Defense Acquisition Workforce: Opportunities Exist to Improve Practices for Developing Program Managers

The Department of Defense's (DOD) major acquisition programs continue to experience cost and schedule overruns. GAO previously found that selecting skilled program managers is a key factor to achieving successful program outcomes. DOD relies on military and civilian program managers to deliver its most expensive new weapon systems, meaning its approach to training, mentoring, retaining, and selecting program managers is critical.

House Report 114-537 included a provision for GAO to review the career paths, development, and incentives for program managers. This report addresses how leading organizations train, mentor, retain, and ultimately select program managers; and the extent to which military service practices align with those leading practices. To conduct this work, GAO identified leading practices documented in prior work and by the Project Management Institute, and interviewed commercial companies identified by the Institute as leaders in this field. GAO also analyzed military service practices for developing program managers and compared those to leading practices.

Leading organizations use 10 key practices to train, mentor, retain, and ultimately select skilled program managers. GAO found that military service practices for developing program managers align extensively with four of the leading practices, as shown in the table below.

At least one military service's practices do not align extensively with five of the leading practices, as shown in the table below.

For the remaining leading practice, none of the military services' practices align extensively, as shown in the table below.

Military service officials generally agreed with the assessments. More consistent alignment with leading practices—adapted for military and civilian personnel as appropriate and including greater use of existing financial rewards—would enhance the services' ability to manage acquisition programs.

GAO is making eight recommendations, including that the military services improve practices that do not align extensively with leading practices and make greater use of existing financial rewards for good performance. DOD concurred with the recommendations.

Our most recent assessment of the Department of Defense’s (DOD)  current portfolio of major defense acquisition programs found that it  consists of 78 programs, including aircraft, missile interceptors,  submarines, and space-based sensors. We also found that the programs  are now expected to cost over $1.46 trillion to acquire, which is $484  billion more than was expected when they established their first full  estimates. Further, programs are now incurring an average delay of 31  months to deliver initial operating capability to the warfighter. We  previously found that key factors to achieving successful cost and  schedule outcomes include sound business cases, disciplined  requirements setting, long-term investment strategies, and the selection  of skilled, experienced, and well-trained program managers.

To run these 78 major defense acquisition programs, DOD relies on  military and civilian program managers tasked with developing and  delivering new weapon systems while balancing factors that influence  cost, schedule, and performance and ensuring that systems are high  quality, supportable, and effective. To fulfill these responsibilities,  program managers require a certain scope of expertise to coordinate with  a broad array of military service and DOD officials, outside suppliers, and  internal and external oversight entities. Therefore, DOD’s approach to  talent management—which we define as training, mentoring, retaining,  and then selecting program managers—is critical for developing the right  people.

The House Committee on Armed Services, in House Report 114-537,  accompanying H.R. 4909 (National Defense Authorization Act for Fiscal  Year 2017), included a provision for GAO to conduct a study of the career  paths, development, and incentives for DOD program managers, and  identify opportunities for more effective approaches. This report  addresses (1) how leading organizations train, mentor, retain, and select  program managers and (2) the extent to which the military services’  practices for training, mentoring, retaining, and selecting program  managers align with those of leading organizations.

To identify how leading organizations train, mentor, retain, and select  program managers, we first reviewed GAO’s Standards for Internal  Control in the Federal Government and prior GAO reports to identify  criteria regarding the controls that federal agencies such as DOD should  have in place to manage talent. We reviewed documentation from the  Project Management Institute, a not-for-profit association that provides  global standards for project and program management. We also selected  and spoke with four commercial companies identified by the Project  Management Institute as leading organizations for developing program  managers to learn about their practices. These companies were  AstraZeneca, a biopharmaceutical company; Boeing, a global aerospace  company; DXC Technology, an information technology services  company; and Rio Tinto, a mining company. Based on these reviews and  discussions, we identified a set of leading practices for developing  program managers in the areas of training, mentoring, retaining, and  selecting.

To identify the extent to which the military services’ practices align with  those of these leading organizations, we analyzed DOD, military service,  and relevant sub-component documentation on training, mentoring,  retaining, and selecting program managers for major defense acquisition  programs. We also interviewed the Directors for Acquisition Career  Management for the military services and officials from the Defense  Acquisition University and the Office of Human Capital Initiatives, among  others. See appendix I for more information about our scope and  methodology.

We conducted this performance audit from August 2016 to February 2018  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

GAO’s Standards for Internal Control in the Federal Government state  that federal agencies—such as DOD—must demonstrate a commitment  to training, mentoring, retaining, and selecting competent individuals,  which would include program managers. These standards explain that  federal agencies like DOD should provide training that enables individuals to develop competencies  appropriate for key roles, reinforces standards of conduct, and can be  tailored based on the needs of the role; mentor individuals by providing guidance on their performance based  on standards of conduct and expectations of competence;  retain individuals by providing incentives to motivate and reinforce  expected levels of performance and desired conduct; and  select individuals for key roles by conducting procedures to determine  whether a particular candidate fits the organization’s needs and has  the competence for the proposed role.

The Project Management Institute, as well as four companies that we  included in this review, have also identified these activities as critical for  developing program managers.

Program managers for DOD’s 78 major defense acquisition programs,  along with program executive officers, their respective deputies, and  program managers for certain non-major programs, occupy what DOD  refers to as program management key leadership positions. There were  446 program management key leadership positions at the end of fiscal  year 2016. They are in turn part of a broader program management  career field, which numbers approximately 17,000 civilian and military  personnel.

The Air Force typically brings its future program managers for major  defense acquisition programs into the career field early in their careers,  and then provides training and experiences to prepare them for the role.  In contrast, the Army and Navy typically bring their future program  managers into the career field later in their careers and from other fields,  such as engineering. As shown in table 1, at the end of fiscal year 2016,  most program manager positions for major defense acquisition programs  were held by military personnel.

According to military service officials, when a military officer fills a  program manager position, a civilian usually fills the deputy program  manager position for that program and vice versa.

Overarching guidance, training, and oversight for the defense acquisition  workforce is provided centrally by DOD in the Office of the Under  Secretary of Defense for Acquisition, Technology and Logistics, which  includes Human Capital Initiatives and the Defense Acquisition University.  Other officials and organizations that play key roles include  the Defense Acquisition Functional leader for program management,  who is responsible for establishing a competency model that reflects  the knowledge and skills required to be successful in the career field,  as well as position descriptions, requirements for key leadership  positions, certification standards, and continuous learning activities;  the Directors for Acquisition Career Management in each of the  military services, who serve as key advisors for policy, coordination,  implementation, and oversight of acquisition workforce programs  within their services; and acquisition commands and program executive offices within each  military service, which work together to manage acquisition programs  and initiatives to improve the workforce.

Over the last decade, Congress has passed several laws aimed at  bolstering the acquisition workforce and specifically the program  management career field. Provisions have included requiring DOD to  develop a comprehensive strategy for enhancing the role of program  managers, provide advancement opportunities for military personnel, and  establish training programs for the acquisition workforce.

Congress also established the Defense Acquisition Workforce  Development Fund (DAWDF) in 2008 to provide funds for the recruitment,  training, and retention of DOD acquisition personnel. Since the  establishment of DAWDF, DOD has obligated more than $3.5 billion in  DAWDF funds for these purposes. Of the more than $440 million in  DAWDF funds obligated in fiscal year 2016, almost $12 million was  obligated for the program management career field: $0.4 million was  obligated for recruitment, $10.5 million was obligated for training, and  $0.9 million was obligated for retention and recognition. Additional funds  supported the salaries of 33 people hired into the career field during fiscal  year 2016.

To bolster the number of civilian personnel that could be selected for a  program manager position, the National Defense Authorization Act for  Fiscal Year 2018 requires DOD to implement a civilian program manager  development program. The act states that the plan for such a program  shall include consideration of qualifications, training, assignments and  rotations, and retention benefits, among other things.

Leading Organizations Use a Combination of Practices to Develop Program Manager Talent

We identified 10 practices, across four distinct areas, used by leading  organizations to develop program manager talent based on our extensive  review of Project Management Institute documents and discussions with  AstraZeneca, Boeing, DXC Technology, and Rio Tinto. These four  areas correspond to the internal control standards discussed previously.  Program managers at these companies share similar basic  responsibilities with DOD program managers, including overseeing the  development and production of goods and services in a timely and cost- effective manner. As shown in figure 1 below, leading organizations provide a mix of formal and informal training opportunities focused on  sharing knowledge and providing experiences that prepare people for  program management, offer mentoring opportunities to guide people along career paths use a mix of financial and nonfinancial incentives to retain high  select program managers based on identification of high-potential  talent and then assign program managers based on program needs.

Boeing representatives noted that by using a combination of these  practices, over the past 15 years, their program managers have primarily  left positions due to promotion or retirement. Rio Tinto representatives  noted that in a challenging environment for finding suitable external talent,  they have been able to use these practices to successfully develop most  of the talent they need internally. DXC Technology representatives noted  that these practices enabled their program managers to receive better  feedback and address skill gaps. An AstraZeneca representative noted  that these practices have made it easier for people to get the range of  experiences they need to move into leadership positions.

Leading Organizations Focus Training on Sharing Knowledge and Gaining Experience

The Project Management Institute identifies training as the most common  component of development. Leading organizations we spoke with use  venues like training classes to share knowledge and experiences. These  organizations also expand people’s knowledge and experience by  encouraging rotation of talent across organizational boundaries. Leading  organizations also provide access to on-the-job learning opportunities and  repositories of best practices and lessons learned. Examples of practices  used by commercial companies we spoke with are described below.

Practice #1—Training classes that allow program managers to share  experiences: Boeing representatives told us that the company sends  employees aspiring to be program managers to a 5-day, in-residence  program manager workshop. Attendees simulate challenging program  management scenarios and get exposure to senior executives who  discuss best practices and share experiences. They are expected to  make decisions quickly, and play different roles throughout the simulation  so they can gain a better understanding of the consequences of their  decisions. Similarly, DXC Technology holds multiday workshops for  program managers where they participate in role-playing scenarios in  which they have to react to a given situation that a program manager  could face. One of the key benefits of the workshop noted by DXC  Technology representatives is that they receive individual feedback on  areas for improvement.

Practice #2—Rotational assignments: According to Boeing  representatives, the company selects high-performing midcareer  employees interested in program management for a 2-year rotation  program in which they take leadership roles and solve difficult challenges  facing a part of the business. These could be internal assignments within  an individual’s current business unit, or external assignments that cross  organizational boundaries, for example, between Boeing’s commercial,  defense, and services businesses. Boeing representatives noted this as a  valuable leadership opportunity for the people involved, which helps drive  change in the organizations to which they are assigned. In order to  expand people’s capabilities and give them a broader perspective on the  business, AstraZeneca regularly notifies its workforce—via a monthly  newsletter and an online portal—of rotational opportunities lasting 6  months to a year. These rotations could be within an individual’s business  unit, or in a different location or part of the business.

Practice #3—On-the-job learning and information repositories: Rio  Tinto representatives told us that the company has managers from one  project participate in reviews and events for other projects in order to  transfer knowledge. For example, a manager from a mining operation  based in one country might visit a mining operation in another country to  share ideas. Rio Tinto also retains the formal reviews that take place at  the end of each project, as well as the lessons learned by the team itself,  in an accessible document management system. Similarly, AstraZeneca  uses online collaboration software to house project information that might  help others. It has also established a community of practice and  networking groups to share knowledge, and provides people moving into  management positions a checklist of tasks and meetings to complete  within their first 6 months. Boeing representatives told us that one way the  company provides on-the-job training and support to program managers  is by temporarily bringing in experts with prior experience to participate in  a wide variety of activities across all types of programs. These activities  include verifying designs and proactively identifying and resolving  challenges such as manufacturing problems.

Leading Organizations Facilitate Mentoring Relationships and Establish Program Management Career Paths

The Project Management Institute identifies mentoring as a way of  encouraging and supporting people. Leading organizations we spoke with  have programs in place to facilitate mentor and mentee relationships.  They expect senior people to serve as mentors. The organizations we  spoke with also mentor employees by laying out the career paths they  might need to follow to achieve the highest levels of program  management within the organization. Examples of practices used by  commercial companies we spoke with are described below.

Practice #4—Mentoring programs with senior leader involvement:  According to Boeing representatives, the company offers voluntary  mentoring programs—both formal and informal—at different points  throughout an employee’s career cycle, including the early stages.  Depending on the career goals of an individual, Boeing offers both  mentors and sponsors, who are senior leaders that nominate people— especially high performers—for specific opportunities. At Boeing, there is  an expectation that senior leaders will be involved in mentoring. For  example, midcareer program managers can be matched with executives  based on the preferences of the two parties. Relationships are  reevaluated annually. Through these relationships, mentees get exposure  to critical decisions, as well as other parts of the business. Rio Tinto  representatives told us that the company has a formal mentoring program  targeted at high-potential talent that partners people with senior leaders,  including those from different departments. Senior leaders at Rio Tinto  are expected to participate in long-term career development discussions  for people two levels below them. The company also provides senior  executives and other lower-level managers access to external coaches  who focus more on leadership than technical company matters.

Practice #5—Career paths that describe skills needed to advance:  According to DXC Technology representatives, the company has  documented a program management career path that details the skills  needed to be a program manager. The company annually identifies the  developmental needs of employees, who can then take steps such as  moving to another program to gain the required experience to address  any gaps. This helps management make decisions that benefit both the  individual and the company. Boeing representatives told us that the  company has developed a general career path for many of its career  fields, including program management, and encourages people to  develop the skills they need by gaining experience in different career  fields and business units. Boeing program managers we met with  described the range of experiences they had within the company that  equipped them for their roles, such as working on different kinds of  aircraft and in technical and business functions.

Leading Organizations Use a Mix of Financial and Nonfinancial Incentives to Retain People

Leading practices identified by us and the Project Management Institute  suggest that a combination of financial and nonfinancial incentives can be  used to retain high performers. For example, leading organizations we  spoke with offer student loan repayments and financing of higher  education in compensation packages as financial incentives. They also  provide monetary awards to recognize excellence in job performance and  contributions to organizational goals. Nonfinancial incentives could  include senior leadership recognizing strong performance in program  management and emphasizing the idea that program management is  prestigious, challenging, and key to business success. Examples of  practices used by commercial companies we spoke with are described  below.

Practice #6—Financial rewards for good performance: Rio Tinto  representatives told us that the company offers incentives that are based  on performance. The company includes pay raises linked to annual  performance ratings, which are determined by the extent to which a  program manager meets objectives including cost and schedule goals.

According to Boeing representatives, the company annually assesses  program managers based on technical and financial performance  measures and employee feedback. These assessments help determine  annual salary increases and bonuses.

Practice #7—Education subsidies: Boeing offers tuition assistance to  all people after they have been at the company for at least 1 year. This  can support degree programs, professional certificates, and individual  courses in fields of study at over 270 colleges and universities. Boeing  representatives noted that this has helped foster a high degree of loyalty  from people.

Practice #8—Recognition: Boeing representatives told us that program  managers for major programs hold a high level of responsibility and  accountability. When program managers are successful at running  effective programs, they are often moved to larger and more complex  programs with much greater responsibility. AstraZeneca announces  recognition for program achievements such as meeting delivery targets  via e-mail and at town hall meetings, and significant achievements can  also be recognized through nomination for annual company-wide awards.

Leading Organizations Select Program Managers Based on Identification of High-Potential Talent and Alignment with Program Needs

The Project Management Institute emphasizes the importance of  identifying top talent and future high performers for key roles. Leading  practices for selecting program managers are rooted in the identification  of high-potential talent and the alignment of that talent with program  needs. Leading organizations we spoke with engage senior management  in identifying high performing people and monitoring their job  assignments, performance, and career progression. They also select  program managers with the blend of skills, experience, knowledge, and  expertise required to be effective within a particular program environment.  Examples of practices used by commercial companies we spoke with are  described below.

Practice #9—Identification of high-potential talent by senior leaders:  Rio Tinto representatives told us that senior leaders at the company  annually assess the potential and performance of its people and then  classify them in one of nine categories that include those who need  additional experiences and developmental opportunities, those in the right  role and at the right level that need to be kept engaged, and those  considered high potential who need challenging opportunities.  AstraZeneca identifies and keeps track of high-potential people through  annual talent assessments addressing each person’s strengths and gaps,  as well as potential roles, development actions, and associated time  frames. The assessments also include an individual’s professional  aspirations. According to Boeing representatives, the company uses its  succession planning process to identify a pool of qualified people able to  step into executive and program manager positions, including those who  are ready to step into a role immediately, and those who need some  additional development.

Practice #10—Assignment based on skills, experiences, and  program needs: According to DXC Technology representatives, the  company assigns program managers to roles based on a review of their  demonstrated management and subject matter competencies. For  example, an individual is evaluated on experience such as managing  programs of a certain size or level of complexity, as well as the outcomes  they achieved on those programs in terms of cost, schedule, and client  feedback. An individual is also evaluated on whether he or she has the  specific skills needed to manage a particular program, such as those  related to data migration or software application design. Boeing  representatives told us that the company takes into account a wide  variety of factors when assigning a program manager to a program.  Factors could include the size, dollar value, and complexity of a program,  as well as the developmental needs of a program manager.

Military Service Practices Show a Mixed Level of Alignment with Leading Practices

Our analysis of the practices used by the military services to train,  mentor, retain, and select program managers for major defense  acquisition programs shows a mix in the level of alignment with the  leading practices. We based our analysis on a review of DOD, military  service, and relevant sub-component documentation on training,  mentoring, retaining, and selecting program managers, including policies,  guidance, strategic plans, curricula, online portals, and acquisition  workforce data. Table 2 provides our assessment of the alignment of  military service practices with the 10 leading practices.

Practices used by each of the military services align extensively with 4 of  the 10 leading practices. For 5 of the 10, practices used by at least one of  the military services do not align extensively with leading practices, and  for the remaining practice related to financial rewards for good  performance, none of the services’ practices align extensively. We  discussed these assessments with each military service Director for  Acquisition Career Management, and they generally agreed with our  assessments.

Practices for All of the Military Services Align Extensively with 4 of the 10 Leading Practices

Military service practices align extensively with four of the leading  practices, as shown in table 3 below.

For the first practice, alignment is largely the result of steps taken by DOD  to comply with the Defense Acquisition Workforce Improvement Act,  enacted as part of the National Defense Authorization Act for Fiscal Year  1991. This legislation set forth education, training, and experience  requirements that program managers must meet prior to being assigned  to a major defense acquisition program or significant non-major defense  acquisition program. All four practices that have extensive alignment  reflect a combination of DOD-wide initiatives and approaches unique to  the military services. The following summarizes our assessment of these  practices.

Practice #1—Training classes that allow program managers to share  experiences: DOD provides centralized training that brings together  current and prospective program managers to strengthen their skill sets  and share their experiences. The Defense Acquisition University has  developed a training curriculum of courses that people must complete—in  conjunction with experience and education standards—to be certified as  ready to take on increasingly challenging assignments. The highest  level courses required for program managers incorporate simulations,  case studies, senior agency and industry speakers, and team projects to  strengthen participants’ analytical, critical thinking, and decision-making  skills. According to a Defense Acquisition University official, each year  approximately 350 people attend these courses. According to the military  services’ Directors for Acquisition Career Management, all current major  defense acquisition program managers met their certification  requirements.

The military services have also developed their own training for program  managers that brings peers together and addresses service-specific  issues. For example, the Navy has established program management  colleges at its largest systems commands. These colleges teach  curricula specific to Navy processes. The Navy also provides  approximately 200 program managers each year with training courses  focused on understanding commercial industry and managing  relationships with contractors. These classes, offered through business  schools, are taught by academic faculty, senior naval officials, and private  sector executives and focus on factors program managers need to be  aware of to understand industry behavior and decision-making.

According to DOD’s acquisition workforce strategic plan for fiscal years  2016 through 2021, the department intends to improve the type of training  it provides program managers, the timing of when courses are provided,  and the delivery method. The plan also noted DOD’s intent to strengthen  qualification requirements for program management positions by further  developing the list of proficiencies associated with certifications, including  leadership skills for all levels and technical skills needed by those in the  “beginner” and “intermediate” level program management positions. In  September 2016, the defense acquisition functional leader for program  management finalized and issued this list.

Practice #3—On-the-job learning and information repositories: Each  of the services provides its own unique on-the-job training or repositories  to share lessons learned from acquisition programs. The Air Force  provides people in the program management career field with detailed  task lists that support on-the-job learning along their career paths. For  example, people are encouraged to demonstrate competence in areas  such as schedule management. The Army has developed an online portal  that houses lessons learned from acquisition programs that were  documented around program milestones or upon termination. Users can  view and search lessons submitted by others, participate in discussion  forums, and reference acquisition case histories. The portal contains over  800 lessons learned, with over 400 relating specifically to program  management. The Navy has created a series of physical “war rooms” that  display materials on the evolution and organization of the Navy, the  service’s acquisition history, how to manage a major program, the unique  challenges of ship building, and case studies. The Navy hosts a 5-day  training program for program managers in these rooms in order to  transfer lessons learned from previous acquisition programs. The  Defense Acquisition University has also established an online program  management community of practice that houses a range of tools and  documents that communicate lessons learned.

Practice #8—Recognition: DOD leadership acknowledges the  challenges and importance of program management by designating the  most senior positions in the career field—including program managers— as key leadership positions. These positions require a significant level of  authority commensurate with the responsibility and accountability for  acquisition program success. Based on our analysis of DOD acquisition  workforce data, while the program management career field represents  just over 10 percent of the overall acquisition workforce, it accounts for  almost 40 percent of key leadership positions.

Senior leadership in each of the services also provides their own types of  recognition for good performance in program management. For example,  each service has an annual award recognizing high-performing program  managers. In addition, program management is an award category for the  DOD-wide Defense Acquisition Workforce Individual Achievement Award,  which includes recognition for winners at an awards ceremony held at the  Pentagon.

Practice #10—Assignment based on skills, experiences, and  program needs: All of the services evaluate the skills and experiences of  candidates for program manager roles, and ensure they have the  required qualifications. As part of their processes for filling these roles,  the services take note of specific needs associated with a program. In the  Army, civilian and military personnel apply each year and are  competitively selected by a board of senior Army acquisition leaders who  use instructions from the Secretary of the Army to select the best qualified  individuals. Once selected by the board, the Army uses another process  to match the skills and experience of the individual to those required by  the program manager position based on factors such as functional,  technical, and educational experience.

In the Navy, civilian and military personnel apply and compete for specific  programs. As part of the documentation of candidate selection, the Navy  requires a description of how the candidate’s skills align with the current  status of the program. The Air Force designates whether a program will  have a military or civilian program manager in advance. The senior official  who approves program manager selections considers program needs  along with individual qualifications and functional requirements. In  addition, the military services consult with the Office of the Under  Secretary of Defense for Acquisition, Technology and Logistics on the  selection of program managers for those programs where that office is  the decision authority.

For Half the Leading Practices, There Is at Least One Military Service with Practices That Do Not Align Extensively

For five of the leading practices, at least one of the military services’  practices do not align extensively, as shown in table 4 below.

The following summarizes our assessment of instances in which one or  two military services may be using a leading practice, but not all three  services. We also identify examples of military service actions that could  serve as a model for meeting those leading practices.

Practice #2—Rotational assignments: Each of the services provides  civilian and military program management personnel with opportunities to  rotate internally among other units or functions. However, while the  military services have identified external rotations with industry as a way  to gain valuable experience and improve people’s business acumen,  practices in this area vary. For example,

The Air Force has an external industry rotation program that is open  to both civilian and military personnel. In total, about seven military  and civilian program management personnel participate in this  program each year, according to the Air Force Director for Acquisition  Career Management.

The Army’s external industry rotation program is open only to military  personnel, and approximately 11 program management personnel  participate each year, according to the Army Director for Acquisition  Career Management. The Director also noted that some local Army  organizations send civilian personnel on industry rotations, but was  not aware of participation by civilian personnel in the program  management career field.

The Navy uses the Secretary of Defense Executive Fellows program  to provide experience with commercial industry. This program is open  to participants from all the military services. Until 2017, participation in  the program was restricted to only military personnel. Over the past  5 years, between two and five Navy military acquisition personnel per  year participated in the program, according to the Navy Director for  Acquisition Career Management.

The Directors for Acquisition Career Management noted that two of the  inherent difficulties with sending civilians on potentially year-long industry  rotations are that their organizational unit would need to fund the  participant’s travel costs, and would also need to find people to perform  the participant’s duties in their absence. The Air Force’s industry  rotation program avoids the travel cost problem by finding civilians  opportunities with local companies. In addition, the program is targeted at  more junior personnel than the programs used by either the Army or  Navy, reducing the difficulty of filling their position while they are on a  rotation. As a result of the focus on military personnel participating in  industry rotations, civilian personnel in the Army and Navy miss an  opportunity to improve their business acumen and gain valuable  experience that would better prepare them for program manager roles.  They could benefit from consideration of the approaches taken by the Air  Force.

Practice #4—Mentoring programs with senior leader involvement:  Each of the services offers some kind of voluntary mentoring program.  However, only the Air Force and Army have a documented expectation  that senior civilian and military personnel serve as mentors. The Navy  provides a range of mentoring resources, but only has a documented  expectation that senior military personnel serve as mentors. The Navy  Director for Acquisition Career Management agrees that this expectation  is not documented for civilians, but believes that senior civilian leaders in  program management are aware that mentoring is a responsibility.  However, because it is not documented, some senior civilian leaders  might not be aware of this expectation.

Practice #5—Career paths that describe skills needed to advance:  Each of the services has outlined the steps people need to take to  become program managers and provided opportunities for both civilians  and military to advance to these and even higher level positions.  However, the descriptions of the skills people should obtain to advance  along the various career paths are inconsistent among the services.

The Air Force includes the skills and competencies people need to  achieve specific career goals in the competency-based task lists  previously discussed as a tool to support on-the-job learning. The task  lists are the same for civilian and military personnel.

The Army describes the skills and competencies civilians need to  advance via a one-page roadmap. While there is a one-page roadmap  for military personnel, it does not discuss or link to skills and  competencies. The online version of the civilian roadmap includes  direct links to an existing DOD tool that people can use to identify and  address gaps in their experience and capture demonstrated  experience in a wide range of program management competencies,  such as stakeholder management. People and their supervisors are  encouraged to use this tool to develop individual career development  plans. The tool also provides a common set of standards that  organizations can use to mitigate skill gaps through hiring or using  developmental opportunities.

The Navy’s systems command responsible for delivering and  supporting aircraft provides a career roadmap for the program  management career field, as well as detailed descriptions of the  different levels of skills and competencies needed to advance.

However, the systems command responsible for delivering and  supporting ships does not have a formal career roadmap.

Both Army and Navy Directors for Acquisition Career Management are  aware of these inconsistencies, and are working to put approaches in  place in fiscal year 2018 to address them and ensure that key groups in  the program management career field are not missing important  information about skills they should develop.

Practice #7—Education subsidies: All the services offer tuition  assistance to military and civilian personnel to further their education,  which has helped increase the percentage of program management  personnel with a graduate degree from 46 percent in fiscal year 2008 to  57 percent in fiscal year 2016. The services also offer student loan  repayments, but use them for different purposes. The Army and Navy use  DAWDF-funded student loan repayments—and the requirement that  recipients sign an agreement to serve for 3 years—as a retention tool for  program management personnel.

However, the Air Force only uses these repayments as a recruiting tool,  despite the fact that they can be used for both recruitment and retention.  This decision stems from the results of a 2016 study the Air Force  commissioned from the RAND Corporation that found limited utility in  offering retention bonuses as a tool to retain talent. The Director for  Acquisition Career Management told us that the Air Force is scaling back  its use of all financial retention incentives and prefers to use student loan  repayments as a recruiting tool. The service agreement therefore only  covers the early part of someone’s career with the Air Force, instead of  being a way to drive retention of more senior personnel. Prior GAO work  has found that financial retention incentives are among the most effective  flexibilities that agencies have for managing their workforce, and that  insufficient use of existing flexibilities can significantly hinder the ability of  agencies to retain and manage personnel.

Practice #9—Identification of high-potential talent by senior leaders:  The Army regularly and systematically involves senior management in  identifying high-potential program management talent among civilian and  military personnel. It requires senior managers to annually evaluate the  leadership potential of all civilian acquisition personnel at midcareer or  above, and the Army’s annual evaluation for all military officers assesses  their potential for positions of greater responsibility. The Air Force has a  similar process for military personnel, but not civilians. The onus is on  civilian personnel to nominate themselves for development programs and  resources, rather than being identified and guided toward those  opportunities by senior leaders. The Navy only identifies high-potential  military and civilian talent on an informal basis, which varies across the  service. The Air Force and Navy risk overlooking high-potential talent as a  result of their approaches. The Directors for Acquisition Career  Management for both services acknowledge the ad hoc nature of their  practices, and are looking into steps they could take in fiscal year 2018 to  more systematically identify high-potential talent.

None of the Military Services’ Practices Align Extensively with the Practice of Providing Financial Rewards for Good Performance

None of the military services’ practices align extensively with leading  practices for providing financial rewards for good performance, as shown  in table 5 below.

Commercial companies have more flexibility than DOD to financially  reward good performance. They are not subject to the legal restrictions  on compensation that federal agencies must consider, and can offer  types of compensation, such as stock options, that federal agencies  cannot. Despite this, DOD has mechanisms to financially reward high- performing people. However, these incentives are either unavailable to all  program management personnel because of the various pay systems  used by DOD, or are underutilized by the military services. For example,  military and civilian personnel are compensated under different systems.  Military pay and allowances are delineated in Title 37 of the U.S. Code,  and while there are provisions for retention bonuses that would cover  acquisition officers, there are none that reward high performance.

Most DOD civilian personnel, on the other hand, are covered by the  General Schedule classification, a pay system that is used in many  agencies across the federal government. For the most part, people in this  pay system receive set pay increases as long as their performance is at  an acceptable level. The military services also have the option to convert  civilian personnel to the Civilian Acquisition Workforce Personnel  Demonstration Project, known as AcqDemo, where people including  those in the program management career field have the opportunity to  earn varying levels of pay increases or bonuses based on their  performance.

The military services’ use of AcqDemo varies. According to AcqDemo  data collected by DOD’s Human Capital Initiatives office, as of the end of  fiscal year 2016, approximately 64 percent of the Army’s civilian program  management workforce is covered by the system. Army officials told us  that the level of coverage has increased since then, and that  organizations containing the remaining eligible workforce are considering  participation in fiscal year 2018. Furthermore, officials told us that all  Army program managers are covered by AcqDemo. However, only 38  percent of the Navy’s civilian program management workforce is covered  by the system, and 29 percent of the Air Force’s. According to the  AcqDemo program manager and the Air Force and Navy Directors for  Acquisition Career Management, organizations are hesitant to extend  coverage because they are apprehensive about whether what is currently  a demonstration program will become permanent, and the time it takes  management to reach formal agreement with local bargaining units. The  greater coverage of AcqDemo across the Army’s civilian program  management workforce compared to the Air Force and Navy suggests  that these two services may have opportunities to learn lessons from the  Army’s experience.

Congress recently took actions that could address some of the concerns  about AcqDemo. The National Defense Authorization Act for Fiscal Year  2018, for example, extends the authorized timeline for AcqDemo use from  December 31, 2020 to December 31, 2023, and increases the total  number of people who may participate in the program at any one time  from 120,000 to 130,000. As of February 2017, a total of approximately  36,000 people across DOD were participating in AcqDemo.

The military services can also use DAWDF funding to recognize high- performing civilian personnel, but have only made limited use of this  funding for program management personnel. The Directors for Acquisition  Career Management reported the following awards between fiscal years  2008 and 2017:

The Air Force awarded $5,000 to one recipient in fiscal year 2017.

The Army awarded a total of $70,000 to 351 recipients on one team in  fiscal year 2015.

The Navy awarded a total of $10,000 to seven recipients between  fiscal years 2008 and 2017.

Requests for DAWDF funds are left to the discretion of acquisition  commands. According to the military services’ Directors for Acquisition  Career Management, local commanders are not frequently requesting  DAWDF funds for program management recognition awards. One director  stated that this was because they want to avoid the perception of treating  civilian personnel differently from military personnel. As a result, the  military services are missing an opportunity to financially reward good  performance and potentially losing talented civilians by not using all  available retention tools. The Army Director stated that Army  organizations have also used other financial performance incentives,  such as spot awards for civilian program management personnel that are  not funded by DAWDF. This director also noted that government-wide  budgetary limitations for individual monetary awards have reduced the  flexibility to offer rewards for performance.

The National Defense Authorization Act for Fiscal Year 2018 requires  DOD to commission a review of military and civilian program manager  incentives, including a financial incentive structure to reward program  managers for delivering capabilities on budget and on time. This  represents an opportunity for DOD to identify and begin to address  concerns about the equitable treatment of civilian and military program  management personnel.

The military services recognize that they need skilled program managers  to develop acquisition programs and have taken steps to develop that  top-notch talent. Of note, DOD has developed a solid training regimen  and established minimum training, experience, and education  requirements for people to manage acquisitions of various dollar  thresholds. The services have also established repositories that share  lessons learned and provide on-the-job learning opportunities to  supplement the formal training.

Yet, when compared to leading practices, we found that several practices  used by the military services for training, mentoring, retaining, and  selecting people for program manager positions could be improved. For  instance, the Air Force has practices that extensively align with all leading  practices for training and mentoring, but we identified some practices for  retaining and selecting program managers that do not. We assessed the  Army as having practices that extensively align with all leading practices  for selecting program managers, but identified some practices for training,  mentoring, and retaining program managers that do not. We assessed  the Navy as having practices that do not extensively align with leading  practices in each of the areas of training, mentoring, retaining, and  selecting program managers.

In nearly all cases, the military services could improve their practices by  learning from ideas and initiatives being used by another military service  or by commercial companies and ensuring that civilian and military  personnel have similar opportunities to develop. While commercial  companies have more flexibility in providing financial incentives to their  program managers, the military services could make greater use of  financial mechanisms provided by Congress—such as DAWDF and  AcqDemo—to reward high performing civilian personnel. DOD also has  an opportunity to identify for Congress any concerns about the equitable  treatment of civilian and military program management personnel when it  comes to rewarding good performance. Taking these actions could  encourage high-potential talent to remain in the program management  career field and strengthen the next generation of program managers.

We are making a total of eight recommendations, including three to the  Air Force, two to the Army, and three to the Navy. Specifically:  The Secretary of the Air Force should take steps to address areas of  civilian and military program manager retention and selection that do not  align extensively with leading practices. This could include using  approaches already used by the other military services or commercial  companies. (Recommendation 1)

The Secretary of the Air Force should make greater use of existing  financial mechanisms such as DAWDF to recognize high performers.  (Recommendation 2)

The Secretary of the Air Force should identify lessons learned by the  Army related to the Army’s experience to extend coverage of AcqDemo  across the civilian program management workforce. (Recommendation 3)

The Secretary of the Army should take steps to address areas of civilian  and military program manager training, mentoring, and retention that do  not align extensively with leading practices. This could include using  approaches already used by the other military services or commercial  companies. (Recommendation 4)

The Secretary of the Army should make greater use of existing financial  mechanisms such as DAWDF to recognize high performers.  (Recommendation 5)

The Secretary of the Navy should take steps to address areas of civilian  and military program manager training, mentoring, retention, and  selection that do not align extensively with leading practices. This could  include using approaches already used by the other military services or  commercial companies. (Recommendation 6)

The Secretary of the Navy should make greater use of existing financial  mechanisms such as DAWDF to recognize high performers.  (Recommendation 7)

The Secretary of the Navy should identify lessons learned by the Army  related to the Army’s experience to extend coverage of AcqDemo across  the civilian program management workforce. (Recommendation 8)

We provided a draft of this report to DOD for review and comment. In its  written comments, reproduced in appendix II, DOD concurred with our  eight recommendations and in some cases identified ongoing efforts  among the military services to address the recommendations and  increase alignment with leading practices. In addition, DOD noted the  importance of addressing restrictions on how it can reward and retain  military personnel, and requested that this issue be included in an  ongoing study of DOD workforce incentives.

DOD also stated that some of its recent accomplishments and  improvements were not mentioned in the report. For example, DOD noted  that representatives from the program management community meet  regularly to discuss and share lessons learned and best practices. Recent  accomplishments include updated competencies, career tracking and  development tools, and improvements to classroom and online training.  Our report recognizes the progress made by DOD in these areas and  highlights some specific examples. We also agree that there is a broader  range of efforts underway to enhance the development of program  managers.

We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; and the Secretaries of the Air  Force, Army, and Navy. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or sullivanm@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

This report addresses (1) how leading organizations train, mentor, retain,  and select program managers and (2) the extent to which military service  practices for training, mentoring, retaining, and selecting program  managers align with those of leading organizations.

To identify how leading organizations train, mentor, retain, and select  program managers, we first reviewed GAO’s Standards for Internal  Control in the Federal Government to identify criteria regarding the  controls that federal agencies such as the Department of Defense (DOD)  should have in place to manage talent. To identify leading practices for  implementing these internal control standards, we first reviewed key  documentation, including relevant legislation and prior GAO reports  related to program management. We also reviewed prior GAO reports on  managing the federal workforce, and in particular those reports that  addressed retention mechanisms. We obtained and reviewed  documentation from the Project Management Institute, a not-for-profit  association that provides global standards for project and program  management, related to program management and managing talent. We  also worked with the Project Management Institute to identify suitable  companies for us to approach to learn about leading practices, based on  their membership in the Project Management Institute’s Global Executive  Council, and insights from Project Management Institute representatives  regarding these companies’ practices for training, mentoring, retaining, or selecting program managers. We spoke with or visited these companies,  and where possible, companies provided relevant documentation to  support their examples. The selected companies were the following:

AstraZeneca is a biopharmaceutical company that focuses on the  discovery, development, and commercialization of prescription  medicines. AstraZeneca reported total revenues of $23 billion in 2016.

Boeing Company is a global aerospace company and manufacturer of  commercial airplanes and defense, space, and security platforms and  systems. Boeing reported total revenues of $94.6 billion in 2016.

DXC Technology is an end-to-end information technology services  company. Created by the merger of CSC and the Enterprise Services  business of Hewlett Packard Enterprise, DXC Technology serves  nearly 6,000 private and public sector clients across 70 countries,  delivering next-generation information technology services and  solutions.

Rio Tinto is a metal and minerals mining company that finds, mines,  processes, and markets mineral resources including iron ore,  aluminum, copper, diamonds, and energy. Rio Tinto reported total  revenues of $33.8 billion in 2016.

Based on our review of Project Management Institute documentation and  prior GAO reports, as well as our discussions with commercial  companies, we identified a set of leading practices for training, mentoring,  retaining, and selecting program managers. We shared this set of leading  practices with Project Management Institute representatives and made  adjustments based on their feedback.

To identify the extent to which military service practices align with those of  leading organizations, we analyzed DOD, military service, and relevant  sub-component documentation on training, mentoring, retaining, and  selecting program managers for DOD’s current portfolio of 78 major  defense acquisition programs as defined in our most recent assessment  of the portfolio. We also interviewed the following DOD and military  service organizations during our review:

Office of the Under Secretary of Defense for Acquisition, Technology  and Logistics, Office of Human Capital Initiatives.

Office of the Under Secretary of Defense for Personnel and  Readiness, Office of the Defense Civilian Personnel Advisory Service.

Office of the Assistant Secretary of Defense for Acquisition

Department of the Air Force Director for Acquisition Career  Management.

Department of the Army Director for Acquisition Career Management.

Department of the Navy Director for Acquisition Career Management.

4th Estate Director for Acquisition Career Management.

We also interviewed a former Assistant Secretary of the Army and Deputy  Assistant Secretary of the Air Force with expertise in defense acquisition.  We used pertinent documentation and information from interviews with  officials to assess the extent to which each of the services’ practices  aligned with leading practices. Specifically, we assigned ratings for three  levels of alignment. Extensive alignment means that the service’s practice  contains all of the elements of the leading practice and is not limited to a  subset of the population. Partial alignment means that the service’s  practice contains some, but not all, elements of the leading practice, or is  limited to a subset of the population, such as military or civilian personnel  only, or a particular organization within the service. Little to no alignment  means that the service’s practice contains minimal or no elements of the  leading practice. The following is a list of elements for each practice:  1.  Training classes that allow program managers to share experiences:  Training classes that involve current or prospective program  managers and that allow for knowledge and experience sharing.  2.  Rotational assignments: Internal and external—that is, industry— rotational assignments available to military and civilian personnel.  3.  On-the-job learning and information repositories: Resources that  provide access to guidance on how to perform program management  activities and learn from past program management experiences.  4.  Mentoring programs with senior leader involvement: Existence of  programs that facilitate mentor-mentee relationships and expectation  that senior personnel serve as mentors.  5.  Career paths that describe skills needed to advance: Documentation  for military and civilian personnel of skills needed at different stages of  career path(s) to becoming a program manager.  6.  Financial rewards for good performance: Consistent use of DAWDF to  fund recognition awards for 1 percent or more of civilian program  management personnel and AcqDemo coverage of a majority of the  civilian program management workforce.  7.  Education subsidies: Tuition assistance for further education and use  of DAWDF-funded student loan repayments as a retention—versus  recruitment—tool.  8.  Recognition: Senior-level recognition of prestige and challenging  nature of program manager role and of good performance in the role.  9.  Identification of high-potential talent by senior leaders: Processes for  senior leaders to assess military and civilian program management  personnel and identify those considered high potential.  10. Assignment based on skills, experiences, and program needs:  Program manager selection processes that assess candidate skills  and experiences and specific needs of a program.

One analyst performed the initial assessment for each service, and the  supporting evidence was then reviewed by the Assistant Director, with  any disagreement discussed and resolved as a team. These discussions  also informed requests for more information and documentation from  each of the services. Assessments were updated based on what was  provided by the services. We also reviewed the military services’  practices for approaches that one or more services had adopted that  aligned with leading practices, and that could potentially be adopted by  the other services to improve their alignment. We shared our  assessments with the military service Directors for Acquisition Career  Management to give them the opportunity to note additional approaches  or initiatives that might inform our assessments, and incorporated their  input as appropriate.

We reviewed data from DataMart, DOD’s acquisition workforce database,  on the composition of the acquisition workforce and the program  management career field as of the end of fiscal year 2016, including the  extent of coverage of the Civilian Acquisition Workforce Personnel  Development (AcqDemo) project. To assess the reliability of DOD’s  DataMart data, we (1) reviewed existing information about the data and  the system that produced them, (2) interviewed knowledgeable agency  officials, and (3) reviewed written answers to questions about the  system’s data reliability, including data collection and entry, underlying  data sources, and use of internal controls. We determined that the data  were sufficiently reliable for the purposes of our reporting objectives.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

Michael J. Sullivan, (202) 512-4841 or sullivanm@gao.gov.

In addition to the contact named above, Cheryl Andrew (Assistant  Director), Emily Bond, Robert Bullock, Lorraine Ettaro, Kurt Gurka, Ruben  Gzirian, Ashley Rawson, Lucas Scarasso, and Robin Wilson made key  contributions to this report.

Cost and schedule overruns have plagued DOD’s major defense acquisition programs, with current projected costs exceeding initial expectations by $484 billion and delays averaging 31 months. To keep programs on track, DOD relies on program managers who can balance factors that influence cost, schedule, and performance.

The military services have taken steps to develop top-notch talent for this role. We compared their practices for training, mentoring, retaining, and selecting program managers to those of leading organizations and found shortfalls.

We made recommendations for improvements, such as making more use of financial incentives.


This testimony summarizes the information contained in GAO's July 2017 report, entitled DOD Excess Property: Enhanced Controls Needed for Access to Excess Controlled Property ( GAO-17-532 ).

merrittz@gao.gov or Wayne A. McElrath at (202) 512-2905 or mcelrathw@gao.gov .

The Defense Logistics Agency (DLA) has taken some actions and is planning additional actions to address identified weaknesses in its excess controlled property program. However, internal control deficiencies exist for, among other things, ensuring that only eligible applicants are approved to participate in the Law Enforcement Support Office (LESO) program and receive transfers of excess controlled property. DLA is establishing memorandums of understanding with participating federal agencies intended to, among other things, establish general terms and conditions for participation, revise its program application to require additional prospective participant information, and plans to provide additional online training for participating agencies that is expected to begin in late 2017. However, GAO created a fictitious federal agency to conduct independent testing of the LESO program's internal controls and DLA's transfer of controlled property to law enforcement agencies.

Through the testing, GAO gained access to the LESO program and obtained over 100 controlled items with an estimated value of $1.2 million, including night-vision goggles, simulated rifles, and simulated pipe bombs, which could be potentially lethal items if modified with commercially available items . GAO's testing identified that DLA has deficiencies in the processes for verification and approval of federal law enforcement agency applications and in the transfer of controlled property, such as DLA personnel not routinely requesting and verifying identification of individuals picking up controlled property or verifying the quantity of approved items prior to transfer. Further, GAO found that DLA has not conducted a fraud risk assessment on the LESO program, including the application process. Without strengthening DLA and LESO program internal controls over the approval and transfer of controlled property to law enforcement agencies, such as reviewing and revising policy or procedures for verifying and approving federal agency applications and enrollment, DLA lacks reasonable assurance that it has the ability to prevent, detect, and respond to potential fraud and minimize associated security risks.

Examples of Controlled Property Items Obtained

DLA maintains a public Internet site to address statutory requirements to provide information on all property transfers to law enforcement agencies. DLA's public Internet site shows all transferred property, and, as of April 2017, in response to GAO's findings, has included a definition of controlled property to distinguish for the general public what items are considered controlled.

Thank you for the opportunity to be here today with my colleague, Wayne  McElrath, with whom I am jointly providing this statement. Today, we will  discuss our July 2017 report on the Department of Defense (DOD) Law  Enforcement Support Office (LESO) program, also known as the 1033  program in reference to the section of the law authorizing it. Under this  authority, DOD can transfer excess personal property to federal, state,  and local law enforcement agencies. The Defense Logistics Agency  (DLA) Disposition Services administers the LESO Program for DOD.

Since 1991, DOD has reported transferring more than $6 billion worth of  its excess personal property to more than 8,600 federal, state, and local  law enforcement agencies. According to DOD, about 4 to 7 percent of the  total excess property transferred is controlled property, which typically  involves sensitive equipment and items that cannot be released to the  public. Examples of controlled items available include night-vision  goggles, thermal imaging equipment, specialized printers, and explosive  ordnance detonation robots, as well as certain high-visibility items, such  as small arms, High Mobility Multipurpose Wheeled Vehicles (HMMWVs),  Mine‐Resistant Ambush Protected Vehicles (MRAPs), and aircraft. LESO  program data shows that during calendar years 2013 through 2015,  approximately $1.1 billion of excess controlled property was transferred to  federal, state, and local law enforcement agencies. Approximately two- thirds of the 388,000 DOD excess controlled property items had been  transferred to state and local agencies, and one-third had been  transferred to federal agencies.

Over the past 15 years, we have examined DOD’s excess property  reutilization program and reported deficiencies, including unauthorized  parties obtaining excess controlled property and internal control  breakdowns with regard to the security of sensitive excess military  equipment. We have made over 20 recommendations aimed at enhancing internal controls over DOD’s disposal and accountability of its  excess property and improving the overall economy and efficiency of the  reutilization program. The department has implemented most of the  recommendations. Likewise, the DOD Office of Inspector General has  reported on internal control deficiencies, such as the distribution of  excess property to law enforcement agencies without the accountability  necessary to ensure that the released property had the proper  authorization. The Inspector General has made recommendations, which  the department has also implemented.

Our testimony today summarizes key findings from our July 2017 report  on DOD excess property. Accordingly, our testimony addresses (1) how  federal, state, and local law enforcement agencies reported using and  benefiting from excess controlled property transferred to them through the  LESO program; and (2) the extent to which DLA has taken actions to  enhance processes, including internal controls, related to its transfers of  excess controlled property.

To conduct our work, we reviewed DOD policies and procedures,  interviewed and surveyed cognizant officials, and conducted independent  testing of LESO’s application and DLA’s transfer process. Specifically, we  conducted a survey of 15 participating federal law enforcement agencies  as well as 53 state coordinators who had controlled property transferred  to their offices through the LESO program during calendar years 2013,  2014, and 2015 to gain an understanding of their use of the LESO  program. Also, we conducted non-generalizable case studies of five  states: Arizona, Georgia, Maryland, Michigan, and Texas. We interviewed  federal, state, and local law enforcement officials in each of the selected  states to gain an understanding of how property is transferred to them,  including how they screen for, obtain, and dispose of DOD excess  controlled property.

Additionally, our investigators created a fictitious federal agency to  conduct independent testing of the LESO program’s internal controls and  DLA’s transfer of controlled property to law enforcement agencies. We  also compared DLA and LESO practices to those identified in GAO’s A  Framework for Managing Fraud Risks in Federal Programs (hereafter  cited as the Fraud Risk Framework). Issued in July 2015, GAO’s Fraud  Risk Framework is a comprehensive set of leading practices that serves  as a guide for program managers to use when developing efforts to  combat fraud in a strategic, risk-based manner. Further details on our  scope and methodology are included in our report. The work on which  this statement is based was conducted in accordance with generally  accepted government auditing standards and our investigative work was  performed in accordance with the Council of Inspector General on  Integrity and Efficiency standards for investigations.

Law Enforcement Agencies Reported Various Uses and Benefits from the Transfer of the DOD Excess Controlled Property

Federal law enforcement agencies and state coordinators in our survey— as well as officials we interviewed from federal, state, and local law  enforcement agencies—reported various uses of DOD excess controlled  property for law enforcement activities. The reported uses included  enhancing counterdrug, counterterrorism, and border-security activities.  Also, law enforcement agencies reported using DOD’s excess controlled  property for other law enforcement activities, such as search and rescue,  natural disaster response, surveillance, reaching barricaded suspects,  police training, and the serving of warrants.

Federal, state, and local agencies cited a number of ways in which they  had benefited from LESO program, with several reporting that the  transfers of controlled property allowed them to save money. For  example, a local law enforcement official in Texas reported that 96  percent of the department budget goes to salaries and that the LESO  program helped the department acquire items that it would otherwise not  be able to afford, saving the department an estimated $2 million to $3  million. Additionally, agencies provided examples of how property they  received through the LESO program have been used. For example, the  Bureau of Indian Affairs officials reported they have used vehicles to  support their Office of Justice Services’ drug unit during marijuana  eradication and border operations by providing transport to agents over  inhospitable terrain in mountainous and desert environments. In another  example, Texas law enforcement officials reported that the San Marcos  and Hays County police departments used their issued Mine Resistant  Ambush Protected (MRAP) vehicles to rescue more than 600 stranded  people from floodwaters in October 2015. Moreover, the Los Angeles  County Sheriff’s Department reported that it used a robot to remove a rifle  from an attempted murder suspect who had barricaded himself.

DLA Has Taken Some Actions to Address Weaknesses in Its Excess Controlled Property Program, but Deficiencies Exist in Key Processes

DLA Actions to Address Weaknesses in LESO Program

DLA has taken some steps to address previously identified weaknesses  in its processes for transferring and monitoring its excess controlled  property through revisions to its policy and procedures on the  management, oversight, and accountability of the LESO program. Such  revisions were made, in part, because of recommendations made by the  DOD and DLA Offices of Inspector General. The DOD and DLA Offices of  Inspector General conducted four audits of the LESO program between  2003 and 2013 that identified more than a dozen recommendations, such  as developing and implementing written standard operating procedures  for the approval and disapproval of law enforcement agency property  requests and issuance, transfer, turn-in and disposal of LESO property. In  our July 2017 report, we found the department had taken the following  actions to enhance its transfer process through revisions to policy and  procedures:  transitioned full management responsibility of the LESO Program to DLA Disposition Services in 2009; developed LESO Program Standard Operating Procedures in 2012 and updated them in 2013; transitioned to a new data system in 2013 after identifying that the old system was not capable of post-issue tracking;revised the DLA instruction that provides policy, responsibility, and procedures for DLA’s management responsibilities of the LESO program in 2014 and 2016; and revised LESO program processes in 2016 to incorporate recommendations made by the Federal Interagency Law Enforcement Equipment Working Group, such as defining executive order controlled property or prohibiting schools K-12 from participating in the program.

In addition, DLA is in the process of developing additional training on  LESO program policies and procedures, and is establishing  memorandums of understanding with federal law enforcement agencies  on the general terms and conditions of participating in the program,  including the restrictions on the transfer and sale of controlled property.

DLA Has Deficiencies in Its Processes for Verifying and Approving Applications and Transferring Property and Has Not Conducted a Risk Assessment

We found weaknesses in three areas: (1) verifying and approving  applications, (2) transferring property, and (3) the assessment of risk.  First, our independent testing of the LESO program’s internal controls  identified deficiencies in the processes for verification and approval of  federal law enforcement agency applications. Specifically, our  investigators posing as authorized federal law enforcement officials of a  fictitious agency applied and were granted access to the LESO program  in early 2017. In late 2016, we emailed our completed application to the  LESO program office. Our application contained fictitious information  including agency name, number of employees, point of contact, and  physical location. In early 2017, after revising our application at the  direction of LESO officials we were notified that our fictitious law  enforcement agency was approved to participate in the LESO program.  LESO officials also emailed us to request confirmation of our agency’s  authorizing statute; in response, our investigators submitted fictitious  authorizing provisions as provisions in the U.S. Code. At no point during  the application process did LESO officials verbally contact officials at the  agency we created—either the main point of contact listed on the  application or the designated point of contact at a headquarters’ level—to  verify the legitimacy of our application or to discuss establishing a  memorandum of understanding with our agency.

DLA’s internal controls for verifying and approving federal agency  applications and enrollment in the LESO program were not adequate to  prevent the approval of a fraudulent application to obtain excess  controlled property. Specifically, LESO’s reliance on electronic  communications without actual verification does not allow it to properly  vet for potentially fraudulent activity. For example, DLA did not require  supervisory approval for all federal agency applications, or require  confirmation of the application with designated points of contact at the  headquarters of participating federal agencies. Additionally, at the time  we submitted our application, DLA officials did not visit the location of the  applying federal law enforcement agency to help verify the legitimacy of  the application. After our briefing of DLA officials in March 2017 on the  results of our investigative work, DLA officials stated they took immediate  action, and in April 2017 visited 13 participating federal law enforcement  agencies. However, at this time DLA has not reviewed and revised the  policy or procedures for verifying and approving federal agency  applications and enrollment in the LESO program.

Second, our independent testing also identified deficiencies in the transfer  of controlled property, such as DLA personnel not routinely requesting  and verifying identification of individuals picking up controlled property or  verifying the quantity of approved items prior to transfer. Our  investigators, after being approved to participate in the LESO program,  obtained access to the department’s online systems to view and request  controlled property. We subsequently submitted requests to obtain  controlled property, including non-lethal items and potentially-lethal items  if modified with commercially available items. In less than a week after  submitting the requests, our fictitious agency was approved for the  transfer of over 100 controlled property items with a total estimated value  of about $1.2 million. The estimated value of each item ranged from $277  to over $600,000, including items such as night-vision goggles, reflex  (also known as reflector) sights, infrared illuminators, simulated pipe  bombs, and simulated rifles. Our investigator scheduled appointments  and obtained the controlled property items, such as those shown in the  photos below.

Using fictitious identification and law enforcement credentials, along with  the LESO-approved documentation, our investigator was able to pass  security checks and enter the DLA Disposition Service warehouse sites.  Personnel at two of the three sites did not request or check for valid  identification of our investigator picking up the property. According to DLA  guidance, direct pickup of allocated property may be made by an  individual with valid identification and the appropriate DOD authorization  form that is signed by the authorized individual listed in the letter.

DLA has not taken steps to reasonably ensure that onsite officials  routinely request and verify valid identification of the individual(s)  authorized to pick up allocated property from the LESO program, as  required by the guidance. DLA officials acknowledged they could take  additional steps to ensure compliance with the requirements in the  handbook. Furthermore, although we were approved to receive over 100  items and the transfer documentation reflects this amount, we were  provided more items than we were approved to receive. The discrepancy  involved one type of item—infrared illuminators. We requested 48 infrared  illuminators but onsite officials at one Disposition Services site provided  us with 51 infrared illuminators in 52 pouches, of which one pouch was  empty. Additionally, we found that one DLA Disposition Services site had  a checklist as a part of their transfer documentation for their personnel to  complete. The checklist required manual completion of several items,  including quantity, date, and who fulfilled the order. The other two DLA  Disposition Services sites, including the site that transferred the wrong  quantity, did not include this checklist with the transfer documentation we  received. DLA guidance states that accountability records be maintained  in auditable condition to allow property to be traced from receipt to final  disposition. We concluded that without guidance that specifically  requires DLA Disposition Services’ on-site officials to verify the type and  quantity of approved items against the actual items being transferred prior  to removal from the sites, DLA will lack reasonable assurance that the  approved items transferred are appropriately reflected in their inventory  records.

Third, while DLA has taken some steps, mostly in early 2017, to address  identified deficiencies in the LESO program, DLA lacks a comprehensive  framework for instituting fraud prevention and mitigation measures.  During the course of our review, DLA revised the LESO program  applications by requiring applicants to sign an attestation that the agency  that they represent is a legitimate law enforcement agency. Further, DLA  officials stated they are more carefully reviewing the legitimacy of some  information on the application such as email addresses and physically  visiting federal agencies that enter into memorandums of understanding  with the LESO program.

However, as previously discussed, we identified internal controls  weakness in the policy and procedures for verifying and approving federal  agency applications and enrollment as well as weakness throughout the  process from approval to the actual transfer of the items to the agencies,  which indicates that DLA has not examined potential risks for all stages of  the process. According to GAO’s Fraud Risk Framework, effective fraud  risk managers collect and analyze data on identified fraud schemes, use  these lessons learned to improve fraud risk management activities, and  plan and conduct fraud risk assessments that are tailored to their  programs. The framework states there is no universally accepted  approach for conducting fraud risk assessments since circumstances  among programs vary. However, per leading practices, assessing fraud  risks generally involves five actions: (1) identifying inherent fraud risks  affecting the program, (2) assessing the likelihood and effect of those  fraud risks, (3) determining fraud risk tolerance, (4) examining the  suitability of existing fraud controls and prioritizing residual fraud risks,  and (5) documenting the program’s fraud risk profile.

DLA has begun to examine some fraud risks associated with the LESO  program. However, DLA officials acknowledged during our March 2017  meeting that they have not conducted a fraud risk assessment on the  LESO program to include the application process, and as such, has not  designed or implemented a strategy with specific control activities to  mitigate risks to the program. We concluded that conducting such an  assessment could have program-wide improvements, including  strengthening the controls to verify the legitimacy of applicants.

Overall, we concluded in our July 2017 report that DLA’s internal controls  did not provide reasonable assurance in preventing fraud. Therefore, we  made four recommendations for DLA to:  review and revise policy or procedures for verifying and approving federal agency applications and enrollment; ensure compliance that DLA Disposition Services on-site officials transferring controlled property verify that persons picking up items have valid identification and are authorized to pick up allocated property from the LESO program; issue guidance that requires DLA Disposition Services on-site officials to verify the type and quantity of approved items against the actual items being transferred prior to removal from the sites; and conduct a fraud risk assessment to design and implement a strategy with specific internal control activities to mitigate assessed fraud risks.

DOD concurred with all of our recommendations and highlighted actions  to address each one.

Chairman Wilson, Ranking Member Bordallo, and Members of the  Subcommittee, this concludes our prepared statement. My colleague, Mr.  McElrath, and I would be pleased to respond to any questions that you  may have at this time.

For questions about this statement, please contact Zina D. Merritt at (202)  512-5257 or merrittz@gao.gov or Wayne A. McElrath at (202) 512-2905  or mcelrathw@gao.gov. In addition, individuals making significant  contributions to this statement include: Marilyn Wasleski, Assistant  Director; Laura Czohara, Martin de Alteriis, Barbara Lewis, Felicia Lopez,  Maria McMullen, George Ogilvie, Richard Powelson, and Samuel Woo.

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