DOD's High-Risk Areas
Progress Made Implementing Supply Chain Management Recommendations, but Full Extent of Improvement Unknown Gao ID: GAO-07-234 January 17, 2007Military operations in Iraq and Afghanistan have focused attention on the Department of Defense's (DOD) supply chain management. The supply chain can be critical to determining outcomes on the battlefield, and the investment of resources in DOD's supply chain is substantial. In 2005, with the encouragement of the Office of Management and Budget (OMB), DOD prepared an improvement plan to address some of the systemic weaknesses in supply chain management. GAO was asked to monitor implementation of the plan and DOD's progress toward improving supply chain management. GAO reviewed (1) the integration of supply chain management with broader defense business transformation and strategic logistics planning efforts; and (2) the extent DOD is able to demonstrate progress. In addition, GAO developed a baseline of prior supply chain management recommendations. GAO surveyed supply chain-related reports issued since October 2001, identified common themes, and determined the status of the recommendations.
DOD's success in improving supply chain management is closely linked with its defense business transformation efforts and completion of a comprehensive, integrated logistics strategy. Based on GAO's prior reviews and recommendations, GAO has concluded that progress in DOD's overall approach to business defense transformation is needed to confront problems in other high-risk areas, including supply chain management. DOD has taken several actions intended to advance business transformation, including the establishment of new governance structures and the issuance of an Enterprise Transition Plan aligned with the department's business enterprise architecture. As a separate effort, DOD has been developing a strategy--called the "To Be" logistics roadmap--to guide logistics programs and initiatives across the department. The strategy would identify the scope of logistics problems and capability gaps to be addressed and include specific performance goals, programs, milestones, and metrics. However, DOD has not identified a target date for completion of this effort. According to DOD officials, its completion is pending the results of the department's ongoing test of new concepts for managing logistic capabilities. Without a comprehensive, integrated strategy, decision makers will lack the means to effectively guide logistics efforts, including supply chain management, and the ability to determine if these efforts are achieving desired results. DOD has taken a number of actions to improve supply chain management, but the department is unable to demonstrate at this time the full extent of its progress that may have resulted from its efforts. In addition to implementing audit recommendations, DOD is implementing initiatives in its supply chain management improvement plan. However, it is unclear how much progress its actions have resulted in because the plan generally lacks outcome-focused performance metrics that track progress in the three focus areas and at the initiative level. DOD's plan includes four high-level performance measures, but these measures do not explicitly relate to the focus areas, and they may be affected by many variables, such as disruptions in the distribution process, other than DOD's supply chain initiatives. Further, the plan does not include overall cost metrics that might show efficiencies gained through the efforts. Therefore, it is unclear whether DOD is meeting its stated goal of improving the provision of supplies to the warfighter and improving readiness of equipment while reducing or avoiding costs. Over the last 5 years, audit organizations have made more than 400 recommendations that focused specifically on improving certain aspects of DOD's supply chain management. About two-thirds of the recommendations had been closed at the time GAO conducted its review, and most of these were considered implemented. Of the total recommendations, 41 percent covered the focus areas in DOD's supply chain management improvement plan: requirements forecasting, asset visibility, and materiel distribution. The recommendations addressed five common themes--management oversight, performance tracking, planning, policy, and processes.
RecommendationsOur 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.
Director: Team: Phone:GAO-07-234, DOD's High-Risk Areas: Progress Made Implementing Supply Chain Management Recommendations, but Full Extent of Improvement Unknown
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Report to the Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia, Committee on Homeland
Security and Governmental Affairs, U.S. Senate:
January 2007:
DOD's High-Risk Areas:
Progress Made Implementing Supply Chain Management Recommendations, but
Full Extent of Improvement Unknown:
GAO-07-234:
GAO Highlights:
Highlights of GAO-07-234, a report to the Subcommittee on Oversight of
Government Management, the Federal Workforce, and the District of
Columbia, Committee on Homeland Security and Governmental Affairs, U.S.
Senate
Why GAO Did This Study:
Military operations in Iraq and Afghanistan have focused attention on
the Department of Defense‘s (DOD) supply chain management. The supply
chain can be critical to determining outcomes on the battlefield, and
the investment of resources in DOD‘s supply chain is substantial. In
2005, with the encouragement of the Office of Management and Budget
(OMB), DOD prepared an improvement plan to address some of the systemic
weaknesses in supply chain management. GAO was asked to monitor
implementation of the plan and DOD‘s progress toward improving supply
chain management. GAO reviewed (1) the integration of supply chain
management with broader defense business transformation and strategic
logistics planning efforts; and (2) the extent DOD is able to
demonstrate progress. In addition, GAO developed a baseline of prior
supply chain management recommendations. GAO surveyed supply chain-
related reports issued since October 2001, identified common themes,
and determined the status of the recommendations.
What GAO Found:
DOD‘s success in improving supply chain management is closely linked
with its defense business transformation efforts and completion of a
comprehensive, integrated logistics strategy. Based on GAO‘s prior
reviews and recommendations, GAO has concluded that progress in DOD‘s
overall approach to business defense transformation is needed to
confront problems in other high-risk areas, including supply chain
management. DOD has taken several actions intended to advance business
transformation, including the establishment of new governance
structures and the issuance of an Enterprise Transition Plan aligned
with the department‘s business enterprise architecture. As a separate
effort, DOD has been developing a strategy”called the ’To Be“ logistics
roadmap”to guide logistics programs and initiatives across the
department. The strategy would identify the scope of logistics problems
and capability gaps to be addressed and include specific performance
goals, programs, milestones, and metrics. However, DOD has not
identified a target date for completion of this effort. According to
DOD officials, its completion is pending the results of the
department‘s ongoing test of new concepts for managing logistic
capabilities. Without a comprehensive, integrated strategy, decision
makers will lack the means to effectively guide logistics efforts,
including supply chain management, and the ability to determine if
these efforts are achieving desired results.
DOD has taken a number of actions to improve supply chain management,
but the department is unable to demonstrate at this time the full
extent of its progress that may have resulted from its efforts. In
addition to implementing audit recommendations, DOD is implementing
initiatives in its supply chain management improvement plan. However,
it is unclear how much progress its actions have resulted in because
the plan generally lacks outcome-focused performance metrics that track
progress in the three focus areas and at the initiative level. DOD‘s
plan includes four high-level performance measures, but these measures
do not explicitly relate to the focus areas, and they may be affected
by many variables, such as disruptions in the distribution process,
other than DOD‘s supply chain initiatives. Further, the plan does not
include overall cost metrics that might show efficiencies gained
through the efforts. Therefore, it is unclear whether DOD is meeting
its stated goal of improving the provision of supplies to the
warfighter and improving readiness of equipment while reducing or
avoiding costs.
Over the last 5 years, audit organizations have made more than 400
recommendations that focused specifically on improving certain aspects
of DOD‘s supply chain management. About two-thirds of the
recommendations had been closed at the time GAO conducted its review,
and most of these were considered implemented. Of the total
recommendations, 41 percent covered the focus areas in DOD‘s supply
chain management improvement plan: requirements forecasting, asset
visibility, and materiel distribution. The recommendations addressed
five common themes”management oversight, performance tracking,
planning, policy, and processes.
What GAO Recommends:
GAO recommends that DOD complete its logistics strategy and develop and
implement outcome-focused performance metrics and cost metrics for
supply chain management. DOD concurred with GAO‘s recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-234].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact William M. Solis at (202)
512-8365 or solisw@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Improvements to Supply Chain Management Are Linked with Overall Defense
Business Transformation and Completion of a Comprehensive, Integrated
Logistics Strategy:
DOD Is Unable to Demonstrate the Full Extent of Its Progress Toward
Improving Supply Chain Management:
DOD's Supply Chain Management Plan Does Not Track Performance Outcomes
and Costs Metrics Associated with Focus Areas and Initiatives:
DOD Has Implemented Recommendations for Improving Aspects of Supply
Chain Management:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendixes:
Appendix I: Supply Chain Management: Summary of GAO Report
Recommendations:
Appendix II: Supply Chain Management: Summary of DOD-IG Report
Recommendations:
Appendix III: Supply Chain Management: Summary of Army Audit Agency
Report Recommendations:
Appendix IV: Supply Chain Management: Summary of Air Force Audit Agency
Report Recommendations:
Appendix V: Supply Chain Management: Summary of Naval Audit Service
Report Recommendations:
Appendix VI: Supply Chain Management: Summary of Non-audit Organization
Report Recommendations:
Appendix VII: Comments from the Department of Defense:
Appendix VIII: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Audit Recommendations to Improve Supply Chain Management:
January 17, 2007:
The Honorable Daniel K. Akaka:
Chairman:
The Honorable George V. Voinovich:
Ranking Minority Member:
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
Military operations in Iraq and Afghanistan have focused attention on
the performance of the Department of Defense's (DOD) supply chain
management in support of deployed U.S. troops. The availability of
spare parts and other critical supply items affects the readiness and
operational capabilities of U.S. military forces, and the supply chain
can be a critical link in determining outcomes on the battlefield.
Moreover, the investment of resources in the supply chain is
substantial, amounting to more than $150 billion a year according to
DOD. As a result of weaknesses in DOD's management of supply
inventories and responsiveness to warfighter requirements, supply chain
management has been on our list of high-risk federal government
programs since 1990. We initially focused on inventory management and
later determined that problems extended to other parts of the supply
chain, to include requirements forecasting, asset visibility, and
materiel distribution.[Footnote 1]
In 2005, with the encouragement of the Office of Management and Budget
(OMB), DOD developed a plan to address some of the systemic weaknesses
as a first step toward removing supply chain management from our high-
risk list. Since then we have reviewed and commented on DOD's progress
toward implementing its supply chain management improvement plan, the
linkage of this plan with other DOD logistics[Footnote 2] plans, and
the extent to which DOD has incorporated performance metrics for
tracking and demonstrating progress.[Footnote 3] We have stated that,
overall, DOD's plan addressing supply chain management is a good first
step toward putting DOD on a path toward resolving long-standing supply
chain management problems, but that the department faces a number of
challenges and risks in fully implementing its proposed changes across
the department and measuring progress.
In response to your Committee's request, we have continued to monitor
DOD's progress toward resolving supply chain management problems.
Specifically, this report discusses (1) the integration of supply chain
management with broader defense business transformation and strategic
logistics planning efforts and (2) the extent to which DOD is able to
demonstrate progress toward improving supply chain management. In
addition, we developed a baseline of recommended improvements to DOD's
supply chain management that have been made over the past 5 years.
Our discussion of the integration of supply chain management with
broader defense business transformation efforts is based primarily on
our prior reports and testimonies. We obtained information from
officials in the Office of the Secretary of Defense on their efforts to
develop an overarching strategy to guide departmentwide logistics
programs and initiatives. We met regularly with DOD and OMB officials
to discuss the overall status of the supply chain management
improvement plan, the implementation schedules of the plan's individual
initiatives, and the plan's performance measures. We visited and
interviewed officials from U.S. Transportation Command, the Defense
Logistics Agency, the military services, and the Joint Staff to gain
their perspectives on improving supply chain management. In developing
a baseline of recommended supply chain management improvements, we
surveyed audit reports issued between October 2001 and September 2006
by our office, the Department of Defense Office of the Inspector
General (DOD-IG), and the military service audit agencies. We selected
this time period because it corresponds with the onset of recent
military operations that began with Operation Enduring Freedom. For
each audit recommendation contained in these reports, we determined its
status and focus. In analyzing the status of recommendations, we
determined whether DOD or the component organization[Footnote 4]
concurred with the recommendations, whether the recommendations were
closed, and whether closed recommendations had been implemented. We
determined that the data we obtained from the DOD-IG and the service
audit agencies were sufficiently reliable for our purposes. In
analyzing the focus of recommendations, we identified those addressing
three specific areas--requirements forecasting, asset visibility, and
materiel distribution--as well those addressing other supply chain
management concerns. We selected these three focus areas as the
framework for our analysis based on our prior work in this high-risk
area and because DOD has structured its supply chain management
improvement plan around them. While we included recommendations by non-
audit organizations in our analysis, we did not determine the extent to
which DOD concurred with or implemented them because their status is
not systemically tracked. Additional information on our analysis,
including further explanation of the terms used in describing the
status of recommendations, is discussed in the scope and methodology
section. We conducted our review from January through November 2006 in
accordance with generally accepted government auditing standards.
Results in Brief:
DOD's success in improving supply chain management is closely linked
with its overall defense business transformation efforts and completion
of a comprehensive, integrated logistics strategy. Our prior reviews
and recommendations have addressed business management problems that
adversely affect the economy, efficiency, and effectiveness of DOD's
operations, and that have resulted in a lack of adequate accountability
across several of DOD's major business areas. We have concluded that
progress in DOD's overall approach to business transformation--
identified as a high-risk area in 2005--is needed to confront other
high-risk areas, including supply chain management. We have made a
number of recommendations to address defense business transformation,
including strengthening the management of DOD's business systems
modernization through the adoption of enterprise architecture and
investment management best practices. In response, DOD has taken
several actions intended to advance transformation, such as
establishing governance structures like the Business Transformation
Agency and developing an Enterprise Transition Plan aligned with its
business enterprise architecture. As a separate effort, DOD has been
developing a strategy to guide logistics programs and initiatives
across the department. Called the "To Be" logistics roadmap, this
strategy would identify the scope of logistics problems and capability
gaps to be addressed and include specific performance goals, programs,
milestones, resources, and metrics to guide improvements in supply
chain management and other areas of DOD logistics. DOD has not
established a target date for completing the "To Be" logistics roadmap.
According to DOD officials, its completion is pending the results of
the department's ongoing test of new concepts for managing logistics
capabilities. Initial results of this test are expected to be available
in the spring of 2007. We have also noted previously that while DOD and
its component organizations have developed multiple plans for improving
aspects of logistics, the linkages among these plans have not been
clearly shown. Without a comprehensive, integrated logistics strategy,
decision makers will lack the means to effectively guide logistics
efforts, including supply chain management, and the ability to
determine if these efforts are achieving the desired results.
DOD has taken a number of actions to improve supply chain management,
but the department is unable to demonstrate at this time the full
extent of progress that may have resulted from its efforts. In addition
to implementing audit recommendations, as discussed below, DOD is
implementing initiatives in its supply chain management improvement
plan. However, it is unclear how much progress its actions have
resulted in because the plan generally lacks outcome-focused
performance metrics that track progress in the three focus areas and at
the initiative level. Performance metrics are essential for
demonstrating progress toward achieving goals and providing information
on which to base organizational and management decisions. Moreover,
outcome-focused performance metrics show results or outcomes related to
an initiative or program in terms of its effectiveness, efficiency,
impact, or all of these. DOD's plan includes four high-level
performance measures that are being tracked across the department, but
these measures do not explicitly reflect the performance of the
initiatives or relate to the focus areas. Additionally, these measures
may be affected by many variables other than DOD's supply chain
initiatives. For example, changes in customer wait time could result
from wartime surges in requirements or disruption in the distribution
process; hence, improvements in the high-level performance measures do
not necessarily reflect the success of an initiative in DOD's supply
chain management improvement plan. Further, the plan does not include
overall cost metrics that might show efficiencies gained through
improvement efforts. Although DOD faces challenges to developing
departmentwide supply chain performance measures, such as the
difficulty of obtaining standardized, reliable data from
noninteroperable systems, without outcome-focused performance and cost
metrics, it is unclear whether DOD is progressing toward meeting its
stated goal of improving the provision of supplies to the warfighter
and improving readiness of equipment while reducing or avoiding costs
through its supply chain initiatives.
In developing a baseline of recommended supply chain management
improvements, we identified 478 recommendations that audit
organizations have made between October 2001 and September 2006. DOD or
the component organization concurred with 411 (86 percent) of the total
recommendations. In addition, 315 (66 percent) recommendations had been
closed, and 275 (87 percent) of the closed recommendations had been
implemented at the time we conducted our review. The three focus areas
of requirements forecasting, asset visibility, and materiel
distribution accounted for 196 (41 percent) of the total
recommendations, while other inventory management issues accounted for
most of the remaining recommendations. In addition, we further grouped
the recommendations into five common themes--management oversight,
performance tracking, planning, policy, and processes. Most of the
recommendations addressed processes (38 percent), management oversight
(30 percent), or policy (22 percent), with comparatively fewer
addressing planning (7 percent) and performance tracking (4
percent).[Footnote 5] Studies conducted by non-audit organizations,
such as the Center for Strategic and International Studies and the
Defense Science Board, made recommendations that address supply chain
management as part of a broader review of DOD logistics. For example,
both these organizations have suggested the creation of a
departmentwide logistics command responsible for end-to-end supply
chain operations.
We are making recommendations to the Secretary of Defense to improve
DOD's ability to guide logistics programs and initiatives across the
department and to demonstrate the effectiveness, efficiency, and impact
of its efforts to resolve supply chain management problems. In
commenting on a draft of this report, DOD concurred with our
recommendations.
Background:
For 16 years, DOD's supply chain management processes have been on our
list of high-risk areas needing urgent attention because of long-
standing systemic weaknesses that we have identified in our reports. We
initiated our high-risk program in 1990 to report on government
operations that we identified as being at high risk for fraud, waste,
abuse, and mismanagement. The program serves to identify and help
resolve serious weaknesses in areas that involve substantial resources
and provide critical services to the public.
Removal of a high-risk designation may be considered when legislative
and agency actions, including those in response to our recommendations,
result in significant and sustainable progress toward resolving a high-
risk problem.[Footnote 6] Key determinants include a demonstrated
strong commitment to and top leadership support for addressing
problems, the capacity to do so, a corrective action plan that provides
for substantially completing corrective measures in the near term, a
program to monitor and independently validate the effectiveness of
corrective measures, and demonstrated progress in implementing
corrective measures.
Beginning in 2005, DOD developed a plan for improving supply chain
management that could reduce its vulnerability to fraud, waste, abuse,
and mismanagement and place it on the path toward removal from our list
of high-risk areas. This supply chain management improvement plan,
initially released in July 2005, contains 10 initiatives proposed as
solutions to address the root causes of problems we identified from our
prior work in the areas of requirements forecasting, asset visibility,
and materiel distribution.
DOD defines requirements as the need or demand for personnel,
equipment, facilities, other resources, or services in specified
quantities for specific periods of time or at a specified time.
Accurately forecasted supply requirements are a key first step in
buying, storing, positioning, and shipping items that the warfighter
needs. DOD describes asset visibility as the ability to provide timely
and accurate information on the location, quantity, condition,
movement, and status of supplies and the ability to act on that
information. Distribution is the process for synchronizing all elements
of the logistics system to deliver the "right things" to the "right
place" at the "right time" to support the warfighter.
Improvements to Supply Chain Management Are Linked with Overall Defense
Business Transformation and Completion of a Comprehensive, Integrated
Logistics Strategy:
DOD's success in improving supply chain management is closely linked
with its overall defense business transformation efforts and completion
of a comprehensive, integrated logistics strategy. In previous reports
and testimonies, we have stated that progress in DOD's overall approach
to business transformation is needed to confront problems in other high-
risk areas, including supply chain management. DOD has taken several
steps intended to advance business transformation, including
establishing new governance structures and aligning new information
systems with its business enterprise architecture. Another key step to
supplement these ongoing transformation efforts is completion of a
comprehensive, integrated logistics strategy that would identify
problems and capability gaps to be addressed, establish departmentwide
investment priorities, and guide decision making.
DOD Is Taking Steps to Advance Business Transformation:
DOD's success in improving supply chain management is closely linked
with overall defense business transformation. Our prior reviews and
recommendations have addressed business management problems that
adversely affect the economy, efficiency, and effectiveness of DOD's
operations, and that have resulted in a lack of adequate accountability
across several of DOD's major business areas.[Footnote 7] We have
concluded that progress in DOD's overall approach to business
transformation is needed to confront other high-risk areas, including
supply chain management. DOD's overall approach to business
transformation was added to the high-risk list in 2005 because of our
concern over DOD's lack of adequate management accountability and the
absence of a strategic and integrated action plan for the overall
business transformation effort. Specifically, the high-risk designation
for business transformation resulted because (1) DOD's business
improvement initiatives and control over resources are fragmented;
(2) DOD lacks a clear strategic and integrated business transformation
plan and investment strategy, including a well-defined enterprise
architecture to guide and constrain implementation of such a plan;
and (3) DOD has not designated a senior management official responsible
and accountable for overall business transformation reform and related
resources.
In response, DOD has taken several actions intended to advance
transformation. For example, DOD has established governance structures
such as the Business Transformation Agency and the Defense Business
Systems Management Committee. The Business Transformation Agency was
established in October 2005 with the mission of transforming business
operations to achieve improved warfighter support and improved
financial accountability. The agency supports the Defense Business
Systems Management Committee, which is comprised of senior-level DOD
officials and is intended to serve as the primary transformation
leadership and oversight mechanism. Furthermore, in September 2006, DOD
released an updated Enterprise Transition Plan that is intended to be
both a business transformation roadmap and management tool for
modernizing its business process and underlying information technology
assets. DOD describes the Enterprise Transition Plan as an executable
roadmap aligned to DOD's business enterprise architecture. In addition,
as required by the National Defense Authorization Act for Fiscal Year
2006, DOD is studying the feasibility and advisability of establishing
a Deputy Secretary for Defense Management to serve as DOD's Chief
Management Officer and advise the Secretary of Defense on matters
relating to management, including defense business activities.[Footnote
8]
Business systems modernization is a critical part of DOD's
transformation efforts, and successful resolution of supply chain
management problems will require investment in needed information
technology. DOD spends billions of dollars to sustain key business
operations intended to support the warfighter, including systems and
processes related to support infrastructure, finances, weapon systems
acquisition, the management of contracts, and the supply chain. We have
indicated at various times that modernized business systems are
essential to the department's effort in addressing its supply chain
management issues.[Footnote 9] In its supply chain management
improvement plan, DOD recognizes that achieving success in supply chain
management is dependent on developing interoperable systems that can
share critical supply data. One of the initiatives included in the plan
is business system modernization,[Footnote 10] an effort that is being
led by DOD's Business Transformation Agency and includes achieving
materiel visibility through systems modernization as one of its six
enterprisewide priorities.
Improvements in financial management are also integrally linked to
DOD's business transformation. Since our first report on the financial
statement audit of a major DOD component over 16 years ago, we have
repeatedly reported that weaknesses in business management systems,
processes, and internal controls not only adversely affect the
reliability of reported financial data, but also the management of DOD
operations.[Footnote 11] Such weaknesses have adversely affected the
ability of DOD to control costs, ensure basic accountability,
anticipate future costs and claims on the budget, measure performance,
maintain funds control, and prevent fraud. In December 2005, DOD issued
its Financial Improvement and Audit Readiness Plan to guide its
financial management improvement efforts. The Financial Improvement and
Audit Readiness Plan is intended to provide DOD components with a
roadmap for (1) resolving problems affecting the accuracy, reliability,
and timeliness of financial information; and (2) obtaining clean
financial statement audit opinions. It uses an incremental approach to
structure its process for examining operations, diagnosing problems,
planning corrective actions, and preparing for audit. The plan also
recognizes that it will take several years before DOD is able to
implement the systems, processes, and other changes necessary to fully
address its financial management weaknesses. Furthermore, DOD has
developed an initial Standard Financial Information Structure, which is
DOD's enterprisewide data standard for categorizing financial
information. This effort focused on standardizing general ledger and
external financial reporting requirements.
While these steps are positive, defense business transformation is much
broader and encompasses planning, management, organizational
structures, and processes related to all key business areas. As we have
previously observed, business transformation requires long-term
cultural change, business process reengineering, and a commitment from
both the executive and legislative branches of government. Although
sound strategic planning is the foundation on which to build, DOD needs
clear, capable, sustained, and professional leadership to maintain
continuity necessary for success. Such leadership would provide the
attention essential for addressing key stewardship responsibilities--
such as strategic planning, performance management, business
information management, and financial management--in an integrated
manner, while helping to facilitate the overall business transformation
effort within DOD. As DOD continues to evolve its transformation
efforts, critical to successful reform are sustained leadership,
organizational structures, and a clear strategic and integrated plan
that encompasses all major business areas, including supply chain
management.
Completion of a Comprehensive, Integrated Logistics Strategy Could
Supplement Business Transformation Efforts:
Another key step to supplement ongoing defense business transformation
efforts is completion of a comprehensive, integrated logistics strategy
that would identify problems and capability gaps to be addressed,
establish departmentwide investment priorities, and guide decision
making. Over the years, we have recommended that DOD adopt such a
strategy, and DOD has undertaken various efforts to identify, and plan
for, future logistics needs. However, DOD currently lacks an
overarching logistics strategy. In December 2005, DOD issued its "As
Is" Focused Logistics Roadmap, which assembled various logistics
programs and initiatives associated with the fiscal year 2006
President's Budget and linked them to seven key joint future logistics
capability areas. The roadmap identified more than $60 billion of
planned investments in these programs and initiatives, yet it also
indicated that key focused logistics capabilities would not be achieved
by 2015. Therefore, the Under Secretary of Defense for Acquisition,
Technology, and Logistics directed the department to prepare a rigorous
"To Be" roadmap that would present credible options to achieve focused
logistics capabilities.
According to officials with the Office of the Secretary of Defense, the
"To Be" logistics roadmap will portray where the department is headed
in the logistics area and how it will get there, and will allow the
department to monitor progress toward achieving its objectives, as well
as institutionalize a continuous assessment process that links ongoing
capability development, program reviews, and budgeting. It would
identify the scope of logistics problems and capability gaps to be
addressed and include specific performance goals, programs, milestones,
resources, and metrics to guide improvements in supply chain management
and other areas of DOD logistics. Officials anticipate that the
initiatives in the supply chain management improvement plan will be
incorporated into the "To Be" logistics roadmap.
DOD has not established a target date for completing the "To Be"
roadmap. According to DOD officials, its completion is pending the
results of the department's ongoing test of new concepts for managing
logistics capabilities. The Deputy Secretary of Defense initiated this
joint capability portfolio management test in September 2006 to explore
new approaches for managing certain capabilities across the department,
facilitating strategic choices, and improving the department's ability
to make capability trade-offs. The intent of joint capability portfolio
management is to improve interoperability, minimize redundancies and
gaps, and maximize effectiveness. Joint logistics is one of the four
capability areas selected as test cases for experimentation. The joint
logistics test case portfolio will include all capabilities required to
project and sustain joint force operations, including supply chain
operations. According to DOD officials, initial results of the joint
logistics capability portfolio management test are expected to be
available in late spring 2007, and the results of the test will then be
used to complete the "To Be" logistics roadmap. The results of the test
are also expected to provide additional focus on improving performance
in requirements determination, asset visibility, and materiel
distribution, officials said.
We have also noted previously that while DOD and its component
organizations have had multiple plans for improving aspects of
logistics, the linkages among these plans have not been clearly shown.
In addition to the supply chain management improvement plan, current
DOD plans that address aspects of supply chain management include the
Enterprise Transition Plan and component-level plans developed by the
military services and the Defense Logistics Agency. Although we are
encouraged by DOD's planning efforts, the department lacks a
comprehensive, integrated strategy to guide logistics programs and
initiatives across the department. Without such a strategy, decision
makers will lack the means to effectively guide program efforts and the
ability to determine if these efforts are achieving the desired
results.
DOD Is Unable to Demonstrate the Full Extent of Its Progress Toward
Improving Supply Chain Management:
Although DOD is making progress implementing supply chain management
initiatives, it is unable to demonstrate at this time the full extent
to which it is improving supply chain management. DOD has established
some high-level performance measures but they do not explicitly address
the focus areas, and an improvement in those measures cannot be
directly attributed to the initiatives. Further, the metrics in DOD's
supply chain management improvement plan generally do not measure
performance outcomes and costs.
DOD Is Making Progress Implementing Supply Chain Management
Initiatives:
In addition to implementing audit recommendations, as discussed in the
next section of this report, DOD is making progress improving supply
chain management by implementing initiatives in its supply chain
management improvement plan. For example, DOD has met key milestones in
its Joint Regional Inventory Materiel Management, Radio Frequency
Identification, and Item Unique Identification initiatives.
* Through its Joint Regional Inventory Materiel Management initiative,
DOD began to streamline the storage and distribution of defense
inventory items on a regional basis, in order to eliminate duplicate
materiel handling and inventory layers. Last year, DOD completed a
pilot for this initiative in the San Diego region and, in January 2006,
began a similar transition for inventory items in Oahu, Hawaii, which
was considered operational in August 2006.
* In May 2006, DOD published an interim Defense Federal Acquisition
Regulation clause governing the application of tags to different
classes of assets being shipped to distribution depots and aerial ports
for the Radio Frequency Identification initiative.
* The Item Unique Identification initiative, which provides for marking
of personal property items with a set of globally unique data items to
help DOD value and track items throughout their life cycle, received
approval by the International Organization for Standardization/
International Electrotechnical Commission in September 2006 for an
interoperable solution for automatic identification and data capture
based on widely used international standards.
DOD has sought to demonstrate significant improvement in supply chain
management within 2 years of the plan's inception in July 2005;
however, the department may have difficulty meeting its July 2007 goal.
Some of the initiatives are still being developed or piloted and have
not yet reached the implementation stage, others are in the early
stages of implementation, and some are not scheduled for completion
until 2008 or later. For example, according to DOD's plan, the
Readiness Based Sparing initiative, an inventory requirements
methodology that the department expects will enable higher levels of
readiness at equivalent or reduced inventory costs using commercial off-
the-shelf software, is not expected to begin implementation until
January 2008. The Item Unique Identification initiative, which involves
marking personal property items with a set of globally unique data
elements to help DOD track items during their life cycles, will not be
completed until December 2010 under the current schedule.
While DOD has generally stayed on track, it has reported some slippage
in meeting scheduled milestones for certain initiatives. For example, a
slippage of 9 months occurred in the Commodity Management initiative
because additional time was required to develop a departmentwide
approach. This initiative addresses the process of developing a
systematic procurement approach to the department's needs for a group
of items. Additionally, according to DOD's plan, the Defense
Transportation Coordination initiative experienced a slippage in
holding the presolicitation conference because defining requirements
took longer than anticipated.[Footnote 12] Given the long-standing
nature of the problems being addressed, the complexities of the
initiatives, and the involvement of multiple organizations within DOD,
we would expect to see further milestone slippage in the future.
DOD's Supply Chain Management Plan Does Not Track Performance Outcomes
and Costs Metrics Associated with Focus Areas and Initiatives:
The supply chain management improvement plan generally lacks outcome-
focused performance metrics that track progress in the three focus
areas and at the initiative level. Performance metrics are critical for
demonstrating progress toward achieving results, providing information
on which to base organizational and management decisions, and are
important management tools for all levels of an agency, including the
program or project level. Moreover, outcome-focused performance metrics
show results or outcomes related to an initiative or program in terms
of its effectiveness, efficiency, impact, or all of these. To track
progress toward goals, effective performance metrics should have a
clearly apparent or commonly accepted relationship to the intended
performance, or should be reasonable predictors of desired outcomes;
are not unduly influenced by factors outside a program's control;
measure multiple priorities, such as quality, timeliness, outcomes, and
cost; sufficiently cover key aspects of performance; and adequately
capture important distinctions between programs. Performance metrics
enable the agency to assess accomplishments, strike a balance among
competing interests, make decisions to improve program performance,
realign processes, and assign accountability. While it may take years
before the results of programs become apparent, intermediate metrics
can be used to provide information on interim results and show progress
towards intended results. In addition, when program results could be
influenced by external factors, intermediate metrics can be used to
identify the program's discrete contribution to the specific result.
DOD's plan does include four high-level performance measures that are
being tracked across the department, and while they are not required to
do so, these measures do not explicitly relate to the focus areas. The
four measures are as follows:
* Backorders--number of orders held in an unfilled status pending
receipt of additional parts or equipment through procurement or repair.
* Customer wait time--number of days between the issuance of a customer
order and satisfaction of that order.
* On-time orders--percentage of orders that are on time according to
DOD's established delivery standards.
* Logistics response time--number of days to fulfill an order placed on
the wholesale level of supply from the date a requisition is generated
until the materiel is received by the retail supply activity.
Additionally, these measures may be affected by many variables; hence,
improvements in the high-level performance measures cannot be directly
attributed to the initiatives in the plan. For example, implementing
RFID at a few sites at a time has only a very small impact on customer
wait time. However, variables such as natural disasters, wartime surges
in requirements, or disruption in the distribution process could affect
that measure. DOD's supply chain materiel management regulation
requires that functional supply chain metrics support at least one
enterprise-level metric.[Footnote 13]
DOD's plan also lacks outcome-focused performance metrics for 6 of the
10 specific improvement initiatives contained in the plan. For example,
while DOD intended to have RFID implemented at 100 percent of its U.S.
and overseas distribution centers by September 2007--a measure
indicating when scheduled milestones are met--it had not yet identified
outcome-focused performance metrics that could be used to show the
impact of implementation on expected outcomes, such as receiving and
shipping timeliness, asset visibility, or supply consumption data. Two
other examples of improvement initiatives that lack outcome-focused
performance metrics are War Reserve Materiel, which aims to more
accurately forecast war reserve requirements by using capability-based
planning and incorporating lessons learned in Operation Iraqi Freedom,
and Joint Theater Logistics, which is an effort to improve the ability
of a joint force commander to execute logistics authorities and
processes within a theater of operations.
One of the challenges in developing departmentwide supply chain
performance measures, according to a DOD official, is obtaining
standardized, reliable data from noninteroperable systems. For example,
the Army currently does not have an integrated method to determine
receipt processing for Supply Support Activities, which could affect
asset visibility and distribution concerns. Some of the necessary data
reside in the Global Transportation Network while other data reside in
the Standard Army Retail Supply System. These two databases must be
manually reviewed and merged in order to obtain the information for
accurate receipt processing performance measures. Nevertheless, we
believe that intermediate measures, such as outcome-focused measures
for each of the initiatives or for the focus areas, could show near-
term progress.
According to a DOD official, in September 2006, DOD awarded a year-long
supply chain benchmarking contract to assess commercial supply chain
metrics. The official indicated that six outcome measures were chosen
for the initial effort: on-time delivery, order fulfillment cycle time,
perfect order fulfillment, supply chain management costs, inventory
days of supply, and forecast accuracy. Furthermore, the specific supply
chains to be reviewed will be recommended by the various DOD components
and approved by an executive committee. According to the same DOD
official, the contractor will be looking at the specific supply chains
approved and the industry equivalent; and a set of performance
scorecards mapping the target supply segment to average and best-in-
class performance from the comparison population will be developed for
each supply chain and provided to the component. This assessment is a
good step but it is too early to determine the effectiveness of this
effort in helping DOD to demonstrate progress toward improving its
supply chain management.
Further, we noted that DOD has not provided cost metrics that might
show efficiencies gained through supply chain improvement efforts. In
addition to improving the provision of supplies to the warfighter and
improving readiness of equipment, DOD's stated goal in its supply chain
management improvement plan is to reduce or avoid costs. However, 9 of
the 10 initiatives in the plan lack cost metrics. Without outcome-
focused performance and cost metrics for each of the improvement
initiatives that are linked to the focus areas, such as requirements
forecasting, asset visibility, and materiel distribution, it is unclear
whether DOD is progressing toward meeting its stated goal.
DOD Has Implemented Recommendations for Improving Aspects of Supply
Chain Management:
Over the last 5 years, audit organizations have made more than 400
recommendations that focused specifically on improving certain aspects
of DOD's supply chain management. DOD or the component organization
concurred with almost 90 percent of these recommendations, and most of
the recommendations that were closed as of the time of our review were
considered implemented. We determined that the three focus areas of
requirements forecasting, asset visibility, and materiel distribution
accounted for 41 percent of the total recommendations made, while other
inventory management and supply chain issues accounted for the
remaining recommendations. We also grouped the recommendations into
five common themes--management oversight, performance tracking, policy,
planning, and processes. Several studies conducted by non-audit
organizations have made recommendations that address supply chain
management as part of a broader review of DOD logistics.
Appendixes I through V summarize the audit recommendations we included
in our baseline. Appendix VI summarizes recommendations made by non-
audit organizations.
DOD or the Component Organization Concurred with Most of the
Recommendations:
In developing a baseline of supply chain management recommendations, we
identified 478 supply chain management recommendations made by audit
organizations between October 2001 and September 2006. DOD or the
component organization concurred with 411 (86 percent) of the
recommendations; partially concurred with 44 recommendations (9
percent); and nonconcurred with 23 recommendations (5 percent).
These recommendations cover a diverse range of objectives and issues
concerning supply chain management. For example, one recommendation
with which DOD concurred was contained in our 2006 report on production
and installation of Marine Corps truck armor. To better coordinate
decisions about what materiel solutions are developed and procured to
address common urgent wartime requirements, we recommended--and DOD
concurred--that DOD should clarify the point at which the Joint Urgent
Operational Needs process should be utilized when materiel solutions
require research and development.[Footnote 14]
In another case, DOD partially concurred with a recommendation in our
2006 report on Radio Frequency Identification (RFID), which consists of
electronic tags that are attached to equipment and supplies being
shipped from one location to another, enabling shipment tracking. To
better track and monitor the use of RFID tags, we recommended--and DOD
partially concurred--that the secretaries of each military service and
the administrators of other components should determine requirements
for the number of tags needed, compile an accurate inventory of the
number of tags currently owned, and establish procedures to monitor and
track tags, including purchases, reuse, losses, and repairs.[Footnote
15] In its response to our report, DOD agreed to direct the military
services and the U.S. Transportation Command to develop procedures to
address the reuse of the tags as well as procedures for the return of
tags no longer required. However, the department did not agree to
establish procedures to account for the procurement, inventory, repair,
or losses of existing tags in the system.
On the other hand, an example of a recommendation that DOD did not
concur with was contained in our 2005 report on supply distribution
operations. To improve the overall efficiency and interoperability of
distribution-related activities, we recommended--but DOD did not
concur--that the Secretary of Defense should clarify the scope of
responsibilities, accountability, and authority between U.S.
Transportation Command's role as DOD's Distribution Process Owner and
other DOD components.[Footnote 16] In its response to our report, DOD
stated that the responsibilities, accountability, and authority of this
role were already clear.
Most Closed Recommendations Were Considered Implemented:
The audit organizations had closed 315 (66 percent) of the 478
recommendations at the time we conducted our review. Of the closed
recommendations, 275 (87 percent) were implemented and 40 (13 percent)
were not implemented as reported by the audit agencies. For example,
one closed recommendation that DOD implemented was in our 2005 report
on oversight of prepositioning programs. To address the risks and
management challenges facing the department's prepositioning programs
and to improve oversight, we recommended that the Secretary of Defense
direct the Chairman, Joint Chiefs of Staff assess the near-term
operational risks associated with current inventory shortfalls and
equipment in poor condition should a conflict arise.[Footnote 17] In
response to our recommendation, the Joint Staff conducted a mission
analysis on several operational plans based on the readiness of
prepositioned assets. On the other hand, an example of a closed
recommendation that DOD did not implement was in our 2003 report on
Navy spare parts shortages. To provide a basis for management to assess
the extent to which ongoing and planned initiatives will contribute to
the mitigation of critical spare parts shortages, we recommended that
the Secretary of Defense direct the Secretary of the Navy to develop a
framework that includes long-term goals; measurable, outcome-related
objectives; implementation goals; and performance measures as a part of
either the Navy Sea Enterprise strategy or the Naval Supply Systems
Command Strategic Plan. DOD agreed with the intent of the
recommendation, but not the prescribed action. The recommendation was
closed but not implemented because the Navy did not plan to modify the
Naval Supply Systems Command Strategic Plan or higher-level Sea
Enterprise Strategy to include a specific focus on mitigating spare
parts shortages.[Footnote 18]
Recommendations to Improve Supply Chain Management Address Five Common
Themes:
Audit recommendations addressing the three focus areas in DOD's supply
chain management improvement plan--requirements forecasting, asset
visibility, and materiel distribution--accounted for 196 (41 percent)
of the total recommendations. The fewest recommendations were made in
the focus area of distribution, accounting for just 6 percent of the
total. Other inventory management issues accounted for most of the
other recommendations. In addition, a small number of recommendations,
less than 1 percent of the total, addressed supply chain management
issues that could not be grouped under any of these other categories.
In further analyzing the recommendations, we found that they addressed
five common themes--management oversight, performance tracking, policy,
planning, and processes. Table 1 shows the number of audit
recommendations made by focus area and theme.
Table 1: Audit Recommendations to Improve Supply Chain Management:
Recommendations addressing focus areas in DOD's supply chain management
plan: Requirements forecasting;
Management oversight: 24;
Performance tracking: 0;
Policy: 25;
Planning: 6;
Processes: 41;
Total: 96.
Recommendations addressing focus areas in DOD's supply chain management
plan: Asset visibility;
Management oversight: 27;
Performance tracking: 5;
Policy: 15;
Planning: 7;
Processes: 19;
Total: 73.
Recommendations addressing focus areas in DOD's supply chain management
plan: Materiel distribution;
Management oversight: 10;
Performance tracking: 3;
Policy: 7;
Planning: 1;
Processes: 6;
Total: 27.
Recommendations addressing focus areas in DOD's supply chain management
plan: Subtotal;
Management oversight: 61;
Performance tracking: 8;
Policy: 47;
Planning: 14;
Processes: 66;
Total: 196.
Recommendations addressing other inventory management issues;
Management oversight: 82;
Performance tracking: 9;
Policy: 56;
Planning: 17;
Processes: 114;
Total: 278.
Recommendations addressing other supply chain issues[A];
Management oversight: 1;
Performance tracking: 0;
Policy: 0;
Planning: 3;
Processes: 0;
Total: 4.
Total;
Management oversight: 144;
Performance tracking: 17;
Policy: 103;
Planning: 34;
Processes: 180;
Total: 478.
Source: GAO analysis.
[A] These recommendations address aspects of supply chain management
that could not be grouped into one of the three focus areas or as
inventory management.
[End of table]
Most of the recommendations addressed processes (38 percent),
management oversight (30 percent), or policy (22 percent), with
comparatively fewer addressing planning (7 percent) and performance
tracking (4 percent). The management oversight theme includes any
recommendations involving compliance, conducting reviews, or providing
information to others. For example, the Naval Audit Service recommended
that the Office of the Commander, U.S. Fleet Forces Command should
enforce existing requirements that ships prepare and submit Ship
Hazardous Material List Feedback Reports and Allowance Change Requests,
whenever required.[Footnote 19] The performance tracking theme includes
recommendations with performance measures, goals, objectives, and
milestones. For example, the Army Audit Agency recommended that funding
for increasing inventory safety levels be withheld until the Army
Materiel Command develops test procedures and identifies key
performance indicators to measure and assess its cost-effectiveness and
impact on operational readiness.[Footnote 20] The policy theme contains
recommendations on issuing guidance, revising or establishing policy,
and establishing guidelines. For example, the DOD-IG recommended that
the Defense Logistics Agency revise its supply operating procedures to
meet specific requirements.[Footnote 21] The planning theme contains
recommendations related to plan, doctrine, or capability development or
implementation, as well as any recommendations related to training. For
example, the Army Audit Agency recommended the Defense Supply Center in
Philadelphia implement a Quality Assurance Surveillance Plan that
encompasses all requirements of the prime vendor contract.[Footnote 22]
The largest theme, processes, consists of recommendations that
processes and procedures should be established or documented, and
recommendations be implemented. For example, we recommended that the
Secretary of Defense direct the service secretaries to establish a
process to share information between the Marine Corps and Army on
developed or developing materiel solutions.[Footnote 23]
Non-audit Organizations' Recommendations Address Supply Chain
Management as Part of a Broader Review of DOD Logistics:
Studies conducted by non-audit organizations contain recommendations
that address supply chain management as part of a broader review of DOD
logistics. For example, the Center for Strategic and International
Studies and the Defense Science Board suggested the creation of a
departmentwide logistics command responsible for end-to-end supply
chain operations. In July 2005, the Center for Strategic and
International Studies issued a report, "Beyond Goldwater-Nichols: U.S.
Government and Defense Reform for a New Strategic Era," which addressed
the entire U.S. national security structure, including the organization
of logistics support. In this report, the study team acknowledged that
recent steps, such as strengthening joint theater logistics and the
existence of stronger coordinating authorities have significantly
increased the unity of effort in logistical support to ongoing
operations. However, according to the study, much of this reflects the
combination of exemplary leadership and the intense operational pull of
Operation Iraqi Freedom, and has not been formalized and
institutionalized by charter, doctrine, or organizational realignment.
It further noted that the fact that a single Distribution Process Owner
was needed to overcome the fragmented structure of DOD's logistical
system underscores the need for fundamental reform. The study team
recommended the integration of the management of transportation and
supply warehousing functions under a single organization such as an
integrated logistics command. The report noted that the Commission on
Roles and Missions also had recommended the formation of a logistics
command back in 1995.
In 2005, the Summer Study Task Force on Transformation, under the
direction of the Under Secretary of Defense for Acquisition,
Technology, and Logistics, convened to assess DOD's transformation
progress, including the transformation of logistics capabilities. In
this assessment, issued in February 2006, the Defense Science Board
suggested that each segment in the supply chain is optimized for that
specific function. For example, in the depot shipping segment of the
supply chain, packages are consolidated into truck-size loads in order
to fill the trucks for efficiency. Yet, optimizing each segment
inevitably suboptimizes the major objective of end-to-end movement from
source to user. The Defense Science Board report further indicated that
although the assignment of the U.S. Transportation Command as the
Distribution Process Owner was an important step towards addressing an
end-to-end supply change, it did not go far enough to meet the
objective of an effective supply chain. The necessary step is to assign
a joint logistics command the authority and accountability for
providing this essential support to global operations.
Unlike recommendations made by audit agencies, DOD does not
systematically track the status of recommendations made by non-audit
organizations. Hence, in our analysis, we did not determine the extent
to which DOD concurred with or implemented recommendations from these
organizations.
Conclusions:
Overcoming systemic, long-standing problems requires comprehensive
approaches. Improving DOD's supply chain management will require
continued progress in defense business transformation, including
completion of a comprehensive, integrated strategy to guide the
department's logistics programs and initiatives. In addition, while DOD
has made a commitment to improving supply chain management, as
demonstrated by the development and implementation of the supply chain
management improvement plan, the plan generally lacks outcome-focused
performance metrics that would enable DOD to track and demonstrate the
extent to which its individual efforts improve supply chain management
or the extent of improvement in the three focus areas of requirements
forecasting, asset visibility, and materiel distribution. Furthermore,
without cost metrics, it will be difficult to show efficiencies gained
through supply chain improvement initiatives.
Recommendations for Executive Action:
To improve DOD's ability to guide logistics programs and initiatives
across the department and to demonstrate the effectiveness, efficiency,
and impact of its efforts to resolve supply chain management problems,
we recommend that the Secretary of Defense direct the Under Secretary
of Defense for Acquisition, Technology, and Logistics to take the
following two actions:
Complete the development of a comprehensive, integrated logistics
strategy that is aligned with other defense business transformation
efforts, including the Enterprise Transition Plan. To facilitate
completion of the strategy, DOD should establish a specific target date
for its completion. Further, DOD should take steps as appropriate to
ensure the supply chain management improvement plan and component-level
logistics plans are synchronized with the department's overall
logistics strategy.
Develop, implement, and monitor outcome-focused performance and cost
metrics for all the individual initiatives in the supply chain
management improvement plan as well as for the plan's focus areas of
requirements forecasting, asset visibility, and materiel distribution.
Agency Comments and Our Evaluation:
In its written comments on a draft of this report, DOD concurred with
our recommendations. The department's response are reprinted in
appendix VII.
In response to our recommendation to complete the development of a
comprehensive, integrated logistics strategy, DOD stated that the
strategy is under development and is aligned with other defense
business transformation efforts. DOD estimated that the logistics
strategy would be completed 6 months after it completes the logistics
portfolio test case in the spring of 2007. DOD did not address whether
it would take steps to ensure the supply chain management improvement
plan and component-level logistics plans are synchronized with the
department's overall logistics strategy. We continue to believe that
these plans must be synchronized with the overall logistics strategy to
effectively guide program efforts across the department and to provide
the means to determine if these efforts are achieving the desired
results.
In response to our recommendation to develop, implement, and monitor
outcome-focused performance and cost metrics, the department indicated
it has developed and implemented outcome-focused performance and cost
metrics for logistics across the department. However, DOD acknowledged
that more work needs to be accomplished in linking the outcome metrics
to the initiatives in the supply chain management improvement plan as
well as for the focus areas of requirements forecasting, asset
visibility, and materiel distribution. DOD stated that these linkages
will be completed as part of full implementation of each initiative. We
are pleased that the department recognized the need for linking outcome-
focused metrics with the individual initiatives and the three focus
areas in its supply chain management improvement plan. However, it is
unclear from DOD's response how and under what timeframes the
department plans to implement this goal. As we noted in the report, DOD
lacks outcome-focused performance metrics for supply chain management,
in part because one of the challenges is obtaining standardized,
reliable data from noninteroperable systems. In addition, initiatives
in the supply chain management plan are many years away from full
implementation. If DOD waits until full implementation to incorporate
outcome-based metrics, it will miss opportunities to assess progress on
an interim basis. We also continue to believe that cost metrics are
critical for DOD to assess progress toward meeting its stated goal of
improving the provision of supplies to the warfighter and improving
readiness of equipment while reducing or avoiding costs through its
supply chain initiatives.
Scope and Methodology:
Our discussion of the integration of supply chain management with
broader defense transformation efforts is based primarily on our prior
reports and testimonies. We obtained information on DOD's "To Be"
logistics roadmap and the joint logistics capabilities portfolio
management test from senior officials in the Office of the Deputy Under
Secretary of Defense for Logistics, Materiel, and Readiness. We met
regularly with DOD and OMB officials to discuss the overall status of
the supply chain management improvement plan, the implementation
schedules of the plan's individual initiatives, and the plan's
performance measures. We visited and interviewed officials from U.S.
Transportation Command, the Defense Logistics Agency, the military
services, and the Joint Staff to gain their perspectives on improving
supply chain management.
To develop a baseline of recommended supply chain management
improvements, we surveyed audit reports covering the time period of
October 2001 to September 2006. We selected this time period because it
corresponds with recent military operations that began with the onset
of Operation Enduring Freedom and, later, Operation Iraqi Freedom. We
surveyed audit reports issued by our office, the DOD-IG, the Army Audit
Agency, the Naval Audit Service, and the Air Force Audit Agency.
For each audit recommendation contained in these reports, we determined
its status and focus. To determine the status of GAO recommendations,
we obtained data from our recommendation tracking system. We noted
whether DOD concurred with, partially concurred with, or did not concur
with each recommendation. In evaluating agency comments on our reports,
we have noted instances where DOD agreed with the intent of a
recommendation but did not commit to taking any specific actions to
address it. For the purposes of this report, we counted these as
concurred recommendations. We also noted whether the recommendation was
open, closed and implemented, or closed and not implemented. In a
similar manner, we worked with DOD-IG and the service audit agencies to
determine the status of their recommendations. We verified with each of
the audit organizations that they agreed with our definition that a
recommendation is considered "concurred with" when the audit
organization determines that DOD or the component organization fully
agreed with the recommendation in it entirety and its prescribed
actions, and "partially concurred with" is when the audit organization
determines that DOD or the component organization agreed to parts of
the recommendation or parts of its prescribed actions. Furthermore, we
verified that a recommendation is officially "closed" when the audit
organization determines that DOD or the component organization has
implemented its provisions or otherwise met the intent of the
recommendation; when circumstances have changed, and the recommendation
is no longer valid; or when, after a certain amount of time, the audit
organization determines that implementation cannot reasonably be
expected. We also verified that an "open" recommendation is one that
has not been closed for one of the preceding reasons. We assessed the
reliability of the data we obtained from DOD-IG and the service audit
agencies by obtaining information on how they track and follow up on
recommendations and determined that their data were sufficiently
reliable for our purposes.
In analyzing the focus of recommendations, we identified those
addressing three specific areas--requirements forecasting, asset
visibility, and materiel distribution--as well those addressing other
supply chain management concerns. We selected these three focus areas
as the framework for our analysis based on our prior work in this high-
risk area and because DOD has structured its supply chain management
improvement plan around them. We then analyzed the recommendations and
further divided them into one of five common themes: management
oversight, performance tracking, planning, process, and policy. To
identify the focus area and theme for each report and recommendation,
three analysts independently labeled each report with a focus area and
identified a theme for each recommendation within the report. The team
of analysts then reviewed the results, discussed any discrepancies, and
reached agreement on the appropriate theme for each recommendation. In
the event of a discrepancy which could not be immediately resolved, we
referred to the original report to clarify what the intent of the
report had been in order to decide on the appropriate focus area and
theme. For the purpose of our analysis, if a recommendation consisted
of multiple actions, we counted and classified each action separately.
We excluded from our analysis recommendations that addressed only a
specific piece of equipment or system. We also excluded recommendations
that addressed other DOD high-risk areas, such as business systems
modernization and financial management. While we included
recommendations by non-audit organizations in our analysis, we did not
determine the extent to which DOD concurred with or implemented them
because their status is not systemically tracked.
We conducted our review from January through November 2006 in
accordance with generally accepted government auditing standards.
We are sending copies of this report to the Director, Office of
Management and Budget; the Secretary of Defense; the Deputy Secretary
of Defense; the Under Secretary of Defense for Acquisition, Technology,
and Logistics; and other interested parties. This report will also be
available at no charge on our Web site at [Hyperlink,
http://www.gao.gov].
Should you or your staff have any questions concerning this report,
please contact me at (202) 512-8365 or solisw@gao.gov. Key contributors
to this report are listed in appendix VIII.
Signed by:
William M. Solis:
Director:
Defense Capabilities and Management:
[End of section]
Appendix I: Supply Chain Management: Summary of GAO Report
Recommendations:
Report title, number, date: Defense Logistics: Lack of a Synchronized
Approach between the Marine Corps and Army Affected the Timely
Production and Installation of Marine Corps Truck Armor (GAO-06-274,
June 22, 2006);
Recommendations: To ensure that the services make informed and
coordinated decisions about what materiel solutions are developed and
procured to address common urgent wartime requirements, GAO recommended
that the Secretary of Defense take the following two actions:
(1) Direct the service secretaries to establish a process to share
information between the Marine Corps and the Army on developed or
developing materiel solutions, and; [Empty];
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Partially concurred, open;
(2) Clarify the point at which the Joint Urgent Operational Needs
process should be utilized when materiel solutions require research and
development;
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Management: Attention Is Needed to
Improve Oversight of DLA Prime Vendor Program (GAO-06-739R, June 19,
2006);
Recommendations: [Empty];
GAO recommended that the Secretary of Defense direct the Under
Secretary of Defense, Acquisition, Technology and Logistics to ensure
that the Director of the Defense Logistics Agency provide continual
management oversight of the corrective actions to address pricing
problems in the prime vendor program;
Focus area: Inventory management;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Inventory: Actions Needed to
Improve Inventory Retention Management (GA0-06-512, May 25, 2006);
Recommendations: GAO recommended that the Secretary of Defense take the
following seven actions: To ensure DOD inventory management centers
properly assign codes to categorize the reasons to retain items in
contingency retention inventory, direct the Under Secretary of Defense
for Acquisition, Technology, and Logistics to:
(1) Direct the Secretary of the Army to instruct the Army Materiel
Command to modify the Commodity Command Standard System so it will
properly categorize the reasons for holding items in contingency
retention inventory;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Partially concurred, open.
(2) Direct the Secretary of the Air Force to instruct the Air Force
Materiel Command to correct the Application Programs, Indenture
system's deficiency to ensure it properly categorizes the reasons for
holding items in contingency retention inventory;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: To ensure that the DOD inventory management centers
retain contingency retention inventory that will meet current and
future operational requirements, direct the Under Secretary of Defense
for Acquisition, Technology, and Logistics to;
(3) Direct the Secretary of the Army to instruct the Army Materiel
Command to require the Aviation and Missile Command to identify items
that no longer support operational needs and determine whether the
items need to be removed from the inventory. The Army Materiel Command
should also determine whether its other two inventory commands, the
Communications- Electronics Command and Tank-automotive and Armaments
Command, are also holding obsolete items, and if so, direct those
commands to determine whether the disposal of those items is warranted;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: To ensure that DOD inventory management centers
conduct annual reviews of contingency retention inventory as required
by DOD's Supply Chain Materiel Management Regulation, direct the Under
Secretary of Defense for Acquisition, Technology, and Logistics to:
(4) Direct the Director of the Defense Logistics Agency to require the
Defense Supply Center Richmond to conduct annual reviews of contingency
retention inventory. The Defense Logistics Agency should also determine
whether its other two centers, the Defense Supply Center Columbus and
the Defense Supply Center Philadelphia, are conducting annual reviews,
and if not, direct them to conduct the reviews so they can ensure the
reasons for retaining the contingency retention inventory are valid;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: (5) Direct the Secretary of the Navy to instruct the
Naval Inventory Control Point Mechanicsburg to conduct annual reviews
of contingency retention inventory. The Naval Inventory Control Point
should also determine if its other organization, Naval Inventory
Control Point Philadelphia, is conducting annual reviews and if not,
direct the activity to conduct the reviews so it can ensure the reasons
for retaining the contingency retention inventory are valid;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: (6) Direct the Secretary of the Army to instruct the
Army Materiel Command to require the Aviation and Missile Command to
conduct annual reviews of contingency retention inventory. The Army
Materiel Command should also determine if its other two inventory
commands, the Communications- Electronics Command and Tank-automotive
and Armaments Command, are conducting annual reviews and if not, direct
the commands to conduct the reviews so they can ensure the reasons for
retaining the contingency retention inventory are valid;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: To ensure that DOD inventory management centers
implement departmentwide policies and procedures for conducting annual
reviews of contingency retention inventories, direct the Office of the
Deputy Under Secretary of Defense for Logistics and Materiel Readiness
to take the following action:
Recommendations: (7) Revise the DOD's Supply Chain Materiel Management
Regulation to make clear who is responsible for providing recurring
oversight to ensure the inventory management centers conduct the annual
reviews of contingency retention inventory;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Logistics: Several Factors Limited
the Production and Installation of Army Truck Armor during Current
Wartime Operations (GAO-06-160, March 22, 2006);
Recommendations: [Empty];
Recommendations: To ensure funding needs for urgent wartime
requirements are identified quickly, requests for funding are well
documented, and funding decisions are based on risk and an assessment
of the highest priority requirements, GAO recommended the Secretary of
Defense direct the Secretary of the Army to establish a process to
document and communicate all urgent wartime funding requirements for
supplies and equipment at the time they are identified and the
disposition of funding decisions;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred with intent, open.
Report title, number, date: Defense Logistics: More Efficient Use of
Active RFID Tags Could Potentially Avoid Millions in Unnecessary
Purchases (GAO-06-366R, March 8, 2006);
Recommendations: GAO recommended that the Secretary of Defense direct
the Under Secretary of Defense (Acquisition, Technology, and Logistics)
to take the following two actions:
Recommendations: (1) Modify the July 30, 2004, RFID policy and other
operational guidance to require that active RFID tags be returned for
reuse or be reused by the military services and other users;
Focus area: Asset visibility;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: (2) Direct the secretaries of each military service
and administrators of other components to establish procedures to track
and monitor the use of active RFID tags, to include;
* determining requirements for the number of tags needed,;
* compiling an accurate inventory of the number of tags currently
owned, and;
* establishing procedures to monitor and track tags, including
purchases, reuse, losses, repairs, and any other categories that would
assist management's oversight of these tags;
Theme: Process;
Status of recommendations: Partially concurred, open.
Report title, number, date: Defense Inventory: Army Needs to Strengthen
Internal Controls for Items Shipped to Repair Contractors (GAO-06-209,
December 13, 2005);
Recommendations: To improve accountability of inventory shipped to Army
repair contractors, GAO recommended that the Secretary of Defense
direct the Secretary of the Army to instruct the Commanding General,
Army Materiel Command, to take the following six actions:
Recommendations: (1) Establish systematic procedures to obtain and
document contractors' receipt of secondary repair item shipments in the
Army's inventory management systems, and to follow up on unconfirmed
receipts within 45 days of shipment;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (2) Institute policies, consistent with DOD
regulations, for obtaining and documenting contractors' receipt of
government-furnished materiel shipments in the Army's inventory
management systems;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: (3) Provide quarterly status reports of all shipments
of Army government- furnished materiel to Defense Contract Management
Agency, in compliance with DOD regulations;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: (4) Examine the feasibility of implementing DOD
guidance for providing advance notification to contractors at the time
of shipment and, if warranted, establish appropriate policies and
procedures for implementation;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: (5) Analyze receipt records for secondary repair items
shipped to contractors and take actions necessary to update and adjust
inventory management data prior to transfer to the Logistics
Modernization Program. These actions should include investigating and
resolving shipments that lack matching receipts to determine their
status;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (6) To ensure consistent implementation of any new
procedures arising from the recommendations in this report, provide
periodic training to appropriate inventory control point personnel and
provide clarifying guidance concerning these new procedures to the
command's repair contractors;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Logistics: DOD Has Begun to Improve
Supply Distribution Operations, but Further Actions Are Needed to
Sustain These Efforts (GAO-05-775, August 11, 2005);
Recommendations: To enhance DOD's ability to take a more coordinated
and systemic approach to improving the supply distribution system, GAO
recommended that the Secretary of Defense take the following three
actions:
Recommendations: (1) Clarify the scope of responsibilities,
accountability, and authority between the Distribution Process Owner
and the Defense Logistics Executive as well as the roles and
responsibilities between the Distribution Process Owner, the Defense
Logistics Agency, and Joint Forces Command;
Focus area: Materiel distribution;
Theme: Management oversight;
Status of recommendations: Nonconcurred, open.
Recommendations: (2) Issue a directive instituting these decisions and
make other related changes, as appropriate, in policy and doctrine;
Theme: Policy;
Status of recommendations: Nonconcurred, open.
Recommendations: (3) Improve the Logistics Transformation Strategy by
directing the Under Secretary of Defense (Acquisition, Technology, and
Logistics) to include specific performance goals, programs, milestones,
and resources to achieve focused logistics capabilities in the Focused
Logistics Roadmap;
Theme: Performance tracking;
Status of recommendations: Concurred, open.
Recommendations: To address the current underfunding of the Very Small
Aperture Terminal and the Mobile Tracking System, GAO recommended that
the Secretary of Defense direct the Secretary of the Army to determine
whether sufficient funding priority has been be given to the
acquisition of these systems and, if not, to take appropriate
corrective action;
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Logistics: Better Management and
Oversight of Prepositioning Programs Needed to Reduce Risk and Improve
Future Programs (GAO-05-427, September 6, 2005);
Recommendations: To address the risks and management challenges facing
the department's prepositioning programs and improve oversight, GAO
recommended that the Secretary of Defense take the following five
actions:
Recommendations: (1) Direct the Chairman, Joint Chiefs of Staff, to
assess the near-term operational risks associated with current
inventory shortfalls and equipment in poor condition should a conflict
arise;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (2) Direct the Under Secretary of Defense for
Acquisition, Technology, and Logistics to provide oversight over the
department's prepositioning programs by fully implementing the
department's directive on war reserve materiel and, if necessary,
revise the directive to clarify the lines of accountability for this
oversight;
Theme: Management oversight;
Status of recommendations: Partially concurred, open.
Recommendations: (3) Direct the Secretary of the Army to improve the
processes used to determine requirements and direct the Secretary of
the Army and Air Force to improve the processes used to determine the
reliability of inventory data so that the readiness of their
prepositioning programs can be reliably assessed and proper oversight
over the programs can be accomplished;
Theme: Process;
Status of recommendations: Partially concurred, open.
Recommendations: (4) Develop a coordinated departmentwide plan and
joint doctrine for the department's prepositioning programs that
identifies the role of prepositioning in the transformed military and
ensures these programs will operate jointly, support the needs of the
war fighter, and are affordable;
Theme: Planning;
Status of recommendations: Partially concurred, open.
Recommendations: (5) Report to Congress, possibly as part of the
mandated October 2005 report, how the department plans to manage the
near-term operational risks created by inventory shortfalls and
management and oversight issues described in this report;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Logistics: Better Strategic
Planning Can Help Ensure DOD's Successful Implementation of Passive
Radio Frequency Identification (GAO-05-345, September 12, 2005);
Recommendations: GAO recommend that the Secretary of Defense take the
following three actions:
Recommendations: (1) Direct the Under Secretary of Defense
(Acquisition, Technology, and Logistics) to expand its current RFID
planning efforts to include a DOD-wide comprehensive strategic
management approach that will ensure that RFID technology is
efficiently and effectively implemented throughout the department. This
strategic management approach should incorporate the following key
management principles:
* an integrated strategy with goals, objectives, and results for fully
implementing RFID in the DOD supply chain process, to include the
interoperability of automatic information systems;
* a description of specific actions needed to meet goals and
objectives;
* performance measures or metrics to evaluate progress toward achieving
the goals;
* schedules and milestones for meeting deadlines;
* identification of total RFID resources needed to achieve full
implementation; and;
* an evaluation and corrective action plan;
Focus area: Asset visibility;
Theme: Planning;
Status of recommendations: Nonconcurred, open.
(2) Direct the secretaries of each military service and administrators
of other DOD military components to develop individual comprehensive
strategic management approaches that support the DOD-wide approach for
fully implementing RFID into the supply chain processes;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Recommendations: (3) Direct the Under Secretary of Defense
(Acquisition, Technology, and Logistics), the secretaries of each
military service, and administrators of other military components to
develop a plan that identifies the specific challenges impeding passive
RFID implementation and the actions needed to mitigate these
challenges. Such a plan could be included in the strategic management
approach that GAO recommended they develop;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Nonconcurred, open.
Report title, number, date: Defense Logistics: Actions Needed to
Improve the Availability of Critical Items during Current and Future
Operations (GA0-05-275, April 8, 2005);
Recommendations: To improve the effectiveness of DOD's supply system in
supporting deployed forces for contingencies, GAO recommended that the
Secretary of Defense direct the Secretary of the Army to take the
following three actions and specify when they will be completed:
Recommendations: (1) Improve the accuracy of Army war reserve
requirements and transparency about their adequacy by:
* updating the war reserve models with OIF consumption data that
validate the type and number of items needed,;
* modeling war reserve requirements at least annually to update the war
reserve estimates based on changing operational and equipment
requirements, and;
* disclosing to Congress the impact on military operations of its risk
management decision about the percentage of war reserves being funded;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred with intent, open.
Recommendations; (2) Improve the accuracy of its wartime supply
requirements forecasting process by:
* developing models that can compute operational supply requirements
for deploying units more promptly as part of prewar planning and;
* providing item managers with operational information in a timely
manner so they can adjust modeled wartime requirements as necessary;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred with intent, open.
Recommendations: (3) Reduce the time delay in granting increased
obligation authority to the Army Materiel Command and its subordinate
commands to support their forecasted wartime requirements by
establishing an expeditious supply requirements validation process that
provides accurate information to support timely and sufficient funding;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred with intent, open.
Recommendations: (4) GAO also recommended that the Secretary of Defense
direct the Secretary of the Navy to improve the accuracy of the Marine
Corps' wartime supply requirements forecasting process by completing
the reconciliation of the Marine Corps' forecasted requirements with
actual OIF consumption data to validate the number as well as types of
items needed and making necessary adjustments to their requirements.
The department should also specify when these actions will be
completed;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred with intent, open.
Recommendations: GAO recommended that the Secretary of Defense direct
the Secretary of the Army and Director of the Defense Logistics Agency
to take the following two actions:
Recommendations: (5) Minimize future acquisition delays by assessing
the industrial-base capacity to meet updated forecasted demands for
critical items within the time frames required by operational plans as
well as specify when this assessment will be completed, and;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred with intent, open.
Recommendations: (6) Provide visibility to Congress and other decision
makers about how the department plans to acquire critical items to meet
demands that emerge during contingencies;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred with intent, open.
Recommendations: GAO also recommended the Secretary of Defense take the
following three actions and specify when they would be completed:
Recommendations: (7) Revise current joint logistics doctrine to clearly
state, consistent with policy, who has responsibility and authority for
synchronizing the distribution of supplies from the United States to
deployed units during operations;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred with intent, open.
Recommendations: (8) Develop and exercise, through a mix of computer
simulations and field training, deployable supply receiving and
distribution capabilities including trained personnel and related
equipment for implementing improved supply management practices, such
as radio frequency identification tags that provide in-transit
visibility of supplies, to ensure they are sufficient and capable of
meeting the requirements in operational plans; and;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred with intent, open.
Recommendations: (9) Establish common supply information systems that
ensure the DOD and the services can requisition supplies promptly and
match incoming supplies with unit requisitions to facilitate
expeditious and accurate distribution;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred with intent, open.
Report title, number, date: Defense Inventory: Improvements Needed in
DOD's Implementation of Its Long-Term Strategy for Total Asset
Visibility of Its Inventory (GA0-05-15, December 6, 2004);
Recommendations: GAO continued to believe, as it did in April 1999,
that DOD should develop a cohesive, departmentwide plan to ensure that
total asset visibility is achieved. Specifically, GAO recommended that
the Secretary of Defense develop a departmentwide long-term total asset
visibility strategy as part of the Business Enterprise Architecture
that:
Recommendations: (1) Describes the complete management structure and
assigns accountability to specific offices throughout the department,
with milestones and performance measures, for ensuring timely success
in achieving total asset visibility;
Focus area: Asset visibility;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, implemented.
Recommendations: (2) Identifies the resource requirements for
implementing total asset visibility and includes related investment
analyses that show how the major information technology investments
will support total asset visibility goals;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred with intent, open.
Recommendations: (3) Identifies how departmentwide systems issues that
affect implementation of total asset visibility will be addressed; and;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred with intent, closed, implemented.
Recommendations: (4) Establishes outcome- oriented total asset
visibility goals and performance measures for all relevant components
and closely links the measures with timelines for improvement. In
addition, since 2001, GAO made a number of recommendations aimed at
improving DOD's refinement and implementation of the business
management modernization program. Most recently, GAO identified the
need to have component plans clearly linked to the long- term
objectives of the department's business management modernization
program. As they relate to total asset visibility, GAO continued to
believe that these recommendations were valid;
Focus area: [Empty];
Theme: Performance tracking;
Status of recommendations: Partially concurred, open.
Report title, number, date: Foreign Military Sales: DOD Needs to Take
Additional Actions to Prevent Unauthorized Shipments of Spare Parts
(GAO-05-17, November 9, 2004);
Recommendations: To reduce the likelihood of releasing classified and
controlled spare parts that DOD does not want to be released to foreign
countries, GAO recommended that the Secretary of Defense take the
following three actions:
Recommendations: (1) Direct the Under Secretary of Defense for Policy,
in conjunction with the Secretaries of the Army and the Navy, and
direct the Secretary of the Air Force to develop an implementation
plan, such as a Plan of Actions & Milestones, specifying the remedial
actions to be taken to ensure that applicable testing and review of the
existing requisition-processing systems are conducted on a periodic
basis;
Focus area: Inventory management;
Theme: Planning;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (2) Direct the Under Secretary of Defense for Policy,
in conjunction with the Secretaries of the Army, the Air Force, and the
Navy, to determine whether current plans for developing the Case
Execution Management Information System call for periodic testing and,
if not, provide for such testing;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (3) Direct the Under Secretary of Defense for Policy,
in conjunction with the Secretary of the Navy, and direct the Secretary
of the Air Force to determine if it would be beneficial to modify the
Navy's and the Air Force's requisition-processing systems so that the
systems reject requisitions for classified or controlled parts that
foreign countries make under blanket orders and preclude country
managers from manually overriding system decisions, and to modify their
systems as appropriate;
Theme: Process;
Status of recommendations: Concurred, closed, not implemented.
Report title, number, date: Defense Inventory: Navy Needs to Improve
the Management Over Government-Furnished Material Shipped to Its Repair
Contractors (GAO-04-779, July 23, 2004);
Recommendations: To improve the control of government-furnished
material shipped to Navy repair contractors, GAO recommended that the
Secretary of Defense direct the Secretary of the Navy to instruct the
Commander, Naval Inventory Control Point, to implement the following
three actions:
Recommendations: (1) Require Navy repair contractors to acknowledge
receipt of material that is received from the Navy's supply system as
prescribed by DOD procedure;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (2) Follow up on unconfirmed material receipts within
the 45 days as prescribed in the DOD internal control procedures to
ensure that the Naval Inventory Control Point can reconcile material
shipped to and received by its repair contractors;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (3) Implement procedures to ensure that quarterly
reports of all shipments of government-furnished material to Navy
repair contractors are generated and distributed to the Defense
Contract Management Agency;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Defense Inventory: Analysis of Consumption
of Inventory Exceeding Current Operating Requirements Since September
30, 2001 (GA0-04-689, August 2, 2004);
Recommendations: To address the inventory management shortcomings that
GAO identified, GAO recommended that the Secretary of Defense take the
following three actions:
Recommendations: (1) Direct the military services and the Defense
Logistics Agency to determine whether it would be beneficial to use the
actual storage cost data provided by Defense Logistics Agency in their
computations, instead of using estimated storage costs, and include
that data in their systems and models as appropriate;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Direct the Secretary of the Air Force to establish
and implement a systemwide process for correcting causes of inventory
discrepancies between the inventory for which item managers are
accountable and the inventory reported by bases and repair centers;
and;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (3) Direct the Secretary of the Air Force to revise
its policy to require item managers to code inventory so that the
inventory is properly categorized;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Foreign Military Sales: Improved Navy
Controls Could Prevent Unauthorized Shipments of Classified and
Controlled Spare Parts to Foreign Countries (GAO-04-507, June 25,
2004);
Recommendations: To improve internal controls over the Navy's foreign
military sales program and to prevent foreign countries from obtaining
classified and controlled spare parts under blanket orders, GAO
recommended that the Secretary of Defense instruct the Secretary of the
Navy to take the following six actions:
Recommendations: (1) Consult with the appropriate officials to resolve
the conflict between the DOD and Navy policies on the Navy's use of
waivers allowing foreign countries to obtain classified spare parts
under blanket orders;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Determine and implement the necessary changes
required to prevent the current system from erroneously approving
blanket order requisitions for classified spare parts until the new
system is deployed;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (3) Establish policies and procedures for the Navy's
country managers to follow when documenting their decisions to override
the system when manually processing blanket order requisitions;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (4) Require that the Navy's country managers manually
enter blanket order requisitions into the Navy's system to correctly
represent foreign-country-initiated orders versus U.S. government-
initiated orders so the Navy's system will validate whether the foreign
countries are eligible to receive the requested spare parts;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: 5) Establish policies and procedures to follow for
blanket orders when the Navy's country managers replace spare parts
requested by manufacturer or vendor part numbers with corresponding
government national stock numbers;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (6) Establish interim policies and procedures, after
consulting with appropriate government officials, for recovering
classified or controlled spare parts shipped to foreign countries that
might not have been eligible to receive them under blanket orders until
the Defense Security Cooperation Agency develops guidance on this
issue;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Partially concurred, closed, not
implemented.
Recommendations: To improve the Navy system's internal controls aimed
at preventing foreign countries from obtaining classified and
controlled spare parts under blanket orders, GAO recommended that the
Secretary of Defense direct the Under Secretary of Defense for Policy
to require the appropriate officials to take the following two actions:
Recommendations: (7) Modify the Navy's system to revalidate blanket
order requisitions when the Navy's country manager replaces spare parts
that are requested by manufacturer or vendor part numbers;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (8) Periodically test the system to ensure that it is
accurately reviewing blanket order requisitions before approving them;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Foreign Military Sales: Improved Army
Controls Could Prevent Unauthorized Shipments of Classified Spare Parts
and Items Containing Military Technology to Foreign Countries (GAO-04-
327, April 15, 2004);
Recommendations: To improve internal controls over the Army's foreign
military sales program and to prevent foreign countries from being able
to obtain classified spare parts or unclassified items containing
military technology that they are not eligible to receive under blanket
orders, GAO recommended that the Secretary of Defense instruct the
Secretary of the Army to take the following two actions:
Recommendations: (1) Modify existing policies and procedures, after
consultation with the appropriate government officials, to cover items
shipped in lieu of items ordered to also ensure the recovery of
classified spare parts that have been shipped to foreign countries that
may not be eligible to receive them under blanket orders;
Focus area: Inventory management;
Theme: Policy;
Status of recommendations: Nonconcurred, closed, not implemented.
Recommendations: (2) Modify existing policies and procedures covering
items, after consultation with the appropriate government officials, to
cover items shipped in lieu of items ordered to also ensure the
recovery of unclassified items containing military technology that have
been shipped to foreign countries that may not be eligible to receive
them under blanket orders;
Theme: Policy;
Status of recommendations: Nonconcurred, closed, not implemented.
Recommendations: To improve the Army system's internal controls aimed
at preventing foreign countries from obtaining classified spare parts
or unclassified items containing military technology under blanket
orders, GAO recommended that the Secretary of Defense direct the Under
Secretary of Defense for Policy to require the appropriate officials to
take the following two actions:
Recommendations: (3) Modify the system so that it identifies blanket
order requisitions for unclassified items containing military
technology that should be reviewed before they are released;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (4) Periodically test the system and its logic for
restricting requisitions to ensure that the system is accurately
reviewing and approving blanket order requisitions;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Defense Inventory: Opportunities Exist to
Improve Spare Parts Support Aboard Deployed Navy Ships (GAO-03-887,
August 29, 2003);
Recommendations: In order to improve supply availability, enhance
operations and mission readiness, and reduce operating costs for
deployed ships, GAO recommended the Secretary of Defense direct the
Secretary of the Navy to:
Recommendations: (1) Develop plans to conduct periodic ship
configuration audits and to ensure that configuration records are
updated and maintained in order that accurate inventory data can be
developed for deployed ships;
Focus area: Requirements forecasting;
Theme: Planning;
Status of recommendations: Concurred, open.
Recommendations: (2) Ensure that demand data for parts entered into
ship supply systems are recorded promptly and accurately as required to
ensure that onboard ship inventories reflect current usage or demands;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (3) Periodically identify and purge spare parts from
ship inventories to reduce costs when parts have not been requisitioned
for long periods of time and are not needed according to current and
accurate configuration and parts demand information; and;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: (4) Ensure that casualty reports are issued consistent
with high priority maintenance work orders, as required by Navy
instruction, to provide a more complete assessment of ship's readiness;
Theme: Management oversight;
Status of recommendations: Concurred with intent, closed, implemented.
Report title, number, date: Defense Inventory: Several Actions Are
Needed To Further DLA's Efforts to Mitigate Shortages of Critical Parts
(GA0-03-709, August 1, 2003);
Recommendations: To improve the supply availability of critical
readiness degrading spare parts that may improve the overall readiness
posture of the military services, GAO recommended that the Secretary of
Defense direct the Director of the Defense Logistics Agency to:
Recommendations: (1) Submit, as appropriate, requests for waiver(s) of
the provisions of the DOD Supply Chain Materiel Management Regulation
4140.1-R that limit the safety level of supply parts to specific demand
levels. Such waivers would allow Defense Logistics Agency to buy
sufficient critical spare parts that affect readiness of service weapon
systems to attain an 85 percent minimum availability goal;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Change the agency's current aggregate 85 percent
supply availability goal for critical spare parts that affect
readiness, to a minimum 85 percent supply availability goal for each
critical spare part, and because of the long lead times in acquiring
certain critical parts, establish annual performance targets for
achieving the 85 percent minimum goal; and;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: (3) Prioritize funding as necessary to achieve the
annual performance targets and ultimately the 85 percent minimum supply
availability goal;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: (4) Ensure that casualty reports are issued consistent
with high priority maintenance work orders, as requested by navy
instruction, to provide a more complete assessment of ship's readiness;
Focus area: [Empty];
Theme: Management oversight;
Status of Recommendations: Concurred with intent, closed, implemented.
Report title, number, date: Foreign Military Sales: Improved Air Force
Controls Could Prevent Unauthorized Shipments of Classified and
Controlled Spare Parts to Foreign Countries (GAO-03-664, July 29,
2003);
Recommendations: To improve internal controls over the Air Force's
foreign military sales program and to minimize countries' abilities to
obtain classified or controlled spare parts under blanket orders for
which they are not eligible, GAO recommended that the Secretary of
Defense instruct the Secretary of the Air Force to require the
appropriate officials to take the following steps:
Recommendations: (1) Modify the Security Assistance Management
Information System so that it validates country requisitions based on
the requisitioned item's complete national stock number;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Establish policies and procedures for recovering
classified or controlled items that are erroneously shipped;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: (3) Establish polices and procedures for validating
modifications made to the Security Assistance Management Information
System to ensure that the changes were properly made;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: (4) Periodically test the Security Assistance
Management Information System to ensure that the system's logic for
restricting requisitions is working correctly;
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (5) Establish a policy for command country managers to
document the basis for their decisions to override Security Assistance
Management Information System or foreign military sales case manager
recommendations;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Defense Inventory: Navy Logistics Strategy
and Initiatives Need to Address Spare Parts Shortages (GA0-03-708, June
27, 2003);
Recommendations: GAO recommended that the Secretary of Defense direct
the Secretary of the Navy to:
Recommendations: (1) Develop a framework for mitigating critical spare
parts shortages that includes long-term goals; measurable, outcome-
related objectives; implementation goals; and performance measures as a
part of either the Navy Sea Enterprise strategy or the Naval Supply
Systems Command Strategic Plan, which will provide a basis for
management to assess the extent to which ongoing and planned
initiatives will contribute to the mitigation of critical spare parts
shortages; and;
Focus area: Inventory management;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: (2) Implement the Office of the Secretary of Defense's
recommendation to report, as part of budget requests, the impact of
funding on individual weapon system readiness with a specific milestone
for completion;
Theme: Process;
Status of recommendations: Concurred with intent, closed, implemented.
Report title, number, date: Defense Inventory: The Department Needs a
Focused Effort to Overcome Critical Spare Parts Shortages (GA0-03-707,
June 27, 2003);
Recommendations: In order to improve the department's logistics
strategic plan to achieve results for overcoming spare parts shortages,
improve readiness, and address the long-standing weaknesses that are
limiting the overall economy and efficiency of logistics operations,
GAO recommended that the Secretary of Defense direct the Under
Secretary for Acquisition, Technology, and Logistics to:
Recommendations: (1) Incorporate clear goals, objectives, and
performance measures pertaining to mitigating spare parts shortages in
the Future Logistics Enterprise or appropriate agencywide initiatives
to include efforts recommended by the Under Secretary of Defense,
Comptroller in his August 2002 study report;
Focus area: Inventory management;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: GAO also recommended that the Secretary of Defense
direct the Under Secretary of Defense, Comptroller to:
Recommendations: (2) Establish reporting milestones and define how it
will measure progress in implementing the August 2002 Inventory
Management Study recommendations related to mitigating critical spare
parts shortages;
Theme: Performance tracking;
Status of recommendations: Partially concurred, closed, not
implemented.
Report title, number, date: Defense Inventory: Air Force Plans and
Initiatives to Mitigate Spare Parts Shortages Need Better
Implementation (GA0-03-706, June 27, 2003);
Recommendations: GAO recommended that the Secretary of Defense direct
the Secretary of the Air Force to take the following steps:
Recommendations: (1) Incorporate the Air Force Strategic Plan's
performance measures and targets into the subordinate Logistics Support
Plan and the Supply Strategic Plan;
Focus area: Inventory management;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, implemented.
Recommendations: (2) Commit to start those remaining initiatives needed
to address the causes of spare parts shortages or clearly identify how
the initiatives have been incorporated into those initiatives already
underway;
Theme: Process;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: (3) Adopt performance measures and targets for its
initiatives that will show how their implementation will affect
critical spare parts availability and readiness;
Theme: Performance tracking;
Status of recommendations: Concurred with intent, closed, implemented.
Recommendations: (4) Direct the new Innovation and Transformation
Directorate to establish plans and priorities for improving management
of logistics initiatives consistent with the Air Force Strategic Plan;
Theme: Planning;
Status of recommendations: Concurred with intent, closed, implemented.
Recommendations: (5) Request spare parts funds in the Air Force's
budget consistent with results of its spare parts requirements
determination process;
Theme: Process;
Status of recommendations: Concurred with intent, closed, implemented.
Report title, number, date: Defense Inventory: The Army Needs a Plan to
Overcome Critical Spare Parts Shortages (GA0-03-705, June 27, 2003);
Recommendations: GAO recommended that the Secretary of Defense direct
the Secretary of the Army to:
Recommendations: (1) Modify or supplement the Transformation Campaign
Plan, or the Army-wide logistics initiatives to include a focus on
mitigating critical spare parts shortages with goals, objectives,
milestones, and quantifiable performance measures, such as supply
availability and readiness-related outcomes and;
Focus area: Inventory management;
Theme: Planning;
Status of recommendations: Concurred with intent, closed, not
implemented.
Recommendations: (2) Implement the Office of Secretary of Defense
recommendation to report, as part of budget requests, the impact of
additional spare parts funding on equipment readiness with specific
milestones for completion;
Theme: Process;
Status of recommendations: Concurred with intent, closed, implemented.
Report title, number, date: Defense Inventory: Overall Inventory and
Requirements Are Increasing, but Some Reductions in Navy Requirements
Are Possible (GA0-03-355, May 8, 2003);
Recommendations: To improve the accuracy of the Navy's secondary
inventory requirements, GAO recommended that the Secretary of Defense
direct the Secretary of the Navy to require the Commander, Naval Supply
Systems Command, to require its inventory managers to use the most
current data available for computing administrative lead time
requirements;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Defense Inventory: Better Reporting on
Spare Parts Spending Will Enhance Congressional Oversight (GA0-03-18,
October 24, 2002);
Recommendations: Given the importance of spare parts to maintaining
force readiness, and as justification for future budget requests,
actual and complete information would be important to DOD as well as
Congress. Therefore, GAO recommended that the Secretary of Defense:
Recommendations: (1) Issue additional guidance on how the services are
to identify, compile, and report on actual and complete spare parts
spending information, including supplemental funding, in total and by
commodity, as specified by Exhibit OP-31 and;
Focus area: Inventory management;
Theme: Policy;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (2) Direct the Secretaries of the military departments
to comply with Exhibit OP-31 reporting guidance to ensure that complete
information is provided to Congress on the quantities of spare parts
purchased and explanations of deviations between programmed and actual
spending;
Theme: Management oversight;
Status of recommendations: Partially concurred, closed, implemented.
Report title, number, date: Defense Management: Munitions Requirements
and Combatant Commanders' Needs Require Linkage (GAO-03-17, October 15,
2002);
Recommendations: GAO recommended that the Secretary of Defense
establish a direct link between the munitions needs of the combatant
commands--recognizing the impact of weapons systems and munitions
preferred or expected to be employed--and the munitions requirements
determinations and purchasing decisions made by the military services;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Defense Inventory: Improved Industrial Base
Assessment for Army War Reserve Spares Could Save Money (GA0-02-650,
July 12, 2002);
Recommendations: In order to improve the Army's readiness for wartime
operations, achieve greater economy in purchasing decisions, and
provide Congress with accurate budget submissions for war reserve spare
parts, GAO recommended that the Secretary of Defense direct the
Secretary of the Army to have the Commander of Army Material Command
take the following actions to expand or change its current process
consistent with the attributes in this report:
Recommendations: (1) Establish an overarching industrial base
capability assessment process that considers the attributes in this
report;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Partially concurred, closed, not
implemented.
Recommendations: (2) Develop a method to efficiently collect current
industrial base capability data directly from industry itself;
Theme: Process;
Status of recommendations: Partially concurred, closed, not
implemented.
Recommendations: (3) Create analytical tools that identify potential
production capability problems such as those due to surge in wartime
spare parts demand;
Theme: Process;
Status of recommendations: Partially concurred, closed, not
implemented.
Recommendations: (4) Create management strategies for resolving spare
parts availability problems, for example, by changing acquisition
procedures or by targeting investments in material and technology
resources to reduce production lead times;
Theme: Process;
Status of recommendations: Partially concurred, closed, not
implemented.
Report title, number, date: Defense Inventory: Air Force Needs to
Improve Control Of Shipments to Repair Contractors (GA0-02-617, July 1,
2002);
Recommendations: To improve the control of inventory being shipped, GAO
recommended that the Secretary of Defense direct the Secretary of the
Air Force to undertake the following: Improve processes for providing
contractor access to government-furnished material by:
Recommendations: (1) Listing specific stock numbers and quantities of
material in repair contracts (as they are modified or newly written)
that the inventory control points have agreed to furnish to
contractors;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Demonstrating that automated internal control
systems for loading and screening stock numbers and quantities against
contractor requisitions perform as designed; Focus area: [Empty];
Theme: Process;
Status of recommendations: Nonconcurred, closed, not implemented.
Recommendations: (3) Loading stock numbers and quantities that the
inventory control points have agreed to furnish to contractors into the
control systems manually until the automated systems have been shown to
perform as designed;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, not
implemented.
Recommendations: (4) Requiring that waivers to loading stock numbers
and quantities manually are adequately justified and documented based
on cost-effective and/or mission- critical needs;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: Revise Air Force supply procedures to include explicit
responsibility and accountability for:
Recommendations: (5) Generating quarterly reports of all shipments of
Air Force material to contractors;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (6) Distributing the reports to Defense Contract
Management Agency property administrators;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (7) Determine, for the contractors in our review, what
actions are needed to correct problems in posting material receipts;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, not implemented.
Recommendations: (8) Determine, for the contractors in our review, what
actions are needed to correct problems in reporting shipment
discrepancies;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, not implemented.
Recommendations: (9) Establish interim procedures to reconcile records
of material shipped to contractors with records of material received by
them, until the Air Force completes the transition to its Commercial
Asset Visibility system in fiscal year 2004;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (10) Comply with existing procedures to request,
collect, and analyze contractor shipment discrepancy data to reduce the
vulnerability of shipped inventory to undetected loss, misplacement, or
theft;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Partially concurred, closed, not
implemented.
Report title, number, date: Defense Inventory: Control Weaknesses Leave
Restricted and Hazardous Excess Property Vulnerable to Improper Use,
Loss, and Theft (GAO-02-75, January 25, 2002);
Recommendations: For all programs, GAO recommended that the Secretary
of Defense direct the Director of the Defense Logistics Agency to take
the following actions:
Recommendations: (1) As part of the department's redesign of its
activity code database, establish codes that identify the type of
excess property--by federal supply class--and the quantity that each
special program is eligible to obtain and provide accountable program
officers access to appropriate information to identify any
inconsistencies between what was approved and what was received;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: (2) Reiterate policy stressing that Defense
reutilization facility staff must notify special program officials of
the specific tracking and handling requirements of hazardous items and
items with military technology/applications;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: GAO also recommended that the Secretary of Defense
ensure that accountable program officers within the department verify,
prior to approving the issuance of excess property, the eligibility of
special programs to obtain specific types and amounts of property,
including items that are hazardous or have military
technology/applications. This could be accomplished, in part, through
the department's ongoing redesign of its activity code database;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: For each individual program, GAO further recommended
the following:
Recommendations: (1) With regard to the 12th Congressional Regional
Equipment Center, that the Secretary of Defense direct the Director of
the Defense Logistics Agency to review and amend, as necessary, its
agreement with the Center in the following areas:
(a) The Center's financial responsibility for the cost of shipping
excess property obtained under the experimental project,;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 1(b) The ancillary items the Center is eligible to
receive,;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 1(c) The rules concerning the sale of property and
procedures for the Center to notify the Agency of all proposed sales of
excess property,;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 1(d) The Center's responsibility for tracking items
having military technology/ application and hazardous items, and;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 1(e) The need for Agency approval of the Center's
orders for excess property;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) With regard to the Army, the Navy, and the Air
Force Military Affiliate Radio Systems, GAO recommended that the
Secretary of Defense direct the Chairman of the Joint Chiefs of Staff
to have the Joint Staff Directorate for Command, Control,
Communications, and Computer Systems review which items these systems
are eligible to receive, on the basis of their mission and needs, and
direct each of the Military Affiliate Radio Systems to accurately track
excess property, including pilferable items, items with military
technology/ applications, and hazardous items;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (3) With regard to the Civil Air Patrol, GAO
recommended that the Secretary of Defense direct the Secretary of the
Air Force to have the Civil Air Patrol-Air Force review which items the
Patrol is eligible to receive, on the basis of its mission and needs,
and direct the Patrol to accurately track its excess property,
including pilferable items, items with military
technology/applications, and hazardous items;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Defense Logistics: Strategic Planning
Weaknesses Leave Economy, Efficiency, and Effectiveness of Future
Support Systems at Risk (GA0-02-106, October 11, 2001);
Recommendations: To provide the military services, the Defense
Logistics Agency, and the U.S. Transportation Command with a framework
for developing a departmentwide approach to logistics reengineering,
GAO recommended that the Secretary of Defense direct the Under
Secretary of Defense for Acquisition, Technology, and Logistics to
revise the departmentwide Logistics Strategic Plan to provide for an
overarching logistics strategy that will guide the components'
logistics planning efforts. Among other things, this logistics strategy
should:
Recommendations: (1) Specify a comprehensive approach that addresses
the logistics life-cycle process from acquisition through support and
system disposal, including the manner in which logistics is to be
considered in the system and equipment acquisition process and how key
support activities such as procurement, transportation, storage,
maintenance, and disposal will be accomplished;
Focus area: Other: Strategic;
Theme: Planning;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (2) Identify the logistics requirements the department
will have to fulfill, how it will be organized to fulfill these
requirements, and who will be responsible for providing specific types
of logistics support;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (3) Identify the numbers and types of logistics
facilities and personnel the department will need to support future
logistics requirements;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, closed, implemented.
Recommendations: (4) GAO also recommended that the Under Secretary of
Defense for Acquisition, Technology, and Logistics establish a
mechanism for monitoring the extent to which the components are
implementing the department's Logistics Strategic Plan. Specifically,
the Under Secretary of Defense for Acquisition, Technology, and
Logistics should monitor the extent to which the components'
implementation plans are (a) consistent with the departmentwide plan,
(b) directly related to the departmentwide plan and to each other, and
(c) contain appropriate key management elements, such as performance
measures and specific milestones;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Source: GAO.
[End of table]
[End of section]
Appendix II: Supply Chain Management: Summary of DOD-IG Report
Recommendations:
Report title, number, date: Logistics: Defense Logistics Agency
Processing of Special Program Requirements (D-2005-020, November 17,
2004);
Recommendations: The Director, Defense Logistics Agency should:
Recommendations: Prepare quarterly statistic reports quantifying the
cost effectiveness of the special program requirement initiative to
reduce or cancel procurement actions by the use of adjusted buy-back
rates, segregated by Defense Supply Centers;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Partially concurred, open.
Report title, number, date: Logistics: Navy Controls Over Materiel Sent
to Defense Reutilization and Marketing Offices; (D-2004-095, June 24,
2004);
Recommendations: 1.(A) The Commander, Naval Supply Systems Command
should establish controls to ensure that Navy organizations comply with
Naval Supply Command Publication P-485, "Ashore Policy," June 1998,
requirements to:
A.1. Transmit shipment notification transactions to the Defense
Reutilization and Marketing Service when materiel is shipped to the
Defense Reutilization and Marketing Office and ensure the data in the
shipment notification are accurate;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: A.2. Review and research Defense Reutilization and
Marketing Service follow-up transactions for materiel reported as
shipped but not received, and respond to the Defense Reutilization and
Marketing Service follow-up transactions in a timely manner;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 1.(B-D) The Commander, Naval Supply Systems Command
should:
Recommendations: B. Establish controls to ensure that Navy
organizations either demilitarize materiel or provide demilitarization
instructions to the Defense Logistics Agency Depots, prior to
requesting the depot ship materiel to disposal, and respond to depot
requests for demilitarization instructions in a timely manner;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, open.
Recommendations: C. Validate that the Realtime Reutilization Asset
Management Program Office reprograms its computer system to ensure that
disposal shipment notifications, rather than disposal shipment
confirmations, are sent to Defense Reutilization and Marketing Service
for disposal shipments;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: D. Request that the Defense Reutilization and
Marketing Service provide management reports which identify Navy
organizations that are not responding to disposal follow-up
transactions for materiel reported as shipped but not received and that
are not sending disposal shipment notifications for materiel shipped to
disposal;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Director, Defense Logistics Agency should:
Recommendations: A. Establish controls to ensure that Defense
Distribution Depot personnel request the required demilitarization
instructions for all materiel awaiting disposal instructions and
reverse the disposal transactions if the required instructions are not
received;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Establish controls to ensure that the Defense
Reutilization and Marketing Service reviews and analyzes management
data to identify Navy organizations that are not routinely preparing
shipment disposal notifications or are not routinely responding to
follow-up transactions and identify to the Naval Supply Systems Command
potential problems with data in the in-transit control system in order
for the Naval Supply Systems Command to ensure that Navy organizations
comply with disposal procedures;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Accountability and Control of
Materiel at the Marine Corps Logistics Base Albany, Georgia; (D-2004-
077, April 29, 2004);
Recommendations: The Commanding General, Marine Corps Logistics Command
should:
Recommendations: 1. Identify all excess materiel and return the
materiel to the supply system, as required by Marine Corps Order
P4400.151B, "Intermediate-Level Supply Management Policy Manual," July
9, 1992;
Focus area: Inventory management;
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Perform physical inventories of all materiel in all
storage locations and adjust inventory records accordingly;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Defense Logistics Agency Cost to
Maintain Inactive National Stock Numbers Items (D-2004-024, November
19, 2003);
Recommendations: The Director, Defense Logistics Agency should:
Recommendations: 1. Reevaluate the cost categories for determining the
average annual cost for maintaining an inactive national stock number
item in the Defense Logistics Agency supply system and recalculate the
average annual cost consistent with other pricing and cost
methodologies;
Focus area: Inventory management;
Theme: Process;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: 2. Discontinue application of the draft Defense
Logistics Agency Office of Operations Research and Resource Analysis
report, "Cost of a DLA Maintained Inactive National Stock Number," July
2002, to any authorized programs of DOD or the Defense Logistics Agency
until all applicable cost categories are fully evaluated and the
applicable costs of those relevant categories are incorporated into the
cost study;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Defense Logistics Agency
Processing of Other Nonrecurring Requirements; (D-2004-018, November 7,
2003);
Recommendations: 1. The Director, Defense Logistics Agency should
revise Defense Logistics Agency Manual 4140.2, Volume II, "Defense
Operations Manual, Defense Supply Center, Supply Operating;
Procedures," April 2002, to specifically:
Recommendations: A. Identify the circumstances or conditions under
which other nonrecurring requirements are authorized for processing;
Focus area: Requirements forecasting;
Theme: Policy;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: B. Identify the requirements for documenting the
methodology and rationale for using other nonrecurring requirement
transactions;
Theme: Policy;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: C. Establish requirements for identifying the supply
center personnel who enter other nonrecurring requirements in the
Defense Logistics Agency supply system and retaining other nonrecurring
requirement records after the support dates have passed;
Theme: Policy;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: 2. The Director, Defense Logistics Agency should:
Recommendations: Establish a timeline for the Defense supply centers to
validate outstanding other nonrecurring requirement transactions in the
Defense Logistics Agency supply system. Other nonrecurring requirement
transactions that do not have sufficient supporting documentation or
that cannot be validated should be canceled or reduced and reported to
the Defense Logistics Agency. The report should include the total
number of other nonrecurring requirement transactions that were deleted
and the dollar value of procurement actions that were canceled as a
result;
Theme: Management oversight;
Status Of Recommendations: Partially concurred, closed, implemented.
Report title, number, date: Logistics: Accountability and Control of
Materiel at the Ogden Air Logistics Center; (D-2003-130, September 5,
2003);
Recommendations: The Commander, Ogden Air Logistics Center should
immediately:
Recommendations: 1. Comply with the guidance in Air Force Manual 23-
110, "U.S. Air Force Supply Manual," and Air Force Materiel Command
Instruction 21-130, "Equipment Maintenance Materiel Control," regarding
the management of maintenance materiel stored at the Air Logistics
Center;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Perform an annual physical inventory of all
materiel recorded in the D035K Wholesale and Retail and Shipping System
that is the responsibility of the Maintenance Directorate, reconcile
the results, and turn in excess materiel to supply;
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 3. Perform a physical count of all materiel located on
the maintenance shop floors and in storage areas to identify
unaccountable and excess materiel, reconcile the physical count to the
D035K Wholesale and Retail and Shipping System, and turn in excess
materiel to supply;
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 4. Complete the review of courtesy storage materiel
listed in the materiel processing system and either turn in the excess
to supply, move to the D035K Wholesale and Retail and Shipping System,
or dispose of the materiel;
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Follow-up Audit of Depot-Level
Repairable Assets at Selected Army and Navy Organizations; (D-2003-098,
June 5, 2003);
Recommendations: 1. The Commander, Army Materiel Command should:
Recommendations: A. Expedite funding and the deployment of the
Commercial Asset Visibility system to Army commercial repair
facilities. Funding and deployment should be prioritized based
primarily on the dollar value of repairable assets at the commercial
repair facilities;
Focus area: Inventory management;
Theme: Process;
Status Of Recommendations: Concurred, open.
Recommendations: B. Perform oversight of compliance with DoD 4000.25-2-
M, "Military Standard Transaction Reporting and Accounting Procedures,"
March 28, 2002, to conduct annual location reconciliations between
inventory control point records and storage depot records;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Commander, Communications-Electronics; Command
should:
Recommendations: Report title, number, date: A. Determine whether the
items with inventory records that were adjusted as a result of the
October 2002 reconciliation between the Communications-Electronics
Command and the Defense Depot Tobyhanna Pennsylvania are obsolete or
excess to requirements. That determination should be made before
requesting special inventories or performing other costly causative
research procedures;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Dispose of those assets that are identified as
obsolete or excess to projected requirements;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, open.
Recommendations: 3. The Commander, Naval Inventory Control Point
should:
Recommendations: A. Develop in-house procedures to provide management
information reports to the inventory accuracy officer, comparable to
the management information reports required in the February 2003
contract awarded to Resources Consultant Incorporated, to assist in
reducing in-transit inventory;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Establish controls to ensure that all in-transit
items that meet the criteria in Naval Supply Systems Command
Publication 723, "Navy Inventory Integrity Procedures," April 19, 2000,
are reviewed prior to writing them off as an inventory loss;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Accountability and Control of
Materiel at the Warner Robins Air Logistics Center; (D-2003-064, March
20, 2003);
Recommendations: The Commander, Warner Robins Air Logistics Center
should immediately:
Recommendations: 1. Comply with Air Force guidance regarding the
management of maintenance materiel stored at the Air Logistics Center;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Issue guidance regarding materiel management
reports for management review;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 3. Perform an annual physical inventory of all
materiel recorded in the D035K Wholesale and Retail and Shipping System
that is the responsibility of the Maintenance Directorate, reconcile
the results, and turn in excess materiel to supply;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 4. Perform a physical count of all materiel located on
the maintenance shop floors and in storerooms, reconcile the physical
count to the D035K Wholesale and Retail and Shipping System, and turn
in excess materiel to supply;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 5. Update or complete Air Force Materiel Command Form
100 for each line of floating stock and spares inventory. Submit to the
floating stock and spares monitor for processing those forms in which
the authorization level changes;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 6. Perform semi-annual reviews of materiel stored in
the courtesy storage area and turn in excess materiel to supply;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 7. Perform quarterly reviews of bench stock materiel
in the Low Altitude Navigation and Targeting Infrared for Night shop of
the Avionics Division and turn in excess materiel to supply;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Logistics: Accountability and Control of
Materiel at the Naval Air Depot, Jacksonville; (D-2003-057, March 5,
2003);
Recommendations: 1. The Commander, Naval Air Systems Command should:
Recommendations: A. Enforce the requirements of Naval Air Systems
Command Instruction 4400.5A to identify excess materiel that has been
inactive for more than 270 days for routine use materiel and 12 months
for long lead-time or low demand materiel;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Require quarterly reporting of excess of materiel
at Naval Air Depots to ensure excess materiel does not accumulate;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, open.
Recommendations: C. Develop policy for point of use inventory;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Commander, Naval Air Depot, Jacksonville
should:
Recommendations: A. Perform physical inventories of materiel stored in
all storage locations and adjust inventory records accordingly;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Perform the required quarterly reviews of materiel
stored in maintenance storerooms to determine whether valid
requirements exist for the materiel;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: C. Identify all excess materiel stored in maintenance
storerooms and return the materiel to the supply system;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, open.
Report title, number, date: Supply Inventory Management: Accountability
and Control of Materiel at the Naval Air Depot, North Island; (D-2003-
033, December 6, 2002);
Recommendations: 1. The Commander, Naval Air Systems Command; should
ensure that the Naval Air Depot, North Island should:
Recommendations: A. Comply with Navy guidance regarding the storage of
maintenance materiel at the depot, performance of quarterly reviews of
maintenance materiel on hand, and submission of management reports for
review;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Develop and implement an effective management
control program;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Commander, Naval Air Depot, North Island should
immediately:
Recommendations: A. Inventory materiel stored in work center
storerooms, record all of the on-hand materiel on accountable records,
identify the materiel for which a valid need exists, and return the
items with no known requirement to the supply system;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Review jobs at closeout to determine whether a need
exists for leftover materiel. Leftover, unneeded materiel should be
made visible to item managers and disposed of in a timely manner;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: C. Perform the required quarterly reviews of materiel
stored in work center storerooms to determine whether valid
requirements exist for the materiel;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: D. Perform physical inventories of materiel stored in
all storage locations and adjust inventory records accordingly;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory Management: Defense
Logistics Agency Managed Items Supporting Air Force Weapon Systems; (D-
2002-149, September 18, 2002);
Recommendations: 1. The Director, Defense Logistics Agency should
establish controls to ensure that national stock number items
supporting current weapon systems are not deleted from the supply
system. Those controls should include procedures to:
Recommendations: A. Comply with the Defense Logistics Agency Manual
4140.2 requirement that Defense Logistics Agency item managers contact
the supply center monitor for the weapon system support program to
coordinate the deletion of the code that identifies the national stock
number item as a weapon system item;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Comply with the Defense Logistics Agency Manual
4140.3 requirement that the supply center monitor for the weapon system
support program notify the Military Departments when a national stock
number item supporting a weapon system is to be deleted from the supply
system as a result of the Defense Inactive Item Program process;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Director, Defense Logistics Agency, in
coordination with the Air Force, should:
Recommendations: Determine the most efficient and cost-effective method
to reinstate national stock number items that were inappropriately
deleted from the supply system;
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 3. The Commander, Air Force Materiel Command should:
Recommendations: A. Review the revised procedures for processing
Defense Inactive Item Program transactions when the FY 2002 process is
complete to ensure the procedures are working as intended and that
inactive item review notifications are being promptly returned to the
Defense Logistics Agency;
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Establish controls to ensure that inactive item
review notifications are reviewed by the user and are returned to the
Defense Logistics Agency before an automatic retain notification is
provided to the Defense Logistics Agency;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: C. Establish controls to review Defense Logistics
Agency transactions deleting national stock numbers from Air Force
systems so that the inappropriate deletion of required data from the
Air Force supply system is prevented;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory Management: Defense
Logistics Agency Aviation Investment Strategy Program; (D-2002-136,
July 31, 2002);
Recommendations: 1. The Director, Defense Logistics Agency should
direct the Defense Supply Center Richmond to revise the Aviation
Investment Strategy implementation plan to more fully express how the
program execution process should be accomplished to ensure appropriate
additive investments. Specifically, the plan should:
Recommendations: A. Describe the factors to be used by the Military
Departments and supply centers to evaluate the validity of potential
candidates for additive investment;
Focus area: Inventory management;
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. Require that additive safety level requirements be
based on consistent and up-to-date supply availability data;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: C. Require regular reviews to determine whether
additive safety levels continue to be appropriate. Establish a
frequency for when and how often reviews should be made and the
criteria for making necessary safety level adjustments and reinvesting
funds;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: D. Establish a method for maintaining safety level
increases that adheres to the DoD safety level limitation while
recognizing and adjusting to changes in the supply system;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: E. Establish a time frame for continuous program
evaluation and a resolution process that includes a flag or general
officer from each Military Department whenever problem elevation is
needed;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. The Director, Defense Logistics Agency should:
Recommendations: Approve and coordinate with the Military Departments
the revised implementation plan;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory Management: Terminal Items
Managed by the Defense Logistics Agency for the Navy; (D-2002-131, July
22, 2002);
Recommendations: 1. The Director, Defense Logistics Agency should:
Recommendations: A. Revise Defense Logistics Agency Manual 4140.2,
"Supply Operations Manual," July 1, 1999, to include terminal national
stock number items with registered users in the Defense Inactive Item
Program;
Focus area: Inventory management;
Theme: Policy;
Status Of Recommendations: Nonconcurred, open.
Recommendations: B. Maintain and report statistics on how many terminal
national stock number items are deleted from the supply system after
the North Atlantic Treaty Organization and foreign governments review
the items;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Nonconcurred, closed, implemented.
Recommendations: 2. The Commander, Naval Supply Systems Command should:
Recommendations: Establish controls to ensure that the Navy is removed
as a registered user of Defense Logistics Agency-managed national stock
number items that are no longer required;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory management: Industrial
Prime Vendor Program at the Air Force Air Logistics Centers; (D-2002-
112, June 20, 2002);
Recommendations: A.1. The Commander, Defense Supply Center Philadelphia
should require Industrial Prime Vendor Program officials to:
Recommendations: A. Discontinue the use of the market basket approach
to determine which bench-stock items are placed on the industrial prime
vendor contract. Instead, evaluate each item separately and select the
most economical source to supply material;
Focus area: Inventory management;
Theme: Process;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: B. Review inventory levels and discontinue placing
items on the industrial prime vendor contract with more than 3 years of
inventory;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: C. Take appropriate action in accordance with contract
terms to remove items with more than 3 years of inventory and start
using existing depot inventories as the first choice to fill contract
demand;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: A.2. The Director, Defense Logistics Agency should:
Recommendations: Convene a performance improvement team composed of
representatives from all relevant stakeholders, including appropriate
oversight agencies, to plan and execute a reengineered best value
approach to manage bench-stock material for all customers that
addresses competition and restriction on contract bundling;
Focus area: [Empty];
Theme: Planning;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. The Commander, Defense Supply Center Philadelphia
should:
Recommendations: 1. Implement procedures to ensure that future spot buy
material procurements are priced and paid for in accordance with the
terms of the contract;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Obtain a full refund from the Science Application
International Corporation for erroneous charges, including lost
interest, and take appropriate steps to reimburse the air logistics
centers for the full amount of the contract overcharges;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory Management: Accountability
and Control of Materiel at the Corpus Christi Army Depot; (D-2002-091,
May 21, 2002);
Recommendations: 1. The Commander, Aviation and Missile Command should:
Recommendations: Direct the Corpus Christi Army Depot to comply with
Army guidance regarding the storage of maintenance materiel at the
depot and the preparation and submission of management reports for
review;
Focus area: Inventory management;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. (A- F) The Commander, Corpus Christi Army Depot
should immediately:
Recommendations: A. Price the materiel stored in the Automated Storage
and Retrieval System that has no extended dollar value or that has been
added to the physical inventory, and identify the value of inventory
excess to prevailing requirements;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, open.
Recommendations: B. Inventory materiel stored in work centers on the
maintenance shop floors, record the materiel on accountable records,
identify the materiel for which a valid need exists, and turn in or
transfer to other programs excess materiel;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: C. Perform an annual physical inventory of all of the
materiel stored in the Automated Storage and Retrieval System;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: D. Perform the required quarterly reviews of materiel
stored in the Automated Storage and Retrieval System to determine if
valid requirements exist for the stored materiel;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: E. Review projects at the 50-percent, 75-percent, and
90-percent completion stages to determine if a need exists for materiel
in storage;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: F. Perform a reconciliation between the Automated
Storage and Retrieval System and Maintenance Shop Floor System files,
at a minimum monthly, to determine if files are accurate. A physical
inventory should be performed to correct any deficiencies;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. (G) The Commander, Corpus Christi Army Depot should
immediately prepare and submit the following report to management for
review:
Recommendations: 1. A monthly total dollar value for materiel stored in
the Automated Storage and Retrieval System;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Items stored in the Automated Storage and Retrieval
System with no demand in the last 180 days;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Partially concurred, closed, implemented.
Recommendations: 3. Materiel stored in the Automated Storage and
Retrieval System against closed program control numbers;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 4. Materiel stored against overhead program control
numbers;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 5. Potential excess materiel by program control
number;
Focus area: [Empty];
Theme: Management oversight;
Status Of Recommendations: Concurred , closed, implemented.
Report title, number, date: Logistics: Delivery and Receipt of DOD
Cargo Inbound to the Republic of Korea; (D-2002-079, April 5, 2002);
Recommendations: A. The Commander, U.S. Forces Korea should:
Recommendations: 1. Establish guidance for delivery of cargo from ports
of debarkation within the theater using Uniform Materiel Movement and
Issue Priority System standards or U.S. Forces Korea supplemental
standards to the Uniform Materiel Movement and Issue Priority System
criteria more applicable to theater requirements;
Focus area: Materiel distribution; T
heme: Policy;
Status Of Recommendations: Concurred, open.
Recommendations: 2. Establish procedures for using and maintaining
documentation that provides evidence of delivery times and the accuracy
of the delivered cargo;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, open.
Recommendations: 3. Prepare or amend commercial carrier contracts that
contain delivery provisions for weekend and holiday deliveries, and
penalties for nonperformance compliance with the standards established
by the provisions of Recommendation A.1;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, open.
Recommendations: 4. Establish procedures to ensure that the priority of
the cargo to be delivered from a port of debarkation is matched with a
commercial carrier contract that has the necessary provisions that will
ensure delivery within the standards established by Recommendation A.1;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 5. Establish procedures, metrics, and surveillance
plans that will monitor and ensure carrier performance of contract
specifications and reconcile movement control documents received from
commercial carriers to ensure consignees received prompt and accurate
delivery of all cargo;
Focus area: [Empty];
Theme: Performance tracking;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B. The Commander, U.S. Forces Korea should revise U.S.
Forces Korea Regulation 55-355 to require:
Recommendations: 1. Supply Support Activities to maintain dated and
signed truck manifests and pickup sheets to confirm receipt;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Supply Support Activities immediately contact end
users for pickup of high priority cargo within the same day the cargo
is made available for end user;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Supply Inventory Management: Management of
Terminal Items at the Defense Logistics Agency; (D-2002-060, March 13,
2002);
Recommendations: The Director, Defense Logistics Agency should:
Recommendations: 1. Revise Defense Logistics Agency Manual 4140.2,
"Supply Operations Manual," July 1, 1999, to include terminal national
stock number items with no registered users in the Defense Inactive
Item Program last user withdrawn process;
Focus area: Inventory management;
Theme: Policy;
Status Of Recommendations: Concurred, open.
[Recommendations: 2. Maintain and report statistics on how many
terminal national stock number items are deleted from the supply system
after the North Atlantic Treaty Organization and foreign governments
review the items;
Theme: Management oversight;
Status Of Recommendations: Nonconcurred, open.
Report title, number, date: Information Technology: Effectiveness of
the Joint Total Asset Visibility Program; (D-2002-057, March 11, 2002);
Recommendations: The Deputy Under Secretary of Defense (Logistics and
Materiel Readiness) should:
Recommendations: Ensure that the Joint Total Asset Visibility Program
is funded until sufficient operational capabilities of the Global
Combat Support System have been fielded and can provide capabilities
that are at least equivalent to the existing Joint Total Asset
Visibility Program;
Focus area: Asset visibility;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Report title, number, date: Government Performance and Results Act:
Performance Measure for DOD Total Asset Visibility (D-2002-016,
November 21, 2001);
Recommendations: The Deputy Under Secretary; of Defense (Logistics and
Materiel Readiness) should:
Recommendations: 1. Evaluate the usefulness of the DoD Total Asset
Visibility performance measure;
Focus area: Asset visibility;
Theme: Management oversight;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: 2. Issue specific, written, performance measure
guidance that standardizes and clarifies the required data elements for
the Total Asset Visibility measure consistent with the evaluation of
the usefulness of the measure;
Theme: Performance tracking;
Status Of Recommendations: Concurred, closed, not implemented.
Recommendations: 3. Establish and institutionalize a process to
evaluate and verify data submitted by DoD Components for the Total
Asset Visibility performance measure, consistent with the evaluation of
the usefulness of the measure;
Theme: Process;
Status Of Recommendations: Concurred, closed, not implemented.
Report title, number, date: Accountability and Control of Materiel at
the Tobyhanna Army Depot (D-2002-003, October 4, 2001);
Recommendations: A.1. The Army Deputy Chief of Staff for Logistics
should:
Recommendations: Reassess guidance regarding the 60-day storage and
requisitioning of fabrication materiel at maintenance depots and revise
Army Regulation 750-2. The guidance should state the following:
* the appropriate number of days depots should be allowed for storing
and requisitioning fabrication materiel;
* quarterly reviews should be performed to determine if materiel is
still required;
Focus area: Inventory management;
Theme: Policy;
Status Of Recommendations: Concurred, closed, not implemented.
Recommendations: A.2. The Commander, Communications-Electronics Command
should:
Recommendations: Report title, number, date: Issue guidance regarding
management of the Automated Storage and Retrieval System at Tobyhanna.
The guidance should include the following:
* all materiel stored in the Automated Storage and Retrieval System
shall be, at a minimum, identified by owning cost center; national
stock number/part number; program control number; quantity; acquisition
source code; nomenclature; and condition code;
* a review of any materiel with a date of last activity more than 6
months shall be performed;
* an annual physical inventory of any materiel stored in the Automated
Storage and Retrieval System shall be performed;
* items stored in mission stocks must represent a bona fide potential
requirement for performance of a maintenance or fabrication
requirement;
* availability of materiel from previously completed fabrication orders
must be determined before placing new requisitions;
* projects shall be reviewed at the 50 percent, 75 percent, and 90
percent completion stages to determine if a need exists for materiel
still in storage;
* reclaimed materiel, materiel removed from assets in maintenance, and
work in process may be stored until reutilized on the maintenance
program. Excess reclaimed materiel shall be turned in or transferred to
a valid funded program;
* materiel shall not be stored in Automated Storage and Retrieval
System in an overhead account;
* quarterly reviews shall be performed on materiel stored in the
Automated Storage and Retrieval System to determine if requirements
still exist;
* prior to closing a depot maintenance program, any associated
remaining repair parts, spares, and materiel on hand shall be
transferred to an ongoing program or a program that will begin within
180 days or turned in to the installation supply support activity
within 15 days;
* The gaining program must be funded, open, and valid;
* The transferred materiel must be a bona fide potential requirement of
the gaining program;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: A.3. The Commander, Communications-Electronics Command
should direct Tobyhanna to immediately:
Recommendations: a. Price the materiel stored in the Automated Storage
and Retrieval System that has no extended dollar value or that has been
added to the physical inventory, identify the value of inventory excess
to prevailing requirements, and; notify the Inspector General, DoD, of
the corrected dollar value of the inventory and value of inventory
excess to the requirements;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: b. Limit the storage of materiel in the Automated
Storage and Retrieval System under overhead accounts. Specifically,
remove materiel obtained from the Sacramento Air Logistic Center from
the overhead account program control numbers;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: c. Record the Tactical Army Combat Computer System
equipment on accountable records and inventory and turn in the computer
equipment to the supply system because no requirement for the equipment
exists at Tobyhanna;
Focus area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B.1. The Commander, Communications-Electronics Command
should:
Recommendations: Issue guidance regarding reports that should be
submitted to management for review. The guidance should require the
following reports:
* an annual physical inventory of all materiel stored in Automated
Storage and Retrieval System;
* a reconciliation between the Automated Storage and Retrieval System
and Maintenance Shop Floor System files, at a minimum monthly, to
determine if files are accurate;
* a physical inventory should be performed to correct any deficiencies.
Reports should be prepared for management review;
* a monthly total dollar value for materiel stored in the Automated
Storage and Retrieval System;
* items stored in the Automated Storage and Retrieval System with no
demand in the last 180 days;
* materiel stored in the Automated Storage and Retrieval System against
closed program control numbers;
* materiel stored against overhead program control numbers;
* potential excess materiel by program control number;
Focus area: [Empty];
Theme: Policy;
Status Of Recommendations: Concurred, closed, implemented.
Recommendations: B.2. The Commander, Communications-Electronics Command
should:
Recommendations: Direct the Tobyhanna Army Depot to immediately perform
a physical inventory and reconcile the Automated Storage and Retrieval
System records with the Maintenance Shop Floor System records to verify
the accuracy of inventory records and submit report for review; Focus
area: [Empty];
Theme: Process;
Status Of Recommendations: Concurred, closed, implemented.
Source: DOD-IG.
[End of table]
[End of section]
Appendix III: Supply Chain Management: Summary of Army Audit Agency
Report Recommendations:
[See PDF for image] - graphic text:
Table did not convert properly.
Source: Army Audit Agency.
[End of figure] - graphic text:
[End of section]
Appendix IV: Supply Chain Management: Summary of Air Force Audit Agency
Report Recommendations:
Report title, number, date: Adjusted Stock Levels (F2006-0010-FC4000,
September 5, 2006);
Recommendations: The Director of Logistics Readiness, Air Force Deputy
Chief of Staff for Installations, Logistics and Mission Support should:
Recommendations: a. Require Air Force
personnel to delete all invalid adjusted stock levels identified in the
audit;
Focus area: Requirements forecasting;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: b. Establish procedures to improve adjusted stock
level management. Specifically, revise Air Force Manual 23-110 to:
* address the role of the Logistics Support Centers. Specifically,
require Logistics Support Center personnel only approve base-initiated
adjusted stock levels with sufficient justification on the Air Force
Forms 1996, maintain all Air Force Forms 1996, and initiate the
revalidation process;
* improve the revalidation process. Specifically, the guidance should
contain the following controls:
* a revalidation checklist detailing procedures logistics personnel
should use to revalidate adjusted stock levels;
* ensure personnel accomplish the revalidation every 2 years;
* a requirement to use Air Force Form 1996 to establish each adjusted
stock level (including MAJCOM-directed adjusted stock levels) and
include a detailed justification of the adjusted stock level purpose
and duration;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Report title, number, date: Due Out To Maintenance Additives (F2006-
0008-FC4000, August 22, 2006);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should:
Recommendations:
a. Direct air logistics center shop personnel to delete the invalid
Credit Due In From Maintenance details identified by audit (provided
separately);
Focus area: Requirements forecasting;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: b. Establish procedures requiring an effective
quarterly Credit Due In From Maintenance Reconciliation. Specifically,
Air Force Manual 23-110, US Air Force Supply Manual, and Air Force
Materiel Command Instruction 23-130, Depot Maintenance Material
Control, should require maintenance personnel to provide written
documentation for each Credit Due In From Maintenance detail (i.e.,
supported by a "hole" in the end item). If such supporting
documentation is not provided, require retail supply personnel to
delete the unsupported Credit Due In From Maintenance details;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: c. Develop training for air logistics center shop
personnel regarding proper spare part turn-in and Credit Due In From
Maintenance Reconciliation procedures. Specifically, the training
should define the various ways to turn spare parts in, and the
differences between each method, to include the impact of improperly
turning in spare parts. In addition, proper Credit Due In From
Maintenance Reconciliation procedures should be covered in depth to
include training on what constitutes appropriate supporting
documentation;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Recommendations: A.1. Air Force Materiel Command Directorate of
Logistics and Sustainment personnel should update Air Force Materiel
Command Manual 23-1, Requirements for Secondary Item, to:: A.2. The Air
Force Materiel Command Director of Logistics should:
Recommendations: A.1. Air Force Materiel Command Directorate of
Logistics and Sustainment personnel should update Air Force Materiel
Command Manual 23-1, Requirements for Secondary Item, to:: a. Establish
detailed procedures in Air Force Manual 23-110 on how an item manager
should validate Due Out to Maintenance additives (i.e., what
constitutes a Due Out To Maintenance additive, where the item manager
can validate the additive, which priority backorders are associated
with Due Out To Maintenance, etc.);
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: b. Direct Warner Robins Air Logistics Center to
rescind local policy allowing item managers to increase the Due Out To
Maintenance additive quantity to account for install condemnations;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: c. Issue a letter to item managers reemphasizing the
requirement to document the methodology used to validate changes to Due
Out to Maintenance additives, and retain adequate support for the Due
Out To Maintenance additive quantity;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Condemnations: Concurred, open.
Report title, number, date: Reparable Item Requirements -
Condemnations; (F2006-0006-FC4000,; April 18, 2006);
Recommendations: A.1. Air Force Materiel Command Directorate of
Logistics and Sustainment personnel should update Air Force Materiel
Command Manual 23-1, Requirements for Secondary Item, to:
Recommendations: a. Include instruction on what information should be
developed and retained to support estimated condemnation rates. The
guidance should include maintaining documentation on key assumptions,
facts, specific details, decision makers' names and signatures, and
dates of decisions so the condemnation percentage can be recreated;
Focus area: Requirements forecasting;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: b. Establish sufficient guidance to instruct equipment
specialists on managing parts replacement forecasting; Specifically,
develop a standardized method to plan for replacement part acquisition
while phasing out the old parts;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Report title, number, date: Shop Flow Time Data Accuracy; (F2006-0004-
FC4000,; December 2, 2005);
Recommendations: The Air Force Materiel Command Director of Logistics
and Sustainment should:
Recommendations: a. Correct the shop flow times for the 211 items with
requirements discrepancies;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: b. Revise the process for computing shop flow times to
adhere to DoD 4140.1-R, which requires the removal of awaiting
maintenance and awaiting parts times from requirements computations;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: c. Evaluate the D200A Secondary Item Requirements
System computer program to identify and correct the programming
deficiencies adversely impacting the shop flow times computation;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: d. Complete the ongoing automation effort designed to
eliminate manual processing errors;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Supply Discrepancy Report Program; (F2006-
0003-FC4000,; November 15, 2005);
Recommendations: A.1. The Air Force Deputy Chief of Staff,
Installations and Logistics, should:
Recommendations: a. Revise Air Force Manual 23-110 to: (1) Provide
supply discrepancy report missing shipment procedures consistent with
Air Force Joint Manual 23-215 guidance. (2) Establish supply
discrepancy report dollar value criteria consistent with DoD 4500.9-R
guidance;
Focus area: Materiel distribution;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: b. Establish base supply personnel training
requirements on supply discrepancy report procedures and communicate
those requirements to the field;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Recommendations: A.2. The Air Force Deputy Chief of Staff,
Installations and Logistics, should:
Recommendations: Request Defense Logistics Agency comply with
procedures requiring depot supply personnel inspect packages and submit
supply discrepancy reports when appropriate;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Report title, number, date: Readiness Spares Package Requirements
(F2006-0002-FC4000,; November 15, 2005);
Recommendations: A.1. The Air Force Deputy Chief of Staff,
Installations and Logistics, should:
Recommendations: a. Revise Air Force Manual 23-110 to (1) describe more
thoroughly documentation requirements for data elements used to compute
readiness spares package item requirements and (2) require all
readiness spares package managers to attend training that includes an
adequate explanation of data element documentation requirements;
Focus area: Requirements forecasting;
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: b. Upgrade the Weapons System Management Information
System Requirements Execution Availability Logistics Model to (1)
accept mechanical data element transfers directly from other source
systems and (2) prompt readiness spares package managers to input
documentation notations supporting the rationale of changes in
readiness spares package data elements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Depot Stock Level Days (F2006-0001-FC4000,;
November 9, 2005);
Recommendations: A.1. The Air Force Materiel Command Directorate of
Logistics and Sustainment personnel should:
Recommendations: a. Reduce the stock level day standard value from 10
days to 4 days in the D200A Secondary Item Requirements System;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: b. Develop and implement an automated method in the
Advanced Planning and Scheduling system to measure the actual order and
ship time needed to replenish depot level maintenance serviceable stock
inventories;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: c. Develop and implement an interim method to measure
or estimate depot order and ship time until an automated method is
developed;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Report title, number, date: Cargo Processing; (F2005-0007-FC4000,; July
14, 2005);
Recommendations: A.1. The Deputy Chief of Staff, Installations and
Logistics, Directorate of Logistics Readiness should require the
Distribution and Traffic Management Division to:
Recommendations: a. Direct Transportation Management Office personnel
to communicate to the consignors the cost and timing benefits to move
shipments via door-to-door commercial air express carrier service when
eligible based on DoD and Air Force guidance. If the consignor refuses
the cost-effective mode, require a waiver letter expressing the need to
use the Air Mobility Command carrier;
Focus area: Materiel distribution;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: b. Develop criteria to allow consignors to adequately
identify priority requirements and assign appropriate priority
designator codes when shipping assets via Air Mobility Command airlift.
This criteria should be included in Air Force Instruction 24-201;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: c. Instruct Transportation Management Office personnel
to properly review all shipping documentation to ensure all required
information is completed by the consignor prior to accepting cargo for
movement to the Air Mobility Command aerial port;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Report title, number, date: Mission Direct Additive Requirements;
(F2005-0006-FC4000, July 11, 2005);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics and Sustainment should:
Recommendations: a. Establish procedures to properly budget for delayed
discrepancy repair requirements by accounting for the eventual return
and repair of unserviceable items in the requirements/ budget process
starting with the March 2005 computation cycle;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Develop procedures or include an edit in the new
system that flags additives and prompts the item manager to perform
thorough reviews of additive requirements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: c. Develop a process that requires program managers,
item managers, and other applicable program directorate personnel to
periodically review program and mission direct additive requirements to
verify that duplication has not occurred;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: d. Inform all item managers and air logistics center
managers that it is an inappropriate use of mission direct additives to
retain excess inventory or preclude contract terminations.
Additionally, reiterate regulatory guidance delineating the approved
process for retaining excess materiel and preventing contract
terminations;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Low Demand Item Requirements Computation
Accuracy; (F2005-0005-FC4000,; March 18, 2005);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics and Sustainment should:
Recommendations: a. Direct item
managers to correct erroneous requirements identified during this
review;
Focus area: Requirements forecasting;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Revise Air Force Materiel Command Manual 23-1 to
clarify procedures for adjusting low demand item requirements.
Specifically, ensure the guidance clearly states item managers may
restore previously decreased requirements to their original level;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Reparable Item Requirements - Repair Cycle
Times; (F2005-0004-FC4000,; February 2, 2005);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics and Sustainment should:
Recommendations: a. Direct item
managers to correct all erroneous requirements computations and related
budgets identified during this review;
Focus area: Requirements forecasting;
Theme: Management Oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Revise Air Force Materiel Command Manual 23-1 to
correct guidance conflicts. Specifically, ensure the guidance only
contains the correct standards requirements (3 days for base processing
times and 10 days for reparable intransit times);
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Indenture Relationship Impact on Secondary
Item Requirements Computations; (F2004-0006-FC4000,; May 21, 2004);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should revise Air Force Materiel Command Manual 23-1 to:
Recommendations: a. Require item managers review and identify excess
next higher assemblies that could be used to satisfy indentured item
repair, as well as buy, requirements;
Focus area: Requirements forecasting;
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: b. Provide specific procedures for item managers to
follow to satisfy the indentured item buy and repair requirements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: A.2. The Air Force Materiel Command Director of
Logistics should:
Recommendations: Revise training, and then train item managers to use
indentures system data to identify excess next higher assemblies that
could be used to satisfy indentured item requirements;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Recommendations: B.1. The Air Force Material Command Director of
Logistics should:
Recommendations: a. Require equipment specialists correct inaccurate
indentures system data;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: b. Publish the draft guidance requiring equipment
specialists ensure indentures system data accuracy;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: c. Train equipment specialists to maintain indentures
system data accuracy;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, open.
Report title, number, date: Contractor Assets and Price Controls;
(F2004-0005-FC4000,; May 10, 2004);
Recommendations: The Air Force Materiel Command Director of Logistics
should:
Recommendations: a. Collect the unserviceable parts identified during
the audit from the contractors or adjust the price of those parts (FY
2000-2002, $238.9 million and estimated FY 2003, $79.6 million);
Focus area: Asset visibility;
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: b. Establish a mechanism to track the issue and return
of parts issued to customers who subsequently provide those parts to
contractors as prescribed in Air Force Manual 23-110, Volume I, Part 3,
Chapter 7;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: c. Either revise the policy to issue parts to
customers who subsequently provide those parts to contractors at
standard price or develop a due- in-from-maintenance-like control to
adjust the part's price if the unserviceable parts are not returned;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Report title, number, date: Propulsion Requirements System Computation
Accuracy (F2004-0003-FC4000, November 12, 2003);
Recommendations: A.1. The Deputy Chief of Staff, Installations and
Logistics should:
Recommendations: a. Revise Air Force Instruction 21- 104 to require
engine managers to input a follow-on tasked unit into the requirements
computation system as a single unit;
Focus area: Requirements forecasting;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Modify PRS software to compute spare engine needs
based on the combined flying hours for follow-on tasked units;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, not implemented.
Report title, number, date: Other War Reserve Materiel (F2003-0010-
FC4000, May 2, 2003);
Recommendations: A.1. The Air Force Materiel Command Supply Management
Division should:
Recommendations: a. Implement corrective software changes to the
Secondary Item Requirements System and Central Secondary Item
Stratification Subsystem systems to remove the Other War Reserve
Materiel requirements from the Peacetime Operating Spares requirements
and report Other War Reserve Materiel requirements separately;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, not implemented.
Recommendations: b. Implement interim procedures to remove Other War
Reserve Materiel requirements from the Peacetime Operating Spares
requirements and budget and report Other War Reserve Materiel
requirements separately until they implement Recommendation A.1.a;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Programmed Depot Maintenance Materiel
Support; (F2003-0008-FC4000,; February 21, 2003);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should:
Recommendations: a. Direct maintenance management personnel to provide
adequate oversight to ensure maintenance personnel turn in all aircraft
parts to the Weapon System Support Center or courtesy storage areas;
Focus area: Inventory management;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Revise Air Force Materiel Command Instruction 21-
130 directing air logistics center Weapon System Support Center
management to establish a supply inventory monitor to oversee
maintenance work areas ensuring excess parts are turned in to Weapon
System Support Center or courtesy storage areas;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: A.2. The Air Force Materiel Command Director of
Logistics should:
Recommendations: Reemphasize the regulatory requirement (Air Force
Materiel Command Instruction 21-130) to the air logistics center
maintenance supervisors to assign a maintenance inventory control
monitor to oversee the maintenance areas and ensure maintenance
personnel tag and label all parts with the applicable aircraft number
and the serviceability condition;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Air Mobility Command Forward Supply System
(F2002-0009-C06100,; September 26, 2002);
Recommendations: A.1. The Army Materiel Command Director of Logistics
should:
Recommendations: Request that the Air Force Materiel Command Director
of Logistics include Air Force Logistics Management Agency Stocking
Policy 11 in the Readiness Base Leveling system to calculate C-5
forward supply location spare parts stock levels;
Focus area: Inventory management;
Theme: Policy;
Status of recommendations: Concurred, closed, not implemented.
Recommendations: B. 1. The Air Force Materiel Command Director of
Logistics should:
Recommendations: Instruct item manager specialists that Air Force Form
1996 is not required to maintain Army Materiel Command Forward supply
secondary item requirements in the Secondary Item Requirements System;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Asset Variance,; (F2002-0008-C06200,;
September 18, 2002);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should:
Recommendations: a. Remove the D200A Secondary Item Requirements System
automatic asset balance variance adjustment;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Establish training requirements for air logistics
center personnel on how to research and resolve D200A Secondary Item
Requirements System asset balance variances;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, closed, implemented.
Recommendations: c. Revise the Air Force Materiel Command Manual 23-1
to require that item managers defer an item's buy and/or repair
requirement until reconciling any asset balance variance greater than a
specified threshold (variance percent, quantity, and/or dollar value);
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: d. Establish asset balance variance oversight
procedures to verify item managers resolve asset balance variances;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Air National Guard Small Arms Management;
(F2002-0005-C06100,; May 20, 2002);
Recommendations: A.1. The Air National Guard, Deputy Chief of Staff,
Logistics, should:
Recommendations: a. Address to subordinate units the importance of
following Air Force equipment guidance related to small arms
accountability, inventory, documentation, storage, and disposal, and
the competitive marksmanship program;
Focus area: Inventory management;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Request the Air National Guard Inspector General to
include small arms accountability, inventory, documentation, storage,
and disposal requirements as a special emphasis area in unit
inspections;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: B.1. The Air National Guard, Deputy Chief of Staff,
Logistics, should:
Recommendations: a. Direct all Air National Guard units revalidate
small arms and conversion kit requirements using Allowance Standard
538;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Recompute requirements (including M-16 conversion
kits), reallocate small arms on-hand based on adjusted authorizations,
and adjust requirements and requisitions, as needed, following the
reallocations;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Material Management Transition (F2002-0006-
C06200,; April 29, 2002);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should revise Air Force Manual 23-110 to include specific
material management transition guidance. Specifically, the guidance
should require:
Recommendations: a. Transition gaining locations to have a training
plan in place to ensure personnel are adequately trained before working
asset buy and repair requirement computations;
Focus area: Requirements forecasting;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Air Force Materiel Command personnel to establish a
transition team to monitor all stages of the transition, to include
ensuring personnel are adequately trained and providing additional
oversight over requirement computations worked by new item managers;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Base-Level Reparable Item Transactions
(F2002-0004-C06100, March 22, 2002);
Recommendations: A.1. The Deputy Chief of Staff, Installations and
Logistics, should:
Recommendations: Revise Standard Base Supply System transaction
processing procedures to automatically select special requisition Air
Force routing identifier codes;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: B.1. The Deputy Chief of Staff, Installations and
Logistics should:
Recommendations: Issue guidance to base supply personnel reminding them
of proper receipt transaction procedures;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: C.1. The Air Combat Command, Director of Maintenance
and Logistics, should:
Recommendations: Discontinue the automated transaction deletion program
since the revised Standard Base Supply System procedures render the
program obsolete;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: C.2. The Deputy Chief of Staff, Installations and
Logistics should:
Recommendations: a. Revise Air Force Manual 23- 110 to direct working
capital fund managers to input reversing entries that will correct
erroneous transactions identified during monthly M01 list reviews;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Direct all base supply working capital fund
managers to: (1) Review the most current M01 list to evaluate the
propriety of all transactions affecting the Purchases at Cost account.
(2) Input reversing entries to correct any erroneous transactions
identified during the M01 list review. This will correct all
deficiencies, including those described in Results-A and Results-B;
Theme: Management Oversight;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Air Force Reserve Small Arms Management
(F2002-0001-C06100, January 2, 2002);
Recommendations: A.1. The Air Force Reserve Command, Deputy Chief of
Staff, Logistics, should:
Recommendations: a. Address to subordinate units the importance of
following Air Force equipment guidance related to small arms
accountability, inventory, documentation, storage, and disposal;
Focus area: Inventory management;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: b. Request the Air Force Reserve Command Inspector
General to include small arms accountability, inventory, documentation,
storage, and disposal requirements as a special emphasis area in unit
inspections;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: B.1. Air Force Reserve Command, Deputy Chief of Staff,
Logistics, should:
Recommendations: a. Request all Air Force Reserve Command units
revalidate small arms and conversion kit authorizations using Allowance
Standard 538;
Theme: Management oversight;
Status of recommendations: Concurred closed, implemented.
Recommendations: b. Recompute requirements (including M-16 conversion
kits), reallocate small arms on-hand based on recomputed
authorizations, and adjust requirements and requisitions, as needed,
following the reallocations;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Unserviceable Secondary Item Control
Activity Assets, (01062016, November 9, 2001);
Recommendations: A.1. The Air Force Materiel Command Director of
Logistics should:
Recommendations: Finalize and issue the revised Air Force Manual 23-110
requiring personnel to identify and timely return secondary items to
the primary control activity;
Focus area: Inventory management;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: B.1. The Air Force Materiel Command Director of
Logistics should:
Recommendations: Finalize and issue the revised Air Force Manual 23-110
requiring personnel to research and validate credit due on repairable
items returned to the primary control activity;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Source: Air Force Audit Agency.
[End of table]
[End of section]
Appendix V: Supply Chain Management: Summary of Naval Audit Service
Report Recommendations:
Report title, number, date: Hazardous Material Inventory Requirements
Determination and Offloads on Aircraft Carriers and Amphibious Assault
Ships (N2005-0027, February 17, 2005);
Recommendations: The Office of the Commander, U.S. Fleet Forces Command
should:
Recommendations: 1. Emphasize Chief of Naval Operations requirements
that all ships maintain proper inventory levels based on authorized
allowances and demand history;
Focus area: Inventory management;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 2. Emphasize Chief of Naval Operations and Naval
Supply Systems Command internal control procedures to ensure inventory
levels in the Hazardous Material Minimization Centers remain within the
authorized limits, and return material exceeding requisitioning
objectives to the supply system;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 3. Emphasize Chief of Naval Operations requirements
that ships requisition only hazardous materials authorized for
shipboard use, and return unauthorized material to the supply system;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 4. Enforce Naval Supply Systems Command requirements
that ships prepare and submit Ship's Hazardous Material List Feedback
Reports and Allowance Change Requests, whenever required;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Naval Supply Systems Command should:
Recommendations: 5. Establish an interface between authorized allowance
documents and the Type-specific Ship's Hazardous Material List to
ensure that hazardous material items authorized for shipboard use also
have authorized allowance levels;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 6. Establish procedures to validate Hazardous Material
Minimization Centers low and high inventory levels with those inventory
levels in Relational Supply for the same items to ensure Hazardous
Material Minimization Centers high limits do not exceed Relational
Supply high limits;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 7. Establish procedures that require unissued
hazardous material in the Hazardous Material Minimization Centers be
counted as on-hand inventory before reordering Relational Supply stock;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 8. Develop and implement a hazardous material usage
database that accumulates and retains data on supply system hazardous
material ordered and used by the ship for use in planning future
hazardous material requirements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, open.
Recommendations: 9. Establish procedures to ensure that Enhanced
Consolidated Hazardous Material Reutilization and Inventory management
Program Afloat Program technicians perform tasks in accordance with the
Enhanced Consolidated Hazardous Material Reutilization and Inventory
management Program Afloat Program Desk Guide;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 10. Establish a working group to determine the
feasibility for the development of ship-specific allowance-control
documents for all items managed in the Hazardous Material Minimization
Centers not already on an approved allowance list;
Focus area: [Empty];
Theme: Planning;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Office of the Supervisor of Shipbuilding,
Conversion, and Repair Newport News should:: The Office of the
Commander, U.S. Fleet Forces Command should:
Recommendations: 11. Return the prohibited undesignated hazardous
material items to the supply system for credit;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Naval Sea Systems Command, with the assistance of
Naval Supply Systems Command should:
Recommendations: 12. Establish formal written guidance stating what
system allowance list hazardous material is designated for and their
current quantities allowed. Guidance should include requisitioning
metrics that cross check hazardous material items against designated
system designs as generated by Naval Inventory Control Point and Naval
Surface Warfare Center Carderock Division - Ship System Engineering
Station, technical manuals, and one-time General Use Consumable List;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 13. Clarify Naval Sea Systems Command Instruction
4441.7B/Naval Supply Systems Command Instruction 4441.29A to measure
the quality of hazardous material load outs instead of the quantity or
percentage of hazardous material loaded on ships;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, open.
Recommendations: The Office of the Supervisor of Shipbuilding,
Conversion, and Repair Newport News should:
Recommendations: 14. Discontinue requisitioning aircraft cleaning,
maintenance, and preservation hazardous material for actual aircraft
before Post Shakedown Availability;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 15. Establish formal written local procedures that
require detailed support, justification, and audit documentation for
system validation on all hazardous material requisitions received from
ship personnel after Load Coordinated Shipboard Allowance List
delivery. This support should indicate the specific system the item is
required for and the document numbers for Preventative Maintenance
Schedule, Maintenance Request Cards, Allowance Equipage List, Allowance
Parts List, General Use Consumables List, and technical manuals. An
Allowance Change Request should be included, if applicable;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 16. Use Outfitting Support Activity when
requisitioning all hazardous material items for ship initial outfitting
to minimize local procurement as required by the Navy Outfitting
Program Manual of September 2002;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Naval Supply Systems Command should:
Recommendations: 17. Enforce compliance with established guidance for
material offloads to ensure a uniform use of DD Form 1348 documents
among ships and the proper processing of Transaction Item Reporting
documents to ensure inventory accuracy;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 18. Update the Enhanced Consolidated Hazardous
Material Reutilization and Inventory management Program Afloat Program
Desk Guide to include specific requirements for the Enhanced
Consolidated Hazardous Material Reutilization and Inventory management
Program Afloat Program technician when offloading Naval Supply Systems
Command-owned hazardous material;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Aircraft Engine/Module Containers (N2004-
0029, February 18, 2004);
Recommendations: The Naval Inventory Control Point should:
Recommendations: 1. In coordination with Naval Air Systems Command,
update policy and procedures issued to field activities on managing and
reporting aircraft engine/module container inventory;
Focus area: Inventory management;
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 2. Require Fleet activities to provide a daily
transaction item report of all intra-activity receipts and issues of
engine/module containers to item managers;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Nonconcurred, closed, implemented.
Recommendations: 3. Establish controls to ensure containers are not
procured in excess of requirements;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 4. Include the Aircraft Engine Container Program as an
assessable unit in Naval Inventory Control Point's Management Control
Program;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Naval Air Systems Command should:
Recommendations: 5. Fully fund the engine/module repair container
program in accordance with requirements generated by Naval Inventory
Control Point;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 6. Report any engine/ module containers costing $5,000
or more in the Defense Property Accounting System;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, open.
Recommendations: The Naval Inventory Control Point and Naval Air
Systems Command should:
Recommendations: 7. Require Naval Aviation Depots, Aircraft
Intermediate Maintenance Depots, and Fleet activities to perform
periodic inventories of engine/module containers, and report the
results to Naval Inventory Control Point's item managers;
Focus area: [Empty];
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: The Norway Air-Landed Marine Expeditionary
Brigade Prepositioning Program (N2003-0079, September 2, 2003);
Recommendations: The Commandant of the Marine Corps should:
Recommendations: 1. Terminate the Norway Air-Landed Marine
Expeditionary Brigade program;
Focus area: Inventory management;
Theme: Process;
Status of recommendations: Nonconcurred, closed, implemented.
Recommendations: 2. Prepare a comprehensive statement encompassing
disposal costs, equipment condition, and status of outstanding
procurements and repairs of the excess onhand ground equipment and
supplies, and identify Norway Air-Landed Marine Expeditionary Brigade
program items that would satisfy outstanding procurements and repairs
for fiscal year 2003 and the out years;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Nonconcurred, closed, implemented.
Recommendations: 3. Cancel the planned modernization procurements
associated with the replacement of Norway Air-Landed Marine
Expeditionary Brigade equipment, subject to negotiated termination
costs for one of the six modernization projects;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Nonconcurred, closed, implemented.
Recommendations: 4. Cancel all procurements that replenish Norway Air-
Landed Marine Expeditionary Brigade preposition inventory shortages;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Nonconcurred, closed, implemented.
Report title, number, date: Department of the Navy Aircraft Engine and
Component Requirements Determination Process (N2003-0041, April 29,
2003);
Recommendations: The Deputy Chief of Naval Operations, Warfare and
Requisitions Programs should:
Recommendations: 1. Perform analyses to establish validated engine
readiness requirements, incorporate ready-for-training engine readiness
rates for training aircraft engines, and establish separate
requirements for different categories of aircraft (such as combat,
support, and training);
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 2. Formally document the engine requirements and
supporting rationale in Department of the Navy guidance;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: The Deputy Chief of Naval Operations, Fleet Readiness
and Logistics should:
Recommendations: 3. Coordinate with Naval Inventory Control Point and
Naval Air Systems Command to require more realistic parameter inputs to
the Retail Inventory Model for Aviation while encouraging engine
maintenance strategies that will ultimately reduce turn around time and
increase reliability (mean time between removal);
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 4. Issue written guidance to assign responsibility for
calculating engine war reserve requirements and the need to compute
additional war reserve engine/ module requirements;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Deputy Chief of Naval Operations, Warfare
Requirements and Programs should:
Recommendations: 5. Adjust out-year F414- GE-400 engine and module
procurement requirements (to be reflected in the President's 2004
Budget) to agree with Naval Inventory Control Point's revised Baseline
Assessment Memorandum 2004 requirements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Commander, Naval Air Systems Command should:: The
Commander, Naval Inventory Control Point should:
Recommendations: 6. Reiterate Secretary of the Navy policy that
documentation supporting official Baseline Assessment Memorandum
submissions be retained for no less than 2 years;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Deputy Chief of Naval Operations, Fleet Readiness
and Logistics should:
Recommendations: 7. In coordination with Deputy Chief of Naval
Operations, Warfare Requirements and Programs, establish policy and
adjust the procurement strategy for F414-GE-400 engines and modules to
procure (based on current audit analyses) approximately 30 percent
whole engines and 70 percent separate engine modules and thereby
improve the engine/module repair capability;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 8. Issue guidance requiring Naval Air Systems Command
to determine, and annually reevaluate, the engine-to-module procurement
mix for the F414-GE-400;
Focus area: [Empty];
Theme: Policy;
Status of recommendations: Concurred, closed, implemented.
Recommendations: The Commander, Naval Air Systems Command should:
Recommendations: 9. Reduce out-year AE1107C spare engine procurement
by 12 (changed to 8 after receipt of management comments) through
fiscal year 2008;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: 10. Adhere to the Chief of Naval Operations-approved
model (Retail Inventory Model for Aviation) for calculations of spare
engine requirements;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Partially concurred, closed, implemented.
Recommendations: The Deputy Chief of Naval Operations, Warfare
Requirements and Programs should:
Recommendations: 11. Adjust planned out-year Aircraft Procurement, Navy-
6 (APN-6) procurement requirements to reduce the quantities of T700-
401C Cold and Power Turbine Modules by 10 each;
Focus area: [Empty];
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Report title, number, date: Marine Corps Equipment Deployment Planning
(N2002-0054, June 12, 2002);
Recommendations: The Commandant of the Marine Corps should:
Recommendations: 1. Validate the Time-Phased Force Deployment Database
equipment requirements and determine how the Marine Corps will source
(make available) the equipment required and determine if the equipment
required is on the unit's table of equipment;
Focus area: Requirements forecasting;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 2. Evaluate the Asset Tracking Logistics and Supply
System II+ to determine if it adequately meets user needs and, if not,
take sufficient action to correct identified deficiencies;
Theme: Management oversight;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 3. Perform onsite technical assessments to determine
the extent of required maintenance/repair;
Theme: Process;
Status of recommendations: Nonconcurred, closed, implemented.
Recommendations: 4. Provide dedicated organic or contract resources to
reduce maintenance backlogs;
Theme: Process;
Status of recommendations: Concurred, closed, implemented.
Recommendations: 5. Establish an acceptable level of noncombat deadline
equipment relative to the total combat deadline equipment and total
equipment possessed and report outside the unit to the Marine
Expeditionary Force commander. This would help ensure that the extent
of nonmajor maintenance/repair requirements receives appropriate
visibility and support requests for resources to reduce maintenance
backlogs;
Theme: Process;
Status of recommendations: Concurred, open.
Source: Naval Audit Service.
[End of table]
[End of section]
Appendix VI: Supply Chain Management: Summary of Non-audit Organization
Report Recommendations:
Report title, author, date: Defense Science Board Summer Study on
Transformation: A Progress Assessment, Volume 1;
Office of the Under Secretary of Defense For Acquisition, Technology,
and Logistics (February 2006);
Recommendations: The Secretary of Defense should:
Recommendations: Create a Joint Logistics Command:
* Responsible for global end-to-end supply chain,;
* That includes the U.S. Transportation Command mission, Defense
Logistics Agency, service logistics and transportation commands as
components to Joint Logistics Command with:
* Regional Combatant Commanders retaining operational control of the
flow of in-theater logistics;
and;
* Program managers retaining responsibility for lifecycle logistics
support plan and configuration control;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations: The Under Secretary of Defense for Acquisition,
Technology, and Logistics should:
Recommendations:
* Lead the work to create an integrated logistics information system;
* Appoint an external advisory board of relevant industry experts to
assist in guiding this effort;
Focus area: All focus areas;
Theme: Management oversight.
Report title, author, date: Sustainment of Army Forces in Operation
Iraqi Freedom;
Major Findings and Recommendations; RAND (2005);
Recommendations: Specific recommendations made for tactical supply,
theater distribution, strategic distribution, national-and theater-
level supply, and command and control;
Overarching recommendations:
* Supply chain planning needs to be better integrated with a common
supply chain vision;
* The newly designated distribution process owner (U.S. Transportation
Command), in concert with the Army, the other services, and the Defense
Logistics Agency, should develop and promulgate a common vision of an
integrated supply chain. The complementary, not redundant roles, of
each inventory location, distribution node, and distribution channel
should be defined;
* Every joint logistics organization should examine and refine its
processes to ensure detailed alignment with this vision. Review
doctrine, organizational designs, training, equipment, information
systems, facilities, policies, and practices for alignment with the
supply chain vision and defined roles within the supply chain;
* The assumptions embedded within the design of each element of the
supply chain with regard to other parts of the supply chain should be
checked to ensure that they reflect realistic capabilities;
* Improve the joint understanding of the unique field requirements of
the services. Likewise, the services need to understand the Defense
Logistics Agency, the U.S. Transportation Command, and the General
Services Agency processes and information requirements, as well as
those of private- sector providers;
* Metrics should be adopted to maintain alignment with the vision;
Focus area: Distribution;
Theme: Processes, performance tracking.
Overarching recommendations:
* Logistics information systems need adequate levels of resources to
provide non-line-of-sight mobile communications and effective logistics
situational awareness in order to make new and emerging operational and
logistics concepts feasible;
Focus area: Distribution;
Theme: Planning.
Overarching recommendations:
* Deliberate and contingency planning should include improved
consideration of the logistics resource requirements necessary to
execute sustained stability and support operations;
Focus area: Distribution;
Theme: Planning.
Overarching recommendations:
* Resourcing processes should consider uncertainty and implications of
capacity shortages;
* The flexibility of financial and resource allocation processes to
rapidly respond to the need for dramatic changes in logistics capacity
that sometimes arises from operational forecast error should be
improved;
* Logistics resource decisions should more explicitly consider how much
buffer capacity should be provided in order to handle typical
operational and demand variability without the development of large
backlogs;
Focus area: Distribution;
Theme: Planning.
Overarching recommendations:
* Joint training should be extended to exercise the entire logistics
system;
* The Army should review all wartime and contingency processes from the
tactical to the national level to determine which are not exercised in
training with all requisite joint organizations participating. Such
processes range from setting up tactical logistics information systems
to planning a theater distribution architecture to determining national
level spare parts distribution center capacity requirements;
* Review which tasks and processes do not have adequate doctrine and
mission training plans;
Focus area: Distribution;
Theme: Processes.
Overarching recommendations:
* Planning tools and organizational structures need to better support
expeditionary operations;
* Automation should more effectively support the identification of
logistics unit requirements to support a given operation;
* Unit "building blocks" should be the right size and modular to
quickly and effectively provide initial theater capabilities and then
to facilitate the seamless ramp-up of capacity and capability as a
deployment matures;
Focus area: Distribution;
Theme: Planning.
Report title, author, date: Logistics Transformation: Next Steps to
Interoperability and Alignment. Lexington Institute (July 2005);
Recommendations: Conclusions and recommendations fall into three
categories: programmatic, constructive, and operational. Programmatic
conclusions and recommendations include:
Recommendations: * Existing funding mechanisms act as disincentives for
joint logistics transformation and interoperability. If
interoperability is important to transformation, the Office of the
Secretary of Defense must fund it adequately and specifically, not just
the component systems and organizations being integrated. Services and
agencies will be reluctant to act against their own financial interest;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations: * Title 10 can be used to prevent joint logistics
transformation and interoperability, and needs clarification. If a
Logistics Command is created, Title 10 may need to be amended;
Focus area: All focus areas;
Theme: Policy.
Recommendations: * Expanded Office of the Secretary of Defense
leadership (beyond technical standardization) for joint logistics
transformation is necessary to effect change. The Logistics Systems
Modernization office efforts to realign business processes and to
prioritize rapid return on investment initiatives are a good start and
can be expanded;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations: * A 4-Star Combatant Command - U.S. Logistics
Command - in charge of logistics needs to be created, following the
example of the U.S. Strategic Command. The responsibilities and
enforcement powers of this Logistics Command may be significantly
different than the U.S. Strategic Command model and require clear
specification. Some responsibilities that this Command could undertake
include:
* Defining the distribution authorities, scenarios, business processes
and process ownership at the "hand-off" from U.S. Transportation
Command distribution to services distribution;
* Developing doctrine and implementing joint business processes and
rules for logistics interoperability between services, prioritizing
known problem and conflict areas, and assigning ownership of business
processes across the broader Supply Chain Operations Reference-defined
supply chain;
* Identifying budget requirements for logistics interoperability, and
requiring logistics interoperability to be adequately funded and
planned as part of the acquisition process of any logistics systems;
* Accelerating interoperability testing of all Global Combat Support
System implementations both within and across services and agencies,
with a spiral development methodology;
* Coordinating and communicating various isolated ongoing efforts in
defining logistics Extensible Markup Language schema, business
processes, databases, published web services and other joint logistics
projects, with the Integrated Data Environment and Enterprise Resource
Planning programs underway in the services and agencies. Where
conflicts, redundancies or gaps are identified, the U.S. Logistics
Command may function as an "honest broker" to develop an interoperable
solution, or as a "sheriff" to enforce an interoperable solution;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations: Constructive conclusions and recommendations include:
* A single logistics business process modeling needs to be created as a
common reference, with the understanding that the modeling effort will
be descriptive rather than prescriptive, due to Services' autonomy and
the need to continue migrating legacy systems and building new
logistics capability. Since all Services, Agencies and the Office of
the Secretary of Defense are employing the Supply Chain Operations
Reference Model for logistics, some degree of commonality should
already exist. If the process modeling effort can build on existing
U.S. Transportation Command/ Defense Logistics Agency business process
models, and incorporate business process models from each of the
Services, it may be available earlier and used more effectively. A
"greenfield" effort may have limited utility and never get beyond the
requirements stage. Efforts to align logistics data are underway within
the Joint Staff Logistics Directorate, and in the ongoing U.S.
Transportation Command/Defense Logistics Agency modeling. The
touchpoints between these alignment efforts and the actual Enterprise
Resource Planning implementations within the services and joint
agencies could be expanded. A variety of "to-be" logistics business
process models must be generated to meet the requirements of varying
future war fighting scenarios. For example, loss of space assets or
enemy use of electromagnetic pulse will create significant constraints
on logistics interoperability, and contingency business processes
should be designed for those scenarios;
Focus area: All focus areas;
Theme: Processes.
Recommendations:
* The logistics business process must be defined from end-to-end at the
DOD level, and then Services and Agencies must assess how they will or
will not align with those processes. Alignment, interoperability and
jointness are consensus goals for system development, but some Service
decisions not aligned with specific DOD level processes may provide net
benefits and increase the robustness of the overall logistics System of
Systems (the federated supply chain, or loosely-coupled approach). The
ongoing questions that the U.S. Logistics Command will address are
these: Should the default state for interoperability be alignment, with
non- alignment developed as a scenario-based exception? Or should the
default state for interoperability be non-alignment, with occasional
moments of alignment (specific data feeds of a finite duration)?;
Focus area: All focus areas;
Theme: Processes.
Recommendations: Operational conclusions and recommendations include:
* Some form of charter or statutory legislation is needed to prevent
joint logistics transformation from backsliding into non- interoperable
organizations and systems, when leadership changes;
Focus area: All focus areas;
Theme: Policy.
* Change management for joint logistics needs to be resourced
specifically, in addition to current resources for logistics
transformation within services and joint agencies;
Focus area: All focus areas;
Theme: Management Oversight.
Report title, author, date: Beyond Goldwater-Nichols: U.S. Government
and Defense Reform for a New Strategic Era - Phase 2 Report.
Center for Strategic and International Studies (July 2005);
Recommendations: The Beyond Goldwater-Nichols study team recommends:
Recommendations:
* Fuse the logistics and transportation functions into an integrated
U.S. Logistics Command;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations: * Implement the Beyond Goldwater-Nichols Phase I
recommendation to merge much of the Joint Staff Directorate of
Logistics with its Office of the Secretary of Defense counterpart, the
Deputy Under Secretary of Defense (Logistics & Material Readiness) into
an office that reports to both the Under Secretary for Technology,
Logistics, and Acquisition Policy;
Focus area: All focus areas;
Theme: Management oversight.
Report title, author, date: Evaluating the Security of the Global
Containerized Supply Chain. RAND (2004);
Recommendations: Three recommendations suggest three complementary
paths for improving the security of the global container supply chain
while maintaining its efficiency:
Recommendations:
* The public sector should seek to bolster the fault tolerance and
resilience of the global container supply chain;
* The closure of a major port-for whatever reason-would have a
significant effect on the U.S. economy. The federal government should
lead the coordination and planning for such events for two reasons.
First, the motivation of the private sector to allocate resources to
such efforts is subject to the market failures of providing public
goods. Second, the government will be responsible for assessing
security and for decisions to close and reopen ports;
Focus area: Distribution;
Theme: Policy.
Recommendations: * Security efforts should address vulnerabilities
along supply-chain network edges;
* Efforts to improve the security of the container shipping system
continue to be focused on ports and facilities (although many ports
around the world still failed to meet International Ship and Port
Security Code guidelines even after the July 1, 2004, deadline.)
Unfortunately, the route over which cargo travels is vast and difficult
to secure. Measures to keep cargo secure while it is en route are
essential to a comprehensive strategy to secure the global container
supply chain;
Focus area: Distribution;
Theme: Planning.
Recommendations: * Research and development should target new
technologies for low-cost, high-volume remote sensing and scanning;
* Current sensor technologies to detect weapons or illegal shipments
are expensive and typically impose significant delays on the logistics
system. New detection technologies for remote scanning of explosives
and radiation would provide valuable capabilities to improve the
security of the container shipping system;
Focus area: Distribution;
Theme: Planning.
Report title, author, date: Final Report: Intra-Theater Logistics
Distribution in the CENTCOM AOR.
Army Science Board FY2004 Task Force (October 2004);
Recommendations: Specific recommendations made for theater opening and
logistics operations, Deployment Distribution Operation Center, Radio
Frequency Identification and in-transit visibility;
Recommendations:
* Doctrine and structure:
* Codify in joint doctrine the distinction between joint theater level
logistics and Army/Land component logistics requirements and the need
for a joint theater-level logistics commander;
* Document a Joint Theater Sustainment Command and assign to Combatant
Commands;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations:
* Implement useful practices of other services;
Focus area: All focus areas;
Theme: Processes.
Recommendations:
* Don't preclude early use of Logistics Civilian Augmentation Program;
Focus area: All focus areas;
Theme: Processes.
Recommendations:
* Complete a thorough business-based cost/benefit analysis of Radio
Frequency Identification before spending more money on it;
Focus area: All focus areas;
Theme: Planning.
Report title, author, date: Objective Assessment of Logistics in Iraq.
Deputy Under Secretary of Defense (Logistics and Materiel Readiness)
and Joint Staff (JSJ4) Sponsored Assessment to Review the Effectiveness
and Efficiency of Selected Aspects of Logistics Operations During
Operation Iraqi Freedom (March 2004);
Recommendations: Summary of recommendations:
* Make directive authority for the Combatant Command real. Joint
doctrine must:
* Be prescriptive in its language, purging words like "should" and
"attempt" and replacing them with specific direction;
* Be joint and comprehensive. It must explicitly address the joint
organizational structure and staffing, develop and institutionalize
joint processes and procedures, and specifically require, not assume,
the necessary communications infrastructure and information tools to
support this vision;
* Support an expeditionary logistics capability to enable rapid
deployment and sustainment of flexible force structures in austere
theaters around the globe;
* Reconcile with the emerging concepts of net-centric warfare and sense
and respond logistics, balancing past lessons with the needs for the
future. Joint doctrine must be based on today's capabilities, not
tomorrow's promises;
* Continue to identify the combatant commander as the locus of control
for logistics in support of deployed forces, and specify the tools,
forces, processes, and technologies required from supporting commands;
Focus area: Distribution;
Theme: Management oversight.
Recommendations:
* Develop a true expeditionary logistics capability;
* Develop logistics systems able to support expeditionary warfare.
Logistics systems must be designed, tested, and developed to support a
mobile, agile warfighter;
* Logistics capabilities need to be native to an expeditionary unit for
swift and agile deployment. The people, equipment, and systems that
accompany these small, cohesive units must be able to integrate data
within the services and commands as well as among the coalition
partners;
* Logistics communications planning and infrastructure are an integral
part of any operation, and must be robust, fully capable, and
deployable in both austere to developed environments. Planning and
development of the required infrastructure must consider the issues of
bandwidth, mobility, security and aggregation of logistics data;
Focus area: Distribution;
Theme: Planning.
Recommendations:
* Retool the planning processes;
* A follow-on replacement for the current Time-Phased Force and
Deployment Data /Joint Operation Planning and Execution System process
is required, with the necessary improvements in task structures and
planning speed. This process should directly drive sustainment
planning, including acquisition and distribution decisions;
* The challenge of requirements identification and fulfillment in a
deployed environment is a joint challenge. Planning tools must be
developed that recognize and fuse the consumption of materiels and
fulfillment of warfighter requirements across the joint force;
* The speed and flexibility of future operations demand that a closer
and more dynamic relationship be developed with suppliers in the
industrial base and prime vendor partners;
Focus area: Distribution;
Theme: Planning, Processes.
Recommendations:
* Create an integrated theater distribution architecture;
* Theater distribution capability must be embedded in a permanent
organization within the theater or at least rapidly deployable to any
global location. The balance of reserve forces and the implications of
the activation cycle must be considered in the development of this
organizational structure and manning;
* The need for a joint in-theater distribution cross dock, staging, and
break-bulk operation must be explicitly recognized in every Combatant
Command Area of Responsibility. Rapid maneuver and task reorganization
precludes a 100% "pure pallet" shipment. Retrograde and reverse
logistics capabilities must also be embedded;
* Leadership must recognize that the growth and development of "joint
logisticians" who can operate and lead effectively in the theater
environment will take time and effort, potentially altering established
career progression plans;
Focus area: Distribution;
Theme: Planning.
Recommendations:
* Resolve the technology issues;
* Rationalize logistics systems. Current battlefield and deployment
realities include the existence of multiple systems for logistics
support. DOD must complete and deploy an integrated architecture,
including operational, systems, technical, and data elements to
streamline the systems capabilities to the joint warfighter, and manage
the portfolio of systems to eliminate those that cannot support the
future state;
* Create visibility within logistics and supply systems that extends to
the tactical units. Today's warfighting mission includes mobile
expeditionary engagements. Support systems need to include the ability
to communicate and synchronize with rear support units and systems 24
hours a day, 365 days a year in both austere and developed
environments;
* Ensure communications capability and availability for logistics, the
environment. Logistics is an information-intensive function with
constant requirements for updated information. Logistics support
planning needs to include communications-level planning and should be
completed before deployment;
Focus area: Distribution;
Theme: Processes.
Recommendations:
* Development of the foundational role of the Distribution Process
Owner;
* The Distribution Process Owner concept must be implemented swiftly
and should recognize the potential resource requirements in the near-
and mid-term to complete this task. This is a necessary first step,
addressing distribution challenges, and should facilitate the
establishment of an integrated, end-to-end logistics architecture,
eliminating the confederation of stovepipes;
* Financial and transactional systems should not be a hindrance to
going to war: They must be designed so that the transition from peace
to war is seamless;
the ability to employ these systems in a deployed environment must take
precedence over garrison requirements. More emphasis needs to be placed
on managing retrograde and repairables;
* Processes must be synchronized and integrated across the stovepipes;
Focus area: Distribution;
Theme: Planning, Processes.
Recommendations:
* Synchronize the chain: from Continental United States to Area of
Responsibility;
* Capacities across the distribution nodes and distribution links, and
across the entire logistics network but particularly in theater, must
be reviewed, understood, and actively managed. The ability to determine
and manage practical and accurate throughput capacities for air and
seaports, along with an understanding of the underlying commercial
infrastructure is essential to future planning. The ability to evaluate
possible scenarios for host nation support is also critical;
Focus area: Distribution;
Theme: Processes.
Recommendations:
* Deploy Performance Based Logistics agreements more comprehensively;
* Standardize Performance Based Logistics implementation.
Implementation of Performance Based Logistics must become more standard
to prevent confusion with other contractor support services and
activities. To the extent possible, common metrics and terms must be
developed and applied;
* Implement Performance Based Logistics across total weapons systems;
* Support broad end-to-end application. Much integration and
synchronization is required to ensure full system synchronization of
performance metrics but the end capability of tracking total system
performance to both cost and "power by the hour" is a significant
potential advancement in warfighter support;
Focus area: Distribution;
Theme: Processes, performance tracking.
Recommendations:
* Make Radio Frequency Identification real;
* Extend Radio Frequency Identification to the warfighter. Asset
tracking system capabilities, infrastructure, and support must extend
to the farthest reaches of the logistics supply chain, even in austere
environments;
Focus area: Asset Visibility;
Theme: Planning.
Report title, author, date: TRANSCOM-DLA Task Group.
Defense Business Practice Implementation Board (June 17, 2003);
Recommendations: The task group developed 3 summary recommendations:
Recommendations:
* Do not combine U.S. Transportation Command and Defense Logistics
Agency;
* Roles, missions and competencies of the two organizations are too
diverse to create a constructive combination;
* Organizational merger would not significantly facilitate broader
transformational objectives of supply chain integration;
* Both organizations perform unique activities/functions in the supply
chain. The real problem is not that the two organizations are separate,
but that their activities are not well integrated;
Focus area: Distribution;
Theme: Management oversight.
Recommendations:
* Elevate leadership for Department of Defense global supplies chain
integration;
* Designate a new Under Secretary of Defense for Global Supply Chain
Integration reporting directly to the Secretary of Defense;
* Ensure the Global Supply Chain Integration is a civilian with
established credibility in the field of supply chain management;
* Establish the Global Supply Chain Integration's appointment as a
fixed term for a minimum of 6 years;
* Direct the U.S. Transportation Command and the Defense Logistics
Agency to report to Global Supply Chain Integration;
* Create a working relationship for the Global Supply Chain Integration
with the Chairman of the Joint Chiefs of Staff;
* Build the Global Supply Chain Integration's staff from existing
staffs in the Office of the Secretary of Defense, the U.S.
Transportation Command, and the Defense Logistics Agency;
Focus area: All focus areas;
Theme: Management oversight.
Recommendations:
* Empower a Global Supply Chain Integrator with the required authority
and control to effect integration. The Global Supply Chain Integrator
should be granted authority to:
* Build end-to-end integrated supply chains through the establishment
of policies and procedures;
* Enable privatization and partnering with global commercial
distributors;
* Oversee program management decisions related to major systems vendor
support;
* Establish/authorize organizations and processes to control flow
during deployment/wartime scenarios;
* Control budgetary decisions affecting the U. S. Transportation
Command, the Defense Logistics Agency, and the distribution budgets of
the services;
Focus area: All focus areas;
Theme: Management oversight.
Source: Defense Science Board, RAND, Lexington Institute, Center for
Strategic and International Studies, Army Science Board FY2004 Task
Force, Deputy Under Secretary of Defense and Joint Staff, Defense
Business Practice Implementation Board.
[End of table]
[End of section]
Appendix VII: Comments from the Department of Defense:
Deputy Under Secretary Of Defense For Logistics And Materiel Readiness:
3500 Defense Pentagon:
Washington, DC 20301-3500:
January 9, 2007:
Mr. William Solis:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the GAO draft
report GAO-07-234, "DOD's High-Risk Areas: Progress Made Implementing
Supply Chain Management Recommendations, But Full Extent of Improvement
Unknown," dated November 29, 2006 (GAO Code 350780). The GAO draft
report recommends that DoD complete its logistics strategy and develop
and implement outcome-focused performance metrics and cost metrics for
supply chain management. The DoD concurs with both recommendations 1
and 2 in the report.
Detailed comments on the draft report recommendations are included in
the enclosure. The DoD appreciates the opportunity to comment on the
draft report.
Signed by:
Jack Bell:
Enclosure:
As stated:
GAO Draft Report - Dated November 29, 2006 GAO Code 350780/GAO-07-234:
"DOD's High-Risk Areas: Progress Made Implementing Supply Chain
Management Recommendations, But Full Extent of Improvement Unknown"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology, and
Logistics to complete the development of a comprehensive, integrated
logistics strategy that is aligned with other Defense business
transformation efforts, including the Enterprise Transition Plan. To
facilitate completion of the strategy, DoD should establish a specific
target date for its completion. Further, DoD should take steps as
appropriate to ensure the supply chain management improvement plan and
component-level logistics plans are synchronized with the Department's
overall logistics strategy. (Pages 18-19/GAO Draft Report):
DOD Response: Concur. The DoD logistics strategy is underway and is
aligned with other Defense business transformation efforts, including
the Enterprise Transition Plan. The ODUSD(L&MR) and the Joint Staff,
J4, are currently in the process of completing a logistics portfolio
test case. This test case will ensure the appropriate capabilities are
considered in completion of the logistics strategy. The test case is
estimated to be complete in the Spring 2007 and the logistics strategy
has an estimated completion date of 6 months after completion of the
test case.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology, and
Logistics to develop, implement, and monitor outcome-focused
performance and cost metrics for all the individual initiatives in the
supply chain management improvement plan as well as for the plan's
focus areas of requirements forecasting, asset visibility, and materiel
distribution. (Page 18-19/GAO Draft Report):
DOD Response: Concur. The DoD has developed and implemented outcome-
focused performance and cost metrics for logistics across the
Department. However, more work needs to be accomplished in linking the
outcome-metrics to the improvement achieved through completion of the
initiatives and their impact on the focus areas of requirements
forecasting, asset visibility, and materiel distribution. These
linkages will be completed as part of the full implementation of each
of the initiatives.
[End of section]
Appendix VIII: GAO Contact and Staff Acknowledgments:
GAO Contact:
William M. Solis (202) 512-8365:
Acknowledgments:
In addition to the contacts named above, key contributors to this
report were Thomas W. Gosling, Assistant Director, Susan C. Ditto,
Amanda M. Leissoo, Marie A. Mak, and Janine M. Prybyla.
(350780):
FOOTNOTES
[1] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.:
January 2005).
[2] DOD defines "logistics" as the science of planning and carrying out
the movement and maintenance of forces. Logistics has six functional
areas: supply, maintenance, transportation, civil engineering, health
services, and other services.
[3] GAO, DOD's High-Risk Areas: High-Level Commitment and Oversight
Needed for DOD Supply Chain Plan to Succeed, GAO-06-113T (Washington,
D.C.: Oct. 6, 2005) and DOD's High-Risk Areas: Challenges Remain to
Achieving and Demonstrating Progress in Supply Chain Management, GAO-
06-983T (Washington, D.C.: July 25, 2006).
[4] Depending on the nature of the recommendation, the component
organization responding to it may be a military service, defense
agency, command, or another office within DOD.
[5] Percentages in this report do not always add to 100 due to
rounding.
[6] GAO, Determining Performance and Accountability Challenges and High
Risks, GAO-01-159SP (Washington, D.C.: November 2000).
[7] GAO, Department Of Defense: Sustained Leadership Is Critical to
Effective Financial and Business Management Transformation, GAO-06-
1006T (Washington, D.C.: Aug. 3, 2006);
GAO, Business Systems Modernization: DOD Continues to Improve
Institutional Approach, but Further Steps Needed, GAO-06-658
(Washington, D.C.: May 15, 2006);
GAO, DOD's High-Risk Areas: Successful Business Transformation Requires
Sound Strategic Planning and Sustained Leadership, GAO-05-520T
(Washington, D.C.: Apr. 13, 2005).
[8] National Defense Authorization Act for Fiscal Year 2006, Pub. L.
No. 109-163, § 907 (2006).
[9] GAO-06-1006T;
GAO-06-658;
GAO, DOD Business Systems Modernization: Important Progress Made in
Establishing Foundational Architecture Products and Investment
Management Practices, but Much Work Remains, GAO-06-219 (Washington,
D.C.: Nov. 23, 2005).
[10] This program was previously called the Business Management
Modernization Program, but it ceased to exist as a program with the
establishment of the Business Transformation Agency.
[11] GAO-06-1006T;
GAO-06-658;
GAO, Defense Management: Foundational Steps Being Taken to Manage DOD
Business Systems Modernization, but Much Remains to be Accomplished to
Effect True Business Transformation, GAO-06-234T (Washington, D.C.:
Nov. 9, 2005).
[12] A bid protest has been filed with GAO concerning the terms of the
solicitation.
[13] DOD 4140.1-R, DOD Supply Chain Materiel Management Regulation (May
23, 2003).
[14] GAO, Defense Logistics: Lack of a Synchronized Approach between
the Marine Corps and Army Affected the Timely Production and
Installation of Marine Corps Truck Armor, GAO-06-274 (Washington, D.C.:
June 22, 2006).
[15] GAO, Defense Logistics: More Efficient Use of Active RFID Tags
Could Potentially Avoid Millions in Unnecessary Purchases, GAO-06-366R
(Washington, D.C.: Mar. 8, 2006).
[16] GAO, Defense Logistics: DOD Has Begun to Improve Supply
Distribution Operations, but Further Actions Are Needed to Sustain
These Efforts, GAO-05-775 (Washington, D.C.: Aug. 11, 2005).
[17] GAO, Defense Logistics: Better Management and Oversight of
Prepositioning Programs Needed to Reduce Risk and Improve Future
Programming, GAO-05-427 (Washington, D.C.: Sept. 6, 2005).
[18] GAO, Defense Inventory: Navy Logistics Strategy And Initiatives
Need To Address Spare Parts Shortages, GAO-03-708 (Washington, D.C.:
June 27, 2003).
[19] Naval Audit Service, Hazardous Material Inventory Requirements
Determination and Offloads on Aircraft Carriers and Amphibious Assault
Ships, N2005-0027 (Feb. 17, 2005).
[20] Army Audit Agency, Increasing Safety Levels for Spare Parts,
Office of the Deputy Chief of Staff, G-4, A-2006-0063-ALR (Jan. 31,
2006).
[21] DOD-IG, Logistics: Defense Logistics Agency Processing of Other
Nonrecurring Requirements, D-2004-018 (Nov. 7, 2003).
[22] Army Audit Agency, Subsistence Prime Vendor Contract, Audit of
Logistics Civil Augmentation Program, A-2006-0168-ALL (Aug. 4, 2006).
[23] GAO-06-274.
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