Defense Logistics
Lack of Key Information May Impede DOD's Ability to Improve Supply Chain Management Gao ID: GAO-09-150 January 12, 2009Military operations in Iraq and Afghanistan have focused attention on the performance of the Department of Defense's (DOD) supply chain management. According to DOD, it spent approximately $178 billion on its supply chain in fiscal year 2007. As a result of weaknesses in DOD's management of its supply chain, this area has been on GAO's list of high-risk federal government programs since 1990. DOD released its Logistics Roadmap in July 2008 to guide, measure, and track logistics improvements. DOD has identified two technologies included in this roadmap, item unique identification (IUID) and passive radio frequency identification (RFID), as having promise to address weaknesses in asset visibility. GAO reviewed (1) the extent to which the roadmap serves as a comprehensive, integrated strategy to improve logistics; and (2) the progress DOD has made implementing IUID and passive RFID. GAO reviewed the roadmap based on DOD statements about its intended purposes and visited sites where IUID and passive RFID were implemented.
The Logistics Roadmap falls short of meeting DOD's goal to provide a comprehensive and integrated strategy to address logistics problems department-wide. The roadmap documents numerous initiatives and programs that are under way and aligns these with goals and objectives. However, the roadmap lacks key information in three areas necessary for it to be a more useful tool that DOD's senior leaders can use to guide and track logistics improvement efforts toward achieving stated goals and objectives. First, the roadmap does not identify the scope of logistics problems or gaps in logistics capabilities, information that could allow the roadmap to serve as a basis for establishing priorities to improve logistics and address any gaps. Second, the roadmap lacks outcome-based performance measures that would enable DOD to assess and track progress toward meeting stated goals and objectives. Third, DOD has not clearly stated how it intends to integrate the roadmap into DOD's logistics decision-making processes or who within the department is responsible for this integration. DOD officials stated they plan to remedy some of these weaknesses in their follow-on efforts. For instance, DOD has begun to conduct gap assessments for individual objectives in the roadmap and hopes to complete these by July 2009. They stated that they recognized the need for these assessments; however, they had committed to Members of Congress to release the roadmap by the summer of 2008 and were unable to conduct the assessments prior to the release of the roadmap. A comprehensive, integrated strategy that includes these three elements is critical, in part, because of the diffuse organization of DOD logistics, which is spread across multiple DOD components with separate funding and management of logistics resources and systems. Until the roadmap provides a basis for determining priorities and identifying gaps, incorporates performance measures, and is integrated into decision-making processes, it is likely to be of limited use to senior DOD decision makers as they seek to improve supply chain management. DOD has taken initial steps to implement two technologies included in the Logistics Roadmap-IUID and passive RFID-that enable electronic identification and tracking of equipment and supplies; but has experienced difficulty fully demonstrating return on investment for these technologies to the military components that have primary responsibility for determining how and where these technologies are implemented. Although DOD has undertaken initial implementation efforts of these technologies at several locations, at present, it does not collect data on implementation costs or performance-based outcome measures that would enable the department to quantify the return on investment associated with these two technologies. Without this information, it may be difficult for DOD to gain the support needed from the military components to make significant commitments in funding and staff resources necessary to overcome challenges to widespread implementation of these technologies. As a result, full implementation of these technologies is impeded and the realization of potential benefits to asset visibility DOD expects may be delayed.
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-09-150, Defense Logistics: Lack of Key Information May Impede DOD's Ability to Improve Supply Chain Management
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
January 2009:
Defense Logistics:
Lack of Key Information May Impede DOD's Ability to Improve Supply
Chain Management:
GAO-09-150:
GAO Highlights:
Highlights of GAO-09-150, a report to congressional committees.
Why GAO Did This Study:
Military operations in Iraq and Afghanistan have focused attention on
the performance of the Department of Defense‘s (DOD) supply chain
management. According to DOD, it spent approximately $178 billion on
its supply chain in fiscal year 2007. As a result of weaknesses in
DOD‘s management of its supply chain, this area has been on GAO‘s list
of high-risk federal government programs since 1990. DOD released its
Logistics Roadmap in July 2008 to guide, measure, and track logistics
improvements. DOD has identified two technologies included in this
roadmap, item unique identification (IUID) and passive radio frequency
identification (RFID), as having promise to address weaknesses in asset
visibility. GAO reviewed (1) the extent to which the roadmap serves as
a comprehensive, integrated strategy to improve logistics; and (2) the
progress DOD has made implementing IUID and passive RFID. GAO reviewed
the roadmap based on DOD statements about its intended purposes and
visited sites where IUID and passive RFID were implemented.
What GAO Found:
The Logistics Roadmap falls short of meeting DOD‘s goal to provide a
comprehensive and integrated strategy to address logistics problems
department-wide. The roadmap documents numerous initiatives and
programs that are under way and aligns these with goals and objectives.
However, the roadmap lacks key information in three areas necessary for
it to be a more useful tool that DOD‘s senior leaders can use to guide
and track logistics improvement efforts toward achieving stated goals
and objectives. First, the roadmap does not identify the scope of
logistics problems or gaps in logistics capabilities, information that
could allow the roadmap to serve as a basis for establishing priorities
to improve logistics and address any gaps. Second, the roadmap lacks
outcome-based performance measures that would enable DOD to assess and
track progress toward meeting stated goals and objectives. Third, DOD
has not clearly stated how it intends to integrate the roadmap into
DOD‘s logistics decision-making processes or who within the department
is responsible for this integration. DOD officials stated they plan to
remedy some of these weaknesses in their follow-on efforts. For
instance, DOD has begun to conduct gap assessments for individual
objectives in the roadmap and hopes to complete these by July 2009.
They stated that they recognized the need for these assessments;
however, they had committed to Members of Congress to release the
roadmap by the summer of 2008 and were unable to conduct the
assessments prior to the release of the roadmap. A comprehensive,
integrated strategy that includes these three elements is critical, in
part, because of the diffuse organization of DOD logistics, which is
spread across multiple DOD components with separate funding and
management of logistics resources and systems. Until the roadmap
provides a basis for determining priorities and identifying gaps,
incorporates performance measures, and is integrated into decision-
making processes, it is likely to be of limited use to senior DOD
decision makers as they seek to improve supply chain management.
DOD has taken initial steps to implement two technologies included in
the Logistics Roadmap–IUID and passive RFID–that enable electronic
identification and tracking of equipment and supplies; but has
experienced difficulty fully demonstrating return on investment for
these technologies to the military components that have primary
responsibility for determining how and where these technologies are
implemented. Although DOD has undertaken initial implementation efforts
of these technologies at several locations, at present, it does not
collect data on implementation costs or performance-based outcome
measures that would enable the department to quantify the return on
investment associated with these two technologies. Without this
information, it may be difficult for DOD to gain the support needed
from the military components to make significant commitments in funding
and staff resources necessary to overcome challenges to widespread
implementation of these technologies. As a result, full implementation
of these technologies is impeded and the realization of potential
benefits to asset visibility DOD expects may be delayed.
What GAO Recommends:
GAO recommends that DOD (1) include in its roadmap additional
information and elements needed for a comprehensive strategy and (2)
collect data associated with the implementation of IUID and passive
RFID, analyze their return on investment, and determine if sufficient
funding priority has been provided. DOD concurred with GAO‘s
recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-150]. For more
information, contact William M. Solis at (202) 512-8365 or
solisw@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOD's Logistics Roadmap Documents Numerous Initiatives and Programs,
but Falls Short of Providing a Comprehensive, Integrated Strategy:
DOD May Face Challenges Achieving Widespread Implementation of IUID and
Passive RFID:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Logistics Initiatives and Programs Documented in the Logistics
Roadmap:
Table 2: Organization of the Logistics Roadmap:
Table 3: Examples of DOD's IUID and Passive RFID Pilot Projects and
Initial Implementations (as of September 2008):
Abbreviations:
AIT: automatic identification technology:
CONOPS: concept of operations:
DLA: Defense Logistics Agency:
DOD: Department of Defense:
IUID: item unique identification:
KPP: key performance parameter:
KSA: key system attributes:
OMB: Office of Management and Budget:
OSD: Office of the Secretary of Defense:
PBL: Performance Based Logistics:
POM: Program Objective Memorandum:
RFID: radio frequency identification:
UID: unique item identification:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
January 12, 2009:
Congressional Committees:
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 approximately $178 billion in fiscal year
2007, according to DOD. As a result of weaknesses in DOD's management
of supply inventories and responsiveness to war fighter requirements,
supply chain management has been on our list of high-risk federal
government programs and operations 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]
DOD has worked to resolve supply chain management problems. In 2005,
for example, with the encouragement of the Office of Management and
Budget (OMB), DOD developed the DOD Plan for Improvement in the GAO
High Risk Area of Supply Chain Management with a Focus on Inventory
Management and Distribution, also known as the Supply Chain Management
Improvement Plan, to address some of these systemic weaknesses as a
first step toward removing supply chain management from our high-risk
list. We stated at the time that DOD's plan was a good first step
toward putting DOD on a path toward resolving long-standing supply
chain management problems, but that the department faced a number of
challenges and risks in fully implementing its proposed changes across
the department and measuring progress.[Footnote 2] In the summer of
2008, DOD released its Logistics Roadmap[Footnote 3] with the intent to
develop a more coherent and authoritative framework for guiding,
measuring, and tracking DOD's logistics improvement efforts. The
roadmap subsumed the Supply Chain Management Improvement Plan. We have
previously recommended that DOD improve its ability to guide logistics
programs and initiatives across the department and demonstrate the
effectiveness, efficiency, and impact of its efforts to resolve supply
chain management problems by completing the development of a
comprehensive, integrated strategy that is aligned with defense
business transformation efforts.[Footnote 4] DOD concurred with this
recommendation.
Asset visibility is an area DOD has focused on in its plans to improve
logistics, including its Supply Chain Management Improvement Plan and
the recently released Logistics Roadmap. The roadmap describes
visibility as answering the questions, "Where is it?", "How will it get
here?", and "When will it get here?" Lack of asset visibility increases
vulnerability to undetected loss or theft and substantially heightens
the risk that millions of dollars will be spent unnecessarily.
Furthermore, a lack of visibility potentially compromises cargo
security and the readiness of the military. Two of the initiatives
included in the Supply Chain Management Improvement Plan and the
Logistics Roadmap that focus on improving asset visibility are item
unique identification (IUID) and passive radio frequency identification
(passive RFID). IUID and passive RFID are technologies for capturing
data on individual items or shipments and are sometimes referred to as
automatic identification technology (AIT). IUID provides for the
marking of individual items with a set of globally unique data elements
to help DOD value and track items throughout their life cycle.[Footnote
5] The passive RFID initiatives provide for the tagging of assets with
an electronic identification device consisting of a chip and an
antenna, usually embedded within a "smart" packaging label, in order to
enable electronic tracking of the assets, including the shipping date
and the date they are received. Passive RFID tags have no battery; they
draw power from the reader, which sends out electromagnetic waves that
induce a current in the tag's antenna.[Footnote 6] DOD has stated that
these two AIT initiatives represent critical efforts in support of
larger improvements to DOD supply chain management, particularly for
improving visibility.
This report addresses DOD's Logistics Roadmap and the status of DOD's
implementation of IUID and passive RFID. It was prepared under the
authority of the Comptroller General to conduct evaluations at his own
initiative and is being addressed to the committees of jurisdiction and
to others who have expressed interest in tracking DOD's efforts to
improve supply chain management. Additionally, it is part of a body of
work we used in our evaluation of DOD supply chain management for our
January 2009 high-risk series update. Specifically, this report
discusses (1) the extent to which DOD's Logistics Roadmap serves as a
comprehensive, integrated strategy to improve DOD logistics and (2) the
progress DOD has made implementing IUID and passive RFID.
To assess the Logistics Roadmap, we reviewed guidance, plans, and other
documents related to its development. We also interviewed officials
from the Office of the Secretary of Defense, Joint Staff, U.S.
Transportation Command, U.S. Joint Forces Command, the Defense
Logistics Agency (DLA), and the four military services involved in the
development of the roadmap. We reviewed DOD statements about the
intended purposes of the roadmap that were made at congressional
hearings,[Footnote 7] in discussions with our office, and in the
roadmap itself. We also assessed whether the roadmap incorporated sound
strategic planning and transformation management principles based on
our prior work.[Footnote 8] To assess DOD's progress implementing
passive RFID and IUID, we reviewed pertinent DOD and military
components' guidance, policy, implementation plans, business case
analyses, and other documentation related to these technologies. We
visited various sites, identified by DOD as locations which have
implemented passive RFID and IUID, to observe these technologies in use
and to more fully understand their implementation challenges and
potential benefits. Additionally, we interviewed officials responsible
for the coordination and management of these technologies from the
Office of the Secretary of Defense, the four military services, DLA,
and U.S. Transportation Command. We also reviewed OMB and DOD guidance
on benefit-cost analysis and economic analysis for decision making
[Footnote 9] and assessed the extent to which key principles embodied
in this guidance have been applied to DOD's decision making for IUID
and passive RFID. Additional information on our scope and methodology
is provided in appendix I. We conducted this performance audit from
January 2008 to January 2009 in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide
a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Results in Brief:
DOD's Logistics Roadmap falls short of providing a comprehensive,
integrated strategy to address logistics problems department-wide and
likely will be of limited use to decision makers. The roadmap documents
numerous initiatives and programs that are under way and aligns these
with logistics goals and objectives. DOD officials stated that the
roadmap should be of use in helping decision makers as they determine
whether current programs and initiatives are sufficient to close any
capability gaps that may be identified. However, the roadmap lacks key
information in three areas necessary for it to be a more useful tool
that DOD senior leaders can use to guide logistics improvements and
track progress toward achieving goals and objectives. First, the
roadmap does not identify the scope of logistics problems or gaps in
logistics capabilities, information that could allow the roadmap to
serve as a basis for establishing priorities to improve logistics and
address any gaps. For example, the roadmap does not discuss logistics
problems that were encountered during operations in Iraq and
Afghanistan and how such problems will be addressed. Second, the
roadmap lacks outcome-based performance measures that would enable DOD
to assess and track progress toward meeting the stated goals and
objectives. Our past work has shown that performance measures are
critical for demonstrating progress toward achieving results and
providing information on which to base organizational and management
decisions. Third, DOD has not clearly stated how it intends to
integrate the roadmap into its logistics decision-making processes or
who within the department is responsible for this integration. For
example, DOD has not shown how the roadmap could shape logistics
budgets developed by individual DOD components or address joint
logistics needs. In our prior work on DOD's transformation efforts, we
have emphasized the importance of establishing clear leadership and
accountability for achieving transformation results, as well as having
a formal mechanism to coordinate and integrate transformation efforts.
[Footnote 10] DOD officials responsible for supply chain integration
stated that the roadmap is a first step and that they plan to remedy
some of these weaknesses in their follow-on efforts to update the
roadmap. For instance, DOD has begun to conduct gap assessments for
individual objectives in the roadmap and hopes to complete these by
July 2009. DOD stated that it recognized the need for these
assessments; however, it had committed to Members of Congress to
release the roadmap by the summer of 2008 and was unable to conduct the
assessments prior to the release of the roadmap. A comprehensive,
integrated strategy that includes these three elements is critical, in
part, because of the diffuse organization of DOD logistics, which is
spread across multiple DOD components with separate funding and
management of logistics resources and systems. As we have previously
reported, the organization of DOD's logistics operations complicates
DOD's ability to adopt a coordinated and comprehensive approach to
joint logistics.[Footnote 11] Until the roadmap provides a basis for
determining priorities and identifying gaps, incorporates performance
measures, and is integrated into decision-making processes, it is
likely to be of limited use to senior DOD decision makers as they seek
to improve supply chain management. Moreover, DOD will have difficulty
fully tracking progress toward meeting its goals, from the component to
the department level, and provide the visibility needed to fully inform
senior decision makers of logistic needs and priorities across the
department. We recommend that DOD include in its Logistics Roadmap the
elements necessary to have a comprehensive, integrated strategy for
improving logistics and clearly state how this strategy will be used
within existing decision-making processes.
DOD has taken several steps toward implementing two technologies
included in the Logistics Roadmap-IUID and passive RFID-that enable
electronic identification and tracking of equipment and supplies, but
DOD may face challenges achieving widespread implementation because it
is unable to fully demonstrate return on investment associated with
these efforts to the military components that have primary
responsibility for determining how and where these technologies are
implemented. Use of IUID and passive RFID was required by memoranda
issued by the Office of the Under Secretary of Defense (Acquisition,
Technology, and Logistics) in July 2003 and July 2004,[Footnote 12]
respectively, and during this time senior DOD officials said that both
technologies represented critical efforts in support of larger
improvements to DOD supply chain management. Since then, the Office of
the Under Secretary of Defense, the military services, DLA, and U.S.
Transportation Command have developed implementation policy and
guidance, established working groups and integrated process teams,
allocated and established funding and infrastructure, and conducted
pilot projects and initial implementation efforts at several locations.
However, full implementation of these technologies is still several
years away under current time frames. In addition, DOD does not gather
the information needed to fully demonstrate return on investment for
IUID and passive RFID. Both DOD and OMB have established guidance for
conducting such analyses. However, DOD does not collect detailed data
on implementation costs or performance-based outcome measures from
initial implementation efforts that would enable the department to
fully quantify the return on investment associated with these two
technologies. For example, existing cost estimates for the
implementation of IUID and passive RFID do not include funding that the
military services and components take from operational accounts to
support implementation efforts. Additionally, performance measures are
either not being collected or address the status of implementation
efforts rather than the effect of implementation. Without the ability
to fully demonstrate that the benefits of IUID and passive RFID justify
the costs and efforts involved in their implementation, it may be
difficult for DOD to gain the support needed from the military
components to make the significant commitments in resources necessary
to achieve widespread implementation of these technologies. As a
result, implementation of these technologies may be impeded and the
realization of potential benefits to asset visibility DOD expects may
be delayed. Therefore, we recommend that DOD collect detailed
information on implementation costs, including costs currently being
funded from operational accounts, and performance-based implementation
outcomes for current and future implementation efforts from the
military components responsible for the implementation of these
technologies. Based on this data, DOD should analyze the return on
investment to justify expanded implementation efforts, and should
determine whether sufficient funding priority has been given to the
integration of these technologies into the military components'
respective business processes.
In its written comments on a draft of this report, DOD concurred with
our recommendations and identified a number of corrective actions it
has taken or plans to take. While we believe DOD's actions, for the
most part, respond to the issues raised in this report, several
questions remain, including both the methodology and time frame for
DOD's assessments of the objectives in the roadmap. On the basis of
DOD's comments, we have modified our fourth recommendation to specify
that DOD collect information on all costs, including costs currently
being funded from operational accounts, associated with implementing
these two technologies. The department's written comments are reprinted
in appendix II.
Background:
DOD is one of the largest and most complex organizations in the world
to manage effectively. While DOD maintains military forces with
unparalleled capabilities, it continues to confront pervasive, decades-
old management problems related to its business operations--which
include outdated systems and processes--that support these forces.
These management weaknesses cut across all of DOD's major business
areas, such as human capital management, including the department's
national security personnel system initiative; the personnel security
clearance program; support infrastructure management; business systems
modernization; financial management; weapon systems acquisition;
contract management; and last, but not least, supply chain management.
All of these areas are on our high-risk list for DOD.[Footnote 13]
Supply chain management consists of processes and activities to
purchase, produce, and deliver materiel--including ammunition, spare
parts, and fuel--to military forces that are highly dispersed and
mobile. DOD relies on defense and service logistics agencies to
purchase needed items from suppliers using working capital funds.
Military units then order items from the logistics agencies and pay for
them with annually-appropriated operations and maintenance funds when
the requested items--either from inventory or manufacturers--are
delivered to the units.
Since 1990, DOD supply chain management (previously, inventory
management) has been on our list of high-risk areas needing urgent
attention because of long-standing systemic weaknesses that we have
identified in our reports. Our high-risk series reports on federal
government programs and operations that we have identified, through
audits and investigations, as being at high risk due to their greater
vulnerabilities to fraud, waste, abuse, and mismanagement. In recent
years, we also have identified high-risk areas to focus on the need for
broad-based transformations to address major economy, efficiency, or
effectiveness challenges. The high-risk series serves to identify and
help resolve serious weaknesses in areas that involve substantial
resources and provide critical services to the public.
DOD Has Taken Actions to Improve Supply Chain Management:
DOD has taken a number of steps to improve supply chain management in
the past several years, including preparing strategic planning
documents and experimenting with a new way to manage its logistics
portfolio.[Footnote 14] In 2005, the Under Secretary of Defense
(Acquisition, Technology, and Logistics)[Footnote 15] released the
Focused Logistics Roadmap, which presented an "as-is" compendium of
logistics programs and initiatives and provided a baseline for future
focused logistics capability analysis and investment within DOD. With
the release of the "as-is" roadmap, DOD also identified a need for a
future-oriented "to-be" roadmap. DOD released the "to-be" roadmap, now
known as the Logistics Roadmap, in July 2008.
In a separate effort, the Deputy Secretary of Defense began, in
September 2006, testing a new approach for managing the development of
joint capabilities and included joint logistics as a test case. This
concept, capability portfolio management, is an effort to manage groups
of similar capabilities across the DOD enterprise to improve
interoperability, minimize capability redundancies and gaps, and
maximize capability effectiveness. In February 2008, the Deputy
Secretary of Defense issued a memo[Footnote 16] formalizing the first
four test cases, including joint logistics, and setting out plans for
further experimentation with five additional test cases. In that memo,
the Under Secretary of Defense (Acquisition, Technology, and Logistics)
was designated the capability portfolio management civilian lead for
logistics, with U.S. Transportation Command serving as the military
lead. According to the memo, the capability portfolio managers will
make recommendations to the Deputy Secretary of Defense and the
Deputy's Advisory Working Group on capability development issues within
their respective portfolio. In addition, the memo states that the
capability portfolio managers have no independent decision-making
authority and will not infringe on existing statutory authorities. A
DOD directive, issued in September 2008, established the policy for
using capability portfolio management to advise the Deputy Secretary of
Defense and the Heads of the DOD Components on how to optimize
capability investments across the defense enterprise.[Footnote 17]
DOD Expects IUID and Passive RFID Will Improve Asset Visibility:
DOD has identified total asset visibility as a key focus area for
improving supply chain management. DOD has defined total asset
visibility as the ability to provide timely and accurate information on
the location, movement, status and identity of units, personnel,
equipment and supplies; and the capability to act on that information
to improve the overall performance of DOD logistics practices. We have
previously reported on issues associated with DOD's lack of asset
visibility.[Footnote 18] DOD's latest roadmap includes a number of
initiatives and programs that involve the implementation of IUID and
RFID, two technologies that enable electronic identification and
tracking of equipment and supplies and that DOD expects will improve
its asset visibility.
DOD's 2007 Enterprise Transition Plan lists IUID and RFID as enablers
to achieve the goal of end-to-end materiel visibility in the DOD supply
chain.[Footnote 19] Specifically, the plan states that IUID enables the
accurate and timely recording of information on the location,
condition, status and identity of appropriate tangible personal
property to ensure efficient and effective acquisition, repair, and
deployment of items, and states that IUID will contribute to
improvements in the responsiveness and reliability of the DOD supply
chain. The plan also states that RFID will improve process efficiencies
in shipping, receiving, and inventory management, contribute to
reductions in cycle time, and increase confidence in the reliability of
the DOD supply chain through increased visibility of the location of an
item or shipment.
IUID includes the application of a data matrix through direct
inscription or placement of a permanent machine-readable label or data
plate onto an item. The data matrix contains a set of data elements
that form a unique item identifier. This data matrix identifies an
individual item distinctly from all other items that DOD buys and owns,
similar to the vehicle identification number on a car. Items can be
marked either by the vendor before entering into DOD's inventory, or by
a DOD component after DOD takes possession of an item. In both cases,
information about the item and the mark are uploaded to the IUID
Registry, which is located in Battle Creek, Michigan, and managed by
the Defense Logistics Agency. The registry serves as the central
repository for data about all of the items in the DOD inventory that
have been marked with a UID data matrix. Although the registry is
intended to contain information about all of the marked items, DOD has
issued policy indicating that the registry is not to be used as a
property accountability system or to maintain detailed transaction
data.[Footnote 20] As part of its IUID initiative, DOD plans to use
this data to more closely track items and more effectively manage its
inventory.
In July 2003, DOD directed that all new solicitations and contracts
issued on or after January 1, 2004, require the use of IUID for items
meeting established criteria.[Footnote 21] Additionally, in December
2004, the IUID policy was updated to require the application of UID to
legacy items (that is, existing personal property items in inventory
and operational use).[Footnote 22] In this memo, DOD requested all
program and item managers plan to complete this marking by the end of
2010. The number of items this requirement covers is unknown. DOD
officials estimate it is probably around 100 million; however, they
stated the actual number of items could be much higher.
RFID is a data input system that consists of (1) a transponder,
generally referred to as a tag; (2) a tag reader, also known as an
interrogator, that reads the tag using a radio signal; (3) centralized
data processing equipment; and (4) a method of communication between
the reader and the computer. The reader sends a signal to the tag,
which prompts the tag to respond with information about the item to
which it is attached. The information is forwarded to central data
processing equipment, which can then be used to get detailed
information about the container or item, such as the shipping date or
the date received. The information contained in the central data
processing equipment can provide visibility over inventory items
throughout the supply chain. DOD's RFID policy, issued on July 30,
2004, finalizes business rules for implementing two types of RFID tags-
-active and passive. This report focuses on DOD's implementation of
passive RFID, which is a newer technology than active RFID and less
well-established in DOD's supply chain. We previously examined DOD's
implementation of passive RFID in September 2005.[Footnote 23]
A passive RFID tag is an electronic identification device consisting of
a chip and an antenna, usually embedded within a "smart" packaging
label. Passive RFID tags have no battery; they draw power from the
reader, which sends out electromagnetic waves that induce a current in
the tag's antenna. Passive RFID readers transmit significant power to
activate the passive tags and are not currently approved for use on
ammunition, missiles, or other potentially explosive hazards.
Primary responsibility for determining how and where to implement IUID
and RFID, as well as funding the implementation and operations of these
technologies, resides with DOD components. These costs include the
purchase of necessary equipment, costs associated with marking and
tagging items, and changes to automated supply systems. In an effort to
coordinate the components' efforts to implement various automatic
identification technologies, DOD designated U.S. Transportation Command
as the lead functional proponent for RFID and related AIT
implementation within the DOD supply chain in September 2006. U.S.
Transportation Command subsequently published an AIT concept of
operations in June 2007 and an implementation plan for this concept of
operations in March 2008. Additionally, the Unique Item Identification
Policy Office was established in 2002 in the Office of the Under
Secretary of Defense (Acquisition, Technology, and Logistics) to
develop and implement unified IUID policy across DOD.
DOD's Logistics Roadmap Documents Numerous Initiatives and Programs,
but Falls Short of Providing a Comprehensive, Integrated Strategy:
Although DOD intended that its Logistics Roadmap would provide a
comprehensive and integrated strategy to address logistics problems
department-wide,[Footnote 24] we found that the roadmap falls short of
this goal. The roadmap documents numerous initiatives and programs that
are under way and organizes these around goals, joint capabilities, and
objectives. However, the roadmap lacks three elements necessary in a
comprehensive, integrated strategy which would make it a more useful
tool for DOD's senior logistics leaders in guiding, measuring, and
tracking progress toward achieving DOD logistics goals and objectives-
-key stated purposes of the roadmap. First, the roadmap does not
identify the scope of logistics problems or gaps in logistics
capabilities, information that could allow the roadmap to serve as a
basis for establishing priorities to improve logistics and address any
gaps. Second, the roadmap lacks outcome-based performance measures that
would enable DOD to assess and track progress toward meeting stated
goals and objectives. Finally, DOD has not clearly stated how it
intends to integrate the roadmap into its decision-making processes and
who will be responsible for this integration. Without a strategy that
provides a basis for determining priorities and identifying gaps, that
includes key strategic planning elements, and that is integrated into
decision-making processes, DOD will have difficulty guiding, measuring,
and tracking progress toward meeting its logistics goals and objectives
and providing the visibility needed to fully inform senior decision
makers of logistic needs and priorities across the department.
Logistics Roadmap Documents Existing Initiatives and Programs:
DOD's Logistics Roadmap, released in July 2008, documents numerous
initiatives and programs that are under way within the department. The
roadmap includes a total of 56 initiatives and 62 programs, based on
information submitted by DOD components.[Footnote 25] According to the
data in the roadmap, the total cost of implementing the initiatives and
programs from fiscal year 2008 to 2013 is estimated at more than $77
billion. Table 1 summarizes the initiatives and programs by DOD
component.
Table 1: Logistics Initiatives and Programs Documented in the Logistics
Roadmap (Dollars in millions):
DOD component: Air Force;
Initiatives: 8;
Programs: 10;
Estimated cost (FY08-13): $32,419.
DOD component: Army;
Initiatives: 8;
Programs: 37;
Estimated cost (FY08-13): $27,312.
DOD component: Defense Logistics Agency;
Initiatives: 4;
Programs: 0;
Estimated cost (FY08-13): $836.
DOD component: Marine Corps;
Initiatives: 4;
Programs: 3;
Estimated cost (FY08-13): $341.
DOD component: Navy;
Initiatives: 6;
Programs: 10;
Estimated cost (FY08-13): $14,744.
DOD component: Office of the Assistant Deputy Under Secretary of
Defense (Maintenance Policy and Programs);
Initiatives: 4;
Programs: 0;
Estimated cost (FY08-13): $3.
DOD component: Office of the Assistant Deputy Under Secretary of
Defense (Supply Chain Integration);
Initiatives: 5;
Programs: 0;
Estimated cost (FY08-13): $647.
DOD component: Office of the Assistant Deputy Under Secretary of
Defense (Transportation Policy);
Initiatives: 6;
Programs: 0;
Estimated cost (FY08-13): $1.
DOD component: U.S. Joint Forces Command;
Initiatives: 5;
Programs: 0;
Estimated cost (FY08-13): $27.
DOD component: U.S. Transportation Command;
Initiatives: 6;
Programs: 2;
Estimated cost (FY08-13): $870.
DOD component: Total;
Initiatives: 56;
Programs: 62;
Estimated cost (FY08-13): $77,200.
Source: GAO analysis of DOD Logistics Roadmap.
[End of table]
DOD Identified a Need for the Logistics Roadmap in 2005:
DOD initially began to develop the Logistics Roadmap in response to
direction from the Under Secretary of Defense (Acquisition, Logistics,
and Technology) in 2005. In the memorandum accompanying the 2005
Focused Logistics Roadmap, the Under Secretary directed the creation of
a follow-on "to be" roadmap. While the Under Secretary recognized that
the Focused Logistics Roadmap provided a baseline of programs and
initiatives for future focused logistics capability analysis and
investment and documented significant resource investment in logistics
programs and initiatives, he also recognized that the roadmap indicated
that key focused logistics capabilities would not be achieved by 2015.
As a result, he expected the "to be" roadmap to present credible
options for achieving focused logistics capabilities for consideration
by the Defense Logistics Board. The "to be" roadmap eventually became
the Logistics Roadmap, released in July 2008 by the Deputy Under
Secretary of Defense (Logistics and Materiel Readiness). Officials in
the Office of the Secretary of Defense (OSD) characterized the "to be"
roadmap as an effort to portray where the department was headed in the
logistics area, how it would get there, and what progress was being
made toward achieving its objectives. Further, they said the roadmap
would institutionalize a continuous assessment process linking ongoing
capability development, program reviews, and budgeting. DOD officials
also testified that the roadmap would include a detailed depiction,
over time, of existing, planned, and desired capabilities to
effectively project and sustain the joint force.[Footnote 26] Moreover,
they said the roadmap would establish a coherent framework for
achieving the best and most cost-effective joint logistics outcomes to
support the warfighter. We have emphasized the importance of DOD
developing an overarching logistics strategy that will guide the
department's logistics planning efforts and have stated that without an
overarching logistics strategy, the department will be unable to most
economically and efficiently support the needs of the warfighter.
Although DOD originally intended for the roadmap to be issued in
February 2007, the department suspended its development while it tested
its new capability portfolio management concept. Joint logistics was
one of the capability areas included in this test. In November 2007,
the Office of Supply Chain Integration, under the direction of the
Deputy Under Secretary of Defense (Logistics and Materiel Readiness),
began the formal development of the roadmap by coordinating with the
military services, combatant commands, the Defense Logistics Agency,
and other OSD offices to gather information on their logistics
initiatives and programs.[Footnote 27] The initial data call from the
Deputy Under Secretary requested that DOD components identify logistics-
related initiatives (e.g., RFID and the Single Army Logistics
Enterprise) and acquisition programs of record (e.g., C-130J Hercules
and Fuel System Supply Point) that are critical to successfully meeting
logistics capability needs. The Deputy Under Secretary requested
additional information about the initiatives and programs, such as a
description, expected benefits and impact, implementation milestones,
and resources.
Logistics Roadmap is Organized around Goals, Capabilities, and
Objectives:
OSD, in presenting information on the department's logistics
initiatives and programs, structured the roadmap around three goals,
three joint capabilities, and 22 objectives. The objectives in the
roadmap are aligned to three logistics goals that were enumerated in
DOD's Guidance for Development of the Force, a department-wide
strategic planning document that followed the 2006 Quadrennial Defense
Review. The three goals are as follows:
* unity of effort - the synchronization and integration of joint,
multinational, interagency, and non-governmental logistics capabilities
focused on the joint force commander's intent;
* visibility - having assured access to information about logistics
processes, resources, and requirements in order to gain the knowledge
necessary to make effective decisions; and:
* rapid and precise response - the ability to meet the constantly
changing logistics needs of the joint force.
The objectives are aligned further with three joint capability areas
that DOD has identified for joint logistics.[Footnote 28] These joint
capabilities are as follows:
* supply - the ability to identify and select supply sources, schedule
deliveries, receive, verify and transfer product, and authorize
supplier payments; the ability to see and manage inventory levels,
capital assets, business rules, supplier networks and agreements, as
well as assessment of supplier performance;
* maintain - the ability to manufacture and retain or restore materiel
in a serviceable condition; and:
* deployment and distribution - the ability to plan, coordinate,
synchronize, and execute force movement and sustainment tasks in
support of military operations, including the ability to strategically
and operationally move forces and sustainment to the point of need and
operate the Joint Deployment and Distribution Enterprise.
The 22 objectives were developed by OSD and each is generally aligned
to both a goal and a joint capability, although some objectives are
aligned with multiple joint capabilities. OSD provided guidance to the
participating DOD components on how to align their initiatives and
programs with the objectives.
Table 2 summarizes the organization of the roadmap, including the
number of initiatives and programs linked to each objective.
Table 2: Organization of the Logistics Roadmap:
Goal: Unity of effort;
Objective: Efficient procurement processes;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 9.
Goal: Unity of effort;
Objective: Effective procurement processes;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 8.
Goal: Unity of effort;
Objective: Align maintenance operations metrics with warfighter
outcomes;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 7.
Goal: Unity of effort;
Objective: Use commercial transportation resources to the maximum
extent practicable, integrated with organic resources;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 16.
Goal: Unity of effort;
Objective: Adopt enterprise-wide metrics that promote common goals and
interoperability;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 31.
Goal: Unity of effort;
Objective: Develop and implement a DOD Logistics Human Capital
Strategic Plan for a competency-based enterprise logistics workforce;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: Visibility: 3.
Goal: Visibility;
Objective: Visibility into customer materiel requirements and available
resources to meet those needs;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 26.
Goal: Visibility;
Objective: Visibility of emerging maintenance workload and in-process
resources to meet customer requirements;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 18.
Goal: Visibility;
Objective: Visibility of in-transit, in-storage, and in-process units
and materiel for optimized movement, planning, and execution;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 32.
Goal: Visibility;
Objective: Implement information technology strategies for improved
visibility and interoperability;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 16.
Goal: Visibility;
Objective: Enable a single authoritative data set for informed
logistics decision making;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 15.
Goal: Rapid and precise response;
Objective: Affordable availability in both peacetime and war;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 28.
Goal: Rapid and precise response;
Objective: Retrograde and disposal processes aligned to department's
needs;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 13.
Goal: Rapid and precise response;
Objective: Identify and sustain requisite core maintenance capability;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 10.
Goal: Rapid and precise response;
Objective: Sustain a highly capable, mission-ready maintenance
workforce;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 9.
Goal: Rapid and precise response;
Objective: Ensure an adequate infrastructure to execute assigned
maintenance workload;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 9.
Goal: Rapid and precise response;
Objective: Continuously improve availability, quality, flow days, and
cost of maintenance operations worldwide;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 20.
Goal: Rapid and precise response;
Objective: In conjunction with Systems Engineering, become the advocate
for the design and production of reliable weapons systems and
equipment;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Empty];
Number of initiatives and programs: 9.
Goal: Rapid and precise response;
Objective: Establish a seamless process between deployment and
sustainment phases;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 33.
Goal: Rapid and precise response;
Objective: Position stock and warehouses to provide effective and
efficient readiness;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 18.
Goal: Rapid and precise response;
Objective: Optimize transportation network;
Joint capability areas: Supply: [Empty];
Joint capability areas: Maintain: [Empty];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 46.
Goal: Rapid and precise response;
Objective: Drive acquisition processes to focus on sustainment key
performance parameter (KPP) and key system attributes (KSA), as well as
implementation of Performance Based Logistics (PBL) strategies;
Joint capability areas: Supply: [Check];
Joint capability areas: Maintain: [Check];
Joint capability areas: Deployment and distribution: [Check];
Number of initiatives and programs: 13.
Source: GAO analysis of DOD Logistics Roadmap.
Note: Initiatives and programs could be linked to more than one
objective.
[End of table]
OSD Intends for the Logistics Roadmap to Initiate New Improvement
Efforts:
OSD intends for the Logistics Roadmap to serve as a starting point for
improvement efforts across the department. In the message from the
Deputy Under Secretary of Defense (Logistics and Materiel Readiness),
included at the beginning of the roadmap, the Deputy Under Secretary
explained that the roadmap initiates the process of defining the
department's logistics capability portfolio in terms of initiatives and
programs, and documents specific actions under way to achieve logistics
goals and supporting objectives, examining them from the perspective of
experts who must advise senior leaders. In addition, he stated that the
roadmap begins an evolutionary process of linking logistics initiatives
and program performance assessments to identifiable and measurable
outcomes. Finally, he explained that the roadmap is intended to be part
of an ongoing process of assessment and feedback linked to the
Quadrennial Defense Review and to the department's Planning,
Programming, Budgeting, and Execution cycles, and to be a tool for the
DOD logistics community to use in guiding, measuring, and tracking
progress of the ongoing transformation of logistics capabilities.
OSD also expects to update and improve the roadmap periodically. The
Office of Supply Chain Integration, under the Deputy Under Secretary of
Defense (Logistics and Materiel Readiness), stated that an updated
roadmap may be completed in the summer of 2009. According to the Deputy
Under Secretary's message in the roadmap, future updates to the roadmap
will incorporate new initiatives and programs, as well as results from
capability-based assessments, joint experiments, and joint technology
demonstrations; report progress toward achieving logistics capability
performance targets; and help connect capability performance targets to
current and planned logistics investment for an overarching view of
DOD's progress toward transforming logistics.
Roadmap Lacks Key Elements Needed by Decision Makers to Identify and
Address Logistics Problems across DOD:
In its current form, the Logistics Roadmap lacks three elements that
are needed in order for it to serve as a more useful tool for DOD's
senior logistics leaders in guiding, measuring, and tracking progress
toward achieving DOD logistics goals and objectives--one of the key
stated purposes of the roadmap. Specifically, the roadmap does not
identify the scope of DOD logistics problems and capability gaps and
lacks outcome-oriented performance measures. Additionally, DOD has not
clearly stated how the roadmap will be integrated into its decision-
making processes and who will be responsible for this integration. DOD
officials stated that they plan to remedy some of these weaknesses in
their future efforts to update and expand the roadmap.
Roadmap Does Not Identify Scope of Logistics Problems and Capability
Gaps:
The Logistics Roadmap does not identify the scope of DOD's logistics
problems or gaps in logistics capabilities. In interviews prior to
developing the roadmap, DOD officials responsible for the roadmap said
that it would identify the scope of DOD's logistics problems and gaps
in logistics capabilities. This information, if included, could allow
the roadmap to serve as a basis for logistics decision makers to
establish priorities for formulating, funding, and implementing
corrective actions. However, the current roadmap does not include a
discussion about department-wide or DOD component-specific logistics
problems. For example, the roadmap does not discuss logistics problems
encountered during the ongoing operations in Iraq and Afghanistan.
Similarly, while the roadmap links initiatives and programs to three
joint capabilities, it does not indicate where there are gaps in either
current or desired capabilities. Without addressing the scope of
logistics problems and gaps in capabilities, the roadmap's utility is
limited and it does not fully inform senior decision makers of the
warfighters' logistics needs or provide them with a basis for
determining priorities to meet those needs by filling capability gaps.
Addressing logistics capabilities is a core function of the roadmap.
For example, according to the roadmap, it initiates the process of
defining the department's logistics capability portfolio in terms of
initiatives and programs, and provides a foundation for future
logistics capability assessments and investment analyses. In addition,
the roadmap states that the Guidance for the Development of the Force,
from which the roadmap's three goals are drawn, directs DOD to focus on
better integrating its logistics capabilities and processes to meet the
demands of an emerging operational environment. The roadmap also states
that it will allow the department's senior leaders to more effectively
advocate for the logistics initiatives and programs most critical for
providing globally responsive, operationally precise, and cost-
effective logistics support for the warfighter. In addition, DOD
officials stated that the roadmap should be of use in helping decision
makers as they determine whether current programs and initiatives are
sufficient to close any capability gaps that may be identified.
DOD officials have begun a series of assessments for 3 of the 22
objectives in the roadmap and directed DOD components to develop these
assessments to identify capability gaps, shortfalls, and redundancies
and to recommend solutions.[Footnote 29] DOD views such assessments as
essential for providing a strategic view of the department's progress
toward achieving the goals and objectives of the roadmap. DOD officials
said that the results of all 22 of these assessments will be included
in the next version of the roadmap, tentatively scheduled for release
in the summer of 2009. Until the assessments for each of the 22
objectives are completed, the roadmap will not begin to provide senior
decision makers with a basis for determining priorities for developing
and maintaining logistics capabilities to support the warfighter.
Roadmap Lacks Outcome-Based Performance Measures:
The roadmap lacks outcome-based performance measures that would enable
DOD to assess and track progress toward meeting stated goals and
objectives. Prior to its development, OSD officials said the roadmap
would allow the department to monitor progress toward achieving its
logistics objectives, and include specific performance goals, programs,
milestones, resources, and metrics to guide improvements in supply
chain management and other areas of DOD logistics. Based on interviews
with OSD officials prior to the completion of the roadmap, we
previously reported that the roadmap would include performance measures
and link objective, quantifiable, and measurable performance targets to
outcomes and logistics capabilities. However, we found that the roadmap
does not include outcome-based performance measures of the objectives,
which would allow DOD to measure progress toward meeting these stated
objectives. While many of the individual initiatives include
performance goals or implementation milestones, the objectives lack
such measures. We also found that although the objectives were
categorized by DOD-wide logistics goals, they were not linked to those
goals with performance or cost metrics. The lack of outcome-based
performance measures makes it difficult to measure progress on how the
objectives are meeting the stated goals.
An official from the Office of Supply Chain Integration, responsible
for leading the development of the roadmap, stated that performance
measures or assessments of the objectives to measure progress were not
included in this version of the roadmap because of a tight schedule for
its completion and release. As noted previously, DOD decided to delay
development of the roadmap until the capability portfolio management
test cases had been completed; however, they had committed to Members
of Congress that the roadmap would be released by the summer of 2008.
Within this time frame, officials said they were unable to address
performance measures or assessments. They stated that future versions
of the roadmap will include these elements, and assessments to measure
progress toward achieving 3 of the 22 objectives were ongoing at the
time we conducted our audit work. In October 2008, we requested
descriptions of the assessment approach and methodology; however, the
DOD official coordinating the assessments indicated that the
assessments were a work in progress and the approach had not been
finalized.
We have emphasized the importance of performance measures as management
tools for all levels of an agency, including the program or project
level, to track an agency's progress toward achieving goals, and to
provide information on which to base organizational and management
decisions. In a previous review of the Supply Chain Management
Improvement plan, we found that many of the initiatives in the plan, as
well as the three focus areas these initiatives were to address, lacked
outcome-focused performance measures, limiting DOD's ability to fully
demonstrate the results achieved through its plan. We also found that
the plan lacked cost metrics that might show efficiencies gained
through these supply chain improvement efforts, either at the
initiative level or overall. Without outcome-focused performance
measures and cost metrics, DOD is unable to fully track progress toward
meeting its goals for improving logistics from the component to the
department level, limiting the department's ability to fully
demonstrate results achieved through the roadmap. Increasing DOD's
focus on measurable outcomes will enable the department's internal and
external stakeholders, including OMB and Congress, to track the interim
and long-term success of its initiatives and help DOD determine if it
is meeting its goals of achieving more effective and efficient supply
chain management. Performance metrics are critical for demonstrating
progress toward achieving results and providing information on which to
base organizational and management decisions. Inadequate information on
performance may be an impediment to improving program efficiency and
effectiveness.
Roadmap Has Not Been Integrated into Decision-Making Processes:
DOD has not clearly stated how it intends to integrate the roadmap into
its decision-making processes and who will be responsible for this
integration. For example, DOD has not shown how the roadmap could shape
logistics budgets developed by individual DOD components or address
joint logistics needs through the new capability portfolio management
process. According to the Deputy Under Secretary's message at the
beginning of the roadmap, the document will be part of on ongoing
assessment and feedback process linked to the Quadrennial Defense
Review and the Planning, Programming, Budgeting, and Execution cycles
and will support senior leader decision making in a constrained
resource environment. However, on the basis of our review, we found
that DOD has not clearly stated the manner in which the roadmap will be
formally or informally used within these processes, how it will be used
to inform senior decision makers, and who will be responsible for its
implementation. In our prior work on DOD's transformation efforts, we
have emphasized the importance of establishing clear leadership and
accountability for achieving transformation results, as well as having
a formal mechanism to coordinate and integrate transformation efforts.
[Footnote 30] In the absence of clear leadership, accountability, and a
formal implementation mechanism, DOD may have difficulty in resolving
differences among competing priorities, directing resources to the
highest priorities, and ensuring progress if changes in senior
personnel occur.
DOD officials explained that procedures for how DOD officials use the
roadmap within these existing processes have not been formalized, but
provided various scenarios in which the assessments associated with the
roadmap's objectives could possibly be used. They stated that upon
completion of the assessments for the individual objectives, the
assessments could be inserted into program and budget reviews, and
could be used to inform the development of future versions of the
Quadrennial Defense Review and the Guidance for the Development of the
Force. Additionally, an official with the Office of Supply Chain
Integration responsible for leading the development of the roadmap
stated the assessments could be incorporated into DOD's budget process
to document the current status of initiatives and programs, and could
aid in identifying redundancies across DOD. DOD officials have stated
various ways in which the roadmap and its associated assessments could
be useful to senior decision makers, but they have not clearly defined
how the products will be used to inform the Quadrennial Defense Review,
Guidance for the Development of the Force, and the budget process.
Some DOD component officials who participated in the development of the
roadmap said it could be useful in the capability portfolio management
process. However, DOD officials stated that because capability
portfolio management was still new and had not been formalized at the
time the roadmap was under development, they were not sure how it would
be implemented and how or if the roadmap could be useful in this
process. As mentioned previously, the roadmap defines the logistics
portfolio and in light of the recent formalization of the joint
logistics capability portfolio, the roadmap could serve as the starting
point to assist the capability portfolio managers with their
responsibilities. The capability portfolio managers for joint
logistics, the Under Secretary of Defense (Acquisition, Technology and
Logistics) and the Commander, U.S. Transportation Command, are
responsible for providing recommendations or advice to appropriate DOD
decision makers and forums regarding integration, coordination, and
synchronization of capability requirements for capability investments,
and for evaluating capability demand against resource constraints,
identifying and assessing risks, and suggesting capability trade-offs
within their portfolio to the heads of the DOD components. Given that
capability portfolio management has been recently formalized, it
remains to be seen how the capability portfolio managers will implement
the process and what types of information they will need to fulfill
their responsibilities.
A comprehensive integrated strategy to address logistics problems
department-wide is critical, in part, because of the diffuse
organization of DOD logistics. Responsibility for logistics within DOD
is spread across multiple components with separate funding and
management of logistics resources and systems. For example, the Under
Secretary of Defense (Acquisition, Technology and Logistics), as part
of OSD, serves as the principal staff element of the Secretary of
Defense in the exercise of policy development, planning, resource
management, fiscal, and program evaluation responsibilities. The
Secretary of Defense designated the Under Secretary of Defense as the
department's Defense Logistics Executive with authority to address
logistics and supply chain issues. However, each of the military
services is separately organized under its own secretary and functions
under the authority, direction, and control of the Secretary of
Defense. The secretaries of the military departments are responsible
for organizing, training, and equipping their forces under Title 10 of
the United States Code. DOD policy states that each of the secretaries
is directed to prepare and submit budgets for their respective
departments, justifying before the Congress budget requests, as
approved by the President; and to administer the funds made available
for maintaining, equipping, and training their forces.[Footnote 31] As
we have previously reported, the diffuse organization of DOD's
logistics operations complicates DOD's ability to adopt a coordinated
and comprehensive approach to joint logistics.[Footnote 32] Until the
roadmap provides a basis for determining priorities and identifying
gaps, incorporates performance measures, and is integrated into
decision-making processes, it is likely to be of limited use, beyond
the current processes and information available, to senior DOD decision
makers as they seek to improve supply chain management.
DOD May Face Challenges Achieving Widespread Implementation of IUID and
Passive RFID:
DOD has taken several steps toward implementing IUID and passive RFID
but may face challenges achieving widespread implementation because it
is unable to fully demonstrate the return on investment associated with
these efforts to the military components that have primary
responsibility for determining how and where these technologies are
implemented. DOD and its military components have made some progress
adopting these two technologies. These efforts include developing
policy and guidance, establishing working groups and integrated process
teams to share information and lessons learned both within and across
the military components, providing funding to support implementation,
and establishing pilot projects and initial implementation efforts at
several locations. Despite these signs of progress, full implementation
of IUID and passive RFID is still several years away under current time
frames. At present, DOD is not able to fully quantify the return on
investment associated with these technologies because it does not
uniformly collect complete information on both the costs and benefits
associated with implementing IUID and passive RFID. Additionally,
effective integration of these technologies with supply chain processes
and information systems is challenging and will require the military
components to make significant commitments of funding and staff
resources. Without the ability to fully demonstrate that the benefits
of IUID and passive RFID justify the costs and efforts involved, DOD is
likely to face difficulty gaining the support needed from the military
components to overcome challenges associated with implementation.
DOD Efforts to Implement IUID and Passive RFID Include Issuing
Guidance, Sharing Information, Allocating Resources, and Conducting
Pilot Projects:
DOD and its military components have taken several steps to facilitate,
support, and undertake the implementation of IUID and passive RFID. Use
of IUID and passive RFID was required by memoranda issued by the Office
of the Under Secretary of Defense (Acquisition, Technology, and
Logistics) in July 2003 and July 2004, respectively, and DOD and its
military components have periodically issued policy and guidance to
manage and inform users regarding the implementation of both
technologies. For example, U.S. Transportation Command, the lead
functional proponent for the implementation of AIT, including IUID and
passive RFID, released an AIT Concept of Operations (CONOPS) in June
2007 and an AIT Implementation Plan in March 2008.[Footnote 33] The
CONOPS and Implementation Plan provide information on DOD's future
vision for AIT use across the supply chain and are intended to
establish a baseline standard for AIT use and implementation throughout
DOD. Guidance on these technologies has also been published by DOD. For
example, DOD has provided guidance concerning the use of IUID to
support improved maintenance and materiel management processes, as well
as detailed information on the technology and the mechanics of its
implementation.[Footnote 34]
DOD has taken other actions to support and facilitate the
implementation of IUID and passive RFID. DOD established a UID Policy
Office and designated staff resources toward RFID implementation in the
Office of Supply Chain Integration. In addition to helping disseminate
policy and guidance, the two offices play a role in promoting the
technologies and educating the military components regarding
implementation. For example, the offices have established Web sites for
suppliers, program managers, and others involved in implementation
efforts to access information on the technologies, including
specifications and requirements, tutorials and trainings, guidance for
implementation, and updates to existing policy and guidance.
Additionally, the UID Policy Office holds biannual UID Forums to
provide practical guidance to help educate military program managers
and DOD contractors regarding IUID implementation, and the Supply Chain
Integration Office holds annual RFID summits to highlight best
practices across the department and provide a forum for discussion of
RFID technologies and their potential applications to supply chain
management.
In addition to guidance developed at the department level, the military
components are developing service-specific implementation plans for
IUID and passive RFID. As of October 2008, the Army had issued a
service-wide strategy for IUID implementation, and the Marine Corps and
Air Force had both completed draft IUID implementation plans. While the
Navy does not have a formal service-wide IUID implementation plan, a
Navy official responsible for managing IUID implementation stated its
draft serialized item management[Footnote 35] implementation plan
contains information pertaining to DOD IUID guidance and requirements.
For passive RFID, the Navy and Air Force had completed plans for
implementation of the technology, the Army had completed a draft
implementation plan, and the Marine Corps was in the process of
updating its existing RFID implementation plan to incorporate
information from the DOD AIT CONOPS.
Efforts to implement the technologies also include information sharing
across DOD and within its military components. DOD and its military
components have established integrated process teams and working groups
to define objectives and establish implementation timelines, identify
common implementation challenges and potential solutions, and
facilitate stakeholder communications. These teams focus on several
areas related to implementation and operate both within and across the
military components. For example, U.S. Transportation Command formed
multiple integrated process teams dedicated to different segments of
supply and distribution operations during the development of its AIT
Implementation Plan, which encompasses both IUID and passive RFID.
Additionally, the UID Policy Office has established and participated in
a number of working groups to support the development and
implementation of IUID policy. Integrated process teams and working
groups also operate within the military components. For example, in
September 2007, the Navy formed an IUID integrated process team whose
four working groups meet monthly to discuss metrics for measuring
implementation progress, technical solutions for implementation
challenges, process mapping of implementation efforts, and internal and
external communications regarding implementation. In December 2007, the
Army also formed an IUID integrated process team, which developed the
Army-wide implementation strategy for IUID and continues to meet to
share lessons learned and discuss challenges related to implementation.
The military components, DLA, and U.S. Transportation Command have
funded implementation of both IUID and passive RFID through various
mechanisms and to varying degrees. For instance, the Army funds AIT,
which includes both IUID and passive RFID, through its regular budget
process. Army officials estimated that, in fiscal years 2007 and 2008,
the Army has spent $22.5 million on the implementation of IUID and has
requested an additional $15 million per year for fiscal years 2009
through 2013. For passive RFID, Army officials estimated that the Army
spent $2.2 million between the third quarters of fiscal year 2006 and
2008. Other services, however, do not uniformly provide designated
funding for implementation. For example, Navy officials stated that
implementation of IUID within the Navy is an unfunded mandate and
funding for implementation must be taken out of operational budgets.
Air Force officials also stated that funding for implementation is
taken out of operational budgets by program managers. Additionally, DLA
and U.S. Transportation Command funded a project that spanned multiple
military components.
Pilot projects and initial implementation efforts for both IUID and
passive RFID are under way at multiple locations throughout the
military components. Table 3 lists examples of pilot projects and
initial implementations that DOD officials identified as important
ongoing efforts.
Table 3: Examples of DOD's IUID and Passive RFID Pilot Projects and
Initial Implementations (as of September 2008):
Robotic Systems Joint Project Office - Joint Robot Repair Fielding
Division;
IUID or passive RFID: IUID;
Component: Army/Marine Corps;
Location: 14 Joint Robot Repair Fielding Centers (both CONUS and OCONUS
locations);
Description: Assign and apply unique item identifiers to all inventory
and integrate their use into maintenance operations.
Aviation and Missile Command - Integrated Materiel Management Center;
IUID or passive RFID: IUID;
Component: Army;
Location: Redstone Army Arsenal, Huntsville, Ala.;
Description: Facilitate data management of IUID implementation
throughout the command.
Space and Naval Warfare Systems Command - Extremely High Frequency Lab;
IUID or passive RFID: IUID;
Component: Navy;
Location: San Diego, Calif.;
Description: Assign and apply unique item identifiers to inventory for
use in inventory management.
Alaska RFID Implementation Project;
IUID or passive RFID: Passive RFID;
Component: DLA/Army/Air Force/U.S. Transportation Command;
Location: San Joaquin DDC, Calif.; Travis AFB, Calif.; Fort Richardson,
Alaska; Elmendorf AFB, Alaska;
Description: Replicate full supply process using passive RFID. Apply
passive RFID tags to shipments and track and receive shipments with
passive RFID technology.
Naval Supply Systems Command --Bangor RFID Evaluation;
IUID or passive RFID: Passive RFID;
Component: Navy/DLA;
Location: Naval Base Kitsap, Bangor, Wash.;
Description: Receive shipments from San Joaquin and Susquehanna Defense
Distribution Centers tagged with passive RFID technology and
accompanying advanced shipping notices.
Defense Distribution Centers;
IUID or passive RFID: Passive RFID;
Component: DLA;
Location: All 17 CONUS Defense Distribution Centers, as well as those
on Hawaii and Guam;
Description: Enable Defense Distribution Centers to read passive RFID
tags attached to shipments received from suppliers and to apply passive
RFID tags on shipments to DOD activities and units.
Source: GAO analysis.
[End of table]
The implementation efforts listed in the table vary in scope, in terms
of both the number of components and installations involved and the
amount of resources required for full implementation. For example, the
Alaska RFID Implementation project, which aimed to test and evaluate
passive RFID within the DOD supply chain in order to streamline supply
chain operations, spanned multiple military components and cost more
than $27 million to implement.[Footnote 36] As a part of this pilot,
passive RFID infrastructure was installed at DLA, Army, and Air Force
locations in Alaska and California. Other implementation efforts,
however, have been smaller and less resource intensive. For instance,
the Robotic Systems Joint Project Office, which works to procure,
field, sustain, and support ground robotics for the Army and the Marine
Corps, implemented IUID at its Joint Robot Repair Fielding division at
a cost of approximately $400,000 during fiscal years 2007 and 2008. The
project office established a process for marking new acquisitions to
its inventory with item unique identifiers and, to maximize the
benefits of implementation, integrated IUID into its existing supply
chain management data system.
Full Implementation of IUID and Passive RFID Remains Several Years
Away:
Full implementation of IUID and passive RFID remains several years away
under current time frames. Although DOD initially projected that all
items currently in its inventory required to be marked under IUID
guidance would be marked with unique item identifiers by fiscal year
2010, officials stated that this target will not be met. According to
DOD officials, as of October 2008 approximately 4 percent of the
estimated 100 million items currently in DOD inventory have been marked
with item unique identifiers. DOD officials stated that, at the current
pace of implementation, full marking of legacy items will take many
additional years. For example, the Air Force estimates that it will
take until fiscal year 2021 to complete marking parts already in
inventory with item unique identifiers. Since 2005, Air Force officials
estimated that the Air Force has marked 10,000 items in its inventory
while the total number of Air Force items required to be marked exceeds
12.5 million.
The DOD AIT Implementation Plan estimates that the implementation of
technologies, including passive RFID will be completed in 2015;
however, current time frames indicate that it may take longer to fully
implement the technology. Initial pilots of passive RFID called for in
the DOD AIT Implementation Plan are under way at selected locations in
each military service, but a DOD official responsible for coordinating
passive RFID implementation across the department stated that the
services are still in the process of gathering baseline information and
the technology will not be fully functional at these locations until
the end of fiscal year 2009. Additionally, according to the DOD AIT
Implementation Plan, updated automatic information systems needed to
support passive RFID and IUID may not be functional until after 2015.
Updates to these systems are necessary in order for the components to
derive benefit from these initiatives. Furthermore, while
infrastructure for reading passive RFID tags is in place in multiple
locations throughout the military components, additional work is
required to reach full implementation. According to a September 2008
report by the DOD Inspector General on DLA's implementation of passive
RFID, 10 percent of supply contracts examined did not contain the
required RFID clause and suppliers for 43 percent of contracts
containing the required clause did not apply passive RFID tags to
shipments they sent to depots.[Footnote 37] The Inspector General also
found that installation-level understanding of the use and application
of passive RFID was limited and additional training was needed to
increase awareness of the technology and its application.
DOD Does Not Collect Information Needed to Fully Demonstrate Return on
Investment for IUID and Passive RFID:
Although implementation of IUID and passive RFID will require
significant funding commitments and staff resources from the military
components, DOD does not gather the cost and performance information
needed to fully demonstrate return on investment for the technologies
to the military components that have primary responsibility for
determining how and where these technologies are implemented. While DOD
gathers information on some of the costs associated with
implementation, cost estimates do not include all of the funding or
staff resources provided by the services to support implementation
because funding for implementation at the component level is frequently
taken out of operational accounts, rather than being directly
allocated. The March 2008 DOD AIT Implementation Plan identified $744
million in programmed AIT-related funding for fiscal years 2008 through
2013, but does not include in its estimate funding that the military
components take from operational accounts to support implementation
efforts. A 2005 memo from the Under Secretary of Defense (Acquisition,
Technology, and Logistics) requires acquisition programs to
specifically identify funding for IUID in budget submissions.[Footnote
38] However, several officials from the military services stated that
they divert resources from other efforts in order to facilitate
implementation of IUID and passive RFID. Navy officials stated that
implementation of IUID within the Navy is treated as an unfunded
mandate and program managers at the installation level must take
funding out of operational budgets in order to support implementation
efforts. Army officials have faced similar challenges. For example,
program managers involved in the Army's implementation of IUID for
small arms have had to release staff from other tasks to assist in the
marking of weapons with item unique identifiers. Since funding and
staff resources are often provided in this indirect manner, the total
resources expended on the implementation of IUID and passive RFID may
not be visible to decision makers, both at the component level and
across DOD.
Additionally, DOD does not require the military components to gather or
report on outcome-based performance measures to demonstrate the extent
to which benefits are being accrued through the implementation of IUID
and passive RFID. While DOD does gather some information to assess
implementation efforts across the military components, the information
collected focuses on measures of implementation progress and does not
include outcome-based performance measures. For example, while OSD and
the military components are required to provide updates to DOD at
quarterly IUID Scorecard Reviews, reporting requirements focus on the
execution of implementation plans rather than benefits accrued from
implementation. At the July 2008 scorecard review, military components
provided installation-level implementation plan status updates and
reported on implementation efforts, such as issuance of new policies
and outreach activities. Furthermore, while U.S. Transportation
Command's AIT Implementation Plan identifies potential performance
measures for automatic identification technologies and establishes a
schedule to begin collecting some data in 2009, the military components
have not yet been required to collect or report information pertaining
to these metrics.[Footnote 39] Senior DOD officials involved in the
implementation of passive RFID stated that they plan to collect this
information in the future.
During our site visits, officials at some locations were able to
describe qualitative benefits derived from the implementation of IUID
or passive RFID. However, the officials had not quantified the benefits
they had observed. For instance, Army officials cited a number of
benefits from the implementation of IUID by the Robotic Systems Joint
Project Office. These included reductions in inventory size, shipping
and receiving time, and data entry errors and increases in data
quality, robustness, and processing speed. However, officials stated
that they had not attempted to quantify these benefits. Other officials
cited installation-level qualitative benefits for implementing passive
RFID. For example, officials from DLA's Defense Distribution Center in
San Joaquin, California, said the implementation of passive RFID
reduced the amount of time needed to prepare shipments. However, they
lacked key data to quantify the extent of the time savings.
Additionally, only limited efforts have been made to gather the
baseline information needed to quantify change in performance outcomes
over time. For instance, DLA gathered baseline information on shipping
and receiving operations at the Defense Distribution Center in San
Joaquin in September 2008, despite beginning its implementation of
passive RFID in November 2004.
Without data on the costs and benefits associated with the
technologies, it is difficult for DOD to create a business case or
other analysis that would fully demonstrate return on investment from
implementing IUID and passive RFID to the military components. Both OMB
and DOD have established guidance for conducting such analyses. The
stated goal of OMB Circular A-94 is to promote efficient resource
allocation through well-informed decision making by the federal
government, and the circular provides general guidance on comparing the
costs of alternative means of achieving the same objective or stream of
benefits. Additionally, according to DOD Instruction 7041.3, economic
analyses are an integral part of the planning, programming and
budgeting system of the department, and economic analysis calculations
should include information on the costs and benefits associated with
alternatives under consideration.
While OSD and the military components have conducted some studies to
assess the business case for the use of IUID and passive RFID, these
studies have had mixed results. For example, a June 2008 analysis of
alternatives for AIT in base-level Air Force supply and distribution
processes found that implementation of the RFID vision presented in the
DOD AIT CONOPS was not optimal, based on the costs and benefits
associated with implementation. Instead, the Air Force determined that
its current state of operations, with limited incorporation of passive
RFID, functioned both effectively and efficiently. Broader analyses of
return on investment, however, have arrived at different results. DOD
released a business case analysis of passive RFID in April 2005 that
projected overall cost savings from implementation of passive RFID
would range from $70 million to $1.781 billion over a 6-year period and
found that there is a reasonable to good expectation that
implementation of passive RFID across DOD will provide an economic
return on investment in the near term and an excellent expectation of
economic returns in the long term. Additionally, a March 2005 cost
benefit analysis of IUID performed by OSD found that implementation of
the technology would deliver benefits in both the short and long terms.
However, these department-wide business case analyses for both
technologies have been characterized by DOD officials involved in the
coordination and management of IUID and passive RFID as overly broad
and unconvincing because analyses have been largely based on data from
private industry implementation efforts. DOD officials stated that the
April 2005 DOD business case analysis for passive RFID and the March
2005 DOD IUID business case analysis were both high-level efforts that
were discounted by the military components for overstating potential
benefits of the technologies, as well as the time frame in which those
benefits would be achieved.
In 2005, we identified unclear return on investment as an impediment to
the implementation of passive RFID.[Footnote 40] This impediment
remains today. Since return on investment for both IUID and passive
RFID is not always clear to the military components charged with their
implementation, it is difficult for DOD to convince program managers at
the installation level to invest time and resources toward overcoming
challenges associated with implementing the technologies at the expense
of other competing priorities. For example, officials from both the
Army and the Navy who have responsibility for coordinating and managing
implementation of these technologies in their respective components
stated that implementation of IUID is given low priority by program
managers, who do not see the benefits associated with implementation.
DOD officials agreed that program managers resist implementation of the
technologies when the value of implementation is unclear. In our
previous work on supply chain management, we have stated that it is
important for the Office of the Secretary of Defense to obtain the
necessary resource commitments from the military services, DLA, and
other organizations, such as U.S. Transportation Command, to ensure
that initiatives are properly supported.[Footnote 41] At present, DOD's
inability to fully quantify return on investment has impeded
implementation progress, as the military components charged with
carrying out implementation are unable to clearly discern the benefits
of the technologies and are reluctant to devote time and resources for
implementation, rather than for competing priorities.
Effective integration of these technologies with supply chain processes
and information systems is challenging and requires the military
components to make significant commitments of funding and staff
resources, often without promise of short-term benefit. As noted
previously, DOD identified $744 million in programmed funding that will
be necessary in fiscal years 2008 through 2013 to achieve the vision
laid out in the AIT Implementation Plan. Military service officials
stated that tasks required to achieve full implementation include
installation of infrastructure and training of personnel to understand
and use the technologies. Additionally, costly and complex business
process changes are necessary for the military components to enable
interoperability between automatic information systems used to gather
data from IUID marks and passive RFID tags and service-specific supply
data systems.
Without these changes, data gathered through IUID and passive RFID
cannot be accessed to derive benefit from the technologies. In some
cases, data are not being gathered at all. Officials at three out of
four locations participating in the implementation of the Alaska RFID
Implementation Project stated they derive no benefit yet from passive
RFID as a result of the lack of integration between RFID data
collection platforms and supply chain information systems. Deriving
benefit from IUID implementation has also been difficult. Officials
from multiple military components stated that while IUID marking
efforts are time consuming and resource intensive, lack of data system
integration prevents implementation benefits from being realized.
Without a clear return on investment, achieving the integration
necessary to derive benefit from the technologies may be resource
intensive to a degree that discourages the military components from
investing in technology solutions. For instance, faced with a lack of
information system interoperability, the Army decided against investing
in technologies that would allow its legacy supply systems to use IUID
and passive RFID data. Instead, the Army decided to delay obtaining
benefit from the technologies for multiple years until Army-wide
information systems that can directly communicate with one another are
operational. Army officials stated that the costs associated with
implementing an interim solution were prohibitive, given the uncertain
return on investment for the technologies in the near term.
Conclusions:
The importance of supply chain management to the operational capability
of U.S. forces, as well as the considerable resources being spent in
this area, highlight the importance of addressing long-standing
problems that have resulted in our designation of this DOD function as
a high-risk area. Given the diffuse organization of DOD's logistics
operations, senior DOD decision makers need a comprehensive, integrated
strategy to guide the department's efforts to make significant
improvements. Although DOD's Logistics Roadmap represents the latest
attempt to establish such a strategy for the department, the lack of
key elements we identified in our review calls into question the
utility of this roadmap in addressing supply chain problems. Further,
without the inclusion of these key elements, it will be difficult for
DOD to demonstrate progress in addressing these problems and provide
Congress with assurance that the DOD supply chain achieves DOD's goal
of providing cost-effective joint logistics support for the war
fighter. Therefore, it will be important that DOD officials follow
through on their intent to remedy weaknesses in the roadmap.
Although incorporating IUID and passive RFID into the DOD supply chain
offers the promise of technologies that may be able to help address
long-standing problems of inadequate asset visibility, the department
is unable to fully quantify the return on investment associated with
the technologies to those in the military components responsible for
implementation. Cost and benefit information collected from actual
implementation efforts could form the basis for quantifying return on
investment and help to encourage the military components to allocate
resources that will be needed for widespread implementation of these
technologies. Until the military components place higher priority on
integration of IUID and passive RFID into their business processes, DOD
will not realize the benefits it expects to achieve from these
initiatives.
Recommendations for Executive Action:
To improve DOD's ability to guide logistics initiatives and programs
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 (Acquisition, Technology, and Logistics) take the following
three actions necessary to have a comprehensive, integrated strategy
for improving logistics:
* Identify the scope of logistics problems and capability gaps to be
addressed through the Logistics Roadmap and associated efforts.
* Develop, implement, and monitor outcome-focused performance measures
to assess progress toward achieving the roadmap's objectives and goals.
* Document specifically how the roadmap will be used within the
department's decision-making processes used to govern and fund
logistics and who will be responsible for its implementation.
To improve the likelihood DOD will achieve the potential benefits it
expects from the implementation of IUID and passive RFID, we recommend
that the Secretary of Defense direct the Under Secretary of Defense
(Acquisition, Technology, and Logistics), in conjunction with the
military components, take the following two actions:
* Collect detailed information on the costs, including costs currently
being funded from operational accounts, and performance outcomes for
ongoing and future implementation of these two technologies.
* On the basis of these data, develop an analysis or analyses of the
return on investment to justify expanded investment of resources in the
implementation of the technologies.
We also recommend that the Secretary of Defense direct the Secretaries
of the Army, the Navy, and the Air Force; the Commandant of the Marine
Corps; and the Director of the Defense Logistics Agency to determine,
on the basis of the above analysis or analyses, whether sufficient
funding priority has been given to the integration of these
technologies into their respective business processes and, if not, to
take appropriate corrective action.
Agency Comments and Our Evaluation:
In its written comments on a draft of this report, DOD concurred with
our recommendations and identified a number of corrective actions it
has taken or plans to take. While we believe DOD's actions, for the
most part, respond to the issues raised in this report, several
questions remain, including both the methodology and time frame for
DOD's assessments of the objectives in the roadmap. On the basis of
DOD's comments, we have modified our fourth recommendation to specify
that DOD collect information on all costs, including costs currently
being funded from operational accounts, associated with implementing
these two technologies. The department's written comments are reprinted
in appendix II.
DOD concurred with our three recommendations focused on improving its
Logistics Roadmap and cited actions to address the recommendations. DOD
stated that the roadmap is a living document and the department
continues progressing toward developing a more coherent and
authoritative framework for guiding its logistics improvement efforts.
Specifically, DOD stated that it has completed an initial review of
three of the roadmap's objectives as the framework for finalizing an
assessment methodology. This initial review is intended to identify
gaps, shortfalls, timing issues, and challenges throughout DOD's supply
chain. DOD also stated that, in addition to monitoring existing
performance metrics, such as customer wait time, the department will
determine which specific outcome-based performance measures can be
linked to each of the objectives and goals within the roadmap. Finally,
DOD stated that it has established an executive advisory committee to
ensure that the roadmap is a useful tool in decision making. Our report
describes the ongoing assessment effort that DOD cites in its comments.
Although DOD did not provide a time frame for completing these
assessments, DOD officials have previously stated that they tentatively
expect to have all 22 assessments completed for the next iteration of
the roadmap in July 2009. Because DOD was not able to provide
information on its assessment methodology, we could not determine
whether these assessments are likely to address the information gaps we
identified in the current roadmap regarding the scope of DOD's
logistics problems and capability gaps; nor could we determine the
extent that these assessments might result in outcome-oriented
performance measures that would enable DOD to assess progress toward
achieving the roadmap's goals and objectives. DOD's decision to form an
executive advisory committee appears to be a positive step. However, it
remains unclear at this time how the roadmap will be integrated within
the department's existing decision-making processes used to govern and
fund logistics; therefore, DOD will need to take additional steps to
clarify how it intends to use the roadmap.
DOD also concurred with our three recommendations aimed at improving
the likelihood that the department will achieve the potential benefits
it expects from implementing IUID and passive RFID. DOD cited a number
of efforts to identify and collect performance metrics for IUID and
passive RFID and to analyze this information to justify the expanded
investment of resources in their implementation. DOD further stated it
will review the services' Program Objective Memorandum inputs to ensure
that, based on the department's AIT investment plan, sufficient funding
priority is given to integrating these technologies into their
respective business processes. Our review indicated that much work
remains for DOD to collect complete and useful performance data.
Additionally, DOD did not indicate plans to gather additional cost
information pertaining to the implementation of IUID and passive RFID.
We continue to believe that cost information associated with the
implementation of these technologies is important to any analysis of
return on investment. As we noted in the report, some funding for the
implementation of IUID and passive RFID is being taken out of
operational accounts. Current POM information may not provide a
complete picture of the costs associated with the implementation of
IUID and passive RFID. Therefore, DOD should gather detailed
information on the full costs associated with the implementation of
both IUID and passive RFID, including those funded from operational
accounts. We have modified our recommendation accordingly.
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Secretaries of the Army, the
Navy, and the Air Force; the Commandant of the U.S. Marine Corps; the
Commander of U.S. Transportation Command; the Director of the Defense
Logistics Agency; and the Director, Office of Management and Budget.
This report will also be available at no charge on GAO's Web site at
[hyperlink, http://www.gao.gov].
If you or your staffs have questions concerning this report, please
contact me at (202) 512-8365 or solisw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix III.
Signed by:
William M. Solis:
Director, Defense Capabilities and Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Daniel K. Akaka:
Chairman:
The Honorable George V. Voinovich:
Ranking 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:
The Honorable John P. Murtha:
Chairman:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine the extent to which the Department of Defense's (DOD) July
2008 Logistics Roadmap serves as a comprehensive, integrated strategy
to improve DOD logistics, we reviewed its content and organization, as
well as documents relating to its development, including DOD guidance
to the components regarding submitting information and reviewing draft
copies of the roadmap. We also reviewed memoranda directing components
to conduct assessments for specific objectives included in the roadmap.
We reviewed prior DOD logistics strategies and plans, including the
2005 Focused Logistics Roadmap and the DOD Plan for Improvement in the
GAO High Risk Area of Supply Chain Management with a Focus on Inventory
Management and Distribution, as well as other DOD strategic plans such
as the Enterprise Transition Plan and the Quadrennial Defense Review.
We reviewed DOD statements about the intended purposes of the roadmap
that were made in congressional hearings, in discussions with our
office conducted during prior GAO work in this area, and in the roadmap
itself. We identified sound management principles based on prior work
evaluating strategic planning efforts and performance assessments.
[Footnote 42] We obtained information on DOD's logistics capabilities
portfolio management test case by reviewing DOD guidance and
interviewing officials within the Office of the Joint Chiefs of Staff,
who were responsible for managing the test case for joint logistics. We
interviewed officials from DOD components submitting information for
the roadmap, including the Army, Navy, Air Force, Marine Corps, the
Defense Logistics Agency, the U.S. Transportation Command, the U.S.
Joint Forces Command, and the Offices of the Assistant Deputy Under
Secretaries of Defense for Supply Chain Integration, Transportation
Policy, and Maintenance Policy and Programs. Over the course of these
interviews, we obtained pertinent information and perspectives on the
roadmap, efforts to compile and review the information included in the
roadmap, and potential uses of the roadmap for logistics decision
making.
To obtain information on the progress DOD has made implementing item
unique identification (IUID) and passive radio frequency identification
(RFID), we reviewed DOD's overall concept of operations and
implementation plan for automatic identification technology, which
includes IUID and passive RFID. We obtained briefing documents
describing the status of IUID and passive RFID implementation. We
obtained and reviewed various service-level implementation plans for
IUID and RFID; however, because the majority of these plans were only
recently released or in draft form, we did not evaluate the adequacy of
these service-level plans. We also reviewed Office of Management and
Budget (OMB) and DOD guidance on benefit-cost analysis and economic
analysis for decision making.[Footnote 43] We visited and conducted
interviews with officials involved in the coordination and management
of these technologies within the Office of the Secretary of Defense
(OSD), Defense Logistics Agency (DLA), the U.S. Transportation Command,
and the military services. Additionally, we visited and observed the
use of passive RFID technology at DLA's Defense Distribution Center in
San Joaquin, California; Travis Air Force Base, California; and the
Naval Base Kitsap in Bangor, Washington. We also visited and observed
the use of IUID at the Robotic Systems Joint Project Office and the
Army Aviation and Missile Command, Alabama. We also interviewed
officials at the following locations involved in implementing either
IUID or passive RFID: Anniston Army Depot, Alabama; Army Project
Manager Soldier Weapons, New Jersey; Navy Extremely High Frequency
Satellite Communications Branch, California; Naval Air Systems Command,
Maryland; Elmendorf Air Force Base, Alaska; Fort Richardson, Alaska;
and Air Mobility Command, Illinois. We also interviewed officials
responsible for managing the IUID registry in Battle Creek, Michigan.
We also interviewed officials in the DOD Inspector General's Office to
review concurrent work that office is conducting on passive RFID.
We conducted this performance audit from January 2008 through January
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Defense:
Department of Defense:
Deputy Under Secretary Of Defense For Logistics And Materiel Readiness:
3500 Defense Pentagon:
Washington, DC 20301-3500:
December 19, 2008:
Mr. William M. Solis:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the Government
Accountability Office (GAO) draft report, GAO-09-150, "Defense
Logistics: Lack of Key Information May Impede DoD's Ability to Improve
Supply Chain Management," dated November 21, 2008 (GAO Code 351156).
The GAO draft report provides DoD with Logistics Roadmap
recommendations that support developing a more comprehensive,
integrated strategy for improving logistics. In the report, GAO also
recommends that the DoD take actions to achieve potential benefits from
the implementation of Item Unique Identification and passive Radio
Frequency Identification. The Department concurs with all six
recommendations.
Detailed comments on the draft report recommendations are included in
the enclosure. The DoD appreciates the opportunity to comment on the
report.
Signed by:
Jack Bell:
Enclosure: As stated:
GAO Draft Report - Dated November 21, 2008:
GAO Code 351156/GAO-09-150:
"Defense Logistics: Lack of Key Information May Impede DoD's Ability to
Improve Supply Chain Management"
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 identify the scope of logistics problems and capability
gaps to be addressed through the Logistics Roadmap and associated
efforts.
DoD Response: Concur. Department of Defense (DoD) has recognized the
need to identify the scope of logistics problems and gaps in the
Roadmap. Since August 2008, DoD has been diligently working to finalize
the Roadmap's assessment phase. The Department has completed an initial
review of three objectives as the framework for finalizing an
assessment methodology that will lead to successful outcomes. This
initial review is laying the framework for the way ahead. The
assessment process will identify gaps, shortfalls, timing issues and
challenges throughout the DoD supply chain. It is important to note
that the 2008 DoD Logistics Roadmap is a living document. Multiple
sections of the product were published in July 2008, but the project
continues progressing towards developing a more coherent and
authoritative framework for guiding the Department's logistics
improvement efforts.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics to develop, monitor, and implement outcome-focused
performance measures to assess progress toward achieving the roadmap's
objectives and goals.
DoD Response: Concur. DoD has developed and is monitoring outcome-
focused performance metrics, such as Customer Wait Time, at various
levels of the supply chain. Additionally, metrics have been developed
based on the Supply Chain Operations Reference Model, such as Perfect
Order Fulfillment; though not all of these metrics can be fully
collected across the DoD until modernized systems have been
implemented. As part of the Roadmap assessment process that started in
August 2008, Supply, Maintenance, Deployment, and Distribution managers
have been tasked to determine which specific outcome performance
metrics can be linked to each of the objectives and goals within the
Roadmap in order to assess progress toward achieving desired results.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics to document specifically how the roadmap will be used within
the Department's decision-making processes used to govern and fund
logistics and who will be responsible for its implementation.
DoD Response: Concur. DoD has established a joint Executive Advisory
Committee made up of senior leaders responsible for implementing
logistics programs, and initiatives. The committee will guide the
Roadmap process to ensure it is a useful tool in decision-making.
Recommendation 4: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics, in conjunction with the Military Components, to collect
detailed information on the costs and performance outcomes for ongoing
and future implementation of the Item Unique Identification (IUID) and
passive Radio Frequency Identification (RFID) technologies.
DOD Response: Concur. IUID complements RFID as a foundational element
of Materiel Visibility and is a critical enabler for DoD's progress
toward Serialized Item Management (SIM). Per DoD IUID and SIM policies
and implementing guidance, Military Components are currently preparing
detailed IUID and SIM implementation plans based on the cost and
projected benefits of marking, tracking and managing discrete items
over their lifecycle. SIM plans highlighting projected outcomes of IUID
investment are to be forwarded to Deputy Under Secretary of Defense
(DUSD) for Logistics and Materiel Readiness (L&MR) by the Military
Components in January 2009. Additionally, DoD tracks IUID
implementation and key programmatic metrics via quarterly IUID
Scorecard reviews chaired by Deputy Under Secretary of Defense for
Acquisition and Technology. For RFID, the DoD Automatic Identification
Technology (AIT) Stakeholders agree that a critical step is to capture
the "As Is" and the "To Be" performance of the supply chain on current
and future implementations of RFID. Toward that end, the baseline "As
Is" measurements were captured for the business processes identified in
the AIT Implementation Plan. The stakeholders will then collect the "To
Be" performance outcomes following implementation of the new AIT
technologies in September 2009.
Recommendation 5: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics, in conjunction with the Military Components, to develop an
analysis or analyses of the return on investment to justify expanded
investment of resources in the implementation of the item unique
identification (IUID) and passive radio frequency identification (RFID)
technologies.
DoD Response: Concur. For IUID, the multi-Service SIM Working Group
developed and issued guidance on developing the IUID/SIM return on
investment analysis in January 2008. As SIM Plans are submitted to DUSD
(L&MR) for review beginning in January 2009, DoD will be able to
analyze and justify expanded investment of resources in the
implementation of IUID technologies and processes. For RFID, the DoD
AIT Stakeholders agree that a critical step is to capture the "As Is"
and the "To Be" performance of the supply chain before and after the
application of new AIT technology in order to justify the investment of
resources on MT. Toward that end, the baseline "As Is" measurements
were captured for the business processes identified in the AIT
Implementation Plan. The stakeholders will then collect the "To Be"
performance outcomes following implementation of the new AIT
technologies in September 2009 to justify expanded investment of
resources.
Recommendation 6: The GAO recommends that the Secretary of Defense
direct the Secretaries of the Army, the Navy, and the Air Force; the
Commandant of the Marine Corps; and the Director of the Defense
Logistics Agency to determine, on the basis of the above analysis or
analyses, whether sufficient funding priority has been given to
integration of these technologies into their respective business
processes and, if not, to take appropriate corrective action.
DoD Response: Concur. For IUID, Military Components IUID/SIM budget
requirements will be forwarded in SIM Plan submittals beginning in
January 2009. Subsequently, Service-level Program Objective Memorandum
(POM) inputs will be reviewed to ensure that a sufficient funding
priority has been provided to implement IUID technologies and processes
in order to achieve stated IUID/SIM outcome based objectives. For RFID,
the DoD AIT Stakeholders recognize that it is very important to
synchronize the expenditures on AIT. The DoD MT synchronization
integrated process team was established to help guide and synchronize
the Services, Defense Logistics Agency (DLA), and U.S. Transportation
Command's (USTRANSCOM) efforts to incorporate new AIT technology for
Transportation and Distribution. The DoD AIT Implementation Plan Global
Team collected Program Objective Memorandum (POM) inputs from each of
the Services and DLA to provide a comprehensive view of the investment
plan for implementing AIT as specified in the plan. As the Services,
DLA, and USTRANSCOM complete the actions for Spiral 1 of the DoD AIT
Implementation Plan for Transportation and Distribution at the end of
September 2009, the Global Team will validate these findings against
the POM funding to ensure sufficient funding priority has been given to
the integration of these technologies into their respective business
processes.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
William M. Solis, (202) 512-8365 or solisw@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Tom Gosling (Assistant
Director), Grace Coleman, Nicole Harms, Brooke Leary, Andrew McGuire,
Paulina Reaves, and Ben Thompson made significant contributions to this
report.
[End of section]
Footnotes:
[1] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-05-207] (Washington, D.C.: Jan. 1,
2005) and High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-07-310] (Washington, D.C.: Jan. 31,
2007).
[2] GAO, DOD's High-Risk Areas: High-Level Commitment and Oversight
Needed for DOD Supply Chain Plan to Succeed, [hyperlink,
http://www.gao.gov/products/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, [hyperlink,
http://www.gao.gov/products/GAO-06-983T] (Washington, D.C.: July 25,
2006).
[3] Office of the Secretary of Defense, Deputy Under Secretary of
Defense for Logistics and Materiel Readiness, Department of Defense
Logistics Roadmap (July 2008).
[4] GAO, DOD's High-Risk Areas: Progress Made Implementing Supply Chain
Management, but Full Extent of Improvement Unknown, [hyperlink,
http://www.gao.gov/products/GAO-07-234] (Washington, D.C.: Jan. 17,
2007).
[5] For the purposes of this report, we looked at the implementation of
IUID in terms of assigning a unique identifier for an item, marking an
item with a data matrix containing that identifier, and registering
information about the item and identifier in a database. In discussions
with senior DOD officials, they noted that the IUID initiative, in a
broader sense, also includes the use of this data to better manage DOD
inventory items. While we recognize that DOD could ultimately use this
data for a number of purposes, including better inventory management,
we are focusing on the technological process of assigning a unique
identifier, marking, and registering items as this is the current focus
of IUID implementation in the department.
[6] Active RFID tags, which generally use a battery, transmit
information through radio signals that are read electronically. Active
tags can hold much more data than passive tags and are also more
expensive.
[7] Senate Committee on Homeland Security and Governmental Affairs,
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia, Overview of the DOD Supply
Chain and Logistics, 109th Cong. 2nd Session, 2006, (statement of Alan
F. Estevez, Assistant Deputy Under Secretary of Defense (Supply Chain
Integration) and Senate Committee on Homeland Security and Governmental
Affairs, Subcommittee on Oversight of Government Management, the
Federal Workforce and the District of Columbia, 110th Cong. 1st
Session, 2007, (statement of Jack Bell, Deputy Under Secretary of
Defense (Logistics and Materiel Readiness), General Norton A. Schwartz,
Commander, U.S. Transportation Command, and Lieutenant General Robert
T. Dail, Director, Defense Logistics Agency).
[8] These strategic planning and transformation management principles
are discussed in the following reports: GAO, Defense Logistics: Efforts
to Improve Distribution and Supply Support for Joint Military
Operations Could Benefit from a Coordinated Management Approach,
[hyperlink, http://www.gao.gov/products/GAO-07-807] (Washington, D.C.:
June 29, 2007); DOD's High Risk Areas: Efforts to Improve Supply Chain
Can Be Enhanced by Linkage to Outcomes, Progress in Transforming
Business Operations, and Reexamination of Logistics Governance and
Strategy, [hyperlink, http://www.gao.gov/products/GAO-07-1064T]
(Washington, D.C.: July 10, 2007); Results-Oriented Cultures:
Implementation Steps to Assist Mergers and Organizational
Transformations, [hyperlink, http://www.gao.gov/products/GAO-03-669]
(Washington, D.C.: July 2, 2003); and Defense Transformation: Clear
Leadership, Accountability, and Management Tools Are Needed to Enhance
DOD's Efforts to Transform Military Capabilities, [hyperlink,
http://www.gao.gov/products/GAO-05-70] (Washington, D.C.: Dec. 17,
2004).
[9] Office of Management and Budget Circular A-94 Revised, Guidelines
for Discount Rates for Benefit-Cost Analysis of Federal Programs (Oct.
29, 1992) and Department of Defense Instruction 7041.3, Economic
Analysis for Decisionmaking (Nov. 7, 1995).
[10] [hyperlink, http://www.gao.gov/products/GAO-05-70].
[11] [hyperlink, http://www.gao.gov/products/GAO-07-807].
[12] Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics Memorandum, Policy for Unique Identification
(UID) of Tangible Items--New Equipment, Major Modifications, and
Reprocurements of Equipment and Spares (July 29, 2003) and Office of
the Under Secretary of Defense for Acquisition, Technology and
Logistics Memorandum, Radio Frequency Identification (RFID) Policy
(July 30, 2004).
[13] [hyperlink, http://www.gao.gov/products/GAO-07-310].
[14] In prior reports, we have noted other DOD actions to resolve
supply chain management problems. For our most recent discussion of
these actions, see [hyperlink,
http://www.gao.gov/products/GAO-07-1064T].
[15] The Under Secretary of Defense (Acquisition, Technology, and
Logistics) has been designated the Defense Logistics Executive, with
overall responsibility for improving and maintaining the Defense
Logistics and Global Supply Chain Management System.
[16] Office of the Deputy Secretary of Defense Memorandum, Capability
Portfolio Management Way Ahead (Feb. 7, 2008).
[17] Department of Defense Directive 7045.20, Capability Portfolio
Management (Sept. 25, 2008).
[18] GAO, Defense Inventory: Improvements Needed in DOD's
Implementation of Its Long-Term Strategy for Total Asset Visibility of
Its Inventory, [hyperlink, http://www.gao.gov/products/GAO-05-15]
(Washington, D.C.: Dec. 6, 2004); DOD Business Transformation: Lack of
an Integrated Strategy Puts the Army's Asset Visibility System
Investments at Risk, [hyperlink,
http://www.gao.gov/products/GAO-07-860] (Washington, D.C.: July 27,
2007); and DOD Business Transformation: Air Force's Current Approach
Increases Risk That Asset Visibility Goals and Transformation
Priorities Will Not Be Achieved, [hyperlink,
http://www.gao.gov/products/GAO-08-866] (Washington, D.C.: Aug. 8,
2008).
[19] DOD describes its Enterprise Transition Plan as the roadmap for
the department's business transformation. It is organized around six
business enterprise priorities, including materiel visibility.
[20] Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics Memorandum, Policy Update for Item Unique
Identification of Tangible Personal Property, Including Government
Property in the Possession of Contractors (May 12, 2005).
[21] Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics Memorandum, Policy for Unique Identification
(UID) of Tangible Items--New Equipment, Major Modifications, and
Reprocurements of Equipment and Spares (July 29, 2003). These criteria
cover all items where (1) unit acquisition cost is $5,000 or more; (2)
it is either serially managed, mission essential or controlled
inventory piece of equipment or reparable item, or a consumable item or
materiel where permanent identification is required; (3) it is a
component of a delivered item, if the program manager has determined
that unique identification is required; or (4) a UID or a DOD-
recognized UID equivalent is available.
[22] Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics Memorandum, Policy for Unique Identification
(UID) of Tangible Personal Property Legacy Items in Inventory and
Operational Use, Including Government Furnished Property (GFP) (Dec.
23, 2004).
[23] GAO, Defense Logistics: Better Strategic Planning Can Help Ensure
DOD's Successful Implementation of Passive Radio Frequency
Identification, [hyperlink, http://www.gao.gov/products/GAO-05-345]
(Washington, D.C.: Sept. 12, 2005).
[24] Senate Committee on Homeland Security and Governmental Affairs,
Subcommittee on Oversight of Government Management, The Federal
Workforce and the District of Columbia, Overview of the DOD Supply
Chain and Logistics, 109th Cong. 2nd Session, 2006 (statement of Alan
F. Estevez, Assistant Deputy Under Secretary of Defense (Supply Chain
Integration).
[25] The DOD official responsible for coordinating the roadmap stated
that there was no defined distinction between initiatives and programs;
however, initiatives were generally focused on process improvements,
while programs generally dealt with the acquisition of specific items,
such as weapons systems.
[26] Senate Committee on Homeland Security and Governmental Affairs,
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia, 110th Cong. 1st Session, 2007
(statement of Jack Bell, Deputy Under Secretary of Defense (Logistics
and Materiel Readiness), General Norton A. Schwartz, Commander, U.S.
Transportation Command, and Lieutenant General Robert T. Dail,
Director, Defense Logistics Agency).
[27] Officials from the Army, Navy, Air Force, Marine Corps, the
Defense Logistics Agency, the U.S. Transportation Command, the U.S.
Joint Forces Command, and the Offices of the Assistant Deputy Under
Secretaries of Defense for Transportation Policy; Maintenance Plans and
Policies; and Supply Chain Integration provided inputs on logistics
initiatives and programs.
[28] In May 2005, the Secretary of Defense directed DOD to begin using
common capability definitions, known as joint capability areas or
capability portfolios, to describe missions and functional activities
performed by the joint force. Joint logistics, one capability
portfolio, is defined as the ability to project and sustain a
logistically ready joint force through the deliberate sharing of
national and multi-national resources to effectively support
operations, extend operational reach, and provide the joint force
commander the freedom of action necessary to meet mission objectives.
In addition to joint logistics' three joint capability areas stated
above, the additional capability areas for joint logistics include
logistics services, operational contract support, engineering, and
force health protection.
[29] The three objectives for which assessments have begun are (1)
effective procurement processes; (2) visibility of in-transit, in-
storage, and in-process units and materiel for optimized movement
planning and execution; and (3) identify and sustain requisite core
maintenance capability. The Deputy Under Secretary of Defense
(Logistics and Materiel Readiness) assigned the following three
components, respectively, to lead each assessment: Defense Logistics
Agency, U.S. Transportation Command, and Assistant Deputy Under
Secretary of Defense (Maintenance Policy and Programs).
[30] [hyperlink, http://www.gao.gov/products/GAO-05-70].
[31] Department of Defense Directive 5100.1, Functions of the
Department of Defense and Its Major Components (Washington, D.C., Aug.
1, 2002).
[32] [hyperlink, http://www.gao.gov/products/GAO-07-807].
[33] United States Transportation Command, Department of Defense
Automatic Identification Technology Concept of Operations for Supply
and Distribution Operations (June 11, 2007) and Department of Defense
Automatic Identification Technology Implementation Plan for Supply and
Distribution Operations (March 2008).
[34] Assistant Deputy Under Secretary of Defense for Materiel Readiness
and Maintenance Policy, The Concept of Operations for IUID-Enabled
Maintenance in Support of DOD Materiel Readiness (Jan. 2007) and Office
of the Deputy Under Secretary of Defense (Acquisition, Technology and
Logistics) The Department of Defense Guide to Uniquely Identifying
Items: Assuring Valuation, Accountability and Control of Government
Property, version 2.0 (Oct. 1, 2008).
[35] Serialized item management is the management of a specific item
relative to its exact conditions, requirements, and circumstances for
the purposes of improving materiel readiness.
[36] This total included $7.88 million in fiscal year 2005, $11.48
million in fiscal year 2006, and $8 million in fiscal year 2007.
[37] United States Inspector General, Department of Defense, Requiring
Radio Frequency Identification in Contracts for Supplies, D-2008-135
(Sept. 2008).
[38] Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics Memorandum, Budget Instructions for Unique
Identification (UID) Implementation FY 2007-2012 (May 11, 2005).
[39] Examples of these metrics are customer wait time, arrival to
receipt time, and RFID tag read rate.
[40] [hyperlink, http://www.gao.gov/products/GAO-05-345].
[41] See [hyperlink, http://www.gao.gov/products/GAO-06-113T].
[42] [hyperlink, http://www.gao.gov/products/GAO-03-669],
[hyperlink, http://www.gao.gov/products/GAO-05-70],
[hyperlink, http://www.gao.gov/products/GAO-07-807], and
[hyperlink, http://www.gao.gov/products/GAO-07-1064T].
[43] Office of Management and Budget Circular A-94 Revised, Guidelines
for Discount Rates for Benefit-Cost Analysis of Federal Programs (Oct.
29, 1992) and Department of Defense Instruction 7041.3, Economic
Analysis for Decisionmaking (Nov. 7, 1995).
[End of section]
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