[Senate Hearing 118-657]
[From the U.S. Government Publishing Office]
S. Hrg. 118-657
POTENTIAL BUDGETARY EFFICIENCIES ACHIEVED
THROUGH IMPROVEMENT TO MANAGEMENT
AND PLANNING PROCESSES WITHIN DEPART-
MENT OF DEFENSE PERSONNEL PROGRAMS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
PERSONNEL
OF THE
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
JULY 26, 2023
__________
Printed for the use of the Committee on Armed Services
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Available via: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
60-411 PDF WASHINGTON : 2025
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COMMITTEE ON ARMED SERVICES
JACK REED, Rhode Island, Chairman
JEANNE SHAHEEN, New Hampshire ROGER F. WICKER, Mississippi
KIRSTEN E. GILLIBRAND, New York DEB FISCHER, Nebraska
RICHARD BLUMENTHAL, Connecticut TOM COTTON, Arkansas
MAZIE K. HIRONO, Hawaii MIKE ROUNDS, South Dakota
TIM KAINE, Virginia JONI ERNST, Iowa
ANGUS S. KING, Jr., Maine DAN SULLIVAN, Alaska
ELIZABETH WARREN, Massachusetts KEVIN CRAMER, North Dakota
GARY C. PETERS, Michigan RICK SCOTT, Florida
JOE MANCHIN III, West Virginia TOMMY TUBERVILLE, Alabama
TAMMY DUCKWORTH, Illinois MARKWAYNE MULLIN, Oklahoma
JACKY ROSEN, Nevada TED BUDD, North Carolina
MARK KELLY, Arizona ERIC SCHMITT, Missouri
Elizabeth L. King, Staff Director
John P. Keast, Minority Staff Director
_________________________________________________________________
Subcommittee on Personnel
ELIZABETH WARREN, Massachusetts,
Chairman
RICHARD BLUMENTHAL, Connecticut RICK SCOTT, Florida
MAZIE K. HIRONO, Hawaii MIKE ROUNDS, South Dakota
TIM KAINE, Virginia DAN SULLIVAN, Alaska
TAMMY DUCKWORTH, Illinois TED BUDD, North Carolina
(ii)
C O N T E N T S
_________________________________________________________________
July 26, 2024
Page
Potential Budgetary Efficiencies Achieved Through Improvement to 1
Management and Planning Processes Within Department of Defense
Personnel Programs.
Members Statements
Statement of Senator Elizabeth Warren............................ 1
Statement of Senator Rick Scott.................................. 4
Witness Statements
Mosher, David E., Assistant Director for National Security, 7
Congressional Budget Office.
Roark, Michael J., Deputy Inspector General, Evaluations 15
Component, Department of Defense, Office of Inspector General.
Field, Elizabeth, Director, Defense Capabilities and Management, 20
Government Accountability Office.
Questions for the Record......................................... 57
(iii)
POTENTIAL BUDGETARY EFFICIENCIES ACHIEVED THROUGH IMPROVEMENT TO
MANAGEMENT AND PLANNING PROCESSES WITHIN DEPARTMENT OF DEFENSE
PERSONNEL PROGRAMS
----------
WEDNESDAY, JULY 26, 2023
United States Senate,
Subcommittee on Personnel,
Committee on Armed Services,
Washington, DC.
The Subcommittee met, pursuant to notice, at 4:03 p.m., in
room 106, Dirksen Senate Office Building, Senator Elizabeth
Warren (Chairman of the Subcommittee) presiding.
Subcommittee Members present: Senators Warren, Blumenthal,
Kaine, Scott, and Budd.
OPENING STATEMENT OF SENATOR ELIZABETH WARREN
Senator Warren. This hearing will come to order. Good
afternoon. I want to welcome our witnesses for today's
Personnel Subcommittee hearing, and I want to offer a very
special thank you to Ranking Member Scott for helping on this
Committee and doing it on rather short notice.
Also, for our other Members for joining us as we examine
opportunities to save money at the Pentagon. Members of
Congress, and this Committee in particular, have a
responsibility to root out waste and price gouging in Pentagon
spending.
We owe it to the men and women of the military who rely on
us to fund the equipment activities they need to defend us, and
we owe it to the taxpayers who foot the bill. I don't think it
will be a surprise to anybody when I tell you, we have a lot of
work to do on this front. This year, the Department of Defense
requested $842 billion in funding.
Just last month, negotiators had barely agreed as part of
the bipartisan deal to lift the Nation and avoid default on the
Nation's debt, to limit this year's Department funding to only
100 percent of the amount that the Department actually
requested in the budget. While the defense industry howled that
$842 billion was simply not enough.
Now, some of my colleagues have already pledged that by the
end of the year they will pass a supplemental budget to give
the Department of Defense more money and are currently drawing
up plans for billions more in spending. If another huge
supplemental is approved by Congress, the total could be the
largest Pentagon budget since World War II.
I support funding our military so that it can do its job to
keep Americans safe. I support making sure that servicemembers
have the pay and benefits they deserve and the high quality
equipment they need to do their work safely.
I support adequate resources for the whole Department of
Defense to operate without cutting corners. I support ensuring
that Ukraine has the support it needs from the United States to
resist Russia's illegal war.
But reports from Pentagon watchdogs and budget experts,
both inside and outside Government, have repeatedly shown that
there are serious problems at the Department of Defense (DOD)
with wasting taxpayer dollars.
Reports from the Government Accountability Office (GAO),
the Department of Defense Inspector General, the Special
Inspector General for Afghanistan Reconstruction, the
Congressional Budget Office (CBO), the Cost Assessment and
Program Evaluation Office, I have now run out of fingers, and
the Pentagon's own auditors have all identified billions and
billions and billions of dollars that do nothing more than line
the pockets of giant defense contractors, often with little or
no oversight from the Pentagon.
When the Department of Defense comes to Congress to ask for
more money, we should be asking why they aren't putting in
place a few basic oversight tools to stop defense industry
price gouging.
Before DOD gets another dollar, they need to put checks in
place to stop paying $1,500 for a medical device that can be
purchased at Wal-Mart for $192, and just stop paying $1,800 for
vaccines that everyone else pays $125 for. Pentagon officials
themselves estimate that savings just from tightening up our
practices in hiring contractors, just that one area alone,
would be about $44 billion over 10 years.
Before we provide more money to the Pentagon, DOD needs to
explain to the American people why it is failing to implement
basic safeguards regularly employed by both families and
businesses. This hearing will focus on a few of the key
findings from budget experts. I appreciate their willingness to
appear as witnesses.
They have identified cost savings across the Pentagon's
work. But because this is the Personnel Subcommittee, we are
going to focus today on issues of waste related to how DOD buys
personnel related goods and services.
I will note as a measure of how little congressional
oversight there has been, and how determined Senator Scott and
I are to reel this back in, that this is only the second time
in the last 15 years that the Inspector General (IG) has been
invited to testify before this Committee. Before turning to our
witnesses, let me briefly highlight two key problems in this
Subcommittee's jurisdiction that clearly require congressional
oversight.
First, DOD fails to prevent price gouging by private
defense contractors, period. There is no real dispute about
this. One report after another from independent Inspector
General has documented that DOD contracting officers agree to
pay excessive prices without asking companies for
justifications and that companies delayed or refused to provide
cost data when requested.
Without that pushback, the U.S. taxpayer is just a sitting
duck for defense industry price gouging. By now, most people
know that over-the-top price gouging occurs on spare parts and
weapons systems. Earlier this year, I called out Boeing for its
failure to provide basic cost data for almost 11,000 items.
In other examples where that price data has been made
public, we learned that Boeing charged the Army $71, $71 for a
pin that should have cost $0.04. In another case, they charged
nearly $1,700 for a ramp gate roller assembly that DOD could
have purchased for $8--$1,700 for $8 item.
A recent investigation by 60 Minutes found that even after
adjusting for inflation, we are paying seven times more for
each missile we send to Ukraine than we paid in the 1990's. But
price gouging isn't limited to spare parts and weapons systems.
It also happens when DOD is paying for health care.
This week I wrote a letter to the Defense Health Agency
(DHA) highlighting pricing on health care items. For example,
DOD was paying $1,500 for breast pumps that Wal-Mart sold for
less than $200. The agency was paying over $1,800 for vaccines
that could be purchased for $125. Multiply that price gouging
by the high volume of purchasing in the military, and it is
clear that taxpayers are getting seriously ripped off.
Another way that taxpayers get gouged is through its
contractor workforce. Our Nation's defense is often supported
through contractors who feed our troops, house our military
families, transport needed equipment, and perform a ride range
of tasks that in past years were either done by Active Duty
military or by civilian employees.
Over the past quarter century, DOD spending on service
contracts has more than doubled, reaching over $205 billion in
fiscal year 2022. This has created a huge industry of military
contractors, turning them into billion dollar businesses. But
in many cases, hiring a contractor cost more than simply paying
a Federal employee to perform exactly the same function.
At a minimum, DOD should be examining each contract to make
certain the prices are reasonable and that the work cannot be
done directly by Federal employees for a whole lot less money.
But that is not what is happening. Instead of carefully
reviewing each Government contract, the GAO has determined that
DOD does not even know how many contractors it has and does not
effectively analyze long term costs.
DOD has failed to safeguard taxpayer money, and it has
opened the door to price gouging by Government contractors. It
is DOD's job to stop these rip offs. As I noted earlier, this
hearing will focus on cost savings and the jurisdiction of this
Subcommittee. We will also primarily focus today on places
where DOD can use authorities it already has.
But let me be crystal clear, if the Pentagon wants more
funding this year, above 100 percent of their budget request
that has already been fulfilled by Congress, then Congress
should at a minimum give DOD more access to cost and pricing
data from contractors, tie any increases in upfront payments to
contractors to requirements that they deliver goods and
services on time, remove a requirement in current law that
military services must send Congress pricey wish lists for
extra spending on top of their annual budget requests, require
contractors to disclose changes in average prices and gross
margins, and require any DOD component that fails to pass an
audit to return 1 percent of its budget back to Treasury.
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For many of these proposals, bipartisan legislation already
exists to make these changes. If other Senators want to dump
more money into the Department of Defense on top of fully
funding the budget they already have, then they should also
support including these commonsense measures to fight back
against price gouging.
So, I am pleased that we are here to talk about this, and I
call on Ranking Member Scott for an opening statement.
STATEMENT OF SENATOR RICK SCOTT
Senator Scott. First off, thanks for being here. I want to
thank Chairwoman Warren for doing this. You know, I am a
business guy, so you have to invest to get what you want done,
but you sure as heck don't want to waste any money. The easiest
way to spend money on something is through savings. It is a lot
easier than have to come up with new capital or borrow more
money, whatever you are doing.
I want to thank Chairwoman Warren for doing this, and we
have talked about doing another hearing in, I think, September,
we want to hear from other Members if they have anything they
want to talk about. But there has to be a hell of life savings
here, right?
The Department Defense is the Nation's largest employer.
Over 2 million people serve in our military in either an Active
or Reserve capacity. We have another 824,000 people who work as
DOD civilian employees. An additional 800,000 people support
the DOD through contract mechanism. That is a lot of people.
Between military personnel, civilian employees, contracted
labor, nearly 50 percent of the total defense budget is spent
on the DOD workforce, which in fiscal year 2023 equates to more
than $400 billion.
They are Americans. It is not just money in numbers.
They are serving our country, and I think every one of them
probably feels like they have a good, important mission to get
done. Each one of them is the reason why the work of this
Subcommittee is so important. There has been plenty of talk in
Washington that have excused the waste and inefficiencies of
the Department of Defense, saying, oh gosh, it is a big place.
I don't know if you can really do this there.
I think most of us think that is pretty ridiculous. We all
have to do it in our homes. We have to do it in our businesses.
Our families are doing it every day, especially at a time where
we are seeing ridiculous inflation. So, I think that we can
figure this out, and there are ways to save a lot of money. I
used to be in business at one time. I ran the seventh biggest
U.S. employer. We had to do it every day.
We had to keep coming up with efficiencies. None of our
customers says, ``I want to give you more money.'' None of our
shareholders said, ``we would like you to give us less of a
return.'' So, we had to constantly come up with this. As a
matter of fact, in some of the manufacturing companies I had,
by contract, by written contract, every year I had to cut 2
percent of my price--my cost, by contract.
Every year I was required to get 2 percent productivity
gains or make less money, and nobody wanted to get paid less,
nobody wants to make less. You just had to do it. It is all
doable.
I just want to thank you guys for what you do. I have only
been up here 4\1/2\ years, but I think every one of your
agencies actually is a real help to what we do in our jobs.
The report you put out, the information you put out is
actually very helpful to me. I think the DOD is in desperate
need of real, thorough, and consistent audits. I can't imagine
not doing an audit, a thorough audit. In the private sector,
when you have an audit and there is anything in the audit that
says ``we need to fix it,'' you have to fix it, you have to fix
it.
Your shareholders are going to hold you accountable, and
you are not going to keep your job if you don't go through that
audit and try to eliminate as many, if not all of the problems
before the next audit, not in 5 years. The next audit, you had
to try to get anything that was in there, and you had to get a
clean audit, or if you are the CEO, you would not have a job.
I think we have got to make sure that--this is a lot of
money. We want to have a lethal military. We want to support
our military. But it has got to be done where we don't waste
any dollars.
This is not about cutting spending. It is about spending
money efficiently and making sure that whatever we spend, it
means we are going to take care of our servicemembers and we
are going to have the most lethal force possible, so hopefully
nobody ever wants to do anything against us.
I don't think it's a hard concept. I think we all do it
every day in our life. The more efficiencies we can find--
either we can save money for the taxpayers of this country, or
we can make bigger investments to make sure we have a better
military. I don't think any of us want to slow down our
investments in defense, but also understand that we shouldn't
be doing things that we don't get a return on.
We ought to be hell bent on getting that done. We also have
to understand that it is getting harder and harder to recruit
in the military, so everybody there is more and more important.
If you look at it, just like in companies, we are spending more
dollars training people now than at any time. When my dad went
in, he was an ace in the Airborne.
They just sent him to the front lines. I don't know how
much training he got. I got a little bit, and then swabbed the
decks, cleaned the latrines a lot. Today, I think they are
getting a lot more training than when I got when I was in. In a
perfect world, our servicemembers would be used exclusively for
military-specific tasks.
But some jobs need to be done, and the uniformed
servicemember is the only person available to do it. But I
agree with Chairman Warren, we use a lot of civilians, and it
just can't cost as much money.
You come up here and you see how many companies have just
been created by provide services to sometimes it is our Federal
Government, sometimes it is just our military. The margins on
this stuff, I mean, we didn't make margins in the business I
was in that were like this.
We have got to make it easier for our servicemembers abroad
to find fulfilling work for their supporting spouses. I was
just traveling, and we had one individual that was telling me
that she had a very well-trained husband and couldn't get a job
where they were.
There is some crazy rule that was preventing--when I was
Governor of Florida, we tried to, and I am sure Senator Kaine
did the same thing, you are trying to make your State the most
military friendly State, and so you figure out how do you wave
everything you can so all the spouses can get a job because it
has a big impact on these, the ones that serve there, but also
their livelihood every day. We can't pay exorbitant salaries
for our military.
A lot of their spouses have to make a decent income to
survive. I recently heard--so this was just about the spouse, I
guess there is--with some of the individuals overseas, they
apply through USA Jobs. It is difficult that they can't get
jobs overseas to do telework in the United States. Some of the
stuff just doesn't make any sense.
We got to make this all easier. I think we have got to do a
review of all of our laws governing Federal civil service. We
want to make sure that it works like the private sector. You
want to be able to hire people when you want to hire them as
quickly as you can, but you want to be able to hold people
accountable.
If you can't hold people accountable, then unfortunately
you end up with the bad actors, not with the best employees. No
one wins in that situation. I think both Republicans and
Democrats have proposed things over--just even since I have
been up here, to try to make that better, but often there is
some special interest to try to prevent that. Hopefully we can
go through all these things.
I think this is going to be a good hearing, but I think
there is more to be done to try to find efficiencies and force
these efficiencies so we can make sure we make good
investments. Thanks for being here. Thanks for what you do
because your reports are really good.
Senator Warren. Thank you very much. Terrific opening
statement. I also want to say thank you to our witnesses for
appearing and thank you for your work. We are going to have one
panel today that is composed of Government watchdogs and budget
experts.
Mr. David Mosher, the Assistant Director for National
Security for the Congressional Budget Office, is with us. Mr.
Michael Roark, who is Deputy Inspector General for the
Evaluations Component of the Department of Defense Inspector
General, and Ms. Elizabeth Field, the Director for Defense
capabilities and Management at the Government Accountability
Office. Thank you all again for appearing today.
Mr. Mosher, you are recognized for 5 minutes for an opening
statement.
STATEMENT OF DAVID E. MOSHER, ASSISTANT DIRECTOR FOR NATIONAL
SECURITY, CONGRESSIONAL BUDGET OFFICE
Mr. Mosher. Thank you very much, Senator. Thank you,
Senator Scott and the committee for inviting me to come
testify. I appreciate the opportunity to talk a little bit
about reducing DOD's compensation costs.
The size of DOD's compensation budget actually is not very
well defined. I know we have a nice pie chart there, and the
challenge is like, what is that $205 billion number? It is not
well-defined.
It is better defined on the military side and on the
civilian compensation side, but definitely in the biggest hole
and is the biggest uncertainty is service contractor workforce,
and that is because DOD really collects and publishes very
incomplete data about that workforce. DOD's total workforce
consists of three types of labor, military personnel, both full
time and part time, Federal civilians, as well as service
contractors.
DOD refers to this is their total force. It is something
you try to manage and balance and get the right capabilities to
the right needs. Compensation for the three types of labor is
largely found in the military personnel account, as well as the
operations and maintenance (O&M) account, although there is
some--operation and maintenance--although there is some in the
research and development (R&D) account as well.
I am focusing on service contract labor, and just to be
clear here, these are contractors who are personnel who are
hired by private companies under service contracts awarded
expressly to augment civilian and military personnel within
DOD. Service contractors provide a wide range of activities.
As you alluded to, Senator Warren, you can't go to a
military base without running into a large number of service
contractors doing very important functions. So just to be
clear, though, I am not talking about people who are hired by
companies who produce goods and weapons that the Department
buys. I am focusing on that other group. How big is DOD's
workforce? We actually don't know.
We know that DOD plans to have at the end of this year
about 2.2 million full time personnel, 1.4 on the military side
and about 800 million on the civilian side. But there is no
centralized accounting for the service contractors, and
estimates range widely from sort of 250,000 was the number that
the Congressional Research Service (CRS) published a year or
two ago, to numbers that are two to three times that amount.
But we don't know, and on that higher end, it rivals the
duty civilian workforce in size. What is the cost of DOD's
workforce? Again, we don't know. We can't get all the pieces of
it. Roughly one-third of annual--DOD's annual budget is devoted
to compensation for military and civilian personnel working
directly for the Department.
That is about $279 billion in 2023. If you include service
contractors, that number could be, as Senator Warren suggested,
close to half of DOD's annual budget. We can't be more precise
in--precisely because we do not get data from DOD that allows
us to do that, in the same way that we get very good data about
military personnel and civilians.
DOD, for example, reports that the budget authority for
service contracts in 2022 was about $95 billion. But Office of
Management and Budget (OMB) data indicates this number could be
as high as $274 billion. This is for the contract dollars, not
necessarily the labor costs.
I will get to that in a moment. We have looked, CBO,
throughout the years at reports at how to reduce DOD's
compensation costs by changing policies mostly. A good example
of that is our options for reducing the deficit budget volume
we reduce--we produce every 2 years. I have highlighted some of
those in my written testimony.
But savings from that for these kinds of policy changes
would be roughly $1 to $3 billion for each of those a year over
10 years, which is 1 to 2 percent of DOD's compensation budget
for the military.
Small changes, but those compound over time with pay
raises, etcetera, that can grow into larger savings. We haven't
been able to look at that for service contractors. One other
thing I want to note and a very important piece of compensation
for the military are veterans benefits.
They are essential to how DOD recruits and retains staff.
It is an important promise that we make to our servicemen and
women. The Department of Veterans Affairs (VA's) budget
requests this year, just for some context, was $320 billion.
So, it is the highest it has ever been for 2024--about twice
the size of DOD's military compensation budget. CBO's options,
we do options looking at that, we have come up with options
that range from about $1 billion a year on average, to more
than $25 billion a year if you make some policy changes.
So, what would be the value of more comprehensive data on
service contractors? First, I think, and my colleagues from GAO
can go into this at great length much better than I can, but it
helps the Department manage its workforce, understand where the
costs are and then what the important things are.
It also provides some transparency so that if we make
changes, DOD makes changes in personnel policy where it wants
to, say, cut military personnel or civilians, that you don't
see costs grow up in service contracts in a way that you can't
anticipate. If you can't track numbers, it is hard to follow
that, and of course, it helps with congressional oversight,
which is a very important one.
We have some specific suggestions about how to do that in
our about changes we would like to see in the way DOD reports
data to the Congress, and that would help with us in our
analysis and understanding the service contractor workforce.
That concludes my remarks, and I want to thank you for the
opportunity, and welcome your questions.
[The prepared statement of Mr. Mosher follows:]
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Senator Warren. Thank you very much. Thank you for being
with us, Mr. Mosher. Mr. Roark, you are recognized for 5
minutes.
STATEMENT OF MICHAEL J. ROARK, DEPUTY INSPECTOR GENERAL,
EVALUATIONS COMPONENT, DEPARTMENT OF DEFENSE, OFFICE OF
INSPECTOR GENERAL
Mr. Roark. Good afternoon, Chairman Warren, and Ranking
Member Scott, and distinguished Members of the Subcommittee.
Thank you for inviting me to appear before you today to discuss
our important oversight work on Department of Defense
healthcare.
Today, I will discuss three reports: two reports where we
identified that additional procedures were needed to contain
healthcare costs, and one report that showed that the DOD
effectively implemented procedures to control costs.
In April 2018, we issued a report on TRICARE payments for
breast pumps and replacement parts. In December 2014, public
law authorized the Defense Health Agency (DHA) to pay for
manual and standard electric breast pumps and replacement
parts.
However, the DHA did not implement maximum reimbursement
rates for standard electric breast pumps and replacement parts.
Instead, DHA paid the amount that suppliers billed, unless
TRICARE regional contractors had negotiated a rate with
suppliers. We determined that the DHA overpaid $16.2 million
for breast pumps and replacement parts for TRICARE
beneficiaries in 2016.
Specifically, DHA overpaid for over 91 percent of breast
pumps and nearly 57 percent of replacement parts. We made two
recommendations to address the deficiencies we identified.
Specifically, we recommended that the DHA only use suppliers
that have entered into agreements and have fixed reimbursement
rates to provide breast pumps and replacement parts.
We also recommended the DHA recoup payments from the
suppliers that billed excessive amounts for breast pumps and
replacement parts. In August 2019, we issued a report on
TRICARE payments for various healthcare services and equipment.
Specifically, we focused on claims for which the DHA paid
the amount the provider billed, or also known as paid as
billed, for items with high claim costs such as vaccines,
contraceptive systems, compression devices, oral appliances for
the treatment of sleep apnea, charges for the installation of
durable medical equipment, and costs associated with obtaining
stem cells that were provided to beneficiaries in the TRICARE
regions in 2017.
We determined that the DHA regularly paid more than pricing
benchmarks for services and equipment where it did not
establish or use existing TRICARE maximum allowable
reimbursement rates. For example, the DHA paid $3.1 million
more than pricing benchmarks for 65 percent of vaccines.
We identified examples of the DHA paying more than pricing
benchmarks for other items such as durable medical equipment
and costs associated with obtaining stem cells. For example,
the DHA paid one supplier as much as $5,000 a month to rent a
vascular compression device, while two other suppliers rented
the same device for only $700 a month.
We made a total of seven recommendations to DHA, including
identifying the reasons why TRICARE region contractors were not
using the existing maximum allowable reimbursement rates,
reviewing opportunities to implement maximum allowable
reimbursement rates, periodically reviewing those rates, and
updating TRICARE policy.
We also recommended that the DHA recoup overpayments and
seek voluntary refunds from TRICARE providers where the DHA
paid more than pricing benchmarks. Finally, in September 2020,
we issued a special report on the actions the DHA took to
control costs for healthcare claims associated with COVID-19,
including eliminating co-payments and cost shares for COVID-19
diagnostic testing, clarifying access to behavioral health
services via telehealth, and implementing temporary TRICARE
regulation changes in response to COVID-19.
As a result, managed care support contractors deferred or
manually paid claims pending system and pricing updates and
created dashboards to share information and perform data
analytics on health care claims related to COVID-19.
The DHA also implemented other initiatives to monitor that
COVID-19 claims were paid and tracked properly, and that
potentially fraudulent COVID-19 related services were
identified.
Through these actions, the DHA reduced the risk of medical
providers exploiting the pandemic for personal gain and
possibly preventing improper payments before they could occur.
This concludes my statement, and I would be happy to answer any
questions you may have.
[The prepared statement of Mr. Roark follows:]
Prepared Statement by Michael J. Roark
Good afternoon Chairwoman Warren, Ranking Member Scott, and
distinguished Members of the Subcommittee. Thank you for inviting me to
appear before you today to discuss our oversight work on the Department
of Defense (DoD) health care.
Providing for the health and well-being of Service members and
their families is critical to DOD recruitment, retention, and
readiness. The annual DOD OIG DOD top management and performance
challenge reports have consistently highlighted the important
challenges facing DOD health care, including rising health care costs.
For example, in 2020, the DOD OIG reported that the DOD must reduce
vulnerabilities for health care fraud within the Military Health System
and control rising health care costs. In 2021, the DOD OIG reported
that the DOD faced challenges, such as fraud, acquisition reforms, and
payments for health care services with limited or no cost controls.
One of the leading contributors to increasing health care costs is
fraud. Health care fraud continues to be one of the top investigative
priorities for the DOD OIG's Defense Criminal Investigative Service
(DCIS). DCIS investigations span the spectrum of health care fraud, to
include pharmacy services, TRICARE, public health, medical facilities,
medical practitioners, health care kickbacks, and pharmaceutical fraud.
DCIS is primarily responsible for most TRICARE related fraud
investigations, and currently has an investigative case count of over
600 cases up from 565 cases in fiscal year 2022.
The DOD OIG also conducts audits and evaluations to provide
oversight of DOD health care. Today I will discuss three audit reports,
two reports where we identified that additional procedures were needed
to contain health care costs, and one report that showed that the DOD
effectively implemented procedures to control costs.
tricare payments for breast pumps and replacement parts
On April 25, 2018, we issued a report on TRICARE payments for
breast pumps and replacement parts. \1\ The objective of this audit was
to determine whether the DOD paid reasonable prices for standard
electric breast pumps and replacement parts from suppliers in the
TRICARE program.
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\1\ DOD OIG Report No. DODIG-2018-108, ``TRICARE Payments for
Standard Electric Breast Pumps and Replacement Parts,'' April 25, 2018.
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In December 2014, Public Law authorized the Defense Health Agency
(DHA) to pay for manual and standard electric breast pumps and
replacement parts. \2\ The DHA implemented a policy, effective December
19, 2014, allowing beneficiaries to obtain either one manual breast
pump or one standard electric breast pump per birth event. This policy
also permitted beneficiaries to receive breast pump replacement parts,
including tubing, adapters, bottle caps, shields, bottles, and locking
rings, as necessary for up to 36 months.
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\2\ Public Law 113-291, ``Carl Levin and Howard P. `Buck' McKeon
National Defense Authorization Act for 2015,'' December 19, 2014.
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The DHA reimburses medical procedures, services, and supplies using
various reimbursement methodologies to establish maximum reimbursement
rates to ensure that payments are reasonable. A TRICARE maximum
allowable reimbursement rate is the payment ceiling for reimbursement
to providers. However, the DHA did not implement maximum reimbursement
rates for breast pumps and replacement parts. Instead, the DHA paid the
amount that the suppliers billed for the breast pumps and replacement
parts, unless the TRICARE regional contractor had a negotiated rate
with the suppliers.
We determined that the DHA overpaid for standard electric breast
pumps and replacement parts for TRICARE beneficiaries in the three
TRICARE regions in 2016. Specifically, the DHA overpaid for:
54,006 of 59,241 breast pumps (91.2 percent); and
380,911 of 671,112 replacement parts (56.8 percent).
This occurred because the DHA did not require contractors for the
three TRICARE regions to use only suppliers that had fixed
reimbursement rates for breast pumps and replacement parts. As a
result, we calculated that the DHA overpaid $16.2 million for standard
electric breast pumps and replacement parts provided to TRICARE
beneficiaries in all three TRICARE regions in 2016.
We made two recommendations to address the deficiencies we
identified. We recommended that the DHA Director use only suppliers
that have entered into agreements that have fixed reimbursement rates
to provide standard electric breast pumps and replacement parts
throughout all TRICARE regions. We also recommended that the DHA
Director review and pursue appropriate action, such as recouping any
overpayments from the suppliers that billed excessive amounts for
breast pumps and replacement parts. Both recommendations are closed.
tricare payments for health care services and equipment
On August 20, 2019, we issued a report on TRICARE payments for
various health care services and equipment. \3\ The objective of this
audit was to determine whether the DHA paid higher prices than
necessary for TRICARE health care services and equipment where it did
not establish or use existing TRICARE maximum allowable reimbursement
rates.
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\3\ DOD OIG Report No. DODIG-2019-112, ``Audit of TRICARE Payments
for Health Care Services and Equipment That Were Paid Without Maximum
Allowable Reimbursement Rates,'' August 20, 2019.
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We focused on claims for which the DHA paid the amount the provider
billed (paid-as-billed) for vaccines and contraceptive systems, such as
human papillomavirus (HPV) vaccines and intrauterine devices;
compression devices; oral appliances for the treatment of obstructive
sleep apnea; charges for the installation of medical equipment; and
costs associated with obtaining stem cells that were provided to
beneficiaries in the TRICARE North, South, and West Regions in 2017. We
selected those services for review because of their high claim costs.
We determined that the DHA regularly paid more than other pricing
benchmarks for services and equipment where it did not establish or use
existing TRICARE maximum allowable reimbursement rates. Specifically,
the DHA paid more than other pricing benchmarks for vaccines,
contraceptive systems, compression devices, oral appliances, costs
associated with the installation of medical equipment, and stem cell
acquisition provided to TRICARE beneficiaries in the three TRICARE
regions in 2017. For example, the DHA paid more than other pricing
benchmarks for 70,248 of 107,953 vaccines (65 percent), and 1,341 of
5,450 contraceptive systems (25 percent).
This occurred because the DHA did not:
use existing TRICARE maximum allowable reimbursement
rates or other industry pricing benchmarks to pay TRICARE claims for
vaccines and contraceptive systems;
identify services and equipment that were paid at prices
that exceeded other pricing benchmarks;
define in TRICARE guidance what would constitute an
excessive payment for TRICARE services and equipment, and provide
instructions to its TRICARE contractors to identify and limit these
charges; or
consistently revise TRICARE reimbursement methodology to
align with Medicare reimbursement methodologies when paying for TRICARE
services and equipment.
As a result, of the $18.1 million reimbursement that we reviewed,
the DHA paid $3.9 million more than other pricing benchmarks for
vaccines and contraceptive systems provided to TRICARE beneficiaries in
the three TRICARE regions in 2017.
We also identified examples of the DHA paying more than other
pricing benchmarks for durable medical equipment, and costs associated
with obtaining stem cells. While we were unable to quantify the total
magnitude, the examples showed that the DHA paid excessive prices and
continues to waste funds on other services and equipment that are paid-
as-billed. For example, the DHA paid a supplier as much as $5,000 per
month to rent a vascular compression device while two other suppliers
rented the same device for approximately $700 per month.
Finally, DHA policy requires beneficiaries in certain TRICARE
categories to pay cost shares for equipment. Therefore, TRICARE
beneficiaries will continue to pay higher out-of-pocket costs if the
DHA does not establish or use existing TRICARE maximum allowable
reimbursement rates. For example, DHA policy requires beneficiaries in
certain TRICARE categories to pay a 20-percent cost share for durable
medical equipment. TRICARE beneficiaries paid costs of $1,000 when a
TRICARE supplier billed $5,000 for the vascular compression device
rental discussed earlier. This $1,000 cost share far exceeded the
prices offered by two other DME suppliers that rented the same device
for approximately $700.
We made a total of 7 recommendations to the DHA Director:
identify the reasons why TRICARE region contractors did
not use existing TRICARE maximum allowable reimbursement rates, take
immediate actions to confirm that TRICARE claims for vaccines and
contraceptive systems are paid using the TRICARE maximum allowable
reimbursement rates, and recoup overpayments;
determine whether TRICARE region contractors applied
TRICARE maximum allowable reimbursement rates to health care services,
other than just vaccines and contraceptive systems;
determine whether the DHA should adopt vaccine
manufacturer rates as reported by the CDC when reimbursing TRICARE
claims for vaccines, and if adopted, regularly update rates to stay
current with the vaccine manufacturer rates;
conduct annual reviews to identify health care services,
supplies, and equipment for which TRICARE paid higher prices, and
establish and implement new TRICARE maximum allowable reimbursement
rates accordingly;
revise TRICARE policy to incorporate wording regarding
reasonable cost and being a prudent buyer similar to the related
clauses in 42 Code of Federal Regulations (CFR) 405.502 and Centers for
Medicare and Medicaid Services Publication 15-1, ``Provider
Reimbursement Manual'';
revise TRICARE reimbursement methodologies to align with
the Medicare program, and establish an annual process to identify
recent changes to Medicare reimbursement methodologies; and
seek voluntary refunds from TRICARE providers where the
DHA paid more than other pricing benchmarks identified in this report.
As of March 2023, 6 recommendations were closed, and one recommendation
is resolved, but open.
dha controls implemented to control costs for tricare covid-2019
related services
On September 3, 2020, we issued a special report on the actions the
DHA took to control costs for health care claims in the first year of
the coronavirus disease-2019 (COVID-19) pandemic. \4\
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\4\ DOD OIG Report No. DODIG-2020-125, ``Special Report: Controls
Implemented by the Defense Health Agency to Control Costs for TRICARE
Coronavirus Disease-2019 Pandemic Related Services,'' September 3,
2020.
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The DHA issued several letters to the managed care support
contractors (MCSCs) providing guidance on claims processing for COVID-
19 related claims. The letters included clarifying guidance and various
new requirements for the MCSCs to implement related to:
eliminating co-payments and cost shares for COVID-19
diagnostic testing;
clarifying access to behavioral health services via
telehealth;
eliminating co-payments and cost shares for COVID-19
serology testing; and
implementing temporary TRICARE regulation changes in
response to COVID-19.
As a result, the MCSCs deferred or manually paid claims pending
system and pricing updates and created dashboards to share information
and perform data analytics on health care claims related to COVID-19.
The DHA also implemented other initiatives. For example, the DHA:
established work groups to monitor and address COVID-19
issues related to DOD healthcare;
updated the pricing system and instituted special
processing codes to ensure COVID-19 claims are paid and tracked
properly; and
added parameters to the annual risk registry that allows
the DHA to monitor and track potential fraudulent COVID-19-related
services.
Through these actions, the DHA took steps to reduce the risk of
medical providers exploiting the pandemic for personal gain and
possibly prevented potential improper payments before they could occur.
With the elimination of co-payments and cost shares and the expansion
of telehealth and behavioral management services, the DHA provided more
flexibility for providers and beneficiaries during the COVID-19
pandemic, which enabled beneficiaries to receive the care they needed.
This concludes my statement and I would be happy to answer any
questions you have.
Senator Warren. Thank you, Mr. Roark. Ms. Field, you are
recognized for 5 minutes.
STATEMENT OF ELIZABETH FIELD, DIRECTOR, DEFENSE CAPABILITIES
AND MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Field. Thank you. Chairwoman Warren, Ranking Member
Scott, and Members of the Subcommittee, thank you for inviting
me to testify on GAO's work regarding the many challenges and
opportunities that DOD faces related to personnel management.
With a total of almost 3 million Active Duty
servicemembers, Reservists, and civilians, not to mention
countless contracted personnel, the Department of Defense is
one of the Nation's biggest employers.
That also means that DOD's workforce is one of its biggest
cost drivers. In determining personnel requirements, the charge
to defense officials is clear, use the least costly mix of
personnel while ensuring the workforce is sufficiently sized
and comprised of the appropriate mix of military, civilian, and
contractor personnel with the right skills to carry out the
mission. I want to emphasize that first part, the using the
least costly mix.
As you know, the Federal Government is on an unsustainable
long term fiscal path. At the end of fiscal year 2022, debt
held by the American public was about 97 percent of GDP.
Moreover, the fiscal year 2022 Federal budget deficit was the
fourth largest in U.S. history. As the largest single category
of discretionary spending, the defense budget deserves
scrutiny.
At the same time, we know that ensuring DOD can carry out
its mission is vitally important. The military services are
today facing what some have called the greatest recruiting
challenge in a generation, all while we encounter increasingly
complex and bold threats from China, Russia, and non-State
actors.
Through our work at GAO, we have identified obstacles that
can hinder defense officials' ability to strike the correct
balance between efficiency and effectiveness in shaping their
workforce: things like unreliable data, overly complicated
hiring mechanisms, arbitrary staffing cuts, and antiquated
Department processes.
We have also identified ways in which DOD could potentially
cut costs by better managing its resources. In an organization
as large and complex as DOD, it can be hard to appreciate what
these challenges and opportunities really look like, so I would
like to briefly offer one example.
The military health system relies on more than 240,000
Active Duty, Reserve, civilian, and contractor personnel to
provide both operational medical care in support of war and
contingencies, and to provide beneficiary care to about 9.4
million eligible people. In 2018, we identified weaknesses in
DOD's approach to managing its workforce for both operational
medical care and beneficiary care.
For example, we reported that in determining medical
personnel requirements for operational care, the Army, Navy,
and Air Force were relying solely on military personnel, even
though civilian and contractor personnel had been used in
operational settings. We also found that the Military
Departments were not considering the full cost of Active
personnel compared to Reservists.
This is significant because Reserve forces are generally
less costly than similar Active component units. In terms of
beneficiary care at military medical treatment facilities, or
MTFs, we reported that DOD faced numerous challenges
implementing its planned workforce mix but had not developed a
strategic workforce plan for managing them.
For example, we found that DOD had not clearly determined
how it planned to mitigate the effect of military personnel
deployments on MTF operations. In one instance, we learned that
due to overlapping deployments, eight of nine general surgeons
at a military hospital were deployed at the same time, leading
to a gap in coverage.
We also found that DOD had not developed a sound strategy
for addressing vacancies in civilian positions, a problem that
has led some MTFs to discontinue providing certain medical care
due to patient safety concerns or to backfill positions with
military personnel, which can be unnecessarily costly and erode
morale.
We further reported in 2018 that in planning for the
transition of MTFs from the military Departments to the then
new Defense Health Agency, DOD had not validated headquarters
level personnel requirements or conducted a comprehensive
review that considers the least costly mix of personnel.
Although DOD concurred with the many recommendations we
made, the Department has yet to fully implement them. Doing so,
especially now that the MTF transition has occurred, is even
more important for ensuring that DOD strikes that difficult
balance between ensuring medical readiness and providing sound
patient care on the one hand and cutting unnecessary costs on
the other.
In fact, GAO has estimated that DOD could save millions of
dollars by implementing some of these recommendations. Thank
you, and I look forward to your questions.
[The prepared statement of Ms. Field follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Warren. Thank you, Ms. Field. I appreciate your
being here and appreciate your testimony. I recognize Senator
Kaine for 5 minutes.
Senator Kaine. Thank you, Chairwoman Warren, and thank you
to our witnesses. I think I am going to make my comments maybe
a little bit more for my colleagues and--but also to share with
these witnesses or experts some frustrations I have and why I
am glad that the chair and ranking Member have decided to do
this hearing and then hopefully embrace others.
I have been very frustrated in my 10 years on the Committee
about the absence of real analysis of major initiatives that we
undertake within the Pentagon, and I am just going to use two,
military housing, and then the formation of the DHA and the
military medical services that Ms. Field discussed.
The Pentagon made a decision, no doubt, for both cost and
quality reasons in the 1990's, to push a privatized housing
model. It is not our core expertise. Why don't we let housing
companies do it? It is not warfighting, let others do it, and
if they do it, they may be able to save us money and also offer
higher quality accommodations to military members and families.
It has been a pretty big failure, and I think the failure
is more on the Pentagon side of the ledger even than the
private provider side of the ledger, because the contracts that
were set up gave the Pentagon significant oversight
responsibility.
For example, on a base, the base commander was to hold back
payment until the end of the year to some certain percentage
and then decide whether the provider had merited some, or all,
or none of that payment based on performance. Instead, the
pattern was essentially for the base commanders to just release
all the money at year end, regardless of performance.
The contracts with the private providers were set up so
that at some midpoint in these long term contractual periods,
the Pentagon could step back and do an assessment, are you
meeting the needs of our families? If not, we need to
renegotiate the contract. That midpoint came. There was no
renegotiation done.
Just steady State, it is now off our shoulders, so it is on
the shoulders of these housing providers, and the housing
providers weren't being incentivized to really treat our
military family members the way that they would treat
commercial clients, because all these providers also had
commercial business.
They treat their commercial clients better because they
would leave and go somewhere else if they didn't. They started
to treat our military families sort of as hostages. We ended up
making it worse. We had as a key theme to the NDAA [National
Defense Authorization Act] a few years ago, there was an effort
to push cut in headquarter staff, a non-defined, across the
board cut in headquarters staff without really digging into who
are headquarters staff.
I fought very hard against an across the board headquarters
staff cut. I was unsuccessful. A couple of years later, this
housing thing blew up in our face, and we went back and looked
at what was the headquarters staff that was cut. In all of the
offices that were charged with the responsibility of overseeing
these housing contracts, they were losing 30, 40, 50, 60
percent of their staff, and surprise, surprise.
To quote a famous Marine, Gomer Pyle, surprise, surprise,
when you cut all the housing staff, suddenly the oversight gets
worse, and the quality gets worse. A program that was designed
to save money and a program that hopefully was going to lead to
a better result, ended up, frankly, probably doing neither.
We have had to come in, and we are making progress, but we
are still not really where we are. We ought to have great both
cost and quality tools to assess a program like this.
Similarly, the different service branches had their own
military expertise. The decision was made based on a study that
was done in 2011 to try to put this together in a combined DHA.
I still hear all kinds of constituent complaints from
servicemembers in Virginia and their families about waiting
lists and insufficient access to services from the DHA. Ms.
Field, you talked about areas where the DHA is spending more
than they need to or having a hard time recruiting people into
key positions.
Where I hear about it is from our military members and
their families who have a hard time getting access to services,
particularly in the mental health space. We have had a raft of
military suicides at the mid-Atlantic Regional Maintenance
Center in Norfolk and in ships that are in dry-dock for
extended periods, and often the availability of mental health
services is weak.
One of my staffers went on a carrier avail recently, and on
the entire carrier there were two mental health psychologist
positions for this huge group of people, and one was vacant. My
staffer asked, okay, how long has this position been vacant?
For a very long time. Well, what is the salary that you would
pay this psychologist?
The salary is $85,000. You would make so much more than
that having a psychology practice in suburban Arlington,
Virginia, or virtually anywhere in the country, and you
wouldn't have to be deployed on a carrier for months at a time
away from your family. We are not going to fill that position
at that salary.
These are two instances of big initiatives, transitioning
healthcare into a DHA environment. Transitioning housing from
the military provides it, to let's get the housing experts to
do it. Both are continuing to show major problems. I am not
sure either really produce savings or produce better quality of
service to our military men and women.
I don't really have a question for you, but I guess Senator
Scott asked me, do you have some issues that are on your mind
that can inform future discussions?
I would like to know when we embrace these major
initiatives, how do we measure them to make sure they are doing
what we say and how do we maybe get hold of it quicker if it is
going the wrong direction, to turn it in a positive direction
rather than just keep investing in something that is not
bearing out as it should?
I will just stop there, but I am really happy that you are
doing this, and I do want to make sure we focus on the dollars,
but I also want to focus on the bang for the buck. If the
dollars are being wasted and we are not getting the service
that we need to either promote lethality or protect our people,
then I think we have got a lot of work to do, and I appreciate
the Committee for tackling this.
Senator Warren. Thank you very much, Senator Kaine, and the
reminder, this is the first of more than one hearing as we try
to dig in better on these issues. I really appreciate your
comments here and the points you highlight. Senator Scott.
Senator Scott. To followup with one other thing Kaine said.
I come from a business background, so my first reaction is, it
is not that the business was bad, right? Was the structure of
the deal wrong?
Was there no accountability? Was there no measurement? Did
it never make, you know--and we don't even have a conversation
like that. It is like we just want to blame somebody, whoever
we want to blame. It is not something that should be hard to
figure out.
In business, you have the ability and there are all these
organizations now that you can compare your costs, all this
stuff to somebody else now. There are all these comparative
groups that you can buy into, and I wonder, I have never heard
of any part of the Federal Government, especially DOD, ever
doing that.
Going back to Mr. Roark, let me ask you a question. When I
became Governor of Florida back in 2011, our Medicaid program--
we bid it out, and the benefit of doing it is we knew our cost
and we also could hold somebody accountable for access and
quality, right, and outcomes. But you had to put all this
measurement in there.
One thing that surprised me, we didn't have any program
where somebody could say, okay, so I wasn't responsible for
buying after that. If you are talking about breast pumps, I
didn't have to buy breast pumps, it was their responsibility to
do that.
They have a contract with TRICARE, they bid it out, and
then the Government is responsible for the purchase of
equipment?
Mr. Roark. Senator, in this case, when Congress passed the
law that enabled breast pumps, I think what happened was that a
lot of suppliers set up websites and so forth and let military
spouses and military members know that this benefit was
available to them, but they didn't have the prices on the
website.
Then they--DHA hadn't set up the price ceiling or the price
cap, if you will, and so, therefore, if there is no price cap
in place, then it just goes into this paid as billed category,
as I mentioned in my statement.
Senator Scott. It is outside of the contract?
Mr. Roark. Correct, and so, the contractor in that case
just pays as billed. If there is a cap, then they can only go
up to that amount. I think that that is the key point here.
Senator Scott. Do they not use any of these group
purchasing organizations? Because there are a bunch of them
now. Now in fact one of my own companies has the biggest in the
country, and I mean all that stuff, you are guaranteed the
lowest price. They don't do that?
Mr. Roark. What we did as the OIG to try to oversee this
particular item is that we went to look for other benchmarks,
like you said. Whether that is other Federal health care
programs, Medicare, Medicaid, or whether that is retail prices,
you know, we were kind of searching for, you know, what would
be a reasonable price for these items.
However, I think that that is the concern and to some
degree the frustration with the pay to billed model, which is,
you know, there is a competing interest where DHA wants to get
the item out to servicemembers in a timely manner, so there is
the kind of--some incentive to do that quickly. On the other
side, we also want to ensure that we get what we paid for, and
we pay a fair price, and so achieving that balance is
critically important.
Senator Scott. So, in your report when you look at DHA
overpayments, was it a little bit of money? Was it--and so, you
have the numbers on how much it is? Are we talking about quite
a bit of money?
Mr. Roark. Correct. For breast pumps, the total amount that
was paid in 2016 was about $28 million, and we have calculated
that the excessive charges or the overpayments were about $16
million.
Senator Scott. What is the total value of DHA overpayments
found by the Inspector General? How much money for everything.
Do you have a total number?
Mr. Roark. Across the entire health system? I don't have
that number, but maybe I can speak to these examples. Again, I
think we highlight these examples as a way of showing that
there is much more out there, and that great efficiencies could
be achieved across the board if some of these lessons learned
are applied across the board.
Senator Scott. Thanks.
Senator Warren. I really appreciate this direction on the
conversation because it is about what information is available
to us. Here we are, we are talking about civilian employees,
servicemembers, and as we see up here, the contractors.
The idea that when we talk about defense contractors, most
people think about Lockheed Martin or Boeing, these giant
companies that win these huge contracts to build fighter jets
or bombs.
But the DOD relies a lot on what it calls service
contractors. These are contractors like Booz Allen, McKinsey,
and CACI International Inc., hired to do things like
accounting, legal services, consulting. Over the past two
decades, the Department of Defense has gone from spending about
$100 billion a year on service contractors, to $205 billion in
2022.
This is the point. It is not quite half of the entire
budget that we are spending, but it sure starting to crowd in
on it. Mr. Mosher, you lead the National Security Division for
the Congressional Budget Office, and you have decades of
experience in budget analysis.
We know from public reports that DOD currently employs 2.1
million military personnel and about 770,000 civilian
personnel. I am going to ask you something I think you answered
in your original testimony, but it is important enough here. I
want to underscore it. Do we know how many contractors DOD
employees?
Mr. Mosher. In a word, no. We just don't know yet.
Senator Warren. We don't know, and I think I heard you in
talking that the estimates that the estimates are from here--it
is not that we don't know down to the last person. We don't
even know what the ballpark is here, I take it from what you
said.
Mr. Mosher. That is correct. We don't know what the maximum
number is. OMB provides data in their object class analysis
that gives the size of the service contracts themselves. One
way of cutting it would be about $274 billion in 2022, I
believe. But that tells you what the cost of the contract is.
It doesn't tell you either the number of the people or how much
we are paying in labor.
There will be labor and non-labor costs. One thing that
is--there are different types of contracts. There are people
who mow lawns and much of their costs would probably be labor.
There are people who sit in chairs next to civilians and
military in the Pentagon. Their costs are probably mostly
labor.
But there are also service contracts that provide
maintenance of tanks and such like that, where you would expect
a smaller portion of their costs would be labor, and they are
buying parts.
Senator Warren. Here we are spending more than $200 billion
on service contractors. We don't really know how many people we
are hiring or what we are paying these people.
We accepted the GAO estimate of $200 billion. I just want
to point out, CBO has said it may be closer to $300 billion.
The inability of Government accountants even to estimate how
much we are spending is a sign that Pentagon contracting is
badly broken.
Every time that DOD decides to hire a contractor to perform
a service for the Department, they are supposed to, by law, be
taking that on because it is the cost effective way to get the
job done.
Ms. Field, this is right in your wheelhouse. Does DOD
collect data that would allow its managers or allow someone
doing oversight to conduct a cost comparison to figure out
whether or not the Department should contract something out or
do that work in-house?
Ms. Field. No. So, it is a source of cost savings, in fact,
to in-source positions, to convert them from contractor to
civilian. The Department used to have a data base that provided
some fairly detailed information about contractors that would
potentially help that sort of analysis. Recently, DOD shifted
to a Federal Government wide data base system that has less
data.
Senator Warren. We now know less than we used to. We spend
more and have less information about it. The Department of
Defense's Cost Assessment and Program Evaluation Office found
that in some cases, defense contractors can cost two or three
times as much as civilian employees doing exactly the same
work.
As you say, people sitting side by side. In other cases,
they are just outright fraud. In 2014, the Department of
Defense Inspector General found that defense contractor
Northrop Grumman improperly billed the Government more than
$100 million for employees to provide training and logistics
support for counter-narco terrorism technology program.
Sounds like an important program. Northrop Grumman was
charging the Government an average of 100 billable hours a day
for a single employee. Ms. Field, pretty clearly, nobody can
work more than 24 hours in a day, so it is a pretty clear sign
that fraud is going on. When you see something like that,
right? No one should have any doubt. There is fraud here. Can
DOD or DODIG easily detect these kinds of overcharges or
excessive rates?
Ms. Field. I am not familiar with that particular case, but
I can absolutely tell you that it is very hard to detect and to
prove fraud. That is why things like hotlines are so valuable
for Inspectors General and GAO.
I will also note very briefly that GAO has recommended some
improvements to DOD's Fraud Risk Management Program. Their
guidance Department wide currently does not require routine
fraud risk assessments. That is something that should be going
on.
Senator Warren. Okay, so they don't know how many
contractors they employ, and they don't have systems in place
that will catch even blatant fraud. Unfortunately, it gets
worse from here.
When DOD submits its annual budget, it has to include a
projection of the long term cost of its programs so that we
know not just what something is going to cost in year one, but
what it is going to look like down the road.
Ms. Field, can DOD estimate what its future costs are for
service contracts that go beyond this fiscal year?
Ms. Field. Not nearly as well as we would like. The
Department did not used to include services contracting at all
in the FYDP [Fiscal Year Defense Program], as you mentioned,
the 5-year future defense program. That was astounding to us
because service contracts represent consistently about half of
the Department's contracting costs.
They have made some improvements in this space, but there
are many more they could make. Will be issuing a report soon
with some recommendations.
Senator Warren. I appreciate that. In fact, the GAO has
reported that DOD has ``limited visibility'' into DOD's future
spending plans. If DOD can't track this, I don't know how it is
that the rest of us are supposed to exercise oversight. So let
me ask you one more, Ms. Field.
The GAO has put DOD service acquisitions, meaning how DOD
manages and makes decisions about hiring outside contractors to
perform duties like program analysis or engineering advice, on
your high risk list. That is what you call it, your high risk
list. What does that mean?
Ms. Field. The high risk list is a report we put out every
2 years of the areas of the Federal Government that are most
vulnerable to fraud, waste, and abuse and, or are in need of
significant management. DOD has more areas on the high risk
list that any other agency.
Senator Warren. All right. So, thank you. I just want to
summarize here what you all have just told me. DOD doesn't know
how many contractors it hires.
DOD can't track whether those contractors will cost more
money or less money than having a Federal employee do the same
job. DOD does not have systems in place to catch even the most
blatant frauds when contractors try to cheat the American
taxpayer.
DOD cannot estimate the long term costs of hiring
contractors, and DOD recognizes that the decisions it makes
about service contractors run a high risk, one of the highest
risks in Government that the taxpayer is getting cheated.
The Department of Defense is not in a position to make
smart decisions about how to spend taxpayer dollars. It doesn't
have basic data about what things cost. If Congress doesn't
have this information, then we can't exercise appropriate
oversight.
We should require the Pentagon to put better systems in
place to collect these data and then make these data available
to you and us. Thank you. Senator Blumenthal.
Senator Blumenthal. Amen. I think that is a very powerful
summary of what we need to do with respect to contracting and
personnel, nonmilitary service contracting, and other similar
kinds of DOD contracting. But I want to come back to the
recruitment issue. Because I think of all the challenges to our
military right now, the clear and present danger is we are not
going to get enough good people to wear the uniform.
The statistic that you provide, 72 percent, that is the
Army's percentage in meeting its recruiting goal. I had
breakfast this morning with the commandant to be, hopefully he
will be confirmed soon and--of the Marine Corps, and he was
very proud of the fact Marine Corps meets its recruiting goals.
Senator Kaine and I had some experience with Marines. Our
two sons served as Active Duty in the Marine Corps. I have
another son who was a Navy SEAL whom Senator Warren knows. They
didn't go into it for the money. At the time they were single,
so they didn't really care that much about the housing and
schools for kids.
I notice that you make some recommendations about how to
address this issue, get more reliable data, monitor plans and
strategies for effectiveness, goals, plans, and strategies. But
I think that something more fundamental is needed here because
you can monitor, you can strategize, but unless you are
reaching the people you want to recruit, it just won't work.
I wonder if any of you have insights, for example. We are
going to raise--if we can get this NDAA approved, we will raise
military pay 4 percent, 5 percent. I don't know whether that
will make a difference.
What is the key here? Should we look to the Marine Corps as
an elite service? Do we need more of the kind of spirit,
image--I don't know. You know, there are plenty of ads that try
to recruit young people. So, tell me what your thoughts are.
Ms. Field. If I could begin, I would just offer two quick
thoughts. The first is I think quality of life in the military
is incredibly important for recruitment because in all of our
work, we often hear that young, enlisted servicemembers talk
about their experience with their buddies back home or with
their families.
When they hear, for example, that they are living in
housing, barracks that is in very poor condition, their buddies
and their family members get the message, don't go into the
military. So that is my first thought, quality of life, which
can cover a lot of things to include housing, but also things
like pay, compensation, food.
My second thought just for your awareness is that we are
right now conducting an audit, looking at the recruiting
programs across the services that will include a look at their
use of digital and social media. I don't have any results from
that audit yet, but we will certainly provide them as soon as
we have.
That might illuminate why the Marine Corps is more
successful than other services, particularly the Army.
Senator Blumenthal. Any others?
Mr. Roark. For me. I think just to echo the points that my
colleague Ms. Field made. I think that health care is an
important part of taking care of the soldiers that we have and
making sure that their quality of life is as good as possible.
I think that efficiencies that we can gain in the health
system to make every dollar count is critically important, and
I think that is why we are all here today to explore
opportunities to do that.
Then on the housing side, I know we have done a number of
projects on housing hazards, health hazards and so forth, that
military families face in privatized housing.
Then we are also completing a series of evaluations right
now on the Fiscal Year 2020 NDAA provisions for privatized
housing. We are in the third year of a 3-year series of
evaluations on that.
Senator Blumenthal. Well, I look forward to the audit. It
can't come soon enough, but I want to add one more perspective.
You know, I recently visited Groton, where our army is training
Ukrainians to fight.
I have never seen American troops more motivated and
engaged than they were in training these young Ukrainians. We
are about to go fight and die. These are young people who were
bakers and teachers and computer scientists, and they are being
taught by our Army who have incredible skills and the challenge
of teaching those Ukrainians their profession. It is a
profession.
Elicited such motivation. The food isn't great, the housing
is okay, but not great. But the mission is really what drives
them. I don't know how we attract people. I have seen some of
the social media, some of the ads about the mission. But that's
just a thought, not an original thought by any means, but one
that struck me thinking about recruitment.
Those young troops from our American troop are going to
talk about that experience their whole lifetime. The same
happened, you know, Senator Kaine and I visited one of the
bases where Ukrainian refugees were brought back, and there
were marines there. These Marines had never been deployed. But
working with the refugees is an experience, again, a mission
for them.
It is not a combat mission, but it is something where their
sense of purpose is really fulfilled. So just a thought and I
don't know how we put it into the recruitment program, but it
just struck me that that is going to be a selling point if we
want to get the best and brightest.
Mr. Mosher. Senator, if I could, on your question about
recruiting and such. As sort of the data guy, one of the things
I think you need to look at is, are the services putting the
money that they should be into the recruiting budgets? How does
the Army's recruiting budget and numbers of recruiters this
year compared to 1 year ago or 2 years ago?
Are they actually sort of doing what you would think they
would do, and that is putting more money against that. So, look
at the numbers. Also, don't forget, we are in a boom economy in
terms of employment and the military always has trouble
recruiting when you can make good money on the outside. So that
is another thing to keep in mind as you are looking at this.
Senator Blumenthal. We are in a boom economy. But you know
what? What the Marine Corps does is they take some of their
best people and they put them on recruiting. It is not a
backwater for them.
It is essential. They put it as a priority. You know, you
are great at what you do as a marine? We are going to put you
out to get more great marines. It is not kind of the fallback
for a well, you know, so-and-so can't really do the job, let's
put him into recruiting.
We will send them out, you know, Hartford, Connecticut. The
marine who goes to Hartford, Connecticut, is among the best
because he has to attract the best. So, just another thought.
Senator Warren. It is a powerful point, Senator Blumenthal.
Senator Scott.
Senator Scott. I just want to followup with what Senator
Blumenthal said. I joined the Navy at 18. They didn't tell me I
was going to sleep in barracks, we didn't have barracks. We had
a ship, 57--3 racks up. I think it was 7 feet tall. So, we had
a rack that was as long as I am tall. Everything we owned was
in a container that size. That was it.
The showers actually didn't work that much because when we
out to sea, because the desalinization stuff didn't work a lot
of times, and they shut it off right in the middle of the
shower, which is really nice. Right when you had soaped down.
Food, not the best.
Better than what my dad had. He was in the Army. So, I
think it goes back to mission, and we had a hearing on this,
and I don't know if you remember hearing much about how they
were selling mission. I didn't. But the truth is, if you are in
business, if you can't sell a mission, you are not going to
recruit good people.
Actually, our offices I bet can find really good people
because we have a mission. I think it goes back to, we got to
really sell why we are doing what we are doing, and I think our
military leadership and whoever is the President has got to
sell the fact that we are doing this for a very specific reason
and purpose, and how important it is.
If we don't, I think it is going to continue to be hard,
and you have to admire what the Marines are doing because they
figured it out. So, can I ask you a question, does anybody meet
with you all? I mean, you put out these nice reports. Does
anybody care from the military? Who talks to you guys?
Ms. Field. I would say, yes. We, for the most part, have a
good working sort of collegial relationship with DOD officials.
They do implement many of our recommendations, but I will also
note DOD has the lowest implementation rate in terms of
implementing GAO recommendations compared to other agencies.
So, yes, they meet with us. I think many of them are
committed, hardworking civil servants, but we would like to see
our recommendations implemented at a higher rate.
Senator Scott. Same thing?
Mr. Roark. For us, same thing for us. So, I think we do a
lot of outreach with senior officials and with others, and
whether that is around the world. I travel around the world to
meet with folks in different organizations and different
commands and understand what their challenges are and so forth.
I think we get very positive, candid feedback there, and
then once we issue a report, or I believe that for the most
part, DOD handles it in a very professional way and takes it
seriously. Sometimes recommendations are, you know, a little
harder to implement. For the most part, I think the
relationship is positive.
Mr. Mosher. We are not really a recommendation generating
agency. We don't make recommendations and kind of till more
with policy, options, and choices. So, it is a little less
direct.
But we certainly do hear from DOD when they don't like
things that we have written or when they like things that we
have written. We hear from Members or staff on the Committee.
So, I think it just really depends for us on the study.
Senator Scott. Well in business, the shareholders, the
board--I mean, you don't keep your job if you don't do your
audit, right? Right, I mean, it is the most basic thing you
have to do. Or the CEO is not going to stay there. Because if
you get a bad audit, I mean, you can be delisted if you are a
public company.
So, I guess part of it is we have got to hold people
accountable on our part at the senior level. If they are--if we
expect them to follow what you guys do. Ms. Field, can I ask
you a question. Can you tell me what the difference between--
like, take an officer that has Active Duty military working for
them, and then they hire an outside firm to do the work.
So, you end up with either a civilian that works for part
of the Federal Government or a civilian that works for Booz
Allen or whatever. How do they manage them?
Because it sure seems like it would be awfully difficult if
they are not in the military and you are an officer, how do you
manage these people? Can you fire them? Can you say ``you are
not going to get a promotion?'' What do you get to do?
Ms. Field. Yes, that is a great question. I think it is
difficult, and I think part of the issue, and I will go back to
the health system just because it is an example that I think
people can really grasp and identify with. The contracting
companies, so let's say Booz Allen, they get to decide who they
are going to send to fill a contract.
What we heard when we went around to military treatment
facilities is, if we don't like the candidate that they send--
and they, by the way, have--the companies have 30 to 60 days to
propose a candidate, they can send that candidate back, but
then that company has another 30, sometimes 60 days----
Senator Scott. You are paying all this time?
Ms. Field. The contract, yes, and so, what we heard from
MTF was that in some cases they have to decide between filling
a position with a subpar candidate or leaving that position
vacant. So, it is a real problem.
Senator Scott. What about if they are a Federal employee?
So, if the choice is between a Federal employee and a military
member, how do you manage them? What would be the differences?
Ms. Field. I think my understanding, and I have certainly
observed this, is that Active Duty military try to treat
everybody as part of the team. It is not surprising, given the
emphasis on leadership in the military.
But they do still face the same struggles that we see sort
of across the civilian workforce, and so Senator Warren pointed
out the GAO's high risk list. Federal strategic human capital
is on that high risk list because it is so hard to manage the
Federal workforce, civilian workforce in the way that would be
most effective.
Senator Scott. Thank you.
Senator Warren. Thank you. I want to talk a bit more about
healthcare, and just so anybody who is watching this knows,
servicemembers and their families get their health care
coverage through TRICARE that we have talked about some today.
This is the DOD's managed health care program, and it is run,
you guessed it, by private contractors, including one of the
largest health insurance companies in the country. The cost of
this health care coverage is shared by taxpayers, and in some
cases by servicemembers and their families who have co-pays on
some of the care that they get.
The Defense Health Agency is responsible for managing these
contractors, and it provides the reimbursements for medical
procedures, services, supplies, whatever is purchased under
this. Years of support show that TRICARE is allowing rampant
price gouging by health care providers, driving up costs for
beneficiaries and ripping off taxpayers.
The Department of Defense Inspector General has long warned
about the costs of letting TRICARE fraud continue unchecked. We
have talked about two examples today, breast pumps that are for
sale at Wal-Mart for $192. The Federal Government, through
TRICARE and a private contractor, ends up paying as much as
$1,500. Vaccines that everywhere else can be purchased for
$127. What happens through TRICARE? It reimburses $1,848 for
exactly the same vaccine.
Now, medical supply companies make a profit when they can
sell items to private insurance companies. That is how they
stay in business. But insurance companies typically set a cap
on what they will reimburse for a product.
Your audit found that the reason DHA was paying these
clearly inflated prices was either because the Federal
Government had failed to set price caps or maximum
reimbursement rates for these products. In other words, DHA had
effectively told these companies that they were willing to pay
whatever it was the company wanted to charge.
Even in cases where the DHA has set those rates, the DHA
continually failed to enforce the caps or to claw back money
when they had been overcharged from the original agreement.
Now, Mr. Roark, when TransDigm overcharged DOD for spare parts,
let's get out of health care for a second, your office
recommended that DOD ask for a refund.
DOD did, they asked for the refund, and the American
taxpayer got $16 million back. But what did DHA, let's go back
to health care, what did DHA say when you recommended asking
for a refund for TRICARE price gouging, both in areas where
they had never set a rate to begin with or where there was a
cap, but DOD had not enforced it? What happened when you asked
them, go get the money back, or at least some of it?
Mr. Roark. In our two reports, we kind of covered this in
two ways. First, we asked them to seek voluntary repayments for
instances where very high prices had been charged for services
or for items.
Then in other cases, we asked them to recoup money for
instances where they did not enforce the cap, as you mentioned.
In the end, about $712 was the kind of the total amount that
they recouped.
Senator Warren. I am sorry, did you say $712?
Mr. Roark. Yes--$712,000--$712,000.
Senator Warren. Okay. All right, $712,000, okay.
Mr. Roark. In terms of the amount of voluntary repayments,
it was zero.
Senator Warren. Voluntary repayments was zero. In fact, I
have the quote here from your report. DHA said--this is when
they have been overcharged. DHA said, ``the idea of voluntary
payments is not realistic.''
In other words, we just aren't going to do it. Why was it
in many cases here that DHA didn't even try to get the money
back? It feels like a failure of both oversight and will.
Interestingly enough, the former head of DHA, the one who
made these decisions not to seek voluntary repayments because
they said we are just not going to get anything from that,
retired from the agency in 2019 and a year later joined the
board of the largest TRICARE contractor.
Mr. Roark, how much do you estimate that DOD could save if
it just set maximum prices caps, like ordinary insurance
companies do, and then actually enforced those caps?
Mr. Roark. I can't say across the entire health system
because that is just a lot of different areas. However, for
these two reports that we are here discussing today, we
calculate that the savings that could be achieved by
implementing our recommendations was around $100.7 million.
That is $81.2 million for the breast pumps report and $19.5
million for the second report.
Senator Warren. Okay. I just want to underscore this. It is
$100 million for breast pumps, which is important, but I mean,
and vaccines, and that is it. We have got $100 million there,
and we have to assume this problem exists all the way across. I
am very concerned that DHA is failing to protect TRICARE
beneficiaries and allowing these companies to rip off
taxpayers.
Yesterday, I sent a letter to both the DOD and DHA asking
both agencies to improve oversight and transparency around
current TRICARE spending and put new rules in place to prevent
price gouging of our military families in the future. I think
we are going to have a lot more work to do in this area.
Do you have another question you would like to ask? You
mind if I do one more and then I will be finished? Okay. I have
got one more round that I want to ask here. During the Obama
administration, Ash Carter, who was then head of acquisitions
at the Pentagon, led an initiative to identify improvements in
how DOD contracts for services. This initiative was called,
Better Buying Power, and it identified $90 billion in potential
savings over 12 years. Let me say that again $90 billion.
One of the biggest recommendations was changing the way
that DOD writes contract requirements when it buys services,
everything from cleaning buildings to management consultants.
The GAO wrote, and I want to quote what the GAO said,
``determining whether to contract for such services,
eliminating duplicative or unnecessary services, and
effectively managing and overseeing contractors is vital to DOD
achieving its missions.''
Ms. Field, help me translate those recommendations into
terms that people who don't do acquisitions policy for a living
will understand. Is this the basic idea that you can protect
your budget when you are buying a service by being clear about
what you expect from whomever you hire, and that you should
probably do an assessment on the front end to determine whether
or not you need that work at all. Is that about right?
Ms. Field. That is exactly right, and maybe to give an
example in DOD. This would be, for example, one of the
services, let's take the Army, deciding that it needs to figure
out how much it is spending on grounds maintenance, right,
which is something that happens at military installations
across the world.
Under this practice, the Army should figure out how many
contracts does it have for grounds maintenance? How many does
it need? How can it cut costs by perhaps consolidating
contracts? It is pretty simple. It is something that we all do
in our own households.
Senator Warren. Ask for a volume discount----
Ms. Field. Right, absolutely. So that is the idea.
Senator Warren. Okay. Okay. It is a really important
insight because we are talking about things that pretty much
every business in America does and pretty much every family by
figuring out in advance what they are getting and what they are
paying for it.
Do you have any idea, Ms. Field, how much money DOD would
save if they conducted these reviews before they shoveled the
money out the door?
Ms. Field. I don't have an across the board estimate for
you, but I will offer two points. The first is that we know
that when two of the smaller DOD components used this practice,
specifically the Defense Logistics Agency and the Defense
Threat Reduction Agency, DTRA, when they did this, they saved
hundreds of millions of dollars. Those were----
Senator Warren. Hundreds of millions for just the smaller--
--
Ms. Field. Just two small components.
Senator Warren. Okay.
Ms. Field. My second point I would offer is that if you
think about the amount that DOD writ large is spending on
services contracting, $205 plus billion, if they were able to
save just 1 percent of that, there is $2 billion right there.
So, there is a lot of potential.
Senator Warren. That is a 1-year.
Ms. Field. That is 1 year.
Senator Warren. It compounds over time, as you were talking
about, the effects of this. You know, it is great that DLA and
other agencies are saving money, but it is the military
services who buy the lion's share of the services here.
I just want to make sure that I understand, that the
military services are not doing similar reviews to the kind you
talked about across other areas to eliminate duplicative
contracts and try to save money.
Ms. Field. So originally really were not doing it, which is
problematic because, as you mentioned, they account for about
three-quarters of the service contracting dollars for DOD. GAO
recommended that the services adopt this practice.
They have begun implementing it to varying degrees of
success. We are just about to issue a new report in the coming
weeks that will identify some recommendations for the services
to do it better, to hopefully get better results.
Senator Warren. You are going to make this recommendation
to the same services that you said have the lowest rate of
picking up your recommendations. Is that right?
Ms. Field. Our hope is that they will take them seriously
and implement them.
Senator Warren. We will find ways to make them take this
more seriously. I just want to underscore here about how we are
leaving money on the table here.
The Better Buying Power Initiative that I talked about a
minute ago estimated that sharpening DOD's pencils on review
requirements alone could save $44 billion over 10 years on
consulting and research and development contractors. If we got
even a 10th of that savings, we would be talking about real
money here.
When DOD asks for supplemental funding, we should remind
them that by following a few basic accounting and oversight
practices, they would have another $44 billion to spend, and
ask why, if they really need this money, they haven't already
done that.
This is just one area where DOD could score huge savings.
You start to multiply that in other areas and we are talking
about significant money here. So, I am going to make a closing
statement. You have closing statement, anything you want to
say?
I just want to thank all of our witnesses. I want to thank
you for your service. I want to thank you for testifying today.
I want to thank you for continuing to make recommendations, and
to stay on this. I also want to thank Jon Clark, and Gary
Leeling, and Andy Scott, and Sofia Kamali, and Noah Sisk, and
Sean O'Keefe, and Katie Magnus, and Brendan Gavin for their
work in helping put this hearing today.
I really appreciate your contributions. I am looking
forward to working with all of you. We are committed to
ensuring that servicemembers and their families receive all of
the resources and all of the support that they need. It is
clear from today's hearing that DOD has a lot of work to do to
make sure that we have the right cost efficient mix of Federal
employees, military personnel, and contractors.
Those failures add up. DOD's own estimates say that we
could save $90 billion over the next 12 years, and our
witnesses today have identified other areas where we can save,
and we know there are more reports coming on this.
I remain concerned that the Pentagon is too focused on
increasing its budget and neglecting to exercise due diligence
to prevent waste and fraud in the money that we have already
allocated. Senator Scott.
Senator Scott. First off, think about what we can do, all
right, take Mr. Roark, what you said that they didn't get
voluntary. What if we asked about it, all right. So, if you
guys will think about that.
I will give you just some of my business background. This
was 26 years ago. I ran a hospital company. Our revenue base
was $24 billion. My savings over--took me a few years to get
there--was $2.4 billion. It is how much, then how much costs I
cut out of--and that was out of, our cost structure would have
been out of 25 percent of the cost. Something like that.
So much of my savings there. I mean, this is staggering,
the dollars that you can save. When you have the Government's
buying power, I mean, it is not a little bit. It is staggering,
the dollar numbers. I don't want to speak on behalf of the
chairwoman, but if there are things that would be helpful that
we can ask for, I think both of us are in the same position.
We support our military. The fund issue--and I am not--I am
not sitting here, and I wouldn't say, gosh, I am here to cut
military spending. I want to make the military spending smart,
efficient, and have a lethal force. But we do have $32, I think
you said it, Ms. Fields, we got $32 trillion of the debt.
We have to spend our money better. We have got problems.
So, if you guys have any ideas. Do you want to say something,
Ms. Field?
Ms. Field. Yes. If I may, I do want to point out that GAO
issues what we call ``matters for congressional
consideration.''
These are recommendations to Congress of improvements that
we think should be made to programs, many of them that could
save money. We just issued a report estimating the total
amount, which was billions that the Government could save.
There is one that is relevant to the discussion today that
we have made and has not yet been implemented, and that was a
recommendation that Congress eliminate the Secretary of
Defense's authority to contract with U.S. Family Health Plan
providers.
This is a very small, little known program, but when we
assessed it back in 2014, we found that that program largely
duplicated providing the same benefit to the same beneficiaries
and many of the same areas as participate in the TRICARE prime
program.
The problem with the U.S. Family Health Plan, besides the
fact that it is duplicative, is that the contractors or the
companies that provide services under this do not need to
compete in the same way that you typically would, nor do they
have to have transparency in how they price out their services.
That is one matter for congressional consideration that
remains unimplemented, and if implemented, could save hundreds
of millions of dollars.
Senator Scott. You said, Mr. Mosher, this bastion is on the
service contracting, that you don't have data. Think about how
much data there is. All that is available. They are just not
giving it to you. All that data is out there because it has to
be in the contract, right?
Mr. Mosher. Well, I think that is the issue, how much is in
actually in the contract in terms of labor costs and on labor
costs. There is actually hope in the sense that the Army, we
think, kind of cracked this.
They had for several years data that they were looking at
service contractors, they were demanding from the contractors
information of the sort that we think would be very useful up
until about 2015, and then it got wrapped up into the broader
DOD system, and now we are getting less than we had before.
You could look back to the way the Army reported and try to
use that as a model. We think that the OP-8, which is one of
the budget displays that DOD provides to the Congress, which
deals with civilians and other labor, does not really capture
much.
If you could do something parallel for service contractors,
that would be data we could use. I mean, I guess my sense is
the best way to start controlling these sorts of things is to
have better data. So, and you can ask for that.
Senator Scott. Good job. Everybody gets a good job today.
Senator Warren. Thank you.
Mr. Roark. Can I add one point? One the consistent themes
that we emphasized across our reports was emphasizing to the
DOD how important volume discounts are and using our
negotiating power to see if we can achieve better prices and
lower cost through that as well.
I think that regarding some of the points that we have all
discussed today, I think that for me, the lessons that we can
learn from the two reports today is just being proactive,
taking a look at the data for trends to try to identify
problems before they become a crisis and a lot of money is
spent, and using those benchmarks, as we talked about, to make
sure that we are getting the best price possible.
Then periodically reviewing and monitoring it to make sure
that we follow through and ensure that those steps that we
implement are effective.
Senator Warren. Thank you very much, all three of you.
Thank you for your service to the country. Thank you for being
in here today. I hope we will all stay in touch. Thank you.
This hearing is adjourned.
[Whereupon, at 5:34 p.m., the Subcommittee adjourned.]
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator Elizabeth Warren
dod organization and management
1. Senator Warren. Ms. Field, there have been many efforts to make
the Pentagon more efficient. In 2010, the then Secretary of Defense
introduced an initiative to reduce overhead costs and reinvest the
saved funds into warfighting. Years later, it was reported the
Department of Defense had a study which found $125 billion that could
be saved over 5 years in its back-office bureaucracy. Additionally in
2015, the National Defense Authorization Act for Fiscal Year 2016,
required the DOD to cut $10 billion in costs from headquarters,
administrative, and support activities. What are the impacts--financial
and otherwise--of reducing costs in headquarters, administrative, and
support activities?
Ms. Field. Reducing unnecessary costs should always be a key
objective for DOD. The issues identified in the above referenced DOD
study are similar to some of GAO's longstanding high-risk areas at DOD,
including our business transformation, financial management, and
contract management high-risk areas. \1\ For example, the Defense
Business Board study noted that DOD could realize savings by optimizing
spending on contracts, developing a change strategy that includes
identifying skills gaps in the workforce, and optimizing information
technology through application rationalization and consolidation.
Similarly, GAO has called for DOD to be more strategic in how it
acquires services, including making greater use of category management
techniques to identify opportunities to meet the department's needs at
lower costs; to address the causes and solutions of skill gaps in the
workforce; and to develop an information technology architecture with
sufficient information about business activities to allow for more
effective identification of overlap and duplication.
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\1\ GAO, High Risk Series: Efforts Made to Achieve Progress Need to
Be Maintained and Expanded to Fully Address All Areas, GAO-23-106203
(Washington D.C.: April 20, 2023).
2. Senator Warren. Ms. Field, can cost saving be achieved without
requiring layoffs of civil servants or a reduction of military
personnel?
Ms. Field. Yes. Our prior work has found that efforts to review
service requirements prior to contract award can result in cost savings
by reducing or eliminating duplicative requirements. For example, we
reported that defense agencies--such as the Defense Logistics Agency
and Defense Threat Reduction agency, among others--saved hundreds of
millions of dollars from fiscal years 2017 to 2019 through holistically
reviewing their service requirements for efficiencies.
We have also reported that improvements in DOD's and other Federal
agencies' use of category management--an Office of Management and
Budget-led initiative intended to help agencies buy more strategically
and achieve efficiencies--has resulted in more than $35 billion in cost
savings across contracts for goods and services. DOD spent $414 billion
on contracts for goods and services in fiscal year 2022, so savings
identified on just 1 percent of that total through improved use of
service requirements reviews or category management initiatives would
amount to over $4 billion.\2\
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\2\ Contract obligations based on GAO's analysis of Federal
Procurement Data System data.
3. Senator Warren. Ms. Field, the DOD was able to identify over $9
billion in cost savings for headquarters, administrative, and support
activities. Has the DOD implemented changes to save the $9 billion it
has identified? If not, why has it not done so?
Ms. Field. I believe this question refers to a DOD report that it
had identified a total of $9.2 billion in cost savings from fiscal year
2015 through fiscal year 2019. However, we found that DOD did not have
a reliable cost estimate to support these estimated savings.\3\
Further, according to DOD's internal assessment, $5.3 billion of these
cost savings were ``not auditable'' because the baseline for reductions
had not been established, among other reasons. In addition,
documentation supporting cost savings estimates from other efficiencies
was not sufficiently detailed.
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\3\ GAO, Defense Efficiency Initiatives: DOD Needs to Improve the
Reliability of Cost Savings Estimates, GAO-17-724 (Washington, DC: July
24, 2017).
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Reducing the resources devoted to headquarters activities has been
a long-standing challenge for DOD, but our subsequent work has shown
some progress in that area. In our November 2020 report on DOD's reform
efforts, we found that DOD's savings estimates were generally reflected
in its budget materials. \4\ In addition, through implementation of its
Performance Improvement Framework, which DOD issued in October 2022,
the department has put in place a process that may help to collect and
validate information on the costs and savings associated with reform
efforts.
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\4\ GAO, Defense Reform: DOD Has Made Progress, but Needs to
Further Refine and Formalize Its Reform Efforts, GAO-21-74 (Washington,
DC: November 5, 2020).
4. Senator Warren. Ms. Field, the DOD increased and improved its
acquisition workforce after an almost 50 percent reduction between 1989
and 1999. How can the DOD improve efficiency and reduce waste in its
acquisition management?
Ms. Field. DOD can continue its efforts to attract, hire, sustain,
and improve the defense acquisition workforce and provide clear
guidance on ways to more strategically and efficiently buy goods and
services. GAO's prior work has found that a larger acquisition
workforce has allowed DOD to bolster support for critical functions,
such as program management, engineering, and contracting. DOD has also
continued to take steps to ensure the acquisition workforce has needed
skills and training to perform key tasks by completing competency
assessments for each of its acquisition career fields and transforming
its credentialing processes for acquisition career fields.
DOD can continue to support its acquisition workforce by making
sure it has clear and up to date guidance on managing acquisitions. For
example, DOD plans to issue guidance by the end of this fiscal year on
better managing its service acquisitions through the use of category
management--an Office of Management and Budget-led initiative intended
to help agencies buy more strategically and achieve efficiencies. We
have reported that improvements in DOD's and other Federal agencies use
of category management has resulted in more than $35 billion in cost
savings across contracts for goods and services. In September 2023, we
also made recommendations to update Air Force and Army service
acquisition policies to ensure data on service acquisitions are
aggregated and reviewed to identify broader cost savings and
efficiencies.
5. Senator Warren. Ms. Field, what would be the financial and
management impact for DOD reducing its acquisition and auditing
workforce?
Ms. Field. Maintaining a skilled acquisition workforce is vital to
maintaining military readiness, increasing DOD's buying power,
achieving savings, and meeting emerging challenges and complexities.
Following reductions in the size of DOD's acquisition workforce in the
1990's due to decreasing defense budgets and concerns about skill gaps
and growing reliance on contractors to perform tasks, GAO included
DOD's acquisition workforce as an area on GAO's High Risk list. DOD has
taken steps to rebuild its acquisition workforce since 2009. For
example, DOD leveraged the Defense Acquisition Workforce Development
Fund to hire, train, and retain a workforce that grew from around
126,000 in fiscal year 2008 to nearly 183,000 in fiscal year 2020, and
has implemented recommendations GAO made to improve how it selects,
trains, and mentors program managers--a critical acquisition career
field. These steps, among others, allowed GAO to remove DOD's
acquisition workforce from GAO's High Risk list in 2021. We have
ongoing work to assess DOD's financial management workforce and expect
to issue a report early next year.
6. Senator Warren. Mr. Roark, you mentioned a 2021 report where DOD
Office of Inspector General (OIG) found the DOD faced challenges to
acquisition reforms in health care services. What are the challenges
the DOD faces in acquisition management?
Mr. Roark. My statement was from the OIG Management Challenges list
2021, it was just a general statement on an overall risk. Nothing
further to report.
7. Senator Warren. Mr. Roark, how can the DOD overcome these
challenges?
Mr. Roark. The two main reports discussed at the hearing were DOD
OIG reports DODIG-2018-108, ``TRICARE Payments for Standard Electric
Breast Pumps and Replacement Parts,'' and DODIG-2019-112, ``Audit of
TRICARE Payments for Health Care Services and Equipment That Were Paid
Without Maximum Allowable Reimbursement Rates.'' The recommendations
from these two DOD OIG reports, discussed in the response to question
10 below, can help the DOD avoid improper payments for health care.
8. Senator Warren. Ms. Field, the DOD has not passed an audit since
they started the independent reviews in 2017. The Government
Accountability Office (GAO) reported that the DOD ``remains the only
major agency that has never been able to accurately account for and
report on its spending or physical assets.'' What value can be gained
from the DOD passing its independent audit?
Ms. Field. The financial statement audit has value far beyond the
audit opinion. It can help to identify vulnerabilities and ways to
improve operations. As DOD reported, financial audits have resulted in
short-and long-term benefits. The audits have increased transparency
and visibility of financial management issues, and are providing a
positive return on investment from value gained through independent
auditor insight into DOD's business processes. These audit insights
help DOD to assess what is performing well and what areas still need
improvement. The audits have also helped identify assets that DOD did
not know existed. For example, as DOD reported in its June 2020
Financial Information and Audit Remediation report, the Navy identified
and added nearly $2.4 billion of unrecorded inventory, operating
materials and supplies, and general equipment. The Navy subsequently
used those items to fill over 12,000 requisitions, which otherwise
would have cost $50 million. DOD reported that as a result of increased
transparency and visibility of financial management, it improved its
operations and business processes, which should lead to the preparation
of reliable financial statements and help DOD's mission by providing
accurate information for decisionmaking. For example, in fiscal year
2022, the Air Force identified and corrected approximately $5.2 billion
worth of variances in its general ledger for equipment and accumulated
depreciation. DOD reported that this increased level of visibility
allows for greater control and oversight of financial transactions
related to military equipment.
9. Senator Warren. Ms. Field, what are the greatest challenges for
DOD passing an audit?
Ms. Field. Issues and risks that hinder DOD's ability to achieve a
clean audit opinion include (1) material weaknesses, (2) ongoing
deficiencies with DOD's financial management systems, and (3)
introduction of new systems and challenges associated with
implementation of those systems.\5\
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\5\ A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the
entity's financial statements will not be prevented, or detected and
corrected, on a timely basis.
While it is possible for any audited entity to receive a
clean audit opinion and still have material weaknesses, some material
weaknesses prevent the auditor from performing procedures to draw a
conclusion on the financial statements. DOD consolidated 16 of its
identified material weaknesses into 10 categories the department now
tracks and reports, which includes Information Technology, Fund Balance
---------------------------------------------------------------------------
with Treasury, property, and reporting entity.
DOD has wide-ranging weaknesses in its financial
management systems that prevent it from collecting and reporting
financial and performance information that is reliable, useful, and
timely. DOD's financial management and business systems modernization
efforts have been on GAO's list of high-risk programs and initiatives
since 1995. DOD management recognizes the risk that legacy systems pose
to its operations and related accounting, and is in the process of
identifying, retiring, and replacing legacy systems. However, DOD must
first produce a complete inventory listing of systems before it can
ensure retirement of all noncompliant systems.
For over 30 years, DOD has initiated a variety of efforts
and undergone several changes in organizational responsibility to help
modernize its business and financial systems and improve the quality of
data. However, DOD rarely processes financial transactions using only
one IT system. For example, in fiscal year 2021, DOD reported that it
used 299 separate IT systems to support its financial statements. The
audit requirement for supportable transactional data is speeding the
pace of system improvements, including new system implementation, which
will eventually provide management with insights, metrics, analytics,
and a common operating picture from which to make informed decisions.
tricare
10. Senator Warren. Ms. Field and Mr. Roark, there are a series of
DOD Inspector General (IG) reports finding that the DOD is failing to
prevent price gouging and overpayments to contractors in the TRICARE
health program. One contributor to these excess healthcare costs is
improper payments. What recommendations does your organization have for
the DOD to better manage improper payments?
Ms. Field. In 2015, GAO found that the Defense Health Agency's
(DHA) method for measuring TRICARE improper payments only examines the
claims processing performance of the contractors that process TRICARE's
purchased care claims and does not examine the underlying medical
record documentation to discern whether each sampled payment was
supported.\6\ As a result, we reported that TRICARE's reported improper
payment estimates may underState the amount of improper payments for
the program. To better assess and address the full extent of improper
payments in the TRICARE program, we recommended that the Secretary of
Defense direct the Assistant Secretary of Defense (Health Affairs) to
implement a more comprehensive TRICARE improper payment measurement
methodology that includes medical record reviews, as done in other
parts of its existing post-payment claims review programs. Since that
time, DHA has taken some action to incorporate medical record reviews
into its improper payment estimates, including completing 2 years of
such review. However, the agency has not taken steps to continue
medical reviews or incorporate the results of such reviews into the
TRICARE improper payment estimates. Relatedly, we recommended that the
Secretary of Defense direct the Assistant Secretary of Defense (Health
Affairs) to develop more robust corrective action plans that address
underlying causes of improper payments, as determined by the medical
record reviews. By fully implementing these recommendations, DOD would
be better positioned to understand and address the extent of TRICARE
improper payments.
---------------------------------------------------------------------------
\6\ GAO, Improper Payments: TRICARE Measurement and Reduction
Efforts Could Benefit from Adopting Medical Record Reviews, GAO-15-269
(Washington, DC, Feb 18, 2015).
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Mr. Roark. In DOD OIG reports DODIG-2018-108 and DODIG-2019-112,
the DOD OIG made a total of 9 recommendations, 3 of which pertain to
improper payments. For report DODIG-2018-108, we recommended that the
Defense Health Agency use only suppliers that have fixed reimbursement
rates for electric breast pumps, and that it pursue actions, such as
recouping overpayments, from suppliers that billed excessive amounts
for breast pumps and replacement parts. For report DODIG-2019-112, we
recommended that the Defense Health Agency identify reasons why
contractors did not use existing TRICARE maximum reimbursement rates
for vaccines and contraceptive systems. Further, we recommended that
the Defense Health Agency update policy, conduct periodic reviews of
reimbursement rates, and seek recoupment for overpayments.
11. Senator Warren. Ms. Field and Mr. Roark, how much could the DOD
be saving by more effective improper payment management?
Ms. Field. With respect to TRICARE, we do not have an estimate of
the financial savings that would result from DOD implementing our
recommendation for improved improper payment reporting or of other
efforts by DOD to improve TRICARE improper payment management.
Mr. Roark. For OIG reports DODIG-2018-108 and DODIG-2019-112, we
identified a total of $116.9 million in potential monetary benefits.
Specifically, for report DODIG-2018-108, we identified $81.2 million in
funds put to better use and $16.2 million in questioned costs. For
report DODIG-2019-112, we identified $19.5 million in funds put to
better use.
12. Senator Warren. Ms. Field, what lessons can be learned from how
the Department of Health and Human Services' (HHS) Centers for Medicare
& Medicaid Services' (CMS) approach to improper payments?
Ms. Field. In 2015, we found that DOD uses a methodology for
measuring TRICARE improper payments that is less comprehensive than the
methodology used to measure improper payments in Medicare. We reported
that CMS's approach to measuring Medicare improper payments examines
medical records associated with a sample of claims to verify support
for the payment. This methodology more completely identified improper
payments beyond those resulting from claim processing errors, such as
those related to provider noncompliance with coding, billing, and
payment rules.
Additionally, CMS we reported that reports more comprehensive
information about root causes of improper Medicare payments than DOD
does for TRICARE, develops corrective actions that more directly
address root causes, and uses the information to address the agency's
goal of reducing future improper payments.
13. Senator Warren. Ms. Field, which other departments or agencies
that manage improper payments better than the DOD?
Ms. Field. We have not specifically assessed whether other
departments or agencies manage improper payments better than DOD.
However, agency inspectors general report annually on their agencies'
compliance with criteria included in the Payment Integrity Information
Act of 2019 (PIIA) and related Office of Management and Budget
guidance. PIIA includes six criteria for compliance, which OMB guidance
expands to 10. OMB instructs inspectors general to report on whether
agencies complied with these criteria, such whether agencies conducted
improper payment risk assessments, reported estimates, and developed
corrective actions plans, as required.
In March 2023, we noted that for fiscal year 2021, only 10 of the
24 agencies specified in the Chief Financial Officers Act of 1990 (CFO
Act), as amended, were compliant with PIIA and related OMB criteria, as
reported by their inspectors general.\7\ These agencies were: (1) U.S.
Agency for International Development, (2) Department of Commerce, (3)
Department of Energy, (4) Department of Interior, (5) Department of
Justice, (6) Department of State, (7) Department of Transportation, (8)
General Services Administration, (9) National Science Foundation, and
(10) Nuclear Regulatory Commission. The total of 10 compliant agencies
was a decrease from 12 agencies in fiscal year 2020, and the lowest
number of compliant CFO Act agencies since fiscal year 2017.
---------------------------------------------------------------------------
\7\ GAO, Improper Payments: Fiscal Year 2022 Estimates and
Opportunities for Improvement, GAO-23-106285 (Washington, DC: March 29,
2023).
14. Senator Warren. Ms. Field, are there best practices DOD should
adopt?
Ms. Field. We have issued several resources for use in managing
improper payments. These include:
Standards for Internal Control in the Federal Government
(known as the Green Book). \8\ The Green Book provides managers
criteria for designing, implementing, and operating an effective
internal control system, which is key to preventing and reducing
improper payments.
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\8\ GAO, Standards for Internal Control in the Federal Government,
GAO-14-704G (Washington, DC: September 10, 2014).
A Framework for Managing Fraud Risks in Federal Programs.
\9\ This framework identifies and conceptualizes leading practices to
aid program managers in managing fraud, including fraud that results in
improper payments.
---------------------------------------------------------------------------
\9\ GAO, A Framework for Managing Fraud Risks in Federal Programs,
GAO-15-593SP (Washington, DC: Jul. 28, 2015).
A Framework for Managing Improper Payments in Emergency
Assistance Programs.\10\
---------------------------------------------------------------------------
\10\ GAO, A Framework for Managing Improper Payments in Emergency
Assistance Program, GAO-23-105876 (Washington, DC: July 13, 2023).
This framework provides principles that can help Federal program
managers mitigate improper payments in emergency assistance programs,
and it can also be useful for managing improper payments in non-
emergency assistance programs or during normal program operations.
In addition, in a June 2023 report, we examined programs with
reported reductions in estimated improper payment rates since fiscal
year 2017. \11\ We identified examples of 19 programs across eight
agencies with reported reductions, according to fiscal year 2022
reporting. Based on our review of agencies' financial reports and
interviews with agency officials, including DOD, we found that
strategies and efforts for mitigating improper payments varied.
However, we found that the most commonly reported mitigation efforts
fell under two broad categories: (1) establishing accountability and
facilitating internal collaboration, and (2) providing technology,
tools, and training targeted to root causes. Efforts related to these
categories may have contributed to reductions in programs' estimated
improper payment rates.
---------------------------------------------------------------------------
\11\ GAO, Improper Payments: Programs Reporting Reductions Had
Taken Corrective Actions That Shared Common Features, GAO-23-106585
(Washington, DC: June 30, 2023).
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DOD has taken some steps to adopt practices that could help reduce
improper payments. For example, for our June 2023 report noted above,
DOD told us the department had established senior accountable officials
at the senior executive service level in each of the military services
and defense agencies to promote accountability for the DOD payment
integrity efforts. In addition, according to DOD, the department
developed and implemented processes and tools to evaluate, monitor, and
measure improper payments for DOD Travel Pay, including developing
performance metrics and tracking them via spreadsheets and data base
dashboards, performing periodic quality assurance reviews of metrics
and corrective action implementation, and monitoring recovery of
overpayments.
DOD is also using Advana, an enterprise data platform, across the
department for advanced analytics. Specifically, according to DOD
officials, DFAS utilizes the Advana Improper Payment Detection (IPD)
tool for the early identification and prevention of improper payments
in seven entitlement systems (i.e., contractual payment systems). DOD
officials told us that the Advana IPD tool has identified and prevented
more than 7,000 potential improper payments since it was implemented in
December 2020. We are working with DOD to obtain more information on
the savings generated from the tool.
privatization
15. Senator Warren. Ms. Field, there has been an effort to
privatize commissaries on military installations or at least study the
effects of privatizing commissaries. Would privatizing commissaries
improve their quality for military personnel and provide cost-savings
for the DOD?
Ms. Field. GAO has not directly assessed whether privatization
would improve the quality for military personnel and provide cost-
savings for DOD. However, GAO has issued several reports on the Defense
Commissary Agency's (DeCA) management of the commissaries, in which we
identify the ways in which DeCA does not operate like a business
because it is required to provide certain benefits to service members,
their families, and retirees.
First, as we reported in 2022, DeCA's two primary
objectives of generating savings and increasing margin can be in
tension with one another, particularly if the targets set for each are
incompatible. \12\ Specifically, if DeCA raises the prices on certain
items to generate more margin (and therefore reduce its reliance on
appropriations), the savings to the customer on those items decreases.
Conversely, if DeCA lowers prices to provide more savings to customers,
DeCA's ability to generate a margin decreases. Since fiscal year 2016,
DeCA has had a global target customer savings rate of 23.7 percent,
meaning that it expects its customers to save, on average across all
commissary locations, over 20 cents on the dollar by shopping at a
commissary instead of making similar purchases at other local grocery
stores.
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\12\ GAO, Defense Commissaries: Actions Needed to Clarify
Priorities and Improve Program Management, GAO-22-104728 (Washington,
DC: June 28, 2022).
Second, DeCA operates commissaries throughout the United
States, including in isolated or more remote areas, as well as at
overseas locations in 13 countries. This means that DeCA operates
commissaries in some locations that would not necessarily be considered
profitable by the private grocery industry, but that are important to
the customer population. Whereas a private grocery store chain might
close a location based on lack of profitability, DOD must follow clear
criteria defined in a DOD instruction to close a commissary. \13\
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\13\ DOD Instruction 1330.17, DOD Commissary Program (June 18,
2014) (incorporating change 2, effective Sept. 14, 2018)
Given these factors, any assessment of the potential effects of
privatizing commissaries would need to determine if a private company
could both deliver the full intended benefit to all consumers,
including those in remote and rural locations, and provide the intended
customer savings, or whether those benefits and savings should be
---------------------------------------------------------------------------
adjusted.
16. Senator Warren. Ms. Field, did the privatization of military
housing improve the quality of housing for military personnel and
provide cost-savings for the DOD?
Ms. Field. In seeking the authorities granted to DOD under the
Military Housing Privatization Initiative (MHPI) in 1996, department
officials posited that leveraging private sector financing would allow
them to eliminate inadequate housing more economically and faster than
could be achieved through traditional military construction financing.
As such, GAO's work in the early years of MHPI sought to assess the
validity of this assumption. A number of complicating factors made
doing so difficult. In 1996, for example, GAO reported that because DOD
was using new construction standards to assess the condition of
military-owned housing units, many housing units that DOD classified as
inadequate were not dilapidated, but only lacked modern amenities, such
as a separate utility room or a carport. \14\ In other words, there was
no reliable baseline with which to compare the condition of the new,
privatized housing to the old, government-owned housing. Based on this
work, we further stated in 1998 that while we recognized that DOD faced
significant housing problems, we did not fully agree with DOD on the
magnitude of the problem. \15\ Further, in 2000, we reported that,
because no projects under the program had been completed, there was
little basis for evaluating the effectiveness of the program in
eliminating inadequate housing more economically and faster than could
be achieved through traditional military construction financing.\16\
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\14\ GAO, Military Housing: Privatization Off to a Slow Start and
Continued Management Attention Needed, GAO/NSIAD-98-178 (Washington,
DC, July 17, 1998).
\15\ GAO/NSIAD-98-178.
\16\ GAO, Military Housing: Continued Concerns in Implementing the
Privatization Initiative, GAO/NSIAD-00-71 (Washington, DC: March 30,
2000).
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However, we were able to evaluate DOD's estimated cost savings.
When GAO analyzed the complete life-cycle cost estimates that DOD had
prepared for individual projects, we found that, overall, the cost
savings were likely to be more modest than predicted. For example, in a
1998 analysis of two privatized housing projects, GAO's review showed
that although privatization was less costly for each project, the
overall estimated cost savings to the Government were considerably less
than the military services' estimates--about $54 million less, or about
7 percent, at one of the two installations, and $15 million less, or
about 10 percent, at the other. GAO also found in a subsequent review
of 12 projects that privatization, on average, should cost the
government about 11 percent less than military construction financing.
For 10 of the projects, we calculated that the estimated savings ranged
from 38 percent to 5 percent. For the remaining two projects, we
estimated that privatization would cost more than military
construction--about 9 percent and about 15 percent more,
respectively.\17\
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\17\ 17GAO/NSIAD-00-71.
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In recent years, as questions about whether privatization was the
right policy choice have transitioned to questions about how
privatization is working, GAO's work has focused on assessing the
financial health of privatized housing projects and DOD's oversight of
the condition of the housing.
__________
Questions Submitted by Senator Joe Manchin
government accountability office
17. Senator Manchin. Ms. Field, the Government Accountability
Office (GAO) recommended in 2005 that the position of Chief Management
Officer (CMO) be created within the Department of Defense. Does GAO
still believe a CMO position is necessary?
Ms. Field. Yes, we believe a CMO function or its equivalent, as
discussed below, is needed to ensure that DOD can effectively manage
business reform to achieve progress. Our work has identified the need
for DOD to have dedicated leadership at a very senior level, with
significant authority, clearly defined roles and responsibilities, and
resources to successfully drive business reform. There are different
models that DOD and Congress could adopt to ensure that a fully
empowered senior leader focused on business operations and
transformation is in place. For example, the U.S. Department of State
has adopted a ``two deputies'' model, in which one Deputy Secretary of
State focuses on management and resources issues, while the other
focuses on the more traditional mission responsibilities of the Deputy
Secretary of State. The CMO model is another structure that DOD could
adopt to address DOD's longstanding weaknesses in managing its business
operations, if the position is sufficiently empowered and resourced to
perform these duties.
For more than a decade, DOD and Congress have experimented with
different organizational structures to try to facilitate successful
business reforms within the department, and to address longstanding
weakness that have resulted in reduced efficiencies and ineffective
performance. We have assessed many of these structures and the reform
initiatives that have come out of them, and have found that these
characteristics--senior leader with sufficient authority, clearly
defined roles and responsibilities, and sufficient resources--to be
critical to success.
18. Senator Manchin. Ms. Field, how would GAO characterize the
Department of Defense handling of that 2005 recommendation to create a
CMO until it was formally created by Congress in the Fiscal Year 2018
National Defense Authorization Act?
Ms. Field. DOD's response to GAO's recommendation to create a CMO
reflected progress in some areas, but challenges in others, and was not
fully successful. DOD first took steps to establish a CMO role in May
2007, when it designated the Deputy Secretary of Defense as the
department's CMO. In September 2007, we found that while the Deputy
Secretary was at the appropriate level with sufficient authority and
responsibility to transform business operations, the demands placed on
the position made it difficult for them to maintain the oversight,
focus, and momentum needed to resolve business operational
weaknesses.\18\
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\18\ GAO, DEFENSE BUSINESS TRANSFORMATION; Achieving Success
Requires a Chief Management Officer to Provide Focus and Sustained
Leadership, GAO-07-1072, (Washington, DC: September 5, 2007).
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Subsequently, Congress included a provision in the National Defense
Authorization Act for Fiscal Year 2008 to codify the Deputy Secretary
of Defense as the DOD CMO, establish a new position known as the Deputy
Chief Management Officer (DCMO) to assist the Deputy Secretary, and
name the Under Secretaries of the military departments as CMOs of their
respective organizations. \19\ The military departments also
established DCMO positions to assist the CMOs with overseeing their
business operations. In addition, the National Defense Authorization
Act for Fiscal Year 2009 required the secretary of each military
department to establish an office of business transformation and
develop business transformation plans, with measurable performance
goals and objectives, to achieve an integrated management system for
the business operations of each military department.\20\
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\19\ Pub. L. No. 110-181, Sec. 904 (2008).
\20\ Pub. L. No. 110-417, Sec. 908 (2008).
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While these structures resulted in enhancements in DOD's business
operations, we found that DOD had not defined the relationship between
the DCMO and military departments, and that the DCMO was advisory and
not held accountable for results. We also found that DOD needed to
further define how the CMO and DCMO would monitor and assess
information to measure department-wide progress against goals, among
other things.\21\
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\21\ See GAO, High-Risk Series: An Update, GAO-13-283 (Washington,
DC: February 2013); High-Risk Series: An Update, GAO-11-278
(Washington, DC: February 16, 2011); and High-Risk Series: An Update,
GAO-09-271 (Washington, DC: January 22, 2009).
19. Senator Manchin. Ms. Field, would you say the Department in any
serious way attempted to address the concerns raised by GAO that lead
the Office to recommend the creation of that position?
Ms. Field. One key reason that DOD's Approach to Business
Transformation has remained on our High Risk List since 2005 is that
the department has not fully implemented our recommendations designed
to position DOD for success in this area. For example, in 2005 we found
that a lack of sustained leadership attention and appropriate
accountability had challenged DOD's progress in implementing a risk
management framework, and that such leadership was needed for
transformational efforts.\22\ We made several recommendations related
to assigning clear leadership with accountability, and developing
performance measures, among others, but DOD did not fully implement
them.
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\22\ See GAO, Defense Management: Additional Actions Needed to
Enhance DOD's Risk-Based Approach for Making Resource Decisions, GAO-
06-13 (Washington, DC: November 15, 2005).
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In 2007, we reported that while DOD had made progress establishing
a management framework for overall business transformation, it did not
fully address broader business transformation efforts.\23\ We concluded
that DOD's efforts at business transformation consisted of various
entities whose interrelationships were not clearly articulated and
numerous plans that were not integrated across the department. We
further found that there was no single individual, office, or
integrated plan within DOD to provide a complete and focused assessment
of the department's business transformation efforts. We recommended
that DOD institutionalize in directives the roles, responsibilities,
and relationships among various business-related entities and
committees and expand the management framework to capture overall
business transformation efforts, rather than limit efforts to
modernizing business systems. DOD did not implement this
recommendation.
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\23\ GAO-07-1072.
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Although DOD has taken some actions over the years to act on GAO's
recommendations in this area, key recommendations remain unimplemented.
Among them are that DOD routinely and comprehensively monitor and
evaluate ongoing efficiency initiatives, and consistently report reform
savings based on definitions of reform.
20. Senator Manchin. Ms. Field, what does GAO attribute the
supposed ``failures'' of the CMO to as identified in the May 6, 2020
Defense Business Board Independent Assessment?
Ms. Field. We found that the absence of a chartering directive,
cultural resistance to enterprise-wide transformation efforts, a lack
of resources, and sustained challenges in delivering material reform
limited the effectiveness of the position. In its 2020 assessment of
the CMO position, among other things, the Defense Business Board
concluded that the CMO position was not set up for success, and we
agree. In addition, a June 2023 report from the Defense Management
Institute echoed these structural and cultural challenges, and
concluded that they hindered the ability of the CMO to drive business
reform.
As we reported in 2019, while Congress had given the CMO both
significant responsibilities and authorities--subject to the authority,
direction, and control of the Secretary and Deputy Secretary of
Defense--DOD had not resolved unanswered questions about how the CMO's
responsibilities and authorities would be carried out. \24\ For
example, the National Defense Authorization Act for Fiscal Year 2019
directed the Secretary of Defense, acting through the CMO, to reform
DOD's enterprise business operations across all organizations and
elements of the department with respect to any activity relating to
civilian resources management, logistics management, services
contracting, or real estate management. \25\ Fulfilling these
responsibilities depended, in part, on the CMO's visibility into the
business operations of all components of the department, including the
military departments, as well as the ability to identify and execute
DOD-wide business reforms.
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\24\ GAO, Defense Business Operations: DOD Should Take Steps to
Fully Institutionalize the Chief Management Officer Position, GAO-19-
199 (Washington, DC: March 14, 2019).
\25\ Pub. L. No. 115-232, Sec. 921 (2018).
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We found that DOD leadership had not fully determined how the CMO
would exercise its authority to direct the secretaries of the military
departments and the heads of all other elements of DOD on matters for
which the CMO had responsibility. We identified instances in which the
lack of a determination as to how the CMO was to direct the business-
related activities of the military departments led to questions about
respective roles and authorities of the CMO. In one case, officials
from the military departments questioned the CMO's authority to make
binding decisions; in another, the military departments sought to
pursue reform activities without CMO involvement and oversight.
We also identified instances in which the CMO's efforts to
implement reforms were hampered by a lack of resources. We reported
that DOD had established reform teams led by senior officials
throughout the department charged with identifying and implementing
initiatives to consolidate the department's business operations. \26\
However, the Office of the CMO did not request funding for reform team
initiatives, in part because officials had initially planned to use
available funding from the savings generated by the initiatives to fund
the development and implementation of other initiatives. Office of the
CMO officials later recognized the need for the initiatives to obtain
funding separate from any savings realized, but had not developed an
approach to do so. As a result, reform teams reported lacking the
funding needed to implement some of their initiatives.
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\26\ GAO, Defense Management: DOD Needs to Implement Statutory
Requirements and Identify Resources for Its Cross-Functional Reform
Teams, GAO-19-165 (Washington, DC: January 17, 2019).
21. Senator Manchin. Ms. Field, does GAO believe the Department's,
and specifically multiple Secretaries of Defense, failure to supply a
Department Charter to the position of CMO confirming its authority
contributed to the assessments outlined in the Defense Business Board
Independent Assessment of the CMO?
Ms. Field. Yes, the lack of a chartering directive directly
contributed to the department's inability to successfully implement the
CMO position. In March 2019, we reported that the absence of a
chartering document to codify the CMO's authorities and
responsibilities and specify how those are to be operationalized, would
raise continued questions about the extent of the CMO's authority and
responsibility, and would prevent a shared understanding across the
department of the CMO's role. We concluded that guidance that fully
encompasses all CMO authorities and responsibilities and explains how
they are to be operationalized could help institutionalize and sustain
the position beyond the tenure of the current acting CMO. We
recommended that DOD codify the CMO's authorities and how they are to
be operationalized in formal department-wide guidance. DOD concurred
with this recommendation, but did not implement it, and subsequently
the CMO position was disestablished by the William M. (Mac) Thornberry
NDAA for fiscal year 2021.
22. Senator Manchin. Ms. Field, does GAO believe the current
delineation of business modernization, cost assessment, and cost
efficiency responsibilities are held by offices within the Department
at a sufficient seniority level, and does GAO believe those duties are
effectively coordinated within the Department?
Ms. Field. It is too soon to tell whether the current delineation
of DOD's business operations responsibilities is effective in driving
sustained and meaningful business transformation.
With the disestablishment of the CMO in January 2021, the Deputy
Secretary of Defense reestablished the Director of Administration and
Management (DA&M), who was subsequently designated the department's
Performance Improvement Officer (PIO). The Deputy Secretary also
transferred a number of former CMO responsibilities to DA&M and other
organizations throughout the department, including the Under Secretary
of Defense (Comptroller) and the Chief Information Officer. Table 1
shows selected responsibilities for each of these officials as
prescribed in the Deputy Secretary of Defense's guidance.
----------------------------------------------------------------------------------------------------------------
Department of Defense official Responsibility
----------------------------------------------------------------------------------------------------------------
Director of Administration and Management/ Performance Improvement Defense reform
Officer Performance improvement
Pentagon Reservation management
Defense-wide support
----------------------------------------------------------------------------------------------------------------
Under Secretary of Defense (Comptroller) Defense business systems
Maintain Financial Improvement and Audit
Remediation Plan
----------------------------------------------------------------------------------------------------------------
Chief Information Officer Defense business systems
----------------------------------------------------------------------------------------------------------------
Source: GAO
DOD is in the process of collecting data and will be reporting on
the results of its new coordination efforts as part of the fiscal year
2025 and 2026 budget cycles. Specifically, ODA&M partnered with the
Under Secretary of Defense (Comptroller) and the Cost Assessment and
Performance Evaluation office to issue revisions to department's
Integrated Program and Budget Guidance for fiscal year 2024-2028 in
order to capture additional information on reform efforts. Further,
ODA&M officials told GAO that they continue to engage with Under
Secretary of Defense (Comptroller) and Cost Assessment and Performance
Evaluation to identify opportunities for performance improvement
initiatives in the department. According to those officials, full
integration of the approach into the Planning, Programming, Budgeting,
and Execution process will likely not occur until the fiscal year 2026
budget cycle, which will be initiated in early 2024.
national defense authorization act
23. Senator Manchin. Ms. Field, does GAO endorse or support section
902 of S. 2226, the National Defense Authorization Act, and does this
include endorsing or supporting this section's inclusion through the
NDAA conference process and within the final version of the Fiscal Year
2024 NDAA?
Ms. Field. While this is a policy decision for the Congress to
make, our work has demonstrated that DOD would benefit from a fully
empowered, senior leader who is dedicated to driving meaningful and
sustainable enterprise-wide business reform. This need could be filled
through different organizational constructs as long as these conditions
are met and the position is appropriately resourced.
We recognize that DOD has recently undertaken a significant
reorganization, pursuant to statutory direction associated with
disestablishment of the CMO, and reassigned the roles and
responsibilities of the position to other offices. DOD has also
established and is also utilizing different governance structures to
help manage departmental reform. Among other things, after the CMO was
disestablished, DOD implemented a new approach to business reform
focusing on a bottom-up approach that emphasizes DOD organizations'
responsibility to initiate and implement business reforms. As recently
as August 2023, the Deputy Secretary of Defense approved a list of
crosscutting initiatives and DOD established a new senior governance
structure for its business management and reform efforts. While DOD has
made some progress laying the groundwork for collecting data associated
with its business reforms under its new structure, it is too soon to
determine if it will be successful. GAO will be reporting on DOD's
initial efforts in implementing this new structure in the Fall 2023,
and will continue to monitor its progress moving forward.
24. Senator Manchin. Mr. Roark, does the DOD Office of Inspector
General endorse or support section 902 of S. 2226, the National Defense
Authorization Act (NDAA), and does this include endorsing or supporting
this section's inclusion through the NDAA conference process and within
the final version of the Fiscal Year 2024 NDAA?
Mr. Roark. The DOD OIG does not endorse or support pending
legislation.
25. Senator Manchin. Mr. Mosher, does the Congressional Budget
Office endorse or support section 902 of S. 2226, the National Defense
Authorization Act (NDAA), and does this include endorsing or supporting
this section's inclusion through the NDAA conference process and within
the final version of the Fiscal Year 2024 NDAA?
Mr. Mosher. CBO's role is to provide objective, nonpartisan
information to support the budget process and to help the Congress make
effective budget and economic policy. The agency does not make policy
recommendations or take positions on legislation.
__________
Questions Submitted by Senator Dan Sullivan
military compensation
26. Senator Sullivan. Mr. Mosher, I and other Senators serving on
the Senate Armed Services Committee (SASC) have repeatedly discussed
the military's recruiting challenges with DOD officials during hearings
this year. In fact we had an entire hearing on the subject in May, in
which we heard from senior representatives from each branch. DOD
officials have provided many reasons for the recruiting crisis from
lack of interest and fitness among young people to their fear of
leaving home and perception that military service puts life on hold.
However, one reason most timely and fitting to your appearance here
today is the belief that in good economic times military recruiting
suffers as more economic opportunities are available. However, as you
know Mr. Mosher, the military offers an attractive compensation plan
that not only includes a competitive salary but medical and life
insurance, housing allowances, and extensive paid leave. In your
opinion, what could the DOD do to make the current military
compensation plan more understandable to potential recruiting pools?
Mr. Mosher. Although military personnel are well compensated when
compared with their peers in the civilian sector, the structure of
DOD's compensation package is complicated. Its mix of cash, noncash,
and deferred compensation (which includes veterans' benefits) differs
significantly from the more straightforward wages or salaries that
potential recruits or servicemembers who are contemplating reenlistment
might use for comparison. Thus, one concern is that prospective and
current members of the military may undervalue the military
compensation package. The armed services provide military personnel
with an accounting of the value of their compensation each year, but it
is not clear how well that information is understood or how it informs
members' decisions about reenlisting.
CBO has not specifically examined ways to make the current military
compensation package more easily understood to potential recruits. In
its broader analysis of military compensation, however, the agency has
presented options for changing aspects of the current compensation
system, such as relying more on cash bonuses, that could improve
understanding.\2\ In a related effort undertaken at the request of the
Senate Armed Services Committee, CBO is developing an infographic that
will illustrate, in part, how military compensation compares with
compensation in the private sector.
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\2\ See, for example, Congressional Budget Office, Approaches to
Changing Military Compensation (January 2020), www.cbo.gov/publication/
55648.
27. Senator Sullivan. Mr. Mosher, in what ways could the DOD
improve the military compensation plan to make it more attractive?
Mr. Mosher. An analysis by CBO has found that compared with their
peers in the civilian sector, military personnel are well
compensated.\3\ On average, enlisted personnel receive cash
compensation that is higher than that received by about 90 percent of
civilians of the same age and education level (which surpasses DOD's
goal that cash compensation meet or exceed the 70th percentile of
civilian earnings). Moreover, the difference between military and
civilian compensation is greater than that comparison suggests because
military compensation includes noncash benefits, such as health care,
that civilians must purchase using their cash compensation. And after
leaving the service, military members may be eligible for deferred
benefits from the Department of Veterans Affairs, such as the GI Bill,
health care, and compensation for medical conditions incurred during
their service.
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\3\ Ibid.
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One way to make the military compensation package more attractive
may be to make it easier to compare with compensation in the private
sector (as discussed in CBO's response to the previous question).
Another solution may be to change the relative mix of cash, noncash,
and deferred compensation to make the overall package more attractive
to potential recruits and service members contemplating reenlistment.
Servicemembers receive a larger share of their overall compensation
in the form of noncash and deferred benefits than do most people
employed in the private sector. And evidence suggests that many service
members greatly underestimate the full value of those deferred
benefits. In addition, because cash can give people more control over
their spending choices, current and prospective service members may
value cash compensation more than noncash compensation. Increasing the
share of military compensation that cash pay represents could improve
efforts to attract and retain military personnel--particularly younger
people. (Research has shown that senior military personnel tend to
value deferred compensation in the form of retiree benefits more than
their younger colleagues do.)
CBO recently examined several ways that DOD could change the
structure of military compensation to reduce or slow the growth of
spending while still attracting and retaining a high-quality force.\4\
Some changes could also help DOD fill needed positions and make the
compensation package more appealing. One approach would emphasize cash
bonuses instead of other elements of compensation--including increases
in basic pay--to give DOD more flexibility to respond to recruiting
challenges and to increase enrollment in undersubscribed career fields,
such as aircraft maintenance or cybersecurity. A second approach would
introduce a salary system in which military personnel would pay for
housing, food, and health care for their families, like civilians do.
Such a system would give policymakers, service members, and--perhaps
most importantly--potential recruits a more complete view of the amount
of cash pay that military personnel can earn.
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\4\ Congressional Budget Office, Approaches to Changing Military
Compensation (January 2020), www.cbo.gov/publication/55648.
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Under one scenario in a new salary system, cash pay could be higher
for junior enlisted service members who are single, particularly young
members living in barracks. Raising their cash pay would encourage
those members to stay in the military longer, in part because it would
compensate them for the hardship of residing in barracks (one of the
least attractive aspects of military life, according to surveys). Some
service members might be worse off, however, and transitioning to a new
salary system would be complicated. DOD's most recent comprehensive
review of military compensation examined some of the advantages and
disadvantages of a salary system but did not recommend implementing
such a system.\5\
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\5\ Department of Defense, Report of the Thirteenth Quadrennial
Review of Military Compensation, Volume I: Main Report (December 2020),
www.tinyurl.com/28jammjb20 (PDF).
special pay to attract dod civilian first responders
28. Senator Sullivan. Ms. Field, several DOD installations in my
State have historically had trouble attracting DOD civilians to fill
first responder positions, particularly firefighters. Some of these
reasons have included the remoteness of duty locations, cost of living,
availability and affordability of housing, high cost of moving
expenses, late declinations by applicants, and physical relocation to
Alaska. However, more recently Fort Greely and Fort Wainwright have
begun applying special pays to attract and retain DOD civilians in key
first responder positions, which so far seems to be working. What
hiring tools does the DOD currently have to hire DOD civilians into
hard to fill positions?
Ms. Field. While we have not evaluated the full range of hiring
tools currently available to DOD to hire civilians into hard-to-fill
positions, we have previously reviewed the department's use of specific
hiring authorities to hire science, technology, engineering, and
mathematics (STEM) personnel at the defense laboratories; the
availability of support services to personnel in remote locations; and
suicide prevention efforts at remote locations outside the contiguous
United States. \27\ Our 2018 review of DOD's use of hiring authorities
found that certain factors--such as the high demand for science and
technology workers, competition with ]the private sector, the
requirement for U.S. citizenship, and the need for security clearances,
among other things--resulted in hiring challenges and prompted concern
about the outlook for a workforce that is vital to the department's
mission. \28\ To address some of those concerns, the Senate Armed
Services Committee noted that it had taken steps to provide the defense
laboratories with certain flexibilities from Federal rules and
regulations that had the potential to hinder the laboratories' ability
to carry out their critical missions. Those flexibilities included
greater pay-setting authority and the ability to hire qualified
candidates who meet certain criteria using direct hire. \29\ Laboratory
officials we surveyed identified certain direct hiring authorities as
both helpful in hiring STEM personnel and doing so in a timely manner.
Laboratory officials also told us, however, that despite the
availability of the hiring authorities, challenges to hiringqualified
candidates remained.
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\27\ GAO, DOD Personnel: Further Actions Needed to Strengthen
Oversight and Coordination of Defense Laboratories Hiring Efforts, GAO-
18-417 (Washington, DC: May 30, 2018); Military Installations: DOD
Should Consider Various Support Services when Designating Sites as
Remote or Isolated, GAO-21-276 (Washington, DC: Jul. 29, 2021); and
Suicide Prevention: DOD Should Enhance Oversight, Staffing, Guidance,
and Training Affecting Certain Remote Installations, GAO-22-105108
(Washington, DC: Apr. 28, 2022).
\28\ GAO-18-417.
\29\ These authorities are intended to expedite the hiring process
and facilitate efforts to compete with the private sector.
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In 2021, we reported on challenges with obtaining support services
at remote installations in the United States. \30\ While this report
did not specifically cover first responders, remote installation
officials identified challenges in general with filling and retaining
civilian employees. For example, officials at the four installations
included in our review stated that they gauge the interests of service
members in specific morale, welfare, and recreation (MWR) programs and
work with regional and service-level MWR officials to maximize the
programs that the installation is able to offer. However, officials
also stated that their ability to provide MWR services is negatively
affected by factors such as low pay, commute time, and cost of living
that impact their ability to fill and retain civilian employees at
installations in remote or isolated areas. For example, officials at
Clear Air Force Station, Alaska, told us that it is difficult to find
civilian workers to support the food and beverage services on the
installation because of low salaries, such as $11 an hour, and the
commute from the nearest community, which is about 25 miles from the
installation. In addition, officials from two of the four installations
and respondents to our survey identified the lack of employment
opportunities for their spouses as a concern. For example, at Marine
Corps Mountain Warfare Training Center, Bridgeport, California, service
members have to choose between living in family housing or in
communities located another 30 miles from the installation so that
their spouses can find employment. If they live in family housing, both
the service member and the spouse face total commutes of over an hour a
day; the service members face a commute of over 2 hours a day if they
live in the nearest community.
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\30\ GAO-21-276.
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Additionally, in April 2022, we reviewed the department's suicide
prevention policies, programs and activities for service members and
dependents, including those assigned to remote locations outside the
contiguous United States. \31\ We found that, while the department had
taken steps to integrate suicide prevention into primary care, it
experienced challenges in fully staffing the primary care behavioral
health positions. According to Defense Health Agency (DHA) officials,
these challenges included high demand for behavioral health providers,
difficulties in recruiting behavioral health personnel that want to
work in a primary care setting, undesirable locations, and prolonged
hiring and on-boarding processes. However, while DHA officials were
aware of the challenges, the agency had not addressed the shortages.
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\31\ GAO-22-105108.
29. Senator Sullivan. Ms. Field, what improvements would you like
to see in the previously mentioned area?
Ms. Field. As noted, we have not evaluated the full range of hiring
tools available to DOD to hire civilians into hard-to-fill positions.
However, the previously discussed reviews of hiring at the defense
laboratories, support services at remote installations, and the
department's suicide prevention efforts at remote installations outside
the contiguous United States identified steps the department could take
to be better positioned to address associated personnel challenges.
\32\
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\32\ GAO-18-417; GAO-21-276; and GAO-22-105108.
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For example, our 2018 review of the defense laboratories' use of
hiring authorities found that the department needed to strengthen the
oversight and coordination of its efforts to hire science, technology,
engineering, and mathematics personnel at the defense laboratories.
\33\ As a result, we recommended that the department obtain and monitor
defense laboratory hiring data to improve oversight, and develop
performance measures for evaluating the effectiveness of the
laboratories' hiring. \34\ While DOD has since taken the necessary
actions to address those recommendations, our findings and
recommendations underscore the need for and importance of establishing
proper oversight mechanisms, including obtaining and monitoring
relevant data on hiring and developing performance measures, to better
understand the use and efficacy of any hiring authorities.
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\33\ GAO-18-417.
\34\ In GAO-18-417, we also recommended that DOD establish
timeframes to guide hiring authority approval and implementation. DOD
has implemented this recommendation.
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During our 2021 review of support services at remote installations,
we recommended, among other things, that the Secretary of Defense, in
collaboration with the Secretaries of the military departments and the
Commandant of the Marine Corps, should systematically assess the risks
associated with not having needed support services for service members
and their dependents stationed in remote or isolated areas and
subsequently develop strategies to better meet those needs as
appropriate. \35\
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\35\ GAO-21-276.
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Our 2022 review of the department's suicide prevention efforts
recommended that DOD develop a strategy to address the previously noted
primary care behavioral health provider staffing shortages, including
those at remote installations. \36\ Having such a plan is key to
resolving shortages. In response to this recommendation, DOD provided
us with standardized contract language for primary care behavioral
health personnel and stated that it expects this language will improve
recruitment and retention of these personnel by including an accurate
position description and recommending the inclusion of certain
incentives in the contract. However, to fully implement this
recommendation, DOD should provide documentation that it has developed
a strategy that comprehensively addresses challenges staffing those
personnel. By developing such a strategy, DOD can help ensure the
military services' ability to provide more comprehensive and effective
behavioral health care to service members and dependents through
primary care resources.
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\36\ GAO-22-105108.
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We also have direction from the Joint Explanatory Statement
accompanying the NDAA for Fiscal Year 2023 that we assess civilian
support at remote locations and provide a report. Specifically, the
Joint Explanatory Statement directs GAO to assess 1) the average number
of vacancies for civilian support services positions at remote or
isolated military installations in comparison to vacancies for such
positions at other military installations, and 2) the average number of
days required to fill such a vacancy at a remote and isolated military
installation in comparison to filling a vacancy of a position with the
same duties at such other installations.
[all]