Less than two weeks after the position of the Defense Department’s chief management officer officially ceased to exist, the Pentagon has already taken major steps to replace the CMO’s functions elsewhere in its organizational chart.

In memoranda signed Monday by David Norquist, the deputy Defense secretary, the Pentagon made several specific changes to reallocate the CMO’s former duties. Perhaps most notable is a strengthening of the DoD comptroller’s office, which will now be in charge of not just financial matters, but also business process improvements across the department. The comptroller will serve as DoD’s performance improvement officer and take the lead on the department’s compliance with the Government Performance Results Act (GPRA).

“Building on the gains we have made with the financial statement audit and development of Advanced Analytics for Executives tool, [the department will] expand the role of the undersecretary of Defense (Comptroller) to improve accountability and performance in DoD business operations,” Norquist wrote.

In addition to its newly-assigned GPRA and performance improvement missions, the memo specifically tasks the comptroller’s office with data analytics responsibilities, including hosting DoD’s ADVANA platform, creating policies for and overseeing the department’s working capital funds, and setting requirements for DoD’s business IT systems.

The reorganization also boosts the stature of a Pentagon organization that normally stays well out of the limelight: The office of Cost Assessment and Program Evaluation. CAPE now has additional responsibilities to create guidance for how the military services will design their forces, and will receive a still-unspecified amount of extra “capacity” to conduct independent analyses on force development and readiness.

Meanwhile, working together, the comptroller and CAPE will take on new oversight functions over the “fourth estate” — the Defense agencies outside the military services had been overseen largely by the CMO over the past year. They’re charged with taking a “portfolio” approach to those agencies when they issue fiscal guidance, grouping them into areas such as research and engineering, intelligence and surveillance, and compensation.

“The [comptroller] will ensure that business oriented defense agencies and DoD field activities (e.g., Defense Logistics Agency and Defense Finance and Accounting Service) provide the necessary business performance detail in the submission,” Norquist wrote. “CAPE will ensure that mission-oriented and capital-intensive DAFAs (e.g., Missile Defense Agency and National Security Agency) provide the necessary mission effectiveness detail in the submission.”

Unsatisfied with the progress the CMO organization had made in reforming DoD’s business processes since its creation three years ago, Congress decided to abolish the office as part of the 2021 National Defense Authorization Act. That provision of the legislation took effect immediately on Jan. 1, when lawmakers voted to override President Donald Trump’s veto of the bill.

The provision left it up to the Pentagon itself to decide how to reallocate the CMO’s functions, and gave the Defense secretary up to a year to complete the process. Nonetheless, the outgoing administration moved to do so within a matter of days.

“The department’s leadership has been getting ready for this for some time, so it’s not surprising that it’s very thorough and very comprehensive,” said retired Maj. Gen. Arnold Punaro, a former member of the Defense Business Board who led a study last year on how to replace the CMO organization. “They knew they were going to have to dissolve it, and this will give business transformation in the department an opportunity to be a lot more successful than the construct that’s been in place for the last 12 years.”

Norquist’s directive also abolishes the department’s Reform Management Group, a business system oversight board that the Government Accountability Office has criticized for gaps in leadership and a lack of clarity in its mission. Its functions will be absorbed into the existing Defense Business Council, which will be co-chaired by DoD’s chief information officer and the comptroller.

Before its abolition, the CMO organization contained four directorates. A second Norquist memo, also signed Monday, reallocated some of the functions of two of those sub-units: Oversight & Compliance and Administration and Organizational Policy.

To do so, the department is re-creating two offices that had been consolidated into the CMO and its predecessor, the office of the deputy chief management officer: The director of Administration and Management (DA&M) and the assistant to the secretary of Defense for Intelligence Oversight.

Mark Dupont, who previously served as the CMO’s senior intelligence oversight official, will become the interim assistant to the secretary of Defense for Intelligence Oversight.

The DA&M will take back control of Washington Headquarters Services (WHS), the office known colloquially as the “mayor” of the Pentagon, and which oversees the building’s physical plant, security, and other real estate in the National Capital Region. Tom Muir, the current WHS director, will serve as the interim DA&M.

Also, by the end of this week, Muir’s new office is tasked with standing up a working group to reallocate any of the CMO functions that aren’t explicitly addressed by Norquist’s memos. Those responsibilities also include sorting out the details of which former CMO personnel will work for what particular organization going forward, and how the former office’s resources will be redistributed throughout the Pentagon.

The CMO’s core staff was relatively small — just 114 people — but Punaro said the ways in which DoD already expects to redistribute them, including to the new comptroller subunit that will oversee the department’s working capital funds, should prove helpful.

“There were 18 people doing that before, and they got eliminated in a previous administration. That’s over $100 billion a year in spend,” he said. “Those activities and others that are being strengthened are coming from staff billets that existed in the CMO, so it’s not an increase in the total headquarters count. The comptroller is a logical place for those functions, and frankly it’s consistent with what we recommended in the DBB study.”

But Punaro acknowledged it will take some time before it’s possible to tell whether the latest reforms are truly a good idea, versus yet another reorganization for the sake of reorganizing.

“The unanswered activity the new Defense secretary and the new deputy are going to have to focus on is giving these organizations, with these enhanced abilities, the performance goals they want them to achieve when it comes to business transformation,” he said. “That’s going to be a challenge. You can’t have just an organizational change. You’ve got to have goals and objectives being handed down — the commanders’ intent, as we call it in the military — from [Defense secretary nominee] Lloyd Austin and [deputy secretary nominee] Kathleen Hicks. I’m confident they understand that, and I’ll bet they get a lot of questions about that during their confirmation process.”

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