Congress weighs closing up No. 3 office at the Pentagon

WASHINGTON — Just three years after Congress created a new civilian position focused on Defense Department reforms and named it the No. 3 official in the Pentagon, key lawmakers are leaning toward eliminating the office.

Congressional documents accompanying the recently signed 2020 National Defense Authorization Act require a series of studies from the Department of Defense on whether the chief management officer position has been successful, with the stated goal to “disestablish the Chief Management Officer position altogether.”

It’s a hard turn from the 2016 NDAA, which elevated the longstanding deputy chief management officer position to a full CMO role, with expanded powers and authorities. And the new language emerged just days before Lisa Hershman, a former CEO who had been serving as acting chief management officer, received Senate confirmation Dec. 19 by unanimous consent, something of a mixed signal being sent the Pentagon’s way. (Hershman will be sworn in after the holidays.)

Rep. Mac Thornberry, the House Armed Services Committee’s ranking member, said some colleagues are reconsidering the CMO office’s existence in order to speed up fiscal savings.

“I think everybody agrees we have to relook at that position. It has not worked out the way we hoped,” said Thornberry, the Texas Republican who was HASC chairman when the CMO office was created. “We’re all grappling with how you have better management of the part of DoD that’s not the services — that was the hope, but it hasn’t worked out that way.”

Because there’s disagreement over whether the position is appropriately placed and empowered, lawmakers agreed to launch a pair of studies — one from the Office of the Secretary of Defense and the other through the Defense Business Board — looking at the CMO position. The NDAA also contains language holding back 25 percent of the funding for the CMO until the office provides more information to Congress about savings found in fiscal 2019.

Among the requirements for those studies are a look at whether the CMO has been “effective” in implementing change, an assessment of whether the “ingrained organizational culture of the Department of Defense poses fundamental structural challenges for the position,” and a look at potential overlap in duties from the CMO, chief operating officer and deputy secretary of defense. The reports are due by March 15, 2020.

The research into whether the CMO’s job can be done by other offices is notable, as Senate Armed Services Committee Chairman Jim Inhofe, R-Okla., is questioning the need for the job partly over his faith in the Pentagon’s No. 2, Deputy Defense Secretary David Norquist.

Norquist, a former comptroller for the Pentagon and Department of Homeland Security, is leading the DoD’s audit and had initiated a departmentwide review of internal acquisition programs.

“It happens that Norquist has a background nobody else has, and he’s really knowledgeable and he’s fully familiar with any [internal] conflict that’s been there in the past,” Inhofe said.

In a statement to Defense News, Hershman said she welcomes "a thorough review of the CMO’s effectiveness.

“We have been quiet about our accomplishments during a period of transition at the DoD while we staffed our efforts, collected data, and executed our reform plan,” Hershman said in the statement. "The history of reform efforts at the Pentagon have achieved very modest results. Congress empowered the CMO position to jumpstart reform, and we are succeeding. We haven’t talked much about our successes, so I think few people are fully aware of what we have achieved. I welcome the opportunity to share our story.”

Success or slowdown?

Speaking to Defense News at the Reagan Forum earlier this month, Hershman expressed optimism for the work her office has been doing, saying the office will likely increase last year’s $4.7 billion in savings through efficiencies by “double-digit” percentage points.

Much of those savings will come from contract management best practices. Hershman pointed the roughly $2.7 billion the department spends on software, much of which she said comes from five companies. But with those five companies, there are 25 distinct contracts, with 5,400 individual orders against them. Condensing those individual orders not only streamlines manpower hours but lets the department make sure it is getting the best price — “fundamentally changing how we do business from a contract management standpoint.”

Hershman also said her office has a “significant” role with both the ongoing DoD audit and the “night court” process launched by Defense Secretary Mark Esper, in particular by grappling with the departmentwide agencies known as the “fourth estate.” Thornberry has targeted those offices as a source of inefficiencies that can be plowed back into the Pentagon’s core war-fighting functions.

David Berteau, a former assistant secretary of defense for logistics and materiel readiness who now leads the Professional Services Council, said that he would be looking for “an indication of what DoD hopes to achieve, either through the existing CMO structure or any modified approach,” when those reports are done.

“Before we look at more reorganization, we need a clear understanding of what DoD goals are for the CMO, including making the system and process improvements which could produce better results at defense at lower costs and faster speed,” he said.

Susanna Blume, a former defense official now with the Center for a New American Security, said that “redrawing the org chart is rarely sufficient to solve real problems.” She also questioned if Congress had thought through the problems it was trying to address when it created the CMO job.

“It was never completely clear to me what problem specifically the DCMO or CMO positions were trying to solve, and so it’s hardly surprising that the results have been somewhat unsatisfying,” she said. “There is a lot of whiplash here, first with creation of DCMO and then CMO, and now potential disestablishment all together, with none of these moves really allowing enough time for implementation to see if was really going to work.”

That whiplash includes the personnel that have led the office since it was created. Jay Gibson, a former Air Force official and industry executive, was nominated and confirmed as the deputy CMO in late 2017; he was then reconfirmed for the higher-ranking CMO office in January 2018, becoming the first person to hold that role since it was stood up by Congress.

Just nine months later, Gibson was effectively fired for lack of performance; he hung around the building until November, when Hershman, the confirmed deputy CMO, took over as acting CMO. Hershman was not nominated for the full CMO job until this summer, and was not confirmed until last week — meaning the Pentagon’s No. 3 job was filled by an acting official for more than a year.

That had an impact, Hershman said, primarily in her ability to staff the office; she was unable to hire a deputy CMO because technically she was still in that role. “Each day you work diligently, but you remain understaffed,” she said.

She also pointed to the use of continuing resolutions as a factor that has slowed reform efforts, saying the budget tactic puts reform “at risk.” As an example, she said the department was likely to lose almost $5 billion in buying power during the three months it was under a CR this year. Furthermore, it was unable to execute efforts such as multiyear buys for equipment like the Apache helicopter.

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