The U.S. Defense Department is a ponderous behemoth that many believe to be an unmanageable enterprise. And so, the Senate Armed Services Committee (SASC) in its Fiscal Year 2021 National Defense Authorization Bill has decided to do away with the Chief Management Officer (CMO) for failing to perform. In the SASC mark-up of the FY21 NDAA, the language unceremoniously announced “Termination of the Position of Chief Management Officer of the Department of Defense.”
Created in 2008, the Office of the CMO (OCMO) has been a problem-plagued organization that has never lived up to expectations. The original idea for the OCMO was to integrate and organize under one functional enterprise all the business systems in the Department of Defense (DoD). As an August 2017 report to Congress from the DoD explained: “The purpose of the CMO is to improve the quality and productivity of the business operations of the Department, thereby reducing the costs of those operations.”
The framers of the early OCMO believed that having organized business systems would result in a more efficiently managed DoD, and that would lead to more effective and efficient use of the DoD budget. There was significant power vested in the CMO position as the number three in authority in the DoD.
A Monopoly Selling to a Monopsony
There is a fundamental flaw in that thinking. The DoD is not a business. There is no profit-loss motivation for efficiency. There are no real market competition forces at work. The relationship between the Military Departments, Defense Agencies, and the DoD and industry providers of weapon systems, services, and consumables is one of a monopoly selling to a monopsony. Peter Levine, in an article for War on the Rocks, described the situation in this way: “the department is more like an economy than a business.”
The introduction of terms like Chief Management Officer, Chief Operating Officer, Chief “Anything” Officer has no cultural counterpart or antecedent in the Defense Department. The management of DoD is run by the defense secretary, deputy defense secretary, undersecretaries, and assistant secretaries with policy and functional responsibilities designed to ensure that warfighters on the field of combat are successful. To attempt to shoehorn these ideas borrowed from corporate-speak will be met generally with less than hoped-for results. Indeed, there are analogous aspects of DoD financial operations and operating a business, but, again, the DoD is not a business. So, it was predictable that these early attempts to apply business principles to the DoD would fail. And they did.
The Office of the Secretary of Defense (OSD) engaged the Defense Business Board (DBB) to do an assessment, and, In June 2020, the CMO’s organization and effectiveness was released. The SASC founded its legislative decision based on an early release of the DBB study back in April. In its 392-page in-depth review of the CMO, the DBB determined that of the six task areas that Congress requested the DBB to assess, all six were deemed ineffective as the task area description, and the accompanying comments below reflect:
- The extent to which the position has been effective in achieving the desired results, and in exercising its specified powers and authorities:The nearly unanimous response from interviews and document reviews was that the position has not been effective.
- The perspectives of the Under Secretaries of the military departments based on their experiences as the Chief Management Officers of their military departments:There was a unanimous response from interviewees that the CMO role has not been effective and provided little value-added.
- The extent to which the ingrained organizational culture of the Department of Defense poses fundamental structural challenges for the CMO position: The nearly unanimous response received was that the DOD culture and subcultures remain resistant to transformational business process changes.
- The observations of the Comptroller General of the United States on progress and challenges during the twelve years since the establishment of the CMO position in DoD:The consistent response among those interviewed was that the CMO has not been effective in most areas.
- An identification and comparison of best practices in the private sector and the public sector of a CMO-like position: Private and public sector best practices have not been effectively adopted within the DoD.
- An identification and assessment of differences in responsibilities and authorities of the CMO with the DoD Chief Operating Officer (COO) and the Deputy Secretary of Defense: There is much overlap and confusion between the DSD, the CMO, and other organizations and PAS [Presidentially Appointed, Senate Confirmed] officials with respect to responsibilities and authorities.”
There is very little fuzz on the DBB findings. The CMO is a failed organization. And as flawed as the DBB described the CMO, there was no way the organization would survive.
Management Failings
If you are looking for the bad guy in all this, there is enough culpability to go around. As the DBB report points out, the National Defense Strategy was adopted over two years ago. Still, the CMO does not have an approved charter – “a fundamental DoD document that provides leadership and authority.” Additionally, as the report continues, “for almost fifty percent of the time during this over 12-year period, the DCMO and then the CMO position has been either vacant or filled by a non-PAS individual in an ‘acting’ or ‘preforming the duties’ of status.” These are management failings that cut across the whole-of-the-Department, the administration, and Congress.
So, here we are. When a cabinet-level agency demonstrates that it is having a problem, you can depend on Congress to come to the rescue with a solution. It may not be a good one, since, after all, imposing the CMO on the Department of Defense originally was a congressional mandate. Nonetheless, the Senate provided a management elixir. The SASC mandated the establishment of a “Performance Improvement Officer” (PIO), who would take over most of the responsibilities of the CMO to ensure that the OSD works efficiently and effectively.
As the SASC report language states, the PIO, “would be authorized to communicate views on matters under the PIO’s purview directly to the Deputy Secretary, without obtaining the approval or concurrence of any other officer or employee of the Department.” Deputy Secretary of Defense picked up some of the CMO tasks and is back to being designated the Chief Operating Officer. The PIO is not the number three in authority, but a direct report to the Deputy Secretary of Defense and Congress left the defining of the “PIO’s purview” to the Defense Secretary. The Secretary of Defense is required to reveal how the allocation of the responsibilities of the defunct CMO will be made in a report to Congress 45 days before the CMO internment. There is a lesson here for DoD. If you don’t mind the store, someone will.
The views expressed are those of the author and not of any other affiliation.
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