Add ASD/C3I Valletta response to Hicks Report

30 August 1997
Source: Hardcopy from the Office of the Secretary of Defense,
Office of Assistant Secretary of Defense (Public Affairs) 1-703-697-5737.
Thanks to G. for prompt response.

## THE OFFICE OF THE SECRETARY OF DEFENSE

## CREATING A NEW ORGANIZATION FOR A NEW ERA

by

Michael B. Donley
James R. Locher
David J. Berteau
Barbara Spyridon Pope

Prepared for
The Secretary and Deputy Secretary of Defense
Contract Numbers: DASW 01-95-D-0060
SAIC Project Number: 01-0851-04-7918-000
SAIC Report Number: SAIC 97-1026

Hicks & Associates, Inc.
1710 Goodridge Drive
McLean, VA 22102

May 1997

CONTENTS

[For the full 140-page report.
Only Key Recommendations and Executive Summary here]

> Key Recommendations i

> Executive Summary ES - 1

> Chapter 1- Introduction 1

> Chapter 2 - Evolution and Composition of OSD 3

> Chapter 3 - OSD's Role 11

> Chapter 4 - Supervision of Defense Agencies / Field Activities 22

> Chapter 5 - The OSD - Joint Staff Relationship 40

> Chapter 6 - Under Secretaries of Defense 52

> Chapter 7 - Command, Control, Communications and Intelligence 62

> Chapter 8 - Under Secretary of Defense, Acquisition & Technology 72

> Chapter 9 - Under Secretary of Defense, Policy 79

> Chapter 10 - Leadership 90

> Chapter 11 - Leadership Team 97

> Chapter 12 - Change and Innovation 104

> Chapter 13 - Horizontal Processes 114

> Chapter 14 - High Level Integration 122

> Chapter 15 - Human Resource Management 131

> Chapter 16 - Vision 140

> __________________________

> Appendices

> A - DOD Organizational Acronyms A -1
> B - Section 901 FY96 DOD Authorization Act B - 1
> C - Section 903 FY97 DOD Authorization Act C -1
> D - Outside Advisory Group D - 1
> E - List of Interviews E - 1
> F - Bibliography F - 1

### Key Recommendations of the OSD Study

- Define OSD's role as focusing on top leadership and management tasks. (Six key management principles are recommended.) Divest OSD of program management and execution, and lower priority tasks, assigning them elsewhere in DOD. (Ten potential candidates for divestiture are provided as a point of departure for internal OSD discussion.)

- Rebaseline the composition of OSD to include staff and headquarters related functions now assigned elsewhere, eliminating the organizational category of Defense Support Activities. Don't decide an optimal size for OSD until outstanding issues of OSD's composition and its organizational role are resolved.

- Strengthen the immediate office of the Secretary and Deputy Secretary of Defense. Consider this office as a single entity, create a chief of staff and reestablish the position of counselor. Commit the roles and functions of key assistants to written form. Create a pool of mid career OSD personnel to provide additional support when necessary.

- Create an OSD leadership team. Establish goals and objectives for senior officials, emphasize USD leadership and management responsibilities and reward teaming. Develop and exploit the use of horizontal management processes, emphasize the role of key leaders as agents of change.

- Clarify the OSD - Joint Staff relationship. Begin dialogue with the Chairman, JCS to establish key principles, identify objectives for closer cooperation, and opportunities for greater efficiency. (Eight key principles and objectives are suggested.) Establish an OSD - Joint Staff working group to support this effort.

- Create an ASD for Intelligence as authorized in current law. Assign the ASD for C3 to the USD (A&T), but provide for direct reporting to the SECDEF for CIO related functions. Undertake a comprehensive review to determine how CIO functions will be implemented, and revalidate roles, responsibilities, goals and objectives for C4ISR activities across DOD.

- Realign Installations and Environment functions to USD (P&R), but retain Logistics within the USD (A&T). Ensure prospective nominees for A&T and P&R are prepared to effectively address issues related to DOD infrastructure.

- Realign and consolidate functions within the USD, Policy office under three Assistant Secretaries of Defense.

- Revitalize civilian personnel management in OSD, enhancing career development and educational opportunities. Do for civilian personnel in OSD what Goldwater-Nichols did for joint officers.

- Continue to review the organizational placement of OSD's subordinate activities. In the meantime, eliminate the organizational category of Field Activity and consolidate management headquarters, reducing the number of Defense Agencies below the current 24. (Potential consolidations are identified in the areas of Health and/or Personnel Support, Acquisition Support, and possibly Intelligence.)

Plan for approximately two to three years to implement these recommendations.

### Executive Summary

In his book, Leading Change, business expert John Kotter observed, "The typical twentieth-century organization has not operated well in a rapidly changing environment. Structure, systems, practices, and culture have often been more of a drag on change than a facilitator. If environment volatility continues to increase, as most people now predict, the standard organization of the twentieth century will likely become a dinosaur." Kotter's observation applies to the Office of the Secretary of Defense, a 1960's style organization which has changed little despite dramatic alteration of its environment.

In its 1995 report, Directions for Defense, the Commission on Roles and Missions of the Armed Forces recommended that DOD "conduct a broad-based review of OSD responsibilities." Subsequent congressional guidance in section 901 of the FY96 Defense Authorization Act directed the Secretary of Defense to "conduct a further review of the organizations and functions of OSD . . . and the personnel needed to carry out those functions." Without waiting for the results of such a study, the Congress prescribed in related provisions of law a 25-percent reduction in OSD manpower by 1999 from a 1995 baseline. The need to prepare a report to the Congress and develop plans for personnel reductions are the proximate causes for a review of OSD roles and functions.

The Deputy Secretary of Defense retained Hicks & Associates to study the roles and functions of the Office of the Secretary of Defense. Goals for the study included assessing institutional trends in OSD, identifying organizational problems and their causes, and projecting leadership requirements and their organizational implications. The Deputy Secretary established defining OSD's role as the study's overarching objective. Beyond this central task, he wanted the effort to focus on other top leadership issues. The study was expected to offer broad organizational alternatives, lay the groundwork for how and where OSD might evolve, provide strategic direction for programmed manpower reductions, and develop the information necessary for a Department of Defense (DOD) response to the congressional reporting requirement on this subject.

A four-member study team reviewed literature on the organization of OSD and related subjects and interviewed nearly one hundred current and former OSD, Joint Staff, and military department officials. Eight outside advisors with extensive national security and defense experience reviewed and supplemented the study team's work.

OSD's Role

For more than 40 years, OSD carried much of the burden for creating and guiding a unified military establishment. Debate and passage of the Goldwater-NIchols act altered the relationship between unified and service interests and gave OSD important allies. Yet the Secretary's staff emerged from this debate without a concept for its role in a reformed DOD. This void has continued through the dynamic changes of the post-Cold War period, permitting continued expansion of OSD's responsibilities with undesirable consequences. The lack of an authoritative definition for OSD's role, combined with the need for unified oversight and management, control of controversial initiatives, and the continuing sub-division of OSD's functional structure has led to a diffusion of OSD staff efforts. This diffusion of effort has weakened the ability of OSD to perform its top leadership and management tasks and effectively support the work of the Secretary and Deputy Secretary. OSD performs a range of responsibilities that extend far beyond top leadership and management tasks including line responsibility for Defense Agencies and Field Activities and, in some cases, program management and execution.

Responsibility for DOD's organizational design is shared between the Congress and the Executive Branch. Broad statutory definitions, interspersed with specific direction, have provided flexibility to successive Secretaries of Defense to organize their staff as they see fit, and OSD has thus benefited from numerous organizational changes designed to meet changing circumstances. At the same time, the underlying purpose of OSD has become less clear as the staff has evolved beyond direct support to the Secretary, policy, program review and oversight, and toward control over functional activities, program management, and oversight of common supplies and services. Today's OSD reflects 45 years of largely ad hoc or narrowly focused organizational decisions and infrequent attention to broad purposes or design. The basic lack of definition and guidance concerning OSD's broader role in the defense establishment is a source of uncertainty to the OSD staff itself and to other DOD components.

Three alternatives were considered. The first would define OSD's role as focusing exclusively on top leadership and management tasks, assigning program management and execution tasks and lower priority tasks elsewhere in DOD. The second alternative would define OSD's role to include all tasks now performed, but introduce initiatives to strengthen the performance of top leadership and management tasks. A third alternative would define OSD's role even more broadly than today, increasing personnel levels and consciously preparing for the further accumulation of cross-cutting, hands-on management tasks in OSD in the future.

Divesting OSD of hands-on program management and related tasks, and lower priority work, was judged most likely to enhance prospects for strengthening staff performance of top leadership and management tasks and improve support to the Secretary and Deputy Secretary. This concentration of activity would help OSD prepare for its future work environment, which is expected to be more turbulent and rapidly changing, and would assist in meeting programmed manpower reductions. The study team identified ten activities currently performed in OSD that could be assigned elsewhere as a starting point for internal OSD discussion of potential divestitures.

In essence, it was concluded that OSD's role is to lead, not to do. OSD's top leadership and management tasks include establishing direction, formulating policies, allocating resources, developing human resources, guiding force employment, maintaining outside relationships, and overseeing policy and program implementation.

- Define OSD's overarching role as establishing direction for DOD, focusing exclusively on top leadership and management tasks. Assign program management and execution tasks, and lower priority tasks, elsewhere in DOD.

- The broad management principles recommended include the following:

> > -- OSD's role is to lead, not to do.

> > -- OSD is a staff and advisory component, not an operating component.

> > -- Activities performing staff and advisory functions for OSD should be part of OSD.

> > -- Activities inside OSD performing other than staff, advisory, or coordinating functions for the Secretary should be assigned elsewhere in DOD.

> > -- Tasks and activities involving resource and program management should be assigned to operating components.

> > -- Assignment of resource and program management responsibilities within OSD should be regarded as a last and temporary resort.

Composition of OSD

Discussion of OSD's role, size and relationship to its subordinate elements depends in some measure on how OSD itself is defined. Deciding what is inside and outside of OSD was an initial challenge. Three areas of uncertainty were reviewed, including placement of the DOD Inspector General, Defense Support Activities, and Washington Headquarters Services. In each of these areas there is lack of clarity and/or agreement between DOD and Congress as to whether these staff and subordinate elements are a part of OSD. The resulting inconsistency in personnel data is an obstacle to effective dialogue between DOD and Congress on the future size of OSD.

Congressional concerns that DOD has in the past purposefully redefined certain activities as not part of OSD, thus making OSD appear smaller while increasing manpower in less visible organizational categories, are justified. At the same time, Congress has developed an artificial baseline for reductions in OSD which does not correspond to OSD's statutory composition and precedes decisions on OSD's basic role. There is a clear need for DOD and Congress to reach agreement on the composition of OSD.

- The Secretary of Defense should rebaseline the composition of OSD to include within OSD the headquarters element of the DOD Inspector General, those elements of the Washington Headquarters Services that support OSD, and the three remaining Defense Support Activities.
  This proposal would eliminate Defense Support Activities as a separate category of organizational activity in DOD.

- DOD and Congress should work together to reach agreement on the rebaselined composition of OSD, but should not decide an optimal manpower strength for OSD until its composition and role have been determined.

High Level Integration

The study team reviewed the organization of the immediate office of the Secretary and Deputy Secretary of Defense. This office includes the Deputy Secretary, the military assistants, the special assistants, the Executive Secretary of DOD, and other key personnel. This is the staff to whom the Secretary and Deputy turn to assist them in the management and administration of OSD and other DOD components. This office is underutilized as a management tool.

Due to the significant demands on the Secretary related to international security matters and its overflow effects on the Deputy Secretary, combined with insufficient integration of staff efforts below the Deputy, an extremely heavy burden for management and administration falls on the Deputy and his two immediate assistants. This 'outside-inside' division of labor between the Secretary and the Deputy is not new; accentuated over the past few years, however, it has led to internal perceptions of the front office as two separate staffs. This situation weakens the ability of the Secretary and Deputy's front office to operate effectively as a single unit.

Causes attributed to this problem include a weak confederation of front office staff responsibilities, a lack of empowerment of key personnel, a weaker secretariat function than found elsewhere in the national security community, and an excessive focus on near-term concerns at the expense of mid-to long term planning, goal setting, and oversight of implementation. The use of less experienced Presidential Management Interns to assist in special projects and overflow work of the front office is also considered a symptom of this problem.

The Secretary and Deputy Secretary should take steps to strengthen their immediate office, making it the most effective management tool possible to assist them in their duties. These steps should include:

- Recognition of the Secretary and Deputy Secretary's supporting staff as a single staff.

- Assign to a single individual responsibility for coordinating the activities of all front office personnel.

- Establish the position of "Chief of Staff, OSD" or "Director, OSD Staff" to assist the Secretary and Deputy Secretary in the administration of OSD; the development, tasking and coordination of requirements for meetings involving the Secretary and/or Deputy Secretary; coordination of defense-wide management processes; and ensuring appropriate coordination of effort among DOD components.
  This position need not be in statute and should not function nor be construed as an additional layer separating the Secretary from other DOD officials.

- Define the immediate office of the Secretary and Deputy Secretary and the roles and functions of its key personnel in writing, either in memorandum or DOD Instruction.

- Appoint a 'counselor' within the front office to assist the Secretary and Deputy Secretary in developing and monitoring a broad departmental agenda, and oversight of implementation for complex and longer term taskings.

- Establish a rotating pool of experienced, mid-level OSD personnel to assist the front office when necessary to accommodate excess workload or special projects.

- Supplement meetings and verbal communications with greater use of written tasking to strengthen the clarity of guidance and the oversight and implementation of assigned tasks.

Under Secretaries of Defense

The Deputy Secretary of Defense tasked the study team to review the structure of OSD's five major offices: the four under secretaries of defense (USDs) -- acquisition and technology, policy, personnel and readiness, and comptroller -- and the Assistant Secretary of Defense for Command, Control, Communications, and Intelligence (ASD(C3I)). These five offices total 90 percent of OSD manpower, exercise authority, direction, and control over nearly all Defense Agencies and Field Activities; and oversee or manage more than 20 percent of the DOD budget.

Setting aside ASD(C3I), the current four-USD structure is sound. It provides the Secretary and Deputy Secretary the advantage of working with a small group. Most important, the existing positions are organized around OSD's core functions: setting strategic and policy guidance, allocating resources, deciding major investment, and developing human resources. This structure provides the ingredients for adequate tension and debate among important areas such as strategy and resources, equipment and manpower, and current operations and future investment.

Despite the soundness of the USD structure, OSD has not realized the benefits of this arrangement. The mainstream of leadership activities does not include one office (personnel and readiness); goals and objectives for USDs are sometimes ill-defined and often poorly communicated to subordinate levels; major offices both inside USD offices and across OSD communicate and coordinate insufficiently; and necessary OSD-wide processes for infrastructure, and to some degree manpower, are absent. Unless corrected, these problems could contribute to an isolation of the Secretary and Deputy Secretary from information and ideas generated by subordinate levels of OSD. The existing structure did not cause these problems, and structural changes would not solve them. The Secretary of Defense has latitude to apply corrective measures without requesting statutory changes.

In examining the USD structure, the use of presidentially appointed positions -- both Senate-confirmed and otherwise -- was also reviewed. While there is a limited supply of Senate-confirmed appointees, they are not in all cases deployed as key management assets across OSD or within their respective offices. In addition, there was considerable debate concerning the need for 'principal deputy' positions across OSD, whether such positions represented an unnecessary management layer, and whether they should be statutory. The potential for realignment of functions among the USDs and ASD (C3I) and more effective coordination among these activities is addressed separately.

Concerning these matters we recommend the Secretary:

- Retain the four USD structure.

- The Secretary should more effectively utilize the USDs as OSD's leadership team or the core of that team, focus the USDs on their leadership and management responsibilities, and establish clear goals and objectives for each USD.

- The Secretary should equally emphasize leadership and management skills and subject matter expertise in evaluating candidates for vacant USD positions.

- The Secretary should review the responsibilities and workload of Senate-confirmed appointees to ensure their effective deployment across OSD and within each major office.

- The need for 'principal deputy' positions should be reviewed and rejustified. Where determined to be necessary, such positions could be filled by political appointees or career civilian personnel, but should not be established in statute.

- Working with Congress, the Secretary should realign narrowly focused statutory positions in OSD to positions or titles providing greater flexibility.

OSD - Joint Staff Relationship

The centralization of authority within OSD and the strengthening of Joint structures have perhaps been the two most important trends in defense organization since 1947. These two trends shared the common objective of improving DOD's unity of effort and reducing the relative independence of the Military Departments. There are now two key staff elements in DOD's higher headquarters. OSD and its subordinate elements are under pressure to become smaller, while Joint elements in some areas are pressured for growth.

The need to better define roles, functions, and relationships between OSD and the Joint Staff therefore is emerging as an urgent requirement for the Secretary of Defense and the Chairman, JCS. The study team asked how these two staffs could work more effectively together without compromising their respective roles, how management processes could be coordinated for greater efficiency, and how the potential for unnecessary duplication could be reduced.

Despite positive working relationships between senior civilian and military officials, the institutional relationship between OSD and the Joint Staff is not well defined. The governing directive is outdated, most officials were unable to define their relationships beyond personal terms, and significant uncertainties and concerns were expressed about each other's roles in resource allocation, operational and contingency planning, and requirements and acquisition. In sum, this ill-defined relationship is denying DOD the full benefits of synergy between its two most senior staffs.

Several causes were identified with this problem. First, the Joint Staff's role appears better defined after the Goldwater-Nichols Act, though it is still evolving; in contrast, OSD's role is less so. In addition, some remnants remain of previous Joint Staff patterns of behavior, such as the desire to work through military disagreements behind closed doors, which are less open to OSD; and some officials are clinging to outmoded concepts which place high walls between civilian and military work. The basic tensions embedded in civil-military relations are also present.

This review has only begun the further analysis necessary to compare the organizational capabilities of each staff, their respective management processes, and subordinate elements. Such analysis is needed to inform future decisions on potential areas of duplication, the staffs' respective personnel requirements, opportunities for closer coordination and objectives for organizational development. Given the sequential attention to Joint structures in the mid-1980s, and now closer attention to OSD in the late 1990s, a more holistic and coordinated development of DOD's senior civilian and military staff capabilities in the future would be a significant breakthrough.

Defining the desired OSD - Joint Staff relationship can only be initiated through dialogue among the Secretary and Deputy Secretary, and the Chairman and Vice Chairman, JCS. The potential dialogue begins not on the basis of a major problem to be solved, but rather the need to clarify the staffs' relationships in the post-Goldwater-Nichols era, with a new sense of OSD's role, and the desire to promote greater coordination of effort and maximum efficiency in DOD's headquarters.

- DOD's top four civilian and military leaders should begin a dialogue to establish key principles governing the OSD - Joint Staff relationship, identify objectives for closer cooperation, and opportunities for greater efficiency.

- Eight potential principles for the relationship were identified, including the following examples:

> - Both staffs work for the Secretary of Defense: OSD is the Secretary's civilian staff, while the CJCS, JCS, and Joint Staff constitute the Secretary's military staff.
> - Related management processes should be mutually reinforcing and, where possible, integrated into a single headquarters process.
> - Activities subordinate to each staff should be mutually supporting and, where possible, consolidated.

- The Secretary and the Chairman should create an OSD - Joint Staff working group to support their effort, develop detailed recommendations, and update necessary directives.

Command, Control, Communications and Intelligence

Consensus judges the performance of ASD(C3I) to fall short of OSD's needs. The failure of this structure to adequately support the Secretary and Deputy Secretary's work on interagency intelligence matters, especially relations with the Director of Central Intelligence, was viewed as a major deficiency. The different treatment accorded to intelligence activities compared with other defense programs, and the apparent lack of agreement on the scope of C3I responsibilities as DOD's Chief Information Officer were also areas for concern.

A strong case can be made for retaining C3 and I in a single organization. However, OSD currently lacks a vision of where to put policy and programmatic emphasis within C3I's broad scope of responsibilities. This is especially so with respect to C4ISR -related resource requirements and emerging concepts for the CIO function. Despite considerable potential, little agreement exists on future directions for C3I.

In contrast, the Secretary's immediate needs with respect to intelligence appear better defined. Current arrangements unnecessarily place responsibility for integrating the activities of DOD's intelligence-related agencies directly on the Secretary, while limiting the ability of subordinate officials to effectively assist. The Secretary and Deputy Secretary should assert their requirement for a full-time official of sufficient stature to effectively coordinate and oversee the intelligence affairs of DOD, capable of speaking for the Secretary and representing an integrated DOD perspective in interagency deliberations.

The objective should be to improve oversight and support to the Secretary of Defense without compromising operational effectiveness or responsiveness to the DCI or other officials. We doubt this requirement can be accomplished at the deputy assistant secretary level, or through a special assistant arrangement. Accordingly, the study team recommends the following actions.

- Establish an ASD for Intelligence and retain an ASD for C3.

- Initiate a comprehensive review of unresolved issues, particularly relating to the definition, assignment, and performance of the chief information officer function and intelligence policy and programmatic tasks.

- In the interim, have the ASD C3 report directly to the USD A&T, except in his capacity as Chief Information Officer, for which the assistant secretary would report directly to the Secretary of Defense.

- Subordinate all intelligence-related Defense Agencies and activities, including NSA and NRO, to the senior OSD intelligence official.

- Continue to strengthen PA&E review of intelligence programs.

USD (A&T)

The excessive span of control under the USD (A&T) was identified as a significant problem during examination of the four-USD structure, confirming the results of a recent RAND study of this office. Appropriate responses to this problem would include a reassessment of A&T's core responsibilities, internal realignment or consolidation of similar functions, and transfer of non-core responsibilities to other OSD offices.

Similar activities which could be internally realigned or consolidated include the DUS for Advanced Technology and DDR&E, offices for acquisition policy and acquisition reform. Consolidation of developmental test and operational test organization should also be considered but would require congressional approval. In addition to identifying opportunities for consolidation within A&T, the study team focused on the potential realignment of the logistics, installations, and environment functions to other OSD offices. These three areas are now assigned to the USD (A&T), who has historically given them little attention. These functions were considered for possible realignment because they are most removed from A&T's core functions of recommending priorities for DOD investment, technology development, acquisition policy, and program oversight.

The installations and environment functions are distant from USD(A&T)'s core responsibilities and appear more closely aligned with the readiness and quality of life responsibilities assigned to USD (Personnel and Readiness). We found neither strong 'process' or strong 'relationship' arguments for retaining installations and environment functions in USD(A&T).

Although good arguments can be made for transfer to USD(P&R) of the logistics function as well, the importance of logistics to weapon systems management supports continued assignment to USD(A&T). A second argument for maintaining the status quo centers on the substantial management challenge for USD(P&R) that transfer of logistics and the Defense Logistics Agency would create. Analysis of various options revealed it unlikely that responsibilities for oversight of infrastructure and support activities could be sensibly consolidated under a single OSD official below the Deputy Secretary. This finding increases the importance of a cross-cutting management process for coordination and oversight of matters related to infrastructure and support.

- Reassess the core responsibilities of A&T.

- Realign the DUSD for Advanced Technology under the DDR&E and consolidate acquisition policy and acquisition reform in a single office.

- Transfer oversight responsibility for Installations and Environment from A&T to P&R.

- Retain oversight for Logistics in A&T.

- Create horizontal processes involving both USD(A&T) and USD(P&R), such as infrastructure management and material life cycle management, to complement these organizational placements.

- Ensure that prospective USDs for A&T and P&R are qualified and committed to active leadership roles in logistics, installations, environment, and other infrastructure areas.

USD (Policy)

The office of the USD(P) is one of OSD's largest elements with approximately 500 personnel. A review of this office revealed four organizational issues. The alignment of responsibilities among USD(P)'s Assistant Secretaries was of particular interest because USD(P) has four of OSD's ten ASDs, one of which is vacant. Other issues include the diffusion of responsibilities for low intensity conflict (LIC), the heavy workload of the ASD for International Security Affairs (ISA), and a lack of clarity in the requirements function assigned to the ASD for Strategy and Requirements (S&R).

A consensus judges that USD(P)'s workload has grown in recent years in response to the dramatic changes in the post-Cold War security environment. However, analysis revealed that USD(P) does not need four ASDs to perform its work. The loss of one ASD position would not shortchange USD(P)'s representational capacity, as five other senior officials in that office would be available for such duties. After considering the potential merger of S&R and ISP into a single organization, it was determined that they should remain separate activities. Assignment of S&R responsibilities to the Principal Deputy USD(P) would more closely align strategy making with USD(P) responsibilities and make better use of the Principal Deputy position.

It was also concluded that coordination of LIC activities would be facilitated by realignment of peacekeeping and humanitarian affairs from S&R to the ASD SOLIC. These two activities are closely connected to SOLIC's special operations and other LIC responsibilities; and the proposed arrangement would also be more consistent with congressional intent. Consideration was also given to the potential transfer of regional responsibilities for Inter-American and African affairs from ISA to SOLIC; however this was rejected in favor of a more balanced workload between these two offices.

Realignment of ISA's two subordinate activities (the Defense Security Assistance Agency and Defense Prisoner Of War / Missing in Action Office) to another office is suggested, consistent with recommendations elsewhere for the consolidation of Defense Agencies and Field Activities. Review of the requirements function now assigned to S&R revealed that this activity is poorly defined and that several OSD and joint offices have contributions to make in this area. Recommendations concerning USD(P) can thus be summarized as follows:

- Reduce the number of Assistant Secretaries of Defense in USD(P) from four to three.

- Dual-hat the PDUSD(P) as the head of the S&R office.

- Transfer peacekeeping and humanitarian assistance from S&R to SOLIC.

- Transfer oversight of DSAA and DPMO from ISA to elsewhere, consistent with other recommended changes in Defense Agencies and Field Activities.

- Create a horizontal process team for requirements identification.

Human Resource Management

Development of future leaders is one of OSD's most important leadership tasks. The lack of adequate attention to developing human resources in OSD was identified as a major concern among many senior managers. In view of continued personnel reductions, tight budgets, limited promotion opportunities and increasing demands for senior staff with multidisciplinary skills and experience, there is a need to look proactively at managing OSD's human resources.

Several causes are associated with this problem. The increased caliber of military personnel assigned to the Joint Staff and to OSD has created at least the perception that there has been a reduction in the quality of career civil servants. In addition, an increasing number of OSD positions have been filled with political appointees, resulting in fewer opportunities for senior career personnel. Post employment restrictions have discouraged those who in the past were willing to join DOD for a limited period of time and return to the private sector. Past personnel policies and limited resources have also constrained billets available for Presidential Management Interns and discouraged opportunities for mid-career education and rotational assignments.

This problem was previously identified by the Commission on Roles and Missions, and DOD has already undertaken a number of initiatives such as the Defense Leadership and Management Program (DLAMP) and APEX program for the Senior Executive Service to strengthen civilian personnel management. Additional efforts are recommended to highlight the importance senior OSD officials should be placing on this leadership responsibility.

- Have the Secretary of Defense give high priority to OSD human resource management.

- Prepare a comprehensive report analyzing the current status of OSD civilian personnel career development programs and initiatives.

- Create a horizontal process team to develop a human resource strategic plan for OSD.

- Require OSD leaders to attend a one-day program of instruction in human resource management.

Supervision of Defense Agencies and Field Activities

The drive for greater efficiencies through creation of DOD-wide support activities is another major factor shaping the role of OSD. The SECDEF has long been encouraged in statute to eliminate unnecessary duplication and seek more efficient and economical administration, and creation of single agencies to perform defense-wide functions has been a common approach. Yet, it has not always been clear where such agencies fit in the broader scheme of DOD organization. Prior to 1977 most reported directly to the SECDEF, and after 25 years the number of Defense Agencies and Field Activities became too unwieldy for effective oversight. Through the late 1970s and mid-1980s, the SECDEF and Congress collaborated on steps to ensure that agencies are clearly assigned either to staff principals in OSD or the CJCS. Today, all except NSA are assigned to OSD. (NSA remains assigned to SECDEF through the exercise of a statutory exemption.)

Responsibility for these agencies and activities, especially those created through consolidations from Military Departments, has indirectly made OSD a provider of goods and services to other components. Under Secretaries and Assistant Secretaries of Defense today are more than advisors, they are now leaders and managers in their own right - not only of their immediate staff organizations but of multiple Defense Agencies and Field Activities over which they exercise the Secretary's authority, direction, and control. We believe the trend of OSD evolution toward the accumulation of management tasks and responsibility for Defense Agencies and Field Activities, and the resulting complexity of interrelationships among OSD and its subordinate elements, is a source of misunderstanding and confusion within DOD, and between DOD and Congress.

In assessing the future role of OSD, and recognizing the possibility for further consolidation of support activities, the study team asked whether OSD should continue evolving toward this role as manager of DOD support functions. Is this a desired role for OSD? If not, what are the alternatives for assigning some Defense Agencies and Field Activities elsewhere? If there are no better alternatives to assigning these activities to the Secretary's staff, how could OSD's supervisory role be performed more effectively or efficiently? Answers to these questions will help determine broad manpower requirements for the OSD staff and those elements that currently support them.

Assignment of DA and FA oversight responsibility to OSD has yielded mixed results. Some senior staff were unclear of the nature of their oversight responsibilities; some were fully active in oversight, some not. It was not clear that OSD staff principals had in all cases received or established specific management objectives for their respective agencies and activities. At the same time, a tendency among OSD staff principals to approach agency ownership from an advocacy point of view was also reported in their defense of agency manpower and budgets.

These issues merged into three problem areas, including lack of an overarching plan for OSD oversight of support functions, the reinforcement of OSD's functional orientation, and the combination of passive supervision and strong advocacy. The causes associated with these problems include the low priority of DA and FA supervisory duty for some officials and higher priority placed on other OSD staff duties, lack of supervisory experience over large complex activities, and 'ownership behavior' -- the tendency to protect and promote the interests of subordinate activities.

While there are problems with OSD oversight of Defense Agencies and Field Activities, their broad diversity makes discussion of alternative approaches to their supervision highly complex. The study team framed this discussion by grouping the 24 DAs and FAs into seven categories and assessing whether they might be better managed within DOD's Joint structure and/or the Military Departments. This shed light on the advantages of current arrangements and the disadvantages of alternatives involving the wholesale transfer of DA and FA oversight responsibility to other components. It also highlighted agencies and activities closely tied to the OSD staff and those performing related functions that could be candidates for consolidation.

This methodology was useful but needs further development. In the end, the study team did not reach consensus on the appropriate assignment of responsibility for supervision of all Defense Agencies and Field Activities. However, a series of actions are recommended that would streamline and improve DOD's management of central support functions now, and enlighten future decisions on where authority, direction, and control of such functions should eventually reside.

- The Secretary of Defense should further strengthen OSD's oversight process to incorporate annual SECDEF guidance for each agency and annual review. This process should utilize the 'board of directors' concept where appropriate and ensure service and Joint Staff participation.

- The Secretary should identify DAs and FAs closely aligned with OSD staff functions and set them aside for retention as subordinate activities of OSD.

- The Secretary should identify agencies and activities least related to DOD missions and functions as candidates for future privatization. Candidates could include DeCA and FA.

- The Secretary should substantially reduce the number of DAs and FAs, for which we recommend the following approach:

> > -- Eliminate the separate organizational category of Field Activity. Smaller activities should be consolidated and larger Field Activities should be redesignated as Defense Agencies.

> > -- Consolidate the management headquarters of related agencies where possible to form functionally integrated support agencies. Candidates could include:

> > > -- A Defense Health Agency, consolidating supervision of DPMS, OCHAMPUS, USUHS, and other medical program management divested from the OSD staff;

> > > -- A Defense Acquisition Support Agency, consolidating DLA, ARPA, BMDO, DARO and/or other centrally managed acquisition programs not assigned to the military departments;

> > > -- Realignment of all defense-wide intelligence activities under the oversight of an ASD for Intelligence is recommended elsewhere. Consolidation of such activities in a single DOD-level agency should also be considered.

Leadership

John Kotter asserts, "Most U.S. corporations today are overmanaged and underled. They need to develop their capacity to exercise leadership." Both Kotter's problem description and solution apply to OSD, which has focused on management and unattended to leadership tasks. The stable Cold War era, which posed few leadership challenges, promoted OSD's management orientation. Today's complex, rapidly changing security environment places a premium on leadership skills and exposes the shortcomings of OSD's continued emphasis on management.

The study team judges five causes to have contributed to OSD's inattention to leadership tasks. Foremost, OSD's culture values management activities and does not identify with distinctly different leadership tasks. Second, in selecting OSD officials, the President, Secretary of Defense, and others infrequently use leadership skills as a criterion. OSD has also not emphasized the development of leaders. OSD officials have permitted excessive workloads to squeeze out attention to leadership tasks. Last, top leaders have not set the example by emphasizing leadership or establishing an agenda of leadership tasks for subordinates.

Creating an OSD culture that values leadership and encourages its development would require a transformation and involve a significant commitment of time, energy, and influence by the Secretary of Defense and senior OSD officials. In a campaign to create this culture, the study team recommends that the Secretary --

- Set the leadership example.

- Establish a leadership agenda for OSD officials and evaluate performance of specified tasks.

- Revise DOD directives for senior OSD positions to define leadership responsibilities.

- Create a Capstone-type leadership course for new senior OSD officials.

- Give priority to developing OSD leaders.

- Create career trajectories other than advancement into leadership and management positions.

The volume of information, pace of activity, and demands on time and attention overwhelm defense leaders, especially the Secretary and Deputy Secretary. Despite this situation, OSD still concentrates responsibility in the top two executives. Suited to the Cold War era, this old model will not meet OSD's future needs. The Secretary and Deputy Secretary need a leadership team. The study team recommends that the Secretary --

- Create an OSD leadership team which would work on broad issues requiring high-level, crossfunctional expertise; determine membership based upon skill, not position.

- Identify statutory requirements and current practices that overemphasize the role of the Secretary and Deputy Secretary and determine opportunities for greater delegation.

Process

In a 1980 study of OSD, William K. Brehm observed, "Management activities are also strongly vertical and compartmentalized, with little horizontal integration and teamwork." Seventeen years later, this situation remains the same. But the work of OSD has changed significantly. Today's more complex and interconnected issues require the expertise of many functional offices, effective sharing of information, and increased organizational flexibility. Despite these needs, the tendency remains to break an issue into small parts that vertical organizations can address. This approach has increasingly proven ineffective. Because none of the vertical organizations understand or is responsible for the entire issue, each suboptimizes based upon its functional perspective.

Trying to piece together the work of individual offices falls to working groups, task forces, and individual coordinators. Different information and perspectives, misinterpretations, and strong rivalries complicate the work of these mechanisms. Functional office representatives focus more on defending parochial interests and perspectives than achieving common objectives. The barriers between offices produce enormous friction. Armies of people and vast amounts of time are employed in trying to create a coherent whole out of the many parts. OSD needs to create horizontal process teams to address major defense issues. As first steps toward this end, the study team recommends that the Secretary of Defense --

- Emphasize and reward cooperative approaches among OSD offices.

- Identify formal and informal DOD-wide processes including roles and products of OSD offices.

- Create two or three horizontal process teams to address selected major issue areas.

Change and Innovation

The 1994 Net Assessment Summer Study: Sustaining the U.S. Military Position in a Time of Exceptional Change finds the convergence of four trends -- coming of the information age, commercialization of military technology, post-Cold War transition, and sharp drop in defense budgets -- are "producing what seems likely to be a prolonged period of exceptional change." This development troubles OSD because, like many large institutions, it has difficulty in anticipating and adapting to change. Its culture, structure, and personnel system contribute to a change-resisting orientation. In today's environment, Peter F. Drucker argues, "every organization has to build the management of change into its very structure." Michael Hammer presents a similar view: "The secret of success is not predicting the future; it is creating an organization that will thrive in a future that cannot be predicted." To institutionalize the management of change in OSD, the study team recommends that the Secretary of Defense --

- Emphasize his role and that of other senior OSD officials in leading change and promoting innovation.

- Create a renewal process team which would identify the need for change by scanning the horizon, develop and recommend adjustments to current practices, and help to implement change.

- Use human resource management to encourage innovative thinkers.

- Develop and use output-oriented categories for the Future Years Defense Plan.

These recommendations are elements of a larger vision for the future evolution of OSD. This vision has OSD more focused on its top leadership tasks, setting and communicating departmental goals and objectives. The future OSD would also be more outwardly oriented, attending to its external tasks and divested of hands-on program and resource management that can be performed by others. This vision would strengthen the headquarters element of DOD by making the Secretary's immediate office a more effective management tool and improving coordination and efficiency in the OSD - Joint Staff relationship. OSD would retain its largely functional structure, but greater emphasis would be placed on cross-office communication and the use of horizontal, multi-disciplinary management processes. OSD would recapture the ability to develop and sustain its future leaders. In addition, movement toward more efficient management and oversight of central support activities, though in need of further development, would begin.

Use of suggested management principles for OSD would provide strategic direction for programmed manpower reductions. Elimination or realignment of activities masking the true size of OSD could result in countervailing staff increases, though the overall benefits are clear. Eliminating two organizational categories and consolidating related functions would reduce the number of management headquarters in the current OSD hierarchy; and agreement with Congress on the composition of OSD would eliminate a source of both irritation and confusion.

This constitutes a robust agenda for action by the Secretary and Deputy Secretary of Defense. With varying timetables and levels of activity in several areas, a sustained commitment of two to three years should be anticipated for implementation. More detailed plans for implementation can be developed subject to further direction.

Hicks and Associates, Inc.

Dr. Donald Hicks, President, Hicks and Associates Inc., former Under Secretary of Defense for Research and Engineering

E-mail: bettyhollander@cpqm.saic.com

[End]

Digitization and hypertext by NYA/Urban Deadline

15 September 1997, Defense Daily:

C3I CHIEF WANTS TO KEEP INTELLIGENCE FUNCTION

By Frank Wolfe

Anthony Valletta, the acting Assistant Secretary of Defense (ASD) for Command, Control, Communications and Intelligence (C3I), said taking the intelligence function away from his office would hinder the intelligence community's goal of becoming fully interoperable with the services.

"We're not there 100 percent yet, but we're on the road further than we've ever been before to get that seamless, integrated, interoperable architecture, " Valletta told sister publication C4I News in a recent interview. "I would really hate to see us go backwards."

Intelligence agencies, such as the National Security Agency and the National Reconnaissance Office, routinely brief the C3I chief, Valletta said. The intelligence agencies in the last 18 months have announced their " acceptance and adoption" of the Joint Technical Architecture and are working to make their equipment interoperable with the services, he said. Valletta said he constantly monitors that effort.

"Any break up of that kind of an oversight capability from an organizational perspective will take us back 10 years and will probably cause stovepiping to promulgate again which then runs into problems of data sharing, being able to pass information back and forth, which eventually dictates things that could put our warfighters in harm's way," Valletta said. "And I don't want to see that happen."

A study last month by Hicks and Associates said "inadequate" intelligence support is provided to top Pentagon leaders and recommended creating a separate secretariat to focus solely on informing the civilian leadership of the latest intelligence. Last year, the Brown Commission on the Roles and Capabilities of the Intelligence Community, headed by former Defense Secretary Harold Brown, recommended the same thing.

Valletta disputed those proposals in the recent interview with C4I News.

"There are some people (in the Pentagon) who probably want to see intelligence go back to a separate reporting chain," he said. " They're going to have to prove to me what's broken from an architecture perspective. Now if there are issues involving policy and how intelligence policy is set, and could that be done better, I'm sure there are improvements that could be made there. But I worry from the fundamental issue of supporting the warfighter."

The C3I secretariat, created by the FY `84 Defense Authorization Act, was reorganized in 1990 to make the ASD (C3I) directly responsible to the secretary of defense. Previously, the C3I chief reported to the undersecretary for acquisition and technology on C3 matters and to the secretary on intelligence matters.