OFFICE OF THE SECRETARY OF DEFENSE

WASHINGTON, D.C. 20301

2 2 MAR 1979

MEMORANDUM FOR THE SECRETARY OF DEFENSE

SUBJECT:

Report of the Defense Agency Review

The attached report forwards the findings and recommendations developed during our exploratory review of the Defense Agencies. We have researched the evolution, roles, missions, and functions of the Agencies and conducted more than 200 interviews to determine if there seem to be problems which might be resolved by organizational change.

on

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Based

our initial review, had identified central organizational issue and six potentially significant cross-cutting issues which are also organizational in nature. As I indicated in my interion report, the six secondary issues were developed primarily as the result of interviews conducted with officials in the Washington area and, therefore, were regarded as tentative. Since that time, however, I and my staff have visited six of the eight Unified and Specified Commands and several of the component Commands. During the

these visits we found no evidence which invalidated our issues. On the contrary, our trips to the field reinforced belief that these are significant issues which need to be resolved if support and services provided to the combat forces by Defense Agencies are to become as efficient and effective as they could be.

course

of

our

we have, therefore, recommended that a deliberate and systematic follow-on study be undertaken which would provide you with a full range of organizational alternatives. We sincerely believe that the importance and complexity of the issues we have identified warrants such an effort. We further recommend that you direct implementation of various proposed measures that could be taken now to improve efficiency and readiness.

Thesene Arenele

PREFACE

This report is submitted in response to the re

quest of the Deputy Secretary of Defense as part of

the Defense Organization Study and presents the results of an exploratory review of the Defense Agencies.

I approached this assignment with the hope that

it would be both challenging and rewarding.

I have not

been disappointed. If I did bring a bias to this study, it stems from my military experiences, both in a combat and support role, which were that military operations are essentially the products of unified and joint ef

forts; i.e. combined arms.

I was also genuinely mindful

of the need to maintain objectivity and neutrality in examining an organizational structure and concept which sometimes evokes emotional reactions from those who

deplore Agencies as part of a trend to more and more cen

tralization.

This issue is not new.

Alfred P. Sloan,

Jr., in his book My Years with General Motors stated

the issue succinctly when he said "good management rests on a reconciliation of centralization and decentralization,

or 'decentralization with coordinated control'".

In conducting this Review, my staff and I examined

During the conduct of this Review I met with the

Directors and Staffs of each Agency, reviewed appropriate legislation, visited CONUS and overseas field commands and, in conjunction with other members of my staff, conducted more than 200 interviews with senior military and

and their Staffs were invariably cooperative and responsive. This report could not have been prepared without their

assistance.

I am especially grateful to General David c.

Jones who lent his full support to this study and to

Dr. John White, whose suggestion that I look at functions

as well as Agencies, proved so beneficial in sorting out

the mass of data which had been collected.

I was ably assisted by the following military and

civilian personnel who were assigned to my staff and who provided valuable expertise in the variety of

specialties, from Intelligence to Logistics, which the

Defense Agencies cover:

Mr. A. V. Krochalis, Colonel

James R. Anderson, USAF; Captain Richard N. Rounds, sc,

USN, LTC Robert Sholar, USA; Major Len Vernamonti, USAF;

Mr. James Wolbarsht, and Mr. Lewis E. Anderson.

Others

who made important contributions included Colonel Norman

E. Ward, Jr., USA; Colonel Peter Petersen

USA; Colonel

Richard Daleski, USAF; and Captain Kenneth M. Stewart,

USAF.

I would also like to express my appreciation to

Mrs. Sharan Nolan, Miss Helen Hackmann, Mrs. Joan March,

Mrs. Marguerite Cowherd and Mrs. Karen Guillaume for the

outstanding administrative support they provided to

the

wise counsel, steadfast assistance and insights.

Although this report is based on the mass of data

involved and reflects the opinion and counsel of

many, I am responsible for the conclusion and

recommendations contained in this report.

TIRODORE ANTONELLI
Ma jor General, USA (Ret)
Washington, D.C.

March 1979

EXECUTIVE SUMMARY

DEFENSE AGENCY REVIEW

This report responds to the request to conduct an exploratory review of Defense Agencies with a view

toward identifying organizational problems, if

any, and developing options for further study. It is based

on data furnished by the Agencies and more than 200

interviews with key Department of Defense (DOD)

officials and other knowledgeable people.

The findings

and issues have been confirmed by field research.

Over the last 20 years an evolutionary trend has

resulted in major changes in the nature of the support/

services system of the Armed Forces. These changes have derived from the need to improve efficiency, economy,

and effectiveness and, in some instances, by the inability

of the Services to agree on common procedures. Control over many aspects of strategic services, such as

communications and intelligence and "wholesale" support,

such as POL, food, and maps has been unified and

centralized in Defense Agencies.

The Services continue

to provide tactical and "retail" support in these

functional areas.

As the Agencies increased from two to twelve,

their size, scope, and influence grew steadily.

They

V

have over 80,000 civilian and 8,000 military personnel

and operating budgets exceeding $3 billion.

In FY 78

they expended or directly controlled approximately

$15 billion 50% of u Military Service budgel through their appropriations, revolving funds, and program

management responsibilities. They also have extensive audit/oversight responsibilities over $31 billion in

defense contracts and foreign Military Sales trust funds.

A wide variety of other support and service organiza

tions have proliferated in DoD.

In addition to six OSD

Field Activities and two organizations reporting through the JCS, we have identified 71 Single Manager, 140 Executive Agent', 103 Lead Service, and 145 Delegation

solidation of audio-visual, command/control, and postal

functions and for expansion of the Defense Logistic

Agency's (DLA) mission to include management of all

consumable items. Studies are planned or in progress

to address centralization of the transportation/ traffic management, commissary, audit, and investigative