GAO: DOD needs CMO to guide business transformation

The Defense Department should have a full-time chief management officer, or it will not succeed at business transformation, Comptroller General David Walker has said. Under a Sept. 18 DOD directive, DOD Deputy Secretary Gordon England was also designated CMO in addition to his other responsibilities . But a part-time CMO is not enough and a CMO should also have a term appointment to ensure continuity or the position may not make the leap to the next administration, Walker said Oct 16 at a hearing of the Senate Committee on Homeland Security and Governmental Affairs' Federal Financial Management, Government Information, Federal Services and International Security Subcommittee. DOD accounts for 15 of the 27 programs on GAO’s high-risk list, reflecting the department's critical need for better management and business transformation. “We should have zero tolerance for waste,” Walker said. Business transformation will take a long time, and DOD’s senior leadership has shown it is committed to addressing long-standing weaknesses, Walker said, adding. “DOD’S current approach is clearly superior to its prior approach; however, progress has been inconsistent and a number of challenges remain.” In addition to a full-time CMO, the department needs a single, integrated plan to guide its business transformation. The plan should go beyond systems, with key metrics and milestones and roles and responsibilities for success, he said. Sen. Tom Carper (D-Del.), subcommittee chairman, supports a full-time CMO, which is in a House version of the DOD authorization bill. The Senate provision assigns the CMO to the deputy Defense secretary, as it is now. The outlook for growing and unsustainable federal deficits and debt levels adds to the urgency for DOD to transform its operations, Walker said. “DOD cannot afford to continue on the course of reduced efficiencies, ineffective performance and inadequate accountability in connection with its business operations,” he said. Examples of some of its most serious problems are in financial management, contract management and weapons system acquisition. DOD continues to be challenged in its efforts to transform its financial management systems, which are non-integrated, and not capable of providing decision-makers with accurate and reliable information, Walker said. This affects the department’s ability to control costs, ensure basic accountability, and anticipate future costs and measure performance, he said. The challenge that DOD faces to transform its operations should not be underestimated, said Paul Brinkley, deputy undersecretary of Defense for business transformation. “We believe, though, that with our persistent focus on accelerating the pace of change the department will continue to make steady and significant progress,” Brinkley said. DOD is the largest and most complex organization in the world, and the largest entity ever to be audited end-to-end, said David Patterson, DOD comptroller and principal deputy undersecretary of Defense. By the end of fiscal 2009, DOD will be able to accomplish a clean audit opinion of department entities that account for 39 percent of its assets and 90 percent of its liabilities, Patterson said. Currently, seven DOD entities with 15 percent of the department's assets and 49 percent of its liabilities have clean audit opinions.