GAO: DOD work force cuts saving little

The Defense Department is well on its way to accomplishing a 25 percent reduction in its acquisition work force by fiscal 2000, but expected savings from the cuts may prove to be elusive, according to a recent report from the General Accounting Office.

DOD slashed almost 60,000 acquisition jobs from the payroll during fiscal 1996 and 1997, which accounted for nearly two-thirds of the total number of jobs the department must cut to meet its objective of 95,153, according to GAO. Reductions in the acquisition work force are moving faster than reductions for DOD as a whole, GAO concluded.

The reduction in the acquisition work force is in response to congressional mandates that call for the streamlining and consolidation of all DOD acquisition organizations.

For the past three years Congress has included language in the National Defense Authorization acts calling on DOD to cut the size of its acquisition work force by a total of 30,000 in 1996 and 1997 combined and by another 25,000 in 1998. In June, Defense Secretary William Cohen notified Congress that fiscal 1998 reductions would amount to 20,096, according to GAO.

In addition, DOD has undertaken major initiatives, such as online purchasing, outsourcing and paperless contracting, that are designed to make the acquisition process more efficient and less dependent on a large work force.

However, GAO reported that DOD may not save as much money from the cuts as estimated.

"DOD accounting systems are unable to directly track work force reductions in acquisition organizations" and cannot correlate those reductions to individual budget accounts and expected savings, according to GAO. In addition, savings from personnel reductions may be offset by early buyouts and undocumented costs such as overtime and work force inefficiencies that are caused by inexperienced workers.

DOD officials said they concur with the report and that they are in the process of migrating their current accounting system to an "activity-based" system whereby they can track savings from individual job reductions. However, the officials said it will be a number of years before the new system is in place.

According to Bob Dornan, senior vice president of Federal Sources Inc., more and more of DOD's contracting work is being done out of what he called the "cost reimbursement shops," such as the General Services Administration. However, "[DOD is] focusing like a laser beam on satisfying the customer at the lowest possible cost" to keep its doors open, he said.

According to the report, the Congressional Budget Office estimated the average salary for a DOD acquisition worker to be $53,000 per year. Using this average, personnel reductions undertaken so far should provide DOD with potential savings of $3.2 billion, according to GAO.

However, "you have to ask yourself what is meant by acquisition work force and what is the net impact on the mission" when these reductions are made, Dornan said. "There may be no way to correlate that."

In addition, Dornan said there is an oversupply of contract vehicles available to government agencies, and increased consolidations and streamlining efforts may be the natural response to a decreasing acquisition work force.

DOD's Acquisition Workforce Identification Working Group, which is studying ways to come up with a standard definition of acquisition jobs across the department, is for the first time trying to link acquisition functions to the budget process, according to GAO. By doing so, the group hopes to provide DOD with the ability to track more accurately the impact of work force reductions and better gauge expected savings.

According to the report, "Tying the acquisition work force to the budget process, if successful, could increase the quality and timeliness of information critical to decision-makers."

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