United States. Defense Reform Initiative

Title: United States. Defense Reform Initiative - Chapter 2

CHAPTER 2: CHANGING THE ORGANIZATION

American business has learned that reengineering business practices requires the concomitant reengineering of the business headquarters. The Department of Defense intends to learn from those experiences and seize the opportunity to prepare the Department for the challenges of the 21st century. There are three central principles guiding the changes: Department headquarters should be flexible enough to deal with future challenges; the Office of the Secretary of Defense (OSD) should focus on corporate-level tasks; and operational management tasks should be pushed to the lowest appropriate level. As a result, all headquarters structures should be thinned, flattened and streamlined, both to avoid the temptation to take on new non-core responsibilities, and to provide the resources to organizations receiving the devolved functions.

To implement these changes the Secretary of Defense has made a series of decisions to reduce and reorganize DoD headquarters elements, beginning with those headquarters elements nearest the Secretary of Defense the OSD staff, the Defense Agencies, the DoD Field Activities, the Defense Support Activities and the Joint Staff. Several of these decisions require additional statutory or Presidential authority, which the Department will seek. OSD and associated activities will emerge better able to focus on corporate tasks and better able to address the challenges facing the Department in the 21st century.

Highlights - Reorganization

As a result of reorganization to focus on core activities:

OSD and associated activities personnel will be reduced 33% from FY 1996 levels over the next 18 months.

Defense Agencies personnel will be reduced 21% over the next five years.

Personnel in DoD Field Activities and other operating organizations reporting to OSD will be reduced 36% over the next two years.

The Joint Staff and associated activities personnel will be reduced 29% from FY 1996 levels by the end of FY 2003.

All other headquarters elements, including the headquarters of the Military Departments and their major commands, will be reduced 10% from their FY 1998 levels by the end of FY 2003.

The headquarters of the Combatant Commands will be reduced by 7% by the end of FY 2003.

In addition these actions will:

Reduce Presidentially Appointed, Senate-confirmed positions in OSD by 9%.

Eliminate the entire category of Defense Support Activities.

Reduce the number of non-intelligence Defense Agencies by 8%.

Reduce the number of DoD Field Activities by 22%.

Definitions

Defense Agencies, DoD Field Activities, and Defense Support Activities

In order to understand the reforms proposed in this chapter it is important to differentiate among the three types of organizations that support the Secretary of Defense:

Office of the Secretary of Defense (OSD):
This is the core staff that provides advice and support to the Secretary. It consists of the direct staff elements in OSD, as well as the Defense Support Activities that perform technical and analytical support. It consists of approximately 3,000 personnel, including OSD's "hidden staff" who effectively work for OSD but traditionally have been attributed to other elements of the Department.

Defense Agencies:
These organizations provide supplies or services that are common to more than one Military Department. There are currently 13 Defense Agencies (not including three intelligence agencies) employing nearly 130,000 civilian and military personnel. (The Department of Defense Educational Activity, although formally a DoD Field Activity, is included in this category for this initiative because its size and function are more closely aligned with Defense Agencies.)

DoD Field and Related Activities:
These are supporting organizations that provide common supplies or services to a more limited portion of the Department than the Defense Agencies, and are generally smaller. There are currently 13 DoD Field and Related Activities employing over 8,000 civilian and military personnel. Also included in this category for this initiative are the miscellaneous support and other operating activities such as the Defense Acquisition University and the Defense Technical Information Center.

See Appendix A for a listing of DoD Field Activities, Defense Agencies, and Defense Support Activities, and a brief description of their respective missions.

Philosophy of Reform

OSD originally was established to provide the Secretary of Defense with a personal civilian staff that could assist him in carrying out his duties and responsibilities under the National Security Act of 1947. Since its inception, the primary mission of the OSD staff has been to provide policy advice to the Secretary of Defense and to perform a range of staff functions supporting the Secretary's management of the Department. The following core functions of OSD remain necessary to fulfilling the Secretary's statutory responsibilities:

Provide policy guidance to Department components

Develop long-range plans for the Department.

Monitor and evaluate program performance.

Allocate resources among the programs and components of the Department.

Execute the Department's legislative program.

However, the duties and responsibilities of the Secretary have evolved and expanded over time in response to various legislative changes to the National Security Act of 1947. The organization and character of the OSD staff have likewise changed, not only in concert with the evolution in the Secretary's duties and responsibilities, but also in response to the different managerial styles of successive Secretaries of Defense.

The result of this evolution is that increasingly, OSD has become involved in activities program management, the exercise of direct control over functional activities, and the management of an expanding number of centralized services organized into defense agencies and field activities beyond the scope of its core functions. This expansion of OSD's functions has occurred incrementally over a long number of years, for often sensible purposes. But in today's environment of limited fiscal resources, and drawing on the lessons of how American business has transformed itself in the last two decades, the Department now must set out to reverse this trend and return the focus of OSD, as much as possible, to its historical core functions. Restoring this focus is critical to concentrating the time and intellectual resources of the Secretary's staff on the issues and security challenges that confront the Department.

Therefore, the underlying principle of OSD reorganization is to refocus the office on corporate-level tasks concerning the higher purposes and priorities of the Department and the oversight (as opposed to day-to-day management) of its many operating components. In particular, we want to improve the staff's support for the Secretary in his role as the leader and communicator of the Department, and for the Deputy Secretary in his role as the chief operating officer, with responsibility for management and internal control. To accomplish this change of focus, we have developed an agenda of organizational changes that will:

Position the Department of Defense to face future challenges.

Relieve the OSD staff of responsibility for operational and program management functions and from the day-to-day management of subordinate activities.

Weed out unnecessary overlap, complexity and redundancy.

Strengthen OSD's focus on long-term strategic, program, and financial planning.

Figure 2ª

OSD Personel Reductions

In recent years, a wide variety of proposals for reform have emerged from study groups both within and outside the Department, and from the Congress. The time for further study and deliberation now has passed. We are at the point where we need to jump-start the reform process by committing to a series of initiatives that flow from the principles outlined above. From among the many proposals that the Secretary and Deputy Secretary have considered, the Department is committed to the organizational initiatives described below.

Reshape Support Activities to Meet New Challenges

Consolidate and improve organizational arrangements for selected Defense Agencies, DoD Field Activities, and other departmental-level organizations.

Realign OSD Offices to Improve Support to the Secretary

Realign OSD's offices to eliminate redundancy and consolidate related functions, eliminate obsolete functions, and devolve operational and program management functions to operational activities. In addition, OSD's "hidden staff" will be eliminated by reducing, transferring, or absorbing into OSD those organizational components that directly support OSD operations, but, in the past, have not been acknowledged as being part of its formal organizational structure, or reported in its personnel strengths. Among other things, this will result in the complete elimination of an entire category of organizations currently known as Defense Support Activities.

Strengthen Alignment of OSD and JCS Staffs. Streamline CINC headquarters

Clarify staff relationships, promote integration of respective activities, and eliminate unnecessary duplication.

These changes will generate immediate savings, and are expected to pay long-term dividends in increased savings and improved organizational performance in the years ahead. Moreover, they will set the example for reform of subordinate organizations within the Department of Defense, such as the headquarters staffs of the Military Services.

Shaping the Future

Defense Management Council

The Defense Management Council (DMC) will be the Secretary's primary mechanism for ensuring that the reform initiatives borne from this effort are carried out. The DMC will be responsible for recommending to the Secretary major reforms still needed, ensuring the implementation of those already identified, and the continuing oversight of our Defense Agencies. DMC will be led by the Deputy Secretary and will include the officials identified in Figure 2b.

Figure 2b.

Defense Management Council

SECDEF Reform Decision:

Establish a Defense Management Council to serve as the Board of Directors for the Defense Agencies and to oversee the continued reengineering of DoD.

The Defense Management Council will fill a long recognized need for stronger Departmental oversight and increased accountability for the Defense Agencies and will provide the impetus to propel the Defense Agencies to adopt new, innovative, and more efficient ways of accomplishing their missions. The Defense Agencies consist of nearly 130,000 civilian and military personnel and collectively spend over $10 billion annually, but there has been no institutional mechanism for effectively overseeing their activities in a coordinated fashion. To avoid creating yet another management layer, this action is being accompanied by the immediate elimination of 22 existing boards and committees in the Department. The Department has over 550 boards, commissions and working groups. A comprehensive review will be conducted this winter to prune these back even further.

Duties of the Defense Management Council

To negotiate performance "contracts" with the heads of the Defense Agencies and to monitor performance against those contracts.

To monitor progress with the business practice changes outlined in this white paper.

To monitor progress with the A-76 competitive evaluations.

To examine follow-up opportunities for consolidation of management activities in the Military Departments and Defense Agencies.

To consult with business leaders to seek new solutions to management problems, re-engineer business practices and streamline operations.

When Hurricane Andrew came crashing ashore in Florida, destroying thousands of homes and leaving tens of thousands homeless, the United States Armed Forces, including National Guard and Reserve, were on the scene within hours, setting up tent cities, pumping clean and safe water, delivering food and medical supplies, and otherwise helping to bind together the torn community.

Extensive flooding in the Mississippi River valley back in 1995 left tens of thousands stranded. Entire communities were encircled by the surging river. Army National Guard helicopters and heavy ground equipment came to the aid of beleaguered cities, towns, and farms, delivering vital supplies and rescuing the stranded.

When riots broke out in Los Angeles, the Governor of California called on the National Guard to complement local law enforcement authorities and help restore a sense of security and calm in the city.

Every year the National Guard and other elements of the Armed Forces of the United States are called in to help Americans in danger or distress. To this end, the Department of Defense maintains extensive peacetime relations with the Federal Emergency Management Agency and with the Governors to provide emergency assistance. The Department coordinates these relief efforts through the Department of the Army's Director of Military Support (DOMS). Acting on behalf of the Secretary of Defense, the Secretary of the Army coordinates all relief activity through DOMS.

SECDEF Reform Decision:

Enhance the role of Reserve Components in domestic emergency response by establishing a General Officer National Guard position as Deputy Director of Military Support Operations (DOMS) and increasing the number of Reserve personnel on the DOMS Staff.

Improving OSD Support to the Secretary

OSD has evolved over the past 50 years and now is organized around five primary secretariats: policy; acquisition and technology; finance; personnel and readiness; and command, control, communications and intelligence. While the basic structure is sound, there are many internal inconsistencies. Further, OSD has numerous organizations that reflect a specific initiative once, but no longer, important, yet the organization remains. Additionally, while the primary responsibility of OSD is to develop policy and to oversee activities on behalf of the Secretary, many OSD elements, in fact, manage programs on a day-to-day basis.

This section outlines the larger initiatives to remove these inconsistencies and streamline the OSD secretariats. Detailed changes for each directorate are contained in Appendix C to this white paper.

Policy Secretariat

The Under Secretary of Defense for Policy (USD (Policy)) is the principal OSD staff assistant for formulating national security and defense policy and for integrating and overseeing DoD policy and plans to achieve national security objectives. Currently, the Policy secretariat includes four assistant secretaries of defense (ASD) as follows:

ASD (International Security Affairs)
ASD (Strategy and Resources)
ASD (International Security Policy)
ASD (Special Operations and Low Intensity Conflict)

This organization needs updating to reflect changes in the international security environment in the past five to eight years. The disintegration of the Soviet Union has created a significantly more complicated environment for existing and prospective arms control arrangements. Proliferation concerns have exploded in the face of the spread of ballistic missile technology and chemical and biological weapons. Finally, a good deal more of United States security policy involves so-called "operations other than war" counterterrorism, counter-drug efforts, humanitarian assistance, and peacekeeping operations.

In order to better address the complex evolving security environment, the Policy secretariat is being restructured with three ASDs:

ASD (International Security Affairs)
ASD (Strategy and Threat Reduction)
ASD (Special Operations and Humanitarian Assistance)

ASD (International Security Affairs) will operate with modest changes consistent with other actions being taken in the Policy secretariat. ASD (Strategy and Threat Reduction) will be the Department's focus for counterproliferation, threat reduction activities and treaty compliance policy issues, and security relations with Russia, Ukraine, and other Newly Independent States. It will also provide civilian advice to the Secretary on national security, strategy, defense strategy, war plans, and defense programs to ensure they are consistent with overall strategies. The ASD (Special Operations and Humanitarian Assistance) will be responsible for counterterrorism activities, counter-drug activities, humanitarian assistance, peacekeeping policy, and security relations with Latin American states.

A more comprehensive discussion of these changes is contained in Appendix C, along with the other changes outlined for the Policy secretariat.

C3I Secretariat

The ASD (Command, Control, Communi-cations and Intelligence) (C3I) is the principal OSD staff assistant for the development and oversight of DoD policies and programs relating to command, control, communications and intelligence. In addition, the ASD (C3I) serves as the Chief Information Officer of the Department.

When ASD (C3I) was created 12 years ago, information technology systems were new and complex and merited a unique management structure. Today, information technology systems are incorporated into every weapons system and business application. Information systems are no longer dedicated, stand-alone systems. Rather, they are embedded in virtually every other system.

Reflecting these changes, we have decided to transfer the acquisition functions associated with C3I to the USD (A&T) and the ASD (C3I) secretariat will become an ASD (Intelligence) secretariat. Coincident with these changes, the C4I Integration Support Activity (CISA), a Defense Support Activity currently reporting to the ASD (C3I), will be

disestablished. CISA functions, personnel, and associated resources will follow the restructuring of ASD (C3I) itself. The USD (A&T) will be designated the Chief Information Officer, strengthening that role in the Department.

A more comprehensive discussion of these changes is contained in Appendix C, along with the related changes scheduled for the C3I secretariat.

Acquisition and Technology Secretariat

The Under Secretary of Defense for Acquisition and Technology (USD (A&T)) is the principal OSD staff assistant for all matters relating to the DoD acquisition system, research and development, advanced technology, test and evaluation, production, logistics, military construction, procurement, and environmental issues.

A number of important changes will take place in the A&T secretariat. As noted above, USD (A&T) will receive the acquisition functions associated with C3I and the CISA.

In addition, program management and operational activities of the Assistant to the Secretary of Defense (Nuclear and Chemical and Biological Programs) (ATSD (NCB)) will be transferred. Chemical demilitarization will be transferred to the Army. Other programs and activities will be transferred to the new Threat Reduction and Treaty Compliance Agency or others. As such, the ATSD (NCB) position is no longer needed and the residual policy duties can be assigned to the Director of Defense Research and Engineering who will assume responsibilities to serve as the principal technical OSD staff advisor on nuclear matters, to include serving on the Nuclear Weapons Council and as the DoD point of contact with the Department of Energy.

Those staff elements in the A&T secretariat that currently serve to promote armaments cooperation with allied countries will be transferred to the Defense Security Assistance Agency. USD (A&T) will continue to maintain Department-wide responsibilities to promote international armaments cooperation and will work accordingly with DSAA to support that critical mission.

These changes are discussed in greater detail in Appendix C, along with other important changes taking place in the Acquisition and Technology secretariat.

Personnel and Readiness Secretariat

The Under Secretary of Defense for Personnel and Readiness is the principal OSD staff assistant for Total Force management, readiness, health affairs, quality of life, and National Guard and Reserve component affairs.

The major change proposed in this area is to shift out of this secretariat those staff in the ASD (Health Affairs) office that manage elements of the Defense Health Program. These staff members will be assigned to the TRICARE Support Office. We also will disestablish the Defense Medical Program Activity and transfer its functions to the TRICARE Support Office.

These changes are discussed in greater detail in Appendix C, along with other changes taking place in the Personnel and Readiness secretariat.

Finance Secretariat

The Finance secretariat is composed of the Office of the Comptroller/Chief Financial Officer and the Director of Program, Analysis and Evaluation. The USD Comptroller is the principal OSD assistant for budgetary and fiscal matters, including financial management, accounting policy and systems, budget formulation and execution, and contract audit administration and organization. The Director, Program Analysis and Evaluation, conducts the annual program review.

Only minor changes are proposed in this secretariat, and they are discussed in Appendix C.

OSD, JCS and CINC Staff Relationships

As part of the Secretary's review of the management of the Department, the Chairman directed a review of the Joint Staff, Chairman-controlled activities, and CINC staffs, which together number about 18,000 personnel.

The Joint Staff and Chairman-Controlled Activities

The role of the Joint Staff is to support the Chairman of the Joint Chiefs of Staff in his role as senior military advisor to the President and the Secretary of Defense, and to support the other members of the JCS. The Joint Staff comprises about 1,400 personnel, with another 1,200 in Chairman-controlled activities, which report to the Joint Staff. The review of the Joint Staff concluded that the Chairman required strong staff support to carry out his core areas of responsibility established in Title 10:

Provides independent military advice to the Secretary of Defense, the National Security Council, and the President.

Assists the President and the Secretary of Defense in providing for the strategic direction of the Armed Forces.

Develops doctrine for the joint employment of the Armed Forces.

Guides the establishment of warfighting requirements for acquisition programs.

Provides leadership for the Services and CINCs in finding joint solutions to common problems.

As with OSD, the basic structure of the Joint Staff is sound, but issues have arisen as the Joint Staff has taken on additional responsibilities since the enactment in 1986 of the Goldwater-Nichols Act.

Some of these additional responsibilities resulted in Joint Staff growth while others resulted in the creation of Chairman-controlled activities. Numerous parallel functions also exist in the Joint Staff and OSD. In some cases, such redundancy is warranted; however, in many cases it is not.

As a result of restructuring, the Joint Staff will eliminate or transfer approximately 170 billets. Functions that parallel those of OSD will be rationalized, eliminating duplication. In addition, most of the Chairman-controlled activities will be transferred to the CINCs, Services or Joint Agencies.

A more comprehensive discussion of these changes is contained in Appendix C.

The Headquarters of the Combatant Commands

The Joint Staff and the Combatant Commanders (CINCs) were established by the National Security Act of 1947; since then Congress has modified their responsibilities and numbers several times by changes to Title 10. The most significant changes were made by the Goldwater-Nichols Act of 1986, which greatly expanded the responsibilities of the Chairman of the Joint Chiefs of Staff and the CINCs and strengthened their supporting staff functions. Currently, there are nine CINCs: five with regional responsibilities USCINCPAC, USCINCCENT, USCINCSO, USCINCEUR and USCINCACOM; four with functional responsibilities USCINCTRANS, USCINCSOC, USCINCSPACE and USCINC-STRAT.

The joint headquarters staff total approximately 15,500 personnel. The review examined all components of the joint headquarters staff: common functions, unique functions, and offices funded from outside agencies. The review concluded that a number of unique functions now reporting to CINC headquarters should be reduced, competed with the private sector, or transferred to lower echelon organizations. In addition, the CINCs Joint Intelligence Centers will be reduced and reductions will be made in the individual CINC headquarters. A more comprehensive discussion of these actions is contained in Appendix C.

Conclusion

These organizational changes will enable the Secretary of Defense to fulfill his responsibilities to the President and the American people. They will improve oversight of the Department and ensure civilian control while enhancing civilian-military relationships in the Department. The reforms will empower managers at lower levels and free policymakers from operational responsibilities. They will free up resources to meet new challenges and ensure that we continue to have quality civilian and military personnel who are well prepared to respond to the changes of the future. Through these reforms the Department of Defense will continue to man, train and equip the finest military force the world has ever seen.