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In the early 1970's, Congress began to express concern about a number of interrelated DoD headquarters issues, especially: (1) the size of the DoD headquarters structure and overlap and duplication within the Office of the Secretary of Defense (OSD), the Services, the Office of the Joint Chiefs of Staff (OJCS), and between civilian and military staffs; and (2) the accuracy of the headquarters data provided by the various DoD components. Congress wanted an accurate accounting of the number of management headquarters personnel and the cost of supporting management headquarters.

In 1972, the House Appropriations Committee, citing these concerns, directed the Department to (1) establish a DoD-wide definition of headquarters functions, (2) establish an OSD approved list of components of headquarters activities, and (3) to develop a common method of accounting for staffing spaces authorized for management functions at headquarters. In response, the Deputy Under Secretary of Defense issued DoD Directive 5100.73 in 1973. The implementation of Directive 5100.73 established a system for identifying and managing the number and size of headquarters and headquarters support activities. In 1981, the Directive was amended to provide more precise criteria for determining when to include an immediate support organization as part of a headquarters. Under these new criteria more support organizations were included in DoD headquarters numbers. The system defined in the Directive provided detailed reports, primarily for internal use, and summary reports to the President and Congress. Over the years, the Directive has been further revised to better account for DoD headquarters personnel and their associated cost.

Historically, the size of management headquarters staff has fluctuated in response to requirements placed upon them by the President, the Secretary of Defense, and the Congress as they anticipated and/or reacted to a changing national security environment, Congressional direction, and fiscal conditions. Authorized strengths for military and civilians peaked during the Vietnam buildup for the armed forces, DoD supporting infrastructure, and their management headquarters staffs. Since 1968 there has been a steady draw down of military and civilian staffs in response to changing security environment and fiscal constraints. During this period, Congress has also been concerned that the official authorizations of management headquarters staff no longer represented an accurate picture of the true size and cost of these organizations; of particular concern was that the Department's reductions in headquarters staff were not been commensurate with the overall force reductions. Congress became convinced, in light of the significant reduction of operational force structure(s), that the Department's headquarters activities needed to be reconfigured, thus freeing up resources to meet operational needs. The Goldwater-Nichols Act of 1986 directed the Secretary of Defense to reduce the total number of personnel assigned to headquarters and their support activities in the defense agencies and field activities and placed caps on the total number of personnel employed in headquarters activities within the Office of the Secretary of Defense (OSD), in the offices of the Service Secretaries and the Service staffs, the Office of the Joint Chiefs of Staff, and combatant commands.

Ceiling controls and periodic reductions by Congress during the late 1980s and thru the mid 1990s made it difficult for headquarters staff to react to expanded responsibilities and management of diverse and increasingly complex functional activities within the DoD Components. Many of the DoD headquarters activities increased the use of personnel and organizations that performed management headquarters functions or provided direct support to a major headquarters, but whose numbers were not included in the official management headquarters employment totals. Believing DOD's efforts to reduce its infrastructure, including the size of its headquarters activities, lagged behind cuts in operational forces, Congress directed the Department to reduce headquarters staffs through legislative actions throughout the 1990's.

• Congress directed the Secretary of Defense to reduce the numbers of Armed Forces and civilian personnel in headquarters and headquarters support activities from FY 1991 to FY 1995 by 4 percent per year using personnel assigned as of 30 September 1990 as a baseline¹.
• The Secretary of Defense was directed by Congress to conduct a review and report on the organizations and functions of OSD, including the Washington Headquarters Service (WHS) and Defense Support Activities (DSA), and the personnel needed to conduct these activities². The review was to include 1) an assessment of the organizational structure to efficiently support the Secretary, 2) an assessment of the extent of unnecessary duplication between OSD and the Joint Staff and between OSD and the military departments, and 3) an assessment of the appropriate size, number, and functional responsibilities of the Defense Agencies and other support organizations. The Act also placed a cap on the WHS and DSA personnel.
• Congress directed DOD to reduce positions in OSD, including Washington Headquarters Services, and other defense support activities, by 25 percent from fiscal year 1994 levels by the end of fiscal year 1999³. The Act also directed a review and report on Military Department Headquarters staff to include 1) an assessment of organizational structure to support the mission of the Services, 2) options to reduce management headquarters personnel and 3) an assessment of the review of Military Department staffs and benefits from consolidating of the civilian secretariat and staffs of the military chiefs.
• The Secretary of Defense was directed by Congress to reduce the number of positions in all DOD headquarters activities by 25 percent from fiscal year 1997 levels by the end of fiscal year 2002⁴.

The GAO reported in October 1997⁵ that the number of management headquarters personnel was significantly higher than reported by the Department of Defense (DOD). During fiscal years 1985-98, DOD reported steady decreases in its management headquarters personnel-a 38-percent decline from about 77,000 to about 48,000. GAO noted that this data did not include personnel at many of DOD's noncombatant organizations that are subordinate to management headquarters. Based on the GAO review of 40 non-combat organizations subordinate to the 10 management headquarters reviewed, it was concluded that DOD had not included 29 organizations and 2,853 personnel performing management headquarters functions. In the GAO review of selected subordinate organizations, the auditors reported that nearly three of every four personnel were primarily performing management or headquarters support functions and should have been reported to Congress by the Department.

The GAO report attributed the under-reporting of headquarters personnel and costs to a number of causes. These included lack of oversight, incentives to "hide" management headquarters personnel to avoid mandated personnel reductions, and the lack of clearly defined criteria for determining whether organizations should be included in the budget exhibits on management headquarters. The criteria for analyzing organizations in the existing Directive were too complicated to ensure their uniform application. The existing guidance also led DoD officials to believe they were only required to report personnel who make policy, allocate resources, or plan for the future. People in organizations providing direct staff support or in direct reporting units performing management headquarters functions for the parent organization were often not reported.

GAO concluded that the Department should clarify its Directive for reporting headquarters costs and personnel to Congress. The GAO recommended that the Secretary of Defense revise DOD Directive 5100.73 to include a simpler definition that would expand its coverage and simplify its criteria and eliminate the need for complicated analyses of organizational work efforts. Secondly, they also recommended that DoD include all personnel assigned to all organizations subordinate to DoD management headquarters, including field operating activities, direct reporting units, and similar organizations that support their parent headquarters.

In response to this requirement, in September 1997, the Director of Administration and Management (DA&M) for the Office of the Secretary of Defense (OSD) established a Working Group to revise Directive 5100.73. It was comprised of representatives from the Military Departments, the Joint Staff, the Under Secretary (Personnel and Readiness), and the Under Secretary (Comptroller). The charter directed the Working Group to provide "recommendations regarding the revision, replacement, or augmentation of DoDD 5100.73 and the revision of the definitions of the terms Œmanagement headquarters' and Œheadquarters support activities'."

A legislative reporting requirement included in Section 911(b)(2) of the FY 1998 Authorization Act (P.L. 105-85), directed the Secretary of Defense to provide recommendations regarding:

1. the revision, replacement, or augmentation of Department of Defense Directive 5100.73, entitled "Department of Defense Management Headquarters and Headquarters Support Activities," as in effect on November 12, 1996; and
2. the revision of the definitions of the terms "management headquarters activities" and "management headquarters support activities" under that Directive so that those terms apply uniformly throughout the Department of Defense.

The Working Group reached a number of conclusions regarding the existing Directive and its implementation. The Working Group found that DoD components often were not accurately reporting headquarters personnel in field operating activities and other direct reporting units. One reason for this is that the existing Directive required reporting only by those activities or units where at least 25 percent of the personnel were performing headquarters activities. Another reason was that uncertainties and gray-areas in the reporting requirements, combined with limited oversight, led to inconsistencies and gaps in reporting. In particular, the definitions of headquarters functions were not consistently followed across various DoD offices and agencies; thus, staff that was performing headquarters-related activities was not always properly counted.

In revising the Directive to address these findings, the Working Group focused on incorporating provisions that would increase uniformity and consistency in the counting of headquarters personnel, improve visibility of the numbers and costs of headquarters personnel, and strengthen oversight arrangements. In May 1999, the Department issued a revised directive with provisions to better clarify the definition of headquarters and strengthen oversight for its execution. The revised Directive includes the following new or strengthened provisions:

• Uniform Coverage of Major Headquarters: The Directive specifically identifies all major management and command headquarters activities covered. These include Service headquarters, Major Service Commands, Unified Combatant Commands, and the Service Component Commands, as well as OSD, the Joint Staff, and Defense Agencies.
• Comprehensive Coverage of Activities Reporting Directly to a Major Headquarters: Any activity that reports directly to a major headquarters activity identified in the Directive, and supports that headquarters, falls within the scope of the revised Directive. This includes field operating agencies and other direct reporting units.
• Clear and Simple Counting Rules: All individuals assigned to major headquarters activities are counted as headquarters personnel. All individuals within direct reporting units, who support major headquarters activities, are included in the total count of headquarters personnel.
• The Exclusion of International Military Headquarters Personnel: Such personnel are excluded because they do not form part of DoD's internal management and command structure. Moreover, the requirements for these personnel are driven by such factors as treaties and international agreements, which are not under the control of DoD management. Nonetheless, the Directive retains the requirement to report the numbers of personnel at international military headquarters to ensure DoD managers have continued visibility into the size of these staffs.
• More Descriptive Title: Renaming the Directive "Major DoD Headquarters Activities" eliminates the implication of the prior title that the Directive covers mainly "management" headquarters activities. The Directive covers both "command" and "management" headquarters activities.
• Reviews by the DoD IG and the Service IGs: The revised directive calls upon the DoD and Service IGs to review and report on DoD Component compliance with the provisions of the directive during the course of audits, inspections, and evaluations.
• Implementation Review Within 120 Days: DoD components were required to review their field operating activities and other direct reporting units within 120 days after the Deputy Secretary approved the Directive. These reviews would establish, within each activity and unit, those personnel who are to be counted as headquarters personnel for the purposes of the Directive. This effort would, thereby, begin to build the new baseline data needed for the management of headquarters personnel in the future.

In October 1999, the Office of the Secretary of Defense (OSD) established the MHA Implementation Working Group under the cognizance of the Director, Administration and Management. Its primary objective was to ensure proper implementation of the new Directive and to review direct reporting units, field activities, and field agencies to ensure an accurate accounting of the DoD Components' headquarters personnel and costs. The Working Group, chaired by a representative of the Director of Administration and Management, consisted of representatives from the USD (Comptroller), USD (Personnel & Readiness), Director, Program Analysis & Evaluation, the Military Departments, Defense Agencies, and DoD Field Activities. A Steering Committee composed of the Director, Program Analysis and Evaluation; Director, Organizational and Management Planning; and comparable Secretariat level representatives from the Military Departments and the Joint Chiefs of Staff provided oversight and guidance to the Working Group. To ensure proper implementation of the Directive, the following areas were considered by the Working Group:

• Whether comparable activities are accounting for similar functions in the same manner.
• Across Services, whether the changes are proportionate for activities in the same organizational category and how many and what proportion of the direct reporting units and similar activities were identified as MHA under the new directive.
• Whether there are systemic errors in the MHA determination and reporting process that need to be corrected.

The Working Group performed in-depth reviews of implementation of DoD Directive 5100.73 throughout the Department. All of the Components established internal working groups or task forces to perform in-depth management headquarters reviews to ensure consistency and conformity in their reporting process and to identify any "gray areas" that needed further clarification. Where necessary, additional information such as functional descriptions, mission statements and position descriptions were reviewed. The reviews were not limited to agency headquarters, but included direct support organizations and constituent elements of larger organizations. The review process looked at all of the direct reporting units (DRUs) and field operating activities (FOAs) that possibly provided direct support to their parent major headquarters activities and determined which organizations and activities should be counted.

Using the data provided by the Components, the Working Group reviewed any questions, problems, and issues that were identified during the conduct of the implementation process. This second look at the implementation of the newly revised Directive was intended to identify and fix problems that were not addressed initially, make any further adjustments to the new Directive, and to establish the Department's MHA FY 1999 baseline incorporating the new MHA reporting criteria. These adjustments were incorporated into Change 1 of the DoD Directive Major Department of Defense Headquarters Activities on June 5, 2001.

¹National Defense Authorization Act for FY 1991 (P.L. 101-510).
²National Defense Authorization Act for FY 1996 (P.L. 104-106).
³National Defense Authorization Act for FY 1997 (P.L. 104-201).
⁴National Defense Authorization Act for FY 1998 (P.L. 105-85).
⁵GAO/NSIAD-98-25, "Defense Headquarters, Total Personnel and Costs Are Significantly Higher Than Reported to Congress," October 1997.

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• Historical Summary of DoD MHA Initiatives
• Historical Personnel Reduction Guidance Since 1990

Page last updated: 20-May-2002