Defense Inventory

The military, which ships inventory worth billions of dollars to various locations around the world each year, has had long-standing problems tracking this inventory from origin to destination. Concerns about the vulnerability of this inventory to waste, fraud, and abuse prompted Congress to pass legislation requiring the Defense Department to prepare a comprehensive plan for tracking inventory while it is being shipped. DOD refers to these shipments as "in-transit inventory." DOD's plan is required to include steps to address these tracking problems, statements of objectives for the actions, and performance measures and schedules. The plan must also identify any resources needed to implement the required actions, along with an estimate of annual costs. This report determines whether the plan (1) responds to the law's provisions, (2) contains the management elements needed to guide effective implementation , and (3) adequately addresses other underlying weaknesses that led to the ineffective control of inventory shipments.

GAO noted that: (1) DOD's plan is generally responsive to the statute and represents a necessary first step toward improving DOD's control over inventory shipments; (2) the plan includes 18 proposed actions to improve the tracking of inventory shipments; (3) as required by the statute, the plan also includes statements of objectives for the actions, performance measures, and schedules for implementation; (4) DOD intends to complete 14 of the proposed actions between fiscal year 2000 and 2006, while the remaining 4 proposed actions are ongoing, with no specific completion date provided; (5) the plan only briefly addresses the issue of resources necessary to implement the proposed actions, and it does not contain an estimate of the annual costs involved, as required by the statute; (6) the plan does not contain some key management elements needed to effectively implement the proposed actions; (7) the Government Performance and Results Act offers a model for developing an effective management framework to improve the likelihood of successfully implementing initiatives and assessing results; (8) although the statute did not require that DOD's plan conform to the Results Act, congressional reports and administrative guidance regarding the Results Act indicate that activities such as inventory management should be subject to these results-oriented principles; (9) DOD's plans does not fully reflect these principles; (10) in most cases, the actions, objectives, and performance measures in the plan are not specific enough to guide implementation; (11) the performance measures do not identify how DOD will assess progress using baseline data, benchmarks, or actual results compared to desired outcomes; (12) also, the plan does not assign accountability within DOD or the military services for implementing the individual initiatives; (13) the plan does not describe the operational processes, skills, technology, human capital, or other resources required to implement each of the specific actions; (14) without identifying the resources required, DOD is not in a position to determine the cost-effectiveness or feasibility of its proposed actions; and (15) the plan does not adequately address underlying weaknesses that have led to the lack of control over inventory shipments, such as: (a) not addressing the widespread problem of military supply activities that do not consistently follow existing DOD policies and procedures; (b) not showing how DOD will address the cultural resistance to change that has hampered its prior initiatives; and (c) not demonstrating a strong commitment to change.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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