed?
    Mr. Vollrath. Personally, I have not.
    Mr. Forbes. Who would make the decision within your 
Department to start this analysis?
    Mr. Vollrath. That would have to start with the Secretary 
of Defense.
    Mr. Forbes. And the Secretary of Defense has given you no 
instruction at all to begin that analysis to date?
    Mr. Vollrath. I personally do not have that kind of 
instruction.
    Mr. Forbes. But you would know if that was going to take 
place based on your position, would you not?
    Mr. Vollrath. Not necessarily, because this is a large 
strategic movement.
    Mr. Forbes. So then as the Principal Deputy Assistant 
Secretary of Defense for Readiness and Force Management at the 
Department of Defense, if you wouldn't know, who would know 
above you?
    Mr. Vollrath. At this stage, I would defer to the Secretary 
of Defense and to the President, and where they intend to----
    Mr. Forbes. Well, the President and the Secretary of 
Defense aren't going to do the actual planning. They would have 
to give that instruction.
    But who would know in the Department if such instructions 
have been given to begin the planning, if you wouldn't know?
    Could this planning take place if you didn't know it?
    Mr. Vollrath. Probably not.
    Mr. Forbes. So then you would know it if the planning was 
going to take place?
    Mr. Vollrath. I am not aware of any planning. But that does 
not mean that there is no planning.
    Mr. Forbes. Well, help me with this.
    It is your testimony that if the planning were taking 
place, you would know it. Then you said you don't know it. But 
then you said the planning could still be taking place.
    Mr. Vollrath. If there were any planning taking place that 
had any specificity to it, I would anticipate that I would be 
aware of that.
    Mr. Forbes. And today in your testimony, you are not aware 
of that.
    Is that your testimony?
    Mr. Vollrath. That is correct.
    Mr. Forbes. Are you aware that anyone has told you not to 
do the planning?
    Mr. Vollrath. No one has told me not to do planning.
    Mr. Forbes. And the only way the planning could be 
generated would be for the Secretary of Defense to begin that.
    Is that your testimony?
    Mr. Vollrath. I believe that to be correct, because there 
would have to be some decisions, as I mentioned before, about 
the force and its shape and decisions relative to that.
    Mr. Forbes. Walk me through the timeline, if you would, 
regarding the 45-day notification, 60-day notification, et 
cetera, that we have to give for a RIF process.
    Mr. Vollrath. Once a decision is made, and it is a decision 
made, then we would give the employees, that would be affected, 
a 60-day notice. Prior to those employees being notified, we, 
by law, must notify Congress of our intent to conduct a 
reduction in force.
    And so that is a minimum of a lead-time of 105 days in 
order to conduct a reduction in force.
    Mr. Forbes. And that date, as I understand it, from January 
4th would be September 21st?
    Is that to the best of your knowledge?
    Mr. Vollrath. To the best of my knowledge, I will agree 
with that date.
    In my mind, I peg it somewhere around the 18th of 
September, but clearly the middle of September.
    Mr. Forbes. Middle of September.
    Mr. Vollrath. Right.
    Mr. Forbes. But at this particular point in time, you have 
done no analysis to determine what that would be.
    Is that correct?
    Mr. Vollrath. That is correct because there is----
    Mr. Forbes. Now, assuming that we do not reduce the 
workforce, doesn't that mean we would have a disproportionate 
impact on our other accounts?
    You mentioned two of them, fuel and training specifically.
    Would it not stand to reason that if it is going to take 4 
months to do this analysis, and we haven't done the analysis, 
and if you would have to give the notices out by September 
21st, 18th, somewhere thereabout, that we wouldn't be able to 
make that timeframe.
    Doesn't it mean sequestration would have a disproportionate 
impact on other accounts such as fuel and training?
    Mr. Vollrath. It could.
    Mr. Forbes. How could it not?
    Mr. Vollrath. By other decisions that would be made.
    Mr. Forbes. Give me one.
    Mr. Vollrath. Where you take that impact in the O&M 
account.
    Mr. Forbes. But it would have to be somewhere other than 
personnel, correct?
    Mr. Vollrath. That is correct.
    Mr. Forbes. And if it is somewhere other than personnel, 
that means we would have to put more on some other accounts 
somewhere else.
    Mr. Vollrath. Potentially. It is clearly, as you stated, a 
zero-sum game.
    Mr. Forbes. Okay. Thank you, Mr. Vollrath.
    I have got a few more questions I will ask at the end.
    Ms. Farrell, I will have some for you at the end.
    But I am going to go now to Ms. Bordallo. We would love to 
hear her questions.
    Ms. Bordallo.
    Ms. Bordallo. Thank you. Thank you very much, Mr. Chairman.
    I have a couple of questions here, Ms. Farrell, and also to 
you, Mr. Vollrath.
    Can you please comment on the risks associated with the 
Senate's proposed arbitrary cuts to the civilian workforce?
    What risks might be associated with their approach if it 
were enacted into law?
    And also with that question, today, what is the percentage 
of the civilian workforce that carry out duties not available 
today with the military workforce?
    I don't--if you can give me some idea. Because I know for 
sure that there are particular positions and duties that the 
civilian workforce carry out today that the military do not.
    Ms. Farrell. Yes, ma'am.
    Let me begin with, we don't comment on proposed 
legislation. But we can draw from our body of work of what we 
have seen that might be useful to you, as well as to DOD, in 
the face of reductions.
    And we would encourage DOD to look at their workforce 
planning. Specifically, you start with critical skills and 
competencies. And we have discussed that DOD has identified 
critical skills in their mission-critical occupations--22--and 
that is their starting point for workforce planning.
    First, you identify your needs. Then you identify the 
competencies that are associated with those. Measure that 
against your existing workforce. Measure that against your 
future workforce.
    And that way you can determine gaps or where you might have 
some overages or where you might have a workforce that is not 
aligned with your strategic planning.
    So that would be my first encouragement based on the body 
of work we have done to look at the workforce planning and 
starting with those mission-critical occupations.
    As far as the percentages of civilians doing military 
personnel jobs, if I understand you correctly, that would be 
difficult.
    We have looked at insourcing. We have looked at 
outsourcing. The numbers, as you know, are not clear in terms 
of a contractor inventory.
    We have looked at work regarding civilians deployed in Iraq 
and Afghanistan. And we are constantly monitoring that. We know 
that there is a number of civilians that do serve in those 
positions rather than the military force.
    But I would have to do further research to give you a more 
specific number unless my colleague can.
    Ms. Bordallo. I think you have partially answered it.
    What I mean is that if you were downsizing the civilian 
workforce today, certainly there must be positions. Because, 
you know, when you go into the military, you are there for 
combat duty mainly.
    So there must be a great number of positions, particular 
positions, in the civilian workforce that are not being held by 
military.
    And I just wondered, what are these critical positions 
that, if you were to downsize today, we would be in a heap of 
trouble.
    Ms. Farrell. Well, currently, DOD does not have a strategy 
for the appropriate mix of personnel--that being military, 
civilians and the contractor force. That was a legislative 
requirement to DOD to include an assessment of the appropriate 
mix of personnel in their overall strategic human capital plan.
    When we last issued our report looking at that, we did note 
that DOD had taken some steps in terms of providing guidance as 
to use the least costly mix of personnel to achieve the mission 
using the military requirements.
    As you may know, there is also a mandate to GAO to look 
more closely at that guidance, and do an assessment of the 
methodology that makes that determination of the least costly 
way to go about making that determination. But there is not a 
strategy or definite numbers that is in the strategic human 
capital plans that we have reviewed.
    Ms. Bordallo. Mr. Vollrath.
    Mr. Vollrath. Let me try to--I can't give you finite 
numbers. But let me try to at least address what I believe to 
be your point and the question.
    The question, if I have it right, is what positions or jobs 
or skills do our Government civilians perform that are more 
aligned with what they would be doing versus what the military 
would be doing.
    Ms. Bordallo. That is correct.
    Mr. Vollrath. In a simple statement, it would be, many of 
the base support requirements, acquisition requirements, RDT&E 
[Research, Development, Testing, and Evaluation] requirements.
    When I talk about base and support requirements, the way 
that I look at the strategic management of the workforce is 
once you decide what the military's strength is going to be, 
and where it is going to be, you then bring in the next look 
from a strategic perspective, the Government civilian workforce 
that is necessary to support that.
    And then last you bring on the contract for services where 
there would be cost-savings and things are not inherently 
governmental.
    Let me go back to the base support.
    Another strategic way that we take a look at shaping this 
force is, if you look at a base, it could be Army, it could be 
Air Force. But we tend to talk in terms of power projection 
platforms.
    We look at that installation as a way to get off to war, 
because we are not going to engage in combat, we hope, there. 
So that we use the civilian workforce to support that power 
projection platform, and so we look for any military skills 
that might have been siphoned into that base support, and try 
to move them back into that warfighting capability.
    And we have, I think, done a very reasonable job of that in 
the last several years.
    Now when we take that idea, and we move it into contract 
services, that is a supplement to both of those. And some of 
that can be ramped up or it can be ramped down depending on 
what our direction is and use of our national strategy.
    And so combining all three is what we believe to be the 
strategic look at the workforce. But it is fundamental to 
supporting that military.
    Now, we have put out guidance, very recently again. But as 
the components and the Services start to work their fiscal year 
2014 budget, and look at the out-years, that they be very 
attuned to the shaping of the force so as not to make decisions 
that could result in borrowed military manpower.
    So if you overextend, or don't properly identify the 
civilian workforce that you need, the probability goes up that 
military might be siphoned off to take care of that gap. So we 
are keenly aware of the historic problems that have been around 
when we do these kinds of downsizing.
    So right now, the strategic look is, start with the 
military, build in behind it. The Government civilians who are 
inherently Government work, and then use contracts for 
services.
    Ms. Bordallo. Thank you.
    There is one other question for the two of you.
    What lessons were learned from former Secretary Gates' 
efficiencies initiative that could be helpful in developing the 
requirements-based workforce management plan?
    And how are issues associated with that initiative 
addressed in the strategic workforce plan?
    Let us start with you.
    Ms. Farrell. Yes. We have work under way looking at the 
current DOD overall----
    Ms. Bordallo. Can you come a little closer to the mic, 
please?
    Ms. Farrell. We have work--can you hear me now?
    Ms. Bordallo. Yes.
    Ms. Farrell. We have work looking at the current overall 
DOD strategic workforce plan. And we are looking at that 
against certain requirements that Congress put in law for DOD, 
as well as events that may have taken place in the last couple 
of years, such as the Secretary's initiatives. But we are not 
in a position at this time to comment on that.
    I would say that these initiatives were of a much smaller 
scale, and may serve as some lessons learned for DOD in the 
event that there are much more significant reductions.
    Ms. Bordallo. Mr. Secretary.
    Mr. Vollrath. What we have learned from that is that we 
need to expand, and are expanding, some of the information 
tools to help guide us better.
    For example, the inventory of contract services was not 
robustly supported in the past. We now believe that we have 
that built, along with information technology support, to get a 
much better handle on what we are getting for those contracts 
for services that we have left.
    We also have, as you have heard, we have improved and 
expanded the strategic workforce plan and the support 
mechanisms to get greater fidelity in there for the civilian 
workforce.
    Now, that strategic workforce plan has in it also a 
military component. But the real focus, frankly, is to get a 
better handle on the civilian workforce and its projected 
requirements.
    Now, I would not sit here and tell you that we will have 
this totally figured out and it will be done in 2015, because 
it is a moving target. It always changes.
    But we believe that as a result of the past efforts we have 
much better tools in place, or about to be in place, that will 
help us shape the force better than we have been able to ever 
do in the past.
    Ms. Bordallo. In your opinion, Mr. Secretary, why has it 
taken so long for DOD to develop its strategic workforce plan?
    Mr. Vollrath. Because of its complexity. Because of its 
complexity. A strategic workforce plan, it depends on how you 
want to look at what a strategic workforce plan is.
    The big problem has been to try to get all three components 
clearly identified and, if you will, in a box that you can take 
a look at it together. And so it has taken time to shape those 
tools to get them all in one holistic look, and I believe, 
frankly, GAO has helped us immensely, okay, with their look at 
our work and our progress, and their suggestions to make this 
better.
    It is not going to ever be, I emphasize again, a thing of 
beauty because it has so many moving parts. As I mentioned, it 
is three workforces: military, Government civilians, contract. 
It is spread across four Services.
    There are sets of laws associated with each one of them. 
The force is disbursed over the globe, literally.
    And then you have the dollar dimension that is added every 
year, that has to be taken into consideration. And then there 
is time.
    And so those are a complex set of things that have to be 
considered in the strategy of managing the workforce.
    For example, cyber--if you took a look at the strategic 
workforce plan, if you went back about 5 years, cyber was 
barely a term. It has now come to the front. And so we are now 
looking at cyber and the skills required for that.
    And in the civilian workforce component, what does that 
mean? What are the competencies?
    As a matter of fact, in looking at cyber, the Government 
civilian workforce is a real opportunity for us, because we can 
hire into the mid-grades people with those kinds of skills.
    On the military side, if we want to build that kind of 
competency, we don't have the ability to hire mid-grade. We 
bring them in, we train them, and we grow over time.
    So the civilian workforce of the Department of Defense is 
critical to national defense to give us that flexibility to get 
the job done.
    Ms. Bordallo. Mr. Secretary, just cutting back on the 
original question, what do you think about the Senate proposal 
on the cuts?
    Mr. Vollrath. I would recommend against having any 
particular arbitrary number. Because if we ever do that, I 
don't know how you do good strategic planning.
    Now, that is not to say that you don't, for the sake of 
looking at potential impacts, take a look at cuts or dollar 
cuts in the budget. That is what we get paid to do to try to 
shape that force. We cannot do it in a vacuum.
    We would prefer to have the flexibility to manage the force 
in a more strategic do. But whether any--you know, if Congress 
decides that we need to move in a slightly different direction, 
that is up to you all.
    It would probably be better expressed in terms of a budget 
number for our flexibility.
    Ms. Bordallo. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Forbes. Thank you, Madeleine.
    The gentleman from New Jersey is recognized for 5 minutes.
    Mr. Runyan. I thank the chairman.
    And thank both of you for your testimony.
    And I want to--it is in the wheelhouse. I am going to talk 
about civilian workforce, but not as it relates to 
sequestration. Because personally--not even personally, I think 
there are many other bases around the country that have a very 
similar problem I have that actually came out of the 2005 BRAC, 
and a lot of it is pay parity.
    And it is a huge pay parity issue in the civilian workforce 
which they are asking us to help support our warfighters.
    The base I have is Joint Base McGuire-Dix-Lakehurst. When 
it was made a joint base in the 2005 BRAC [Base Closure and 
Realignment], the McGuire-Dix side was in a Philadelphia wage 
and the Lakehurst side was in New York wage.
    And it still currently sits there for the wage grade 
employees. The General Service employees went over to the New 
York wage grade.
    So it is a huge inequity that is out there left over from 
that. And we have addressed that in this committee in both the 
fiscal year 2012 and the fiscal year 2013 NDAA.
    And, really, what I am looking for as we ask how we are 
going to do whatever we have to do when and if sequestration 
hits, we have another looming issue out there if you are going 
to--maybe it might come to the fact where you have to backfill 
a lot of this stuff with more civilian workers. But yet we 
still have this looming issue hanging out there.
    And I would, Mr. Secretary, I would like your comment on 
what the DOD is doing to help try to correct a situation like 
this. And I know it is not just at Joint Base McGuire-Dix-
Lakehurst. It is at other ones.
    Mr. Vollrath. Unfortunately, I don't know specifically 
about, you know, McGuire-Dix and the wage grade. So I will take 
that question get you an answer for the record.
    [The information referred to can be found in the Appendix 
on page 74.]
    Mr. Vollrath. But let me take that and go a step further. 
Because you mentioned base closure and the sequestration and 
the effects that it has on the workforce.
    Clearly if sequestration were to happen, that is just 
another dimension of the decision process, you know, that we 
would have to go through. There are other dimensions.
    You talked about the workforce at that installation. We 
would have to do more work in terms of seniority. We would have 
to--you know, who stays, who goes.
    We would have to be very careful in how we manage that 
downsizing the workforce, so that we retain enough flexibility 
in that workforce for our future okay.
    As the chairman mentioned we have a very senior force, 
eligible for retirement. We are very cognizant of the fact that 
we have to work on bringing more into the middle and more into 
the bottom in order to mitigate that potential effect.
    Same would be true during sequestration. It would be a 
disaster to do a salami slice for anything that way.
    We would be paying for that sequestration for years to 
come.
    So I understand the question about wage grade. I don't have 
a specific answer for you. But I will take it for the record--
--
    Mr. Runyan. I would appropriate that.
    And we have been working with OPM [Office of Personnel 
Management] on it a lot. And it is really at that level of OPM 
and anything we can do to do that.
    Because when you go back and interact with these--with 
civilian employees, majority of them are our veterans also. And 
we are in that world of, you know, taking care of the men and 
women that take care of us and it falls right back in line with 
that.
    So I thank you.
    And Mr. Chairman, I yield back.
    Mr. Forbes. I thank the gentleman.
    The gentleman from Iowa, Mr. Loebsack, is recognized for 5 
minutes.
    Mr. Loebsack. Thank you, Mr. Chairman and Ranking Member 
Bordallo for doing this event today, this hearing today.
    And I want to thank both of you for being there, as well.
    I think all of us understand and certainly accept that the 
civilian workforce performs critical work on behalf of our 
troops and our national security.
    At the Rock Island Arsenal, which I am very familiar with, 
they work every day to build the equipment that keeps our 
troops safe on the battlefield. And when called upon to do so 
they have produced equipment. And they have really done their 
job.
    They have gotten to our troops in the field when needed, 
and when no one else is able to. I think that is important to 
keep in mind, as well.
    When armor was needed, for example, for the Stryker 
vehicles to protect our troops, the men and women at the Rock 
Island Arsenal worked 24 hours a day, 7 days a week to produce 
the lifesaving ballistic shield kits that our troops needed at 
that time.
    And I know that those workers are very proud of the work 
that they did, as well, because they have told me many, many 
times how proud of that work they are.
    And it is because of examples like this, of what our 
civilian workforce does every day on behalf of our service 
members that I am, of course, like everyone here, I think, 
extremely concerned about any proposals, as was mentioned, that 
arbitrarily cut the workforce without regard of the effect 
possibly on our critical missions and our capabilities.
    I think we are all in agreement about that.
    Mr. Vollrath, Secretary Panetta has repeatedly highlighted 
the importance of protecting the defense industrial base, which 
in response to questions from me and other members of this 
committee, he has said includes both organic and private sector 
facilities and capabilities.
    It appears that the Senate Armed Services Committee 
attempted to protect some elements of the industrial base from 
the cuts mandated in their bill, but failed to include organic 
manufacturing facilities such as Army arsenals.
    What assurances, if any, can you provide that DOD 
leadership will protect the remaining organic defense 
industrial base, or critical Army arsenals from cuts that would 
undermine our essential capabilities and reduce efficiency?
    And would the Department have the ability to base decisions 
regarding the reductions on readiness and critical 
capabilities? Or would the Department have to take an across-
the-board approach across facilities and DOD offices?
    Mr. Vollrath. Sir, is your question relative to 
sequestration or how we manage the force?
    Mr. Loebsack. How we manage it, but it could be 
sequestration. It could be other cuts that come down the pike.
    Mr. Vollrath. As you correctly point out, we need to make 
reasoned decisions and set priorities as we execute, quote--
``strategic human capital management,'' or workforce 
management.
    In terms of process there are guidances given in the 
development of the coming budget and the projected years--
normally out 5 years in the POM [Program Objective Memorandum] 
process.
    That guidance is generally focused on those key and 
critical functions, particularly where the civilian workforce 
is the backbone. So as the process occurs that guidance is 
developed.
    I am just not current on the guidance for that particular 
element that you highlight. I do know that we have guidance in 
the development for our next budget and for the POM out, to 
ensure that we take care of that part of it that has to do with 
reset.
    Mr. Loebsack. Yes, I am concerned, obviously, about some of 
the cuts that the Senate has been talking about--what they have 
approved. And so that is why I am asking that question.
    I have got a number of other questions. In the interest of 
time, I think I am going to cut myself off here just a little 
bit early, which almost never happens in Congress, obviously.
    I think I have about four other questions. And if I may, 
Mr. Chair, I am going to submit those for the record to you. 
And to you, Ms. Farrell, as well, we have at least one for you, 
if that is okay with you, Mr. Chair.
    Mr. Forbes. Without objection, that will be fine, Mr. 
Loebsack.
    Mr. Loebsack. Thank you very much. And I yield back the 
balance of my time.
    Thank you, Mr. Chair.
    Mr. Forbes. Thank you.
    And the gentleman from Mississippi is recognized for 5 
minutes.
    Mr. Palazzo. Thank you, Mr. Chairman.
    And I thank our witnesses for being here today.
    I just have some questions. When I think of DOD civilians, 
think the Department of Defense. And typically I think of the 
military.
    Can you tell me how many of your DOD civilians actually 
have veteran status or have served in the military?
    I know they may not have their 20 years, but----
    Mr. Vollrath. I cannot, but I will be glad to take that, 
because I know we have that information. I just don't know it.
    So if I can take that for the record, I will absolutely 
give you the answer for that.
    [The information referred to can be found in the Appendix 
on page 74.]
    Mr. Vollrath. A large portion--I will just tell you. A 
large portion of our civilian workforce has veteran status.
    And in the hiring process veterans have some preference in 
hiring. And, frankly, we need some of that talent that was 
developed over those many years in the military to move into 
our civilian workforce.
    That is in many respects how we fill that middle 
requirement in our civilian workforce.
    Mr. Palazzo. I agree with you 100 percent. I think veterans 
coming off and the experience that they have gleaned over 
whether it is 10 years, 20 years, or 30 years. Being able to 
come in and sit next to a true civilian who has never worn the 
uniform or been in a combat situation or boot camp-like 
scenario can help.
    He will bring his skillset. He will kind of bridge the gap 
between the civilian and the military.
    And there is definitely a culture that the military and DOD 
should not, you know, kind of mold itself to the civilians. But 
that civilian employee needs to understand the military culture 
because that is what makes our military so great, and has kept 
our country so strong for so long.
    Mr. Vollrath. The Administration--just to follow up on 
that--has a very robust program across all of the Federal 
departments to hire veterans. I sit on that committee. And we 
report out regularly how each one of the various different 
agencies is doing to focus on those veterans.
    Mr. Palazzo. Can DOD civilians unionize?
    Mr. Vollrath. The answer is yes. They may unionize.
    Mr. Palazzo. Just out of curiosity, how many DOD civilians 
have been fired in the past year?
    I am sure you might not have that number in your head, 
but----
    Mr. Vollrath. I don't have a number in my head. I would 
have to--define fired, okay?
    Mr. Palazzo. Terminated, but----
    Mr. Vollrath. Terminated for cause is one way. And I can 
get back to you again--and take that--others, but terminated 
because of a reduction in the last year, meaning a RIF?
    Mr. Palazzo. Not a RIF.
    Mr. Vollrath. All right. I do not know that number, but 
if----
    Mr. Palazzo. Unproductive, insubordinate, you know, typical 
things that will get you----
    Mr. Vollrath. I don't know. Relatively----
    Mr. Palazzo [continuing]. In the military----
    Mr. Vollrath. I understand.
    Mr. Palazzo. Okay.
    Mr. Vollrath. In terms of percentage of the workforce, it 
is going to be relatively small. But with your agreement, I 
will take it for the record, Mr. Chairman, and get back.
    [The information referred to can be found in the Appendix 
on page 75.]
    Mr. Palazzo. What sort of tax breaks would DOD civilians 
get for serving in combat zones?
    I know a lot of them have been serving in Iraq and 
Afghanistan, Djibouti and pretty much everywhere there is 
military personnel.
    Mr. Vollrath. I do not know, other than the standard tax 
breaks that you would get. I am not up on exactly what 
additional tax breaks they get that are unique to that Service 
in the CEW [Civilian Expeditionary Workforce] workforce.
    It is a voluntary workforce but----
    [The information referred to can be found in the Appendix 
on page 75.]
    Mr. Palazzo. It is probably more hazard pay as opposed to a 
tax----
    Mr. Vollrath. Again, I don't know--I don't know----
    Mr. Palazzo [continuing]. It used to be 1 day--if you step, 
1 day, in a combat zone, during the month, for military----
    Mr. Vollrath. For military----
    Mr. Palazzo. A whole month up to a certain cap based on 
rank?
    Mr. Vollrath. Correct. Correct.
    Mr. Palazzo. Okay. Also, I was reading your bio and I 
noticed that you are responsible for all matters related to 
civilian and military personnel, readiness of the force, 
military community, and family policy, and so forth and so on.
    I was just curious. Are military personnel banned from 
attending political events in uniform?
    Mr. Vollrath. Yes.
    Mr. Palazzo. Okay.
    There seems to have been an exception to that policy this 
past couple of weeks where uniformed military personnel were 
allowed to march in a political parade in California.
    Did that decision come from your area, readiness and force 
management?
    Mr. Vollrath. It did not come from my area. But I am not 
sure that we correctly characterize that as a political event.
    I mean, it was a unique event. But I am not sure there was 
a clear, political----
    Mr. Palazzo. There must have been some concern that it was 
political or could be perceived as political, because it was 
very quickly noticed, oh, this is a one-time exception.
    Do you all have any internal discussions on who authorized 
that?
    And do you think it actually went through the proper chain 
of command?
    Because I would think that would be under your area of 
responsibility, and not maybe some public affairs or general 
council?
    Mr. Vollrath. It was made by the right--the people that 
made it had the right authorities to do that. And it is a one-
time exception, clearly, because we do need to assess follow-on 
impacts potentially to that. But it was not ill advised or 
taken lightly. Let us put it that way.
    Mr. Palazzo. Well, I see my time is over.
    Tradition is one thing that has served the military 
extremely well from the days our country was founded. And 
breaking with tradition, I don't think, is a good thing to do 
at this time.
    Thank you for your testimony.
    Mr. Forbes. I thank the gentleman for his questions.
    And, Mr. Vollrath, how can you say that the proper people 
and the proper authorities made the decision when you don't 
know who made the decision?
    Mr. Vollrath. I know who made the decision.
    Mr. Forbes. Can you tell us who made the decision?
    Mr. Vollrath. It was in the public affairs part of the 
Department of Defense.
    Mr. Forbes. But it wasn't with the Joint Chiefs or any of 
the chairmen of the Joint Chiefs, was it?
    Mr. Vollrath. I don't know.
    Mr. Forbes. Then you don't know?
    Mr. Vollrath. I would have to get----
    Mr. Forbes. But they didn't know about it?
    Mr. Vollrath. I do not know that.
    Mr. Forbes. Okay.
    The gentlelady from Hawaii is recognized for 5 minutes.
    Ms. Hanabusa. Thank you. Thank you, Mr. Chairman.
    Both Mr. Vollrath and Ms. Farrell, I have sat in this 
committee, as well as in the major committee, and have asked 
many people, including all the chiefs and the joint chiefs, a 
very simple question, in my mind, which is what is the military 
of the future going to look like?
    And to my surprise, no one knows.
    As a matter of fact, I think General Chiarelli said it best 
when he said, ``All I can tell you is that we have been 100 
percent correct in not being able to predict it at all.''
    I am basically summarizing it.
    And now that is why I come back to what both of you have 
said, Ms. Farrell in her written testimony, you in your 
statement, is you talked about a new defense strategy in terms 
of the civilian workforce. And Ms. Farrell talks about, on page 
eight, mission-critical occupations.
    So my question to both of you is, when you both say that, 
what, Mr. Secretary, is that new defense strategy that you are 
looking to the civilian workforce, our workforce, to get to?
    And, Ms. Farrell, when you talk about your mission-critical 
occupations, what is the definition of mission, and what makes 
it critical?
    So beginning with you, Mr. Secretary.
    Mr. Vollrath. Thank you.
    When I talk about this as a strategy, it is a framework for 
a strategy. As I mentioned before, several years ago--define 
that, maybe, as 5 or 6, cyber would not have been on the table. 
It is now.
    What I am trying to convey is that, in the strategic 
workforce planning, we have now put inside the capability to 
have greater visibility of contracts for services, the civilian 
workforce in the military, side by side. That is a markedly 
different approach than we have historically pursued.
    I do not want to leave you with the impression that, 
because of that, we have this now greatly improved ability to 
look out 8 years and see what that workforce is going to be.
    We do not. But we do, in this process, try to push the 
limits out as far as we can.
    For example, I mentioned cyber. One way is to say, well, we 
will just grow the military and that will take a long time.
    The other is to say can we complement that with the 
civilian workforce?
    The answer, as I gave you before, is yes, we can. We can 
input that talent much faster and at a higher level, in order 
to accomplish the change that is coming.
    Now, we aren't any better because of the processes in 
divining what is going happen 6 years from now. We are paid to 
try to do that.
    We are paid to come up with systems that would assist us in 
doing that. And frankly, as we get better at this, we are going 
to make some guesses, and they may not turn out to be exactly 
right.
    But the good news is we are now in that position to start 
taking that professional look further out, with more 
information on which to make those types of decisions.
    Ms. Hanabusa. Ms. Farrell.
    Ms. Farrell. Yes. It is in the National Defense 
Authorization Act for 2010 that requires DOD to include its 
critical skills for its existing workforce, as well as for the 
future.
    The 2010 was an amendment--actually, they have been 
required since to develop such a plan.
    So DOD chose to use what they call mission-critical 
occupations to identify their critical skills. They came up 
with those occupations through discussions at very senior 
levels, and with the functional community managers. That is our 
understanding.
    The NDAA requires DOD to report their critical skills and 
competencies for the year that they are issuing, as well as 7 
years out. So it is not 10 or 20 or 30 years in the future.
    It is 7 years from the issuance date of the plan. And the 
plan is required through this year. There will be another plan 
that will be, for example, 2012, and then we will project for 7 
years out.
    Ms. Hanabusa. So, Ms. Farrell, would you agree with me that 
basically what you were studying was basically their best guess 
at what we would need?
    Ms. Farrell. They are not our identification. We are----
    Ms. Hanabusa. I understand that.
    What you are doing your analysis on is their best guess, 
DOD's best guess of what we are going to need in terms of 
workforce for the next 7 years.
    Ms. Farrell. We are looking for what decisions they are 
making that are data-driven. There are ways to identify skills 
and competencies to gather data, including what are emerging 
issues and information technology management.
    Ms. Hanabusa. But it is still based on their best guess. If 
they don't know, that is what----
    Ms. Farrell. No, there could be data that they could 
collect from functional community managers, as well as doing 
surveys to identify what those critical skills and competencies 
that are needed today, as well as what is on the horizon.
    Ms. Hanabusa. Mr. Chairman, I will ask to be able to follow 
up in writing. Thank you.
    Mr. Forbes. Let me just, if I can, close a couple of the 
gaps.
    Mr. Vollrath, you mentioned that you wanted to accomplish 
the change that was coming.
    What is that change?
    Mr. Vollrath. I am not sure that I can recall what that was 
about. I want to accomplish the change?
    Mr. Forbes. You said you wanted to prepare in order to 
accomplish the change that is coming, that was I thought you 
said. Maybe I misunderstood you.
    That is okay. Let me move on.
    You also mentioned that the Department would prefer a 
modification to sequestration to more effectively implement the 
negative consequence associated with sequestration.
    Do you recall that?
    Mr. Vollrath. In the context of what the Secretary of 
Defense has been looking for in terms of relief, yes.
    Mr. Forbes. Now, considering the implementation deadline is 
early January, when does the Administration intend on providing 
that legislative proposal?
    Mr. Vollrath. In this case I would defer to Secretary 
Carter and the work that he will do with the committee on the 
first of August.
    Mr. Forbes. Have you seen any such a proposal?
    Mr. Vollrath. I have not.
    Mr. Forbes. What would the negative consequences be 
expected without this legislative proposal?
    Mr. Vollrath. A compressed timeframe to make some very 
significant decisions that affect the lives of the fine men and 
women that defend our Nation.
    Mr. Forbes. Ms. Farrell, based on GAO's previous work, do 
you believe that the Department of Defense has analyzed and 
documented the critical skills and competencies in its 
workforce, civilian, contractor and military to identify their 
requirements and gaps in the existing workforce?
    Ms. Farrell. Well, I have noted earlier that DOD has mixed 
results from their strategic human capital plans. And we are 
currently reviewing their latest that was issued March of this 
year.
    Last time we did the review we noted that they did not meet 
the legislative requirement to assess the appropriate mix of 
military, civilians and contractors.
    They have taken some steps, as you may know, to better 
identify the contractor inventory, for example. They have 
issued guidance to determine the least costly mix of personnel 
needed to meet military requirements.
    But at this time there is not a strategy or an assessment 
of the appropriate mix.
    Mr. Forbes. The report that you are talking about that was 
filed in March, to be released as I understand it in September, 
what timeframe was that for?
    Ms. Farrell. That was their 2010 human capital plan.
    And then it was based looking 7 years out from that date 
that was issued in March of this year.
    Mr. Forbes. So essentially the plan that has been filed, 
which was in March of 2012, was for 2010. And it has still not 
yet been released. It will be released in September.
    Ms. Farrell. It has been released to us. We are currently 
reviewing it.
    You are correct, though. It was issued this year but it is 
actually 2 years old to begin with. And we are looking to see 
if it does take into account things as the Secretary's 
initiatives, which did affect the civilian workforce.
    Mr. Forbes. Is a plan that is 2 years old before it is 
submitted, is that timely enough to be used in a competent 
fashion for planning strategically with our workforce?
    Ms. Farrell. We would hope that DOD would continue to work 
on their workforce planning whether GAO was looking at what 
they are doing or not.
    I know that they are already thinking about the next 
workforce plan that will be due. And we would encourage them to 
move forward and not wait for any legislative requirement.
    Mr. Forbes. Based upon your analysis, do you feel that DOD 
is in a good position to properly prepare for downsizing in the 
workforce now?
    Ms. Farrell. Well, again, I probably sound like a broken 
record, but it is workforce planning, workforce planning. That 
is where we feel that an organization should look to determine 
what their needs are.
    And then if they are in a position, such as what DOD may be 
facing, that that is the starting point.
    We did work back in the mid 1990s looking at organizations 
outside of DOD that were considered to be successful during 
their downsizing periods. Those were, I believe, 17 private 
organizations, about 5 states and about 3 foreign governments.
    And each organization had to tailor its approach for 
downsizing. But each of them had a common theme, and that was 
that workforce planning was essential for their downsizing 
efforts.
    They all felt that without the workforce planning, they 
would have lost more critical people than they did. And it 
would have definitely impacted their ability to meet their 
mission.
    Mr. Forbes. And you are being polite in saying that we need 
to do this and we need to do it better.
    But what we need to determine as this committee is, is DOD 
in a position today, with the workforce planning that they have 
done, to properly do the downsizing it needs for its workforce.
    Ms. Farrell. Yes. Again, I know I sound like a broken 
record, but we still have the impact of across-the-board 
reductions that if an agency does not know what their needs are 
and what the impact is, there could be severe harm.
    But we have not looked, let me be clear, we have not looked 
at the sequestration impact. Our analysis is based on lessons 
learned or observations that we have from the 1990s, and 
organizations that went through the downsizing efforts outside 
of DOD.
    Mr. Forbes. Mr. Vollrath, 10 U.S. Code 129 [Title 10 United 
States Code Section 129] prohibits any constraint or limitation 
in terms of maximum number of employees.
    Based on that, how is DOD able to impose a cap on civilian 
personnel at fiscal year 2010 levels and extend that cap 
through fiscal year 2018?
    Mr. Vollrath. That is a good question. Let me try to put it 
in a context.
    First of all, from my perspective, and I think I have this 
correct, these were set as targets with exceptions. Now, let me 
try to explain this because it needs to be in a context.
    And that goes back to how can you best manage a force. And 
I am back to three pillars of the support of national defense: 
the military, the Government civilians, and the contract-for-
services people.
    In the case of the military, the military workforce is 
defined annually in terms of end-strength. Army, at the end of, 
will have 520,000. The Reserves will have X.
    And so that is a finite number. There is a dollar. There is 
a budget behind that. But it is a finite number.
    On the contract-for-services side, we now have a capability 
to measure the contract-for-services in terms of contract FTEs 
[full-time equivalent] for comparison purposes. With your 
guidance and help, we have instituted that far more robustly 
than we ever have.
    So on the military side we look at end-strength. On the 
contract-for-services side we now are able to account for that. 
It is still dollar-driven.
    And so when we want to have an intelligent discussion about 
the future, we need to include the number of Government 
civilians in that mix.
    When it comes to execution, it clearly, as in the other 
three areas, will be impacted by the budget. But let me give 
you an example in my office.
    As you heard in testimony yesterday from the Secretary of 
Defense and the Veterans Affairs and also from the President, 
we are standing up and implementing a new veterans transition 
program, the new and improved, to try to properly take care of 
our transitioning veterans.
    In my office, we have overall responsibility for that 
program. We sat down some time ago and said what do we think it 
would take to properly manage this program from the defense 
level. And when we----
    Mr. Forbes. That is a difference between saying these are 
what we are projecting and between putting caps on, is it not?
    Mr. Vollrath. I don't think so.
    Because if in my office, for example, we said 
unconstrained, we would like to have 21 people to do this, 
unconstrained. But then we have to bring it back into the 
reality of how many people do we have, and what could we 
possibly afford.
    Mr. Forbes. But----
    Mr. Vollrath. That then becomes a discussion----
    Mr. Forbes. The statute says specifically, the management 
of such personnel in any physical year shall not be subject to 
any constraint or limitation in terms of man-years, end-
strength, full-time equivalent positions or maximum number of 
employees.
    Based on that, how was DOD able to impose a cap on civilian 
personnel at fiscal year 2010 levels? And----
    Mr. Vollrath. I do not believe that we have imposed a cap. 
We have put it out in terms of a target, with exceptions to 
have that intelligent discussion.
    I don't know how else you do that, frankly. If we just give 
a dollar value, I am not sure what that means.
    I have to, in terms of deciding the number of people that 
it takes to prosecute the mission, I need to have a way to look 
at that and some reasonable management effort. We have not told 
the Services that they may not increase their civilian 
workforce.
    As a matter of fact, the exceptions are there. We are 
looking at exceptions--language training, in order to support 
that. That is the most current one that has been working.
    Mr. Forbes. So you feel that when it says that you can't 
impose any constraint, that you feel that you can impose 
whatever constraints you want as long as you have exceptions to 
that.
    Mr. Vollrath. In part I would agree, but I keep coming back 
to we need to have a reasonable basis on which to have the 
discussion.
    Mr. Forbes. I don't think anybody would challenge the fact 
that we need to have reasonable basis to have discussion. I 
think what they would challenge is whether or not we are 
complying with the intent, either the letter or the spirit of 
that law.
    Let me take you back to some of our force structure 
reductions.
    It is my understanding that should DOD undertake a 
reduction in force, that a determination regarding which 
individuals to retain is based on essentially two things.
    You talked about longevity in service. And yet if you are 
looking at longevity in service, we are talking about a 
situation where 90 percent of the senior leadership is going to 
be retirement age in 2015, and about 30 percent of the DOD 
workforce is going to be in retirement age by 2015.
    Then the other criteria you talked about to the gentleman 
from Mississippi was the veterans preferences that you had in 
there.
    If you have those two pincers, basically, that are coming 
into your workforce, how are you going to possibly be analyzing 
and look at skills and capability gaps?
    Mr. Vollrath. As we take a look in this strategic workforce 
planning, one of the critical elements that we look at is the 
age of the force, the retirement eligibility of the force, and 
also the ability to hire. And so when we do that strategic 
planning, and we look for those skills and gaps that have been 
discussed, those are the types of things that we look at.
    Mr. Forbes. Okay, now, let me just ask you this.
    Have you done that strategic planning now to look at those 
skills and capabilities, and what we need projecting out in the 
future?
    Mr. Vollrath. We are in the process of doing that.
    Mr. Forbes. When did you start?
    Mr. Vollrath. I would say we started in earnest in 2011 
with creating this ability to get the visibility to do that.
    Mr. Forbes. But right now, we don't have any analysis to 
say what those critical skills and capabilities are.
    Is that true?
    Mr. Vollrath. No, that is not correct. We have started 
that. We have done it for at least 22 now.
    What we are doing now is driving it further and further 
down the workforce and broader and broader now.
    Mr. Forbes. Okay.
    Ms. Farrell.
    Ms. Farrell. It is true that DOD has identified their 
critical skills for the existing workforce.
    The area that we have been trying to steer them toward is 
the gap analysis that we talked about earlier. That once you 
determine what your mission-critical occupations are, as DOD 
refers to them, their critical skills, then the next step is to 
measure those against the existing workforce in order to 
determine where your gaps are in some cases.
    And it always has to be tailored to what is going on in 
that particular field. In some fields, you have to consider how 
long it takes to train someone up. And in that case, retirement 
eligibility may become more of a factor in your strategy to 
fill those positions.
    In other cases, you may look at an emerging field and see 
that it is just going up and down each year and it is not very 
steady. In those cases, that is when you may want to develop a 
strategy that may rely more upon contractors if it is not for a 
position that is inherently governmental.
    But we would like to see more gap analyses.
    DOD did have a plan to have gap analyses completed for 
their 22 mission-critical occupations by 2015. We would 
encourage them to expedite those analyses.
    Mr. Forbes. So Mr. Vollrath, right now we have not done 
that gap analysis.
    Is that a fair conclusion?
    Mr. Vollrath. We have not completed it. We have started 
that process.
    Mr. Forbes. Well, if you have started the process, the 
process doesn't do you any good until you have completed it, 
does it?
    Mr. Vollrath. I am not sure I would agree with that. As we 
will learn as we go along. And we will have--we are doing it--
--
    Mr. Forbes. Can you give to this committee today anything 
that we can look at to see what those gaps are?
    Mr. Vollrath. I believe we can give you in some instances, 
yes, because we have started that. We have not completed it.
    Mr. Forbes. Well, will you supply to us whatever that you 
have in terms of that gap analysis now?
    Mr. Vollrath. Certainly.
    [The information referred to can be found in the Appendix 
on page 73.]
    Mr. Forbes. And have you looked at how sequestration is 
going to impact that gap analysis?
    Mr. Vollrath. Have not.
    Mr. Forbes. If it has taken you a year or more to just get 
to where you are now, why are we waiting when we only have 5 
months left before sequestration before we look at these 
impacts?
    Mr. Vollrath. I will have to defer to Secretary Carter 
and----
    Mr. Forbes. Do you think that is reasonable to wait?
    Mr. Vollrath. At this point, I don't know. I know what the 
rules are. I know what potential implications could be.
    Mr. Forbes. But you don't know whether it is reasonable or 
not for the Department of Defense 5 months out from a $\1/2\ 
trillion of cuts across the board to not be doing any planning 
on what kind of gap analysis we would have should sequestration 
hit?
    Mr. Vollrath. Again, I will defer to Secretary Carter and 
testimony on the first of August.
    Mr. Forbes. But you don't have any opinion on that?
    Mr. Vollrath. I don't have any opinion other than that 
which I expressed in terms of how the mechanics would have to 
work.
    Mr. Forbes. Madeleine.
    Ms. Bordallo. Thank you, Mr. Chairman.
    I have just a couple of questions here.
    First, to Mr. Vollrath.
    How does the strategic workforce plan inform the workforce 
on budget decisions in DOD, if at all?
    Mr. Vollrath. It does inform the leadership on the budget. 
Again, in that analysis, supported by the strategic workforce 
plan, we have in there a look at the military, a look at the 
Government civilian. And when we also have on top of that what 
is called the ICS [Inventory of Contract Services] to look at 
the contracted services.
    That is used every cycle to try to get the best mix 
possible for the next budget submit and for, I will use the 
term normalization or rationalization of a look 5 years out as 
to what we believe we need to ask for in the 5-year strategic 
look.
    And so we are using that product and that process today.
    Ms. Bordallo. So in your opinion, then, the workforce would 
be adequately informed.
    Mr. Vollrath. The need for a workforce and what that 
workforce is, I believe we have good information to make 
reasoned decisions. We do not normally use that to, quote--
``inform the workforce,'' meaning public announcements, et 
cetera, because that is not what it is designed for, if I am 
getting your question proper.
    Ms. Bordallo. Right. Okay.
    My second question is, how does the DOD synchronize, 
separate, and discrete civilian military and contractor funding 
decisions and ensure that proposed savings from reducing one 
category of manpower are not offset by increases in other 
categories of manpower?
    Mr. Vollrath. A very good question.
    The first answer to that is we have drawn a line and said 
you may not outsource those functions which are inherently 
governmental. We also have guidance in law that says we may not 
increase the dollars spent on contracts for services above the 
fiscal year 2010 level, as indicated in the President's budget 
submit for fiscal year 2010.
    And so there is a relatively bright line for that right 
now.
    In terms of Government workers and military, what we have 
said in terms of planning guidance, as I mentioned earlier, is 
be careful, commanders, as you build your workforce, to make 
sure that you don't create the situation where you are forced 
into the position of having to use borrowed military manpower.
    If you have a legitimate reason-need, for which you have no 
other choice but Government civilians, then that is the answer. 
And you should ask appropriately. And if exceptions are 
required, then you have that responsibility to ask for those 
exceptions.
    We need to make the right decisions for the people, and in 
the context of national defense and the budgets that drive it.
    Ms. Bordallo. Well, thank you. You have made that very 
clear.
    Ms. Farrell, what observations can you offer regarding 
DOD's efforts to plan for its civilian workforce requirements?
    And in your estimation, is the implementation of total 
force management helping to identify the core requirements by 
workforce type, civilian, military and personnel?
    And what improvements could be made in the process to 
determine requirements and critical skills across the 
workforce?
    Ms. Farrell. I would like to talk about the civilian 
workforce plan to begin with.
    We bounced it around quite a bit. And I think we all agree 
that it is key.
    But the overall civilian strategic human capital plan that 
we looked at in 2010 was far from being mature enough to make 
informed decisions regarding the mix of personnel or the cost 
or the trade-offs that we are discussing today.
    There has been an update to that plan. And we are looking 
at that. But I think it is probably safe to assume that DOD has 
not progressed at the rate we all would like to see in terms of 
the competency-based gap analysis.
    I keep coming back to that. Gap analysis is very key to 
determine what you need today and what you need in the future. 
And that is what we would like to see the decisions based on.
    Again, the plan is based on leading principles that OPM and 
GAO identified that were key to developing human capital 
management.
    DOD had been reluctant to develop such a plan in 2000, 
2002, 2004. And then in 2006 Congress stepped in and mandated.
    These are the elements from leading practices. This is what 
we would like to see for your overall strategic human capital 
plan.
    And then as well, the single leader workforce, which is the 
senior executive service, and those that are at the top 
leadership in the intelligence community, and then there are 
very specific requirements again, that are based on leading 
practices of how to develop such a plan for the acquisition 
workforce.
    The plan includes appendices that address different 
subcomponents, information management technology, medical. And 
these plans, subcomponents, are in different levels of 
maturity.
    But again the overall plan that we have reviewed is not 
mature enough to make informed decisions.
    Ms. Bordallo. I just want a direct answer on this one.
    In your opinion then is DOD driving manpower decisions by 
resources or by requirements in critical skills required across 
its workforce?
    Ms. Farrell. Well again, we refer to workforce planning as 
a way to determine what the size of the workforce should be, 
and what the makeup of the workforce should be. And there are 
principles that can help you obtain the data and do the 
analysis to come up with that.
    Now at a certain point, management may have to come in and 
make tradeoffs. But we would encourage DOD to have data-driven 
analysis in their human capital plan to make such decisions.
    Ms. Bordallo. All right.
    Thank you, Mr. Chairman. I have no further questions.
    Mr. Forbes. I would like to thank the members and our 
witnesses. And members certainly can submit any questions we 
would like.
    Gentlemen,--Mr. Vollrath, thank you for being here.
    Ms. Farrell, thank you.
    Both of you for your service to our country and for your 
willingness to be here and your expertise, and I think you can 
see whether we are Republicans or Democrats here, we are very 
concerned about this issue.
    We are united and being concerned about the fact that, Mr. 
Vollrath, as you come in here with all of your expertise that 
we appreciate and respect so much as the Principal Deputy 
Assistant Secretary of Defense for Readiness and Force 
Management for the United States Department of Defense, that 
today it is our understanding in this committee that we really 
do not have a gap analysis today to show us the gaps that we 
have in our critical skills and our competencies today.
    And that is before sequestration hits, which is just 5 
months out from today. And at that particular point in time we 
don't even have an opinion of whether or not we think it is 
reasonable or unreasonable that we should be preparing for 
that.
    And, you know, that is a message that I just hope you will 
take back to your friends at the Pentagon. And just say, you 
know, again, we are united as this committee in saying, as Ms. 
Farrell said, that we think it is absolutely crucial that we do 
a workforce analysis that we have some planning instead of just 
pulling these numbers out of the air and moving forward with 
those.
    And so for all of your help and expertise, all the members 
who were here today, and for my friend from Guam, we want to 
thank you for being here.
    And with that, we are adjourned.
    [Whereupon, at 2:35 p.m., the subcommittee was adjourned.]



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                            A P P E N D I X

                             July 26, 2012

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             July 26, 2012

=======================================================================

      
                   Statement of Hon. J. Randy Forbes

               Chairman, House Subcommittee on Readiness

                               Hearing on

                Civilian Workforce Requirements--Now and

                Across the Future Years Defense Program

                             July 26, 2012

    I want to welcome all of our members and our distinguished 
witnesses to today's hearing that will focus on ``Civilian 
Workforce Requirements--Now and Across the Future Years Defense 
Program.''
    The civilian workforce provides an invaluable contribution 
to the DOD mission both at home and abroad, frequently 
deploying to combat zones alongside military and contractor 
personnel. I welcome this discussion today and the opportunity 
to better understand how the Department of Defense is 
forecasting its future workforce requirements and balancing the 
critical skills required across all components of its 
workforce.
    Additionally, I want to understand the impact of directed 
reductions. Right now, there are two possible reductions that 
could negatively impact the civilian workforce in the short 
term--sequestration, and the proposed Senate NDAA language. 
Let's start with the Senate committee-passed language that 
directs civilian and service contractor workforce reductions 
commensurate with military end strength through FY17 which 
would be expected to be in excess of 5%. Based on the numbers 
provided in FY13, simple math would suggest that more than 
39,000 civilian Full Time Equivalents would be eliminated.
    Next, we have sequestration. Nobody wants it to happen, 
most especially not me. We have been talking about it for 
awhile, but, it appears there is little to no planning 
associated with this legislative mandate. Assuming an exemption 
for military personnel, we calculate there would be an 
approximate 11.3% reduction across all other accounts. Again, 
simple math would suggest that an additional 89,000 civilians 
would be eliminated. When you add the two figures, we are 
talking about more than 128,000 people. And, informally, some 
in the Pentagon have indicated that sequestration alone could 
be as high as a quarter of the total civilian workforce, or 
almost 200,000 people. The result of any such cuts, 
particularly without analytical underpinning, would be long-
term, irreversible damage to the workforce. And, let us not 
forget the costs that would have to be calculated to implement, 
and the sunk costs from the first quarter of the year.
    Fundamentally, I have opposed any effort without the 
necessary details that support the proposal. In the case of the 
Senate reductions and the mindless implementation of 
sequestration, both appear to lack any basis in fact or reason. 
That is why I believe the more prudent approach to managing the 
civilian and contractor workforce is to assess the requirement 
and then to shape the workforce to meet these decision. I look 
forward to discussing all of these issues later in this 
hearing.
    So, where does that leave us? Well, according to the 
statutory requirement in 10 U.S.C 1597, any involuntary 
Reductions In Force require notification--both to Congress and 
the employee. So, if sequestration were to take effect in 
January, DOD would be required to notify us at the end of 
September.
    In light of potential reductions, what genuinely concerns 
me is the Department of Defense's planning for its future 
workforce requirements, and negotiating the appropriate balance 
among civilian, contractor and military personnel. Since 2001, 
GAO has listed Federal human capital management as a 
Government-wide, high-risk area because of a need to address 
current and emerging critical skill gaps that are undermining 
agencies' abilities to meet their vital missions. And, we know 
that approximately 30% of the DOD workforce and 90% of its 
senior leaders are eligible for retirement as early as 2015.
    I look forward to hearing about what analysis DOD has 
undertaken to identify and document critical skills and 
competencies required in each component of the workforce, 
particularly should directed reductions occur. And, what 
recommendations GAO has for that DOD process.
    We were also recently notified that the Department just 
extended its civilian personnel cap through Fiscal Year 2018. 
Does that presume that budget is driving DOD workforce 
requirements, or vice versa? And, I look forward to 
clarification of how this cap is not in direct contradiction to 
the statutory requirement set forth in 10 U.S.C. 129 which 
clearly precludes any ``constraint or limitation in terms of . 
. . maximum number of employees.''
    We in Congress, and namely this Subcommittee, have 
exercised great oversight of civilian workforce issues to 
ensure DOD best plans for its requirements. Total Force 
Management in particular directs a holistic perspective of 
workforce requirements across civilian, military, and 
contractor personnel. However, I am not convinced that we even 
have perfect knowledge into our civilian requirements.
    I look forward to our discussions today and delving into 
these topics further. We need to exercise appropriate oversight 
of the process to ensure that sequestration or other reductions 
do not blindside our workforce. They deserve to know what may 
lie ahead and it is our job to ensure the public is informed.
    Joining us today to discuss the DOD's civilian workforce 
are two distinguished witnesses:
         LMr. Frederick Vollrath, Principal Deputy 
        Assistant Secretary of Defense for Readiness and Force 
        Management at the Department of Defense; and
         LMs. Brenda Farrell, Director of Defense 
        Capabilities and Management at the U.S. Government 
        Accountability Office.
    We thank you both for being here. We are looking forward to 
your testimony.
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=======================================================================


              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             July 26, 2012

=======================================================================

      
              RESPONSE TO QUESTION SUBMITTED BY MR. FORBES

    Mr. Vollrath. The Department is committed to improving its 
strategic workforce planning capabilities in order to fully meet the 
requirements of section 115b of title 10, United States Code by fiscal 
year (FY) 2015. A key challenge is normalizing data and requirements 
across the military and civilian workforces, as well as contracted 
support, in order to accurately assess and project future needs. The 
Department has made considerable progress in developing and 
implementing practical tools and strategies to make data-driven 
decisions in managing mission-critical skills.
    The current FY10-18 DOD Strategic Workforce Plan (SWP) was 
delivered to Congress in March 2012. The plan provides details on the 
steps already taken and the way ahead to meet the 2015 goal (see 
summary table below). Following are some specific examples of steps 
taken since FY10 to improve the SWP and institutionalize use of the 
plan for workforce shaping decisions.
    The Department expanded its functional communities from 12 to 23 to 
cover all major occupations in the workforce versus only the Mission 
Critical Occupations (MCOs) covered in previous plans.
    DOD led a Federal-wide initiative to develop new government-wide 
criteria for determining MCOs based on mission goals and priorities, 
and determining high-risk skills based on staffing and competency gaps. 
As a result, 33 DOD MCOs, including three high-risk MCOs, were 
identified in March 2012 based on the new criteria.
    In October 2011, the Department issued guidance on reframing the 
DOD SWP and issued additional guidance in November 2011 on the 
enterprise competency management framework.
    A new governance structure for strategic human capital management 
was also implemented providing integrated decisions between functional 
community and component leaders in the expanded functional community 
construct.
    The Department implemented standard competency taxonomy for 
identifying and assessing occupational competencies across the 
workforce. Competency models for all DOD MCOs will be in place by the 
end of 2012, and a DOD-wide tool for assessing employee competency gaps 
is planned for deployment in 2013.
    Additional initiatives are underway to improve total force data and 
requirements needed for a comprehensive approach to assess total force 
mix, implement more robust enterprise planning tools for use across the 
Department, and strengthen and mature workforce planning capability and 
results. [See page 28.]
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              RESPONSE TO QUESTION SUBMITTED BY MR. RUNYAN
    Mr. Vollrath. The Office of Personnel Management (OPM) has 
authority to redefine Federal Wage System (FWS) wage areas and to 
assign geographic designations to a specific wage area. The Federal 
Prevailing Rate Advisory Committee (FPRAC), comprised of labor and 
management members, makes recommendations for wage area changes to the 
Director of OPM. The FPRAC majority recently made a recommendation to 
the Director of OPM to realign many wage areas. [See page 17.]
            RESPONSES TO QUESTIONS SUBMITTED BY MR. PALAZZO
    Mr. Vollrath. As of June 30, 2012, the number of DOD civilians with 
prior military experience or veteran status is 336,229, representing 
42.99% of the total DOD civilian workforce. [See page 20.]
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    Mr. Vollrath. In Fiscal Year (FY) 2012, as of June 30, the 
Department of Defense has removed or terminated 1,936 civilian 
employees out of a total workforce of 782,029 civilian employees due to 
unacceptable or unsatisfactory performance, misconduct, or delinquency. 
This figure represents 0.24% of the total workforce (less than 1%). In 
FY 2011, the Department removed or terminated 2,587 civilian employees 
for similar reasons. [See page 21.]
    Mr. Vollrath. Federal civilian employees do not receive combat zone 
income tax exclusion. Section 112 of title 26, United States Code 
provides tax benefits for military members serving in combat zones, but 
there is currently no comparable provision for Federal civilians. [See 
page 21.]
?

      
=======================================================================


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             July 26, 2012

=======================================================================

      
                   QUESTIONS SUBMITTED BY MR. FORBES

    Mr. Forbes. How is DOD managing its future force structure 
requirements in light of the reductions in military personnel as you 
draw down in Iraq and Afghanistan? And, specifically, is the DOD 
expecting to reduce its civilian and contractor workforce commensurate 
with the military personnel reductions? If not, why not?
    Mr. Vollrath. Currently proposed reductions in military end-
strength are linked to declines in our current overseas commitments; 
expiration of the temporary end-strength increases associated with 
Operations Iraqi and Enduring Freedom; revised strategy, posture and 
operational planning; and changes to our force structure. The military 
reductions currently planned for ensure that the Active Duty end-
strength of the Department is nearly the same as it was prior to 
September 11, 2001. Under the current budget plan, ground force 
capabilities within the Army and Marine Corps will remain at slightly 
above 2011 levels, while Navy and Air Force levels decrease. These 
decreases are attributable to reductions in ship and aircraft 
inventories and modernization of the respective fleets.
    The Department's FY 2013 budget reflects a balanced workforce that 
reflects our best judgment, representing a carefully coordinated 
approach based on the Department's strategy and policy that balances 
operational needs and fiscal reality without placing national security 
and our overall defense posture at risk.
    The Department's sourcing of functions and work among military, 
civilian, and contracted services must be consistent with workload 
requirements, funding availability, readiness and management needs, as 
well as applicable laws and guidance. Even during this period of 
constrained defense budgets, we must ensure that we have a sufficient 
number of Federal civilian personnel to meet the support needs of our 
military forces. We must also be sure that military or Federal 
civilians are performing all inherently governmental jobs, and that 
sufficient levels of civilians are available to perform critical 
oversight, management, and readiness functions of the Department.
    The Department also recognizes that we operate in a dynamic and 
changing environment and must retain the flexibility to adapt our 
workforces accordingly.
    Mr. Forbes. What analysis has DOD undertaken to identify workforce 
levels based on requirements? Or, are the number of personnel driven by 
fiscal constraints and budgetary imperatives?
    Mr. Vollrath. The Fiscal Year (FY) 2013 President's Budget request 
reflects an objective and reasonable approach to all components of the 
Total Force: military, Government civilians, and contracted services. 
During this period of constrained defense budgets, the Department must 
ensure that a sufficient number of Federal civilian personnel are 
available to meet the support needs of our military forces and deliver 
operational readiness. The Department must also prioritize and reduce 
less critical missions. In an effort to significantly reduce excess 
overhead costs the Department carried out a number of initiatives 
beginning in FY 2011 including directing Components to maintain 
civilian personnel, with certain exemptions and exceptions, at FY 2010 
levels. Components were directed to make trade-offs and separate core 
mission workload and requirements from less compelling support needs 
based on organizational assessments and mission/function 
prioritization. This reflects a commitment to challenge workload 
requirements and size our workforce to meet our most pressing and 
critical priorities. Exceptions to this have been granted on a case by 
case basis, where justified by workload or other specific rationales.
    Mr. Forbes. What analyses has the DOD completed in order to 
determine the core or critical functions that would be most 
appropriately performed by each category--civilian, military, and 
contractor workforce? And, what analyses has the DOD done to ensure 
that it has the right mix of people with the right skills in order to 
perform these critical functions?
    Mr. Vollrath. The many Components of the Department execute a wide-
range of missions and functions, and as such, have varying skill and 
capability requirements. These requirements are mission and workload 
driven, and are affected by operating environment, risk levels, local 
labor market conditions, and other factors. The Department's 
``sourcing'' of functions and work between military and civilians, or 
through contracted services, must be consistent with workload 
requirements, readiness, and management needs, as well as applicable 
laws and statute. There are many tools and processes available to help 
inform such decisions. These include, but are not limited to, the 
Strategic Workforce Planning construct of functional communities and 
mission-critical occupations; the inherently governmental and 
commercial activities inventory; the inventory of contracts for 
services; and force and infrastructure classifications.
    Accordingly, the Department remains committed to ensuring and 
delivering a balanced, flexible, responsive workforce with the right 
skills and competencies that: is the appropriate mix of labor; 
mitigates risk, ensures continuity of operations, and promotes an 
organic knowledge base; delivers core and critical functions necessary 
to maintain operational readiness; and ensures mission requirements are 
met most cost effectively and efficiently. DOD Components request 
funding and manpower resources based on workload requirements, 
including the most critical functions necessary to meet their 
respective missions.
    Mr. Forbes. Why has the DOD extended its civilian workforce cap 
through 2018, and what savings do you expect to garner as a result of 
which? And, how does DOD reconcile the workforce cap with current law 
and statute in 10 U.S.C. 129 which precludes such limitations by number 
of employees?
    Mr. Vollrath. The Department does not have a cap on its civilian 
workforce. As part of its budget building process for the past few 
years, the Department directed that components maintain fiscal year 
2010 civilian levels as a departure point for prioritizing and shaping 
its workforce, and in an effort to ensure resources are applied to our 
most compelling requirements. DOD organizations may exceed their fiscal 
year 2010 civilian workforce levels as needed to meet mission and 
workload requirements, consistent with section 129 of title 10, United 
States Code. Where necessitated by mission and workload, exceptions to 
fiscal year 2010 civilian levels may be granted. Those decisions will 
be reflected in the FY 2014 President's Budget.
    Mr. Forbes. How do you expect that sequestration will impact the 
civilian workforce, and when would DOD be required to notify personnel 
of an impending Reduction in Force?
    Mr. Vollrath. We believe that civilian RIFs would result in added 
costs, or at most only small savings in FY13, so RIFs are not a viable 
tool for accommodating that FY13 sequester. To accommodate sequester in 
FY13, we would need to focus more on eliminating temp hires, hiring 
freezes, and perhaps unpaid furloughs. All of these would harm 
readiness and our ability to support military operations.
    RIFs also do long term damage in the workforce because they are 
based primarily on length of service as opposed to maintaining a 
workforce that is responsive to mission needs. RIFs also take time. 
Involuntary separations conducted under Reduction in Force rules 
require a 45-day congressional notification followed by a 60-day 
notification to employees. This can further be complicated by the need 
to bargain with individual unions. For all these reasons, RIFs are not 
a viable tool to accommodate sequester.
    Mr. Forbes. In light of the fact that 30% of the civilian workforce 
is eligible to retire in 2015, and 90% of your senior management, how 
is the DOD managing its workforce and developing critical skills to 
ensure a viable workforce in the future with the requisite skills?
    Mr. Vollrath. At the enterprise level, the Department manages its 
workforce through a functional community construct. The Department 
forecasts retirements and other losses through the DOD Strategic 
Workforce Plan (SWP).
    DOD and its Components work together to track and manage skill gaps 
and to develop and implement recruitment, retention, and development 
strategies to close projected skill gaps due to retirement and other 
losses.
    Current DOD workforce data shows that 20.6% of the overall 
workforce (GS 1-15 and equivalent) and 51.3% of the senior leader 
workforce are eligible to retire by the start of 2015. DOD monitors and 
tracks retirement eligibility in mission-critical occupations (MCOs) on 
an ongoing basis as part of its SWP process. The goal is to ensure 
strategies are in place to manage knowledge transfer and succession for 
critical skills and competencies needed.
    Mr. Forbes. How does the Strategic Workforce Plan inform workforce 
and resource allocation decisions in DOD, if at all?
    Mr. Vollrath. The DOD Strategic Workforce Plan (SWP) serves as a 
guide for managing civilian positions across the Department within 
functional communities and components. The SWP is informed by validated 
missions. DOD Components request funding and civilian full-time 
equivalents based on validated workload. By focusing on specific 
strategies for closing mission-critical and high-risk skills gaps, the 
SWP guides leaders in making workforce decisions to meet changing 
mission strategies, environmental and labor market conditions, and 
budget constraints. Allocated resources then are aligned by DOD 
Components to their most critical missions/priorities, informed by 
workforce gaps identified in the DOD-wide SWP.
    Mr. Forbes. How does the DOD synchronize separate and discrete 
civilian, military and contractor funding decisions and ensure that 
proposed savings from reducing one category of manpower are not offset 
by increases in other categories of manpower?
    Mr. Vollrath. Departmental guidance on manpower management is 
intended to ensure that Components align the best manpower mix to 
missions, tasks, and functions and requires associated risk mitigation 
and consideration of costs. Components prioritize their manpower 
requirements/funding requests in developing their annual program and 
budget submissions and may make adjustments within the Total Force mix. 
Their priorities are a reflection of their requirements, which are 
driven in part by the National Military Strategy, the Secretary's 
Defense Planning Guidance, Quadrennial Defense Reviews, and Combatant 
Command operational planning documents. Once requirements are submitted 
as part of initial budget submissions, a corporate review is conducted 
to assess and prioritize requirements in a holistic manner. Where 
necessary, resource and manpower trade-offs are identified and 
recommended courses of action are presented to the Secretary of Defense 
for final decision. Adjustments to manpower requirements, and their 
mix, can be a result of changes in force structure, mission 
prioritization, and workload.
    Mr. Forbes. What steps is the DOD taking to improve the visibility 
of contracted services to ensure that such services get the same 
scrutiny as civilian and military workforce end strengths?
    Mr. Vollrath. In November 2011, the Department submitted a plan to 
the Congressional defense committees delineating both short- and long-
term actions to fully implement the requirements of section 2330a of 
title 10, United States Code. As a result of this plan, and subsequent 
guidance issued in December, the Department will have increased 
visibility and accountability into contracted services. Specifically, 
improvements currently underway will enable the Department to more 
accurately identify contracted level of effort based on direct labor 
hours and associated data collected from private sector providers. 
Additionally, DOD Component heads must now certify, in writing, that 
they have completed comprehensive reviews of their contracted services 
to ensure appropriate utilization, cost effectiveness, and alignment to 
mission need and priority. Along with restrictions on contract spending 
included in the Fiscal Year 2012 National Defense Authorization Act, 
these reviews will help inform subsequent budget requests, and ensure 
that requests for contracted services receive scrutiny similar to that 
afforded civilian personnel levels and military end-strength.
    Mr. Forbes. What would be the impact of the SASC NDAA reductions of 
civilian and contractor workforce by 5% over the next 5 years? And, has 
the DOD assessed the critical skills it needs to retain in each 
workforce? If so, what are some examples?
    Mr. Vollrath. Given the planned decreases to force structure, the 
streamlined new strategic direction of the Department, and continued 
fiscal pressures, the Department continues to evaluate the size of our 
Total Force, including our civilian and contracted services workforces. 
Any changes must be done in a holistic, analytically based, and 
responsible manner that is consistent with the Department's 
responsibilities under sections 129 and 129a of title 10, United States 
Code.
    The Department's civilian and contracted support workforces perform 
key enabling functions for the operating forces, such as critical 
training, equipment modernization and reset, medical care, family 
support, and base operating and infrastructure services--all vital 
services that support our men and women in uniform. Within these 
functional communities, the Department has identified 33 mission-
critical occupations (MCOs). The DOD's Strategic Workforce Plan 
forecasts future MCO requirements and provides recruitment, retention, 
and development strategies to close workforce gaps ensuring that 
critical skills are maintained in each.
    Furthermore, the Department's sourcing of functions and work among 
military, civilian, and contracted services must be consistent with 
workload requirements, funding availability, readiness and management 
needs, as well as applicable laws and guidance. Even during this period 
of constrained defense budgets, we must ensure that we have a 
sufficient number of Federal civilian personnel to meet the support 
needs of our military forces. We must also be sure that military or 
Federal civilians are performing all inherently governmental jobs, and 
that sufficient levels of civilians are available to perform critical 
oversight, management, and readiness functions of the Department.

    Mr. Forbes. In the past, GAO has stated that across-the-board cuts 
could have an adverse effect on essential programs if the DOD does not 
take a strategic view of ensuring that those employees with the 
critical skills needed to perform the DOD's critical functions are not 
arbitrarily cut. What recommendations would you offer based on previous 
GAO analysis for how the DOD could best manage that process?
    Ms. Farrell. While we have not evaluated the potential impact of 
across-the-board cuts on the Department of Defense's (DOD) current 
workforce, since 2008 we have reviewed DOD's Strategic Human Capital 
Workforce Plans and identified opportunities for improvement. \1\ Our 
reviews of those plans have found that DOD addressed the requirement to 
assess its critical skills. Specifically, the overall civilian 
workforce plan identified 22 mission-critical occupations, which, 
according to DOD, represent the Department's assessment of critical 
skills. However, we also found that DOD's plan lacked such key elements 
as competency gap analysis and monitoring of progress. Our prior work 
has identified competency gap analyses and monitoring progress as two 
key elements in the strategic workforce planning process. Specifically, 
competency gap analyses enable an agency to develop specific strategies 
to address workforce needs and monitoring progress demonstrates the 
contribution of workforce planning to the achievement of program goals. 
As we have reported, without a competency gap analysis, DOD will 
continue to rely on incomplete information concerning the size, 
composition, and needs of its civilian workforce. Inclusion of these 
elements in an agency's strategic workforce planning efforts can help 
the agency design and fund the best strategies to fill their talent 
needs through recruiting and hiring and make appropriate investments to 
develop and retain the best possible workforce. \2\
---------------------------------------------------------------------------
    \1\ GAO, Human Capital: Further Actions Needed to Enhance DOD's 
Civilian Strategic Workforce Plan, GAO-10-814R (Washington, D.C.: Sept. 
27, 2010); Human Capital: Opportunities Exist to Build on Recent 
Progress to Strengthen DOD's Civilian Human Capital Strategic Plan, 
GAO-09-235 (Washington, D.C.: Feb. 10, 2009); The Department of 
Defense's Civilian Human Capital Strategic Plan Does Not Meet Most 
Statutory Requirements, GAO-08-439R (Washington, D.C.: Feb. 6, 2008).
    \2\ GAO, DOD Civilian Workforce: Observations on DOD's Efforts to 
Plan for Civilian Workforce Requirements, GAO-12-962T (Washington, D.C: 
July 26, 2012).
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    Mr. Forbes. What observations can you offer regarding DOD's efforts 
to plan for its civilian workforce requirements? In your estimation, is 
the implementation of Total Force Management helping to identify the 
core requirements by workforce type--civilian, military and personnel? 
And, what improvements could be made in the process to determine 
requirements and critical skills across the workforce?
    Ms. Farrell. We have reviewed DOD's mandated Strategic Human 
Capital Workforce Plans since 2008, and found that DOD's earlier 
efforts did not meet many of the mandated requirements. \3\ In our 
assessment of DOD's original plan, which was submitted to Congress on 
November 6, 2007, we found that it partially addressed two of the eight 
statutory requirements. \4\ For example, while DOD's plan listed 
current critical skills that DOD called enterprisewide mission-critical 
occupations, \5\ it lacked a ``gap analysis''--an assessment of the 
difference between the existing and future critical skills and 
competencies of the civilian workforce. We recommended that DOD provide 
Congress a plan that addressed all of the legislative requirements. DOD 
disagreed, noting that its response to the congressional reporting 
requirements reflected a centralized enterprisewide strategic 
perspective--as opposed to providing the information specified by law 
such as recruiting and retention goals. We noted in our 2009 review of 
DOD's update to the plan that the Department had made progress in 
implementing the eight statutory requirements in the National Defense 
Authorization Act for Fiscal Year 2006 when compared with its first 
plan; however, the 2008 update only partially addressed each of the 
eight requirements. For example, the update still did not include an 
assessment of its future enterprisewide mission-critical occupations 
that cover a 10-year period, as was then required by law. The statutory 
requirements governing DOD's strategic human capital plans \6\ have 
been amended several times in the intervening period, and we have 
continued to closely monitor DOD's efforts to address the statutory 
requirements. In our September 2010 review of DOD's 2009 update to its 
human capital strategic plan we found that, although DOD had addressed 
additional legislative requirements, several key elements continued to 
be missing from the process--including such elements as competency gap 
analyses and monitoring of progress. Regarding total force management, 
our September 2010 review also found that the Department had issued a 
directive stating that missions should be accomplished using the least 
costly mix of personnel (military, civilian, and contractors) 
consistent with military requirements and other needs. However, as our 
report noted, the Department's workforce plan did not provide an 
assessment of the appropriate mix of military, civilian, and contractor 
personnel capabilities.
---------------------------------------------------------------------------
    \3\ DOD is required by law to develop periodic strategic human 
capital plans containing certain specific elements, which have changed 
over time. The current plan requirement is codified at 10 U.S.C. 
Sec. 115b.
    \4\ GAO-08-439R.
    \5\ According to DOD officials, enterprisewide mission-critical 
occupations are used in DOD's updated strategic plan to refer to both 
critical skills and competencies.
    \6\ GAO-12-962T and GAO-10-814R.
---------------------------------------------------------------------------
    Mr. Forbes. In your opinion, is DOD driving manpower decisions by 
resources or by requirements and critical skills required across its 
workforce?
    Ms. Farrell. Both requirements and resources help to shape DOD's 
workforce decisions. We have previously reported on DOD's efforts to 
strategically manage its civilian workforce, but have noted that 
opportunities exist for further improvement. For instance, we reported 
in 2010 \7\ that DOD's 2009 strategic workforce plan assessed the 
Department's critical skills and identified 22 mission-critical 
occupations, such as acquisition and financial management. However, 
DOD's plan only discussed competency gap analyses for 3 of its 22 
mission-critical occupations. We have reported that competency gap 
analyses are key to enabling an agency to develop specific strategies 
to address workforce needs. For example, we found that DOD had not 
conducted a competency gap analysis for its financial management 
workforce, and we remain concerned that DOD lacks critical information 
it needs to effectively plan for its workforce requirements. We are 
currently reviewing DOD's latest strategic workforce plan, which was 
released in March 2012. The results of our review are expected to be 
released in September 2012. \8\
---------------------------------------------------------------------------
    \7\ GAO-10-814R.
    \8\ GAO-12-962T.
---------------------------------------------------------------------------
    Mr. Forbes. Based on previous GAO analysis, what recommendations 
would you offer for the best practices to manage civilian workforce 
downsizing?
    Ms. Farrell. Our prior work \9\ has found that workforce planning 
is essential in identifying positions to be eliminated and pinpointing 
specific employees for potential separation. We have reported that in 
organizations where planning did not occur or was not effectively 
implemented, difficulties arose in the downsizing. For example, a lack 
of effective planning for skills retention can lead to a loss of 
critical staff, and an organization that simply reduces the number of 
employees without changing work processes will likely have staffing 
growth recur eventually. \10\ More specifically, simply reducing staff 
does not make the work that they were doing go away, and may be costly, 
indiscriminate, and inconsistent with continuing productive work flow 
with fewer staff. However, with proper planning, downsizing can be 
targeted to specific skills the organization no longer needs in its 
revised structure. Our work has also found that an important lesson 
learned is for organizations undergoing downsizing to carefully examine 
their functions and identify needed structural changes and other 
revisions to traditional methods of operation as a precursor to making 
decisions on where and to what extent workforce cuts are appropriate. 
However, a number of factors may constrain organizations' use of 
downsizing strategies, such as public sentiment, budget limitations, 
legislative mandates to maintain certain programs, and personnel laws.
---------------------------------------------------------------------------
    \9\ GAO, Workforce Reductions: Downsizing Strategies Used in 
Selected Organizations, GAO/GGD-95-54 (Washington, D.C.: Mar. 13, 
1995).
    \10\ GAO-12-962T.
---------------------------------------------------------------------------
    Mr. Forbes. If sequestration were to occur, what recommendations 
would you offer DOD to consider now to best manage its directed 
manpower reductions? And, what, in your opinion, would be the impact of 
sequestration on the DOD workforce--civilian, contractor and military 
personnel?
    Ms. Farrell. GAO has not conducted the work necessary to make 
recommendations related to or analyzing the impact of a sequestration. 
However, our prior work \11\ has found that workforce planning is 
essential in identifying positions to be eliminated and pinpointing 
specific employees for potential separation. We have also reported that 
in organizations where planning did not occur or was not effectively 
implemented, difficulties arose in the downsizing. For example, a lack 
of effective planning for skills retention can lead to a loss of 
critical staff, and an organization that simply reduces the number of 
employees without changing work processes will likely have staffing 
growth recur eventually. \12\
---------------------------------------------------------------------------
    \11\ GAO/GGD-95-54.
    \12\ GAO-12-962T.
---------------------------------------------------------------------------
    Mr. Forbes. Ms. Farrell, in your statement, you devote a portion to 
discussing DOD's downsizing efforts of the early 1990s. Specifically, 
you note that DOD's approach to its civilian workforce reductions was 
not focused on shaping the makeup of the workforce--as it typically 
does when managing its military downsizing--which resulted in 
significant imbalances in terms of shape, skills, and retirement 
eligibility of the civilian workforce. Could you elaborate on whether 
or not DOD had a strategy guiding that downsizing and what the effect 
of that downsizing was on the civilian workforce?
    Ms. Farrell. As noted in my statement, \13\ DOD's civilian 
workforce downsizing efforts in the 1990s were not oriented toward 
shaping the makeup of the workforce, which resulted in significant 
imbalances in terms of shape, skills, and retirement eligibility of its 
workforce. Specifically, in our reviews \14\ of these efforts, we found 
that DOD's efforts in the 1990s to reduce its Federal civilian 
workforce to levels below that of 1987 were hampered by incomplete data 
and lack of a clear strategy for avoiding skill imbalances and other 
adverse effects of downsizing. For instance, in 1992, GAO found that 
DOD used incomplete and inconsistent data related to workers, workload, 
and projected force reductions. Further, the approaches DOD has 
previously relied on to accomplish downsizing have sometimes had 
unintended consequences. The use of voluntary attrition, hiring 
freezes, and financial separation incentives allowed DOD to mitigate 
some adverse effects of civilian workforce reductions, but were less 
oriented toward shaping the makeup of the workforce than was the 
approach the Department used to manage its military downsizing. For 
DOD, this was especially true of the civilian acquisition workforce. 
Our work has also found that use of strategies such as financial 
separation incentives makes it difficult to document or estimate the 
actual cost savings of Government downsizing efforts, especially in 
cases where the work previously performed by the eliminated personnel 
continues to be required. For example, if the work continues to be 
required, it may need to be contracted out to private companies and 
contract costs should be considered in determining whether net savings 
will result from workforce reductions.
---------------------------------------------------------------------------
    \13\ GAO-12-962T.
    \14\ GAO, Defense Force Management: Expanded Focus in Monitoring 
Civilian Force Reductions Needed, GAO/T-NSIAD-92-19 (Washington, D.C.: 
Mar. 18, 1992); and Defense Force Management: Challenges Facing DOD as 
It Continues to Downsize Its Workforce, GAO/NSIAD-93-123 (Washington, 
D.C.: Feb. 12, 1993).
---------------------------------------------------------------------------
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. The National Defense Authorization Act for Fiscal 
Year 2012 directed the Department of Defense to take a more holistic 
approach to its manpower requirements in order to achieve the 
appropriate balance in its total workforce, rather than simply managing 
to budgetary targets. The Secretary was required to develop a total 
force management plan that would provide the means to establish the 
appropriate mix of manpower to perform the Department's mission, 
whether by military (Active or Reserve), civilian, or contractor 
personnel. The committee is concerned, however, that the budget request 
does not reflect this holistic approach. What steps is the Department 
taking to help ensure that the budget request reflects a more holistic 
approach?
    Mr. Vollrath. The Department has extensive guidance regarding 
manpower management and workforce mix. Consistent with this guidance 
and applicable statutory requirements, including those included in the 
Fiscal Year 2012 National Defense Authorization Act, DOD Components 
identify the requisite manpower and resources needed to execute their 
missions, tasks, and functions. The Department remains committed to 
ensuring and delivering a balanced, flexible, responsive workforce with 
the right skills and competencies that: is the appropriate mix of 
labor; mitigates risk; ensures continuity of operations; promotes an 
organic knowledge base that delivers core and critical functions 
necessary to maintain operational readiness; and ensures mission 
requirements are met cost effectively and efficiently. Through the 
program and budget review process, Component manpower and resource 
requests are prioritized and trade-offs are made in a manner that 
ensures a holistic, analytically based, and responsible allocation of 
limited resources to our highest priorities.
    Ms. Bordallo. Why has it taken so long for the Department of 
Defense to develop its Strategic Workforce Plan? Further, I am 
concerned that the current plan uses data from 2010 and may not provide 
DOD with the right type of requirements-based gap analysis that is 
really needed. Does the Department of Defense have the tools, 
leadership and data it needs to make strategic decisions? Is there 
something impeding the timely development of this plan?
    Mr. Vollrath. In May 2011, using 2010 baseline on-board data, DOD 
drafted the current Fiscal Year (FY) 10-18 Strategic Workforce Plan 
(SWP), which was submitted to Congress in March 2012. The SWP planning 
process is extensive in scope and complexity, covering a workforce of 
over 780,000 employees across multiple functional communities, the 
military departments, and defense agencies and activities. The normal 
planning cycle is 12 months. Efficiency reviews and major budget shifts 
during the planning cycle can delay planning requiring changes in 
workforce planning targets and forecasts. The SWP considered major 
budget decisions that were made before the final draft was approved. 
Budget shifts since then are now being assessed against the baseline 
set by the current SWP.
    Per the National Defense Authorization Act for FY2012 (Public Law 
112-81), the Department is now on a biennial planning cycle, allowing 
time for implementation and progress evaluation before developing the 
next plan. Each SWP starts with baseline on-board data from the current 
year, identifies targets for future years based on budgeted manpower 
requirements, then forecasts hiring and attrition to identify current 
and projected skill gaps. The FY12-18 SWP which is currently under 
development will follow this approach using 2012 baseline data. The 
next biennial SWP development began in May for the FY12-18 planning 
cycle, which corresponds with the budget established in the Future 
Years Defense Program. This plan is expected to be delivered to 
Congress in 2013.
    Ms. Bordallo. DOD's 2010 Strategic Workforce Plan states that most 
of the Department's civilian mission-critical occupations are 
projecting some growth through 2018, roughly 4%. With regard to the 
current fiscal environment and caps on the civilian workforce at the 
2010 strength level, how does the Department expect to maintain as well 
as grow these mission-critical occupations without having a negative 
impact on other missions or personnel requirements?
    Mr. Vollrath. The Department does not have a cap on its civilian 
workforce. As part of its budget building process for the past few 
years, the Department has directed that components use Fiscal Year 2010 
civilian levels as a departure point for prioritizing and shaping its 
workforce in an effort to make sure resources are applied to our most 
compelling needs. Components are asked to make trade-offs, ensuring 
civilian personnel are aligned to the most critical missions and 
requirements. Where trade-offs are not achievable, and where 
necessitated by mission and workload, exceptions to Fiscal Year 2010 
civilian have and will continue to be granted. Where appropriate, this 
will include those mission-critical occupations covered by the 
Department's Strategic Workforce Plan.
    Ms. Bordallo. As we have seen in the past, across-the-board, 
arbitrary cuts of thousands of civilian employees could have an adverse 
effect on essential programs if the Department does not take a 
strategic view of ensuring that those employees with the critical 
skills needed to perform the Department's critical functions are not 
arbitrarily cut. How does the Department plan to help ensure that 
reductions in civilian employees will be done with the assurance of 
maintaining those skills critical to the Department's mission?
    Mr. Vollrath. Changes in the civilian workforce must be made in a 
way that preserve mission essential skills and abilities over the long 
term and in a manner that enables DOD to recruit and retain the most 
talented individuals consistent with mission requirements and 
priorities. As currently programmed reductions are implemented, DOD 
will continue to focus on ensuring the appropriate mix of skill sets 
and competencies needed to execute our mission.
    In fiscal year (FY) 2012, the Department identified mission-
critical occupations (MCOs) and high-risk skills in the Strategic 
Workforce Plan (SWP) based on new Federal-wide criteria and staffing 
gap data. This data-driven, systematic method aligns strategic mission 
goals and priorities to mission-critical occupations and assesses 
staffing gap risks. As a result, recruitment, retention, and 
development strategies can be targeted to reduce skill gaps in MCOs.
    In addition, the Department has implementing a standard competency 
taxonomy for identifying and assessing occupational competencies across 
the workforce. Competency models for MCOs will be in place by the end 
of 2012 and a DOD-wide tool for assessing employee competency gaps is 
planned for deployment in 2013. These tools will give DOD far more 
insight into employee skills--including strengths, gaps, and future 
needs--to improve workforce planning and decisions in a fiscally 
constrained environment.
    Ms. Bordallo. How many civilian personnel positions does the 
Department intend to eliminate between FY12 and FY17, broken down by 
years? How many civilian personnel positions would the Department have 
to eliminate between FY12 and FY17, if Section 341 of S. 3254 is 
enacted? Would such cuts be in addition to cuts in civilian personnel 
planned by the Department? Would such cuts be in addition to those that 
might be required by sequestration?
    Mr. Vollrath. The President's Budget request for Fiscal Year 2013 
reflected an approximate 2% decrease in the Department's civilian 
workforce (excluding foreign nationals) by Fiscal Year 2017. This 
equals 13,668 civilian positions--from 751,172 in Fiscal Year 2012 to 
737,504 in Fiscal Year 2017. Annual levels through Fiscal Year 2017 are 
as follows: FY12--751,172; FY13--743,815; FY14--738,880; FY15--739,561; 
FY16--738,440; and FY17--737,504. As currently written, section 341 
would not require a specific reduction in civilian workforce levels. 
Legislatively directing reductions in selected elements of the 
workforce simply because well-reasoned reductions are being taken in 
other elements would preclude the Department from appropriately sizing 
its workforce to meet its mission workload.
    In terms of sequestration, the Secretary's focus remains on 
precluding, not planning, for sequestration. If sequestration does 
occur, it would have across the board impacts on the Department's 
readiness and capabilities, including critical missions and tasks 
performed by DOD civilian employees.
    Ms. Bordallo. In which functional areas has the Department added 
personnel since FY09, broken down by numbers of positions and by years, 
and why are these increases necessary? To what extent, if at all, are 
these increases related to changes in military end-strength? In which 
functional areas does the Department anticipate adding civilian 
personnel, between FY12 and FY17, broken down by numbers of positions 
and by years, and why are these increases necessary? To what extent, if 
at all, are these increases related to changes in military end-
strength?
    Mr. Vollrath. Across the Department of Defense, civilian personnel 
levels have increased in a number of mission-critical occupations and 
functional communities since Fiscal Year 2009. These increases reflect 
the Department's appropriate response to changing missions, needs, and 
requirements. These increases include, but are not limited to, 
personnel performing critical acquisition oversight, intelligence, 
cyber operations, information technology, security, medical care, and 
financial management functions. In some instances these increases are 
tied to operational tempo, end-strength levels, and military force 
structure. The Department's current budget request calls for an overall 
decrease in civilian personnel of approximately 2% by Fiscal Year 2017. 
However, some functional capabilities (e.g. IT, cyber and medical) will 
likely see some limited growth during that time to adapt to missions 
and workload.
    Ms. Bordallo. How many civilian positions are included in each of 
the following four items: the Mission Critical Occupations as defined 
by the Civilian Human Capital Strategic Plan of the Department of 
Defense, the Acquisition Workforce Plan of the Department of Defense, 
personnel employed at facilities providing core logistics capabilities, 
and the Office of the Inspector General? Please indicate which 
functional areas and the numbers of civilian personnel who perform such 
functions would not be included in those four categories. Please also 
indicate the GS and WG status of the civilian personnel who would not 
be included in those four aforementioned categories.
    Mr. Vollrath. The Fiscal Year 2010-2018 (FY10-18) Strategic 
Workforce Plan delivered to Congress in March 2012 covered 22 mission-
critical occupations (MCOs). DOD has expanded the functional community 
construct to cover ALL major occupations in the civilian workforce 
across 23 functional communities, including Acquisition and Logistics 
communities. The table below provides a current overview and 
representation of the Department's current 23 functional communities, 
the occupations and number of employees associated with each, and the 
33 current DOD mission-critical occupations, including Wage Grade 
occupations.
[GRAPHIC] [TIFF OMITTED] 75669.032


[GRAPHIC] [TIFF OMITTED] 75669.033

[GRAPHIC] [TIFF OMITTED] 75669.034


    Ms. Bordallo. Has the Department determined that the functions 
excluded from cuts by Senate FY13 NDAA Section 341 need not be reviewed 
for efficiencies? Do the exclusions mean that for purposes of complying 
with Section 341 that non-excluded functions will have to be reduced in 
excess of what the Department had planned? Will the Department be 
reviewing those excluded functions for efficiencies, regardless of 
whether Section 341 is enacted?
    Mr. Vollrath. The Department has not undertaken any planning 
specifically related to the provision in the Senate Armed Services 
Committee mark-up of the fiscal year 2013 National Defense 
Authorization Act. Legislatively directing reductions (and possible 
exclusions from such reductions) to the civilian workforce would 
preclude the Department from most appropriately, effectively, and 
efficiently sizing its Total Force to meet mission and workload. We are 
committed to ensuring all aspects of the civilian workforce are aligned 
to workload, consistent with mission priorities, and that we execute 
such workload as efficiently and effectively as possible and in 
compliance with sections 124 and 129a of title 10, United States Code.
    Ms. Bordallo. Do civilian personnel perform functions related to 
the maintenance and repair of military equipment but who are not 
employed at facilities providing core logistics capabilities? Section 
341 would exclude from cuts those contractor ``personnel performing 
maintenance and repair of military equipment''. Is that contractor 
workforce comparable in terms of functional areas to the civilian 
workforce that provides core logistics capabilities pursuant to 10 USC 
2464? If the former includes functional areas not included in the 
latter, which ones would they be and how many civilian employees 
perform those functional areas that are not included?
    Mr. Vollrath. The Department does have both civilian and contractor 
personnel performing functions related to the maintenance and repair of 
military equipment some of whom are not employed at facilities 
providing core logistics capabilities. The contracted skill sets are 
comparable to those within the civilian workforce in terms of the 
functional areas needed to perform the required maintenance and repair.
    Ms. Bordallo. Are all civilian positions related to the provision 
of medical and financial audit services included within the Mission 
Critical Occupations as defined by the Civilian Human Capital Strategic 
Plan of the Department of Defense and the Acquisition Workforce Plan of 
the Department of Defense? If not, which positions and how many 
positions are not included for each function?
    Mr. Vollrath. There are five occupations in the Medical Functional 
Community and four occupations in the Financial Management Functional 
Community designated as Mission Critical Occupations (MCO). The table 
below lists all the occupations in these communities, including those 
designated as MCOs and high-risk occupations. Functional communities 
are based on the occupational series assigned to civilian positions.

[GRAPHIC] [TIFF OMITTED] 75669.035

[GRAPHIC] [TIFF OMITTED] 75669.036

    Ms. Bordallo. What process did the Department undertake to 
determine the extent to which military end-strength should be reduced? 
Did it arbitrarily assign a percentage in determining how much military 
end-strength should be reduced? Or did it first engage in thoughtful 
analysis?
    Mr. Vollrath. The currently planned for reductions in military end-
strength are the result of extensive planning and thoughtful analysis, 
including a comprehensive review of the Nation's military and defense 
strategies called for by the President of the United States, and are 
not based on an arbitrarily assigned percentage reduction. Military 
end-strength reductions are based on changes to our overall force 
structure; reduced operational tempos and commitments associated with 
Operations Iraqi and Enduring Freedom; and a shift in our strategic 
priorities to the Asia-Pacific area of operations.
    Ms. Bordallo. Within the last eight months, Personnel and Readiness 
has issued three different guidances to prevent work performed by 
civilian employees from being illegally and inappropriately converted 
to performance by contractors and military personnel.

    a) What role did the cap play in the issuance of these guidances?

    b) It is our understanding that while Personnel and Readiness 
attempts to follow up on credible reports of violations of those 
guidances that it is ultimately powerless to prevent components from 
carrying them out. Is that true?

    c) In the Army's March 29 HSGAC testimony, it was written ``When 
faced with hiring decisions, people are therefore being placed in the 
unenviable position of having to decide whether to comply with the 
civilian cap, or to comply with the other statutes governing the 
workforce . . . '' That seems to be an implicit acknowledgement that 
the cap compels commanders to violate the law. Does that testimony 
accurately describe why commanders may feel compelled to defy Personnel 
and Readiness' guidances?

    d) What additional power does Personnel and Readiness need to 
enforce the guidances and the underlying laws?

    e) House report language directed the Department to make it clear 
that the guidances also covered functions performed by Non-Appropriated 
Fund employees. Has this been done? If not, why?

    f) Will the imposition of an arbitrary cut in civilian employees, 
as proposed by the Senate, make it more difficult to enforce laws 
against direct conversions and the Department's guidances to enforce 
those laws?
    Mr. Vollrath. Each question within the broader question is answered 
individually:

    a) The guidance was issued in order to remind Commanders and 
managers of their obligations under title 10 and DOD policies to ensure 
that efficient and workforce mix. The guidance focused our efforts in 
the context of the efficiencies initiatives eliminating low priority 
workload and limiting resources for overhead and administrative 
functions in order to sustain core mission capabilities due, in part, 
to the changing budgetary landscape.

    b) The Office of the Under Secretary of Defense for Personnel and 
Readiness (OUSD (P&R)) provides policy and guidance. In cases where 
there have been reported instances of workload re-alignment that are 
potentially in contradiction to statutory requirements or established 
policies, OUSD (P&R) has engaged with Components, based on Secretary of 
Defense authority, to ensure that appropriate component leadership 
attention is given to those reports.

    c) I cannot speak to the Army's testimony to the HSGAC. However, 
DOD decisionmakers must make daily decisions based on mission workload, 
resource availability, and risk mitigation. These decisions often 
require consideration for multiple policies, statutes, and directives 
and will result in trade-offs and workload prioritization. OUSD (P&R), 
as a policy and oversight office, works with those decisionmakers to 
ensure compliance with appropriate statutory requirements and internal 
policies.

    d) OUSD (P&R) does not require any additional power or authorities 
beyond those currently provided for in law and as prescribed by the 
Secretary of Defense.

    e) No, the Department has not yet issued clarifying guidance 
regarding the application of these statutory sourcing provisions to 
Non-Appropriated Fund (NAF) employees. While we appreciate the concerns 
expressed in the House report the Department is currently assessing the 
application of our workforce sourcing policies, in the context of 
statutory requirements, and reconciling them with the personnel 
management policies for NAF employees and the policies that govern the 
day-to-day operations of NAF instrumentalities. Existing policies will 
be updated as needed.

    f) Any arbitrary reduction in civilian employees, whether 
legislatively directed or internally executed, would create challenges 
with regard to appropriate and effective workforce mix and workload 
alignment. The Department's sourcing of functions and work among 
military, civilian, and contracted services must be consistent with 
workload requirements, funding availability, readiness and management 
needs, as well as applicable laws and guidance. Legislatively directing 
reductions in selected elements of the workforce simply because well-
reasoned reductions are being taken in others would preclude the 
Department from appropriately sizing its workforce to meet its mission 
workload. Even during this period of constrained defense budgets, we 
must ensure that we have a sufficient number of Federal civilian 
personnel to meet the support needs of our military forces. We must 
also be sure that military or civilian personnel are performing all 
inherently governmental jobs, and that sufficient levels of civilian 
personnel are available to perform critical oversight, management, and 
readiness functions of the Department. The Department is committed to 
ensuring all aspects of the civilian workforce are aligned to workload, 
consistent with mission priorities, and that we execute such workload 
as efficiently and effectively as possible.
    Ms. Bordallo. Does the Department have the same sort of visibility 
and control over service contract spending as it does over civilian 
personnel spending? Is it easier to cut and actually enforce cuts in 
civilian personnel spending than in service contract spending because 
of the absence of an inventory of service contracts that has been 
integrated into the budget? Is it accurate to say that the Department 
is far more likely to realize the arbitrary cuts in civilian personnel 
imposed by Section 341 than the arbitrary cuts in service contract 
spending? The Comptroller claims that one of the principal reasons that 
the Department doesn't have better cost information on service 
contractors is that it is not possible to distinguish between base and 
OCO spending. However, the Army, which is recognized as the leader on 
the contractor inventory insists that the two categories of spending 
can be substantially distinguished. Who's right?
    Mr. Vollrath. The Department does not have the same visibility into 
service contract spending as it does over civilian personnel spending. 
However, in November 2011, the Department submitted a plan to Congress 
delineating both short- and long-term actions to fully implement the 
requirements of section 2330a of title 10, United States Code. As a 
result, the Department will have better fidelity, visibility, and 
accountability into contracted services. Improvements currently 
underway will enable the Department to more accurately assess 
contracted workload based on direct labor hours and associated data 
collected from private sector providers. Additionally, DOD Components 
must now certify that they have completed comprehensive reviews of 
their contracted services to ensure appropriate utilization, cost 
effectiveness, and alignment to mission need and priority.
    Ms. Bordallo. The Department has claimed significant savings from 
insourcing. According to testimony, the Army's once robust insourcing 
program was significantly responsible for a dramatic drop in service 
contracting costs. Unfortunately, the insourcing effort came to a halt 
as a result of the imposition of the FY10 cap on the civilian 
workforce. Will the Department be forced to leave inherently 
governmental and other important/sensitive functional areas in the 
hands of contractors due to the collapse of the insourcing effort? (The 
Army has told the GAO that one of the reasons it can't insource 
inherently governmental functions is the FY10 cap on the civilian 
workforce.) Will the Department fail to generate cost savings from 
insourcing because of the cap on the civilian workforce? (The Army has 
testified that service contracting costs increased when the imposition 
of the cap on the civilian workforce all but killed off insourcing.) 
Will the imposition of arbitrary cuts in civilian employees make it 
even more difficult to use insourcing to save money and reassert public 
control over important and sensitive functions?
    Mr. Vollrath. The Department does not have a cap on its civilian 
workforce. As part of its budget building process for the past few 
years, the Department directed that components maintain Fiscal Year 
2010 civilian levels as a departure point for prioritizing and shaping 
its workforce, and in an effort to ensure resources are applied to our 
most compelling requirements. DOD organizations may request to exceed 
their Fiscal Year 2010 civilian workforce levels as needed to meet 
mission and workload requirements.
    The Department remains committed to its statutory obligations under 
title 10 to annually review contracted services and ensure appropriate 
performance of functions that are inherently governmental; closely 
associated; otherwise exempted from private sector performance (to 
mitigate risk, ensure continuity of operations, build internal 
capability, meet and maintain readiness requirements, etc); and in the 
most cost effective manner possible. Contracted services that meet the 
necessary criteria should be in-sourced to Government performance. 
Where appropriate, DOD organizations may in-source, and in fact 
continue to do so, by absorbing work into existing Government positions 
by refining duties or requirements; establishing new positions to 
perform contracted services by eliminating or shifting equivalent 
existing manpower resources (personnel) from lower priority activities; 
or requesting an exception to their civilian levels.
    Ms. Bordallo. Section 341 includes ``Section (d) Limitation on 
Transfers of Functions''. Work performed by civilian employees is 
already being illegally directly converted to contractor performance 
because of the arbitrary caps the Department has imposed on the 
civilian workforce. Imposition of an additional arbitrary cut in the 
civilian workforce will surely exacerbate this problem. What impact if 
any will this ``Limitation on Transfer of Functions'' language have in 
stopping illegal direct conversions caused by arbitrary constraints and 
cuts in the civilian workforce? Will this language prevent the 
Department from insourcing work for cost reasons, even if in-house 
performance would be cheaper?
    Mr. Vollrath. If section 341, as contained in the Senate Armed 
Services Committee mark-up of the fiscal year 2013 National Defense 
Authorization Act, were to be enacted and become public law, paragraph 
(d), regarding the limitation on transfers of functions, would 
reinforce the Department's current policies. Namely, reductions in 
civilian workforce must be tied to reductions in workload and mission 
and cannot result in either the transfer of work to contract 
performance (consistent with section 2461 of title 10, United States 
Code and existing legislative prohibitions on the use of public-private 
competitions); or the transfer of non-military essential work to 
military personnel performance (consistent with DOD policies concerning 
military essentiality and the alignment of workload). Similarly, 
reductions in contracted services must also be tied to reductions in 
mission and workload, unless the work is appropriately transferred from 
contract to civilian performance (in-sourcing). In-sourcing is 
appropriate in instances where contracted work was determined to be 
inherently governmental, critical, or so closely associated with 
inherently governmental as to pose risk to Government operations; or 
more cost effectively performed by Government personal. Such workload 
realignment, or in-sourcing, would be justified under the language in 
paragraph (d) of section 341 as proposed and consistent with existing 
statutory authorities in section 2463 of title 10, United States Code.

    Ms. Bordallo. In order to make more strategic decisions about the 
right workforce mix of military, civilian, and contractor personnel, 
and to better align resource needs through the budget process to 
achieve that mix, DOD needs adequate information on the appropriate mix 
of these three groups. Based on GAO's reviews of DOD's Strategic 
Workforce Plan, does DOD have a strategy for assessing the appropriate 
mix of military, civilian, and contractor personnel capabilities?
    Ms. Farrell. Our September 2010 review of DOD's 2009 strategic 
workforce plan found that although the Department had issued a 
directive stating that missions should be accomplished using the least 
costly mix of personnel (military, civilian, and contractors) 
consistent with military requirements and other needs, the Department's 
2009 plan did not provide an assessment of the appropriate mix of these 
capabilities. \15\ We currently have ongoing work assessing DOD's 2010-
2018 Strategic Workforce Plan, which the Department released in March 
2012. The results of our review are expected to be released in 
September 2012.
---------------------------------------------------------------------------
    \15\ GAO-10-814R.
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    Ms. Bordallo. In your statement, you devote a portion to discussing 
DOD's downsizing efforts of the early 1990s. Specifically, you note 
that DOD's approach to its civilian workforce reductions was not 
focused on shaping the makeup of the workforce--as it typically does 
when managing military manpower downsizing--resulting in significant 
imbalances in terms of shape, skills, and retirement eligibility of the 
civilian workforce. Could you elaborate on whether or not DOD had a 
strategy guiding that downsizing and what the effect of that downsizing 
was on the civilian workforce?
    Ms. Farrell. As noted in my statement, \16\ DOD's civilian 
workforce downsizing efforts in the 1990s were not oriented toward 
shaping the makeup of the workforce, which resulted in significant 
imbalances in terms of shape, skills, and retirement eligibility of its 
workforce. Specifically, in our reviews \17\ of those efforts, we found 
that DOD's efforts in the 1990s to reduce its Federal civilian 
workforce to levels below that of 1987 were hampered by incomplete data 
and lack of a clear strategy for avoiding skill imbalances and other 
adverse effects of downsizing. For instance, in 1992, GAO found that 
DOD used incomplete and inconsistent data related to workers, workload, 
and projected force reductions. Further, the approaches DOD has 
previously relied on to accomplish downsizing have sometimes had 
unintended consequences. The use of voluntary attrition, hiring 
freezes, and financial separation incentives allowed DOD to mitigate 
some adverse effects of civilian workforce reductions, but were less 
oriented toward shaping the makeup of the workforce than was the 
approach the Department used to manage its military downsizing. For 
DOD, this was especially true of the civilian acquisition workforce. 
Our work has also found that use of strategies such as financial 
separation incentives makes it difficult to document or estimate the 
actual cost savings of Government downsizing efforts, especially in 
cases where the work previously performed by the eliminated personnel 
continues to be required. For example, if the work continues to be 
required, it may need to be contracted out to private companies and 
contract costs should be considered in determining whether net savings 
will result from workforce reductions.
---------------------------------------------------------------------------
    \16\ GAO-12-962T.
    \17\ GAO/T-NSIAD-92-19 and GAO/NSIAD-93-123.
---------------------------------------------------------------------------
    Ms. Bordallo. What are the risks associated with both the Senate's 
proposed arbitrary cuts to the civilian workforce and the cuts that 
would be imposed on thousands of DOD civilians by sequestration?
    Ms. Farrell. GAO has not conducted the work necessary to comment on 
the Senate's proposal or the effects of a sequestration. However, as 
our prior work \18\ has noted, strategic workforce planning is an 
integral part of human capital management and helps organizations to 
determine if they have staff with the necessary skills and competencies 
to accomplish their strategic goals. To facilitate effective workforce 
planning, we and the Office of Personnel Management have identified six 
leading principles such workforce plans should incorporate, including: 
1) aligning workforce planning with strategic planning and budget 
formulation; 2) involving managers, employees, and other stakeholders 
in planning; 3) identifying critical skills and competencies and 
analyzing workforce gaps; 4) employing workforce strategies to fill the 
gaps; 5) building the capabilities needed to support workforce 
strategies through steps to ensure the effective use of human capital 
flexibilities; and 6) monitoring and evaluating progress toward 
achieving workforce planning and strategic goals. \19\ Specifically, 
with regard to critical skills and competencies and analyzing workforce 
gaps, we have found \20\ that DOD's Strategic Workforce Plan identified 
22 mission-critical occupations \21\ that, according to the Department, 
represent the results of its assessment of critical skills. However, 
our work also found that DOD's plan only discussed competency gap 
analysis for 3 of its 22 mission-critical occupations. Further, DOD was 
in the initial stages of assessing competency gaps for its senior 
leader workforce, but it had not completed the analysis needed to 
identify gaps. Without including analyses of gaps in critical skills 
and competencies as part of its strategic workforce planning efforts, 
DOD and the components may not be able to design and fund the best 
strategies to fill their talent needs through recruiting and hiring or 
to make appropriate investments to develop and retain the best possible 
workforce. Further, DOD leadership may not have information necessary 
to make informed decisions about future workforce reductions, should 
further reductions to its workforces become necessary.
---------------------------------------------------------------------------
    \18\ GAO-10-814R.
    \19\ GAO-12-962T.
    \20\ GAO-12-962T and GAO-10-814R.
    \21\ DOD has identified 24 enterprisewide mission-critical 
occupations; 22 of these occupations are associated specifically with 
the overall civilian workforce and are discussed in the strategic 
workforce plan, while, the remaining 2 are acquisition-related 
occupations--contracting and quality assurance--and are discussed in 
the Defense Acquisition Workforce Improvement Strategy (published as a 
separate report).
---------------------------------------------------------------------------
    Ms. Bordallo. What lessons were learned from former Secretary 
Gates' efficiencies initiative that could be helpful in developing a 
requirements-based workforce management plan? How are issues associated 
with that initiative addressed in the Department's strategic workforce 
plan?
    Ms. Farrell. Our prior work reviewing former Secretary Gates's 
efficiencies initiative found that the Department does not have 
complete and reliable major DOD headquarters activity data available 
for use in making efficiency assessments and decisions because the 
Department continues to have challenges in identifying and tracking 
personnel and other resources devoted to headquarters. According to our 
internal control standards, an agency must have relevant, reliable, and 
timely information in order to run and control its operations. \22\ In 
addition, we have previously identified key practices from Federal and 
state efficiency initiatives, which include 1) using change management 
practices to implement and sustain efficiency initiatives, such as 
setting implementation goals and a timeline; 2) targeting both short-
term and long-term efficiency initiatives by identifying efficiency 
initiatives that can generate immediate returns as well as more 
substantive changes to operating procedures, programs, and 
organizational structures; and 3) building capacity for improving 
efficiency through the use of a department-level office to standardize 
guidance and training and facilitate sharing best practices. \23\ These 
key practices from Federal and state efficiency initiatives may help 
guide DOD's strategic workforce planning efforts. We are currently 
reviewing DOD's latest strategic workforce plan, which was released in 
March 2012. The results of this review are expected to be released in 
September 2012. \24\
---------------------------------------------------------------------------
    \22\ GAO, Standards for Internal Control in the Federal Government, 
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
    \23\ GAO, Streamlining Government: Key Practices from Select 
Efficiency Initiatives Should Be Shared Governmentwide, GAO-11-908 
(Washington, D.C.: Sept. 30, 2011).
    \24\ GAO-12-962T.
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    Ms. Bordallo. In which functional areas has the Department added 
personnel since FY09, broken down by numbers of positions and by years, 
and why are these increases necessary? To what extent, if at all, are 
these increases related to changes in military end-strength? In which 
functional areas does the Department anticipate adding civilian 
personnel, between FY12 and FY17, broken down by numbers of positions 
and by years, and why are these increases necessary? To what extent, if 
at all, are these increases related to changes in military end-
strength?
    Ms. Farrell. GAO has not conducted a detailed review of DOD's past 
or planned personnel growth or determined the extent to which any 
growth can be attributed to changes in military end-strength.
    Ms. Bordallo. Do civilian personnel perform functions related to 
the maintenance and repair of military equipment but who are not 
employed at facilities providing core logistics capabilities? Section 
341 would exclude from cuts those contractor ``personnel performing 
maintenance and repair of military equipment''. Is that contractor 
workforce comparable in terms of functional areas to the civilian 
workforce that provides core logistics capabilities pursuant to 10 USC 
2464? If the former includes functional areas not included in the 
latter, which ones would they be and how many civilian employees 
perform those functional areas that are not included?
    Ms. Farrell. GAO has reviewed various aspects of DOD functions 
related to maintenance and repair of military equipment, but has not 
conducted a detailed review of DOD's civilian personnel performing 
functions related to the maintenance and repair of military equipment 
that are not employed at facilities providing core logistics 
capabilities. Starting in 2012, section 2464 of Title 10 of the United 
States Code requires DOD to submit to Congress biennial and annual 
reports on its core depot-level maintenance and repair capability 
requirements. The statute also requires GAO to review DOD's reports for 
completeness and compliance and provide findings and recommendations to 
the congressional defense committees not later than 60 days after the 
report is submitted to Congress. The statute does not require specific 
reporting on civilian personnel performing maintenance and repair.
    Ms. Bordallo. Are dollars for contracted workload constrained or 
limited to the same degree as are dollars for OMA funded civilians? 
(The Army has testified that for every one dollar cut from service 
contracting, ten dollars are cut from civilian personnel.) Service 
contracting expenses more than doubled in the Department over the last 
ten years, while civilian personnel expenses held steady. Given that 
most if not almost all of that immense growth in service contracting 
was premised on it being short-term and non-recurring, should both 
civilian personnel spending and service contract spending be cut by the 
same percentage, as would be required by Section 341?
    Ms. Farrell. We have not conducted work that would enable us to 
comment upon the appropriate level of potential reductions in civilian 
personnel or service contract spending.
    Ms. Bordallo. The Army testified at a March 29 HSGAC subcommittee 
hearing that the civilian workforce cap ``has the unintended 
consequence of limiting the flexibility of the Army in managing its 
workforce. Cost-effective workforce management decisions ought to be 
based on allowing for the hiring of civilians to perform missions, 
rather than contractors, if the civilians will be cheaper.'' Do you 
agree with the Army's assessment of the cap--that it is preventing DOD 
from using civilian employees even when they'd be cheaper? Do you think 
such cap-generated inflexibilities and inefficiencies are limited to 
the Army? The Department claims that there is an exceptions process to 
the civilian personnel cap. Given that it is so forbidden and 
cumbersome, do you really think that there actually is a viable and 
workable exceptions process to the cap? We understand that when the 
Department is assigned new functions that must be performed by civilian 
employees that comparable numbers of civilian employee positions 
elsewhere must be eliminated to offset any overall increases to the 
civilian workforce. How can that possibly be justified? Surely, that is 
evidence that there is not a viable and workable exceptions process to 
the cap? Are there comparable constraints on service contract spending? 
For example, does the Department require that new contracts and 
increases in existing contracts be offset by comparable reductions 
elsewhere?
    Ms. Farrell. To date, GAO has not issued any work on the Department 
of Defense's or the Department of the Army's efforts to cap its 
civilian workforce that would allow us to comment on the Army's 
experience with implementing the cap.
    Ms. Bordallo. Within the last eight months, Personnel and Readiness 
has issued three different guidances to prevent work performed by 
civilian employees from being illegally and inappropriately converted 
to performance by contractors and military personnel. What role did the 
cap play in the issuance of these guidances? It is our understanding 
that while Personnel and Readiness attempts to follow up on credible 
reports of violations of those guidances that it is ultimately 
powerless to prevent components from carrying them out. Is that true? 
In the Army's March 29 HSGAC testimony, it was written ``When faced 
with hiring decisions, people are therefore being placed in the 
unenviable position of having to decide whether to comply with the 
civilian cap, or to comply with the other statutes governing the 
workforce . . . '' That seems to be an implicit acknowledgement that 
the cap compels commanders to violate the law. Does that testimony 
accurately describe why commanders may feel compelled to defy Personnel 
and Readiness' guidances? What additional power does Personnel and 
Readiness need to enforce the guidances and the underlying laws? House 
report language directed the Department to make it clear that the 
guidances also covered functions performed by Non-Appropriated Fund 
employees. Has this been done? If not, why? Will the imposition of an 
arbitrary cut in civilian employees, as proposed by the Senate, make it 
more difficult to enforce laws against direct conversions and the 
Department's guidances to enforce those laws?
    Ms. Farrell. To date, GAO has not issued any work on the Department 
of Defense's efforts to cap its civilian workforce that would allow us 
to comment on DOD's or the Department of the Army's experience with 
implementing the cap.
    Ms. Bordallo. Does the Department have the same sort of visibility 
and control over service contract spending as it does over civilian 
personnel spending? Is it easier to cut and actually enforce cuts in 
civilian personnel spending than in service contract spending because 
of the absence of an inventory of service contracts that has been 
integrated into the budget? Is it accurate to say that the Department 
is far more likely to realize the arbitrary cuts in civilian personnel 
imposed by Section 341 than the arbitrary cuts in service contract 
spending? The Comptroller claims that one of the principal reasons that 
the Department doesn't have better cost information on service 
contractors is that it is not possible to distinguish between base and 
OCO spending. However, the Army, which is recognized as the leader on 
the contractor inventory insists that the two categories of spending 
can be substantially distinguished. Who's right?
    Ms. Farrell. Congress has mandated that DOD use the inventory of 
contracted services and the associated review process to help DOD 
ensure that contractors are performing work that is appropriate, to 
support development of DOD's annual strategic workforce plan, and to 
specify the number of contractor full-time equivalents included in 
DOD's annual budget justification materials. For example, the National 
Defense Authorization Act for Fiscal Year 2010 added section 235 to 
Title 10 of the U.S. Code, which requires DOD to include information in 
its annual budget justification materials regarding the procurement of 
contracted services. Specifically, the legislation requires each budget 
account to identify clearly and separately (1) the amount requested for 
the procurement of contract services for each DOD component, 
installation, or activity, and (2) the number of contractor FTEs 
projected and justified for each DOD component, installation, or 
activity based on the inventory and associated reviews. DOD's fiscal 
year 2013 budget guidance to DOD components requires the budget 
estimates to be informed by the fiscal year 2010 inventory of 
contracted services. While we did not assess DOD's implementation of 
this requirement as part of our April 2012 report, we did find that 
DOD, with the exception of the Army, has much further to go in 
addressing the requirements for compiling and reviewing the inventories 
of contracted services. \25\ For example, DOD continued to rely on the 
Federal Procurement Data System--Next Generation for the inventory for 
most defense components other than the Army. As such, DOD acknowledged 
a number of factors that limited the utility, accuracy and completeness 
of the inventory data.
---------------------------------------------------------------------------
    \25\ GAO, Defense Acquisitions: Further Actions Needed to Improve 
Accountability for DOD's Inventory of Contracted Services, GAO-12-357 
(Washington: D.C.: Apr. 6, 2012).
---------------------------------------------------------------------------
    Ms. Bordallo. The Department has claimed significant savings from 
insourcing. According to testimony, the Army's once robust insourcing 
program was significantly responsible for a dramatic drop in service 
contracting costs. Unfortunately, the insourcing effort came to a halt 
as a result of the imposition of the FY10 cap on the civilian 
workforce. Will the Department be forced to leave inherently 
governmental and other important/sensitive functional areas in the 
hands of contractors due to the collapse of the insourcing effort? (The 
Army has told the GAO that one of the reasons it can't insource 
inherently governmental functions is the FY10 cap on the civilian 
workforce.) Will the Department fail to generate cost savings from 
insourcing because of the cap on the civilian workforce? (The Army has 
testified that service contracting costs increased when the imposition 
of the cap on the civilian workforce all but killed off insourcing.) 
Will the imposition of arbitrary cuts in civilian employees make it 
even more difficult to use insourcing to save money and reassert public 
control over important and sensitive functions?
    Ms. Farrell. While we have not issued any work on the civilian 
workforce cap to date, in February 2012 we reported \26\ that DOD 
stated in its fiscal year 2010 budget submission to Congress that it 
expected to save $900 million in fiscal year 2010 from in-sourcing. In 
August 2010, the Secretary of Defense stated he was not satisfied with 
the Department's progress in reducing its over-reliance on contractors. 
Also, representatives from the Offices of the Under Secretary of 
Defense (Personnel and Readiness) and the Under Secretary of Defense 
(Comptroller) told us that DOD avoided some contracted support services 
costs due to the budget decision associated with in-sourcing, although 
total spending across all categories of service contracts increased in 
fiscal year 2010 by about $4.1 billion. To accelerate the process and 
achieve additional savings, the Secretary directed a 3-year reduction 
in funding for service support contracts categorized by DOD as 
contracted support services. He also directed a 3-year freeze on the 
level of DOD civilian authorizations at OSD, the defense agencies, and 
the Combatant Commands, and stated that with regard to in-sourcing, no 
full-time OSD civilian authorizations would be created after the then-
current fiscal year to replace contractors, except for urgent needs. We 
also noted that the statutory requirement to regularly consider in-
sourcing contracted services remains in effect, and DOD officials told 
us that, accordingly, in-sourcing continues in the Department, though 
on a more limited basis.
---------------------------------------------------------------------------
    \26\ GAO, Defense Workforce: DOD Needs to Better Oversee In-
sourcing Data and Align In-sourcing Efforts with Strategic Workforce 
Plans, GAO-12-319 (Washington, D.C.: Feb. 9, 2012).
---------------------------------------------------------------------------
    Our report also found that--under DOD's policy for determining the 
appropriate mix of military and DOD civilians and contractor support--
risk mitigation shall take precedence over cost savings when necessary 
to maintain appropriate control of Government operations and missions. 
This policy provides manpower mix criteria for assessing which 
functions warrant performance by military or civilian personnel due to 
their associated risks, and which functions will therefore be 
considered exempt from performance by contractor support.
    Ms. Bordallo. How is the Senate's proposed arbitrary cut in funding 
for civilian personnel different from the sequestration that would 
result from the Budget Control Act? Aren't both arbitrary cuts in 
funding that would mindlessly eliminate defense industrial base jobs 
and undermine our economic recovery?
    Ms. Farrell. GAO has not conducted the work necessary to analyze 
the Senate's proposal or the impact of a sequestration.
    Ms. Bordallo. Section 341 includes ``Section (d) Limitation on 
Transfers of Functions''. Work performed by civilian employees is 
already being illegally directly converted to contractor performance 
because of the arbitrary caps the Department has imposed on the 
civilian workforce. Imposition of an additional arbitrary cut in the 
civilian workforce will surely exacerbate this problem. What impact if 
any will this ``Limitation on Transfer of Functions'' language have in 
stopping illegal direct conversions caused by arbitrary constraints and 
cuts in the civilian workforce? Will this language prevent the 
Department from insourcing work for cost reasons, even if in-house 
performance would be cheaper?
    Ms. Farrell. We have not assessed the implications of implementing 
Section 341 of S. 3254, a bill for the National Defense Authorization 
Act for Fiscal Year 2013 that was reported out of the Senate Armed 
Services Committee in June 2012. The proposed bill has been placed on 
the Senate Legislative Calendar, but no further action has been taken.
                  QUESTIONS SUBMITTED BY MR. LOEBSACK
    Mr. Loebsack. In their version of the FY13 National Defense 
Authorization Act, the Senate Armed Services Committee attempted to 
protect some elements of the industrial base from the civilian 
personnel cuts mandated in their bill, but failed to include organic 
manufacturing facilities such as Army arsenals. What assurances can you 
provide that DOD leadership will protect the remaining Army arsenals 
from cuts that would undermine essential capabilities and reduce 
efficiency? Would the Department have the ability to base decisions 
regarding the reductions required by the Senate Armed Services 
Committee's bill on readiness and critical skills and capabilities or 
would the Department have to make across-the-board cuts across 
facilities and DOD offices? How would those critical skills and 
capabilities be determined?
    Mr. Vollrath. The Department has not done an assessment based on 
the SASC NDAA provision requiring reductions to civilian and contractor 
workforces. The DOD will determine how best to implement any reductions 
included in the 2013 National Defense Authorization Act.
    Mr. Loebsack. If the Senate Armed Services Committee's proposed 
reductions were enacted, would they be carried out in addition to the 
cap on the civilian workforce and reductions that have already been 
announced by the Department? Or would the already announced caps and 
reductions be applied to meet the cuts mandated by the Senate Armed 
Services Committee?
    Mr. Vollrath. The Department has not undertaken any planning 
specific to section 341, as contained in the Senate Armed Services 
Committee mark-up of the Fiscal Year 2013 National Defense 
Authorization Act. The Department does not have a cap on its civilian 
workforce. As part of its budget building process for the past few 
years, the Department has directed that components use Fiscal Year 2010 
civilian levels as a departure point for prioritizing and shaping its 
workforce in an effort to make sure resources are applied to our most 
compelling needs. DOD organizations may, and have, by exception 
exceeded their Fiscal Year 2010 civilian workforce levels as needed to 
meet mission and workload requirements. If the section 341 were to be 
enacted as proposed and became public law, it would require reductions 
in the civilian workforce from Fiscal Year 2012 to Fiscal Year 2017. 
The current budget request includes estimated Fiscal Year 2012 levels 
that reflect reductions taken as a result of efficiencies in Fiscal 
Years 2010, 2011, and 2012. This includes the direction to maintain 
2010 civilian levels with exceptions.
    Mr. Loebsack. How does DOD determine what the right mix of 
military, civilian, and contractor personnel is? What analysis is 
performed to ensure that it is the right mix and how does the 
Department determine what work is done by each group? In addition, when 
reductions in one area are made, is it determined whether the work 
being done by that group will have to be transferred to another group? 
If so, is a cost-benefit analysis performed to determine whether the 
reduction will actually result in cost savings?
    Mr. Vollrath. The Strategic Workforce Planning construct of 
functional communities and mission-critical occupations; the inherently 
governmental and commercial activities inventory; the inventory of 
contracts for services; and force and infrastructure classifications 
are among the tools and processes used to determine appropriate 
workforce mix. Departmental guidance on manpower management is intended 
to ensure that Components apply the best workforce mix (military, 
civilian, or contract support) to missions, tasks, and functions; and 
requires associated risk mitigation and consideration of costs. 
Reductions in elements of the Department's Total Force of military, 
civilian, and contract support is based on a change in mission and 
associated reduction in workload, or an outright elimination of lower 
priority functions. If warranted, workload may be realigned from one 
sector of the workforce to another consistent with existing statutory 
and legislative requirements, as well as Departmental policies. These 
adjustments require that unless otherwise justified by mission or 
nature of work (e.g., inherently governmental, critical to mission 
readiness, maintain Government oversight and control), a cost benefit 
analysis must justify workload realignment. In all cases, under 
currently enacted laws, the realignment of workload from civilian to 
contract performance is currently prohibited regardless of any 
potential cost benefit.
                  QUESTIONS SUBMITTED BY MS. HANABUSA
    Ms. Hanabusa. In page five of your testimony, you say that 
``Changes in the civilian workforce must be done in a way that 
preserves mission essential skills and abilities over the long term.'' 
In regards to this statement I have some questions:
    What constitutes how you determine ``mission essential''?
    Specific example, would maintenance on a Virginia class submarine 
be essential? How would this be preserved during cuts to the workforce? 
During sequestration?
    Mr. Vollrath. Mission essentiality will vary dependent on each 
organization's missions, tasks, and functions. Moreover, work, tasks, 
and functions (and associated skills) essential to mission success in 
the Navy will differ from those in the other military services or those 
in Defense-wide agencies or activities, such as DOD Education Activity 
or the TRICARE Management Activity.
    In the specific example of Virginia class submarine maintenance, 
the Naval shipyard mission is to accomplish maintenance on ships and 
submarines, ensuring operational readiness by returning them back to 
the fleet on time, within budget, safely and with high quality 
workmanship. In order to sustain readiness, the Department of the Navy 
will balance essential requirements with available resources.

    Ms. Hanabusa. In your testimony, when asked if your workforce 
management plan was based on the ``best guess'' of DOD, you stated that 
the plan was data driven. Yet, Mr. Vollrath stated repeatedly at the 
hearing that their gap analysis was incomplete, and you yourself stated 
that DOD has not progressed on a competent gap analysis. If this is the 
case, then what specific data are you using to plan?
    Ms. Farrell. At this time, we have work underway reviewing DOD's 
mandated 2010-2018 Strategic Workforce Plan. The results of our review 
will be released in September 2012. GAO's assessments are based on the 
data that DOD provides to us related to how the Department developed 
its own plan. We found \27\ in a September 2010 report that DOD's 
workforce plans to date had mixed results. In that report, which 
assessed DOD's 2009 plan, we found that DOD had demonstrated some 
progress in addressing the legislative requirements related to its 
Civilian Human Capital Strategic Workforce Plan, but several key 
elements continued to be missing from the process--including such 
elements as competency gap analyses and monitoring of progress. 
Competency gap analyses enable an agency to develop specific strategies 
to address workforce needs and monitoring progress demonstrates the 
contribution of workforce planning to the achievement of program goals. 
For example, at the time of our review, because the plan discussed 
competency gap analyses for only 3 of the 22 mission-critical 
occupations and did not discuss competency gaps for the other 19 
mission-critical occupations, we determined that the requirement was 
only partially addressed.
---------------------------------------------------------------------------
    \27\ GAO-10-814R.
---------------------------------------------------------------------------
                   QUESTIONS SUBMITTED BY MS. SPEIER
    Ms. Speier. What data does the Government need to make accurate 
assessments of the costs of the Federal civilian versus the Federal 
contractor workforce? Please also specify whether this data should or 
should not include: costs of whether the work is performed on 
Government property; the total amount billed by contractors for the 
services provided; the total amount billed that is attributable to 
overhead costs of the contractor and of subcontractors of the 
contractor at any tier, and the percentage of total billing that is 
attributable to such overhead costs; the total costs to the Government 
if the services had been performed by Government employees, in 
accordance with Department of Defense cost-comparisons models, pursuant 
to section 129a(a) of Section 2330a of title 10; and the number of 
employees used by the prime contractor and by subcontractors of the 
contractor at any tier.
    Mr. Vollrath. Comparisons of costs to perform work can be 
influenced by any number of criteria and factors. The Department 
recognizes that numerous studies have been conducted both inside and 
outside of the Government related to such comparisons and what criteria 
are most appropriate. The data elements specified in the question can, 
in some instances, be useful to make an accurate cost comparison. There 
may be instances, based on other variables, where these elements may 
not be determined necessary for well-reasoned comparison. The 
Department is working with the Office of Management and Budget (OMB) on 
its effort to develop guidance and tools, including cost comparisons, 
to help agencies determine where rebalancing of work can save money.
    Ms. Speier. What do you attribute the disparity among our forces in 
implementation of effective cost analysis modeling? Do you believe that 
the approach the Army has taken would work for the other forces? How 
long would it take to implement across the Department?
    Mr. Vollrath. The Department has had a standardized set of business 
rules in place since January 2010 regarding the estimating of military, 
civilian, and contracted support performance of functions. A 
complementary cost modeling software solution has been under 
development, is undergoing final beta testing, and will soon be 
available Department-wide. The fielding of this software, and updated 
guidance that incorporates best practices and lessons learned from 
Department-wide cost analysis experiences, will ensure a more 
standardized implementation.
    Ms. Speier. What are DOD's current requirements for implementing 
effective cost analysis modeling to compare the costs of service, 
Federal, and contractor employees? What efforts does DOD have in place 
to improve these cost analyses? Are any of these improvements also 
seeking consistent cost modeling?
    Mr. Vollrath. The Department's requirements are contained within 
Directive Type Memorandum (DTM) 09-007, Estimating & Comparing the Full 
Costs of Civilian & Military Manpower & Contract Support. The policies 
and requirements contained within this DTM are currently being 
institutionalized in a DOD Instruction that incorporates lessons 
learned and best practices. To support this issuance, the Department is 
also preparing to field a costing software solution, the Full Cost of 
Manpower Tool, which is currently under final beta testing.

    Ms. Speier. What data does the Government need to make accurate 
assessments of the costs of the Federal civilian versus the Federal 
contractor workforce? Please also specify whether this data should or 
should not include: costs of whether the work is performed on 
Government property; the total amount billed by contractors for the 
services provided; the total amount billed that is attributable to 
overhead costs of the contractor and of subcontractors of the 
contractor at any tier, and the percentage of total billing that is 
attributable to such overhead costs; the total costs to the Government 
if the services had been performed by Government employees, in 
accordance with Department of Defense cost-comparisons models, pursuant 
to section 129a(a) of Section 2330a of title 10; and the number of 
employees used by the prime contractor and by subcontractors of the 
contractor at any tier.
    Ms. Farrell. The executive branch encourages Federal agencies to 
obtain commercially available services from the private sector when 
doing so is cost effective and when the work is not inherently 
governmental. To make accurate assessments of the costs of the Federal 
civilian versus the Federal contractor workforce, it is important to 
have reliable and accurate data. The Office of Management and Budget's 
Circular A-76 provides agency management with a structured process for 
comparing the public and private sector approaches and costs of 
performing commercial activities.
    Although we have not conducted work that addresses all of the costs 
in the question, we have issued reports on the costs and other issues 
related to civilian- and contractor-performed work. For example, in 
March 2008, we reported that the Army Contracting Agency's Contracting 
Center of Excellence paid up to almost 27 percent more for its 
contractor-provided contract specialists than for similarly graded 
Government employees but that the contractor employees had on average 
more contracting experience than the recent Government hires. \28\ We 
considered a variety of costs, including overhead and whether the work 
was performed on Government property. In March 2010, we reported that 
for three of the four task orders awarded by the State Department for 
security in Iraq that we examined, the cost of using Federal employees 
would be greater than using contractors. \29\ We considered a range of 
costs and estimated the total cost to the Government if the work had 
been performed by a Federal employee or contractor. In addition, in 
September 2011, we assessed DOD's review of various aspects of its 
public-private competition policies and found that the Department's 
review met statutory reporting requirements on public-private 
competitions. \30\ We reiterated our prior finding that the overhead 
rate used in the costs comparisons did not have a sound analytical 
basis, which leaves some uncertainty about whether that rate may be 
understated or overstated for any given public-private competition.
---------------------------------------------------------------------------
    \28\ GAO, Defense Contracting: Army Case Study Delineates Concerns 
with Use of Contractors as Contract Specialists, GAO-08-360 
(Washington, D.C.: Mar. 26, 2008).
    \29\ GAO, Warfighter Support: A Cost Comparison of Using State 
Department Employees versus Contractors for Security Services in Iraq. 
GAO-10-266R (Washington, D.C.: Mar. 4, 2010).
    \30\ GAO, DOD Met Statutory Reporting Requirements on Public-
Private Competitions, GAO-11-923R (Washington, D.C.: Mar. 4, 2010).
---------------------------------------------------------------------------
    More generally, we reported that in making the decision to use 
contractors, agencies have experienced challenges such as: determining 
which functions and activities should be contracted out and which 
should not to ensure institutional capacity; developing a total 
workforce strategy to address the extent of contractor use and the 
appropriate mix of contractor and Government personnel; identifying and 
distinguishing the roles and responsibilities of contractors and 
civilian and military personnel; and ensuring appropriate oversight, 
including addressing risks, ethics concerns, and surveillance needs. 
\31\
---------------------------------------------------------------------------
    \31\ GAO, Defense Management: DOD Needs to Reexamine Its Extensive 
Reliance on Contractors and Continue to Improve Management and 
Oversight, GAO-08-572T (Washington, D.C.: Mar. 11, 2008).
---------------------------------------------------------------------------
    Ms. Speier. What do you attribute the disparity among our forces in 
implementation of effective cost analysis modeling? Do you believe that 
the approach the Army has taken would work for the other forces? How 
long would it take to implement across the Department?
    Ms. Farrell. GAO has not conducted the work necessary to respond to 
this question.
    Ms. Speier. What are DOD's current requirements for implementing 
effective cost analysis modeling to compare the costs of service, 
Federal, and contractor employees? What efforts does DOD have in place 
to improve these cost analyses? Are any of these improvements also 
seeking consistent cost modeling?
    Ms. Farrell. GAO has not conducted the work necessary to respond to 
this question.
                  QUESTIONS SUBMITTED BY MR. SCHILLING
    Mr. Schilling. What are the workforce requirements that the U.S. 
needs in order to ensure there is not a single point of failure in our 
defense manufacturing capabilities?
    Mr. Vollrath. The Department successfully maintains and manages, 
within acceptable and manageable risk levels, our defense manufacturing 
capabilities. Given the future outlook of defense requirements, it is 
likely the Department will see a further contraction and consolidation 
of commercial and organic manufacturing. In order to mitigate risk, a 
Government workforce of highly trained personnel in armaments and 
ammunition manufacturing, among other things, is essential. Such a 
workforce is increasingly relevant if more production is privatized. A 
highly skilled workforce, which captures historic knowledge, will help 
ensure continuity of operations.
    Mr. Schilling. In your strategic plan you mentioned the need for a 
highly skilled civilian workforce. Does this include the organic 
manufacturing base?
    Mr. Vollrath. The DOD Strategic Workforce Plan (SWP) focuses on 
mission-critical occupations at the enterprise level. In addition, the 
next iteration SWP that is currently under development will also assess 
overall workforce health of each DOD functional community, including 
occupations supporting logistics and manufacturing work, through 
functional community managers at the Office of the Secretary of 
Defense, Military Departments and Defense Agencies. The organic 
manufacturing base does require a highly skilled civilian workforce to 
maintain continuity of operations and strategically plan for the future 
of the Department. For example, the ammunition supplied by the organic 
industrial base is critical to meeting the needs of the warfighter and 
requires highly skilled scientists, engineers, and acquisition 
professionals who have knowledge in armaments manufacturing. 
Maintaining a highly skilled civilian workforce to manage the organic 
manufacturing base reduces the risk that critical processes and the 
lessons learned from their implementation are lost.
    Mr. Schilling. How do you determine the definition of mission 
essential skills in the organic base, specifically arsenals?
    Mr. Vollrath. Mission essential skills in the organic industrial 
base that are specific to arsenals should be determined based on the 
unique capabilities and/or processes performed by the individual 
arsenals. In the circumstance of the Army's three ammunition production 
arsenals (Pine Bluff Arsenal, Rock Island Arsenal and Watervliet 
Arsenal), the highly skilled scientists, engineers and acquisition 
professionals that are necessary to operate, maintain and manage the 
armaments manufacturing process have mission essential skills. Mission 
essential skills at these locations may include knowledge of chemical/
biological defense production and repair, knowledge of prototyping and 
manufacturing, integration, testing and logistics, as well as 
procurement and product assurance for cannons, howitzers, mortars, and 
associated armaments for weapon systems.

    Mr. Schilling. What are the workforce requirements that the U.S. 
needs in order to ensure there is not a single point of failure in our 
defense manufacturing capabilities?
    Ms. Farrell. GAO has reported on the challenges that DOD faces in 
managing the defense industrial base, but has not specifically reviewed 
the workforce requirements for maintaining defense manufacturing 
capabilities. \32\ DOD, through its Annual Industrial Capabilities 
Report to Congress, reports on the health of various defense sectors, 
including the extent to which they face workforce challenges. For 
example, in the most recent report in September 2011, DOD cited 
concerns about the challenges faced by the aviation industry with an 
aging workforce and a decreased likelihood that a younger engineering 
workforce will remain in the industry due to the lack of new challenges 
and interesting things to do. Based on this, DOD recommended that 
adequate funding be identified to encourage innovation and to mitigate 
risk taking through company sponsored independent research and 
development activities. It also identified a growing need to address 
shortages in specific critical-skill sets, such as structural analysis, 
systems integration, and other critical military unique skills. The 
report also cites that efforts are underway through the current 
administration, private industry, and DOD programs to revitalize the 
U.S. Science, Technology, Engineering and Mathematics education, but 
does not specifically identify those efforts. In addition, DOD's Office 
of Under Secretary of Defense for Acquisition, Technology and 
Logistics, Office of Manufacturing and Industrial Base Policy is 
conducting a comprehensive sector by sector study of U.S. industry to 
guide the Department in sustaining the health, vibrancy, and efficiency 
of the industrial base, which may identify additional workforce 
challenges.
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    \32\ GAO, DOD Assessments of Supplier-Base Availability for Future 
Defense Needs, GAO-10-317R (Washington, D.C.: Jan. 27, 2010) and 
Department of Defense: A Departmentwide Framework to Identify and 
Report Gaps in the Defense Supplier Base Is Needed, GAO-09-5 
(Washington, D.C.: Oct. 7, 2008).
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    Mr. Schilling. Do you believe that arsenals are being included as 
they should be in the workforce requirements of DOD?
    Ms. Farrell. Since 2008, we have reviewed DOD's Strategic Human 
Capital Workforce Plans. \33\ Our reviews of those plans have found 
that DOD addressed the requirement to assess its critical skills. More 
specifically, the overall civilian workforce plan identified 22 
mission-critical occupations, \34\ which according to DOD represent the 
Department's assessment of critical skills. Given that each agency has 
its own set of unique challenges and its own approach for handling 
those challenges, we believe that the Department is in the best 
position to determine its critical skills and which segments of its 
workforce should be included as part of its determination of critical 
skills.
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    \33\ GAO-10-814R; GAO-09-235; and GAO-08-439R.
    \34\ DOD has identified 24 enterprisewide mission-critical 
occupations; 22 of these occupations are associated specifically with 
the overall civilian workforce and are discussed in the strategic 
workforce plan, while the remaining 2 are acquisition-related 
occupations--contracting and quality assurance--and are discussed in 
the Defense Acquisition Workforce Improvement Strategy (published as a 
separate report).
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