Defense Acquisition Organizations: Status of Workforce Reductions (Letter
Report, 06/29/98, GAO/NSIAD-98-161).

Pursuant to a congressional request, GAO reviewed the Department of
Defense's (DOD) acquisition workforce reductions, focusing on: (1) DOD's
progress in reducing its workforce in acquisition organizations by 25
percent; (2) the potential savings associated with these personnel
reductions; (3) the status of DOD efforts to redefine its acquisition
workforce; and (4) DOD's efforts to consolidate and restructure
acquisition organizations.

GAO noted that: (1) DOD has been reducing its acquisition workforce at a
faster rate than its overall workforce and is on schedule to accomplish
a 25-percent reduction by the end of fiscal year 2000; (2) however,
potential savings from these reductions cannot be precisely tracked in
DOD's budget; (3) in addition, some of the potential savings from
acquisition workforce reductions may be offset by other anticipated
costs; (4) such costs include those for contracting with private
entities for some services previously performed by government personnel;
(5) DOD developed a new definition for the acquisition workforce and is
using it to identify individuals who perform acquisition functions
throughout the Department; (6) DOD is also exploring a process by which
it can, for the first time, link management of the acquisition workforce
to DOD's overall manpower and budget processes; (7) although far from
assured, success in this arena could allow better planning and budgeting
for workforce training and tracking changes in the workforce; (8) GAO
recently reported that DOD's efforts to streamline and consolidate the
research, development, test, and evaluation segment of its acquisition
organizations have not resulted in significant infrastructure
reductions; and (9) GAO's further analysis of the results of one Air
Force effort confirmed GAO's earlier conclusions that such initiatives
have been unable to overcome numerous obstacles, which often impede
them.

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

 REPORTNUM:  NSIAD-98-161
     TITLE:  Defense Acquisition Organizations: Status of Workforce 
             Reductions
      DATE:  06/29/98
   SUBJECT:  Military personnel
             Military downsizing
             Reductions in force
             Civilian employees
             Personnel management
             Defense procurement
             Defense cost control
             Employee transfers
             Federal agency reorganization
IDENTIFIER:  DOD Vision 21 Plan
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Report to the Chairman, Committee on National Security, House of
Representatives

June 1998

DEFENSE ACQUISITION ORGANIZATIONS
- STATUS OF WORKFORCE REDUCTIONS

GAO/NSIAD-98-161

Defense Acquisition Organizations

(707316)


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

  BRAC - base realignment and closure
  DAWIA - Defense Acquisition Workforce Improvement Act
  DMDC - Defense Manpower Data Center
  DOD - Department of Defense
  O&M - operations and maintenance
  RDT&E - research, development, test, and evaluation

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


B-279586

June 29, 1998

The Honorable Floyd D.  Spence
Chairman, Committee on National Security
House of Representatives

Dear Mr.  Chairman: 

You asked us to (1) review the Department of Defense's (DOD) progress
in reducing its workforce in acquisition organizations by 25 percent,
(2) examine the potential savings associated with these personnel
reductions, (3) determine the status of DOD efforts to redefine its
acquisition workforce, and (4) examine DOD's efforts to consolidate
and restructure acquisition organizations.  In an interim product,\1
we reported that DOD will likely meet its acquisition workforce
reductions target.  We also reported on DOD's initial efforts to
redefine its acquisition workforce. 

This report updates information on acquisition workforce reductions. 
As discussed with your office, we have included a study of one Air
Force restructuring initiative to illustrate some of the issues
surrounding DOD efforts to consolidate and restructure acquisition
organizations. 


--------------------
\1 Defense Acquisition Organizations:  Reductions in Civilian and
Military Workforce (GAO/NSIAD-98-36R, Oct.  23, 1997). 


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

DOD has some 20 acquisition organizations as well as a diverse,
multilayered workforce.  In recent years, Congress has enacted
legislation that requires DOD to reduce its acquisition workforce
significantly and to identify opportunities to streamline and
consolidate acquisition organizations and functions.  These
legislative efforts, aimed primarily at reducing the acquisition
workforce consistent with decreasing budgets and acquisition reform
initiatives, allow the Secretary of Defense wide latitude in
implementing the reductions.  DOD has long sought to focus on
infrastructure reductions in an effort to fund weapons modernization. 

Section 906(a) of the National Defense Authorization Act for Fiscal
Year 1996 (P.  L.  104-106) required a plan that, if implemented,
would reduce the acquisition workforce by 25 percent over the 5-year
period beginning October 1, 1995.  Section 906(d) further required a
reduction of 15,000 persons in fiscal year 1996.\2 Appendix I
contains a complete list of these acquisition organizations.  Section
277 of the same act required DOD to develop a 5-year plan to
consolidate and restructure its laboratories and test and evaluation
centers. 

Section 902 of the National Defense Authorization Act for Fiscal Year
1997 (P.  L.  104-201) amended section 906 to require a total
reduction of 30,000 personnel in fiscal years 1996 and 1997 combined. 

Section 912 of the National Defense Authorization Act for Fiscal Year
1998 (P.  L.  105-85) required a reduction of 25,000 personnel in
fiscal year 1998.  The act gave the Secretary of Defense the
authority to reduce that number to as few as 10,000 if he determined
and certified to Congress that further reductions would be
inconsistent with the cost-effective management of defense
acquisition systems and would adversely affect military readiness. 
On June 1, 1998, the Secretary notified Congress that the reductions
in fiscal year 1998 would be 20,096.  Section 912(b) required DOD to
report on recent reductions, define the term defense acquisition
workforce, and apply the term uniformly throughout DOD.  Section 912
(c) required DOD to submit an implementation plan, by April 1, 1998,
designed to streamline and consolidate acquisition organizations. 
DOD has submitted its plan. 


--------------------
\2 Military and civilian personnel subject to the act were those
employed in organizations defined by DOD Instruction 5000.58 (Jan. 
14, 1992), excluding certain depot trade-skill personnel. 


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

DOD has been reducing its acquisition workforce at a faster rate than
its overall workforce and is on schedule to accomplish a 25-percent
reduction by the end of fiscal year 2000.  However, potential savings
from these reductions cannot be precisely tracked in DOD's budget. 
In addition, some of the potential savings from acquisition workforce
reductions may be offset by other anticipated costs.  Such costs
include those for contracting with private entities for some services
previously performed by government personnel (i.e., substituting one
workforce for another). 

DOD developed a new definition for the acquisition workforce and is
using it to identify individuals who perform acquisition functions
throughout the Department.  DOD is also exploring a process by which
it can, for the first time, link management of the acquisition
workforce to its overall manpower and budget processes.  Although far
from assured, success in this arena could allow better planning and
budgeting for workforce training and tracking changes in the
workforce. 

We recently reported that DOD's efforts to streamline and consolidate
the research, development, test, and evaluation (RDT&E) segment of
its acquisition organizations have not resulted in significant
infrastructure reductions.\3 Our further analysis of the results of
one Air Force effort confirmed our earlier conclusions that such
initiatives have been unable to overcome numerous obstacles, which
often impede them.\4


--------------------
\3 DOD generally defines infrastructure as "all fixed and permanent
installations, fabrications, or facilities for the support and
control of military forces." It consists of mission supporting
property, plant, equipment, and personnel, including contractor
manpower.  DOD excludes the equipment and personnel necessary to
perform directly critical technical and acquisition functions. 

\4 See Best Practices:  Elements Critical to Successfully Reducing
Unneeded RDT&E Infrastructure (GAO/NSIAD/RCED-98-23, Jan.  8, 1998). 


   DOD'S ACQUISITION WORKFORCE IS
   SMALLER, BUT POTENTIAL SAVINGS
   ARE DIFFICULT TO TRACK AND MAY
   BE OFFSET
------------------------------------------------------------ Letter :3

Our analysis of data obtained from the Defense Manpower Data Center
(DMDC) indicates that DOD is still on schedule to achieve acquisition
workforce reductions of 25 percent by the end of fiscal year 2000. 
DOD reduced its acquisition workforce 15.8 percent (or 59,974) during
fiscal years 1996 and 1997.  This reduction is nearly two-thirds of
the reduction of 95,153 personnel that DOD must achieve to meet its
25 percent, 5-year target.  Despite these reductions, potential
savings cannot be directly tracked in DOD budget accounts.  In
addition, some of the potential savings DOD anticipates it will
achieve through these reductions may be offset by other costs. 


      DOD IS STILL ON SCHEDULE TO
      ACHIEVE PLANNED REDUCTIONS
---------------------------------------------------------- Letter :3.1

Our analysis of data obtained from DMDC indicates that during fiscal
years 1996 and 1997, DOD reduced its acquisition workforce at a
significantly higher rate than it reduced its overall workforce.  At
the end of fiscal year 1995, DOD employed 380,615 persons in its
acquisition organizations.  At the end of fiscal year 1997, the total
number of personnel employed dropped to 320,641--a reduction of
59,974 (or 15.8 percent).  Since the 25-percent planned reduction by
the end of fiscal year 2000 is 95,153, DOD achieved nearly two-thirds
of the target during the 2-year period.  Table 1 provides an analysis
of workforce reductions that have already taken place in each of the
acquisition organizations. 

By contrast, at the end of fiscal years 1995 and 1997, respectively,
DOD employed 2,319,401 and 2,158,927 persons overall.  This overall
reduction of 160,474 (or 6.9 percent) during the same period was less
than one-half of that achieved in DOD's acquisition workforce. 



                                     Table 1
                     
                          Workforce Reductions in DOD's
                     Acquisition Organizations (fiscal years
                                     1995-97)

                                 Fiscal year
                      ----------------------------------
                                                                      Percent of
                                                              Change      change
                                                              fiscal      fiscal
                                                          year 1995-  year 1995-
Organization                1995        1996        1997          97          97
--------------------  ----------  ----------  ----------  ----------  ----------
Under Secretary of           541         601         553          12        -2.2
 Defense
 (Acquisition)

Army
--------------------------------------------------------------------------------
Army Information          17,085      16,261         478     -16,607       -97.2
 Systems Command
Army Materiel             66,065      61,201      58,552      -7,513       -11.4
 Command
Army Strategic             1,031       1,024         997         -34        -3.3
 Defense Command
Army Acquisition           2,693       2,744       2,755          62         2.3
 Executive
================================================================================
Subtotal                  86,874      81,230      62,782     -24,092       -27.7

Navy
--------------------------------------------------------------------------------
Assistant Secretary          121         118         116          -5        -4.1
 of the Navy
 (Research,
 Development, &
 Acquisition)
Naval Sea Systems         61,909      53,699      49,814     -12,095       -19.5
 Command
Naval Air Systems         32,882      30,061      26,053      -6,829       -20.8
 Command
Naval Supply Systems      14,539      14,031      11,417      -3,122       -21.5
 Command
Naval Facilities          22,441      21,854      19,419      -3,022       -13.5
 Engineering Command
Office of the Chief        4,274       4,182       4,021        -253        -5.9
 of Naval Research
Space and Naval            6,960       6,714       6,529        -431        -6.2
 Warfare Systems
 Command
Navy Program               2,777       2,909       2,813          36        -1.3
 Executive Officers/
 Direct
 Reporting Program
 Management Officers
Marine Corps Systems         736         738         730          -6        -0.8
 Command
================================================================================
Subtotal                 146,639     134,306     120,912     -25,727       -17.5

Air Force
--------------------------------------------------------------------------------
Assistant Secretary          485         434         428         -57       -11.8
 of the Air Force
 (Acquisition)
Air Force Material        95,064      92,441      89,612      -5,452         5.7
 Command
Air Force Program             52          52          51          -1         2.0
 Executive
 Organization
================================================================================
Subtotal                  95,601      92,927      90,091      -5,510        -5.8
Ballistic Missile            231         262         275          44        19.1
 Defense
 Organization
Defense Logistics         50,643      47,400      45,948      -4,695        -9.3
 Agency
Special Operations            86          87          80          -6        -7.0
 Command Acquisition
 Center
================================================================================
Total                    380,615     356,813     320,641     -59,974       -15.8
--------------------------------------------------------------------------------
Source:  DOD. 

While most of the reductions in the acquisition workforce have been
achieved directly through personnel reductions, a significant portion
was also attained by disestablishing the Army Information Systems
Command and distributing the majority of its personnel into a
nonacquisition organization (i.e., an organization outside the
purview of DOD Instruction 5000.58). 


      POTENTIAL SAVINGS FROM
      PERSONNEL REDUCTIONS CANNOT
      BE PRECISELY TRACKED IN
      DOD'S BUDGET
---------------------------------------------------------- Letter :3.2

DOD's civilian acquisition workforce comprises nearly 40 percent of
DOD's overall civilian workforce and is paid primarily through
operations and maintenance (O&M) and RDT&E funding.\5 The
Congressional Budget Office estimates that the average annual salary
and benefits of an acquisition worker is about $53,000.  Using this
average, the personnel reduction in acquisition organizations during
fiscal years 1996 and 1997 represents a potential savings of
approximately $3.2 billion. 

However, DOD's accounting systems are unable to directly track
workforce reductions in acquisition organizations to DOD budget
accounts.  For example, although, since 1995, the civilian payroll
portion of DOD's O&M budget has been reduced by approximately $3.6
billion (roughly 9 percent),\6 it is unclear how much of that decline
is accounted for by acquisition workforce reductions. 

During the same period, the RDT&E account actually increased
approximately $826 million (more than 2 percent).  It is also unclear
how much of that increase is accounted for by acquisition workforce
changes because DOD's RDT&E account does not break out civilian
payroll. 


--------------------
\5 See Defense Budget:  Analysis of Operations and Maintenance
Accounts for 1985-2001 (GAO/NSIAD-97-73, Feb.  28, 1997), for
additional information regarding the relationship between payroll
costs and the O&M budget account. 

\6 Monetary values are presented in constant 1998 dollars. 


      POTENTIAL SAVINGS FROM
      PERSONNEL REDUCTIONS MAY BE
      OFFSET
---------------------------------------------------------- Letter :3.3

In addition to DOD's inability to accurately track savings from
personnel reductions in acquisition organizations, such savings have
not been and may not be fully realized due to other offsetting costs. 
For example, potential savings from acquisition workforce reductions
may be offset in part by contracting with private entities for some
services previously performed by government personnel (i.e.,
substituting one workforce for another).  According to a DOD
official, other mission-specific costs that may offset savings from
workforce reductions include (1) investment costs, such as early
buyouts and (2) undocumented costs, such as overtime and workforce
inefficiencies introduced by personnel shortages or inexperienced
workers. 

Our analysis shows that while DOD's acquisition workforce has
declined, defensewide contract awards for support services have
increased over the past 5 years.\7 As shown in figure 1, DOD's
spending on support services, as a percentage of overall DOD spending
on contracts, is increasing.  For example, the dollar value of DOD's
support service contracts in fiscal
year 1997 was $47.8 billion (roughly 40 percent), compared to $45.5
billion (about 33 percent) in fiscal year 1993.\8 Although we cannot
directly correlate the increase in support service contracting to
specific reductions in the acquisition workforce, we found that
support service contracts generally increased for certain
occupational fields that experienced the largest personnel
reductions, including management analyst, contracting,
administrative, and computer specialist.  DOD officials stated that
they have not studied the direct correlation of outsourced activities
as they relate to mandated reductions.  DOD is in the process of
trying to determine cost savings associated with outsourcing
activities. 

   Figure 1:  DOD Support Service
   Contracts as a Percentage of
   Total Contract Dollars (fiscal
   years 1993-97)

   (See figure in printed
   edition.)

Source:  DOD Form 350, Individual Contract Action Report. 


--------------------
\7 For the purposes of this report, the term "support services"
contracts refers to contracts valued over $25,000 identified in DOD's
Procurement Coding Manual as "other services and construction." This
type of contract consists of 23 major categories, including technical
representative services, architect and engineering services, and
professional, administrative, and management support services. 

\8 See also Defense Advisory and Assistance Services
(GAO/NSIAD-97-166R, June 13, 1997) and
DOD Consulting Services:  Erroneous Accounting and Reporting of Costs
(GAO/NSIAD-98-136,
May 18, 1998). 


   ACQUISITION WORKFORCE
   REDEFINITION HAS POTENTIAL TO
   ENHANCE PERSONNEL MANAGEMENT
------------------------------------------------------------ Letter :4

Numerous definitions have been applied to DOD's acquisition
workforce.  These definitions can greatly affect how this workforce
is counted and thus the number of personnel included.  In response to
congressional direction, DOD has developed a new way to define its
acquisition workforce that it believes (1) more accurately reflects
the numbers of personnel performing acquisition functions throughout
the agency and (2) has the potential to directly link the management
of acquisition personnel to DOD's overall manpower and budgeting
systems and processes. 


      ACQUISITION WORKFORCE
      DEFINITIONS
---------------------------------------------------------- Letter :4.1

While DOD's acquisition workforce has been defined in numerous ways
over the years, generally one of three approaches has been used.  The
first is to identify organizations with missions that fit the concept
of acquisition and to include all the people in those organizations
as the acquisition workforce.  Under this approach, various segments
of that workforce have been exempted.  The first three examples in
table 2 (1 through 1.b) show the number of acquisition workforce
personnel as defined by this approach. 



                                Table 2
                
                DOD Acquisition Workforce Under Various
                     Definitions (fiscal year 1997)

Criteria                                                     Workforce
--------------------------------------------------  ------------------
1. DOD Instruction 5000.58 (includes all civilian              355,299
 and military personnel employed in covered
 organizations)
1.a. Section 906 National Defense Authorization                320,641
 Act for
 FY 1996 (DOD Instruction 5000.58; exempts blue
 collar depot workers)
1.b. Section 912 National Defense Authorization                269,603
 Act for
 FY 1998 (DOD Instruction 5000.58; exempts all
 civilian depot workers)
2. DAWIA\a                                                     105,000
3. DOD's Acquisition Identification Working Group              189,158
 definition (as of Dec. 18, 1997)
----------------------------------------------------------------------
\a Defense Acquisition Workforce Improvement Act. 

Source:  DOD. 

A second approach has been to focus on the senior professional
members of the acquisition workforce having to meet the certification
requirements of DAWIA.  The act, (10 U.S.C.  1701 et seq.) enacted
November 5, 1990, aims to professionalize DOD's acquisition
workforce.  It requires the Secretary of Defense to establish an
acquisition workforce with specific experience, education, and
training qualifications.  Specific provisions of the act require the
Secretary of Defense to (1) establish a management structure along
with policies and regulations for implementing the act's provisions,
(2) establish qualification requirements, (3) provide training and
education to meet these requirements, and (4) enhance civilian
opportunities to progress to senior acquisition positions. 

A third approach provides the basis for DOD's new definition; that
is, to identify acquisition functions and related occupations and
then identify the people performing those functions regardless of
their assigned organization.  DOD officials contend that the first
approach overstates the number of personnel involved in acquisition
and excludes others performing acquisition functions in other DOD
organizations.  For example, if all individuals that are employed in
the organizations included in DOD Instruction 5000.58 (see app.  I
for a complete list) are identified as acquisition personnel, such
occupations as doctors and security guards would be included. 
Conversely, the Defense Information Systems Agency, which, according
to a DOD official, is the primary purchasing agent for DOD's
information systems technology, is not listed in 5000.58 as an
acquisition organization and would not be included as part of the
acquisition workforce. 


      STATUS OF DOD'S REDEFINITION
      OF ITS ACQUISITION WORKFORCE
---------------------------------------------------------- Letter :4.2

In response to the requirement contained in section 912(b) of the
National Defense Authorization Act for Fiscal Year 1998, the
Secretary of Defense informed Congress that beginning October 1,
1998, members of the acquisition workforce will be uniformly
identified using an updated version of an approach developed by the
1986 Packard Commission.\9 This method, developed by DOD's
Acquisition Workforce Identification Working Group in cooperation
with an outside consultant, identifies the workforce by considering
occupations across DOD and occupations in certain organizations.  The
workforce will be a combination of (1) certain occupations regardless
of the organizational designation, (2) certain occupations only if
employed in certain organizations, and (3) other selected functions
throughout DOD.  These three categories, for the first time, create a
DOD-wide framework around which each of the military services and
defense agencies can seek consensus.  The Working Group has
subsequently engaged the services and agencies in identifying the
personnel that would constitute a newly defined acquisition
workforce. 

The Working Group is also seeking ways to incorporate the acquisition
workforce into DOD's manpower management and budgeting systems.  One
of the Group's primary objectives is to tie DOD-wide acquisition
functions directly to corresponding budgetary program element codes,
thus linking the acquisition workforce to DOD's budget process for
the first time.  This approach, according to the Working Group, would
allow DOD to address some specific shortfalls in its traditional
approach.  For example, it could (1) improve significantly, DOD's
ability to effectively manage the acquisition workforce in budgeting
and planning for training and (2) allow DOD to more directly identify
and track the impacts of changes in the acquisition workforce, such
as reductions and potential savings. 


--------------------
\9 See Final Report to the President by the President's Blue Ribbon
Commission on Defense Management, June 1986. 


   AIR FORCE LABORATORY
   STREAMLINING AND CONSOLIDATION
   EFFORT HAS LIMITED IMPACT ON
   SIZE OF INFRASTRUCTURE
------------------------------------------------------------ Letter :5

Significant cuts in DOD's acquisition workforce might be expected to
result in reductions in associated infrastructure.  In a review of a
major Air Force laboratory reorganization, however, we found that
DOD's efforts focused more on management efficiencies than actual
infrastructure reductions.  We believe the results of DOD's
laboratory consolidation efforts are instructive in attempting to
understand the lack of change in the infrastructure related to the
acquisition workforce. 

In 1996, Congress required DOD to develop a 5-year plan for
restructuring and consolidating its laboratories and test and
evaluation centers.  DOD's response was Vision 21, a plan based on
the reduction, restructuring, and revitalization of its RDT&E
infrastructure. 

In our report on best practices associated with restructuring the
federal RDT&E infrastructure, we pointed out that a variety of
critical elements need to be in place to ensure that any
restructuring effort is successful, and we concluded that DOD's
Vision 21 plan incorporated many of these elements.  These elements
include (1) a crisis or catalyst that served to spark action; (2) an
independent authority to overcome parochialism and political pressure
that impede decision-making; (3) core missions focused to support the
organization's overall goals and strategies; (4) clear definitions
that fully delineate the existing infrastructure; and (5) accurate,
reliable, and comparable data that capture total infrastructure costs
and utilization rates for each affected activity. 

To position itself for DOD's implementation of the Vision 21 plan,
the Air Force restructured its research laboratories.  The Air Force
Research Laboratory, created in October 1997, was a consolidation of
four independent laboratories and is responsible for research and
technology development in support of the Air Force's future and
existing aircraft and weapon systems.  The specific objectives of
creating a single laboratory were to (1) streamline the laboratory
organizational structure, with emphasis on reducing the cost of
operating the infrastructure; (2) consolidate full resource ownership
and accountability (dollars and people) under a single commander; (3)
reduce fragmentation of similar technologies currently distributed
among multiple technology directorates; and (4) create a more robust,
focused laboratory enterprise postured for the future. 

Under this consolidation, the independent laboratories were all
functionally consolidated as a single organization.  The number of
directorates was reduced from 22 to 9, and the number of planning
staffs was reduced from 5 to 1.  Laboratory officials told us that
they are now in the process of identifying and collecting actual
total operating costs, such as civilian and military labor, base
operating support, depreciation, contract support, and equipment. 
These officials expect to eventually reduce the laboratory's
management overhead by 450 positions.  Although 78 percent of the
Laboratory's budget is outsourced to industry and academia,
Laboratory officials estimate that its support costs are 24 cents per
dollar of revenue, or about $591 million.  The goal is to maintain
the laboratory's support cost at 24 cents per dollar for the period
2000-2005, a move that would save an estimated $50 million a year. 

Laboratory officials told us that there were two basic reasons the
closure of major facilities was not considered as part of their
consolidation efforts.  First, they believed that Congress would be
unwilling to approve any unilateral restructuring of its research
facilities unless a base realignment and closure (BRAC) process is
undertaken.  Second, they did not want to preempt any action that
might take place under Vision 21, which calls for a comprehensive
review of all DOD laboratories and test centers.  But Vision 21 was
subsequently subsumed by the Quadrennial Defense Review, which called
for two additional BRAC rounds for fiscal years 1999 and 2001.  DOD
decided not to submit its legislative package for Vision 21 and
instead opted to include its RDT&E infrastructure in any future BRAC
rounds.  Congress has rejected the recommendation for additional BRAC
rounds. 

In response to section 912(c) of the National Defense Authorization
Act for Fiscal Year 1998, the Secretary of Defense called for further
study of DOD's RDT&E base. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

DOD has reduced its acquisition workforce and associated costs. 
Further, DOD is on schedule to meets its 25-percent personnel
reduction target.  However, the potential savings from these
reductions cannot be precisely tracked in DOD's O&M and RDT&E budget
accounts.  In any case, these anticipated savings may be offset by
other costs.  Furthermore, DOD has not reduced its acquisition
infrastructure to the extent that it reduced its acquisition
personnel.  Further attention may be needed to achieve cuts in the
infrastructure associated with the personnel reductions. 

DOD's redefinition of its acquisition workforce appears to be based
on a solid analytical framework of identifying and linking
acquisition personnel and acquisition functions.  Tying the
acquisition workforce to the budget process, if successful, could
increase the quality and timeliness of information critical to
decisionmakers. 


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

We provided DOD officials with a draft of this report.  DOD provided
oral comments and concurred fully with the information contained in
it. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

To determine the extent of reductions in DOD's overall workforce and
in its acquisition workforce, we obtained employment levels, as
measured by end strength, through the end of fiscal year 1997 from
DMDC located in Monterey, California (West Division), and Washington,
D.C.  (East Division).  We performed analyses on various aspects of
the data, stratifying it by organization, occupational/job series,
and so forth.  We also interviewed and obtained defense manpower data
from officials in the Office of the Under Secretary of Defense
(Personnel and Readiness), the Office of the Under Secretary of
Defense (Acquisition & Technology), and other selected DOD
components. 

To examine trends in DOD O&M budget accounts, we obtained the Future
Years Defense Program's Total Obligational Authority figures for
fiscal years 1996-99.  We stratified the budget data by pay for
civilian personnel versus all other obligational authority. 

To examine trends in contract awards for services, supplies, and
equipment, we retrieved contract data from DOD's Individual Contract
Action Report for fiscal years 1993-97, stratified by year.  We
converted budget, payroll, and contract data to constant 1998
dollars. 

In reviewing the Air Force Research Laboratory consolidation, we
interviewed cognizant Air Force officials, to obtain their
justifications and rationale for initiating the restructuring effort. 
To ascertain the Laboratory's pre- and post-consolidation parameters,
we obtained specific data regarding the size and composition of the
workforce, the number of laboratories and sites, overlap of primary
areas of research, and so forth. 

We discussed various consolidation and restructuring cases with
officials in the Office of the Under Secretary of Defense and other
DOD components.  In determining appropriate case studies for this
report, we also applied an analytical framework developed in earlier
work. 

We did not independently review the reliability of DOD's management
information systems or databases.  However, we interviewed DMDC
officials regarding their quality control procedures for minimizing
sources and chances for error.  Further, we independently obtained
the data and compared the results of our analyses to those of other
users of the same database.  Checking and matching of this
independently derived information gave us assurance that the data
were consistent.  Lastly, we ascertained the extent to which DOD
assessed the reliability of the Data Center's products. 

We performed our work from January through May 1998 in accordance
with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Ranking Minority Member
of the House National Security Committee, the Secretary of Defense,
and the Director of the Office of Management and Budget.  We will
make copies available to others upon request. 

If you have any questions concerning this report, please contact me
at (202) 512-4841.  Major contributors to this report are listed in
appendix II. 

Sincerely yours,

Katherine V.  Schinasi
Associate Director,
Defense Acquisitions Issues


DEFENSE ACQUISITION ORGANIZATIONS
=========================================================== Appendix I

The Department of Defense (DOD) Instruction 5000.58 states that the
mission of an acquisition organization, with its subordinate
elements, includes planning, managing, and/or executing acquisition
programs that are governed by DOD Directive 5000.1 (reference (n)),
DOD Instruction 5000.2 (reference (o)), and related issuances. 
Specifically, these organizations (and any successor organization of
these commands) are as follows: 

  -- Office of the Under Secretary of Defense (Acquisition and
     Technology)

  -- Army Information Systems Command\1

  -- Army Materiel Command

  -- Army Strategic Defense Command (now the Army Space and Strategic
     Defense Command)

  -- Army Acquisition Executive

  -- Office of the Assistant Secretary of the Navy (Research,
     Development, and Acquisition)

  -- Naval Sea Systems Command

  -- Naval Air Systems Command

  -- Naval Supply Systems Command

  -- Naval Facilities Engineering Command

  -- Office of the Chief of Naval Research

  -- Space and Naval Warfare Systems Command

  -- Navy Strategic Systems Program Office

  -- Navy Program Executive Officers/Direct Reporting Program Manager
     Organization

  -- Marine Corps Systems Command

  -- Office of the Assistant Secretary of the Air Force (Acquisition)

  -- Air Force Systems/Air Force Logistics Commands (now the Air
     Force Material Command)

  -- Air Force Program Executive Organization

  -- Strategic Defense Initiative Organization (now the Ballistic
     Missile Defense Organization)

  -- Defense Logistics Agency

  -- Special Operations Command (now the Special Operations Command
     Acquisition Center)


--------------------
\1 Disestablished as of October 1, 1996, and realigned as a major
subordinate command under the Army Forces Command, a nonacquisition
organization. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II

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

Clifton E.  Spruill, Assistant Director
James L.  Morrison, Evaluator-in-Charge
Arnett Sanders, Senior Evaluator
Ray Denmark, Evaluator
Julia Kennan, Computer Specialist

CHICAGO FIELD OFFICE

Richard L.  Strittmatter, Senior Evaluator
Arthur L.  Cobb, Evaluator
Johnetta C.  Gatlinbrown, Evaluator

RELATED GAO PRODUCTS

Best Practices:  Elements Critical to Successfully Reducing Unneeded
RDT&E Infrastructure (GAO/NSIAD/RCED-98-23, Jan.  8, 1998). 

Defense Acquisition Organizations:  Reductions in Civilian and
Military Workforce (GAO/NSIAD-98-36R, Oct.  23, 1997). 

Defense Acquisition Organizations:  Changes in Cost and Size of
Civilian Workforce (GAO/NSIAD-96-46, Nov.  13, 1995). 

Defense Acquisition Infrastructure:  Changes in RDT&E Laboratories
and Centers (GAO/NSIAD-96-221BR, Sept.  13, 1996). 

*** End of document. ***