Summary: The Pentagon, which is attempting to reform its business processes by using "best practices" from the private sector, must further streamline operations and eliminate duplication of effort if it is to realize the cost savings that it is counting on to pay for weapon systems modernization. The Defense Department (DOD) is proposing to reengineer its business processes, consolidate and reorganize headquarters elements and defense agencies, increase the use of the Office of Management and Budget A-76 process to compete its commercial activities, and conduct two more rounds of base closures. Members of Congress have raised concerns, however, about the military's record in achieving infrastructure savings and the potential impact on readiness accounts if current reform initiatives falter. This testimony discusses the (1) risks associated with reducing budgets before savings are achieved, (2) challenges associated with implementing DOD's business process reengineering efforts, (3) opportunities to capitalize on consolidation and regionalization opportunities, and (4) underlying management problems that need to be corrected before implementing these reforms.
