Because future threats the nation may face are uncertain, and with many competing demands on its resources, the Department of Defense (DoD) has begun to transform its military capabilities. This transformation will involve not only the acquisition of new weapon systems, but also the ways in which the Armed Forces think, train, and fight. In 2003, DoD estimated that $263 billion would be allocated from fiscal years 2004 through 2009 for transformation efforts. In this report, GAO does the following: (1) describes DoD's strategy to transform joint military capabilities; (2) assesses the extent to which DoD has established clear leadership, accountability, and a mechanism to integrate transformation efforts; and (3) assesses the extent to which DoD's framework incorporates results-oriented management tools to guide transformation efforts. GAO makes recommendations designed to establish clear leadership, accountability, and a more results-oriented management framework to guide DoD's transformation of military capabilities. In oral comments, the Office of Force Transformation disagreed with these recommendations but did not address the weaknesses described in this report or provide convincing evidence to show the recommendations are not warranted. Therefore, GAO continues to believe the recommendations are appropriate.

Defense Transformation: Clear Leadership, Accountability, and Management Tools Are Needed to Enhance DOD's Efforts to Transform Military Capabilities

" While DOD maintains military forces with unparalleled capabilities, it continues to confront management weaknesses related to its business functions that support these forces. GAO designated DOD's approach to business transformation as high risk in 2005 because DOD had not taken steps to achieve business reform on a strategic, department-wide basis. This report (1) describes the roles and responsibilities established by DOD and the military departments for overseeing business transformation and the continuity of leadership in senior business transformation positions, (2) assesses the extent to which DOD has coordinated with the military departments to align strategic planning efforts for business transformation, and (3) evaluates the extent to which the DOD DCMO has used the Defense Business Council to effectively monitor department-wide performance. GAO reviewed documentation, including summaries from Defense Business Council meetings, and interviewed cognizant officials. "

The Department of Defense (DOD) considers the transformation1 of the U.S. military a strategic imperative to meet the security challenges of the new century. In October 1998, DOD established a joint concept development and experimentation program to provide the engine of change for this transformation. The U.S. Joint Forces Command, the executive agent of the program, carries out experiments-with support from the military services, the combatant commands, and other DOD organizations-to explore and analyze new joint operational and organizational concepts. The experiments can include studies and analyses, conferences, workshops, seminars, war games, and simulated or live field experiments. On the basis of these experiments, the Joint Forces Command recommends changes aimed at achieving significant improvements in joint capabilities. The Joint Requirements Oversight Council2 reviews the Command's recommendations, and the Chairman of the Joint Chiefs of Staff is responsible for approving them. The Council also oversees the implementation of approved recommendations. The cumulative changes are expected to contribute to the way U.S. military forces are transformed. In November 2001, DOD also created an Office of Force Transformation to foster innovation and experimentation and assist the Secretary of Defense to develop guidance and identify strategies and policies for transformation. Because of the central role DOD's joint experimentation program plays in military transformation, we reviewed related activities to determine whether changes are needed to improve the program's ability to focus on future joint operations, military transformation, and the rapid integration of results.

The Department of Defense (DOD) invests billions of dollars annually to modernize its business systems, which have been on GAO's high-risk list since 1995. DOD is in the process of implementing nine enterprise resource planning (ERP) efforts which perform business-related tasks such as general ledger accounting and supply chain management. These efforts are essential to transforming DOD's business operations. GAO was asked to (1) provide the status of the ERPs as of December 31, 2009; (2) determine whether selected ERPs followed schedule and cost best practices; and (3) determine if DOD has defined the performance measures to assess whether the ERPs will meet their intended business capabilities. To accomplish these objectives, GAO reviewed data on the status of each ERP from the program management officers and interviewed the DOD and military departments' chief management officers.