Hagel announces cuts and reorganization affecting DCMO and DoD CIO

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A cost-cutting reorganization announced Dec. 4 by Defense Secretary Chuck Hagel includes changes to the departmental chief information officer and the deputy chief management officer.

Hagel said the office of the secretary of defense will reduce headquarters spending by at least $1 billion and likely up to 20 percent of the operating budget, over the next five years--"a small percentage of the sequester-level cuts," he acknowledged.

In July, Hagel said each military and defense headquarters offices would undergo a 20 percent spending reduction over time, and early in his tenure he empaneled a cost-cutting and reorganization review committee dubbed the Strategic Choices and Management Review.

The cuts announced Wednesday, informed by the review's findings, "will be achieved through contractor reductions, although there will be reductions in civilian personnel," Hagel said.

As part of it, the Pentagon will ask for congressional authorization to transfer responsibility for defense business information technology systems oversight from the DCMO to the DoD CIO, while still keeping the undersecretary of defense for acquisition, technology and logistics responsible for IT acquisition.

The DCMO absorbed much of the Business Transformation Agency in 2011--an earlier DoD efficiency drive caused its disestablishment--inheriting business system oversight functions in the process. In September 2012, then-DCMO Elizabeth McGrath announced that an investment review board chaired by the DCMO would review all business systems spending worth more than $1 million over 5 years, subjecting virtually of the estimated $7.4 billion worth of DoD business systems to the IRB.

Military departments and defense agencies have a decidedly mixed record when it comes to business system implementation, with the Air Force going perhaps most egregiously off the rails in its Expeditionary Combat Support System, canceled after $1.03 billion in spending with little return for it.

Although the DCMO may lose its business system functions, the Office of the Director of Administration and Management would realign into it. "Since its inception, the DCMO has lacked the resources and the mandate to effectively fulfill its role as a DOD-wide manager," Hagel said; the office has no programmatic responsibility.

The Pentagon stood up the DCMO in fiscal 2008 following years of pressure to do so by the Government Accountability Office, although with a level of power far below what the GAO envisioned. The new DCMO "will focus on four activities: management, policy, and  analysis; administration; planning, performance, and integration; and compliance and open government," states a DoD fact sheet (.pdf).

Hagel's reorganization differs substantially from what the Senate Armed Services Committee proposed in its markup (S. 1197) of the fiscal 2014 national defense authorization act (currently stalled by procedural disagreements).

The committee proposed elevating the position of DCMO to the Senate-confirmed undersecretary level, and designating it as the departmental CIO. In its NDAA report, the committee argues that combining DCMO and CIO responsibilities into a single office would strengthen management and oversight of IT.

For more:
- download a Dec. 4 memo from Hagel announcing the cuts and reorganization (.pdf)
- download an accompanying fact sheet (.pdf)
- read a transcript of Hagel's press conference announcing the changes

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