Although DOD has made progress toward establishing a management framework for overall business transformation, the framework currently focuses on business systems modernization and does not fully address broader business transformation efforts. In 2005, DOD set up the Defense Business Systems Management Committee to review and approve the business enterprise architecture a transformation blueprint and new business systems modernization investments. It also established the Business Transformation Agency, which currently reports to the Vice Chair of the Defense Business Systems Management Committee, to coordinate and lead business transformation across the department. Despite these steps, DOD has not clearly defined or institutionalized interrelationships, roles and responsibilities, or accountability for establishing a management framework for overall business transformation. For example, differences of opinion exist within DOD about the roles of various senior leadership committees. Until DOD's business transformation management framework is institutionalized and encompasses broad responsibilities for all aspects of business transformation, it will be challenging for DOD to integrate related initiatives into a sustainable, enterprise-wide approach to successfully resolve weaknesses in business operations that GAO has shown are at high risk of waste, fraud, and abuse.

In 2005, GAO added the Department of Defense's (DOD) approach to business transformation to its high-risk list because (1) DOD's improvement efforts were fragmented, (2) DOD lacked an integrated and enterprisewide business transformation plan, and (3) DOD had not designated a senior official at the right level with the right authority to be responsible for overall business transformation efforts. This report assesses (1) the progress DOD has made in setting up a management framework for overall business transformation efforts and (2) the challenges DOD faces in maintaining and ensuring the success of those efforts. GAO conducted this work under the Comptroller General's authority to conduct evaluations under his own initiative. In conducting its work, GAO compared DOD's actions to key practices of successful transformations. Although DOD has made progress toward establishing a management framework for overall business transformation, the framework currently focuses on business systems modernization and does not fully address broader business transformation efforts. In 2005, DOD set up the Defense Business Systems Management Committee to review and approve the business enterprise architecture-a transformation blueprint-and new business systems modernization investments. It also established the Business Transformation Agency, which currently reports to the Vice Chair of the Defense Business Systems Management Committee, to coordinate and lead business transformation across the department. Despite these steps, DOD has not clearly defined or institutionalized interrelationships, roles and responsibilities, or accountability for establishing a management framework for overall business transformation. For example, differences of opinion exist within DOD about the roles of various senior leadership committees. Until DOD's business transformation management framework is institutionalized and encompasses broad responsibilities for all aspects of business transformation, it will be challenging for DOD to integrate related initiatives into a sustainable, enterprisewide approach to successfully resolve weaknesses in business operations that GAO has shown are at high risk of waste, fraud, and abuse. DOD also must overcome two critical challenges, among several others, if it is to maintain and ensure success. Specifically, DOD does not have (1) a comprehensive, integrated, and enterprisewide plan or set of linked plans, supported by a planning process that sets a strategic direction for overall business transformation efforts, prioritizes initiatives and resources, and monitors progress, and (2) a full-time leadership position at the right level dedicated solely to the planning, integration, and execution of overall business transformation efforts. A broad-based consensus exists among GAO and others, including the Institute for Defense Analyses and the Defense Business Board, that the status quo is unacceptable and that DOD needs a CMO to provide leadership over business transformation efforts. In a May 2007 letter to Congress, however, DOD stated its view that a separate position is not needed as the Deputy Secretary of Defense can fulfill the CMO role. Although the Deputy Secretary may be at the right level with appropriate authority to transform business operations, the demands placed on this position make it difficult for the Deputy Secretary to focus solely on business transformation-nor does the position have the necessary term of appointment to sustain progress across administrations. Further, DOD plans to leave the assignment of the CMO role to the discretion of the Secretary of Defense. In GAO's view, codifying the CMO position in statute as a separate, full-time position at the right level with an extended term is necessary to provide sustained leadership, further DOD's progress, and address challenges the department continues to face in its business transformation efforts.

A myth from the colonial period was that Americans could defend themselves by keeping a rifle in the closet and when needed, grab it, and march off to battle in times of crisis. Unfortunately, providing national defense is more complicated that that; indeed it was more complicated even during the Revolutionary war. General George Washington’s struggles to form a standing army supported by workable logistics and supply processes and to get funding for both from the Revolutionary Congress are well documented. Financing national defense requires planning and resourcing in advance. Reacting at the instant of crisis is too late. Building an educated, highly trained and capable Armed Forces and the acquisition of defense weapons and weapons systems has long lead times and involves making decisions the consequences of which are likely to last for decades. These decisions include how to recruit and retain military and civilian personnel as well as designing, buying and fielding a vast array of ground weapons, ships, aircraft and other weaponry. A decision to buy a major defense weapons system for example sets in motion a chain of other decisions that will affect the U.S., its allies and enemies around the world. Implementation of such decisions is financed through the U.S. federal government and Department of Defense budget processes in a planned yet highly and pluralistic and disaggregated system for determining how to advocate, acquire and allocate scarce resources in a manner that culminates in congressional and presidential approval. In this book we examine the concepts and practices of defense financing, provide a detailed description and analysis of resource policy decision making, financial management and budget execution processes, and analyze the most significant features of the national defense and U.S. federal government resource decision and management system. The book assesses the numerous factors, including those that characterize the complex budget review and appropriation decision making dynamics of Congress, that make U.S. defense finance and budgeting different from any other system in the world. In addition, in a concluding chapter the book compares U.S. defense policy and budgeting to other nations in different regions of the globe, drawing conclusions about the effects of U.S. defense policy and defense financing abroad in regions including Europe, Russia, the Middle-East and Asia.