DOD Civilian Personnel: Comprehensive Strategic Workforce Plans  
Needed (30-JUN-04, GAO-04-753). 				 
                                                                 
During its downsizing in the early 1990s, the Department of	 
Defense (DOD) did not focus on strategically reshaping its	 
civilian workforce. GAO was asked to address DOD's efforts to	 
strategically plan for its future civilian workforce at the	 
Office of the Secretary of Defense (OSD), the military services' 
headquarters, and the Defense Logistics Agency (DLA).		 
Specifically, GAO determined: (1) the extent to which civilian	 
strategic workforce plans have been developed and implemented to 
address future civilian workforce requirements, and (2) the major
challenges affecting the development and implementation of these 
plans.								 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-753 					        
    ACCNO:   A10641						        
  TITLE:     DOD Civilian Personnel: Comprehensive Strategic Workforce
Plans Needed							 
     DATE:   06/30/2004 
  SUBJECT:   Civilian employees 				 
	     Human resources utilization			 
	     Internal controls					 
	     Personnel evaluation				 
	     Personnel management				 
	     Strategic planning 				 
	     Labor force					 
	     Human capital					 
	     National Security Personnel System 		 

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GAO-04-753

United States General Accounting Office

GAO	Report to the Ranking Minority Member, Subcommittee on Readiness, Committee
                  on Armed Services, House of Representatives

June 2004

DOD CIVILIAN PERSONNEL

                 Comprehensive Strategic Workforce Plans Needed

GAO-04-753

Highlights of GAO-04-753, a report to the Ranking Minority Member,
Subcommittee on Readiness, Committee on Armed Services, House of
Representatives

During its downsizing in the early 1990s, the Department of Defense (DOD)
did not focus on strategically reshaping its civilian workforce. GAO was
asked to address DOD's efforts to strategically plan for its future
civilian workforce at the Office of the Secretary of Defense (OSD), the
military services' headquarters, and the Defense Logistics Agency (DLA).
Specifically, GAO determined: (1) the extent to which civilian strategic
workforce plans have been developed and implemented to address future
civilian workforce requirements, and (2) the major challenges affecting
the development and implementation of these plans.

GAO recommends that DOD and the components include certain key elements in
their civilian strategic workforce plans to guide their human capital
efforts. DOD concurred with one of our recommendations, and partially
concurred with two others because it believes that the department has
undertaken analyses of critical skills gaps and are using strategies and
personnel flexibilities to fill identified skills gaps. We cannot verify
DOD's statement because DOD was unable to provide the gap analyses. In
addition, we found that the strategies being used by the department have
not been derived from analyses of gaps between the current and future
critical skills and competencies needed by the workforce.

www.gao.gov/cgi-bin/getrpt?-GAO-04-753.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Derek Stewart at (202)
512-5559 or [email protected].

June 2004

DOD CIVILIAN PERSONNEL

Comprehensive Strategic Workforce Plans Needed

OSD, the service headquarters, and DLA have recently taken steps to
develop and implement civilian strategic workforce plans to address future
civilian workforce needs, but these plans generally lack some key elements
essential to successful workforce planning. As a result, OSD, the military
services' headquarters, and DLA-herein referred to as DOD and the
components-do not have comprehensive strategic workforce plans to guide
their human capital efforts. None of the plans included analyses of the
gaps between critical skills and competencies (a set of behaviors that are
critical to work accomplishment) currently needed by the workforce and
those that will be needed in the future. Without including gap analyses,
DOD and the components may not be able to effectively design strategies to
hire, develop, and retain the best possible workforce. Furthermore, none
of the plans contained results-oriented performance measures that could
provide the data necessary to assess the outcomes of civilian human
capital initiatives.

The major challenge that DOD and most of the components face in their
efforts to develop and implement strategic workforce plans is their need
for information on current competencies and those that will likely be
needed in the future. This problem results from DOD's and the components'
not having developed tools to collect and/or store, and manage data on
workforce competencies. Without this information, it not clear whether
they are designing and funding workforce strategies that will effectively
shape their civilian workforces with the appropriate competencies needed
to accomplish future DOD missions. Senior department and component
officials all acknowledged this shortfall and told us that they are taking
steps to address this challenge. Though these are steps in the right
direction, the lack of information on current competencies and future
needs is a continuing problem that several organizations, including GAO,
have previously identified.

Strategic Workforce Planning Process

Source: GAO.

Contents

  Letter

Results in Brief
Background
Steps Have Been Taken to Develop and Implement Strategic

               Workforce Plans, but Some Key Elements Are Lacking

Need for Information on Current and Future Workforce Competencies Is the
Major Challenge to Effective Strategic Workforce Planning

Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation

                                       1

                                      4 6

13

19 21 21 22

Appendix I Scope and Methodology

  Related GAO Products

Tables                                                                  
               Table 1: Various Strategic Human Capital Management and     
                             Workforce Planning Guidance                   12 
             Table 2: Steps Taken by DOD and the Components to Develop and 
                         Implement Strategic Workforce Plans               14 
Figures                                                                 
           Figure 1: Distribution of Civilian Employment by DOD Component, 
                   as of December 30, 2003 (655,545 Direct Hires)           8 
                   Figure 2: Strategic Workforce Planning Process          11 

Abbreviations

DLA Defense Logistics Agency
DOD Department of Defense
GAO General Accounting Office
NSPS National Security Personnel System
OMB Office of Management and Budget
OPM Office of Personnel Management
OSD Office of the Secretary of Defense

OUSD/P&R 	Office of the Under Secretary of Defense for Personnel and
Readiness

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protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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separately.

United States General Accounting Office Washington, DC 20548

June 30, 2004

The Honorable Solomon P. Ortiz Ranking Minority Member Subcommittee on
Readiness Committee on Armed Services House of Representatives

Dear Mr. Ortiz:

The achievement of the Department of Defense's (DOD) mission is dependent
in large part on the skills and expertise of its civilian workforce. DOD's
civilian workforce, among other things, develops policy, provides
intelligence, manages finances, and acquires and maintains weapon systems.
During its downsizing in the early 1990s, DOD did not focus on reshaping
the civilian workforce in a strategic manner. This downsizing has resulted
in a workforce characterized by a growing gap between older, experienced
employees and younger, less experienced ones. With more than 50 percent of
its civilian personnel becoming eligible to retire in the next 5 years,
DOD may find it difficult to fill certain mission-critical jobs with
qualified personnel. The problem is exacerbated by today's emerging
security threats and rapidly evolving technology. Civilian personnel have
been deployed along with military personnel to participate in operations
such as Iraqi Freedom, Desert Storm, Bosnia, and Kosovo. In addition,
technological advances have generated the need for a DOD civilian
workforce with more advanced education and greater technological skills.

DOD has undertaken several human capital reforms that will affect its
future civilian workforce of approximately 700,000 personnel. One major
initiative is DOD's creation of a new human capital management system, the
National Security Personnel System (NSPS), which will give the department
significant flexibility for creating a new framework of rules,
regulations, and processes to govern the way civilians are hired,
compensated, promoted, and disciplined. In addition, DOD has undertaken
efforts to convert over 20,000 military positions to civilian positions in
fiscal years 2004 and 2005, and more conversions are to be addressed in
fiscal year 2006 and the out-years. Futhermore, DOD was granted permanent
authority beginning in fiscal year 2004 to extend buyouts to as many as
25,000 civilian employees each year to downsize or restructure the
workforce to meet mission objectives. For these and other human

capital reforms to have maximum effectiveness and value, it is critical
that DOD engage in effective strategic workforce planning.

Leading public-sector organizations have found that strategic human
capital management must be the centerpiece of any serious change
management initiative to transform the culture of government agencies.
Strategic workforce planning, an integral part of human capital
management, helps ensure that an organization has the staff with the
necessary skills and competencies to accomplish its strategic goals.1
Critical skills are core mission and support occupations that are vital to
the accomplishment of an agency's goals and objectives. Competencies are a
set of behaviors that encompass knowledge, skills, abilities, and personal
attributes that are critical to successful work accomplishment. They
describe what employees know, what they do, and how they do it and
translate into effective on-the-job performance. Strategic workforce
planning is an iterative, systematic process that addresses two critical
needs: (1) aligning an organization's human capital program with its
current and emerging mission and programmatic goals and (2) developing
long-term strategies for acquiring, developing, and retaining an
organization's workforce to achieve programmatic goals. The strategic
workforce planning process includes five elements used by leading
publicand private-sector organizations: (1) involvement of management,
employees, and stakeholders in developing, communicating, and implementing
strategic workforce plans; (2) performing analyses to identify critical
skill and competency gaps between current and future workforce needs; (3)
developing strategies to fill these skill and competency gaps; (4)
building the capability necessary to address administrative, educational,
or other requirements to support workforce strategies; and (5) monitoring
and evaluating progress and the contribution of strategic workforce
planning efforts in achieving program goals.

In recent years, we have examined various aspects of DOD's human capital
management of its civilian workforce. For example, in March 2000, we
testified that a strategic approach should be used to guide DOD civilian

1 The Government Performance and Results Act required that an agency's
strategic plan cover a period of at least 5 years forward from the fiscal
year in which it was submitted. We have reported that the act's strategic
planning requirements provide a useful framework for agencies to integrate
their human capital strategies with their strategic and programmatic
planning. See U.S. General Accounting Office, A Model of Strategic Human
Capital Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).

workforce management. We further testified that DOD must define the kind
of workforce it will need in the coming years, develop plans for creating
that workforce, and follow up with the actions and investments needed so
that the right employees-with the right skills, training, tools,
structures, and performance incentives-will be on hand in the years to
come.2 In March 2003, we reported on the department's strategic planning
efforts for civilian personnel both at DOD and selected defense
components.3 In that report we recommended that the Secretary of Defense
strengthen civilian human capital planning, including integration with
military personnel and sourcing initiatives. DOD did not concur with our
recommendation and stated that it presently has both a military and
civilian plan; the use of contractors is just another tool to accomplish
the mission, not a separate workforce, with separate needs, to manage. In
April 2003, we issued a report on DOD's strategic workforce planning
efforts for its civilian industrial workforce.4 We recommended, among
other things, that the Secretaries of the services and the Commandant of
the Marine Corps improve the quality and comprehensiveness of the
services' workforce planning efforts for civilian industrial employees.
DOD concurred with most of our recommendations and highlighted the
importance the department places in human capital management.

In our 2001 High-Risk Series and Performance and Accountability Series and
again in 2003, we designated strategic human capital as a high-risk area
and stated that serious human capital shortfalls are threatening the
ability of many federal agencies to economically, efficiently, and
effectively perform their missions.5

2 U.S. General Accounting Office, Human Capital: Strategic Approach Should
Guide DOD Civilian Workforce Management, GAO/T-GGD/NSIAD-00-120
(Washington, D.C.: Mar. 9, 2000).

3 U.S. General Accounting Office, DOD Personnel: DOD Actions Needed to
Strengthen Civilian Human Capital Strategic Planning and Integration with
Military Personnel and Sourcing Decisions, GAO-03-475 (Washington, D.C.:
Mar. 28, 2003).

4 U.S. General Accounting Office, DOD Civilian Personnel: Improved
Strategic Planning Needed to Help Ensure Viability of DOD's Civilian
Industrial Workforce, GAO-03-472 (Washington, D.C.: Apr. 30, 2003).

5 U.S. General Accounting Office, High-Risk Series: An Update, GAO-01-263
(Washington, D.C.: January 2001); U.S. General Accounting Office,
Performance Accountability Series- Major Management Challenges and Program
Risks: A Governmentwide Perspective, GAO-01-241 (Washington, D.C.: January
2001); and U.S. General Accounting Office, Major Management Challenges and
Program Risks: A Governmentwide Perspective, GAO-03-95 (Washington, D.C.:
January 2003).

This report addresses DOD's efforts to strategically plan for its future
civilian workforce at the Office of the Secretary of Defense (OSD), the
military services' headquarters, and the Defense Logistics Agency (DLA).
As agreed with your office, we determined (1) the extent to which civilian
strategic workforce plans have been developed and implemented to address
future civilian workforce requirements and (2) the major challenges
affecting the development and implementation of civilian strategic
workforce plans.

To determine the extent to which OSD, the military services' headquarters,
and DLA (hereinafter referred to as "DOD and the components")6 have
developed and implemented strategic workforce plans to address future
civilian workforce requirements, we obtained their workforce planning
documents and evaluated their strategic workforce planning efforts in
terms of the five strategic workforce planning elements noted above. We
tested the reliability of selected Defense Civilian Personnel Data System
data used for workforce analysis and reviewed the internal controls
related to the management of the system. We determined that the data were
sufficiently reliable to meet our objectives. To determine what challenges
affect OSD's, the service headquarters', and DLA's development and
implementation of civilian strategic workforce plans, we interviewed
officials and obtained, reviewed, and analyzed documentation to identify
the challenges that affect planning. We conducted our review from April
2003 through June 2004 in accordance with generally accepted government
auditing standards. Further details on our scope and methodology are
presented in appendix I. A list of recent GAO products related to federal
agencies' management of human capital is included at the end of this
report.

The Office of the Secretary of Defense, the military services'
headquarters, and DLA have taken steps to develop and implement civilian
strategic workforce plans to address future civilian workforce needs, but
these plans generally lack some key elements essential to successful
workforce planning. As a result, DOD and the components do not have
comprehensive strategic workforce plans to guide their human capital
efforts. None of the plans included analyses of the gaps between the

6 Throughout this report, the term "component" refers to DLA and all the
services in DOD. The term "service" refers to the U.S. Air Force, the U.S.
Army, the U.S. Marine Corps, or the U.S. Navy.

  Results in Brief

critical skills and competencies currently needed by the workforce and
those that will be needed in the future. Analyses of gaps between critical
skills and competencies are critical to mapping out the current condition
of the workforce and deciding what needs to be done to ensure that the
department and components have the right mix of skills and talents for the
future. As a result, none of the human capital strategies contained in the
strategic workforce plans were derived from such analyses. Without
including analyses of gaps in critical skills and competencies, DOD and
the components may not be able to design and fund the best strategies to
fill their talent needs through recruiting and hiring or to make
appropriate investments to develop and retain the best possible workforce.
Furthermore, none of the plans contained results-oriented performance
measures; that is, the plans did not reflect the measures that could
provide meaningful data necessary to assess the outcomes of their civilian
human capital initiatives. Without these measures, DOD and the components
cannot gauge the extent to which their human capital investments
contribute to achieving their organizations' programmatic goals.

The major challenge that DOD and most of the components face in their
efforts to develop and implement strategic workforce plans is their need
for information on current personnel competencies and those that will
likely be needed in the future. This problem results from DOD and the
components not having developed tools to collect and/or store, and manage
data on workforce competencies. Without this information it cannot be
determined whether DOD and the components are designing and funding
workforce strategies that will effectively shape the civilian workforce
with the appropriate competencies needed to accomplish future DOD
missions. Senior department and component officials all acknowledged this
shortfall and told us that they are taking steps to address this
challenge. For example, in July 2003, the Army formed a working group to
identify its civilian personnel competencies. In February 2004, the Navy
implemented an online survey instrument to collect competency data for its
civilian workforce. The Navy has also partnered with a contractor to
manage its competency collection process. In July 2004, DLA plans to
implement an automated skills inventory tool to capture the competencies
of its current workforce. Though these are steps in the right direction,
the lack of information on current competencies and future needs is a
continuing problem that several organizations, including GAO, have
previously identified.

We are making recommendations to the Secretary of Defense to have DOD and
the components include more key elements in their civilian strategic
workforce plans to help guide their human capital efforts. DOD provided

oral comments after reviewing a draft of this report, concurring with one
of our three recommendations, and partially concurring with two others. In
partially concurring with our recommendation to analyze and document
critical skills and competency gaps between its current and future
workforces, the department stated that it recently began analyses between
gaps in the critical skills currently needed and those needed in the
future. We cannot verify DOD's statement because DOD was unable to provide
any specific documentation showing that it had performed gap analyses.
Regarding gap analyses of competencies, DOD stated that the value of
conducting a global gap analysis between current competencies and those
needed for the future is unclear. Our recommendation did not suggest that
DOD conduct a global gap analysis of competencies for its entire civilian
workforce. Rather, we recommended that DOD analyze and document the gaps
between current critical skills and competencies and those needed for the
future workforce. In partially concurring with our recommendation to
develop workforce strategies to fill identified workforce gaps in skills
and competencies, the department stated that it is actively engaged in
developing strategies to fill identified skills gaps and noted that its
new human capital management system, the National Security Personnel
System, will provide for increased personnel flexibilities designed to
help support the department's strategic workforce planning efforts. The
department also noted that it continues to use existing flexibilities such
as recruitment and retention bonuses, and relocation allowances. In our
report, we acknowledge that DOD and the components have implemented
various strategies to address workforce imbalances. However, as we noted
in our report, these strategies have not been derived from analyses of
critical skills and competency gaps.

With almost 700,000 civilian employees on its payroll, DOD is the second
largest federal employer of civilians in the nation, after the Postal
Service. The achievement of DOD's mission is dependent in large part on
the skills and expertise of its civilian workforce. DOD's civilian
workforce, among other things, develops policy, provides intelligence,
manages finances, and acquires and maintains weapon systems. Because of
the global war on terrorism, the role of DOD's civilian workforce is
expanding to include participation in combat support functions, thus
enhancing the availability of military personnel to focus on warfighting
duties for which they are uniquely qualified. Career civilian personnel
possess "institutional memory," which is particularly important in DOD
because of the frequent rotation of military personnel and the short
tenure of the average political appointee.

  Background

Since the end of the Cold War, the civilian workforce has undergone
substantial change, due primarily to downsizing, base realignments and
closures, competitive sourcing initiatives, and DOD's changing mission.
For example, between fiscal years 1989 and 2002, DOD's civilian workforce
shrank from 1,075,437 to 670,166-about a 38 percent reduction.7 As of
December 30, 2003, DOD's civilian workforce was down to 655,545 employees.
DOD performed this downsizing without proactively shaping the civilian
workforce to ensure that it had the specific skills and competencies
needed to accomplish future DOD missions. A consequence of this lack of
attention to force shaping can be seen in the age distribution of the
civilian workforce in comparison to the distribution at the start of the
drawdown. Today's workforce is older and more experienced, but 57 percent
of the workforce will be eligible for early or regular retirement in the
next 5 years.

As shown in figure 1, as of December 30, 2003, the military services
employed about 85 percent of DOD's civilians; 15 percent were employed by
other defense organizations.

7 These numbers do not include indirect-hire employees.

Figure 1: Distribution of Civilian Employment by DOD Component, as of
December 30, 2003 (655,545 Direct Hires)

Army (223,584)

Other Defense organizations (99,630)a

Air Force (152,029)

Navy (180,302)b

                      Sources: DOD (data); GAO (analysis).

aOther Defense organizations include Defense agencies, DOD field
activities, the Joint Chiefs of Staff, Office of the Inspector General,
U.S. Court of Appeals for the Armed Forces, and the Office of the
Secretary of Defense.

bThe Department of the Navy includes Navy and Marine Corps personnel.

    DOD Civilian Human Capital Reforms

DOD has undertaken several human capital reforms that will affect the
future civilian workforce. In November 2003, Congress, in making
authorizations for DOD, authorized the Secretary of Defense to establish a
new human capital management system, the National Security Personnel
System.8 The law granted DOD exemptions from laws governing federal
civilian personnel management found in title 5 of the United States Code.9
Congress provided these flexibilities in response to DOD's position that
the inflexibility of federal personnel systems was one of the most
important constraints to the department's ability to attract, retain,
reward, and develop a civilian workforce to meet the national security
mission of

8 National Defense Authorization Act for Fiscal Year 2004, Pub. L. No.
108-136, S: 1101 (codified at 5 U.S.C. S: 9902).

9 Congress did not exempt DOD from provisions of title 5 pertaining to
veterans' preference, merit systems principles, prohibited personnel
practices, and equal employment opportunity.

the 21st century. The NSPS will give the department significant
flexibility for creating a new framework of rules, regulations, and
processes to govern the way that civilians are hired, compensated,
promoted, and disciplined.

Congress also granted DOD other new personnel flexibilities, including
permanent authority to extend separation incentives (commonly referred to
as "buyouts") to induce as many as 25,000 civilians to voluntarily leave
federal service. These separation incentives may be used to, among other
things, reshape or reduce the department's civilian workforce. In December
2003, the Under Secretary of Defense for Personnel and Readiness
authorized the military services' headquarters and DOD components to
immediately initiate buyouts as long as affected employees leave
government service during fiscal year 2004.

In addition, DOD has undertaken efforts to expand the use of its civilian
workforce to perform combat support functions traditionally performed by
military personnel. In December 2003, the Under Secretary of Defense
(Comptroller) directed the military services to convert over 20,000
military positions to civilian positions in fiscal years 2004 and 2005;
more conversions are to be addressed in fiscal year 2006 and the
out-years.

    Strategic Workforce Planning

Studies by several organizations, including GAO, have shown that
successful organizations in both the public and private sectors use
strategic management approaches to prepare their workforces to meet
present and future mission requirements. We have found that these
organizations have used strategic workforce planning as a management tool
to develop a case for human capital investments and to anticipate and
prepare for upcoming human capital issues that could jeopardize the
accomplishment of goals.10 Strategic human capital planning begins with
establishing a clear set of organizational intents-including a clearly
defined mission, core values, goals and objectives, and strategies-and
then developing an approach to support these strategic and programmatic
goals. Strategic workforce planning, an integral part of human capital
management, requires systematic assessments of current and future human
capital needs and strategies-which encompass a broad array of initiatives
to attract, retain, develop, and motivate a top-quality

10 GAO-02-373SP and U.S. General Accounting Office, Human Capital: Key
Principles for Effective Strategic Workforce Planning, GAO-04-39
(Washington, D.C.: Dec. 11, 2003).

workforce-to fill the gaps between an agency's current and future
workforce needs. Approaches to such planning vary according to
agencyspecific needs and mission, but our work suggests that, irrespective
of the context in which planning is done, such a process should address
five key elements (see fig. 2):

1. 	Involvement of management and employees: Efforts that address key
organizational issues, like strategic workforce planning, are most likely
to succeed if, at their outset, agencies' top program and human capital
leaders set the overall direction, pace, tone, and goals of the effort,
and involve employees and stakeholders in establishing a communication
strategy that creates shared expectations for the outcomes of the process.

2. 	Workforce gap analysis: Identifying whether gaps exist between the
current and future workforces needed to meet program goals is critical to
ensuring proper staffing. The absence of fact-based gap analyses can
undermine an agency's efforts to identify and respond to current and
emerging challenges. The analysis of the current workforce should identify
how many personnel have the skills and competencies needed to meet program
goals and how many are likely to remain with the agency over time, given
expected losses due to retirement and other attrition. The characteristics
of the future workforce should be based on the specific skills and
competencies that will be needed. The workforce gap analyses can help
justify budget and staff requests by linking the program goals and
strategies with the budgetary and staff resources needed to accomplish
them.

3. 	Workforce strategies to fill the gaps: Developing strategies to
address any identified workforce gaps in critical skills and competencies
creates the road map needed to move from the current to the future
workforce. Strategies address how the workforce is acquired, developed and
trained, deployed, compensated, motivated, and retained.

4. 	Build-up of capability to support workforce strategies: As agencies
develop tailored workforce plans and the administrative, educational, and
other requirements that are important to support them, it is especially
important to educate managers and employees about the human capital
flexibilities so that the flexibilities are implemented openly, fairly,
and effectively.

5. 	Evaluation of and revisions to strategies: Evaluating the results of
the workforce strategies and making needed revisions helps to ensure that

the strategies work as intended. A key step is developing resultsoriented
performance measures as indicators of success in attaining human capital
goals and program goals, both short-and long-term. Periodic measurement
and evaluation provide data for identifying shortfalls and opportunities
to revise workforce plans as necessary.

                 Figure 2: Strategic Workforce Planning Process

Source: GAO.

These concepts are especially relevant in considering the human capital
reforms that DOD has under way that will fundamentally change the way it
manages its civilian workforce. Because DOD is one of the largest
employers of federal civilian employees, how it approaches human capital
management sends important signals about trends and expectations for
federal employment across the government. More importantly, the role that
DOD's civilian workforce plays in support of our national security makes
DOD's approach to managing its people a matter of fundamental public
interest.

Guidance for Managing Four agencies-GAO, the Office of Management and
Budget (OMB), the Strategic Workforce Office of Personnel Management
(OPM), and the Office of the Under Planning Secretary of Defense for
Personnel and Readiness (OUSD/P&R)-have

developed guidance for human capital management and workforce

planning. Highlights of this guidance are presented in table 1.

Table 1: Various Strategic Human Capital Management and Workforce Planning
Guidance

                                Agency Guidance

GAO	In March 2002, we issued an exposure draft of our model of strategic
human capital management to help federal agency leaders effectively lead
and manage their people. The model is designed to help agency leaders
effectively use their people and determine how well they integrate human
capital considerations into daily decision making and planning for the
program results they seek.

OMB 	In October 2001, OMB developed standards of success for strategic
human capital management-one of five governmentwide reform initiatives in
the President's Management Agenda.

OPM	In December 2001, OPM released a human capital scorecard to assist
agencies in responding to the OMB standards for success; later in October
2002, OMB and OPM developed-in collaboration with GAO-revised standards
for success. To assist agencies in responding to the revised standards,
OPM released the Human Capital Assessment and Accountability Framework.

OUSD/P&R	In April 2002, OUSD/P&R published a departmentwide strategic
plan, the Civilian Human Resources Strategic Plan, to set forth its vision
to design, develop, and implement human resource policies, strategies,
systems, and tools to ensure a mission-ready civilian workforce.

Source: GAO.

Congress has additionally recognized the importance of workforce planning
and, in 2002, added to the Government Performance and Results Act a
provision requiring the Chief Human Capital Officer of each agency to
prepare an annual plan that provides a description of how the performance
goals and objectives are to be achieved, including the operation
processes, training, skills, and technology, and the human capital,
information, and other resources and strategies required to meet those
performance goals and objectives.11

11 See Pub. L. No. 107-296, S: 1311(a)(1), which rewrote 31 U.S.C. S:
1115(a)(3); See Pub. L. No. 107-296, S: 1311(a)(2-3), which redesignated
former subsection (f) as (g) and added a new subsection (f).

  Steps Have Been Taken to Develop and Implement Strategic Workforce Plans, but
  Some Key Elements Are Lacking

Although the DOD and the components have taken steps to develop and
implement strategic workforce plans, the plans lack some key planning
elements. As a result, the plans are not comprehensive. DOD and most of
the components we reviewed have involved top-level management, staff, and
stakeholders in the development and implementation of their strategic
workforce plans; however involvement has been limited in the Navy but
increasing. The strategic workforce plans have also included the
identification of critical skills currently needed by the workforce and
those needed in the future, as well as administrative, educational, and
other requirements developed to support workforce strategies. However, the
plans are not comprehensive because they lack some key elements essential
for successful workforce planning. For example, the strategic workforce
plans lacked analyses of gaps in critical skills and competencies, human
capital strategies derived from analyses that identified such gaps, and
results-oriented performance measures.

    DOD and Components Have Taken Some Strategic Workforce Planning Steps

DOD and most of the components we reviewed have involved top-level
management, staff, and stakeholders in the development and implementation
of their strategic workforce plans. However, involvement has been limited
but increasing in the Navy. The strategic workforce plans have also
included the identification of critical skills currently needed by the
workforce and those that will be needed by the workforce in the future, as
well as agencywide plans and procedures to support workforce strategies.
Table 2 provides an overview of the steps taken by DOD and the components
toward developing and implementing strategic workforce plans in terms of
the five key strategic workforce planning elements.

Table 2: Steps Taken by DOD and the Components to Develop and Implement
Strategic Workforce Plans

Marine Key strategic workforce planning elements OSD Army Navy Corps Air
Force DLA Involvement of management and employees

     Top management set the overall strategic    Yes  Yes  Yesa  Yes  Yes Yes 
                    direction.                                            
      Employees and stakeholders involved in     Yes  Yes   Yes  Yes  Yes Yes 
developing and implementing future workforce                           
                    strategies.                                           
Communication strategy established to create  Yes  Yes   Yes  Yes  Yes Yes 
    shared expectations, promote transparency,                            
               and report progress.                                       

          Workforce gap analysis Workforce strategies to fill the gaps

Identification of current and future critical  Yes  Yes  Yes  Yes  Yes Yes 
                      skills.                                             
    Analysis of gaps between current and future    No   No   No   No  No   No 
                  critical skills.                                        
        Identification of current and future       No   No   No  Yes  No   No 
                   competencies.                                          
    Analysis of gaps between current and future    No   No   No   No  No   No 
                   competencies.                                          

Strategies derived from analyses of critical No No No No No No skills and
competency gaps.

Build capability to support workforce strategies

Administrative, educational, and other Yes Yes Yes Yes Yes Yes
requirements developed to support workforce
strategies.

                         Evaluate and revise strategies

Result-oriented performance measures No No No No No No established to
evaluate plans.

Sources: DOD (data); GAO (analysis).

aSubsequent to our exit conference with DOD and the components to discuss
the results of our work, a Department of the Navy official provided us
with a draft human capital strategic plan for the civilian workforce
(Department of the Navy Human Capital Management: An Overview, April
2004). However, we did not have time to assess the plan because of the
short period of time between the time when the draft plan was provided and
the issuance of this report.

Strategic Workforce Plans While DOD and the components have taken steps to
develop and

Lack Some Key Elements 	implement civilian strategic workforce plans,
their plans generally lacked some key elements essential to successful
workforce planning.

Strategic Workforce Plans Did Not Analyze Critical Skills and Competency
Gaps

Specifically, none of the plans included analyses of gaps between the
critical skills and competencies currently needed by the workforce and
those that will be needed in the future. As a result, none of the human
capital strategies contained in the strategic workforce plans were derived
from analyses that identified gaps in critical workforce skills or
competencies needed by DOD and the components to meet future strategic
goals. Furthermore, none of the plans contained results-oriented
performance measures. As a result, DOD and the components do not have
comprehensive strategic workforce plans to guide their human capital
efforts. Without comprehensive strategic workforce plans, DOD and the
components may not know the competencies of the current and future staff,
what gaps exist in skills and competencies, and what their workforce
strategies should be. This is especially important as changes in national
security, technology, budget constraints, and other factors alter the
environment within which DOD operates.

As previously discussed, the civilian strategic workforce plans we
reviewed included information about the current and future critical
skills. However, none of the plans included analyses of gaps between the
critical skills and competencies currently needed and those needed in the
future. GAO and others have reported that it is important to analyze
future workforce needs to (1) assist organizations in tailoring
initiatives for recruiting, developing, and retaining personnel to meet
their future needs and (2) provide the rationale and justification for
obtaining resources and, if necessary, additional authority to carry out
those initiatives. We also stated that to build the right workforce to
achieve strategic goals, it is essential that organizations determine the
critical skills and competencies-a set of behaviors that encompass
knowledge, skills, abilities, and personal attributes-that are critical to
successful work accomplishment. To do so, the following data are needed:

o  	What is available-both current workforce characteristics and future
availability. This is accomplished by assessing the current workforce-
defining the number and types of competencies for employees in each
occupational group; determining the skill levels for each competency; and
assessing how they will evolve over time, factoring in such events as
retirements.

o  	What is needed-the critical workforce characteristics needed in the
future. This is accomplished by analyzing the future workforce- developing
specifications for the kinds, numbers, and location of personnel it will
need to address its future challenges.

o  	What is the difference between what will be available and what will be
needed-that is, the gap. This is especially important as changes in

national security, technology, and other factors alter the environment
within which DOD and the components operate.

We reported that DOD and the four military services lacked information
about their future workforce needs in a March 2003 report on strategic
planning efforts for civilian personnel.12 We pointed out that a National
Academy of Public Administration study noted DOD's increasing reliance on
contractor personnel, and its need for civilian personnel expertise to
protect the government's interest and ensure effective oversight of
contractors' work. We recommended that DOD define the future civilian
workforce, identifying the required characteristics (e.g., the skills and
competencies, number, deployment, etc.) of personnel needed, and determine
the workforce gaps that needed to be addressed through human capital
initiatives. DOD did not concur with our recommendation and stated that
this action was already being accomplished through information provided to
OMB and OPM for the President's Management Agenda Scorecard.13 However,
DOD did not provide us with this information during the course of our
prior review. Based on our current review of the data being supplied to
OMB and OPM, we determined that the data are not sufficiently
comprehensive to fully address the broader elements of workforce planning
that we have endorsed to ensure that workforce data be compiled and
analyzed as an integral part of the strategic workforce planning process
and factored into planning for human capital initiatives.

Though DOD and the components have implemented various strategies to
address expected workforce imbalances, these strategies have not been
derived from analyses of gaps between the critical skills and competencies
currently needed by the workforce and those that will be needed in the
future. Without analyzing critical skills and competency gaps, DOD and the
components may not be able to design and invest in strategies that will
effectively and efficiently transition to the future workforce they desire
and need.

Applying this principle to strategic workforce planning means that
agencies consider how hiring, training, staff development, performance

Workforce Strategies Generally Not Derived from Analyses of Critical
Skills and Competency Gaps

12 GAO-03-475.

13 As part of the President's management agenda for improving government
performance, OMB evaluates executive agencies, including DOD's performance
in five major management categories, including human capital management.

management, and other human capital strategies can be used to close gaps
and gain the critical skills and competencies needed in the future. GAO
and others have reported that it is important to analyze future workforce
needs to assist organizations in tailoring initiatives for recruiting,
developing, and retaining personnel to meet their future needs, and to
provide the rationale and justification for obtaining and targeting
resources and, if necessary, additional authority to carry out those
initiatives. Although not based on formal analyses of skills and
competency gaps, DOD and the components have implemented various
recruitment, retention, training and professional development, and
compensation strategies to address workforce imbalances.

o  	The Army is planning to hire more entry-level professional,
administrative, and technical personnel through its career intern program
in preparation for expected retirements of civilians in leadership
positions. In addition, it is offering bonuses for engineers, scientists,
and computer specialists; accelerated promotions for engineers; permanent
change-of-station moves for all interns; and in some cases, advanced
in-hire pay rates. According to the Army, all of these initiatives will
help grow the leaders of tomorrow, accomplish the necessary transfer of
institutional knowledge, and restore a more balanced age distribution to
the Army's workforce.

o  	The Navy (including the Marine Corps) has implemented a variety of
recruitment, retention, and retirement strategies to address its aging
civilian workforce. One particular strategy involves hiring retired
military personnel, who are well-seasoned employees already familiar with
the knowledge and skills necessary to maintain the Navy's mission.

o  	The Air Force has developed a strategy centered on enhancing
recruitment efforts, investing in the workforce through skill proficiency
training and leadership development, and establishing incentives for force
shaping. As of April 2004, the Air Force had hired 1,381 interns since
fiscal year 2000. According to the Air Force, the intern program is a key
element of the Air Force renewal effort. In addition, the Air Force
believes that force development plays a central role in creating a
workforce that is ready for the challenges of its aerospace mission to
ensure the orderly transfer of institutional knowledge as well as develop
new skills for the aerospace mission. According to an Air Force official,
in fiscal year 2002, the Air Force invested $9 million in civilian
leadership training as a direct result of its aging workforce profile.

o  	DLA has created a Corporate Intern Program that provides systematic
training and on-the-job training work experience. DLA plans to hire
approximately 150 interns per year through fiscal year 2007. According to
a DLA official, 518 interns had been hired since 2000. DLA developed a
Professional Enhancement Program to help high-potential employees in
grades 12 to 15 to increase their knowledge and/or skills.

Strategic Workforce Plans for Civilian Personnel Lack Results-Oriented
Performance Measures to Monitor and Evaluate Progress

While these strategies are important efforts to help shape DOD's and the
components' future as the current workforce becomes eligible for
retirement, these strategies have not been derived from analyses of gaps
between the critical skills and competencies currently needed by the
workforce and those that will be needed in the future. Therefore, it is
unknown whether these strategies will lead to a desirable future workforce
that will help attain programmatic goals.

DOD and the components have not developed results-oriented performance
measures to provide a basis for evaluating workforce planning
effectiveness. Thus, DOD and the components cannot gauge the extent to
which their human capital initiatives contribute to achieving their
organizations' missions. Performance measures, appropriately designed, can
be used to gauge two types of success: (1) progress toward reaching human
capital goals and (2) the contribution of human capital activities toward
achieving programmatic goals. These measures can also improve the
effectiveness of workforce planning strategies, the overall workforce
planning process, and oversight, by identifying shortfalls in performance
and other improvement opportunities, such as corrective actions that can
be incorporated into the next planning cycle. Without results-oriented
measures, it is difficult for an organization to assess the effectiveness
of its human capital initiatives in supporting its overarching mission and
goals.

DOD and the components have not defined practical, meaningful measures
that assess the effectiveness of human capital management. For example,
DOD's fiscal year 2003 Annual Report on civilian human resources
emphasized the department's efforts to achieve activity-oriented goals,
such as employee satisfaction with DOD employment, diversity in management
positions, and new hire turnover rates. While this is useful for tracking
DOD's progress, it does not gauge how well DOD's human capital efforts
helped the department achieve its programmatic goals. As a result, the
link between specific human capital strategies and strategic program
outcomes is not clear.

  Need for Information on Current and Future Workforce Competencies Is the Major
  Challenge to Effective Strategic Workforce Planning

The major challenge that DOD and most of the components face in their
efforts to develop and implement strategic workforce plans is their need
for information on current workforce competencies and the competencies
they anticipate needing in the future. This problem results from DOD's and
the components' not having developed tools to collect and/or store, and
manage data on workforce competencies that are critical to successful work
accomplishment. As a result, it is not clear whether they are designing
and funding workforce strategies that will effectively shape the civilian
workforce with the appropriate competencies needed to accomplish future
DOD missions.

Effective workforce planning requires that human capital staff and other
managers base their workforce analyses and human capital decisions on
complete, accurate, and timely personnel data. Senior department and
component officials all acknowledged this shortfall, and told us that they
are taking steps to address this challenge. Though these are steps in the
right direction, the lack of information on current competencies and
future needs is a continuing problem that several organizations, including
GAO, have previously identified.

In our March 2003 report on DOD strategic human capital management, we
reported that DOD had begun adopting the Army's Civilian Forecasting
System and its Workforce Analysis Support System for departmentwide use.
According to DOD, those systems are still being evaluated by the Strategic
Integration Division in the Civilian Personnel Management Service (CPMS)
at OSD and CPMS is trying to make this software easier to use. However,
the systems do not collect, store, and manage data on current and future
competencies. The Army is working with OPM to link its Civilian
Forecasting System and Workforce Analysis Support System to OPM's Human
Resources Management database to perform competency forecasts.

In April 2001, the Army commissioned a contractor to, among other things,
assist in assessing its civilian workforce and to develop new concepts for
workforce planning. The contractor concluded that the Army's forecasting
models are largely based on the current occupational series and grade
structure and do not lend themselves to forecasting the supply of
multiskilled civilians with the competencies needed in the future. The
contractor recommended that the Army develop a competency-based inventory
of the current workforce using, among other types of information, core and
occupation-specific competencies. According to an Army official, in July
2003, the Army formed a Competency Area Review Work Group that consists of
the Chief of Workforce Analyses and

Forecasting in Civilian Personnel Policy, some operations research
analysts, and personnel specialists to identify the civilian personnel
competencies and competency measures. According to an Army official, the
group is constructing a competency database that will eventually contain
competencies on all employees. By the end of July 2004, the Army will have
occupational forecasts linked to competencies for a subset of the Army's
workforce. In fiscal year 2005, the remaining workforce will be linked by
occupation to competencies.

Like the other agencies, the Navy currently does not have the means to
collect, store, and manage data on workforce competencies. In August 2000,
a National Academy of Public Administration study for the Navy pointed out
that strategic workforce planning should include automated tools to
identify the tasks and competency requirements of its civilian workforce.
In February 2004, the Navy implemented an online survey instrument to
collect competency data for its civilian workforce. It has also partnered
with a private-sector contractor to manage the competency collection
process. The safety community of the Navy was the first to initiate the
pilot. The process is the same that is being used to collect competencies
for Navy sailors and officers.

The Marine Corps has collected data on workforce competencies. It has a
system under development (the Civilian Workforce Development Application)
that will be used to store and manage data on these competencies. The
target date for completing construction of the application is July 2005.

The Air Force has identified leadership competencies for the total force
(i.e., active duty military, Air National Guard, Air Force Reserves, and
civilians). It has begun to develop an analytical information system-the
Total Human Resource Managers' Information System-to capture occupational
codes for the total force. But according to Air Force officials, the
system will not collect, store, and manage data on workforce competencies.

DLA also currently lacks competency data but has included an objective in
its 2002-2007 Strategic Plan to identify gaps between the workforce
competencies and the skills to meet mission requirements for all DLA
positions by the end of fiscal year 2007. According to a DLA official, the
agency is in the process of constructing a skills management tool. With
the help of a contractor, DLA plans to roll out an automated skills
inventory tool (Competency Analysis Management Tool) expected in July 2004
to capture the competencies of its current workforce. The analysis tool
will

Conclusions

Recommendations for Executive Action

be a Web-based system that employees can access and provide input
regarding their proficiency levels in competencies that have been
identified for the respective job families, according to a DLA official.

DOD's current efforts to establish a new personnel system and convert
thousands of military positions to civilian positions, and permanent
authority to offer annual cash buyouts to thousands of employees-when
taken together-provide for wide-ranging changes in DOD's civilian
personnel reforms. However, it is questionable whether DOD's
implementation of these reforms will result in the maximum effectiveness
and value because DOD has not developed comprehensive strategic workforce
plans that identify future civilian workforce needs.

Although DOD and the components have taken steps to develop and implement
civilian strategic workforce plans to address future civilian workforce
needs, they generally lack some key elements essential to successful
workforce planning. Because DOD and the components have not addressed all
of the elements of strategic workforce planning, they do not know what
gaps exist in skills and competencies; what type of recruitment,
retention, and training and professional development workforce strategies
should be developed and implemented to meet future organizational goals;
and what competencies their staff need to do their work now and in the
future. More complete information on the competencies needed for the
future workforce would, for example, enhance DOD's decisions on which
employees to offer cash buyouts. In addition, DOD and the components lack
defined practical, meaningful measures to gauge outcomes of their
workforce strategies. Without including these key elements, their civilian
strategic workforce plans lack comprehensiveness and consequently, DOD's
future strategic workforce plans may not result in workforces that possess
the critical skills and competencies needed.

To improve the comprehensiveness of strategic workforce planning for the
DOD civilian workforce, we recommend that the Secretary of Defense direct
the Office of the Secretary of Defense, the military service headquarters,
and the Defense Logistics Agency to build upon their strategic workforce
planning efforts through the following three actions:

o  	Analyze and document the gaps between current critical skills and
competencies and those needed for the future workforce.

o  	Develop workforce strategies to fill the identified skills and
competency gaps.

o  Establish results-oriented performance measures to use in evaluating

  Agency Comments
  and Our Evaluation

workforce planning efforts.

We requested comments on a draft of this report from the Department of
Defense. The Office of the Under Secretary of Defense for Personnel and
Readiness provided oral comments on a draft of this report. The department
partially concurred with our recommendation that it analyze and document
critical skills and competency gaps between its current and future
workforces. Also, the department partially concurred with our
recommendation that it develop workforce strategies to address identified
workforce gaps in skills and competencies. The department concurred with
our recommendation that it establish results-oriented performance measures
to use in evaluating its workforce planning efforts. DOD also provided
technical and general comments that we have incorporated where
appropriate.

DOD partially concurred with our recommendation that the department
analyze and document critical skills and competency gaps between its
current and future workforces. The department stated that in the first
quarter of fiscal year 2004, it began analyses between gaps in the
critical skills currently needed and those needed in the future, and that
it supplements the analyses, as necessary, to meet emerging technologies
and missions. We cannot verify DOD's statement because DOD was unable to
provide any specific documentation showing that it had performed gap
analyses. Regarding gap analyses of competencies, DOD stated that the
value of conducting a global gap analysis between current competencies and
those needed for the future is unclear, particularly as applied to over
650,000 jobs in nearly 700 occupations. Our recommendation did not suggest
that DOD conduct a global gap analysis of competencies for its entire
civilian workforce. Rather, we recommended that DOD analyze and document
the gaps between current critical skills and competencies and those needed
for the future workforce.

DOD partially concurred with our recommendation that the department
develop workforce strategies to fill identified workforce gaps in skills
and competencies. The department stated that it is actively engaged in
developing strategies to fill identified skills gaps and noted that its
new human capital management system, the National Security Personnel
System, will provide for increased personnel flexibilities designed to
address workforce challenges and help support the department's strategic

workforce planning efforts. The department also noted that it continues to
use existing flexibilities such as recruitment and retention bonuses, and
relocation allowances. In our report, we acknowledge that the NSPS will
give the department significant flexibility for creating a new framework
of rules, regulations, and processes to govern the way civilians are among
other things, hired, compensated, and promoted. We also acknowledge that
DOD and the components have implemented various recruitment, retention,
training and professional development, and compensation strategies to
address workforce imbalances. However, as we noted in our report, these
strategies have not been derived from analyses of critical skills and
competency gaps. Without such analyses, DOD and the components may not be
able to design and invest in strategies will effectively and efficiently
transition them to the future workforce they desire and need.

Regarding our recommendation that the department establish resultsoriented
performance measures to use in evaluating its workforce planning efforts,
the department concurred, noting that it is committed to focusing on
results and using data in evaluating workforce planning efforts.

We are sending copies of this report to the appropriate congressional
committees; the Secretary of Defense; the Secretaries of the Air Force,
Army, and Navy; the Commandant of the Marine Corps; and the Director of
DLA. We will also make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
http://www.gao.gov.

If you or your staff have any questions regarding this report, please
contact me at (202) 512-5559 ([email protected]) or Sandra F. Bell at (202)
512-8981 ([email protected]). Major contributors to this report were Janine
Cantin, Jeanett H. Reid, Jose Watkins, Alissa Czyz, and Cheryl Weissman.

Sincerely yours,

Derek B. Stewart
Director, Defense Capabilities and Management

                       Appendix I: Scope and Methodology

To determine the extent to which civilian strategic workforce plans have
been developed and implemented to address future civilian workforce
requirements, we obtained and reviewed Office of Management and Budget
(OMB) guidance on standards for success for strategic human capital
management, and the Office of Personnel Management (OPM) Human Capital
Assessment and Accountability Framework. We also obtained and reviewed
civilian human capital strategic plans, workforce planning documents, and
workforce analysis submitted by the Department of Defense (DOD) to OMB. We
assessed the reliability of data used for the workforce analysis by (1)
reviewing existing information about the system and the data produced by
the system; (2) interviewing agency officials knowledgeable about the data
and reviewing their responses to questions on system controls; and (3)
making basic comparisons of the data with OPM's Civilian Personnel Data
File's data for obvious errors in accuracy. We determined that the data
were sufficiently reliable to meet our objectives. Using the workforce
planning documents, we evaluated DOD's and the components' strategic
workforce planning efforts in terms of five strategic workforce planning
elements that we identified through our prior work in review of studies by
leading workforce planning organizations that included the OPM, other U.S.
government agencies, the National Academy for Public Administration, and
the International Personnel Management Association. We also held
discussions with the following cognizant officials to obtain their views
on their strategic workforce planning efforts: the Office of the Under
Secretary of Defense for Personnel and Readiness; the Army, Navy, Marine
Corps, and Air Force headquarters; and the Defense Logistics Agency.
Additionally, we obtained and reviewed civilian employee data and
personnel retirement eligibility data from the Defense Civilian Personnel
Data System.

To determine the challenges affecting the development and implementation
of civilian strategic workforce plans, we interviewed officials and
obtained, reviewed, and analyzed documentation to identify the types of
challenges that might affect planning. We also assessed the extent to
which the DOD components had efforts under way to develop and implement
tools to collect, store, and manage data on workforce competencies.

We conducted our work from April 2003 through June 2004 in accordance with
generally accepted government auditing standards.

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GAO-01-357T. Washington, D.C.: February 1, 2001.

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