Defense Logistics
Additional Oversight and Reporting for the Army Logistics Modernization Program Are Needed Gao ID: GAO-11-139 November 18, 2010In Process
The Army has made improvements to its LMP implementation strategy, but it may not fully achieve the intended LMP functionality in its third deployment, which began in October 2010, because it has not corrected long-standing data inaccuracies and has not fully developed the software and systems needed to support critical functionality. Specifically: (1) GAO previously recommended that the Army improve testing activities to obtain reasonable assurance that the data used by LMP can support the LMP processes. The Army implemented data audits and new testing activities to improve data accuracy, but data issues persist, which could impede LMP functionality. According to Army officials, these new testing activities were designed to assess how well the LMP software functions but not how well the data work in LMP. Third deployment locations were also able to perform individual tests on the data, but these activities were not coordinated or managed by the Army. As a result, the audits and new testing activities did not provide the Army reasonable assurance that the data in LMP are of sufficient quality to achieve the intended LMP functionality once the system has been deployed. Without this assurance, the Army may experience the same data-related problems during the third deployment that were experienced during the second deployment, which prevented Corpus Christi and Letterkenny Army Depots from using LMP functionality as intended. (2) The Army's software development schedule and subsequent testing of capabilities needed by several locations are not expected to be delivered until after September 2010, but costly mitigations may be required if delivery is delayed. Unlike the previous deployments of LMP, the operations at some of the third deployment locations require additional capabilities. For example, the Army Sustainment Command and the Joint Munitions and Lethality Life Cycle Management Command perform missions that require LMP to interface with existing systems in order to perform day-to-day missions. If the software capabilities are not operating as intended, several sites will not have the necessary LMP functionality to perform their missions. The Army has mitigation plans to address this functionality gap. For example, the Joint Munitions and Lethality Life Cycle Management Command plans to hire 172 additional personnel, and the Tank-automotive and Armaments Command expects to hire 95 additional personnel to perform manual data entry until the capability is delivered. The Army expects that these mitigation plans will increase costs. Prior to transitioning to LMP, the Army is directed to certify that it is prepared to make the transition, but it is not required to regularly report to Congress specifically on LMP implementation. Congress therefore lacks complete and ongoing information to aid in its oversight of this program characterized by implementation delays and long-standing problems that have precluded LMP functionality at the sites included in the first two LMP deployments. GAO previously recommended that the Army address issues related to its implementation of LMP. GAO recommends further that the Army periodically report to Congress on the progress of LMP, including its progress in ensuring that the data used in LMP can support the system, timelines for the delivery of software necessary to achieve full benefits, and the costs and time frames of its mitigation strategies. DOD agreed with GAO's findings and recommendation.
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: William M. Solis Team: Government Accountability Office: Defense Capabilities and Management Phone: (202) 512-8365GAO-11-139, Defense Logistics: Additional Oversight and Reporting for the Army Logistics Modernization Program Are Needed
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United States Government Accountability Office:
GAO:
Report to the Chairman, Subcommittee on Readiness, Committee on Armed
Services, House of Representatives:
November 2010:
Defense Logistics:
Additional Oversight and Reporting for the Army Logistics
Modernization Program Are Needed:
GAO-11-139:
GAO Highlights:
Highlights of GAO-11-139, a report to the Chairman, Subcommittee on
Readiness, Committee on Armed Services, House of Representatives.
Why GAO Did This Study:
The Logistics Modernization Program (LMP) is an Army business system
that is intended to replace the aging Army systems that manage
inventory and depot repair operations. From 1999 through 2009, the
Army expended more than $1 billion for LMP. LMP was originally
scheduled to be completed by 2005, but after the first deployment in
July 2003, the Army delayed fielding because of significant problems.
The Army later decided to field the system in two additional
deployments: the second in May 2009 and the third in October 2010. GAO
was asked to evaluate the extent to which the Army will achieve the
intended functionality (e.g., supply chain management and materiel
maintenance) from LMP for the commands, depots, and arsenals
participating in the third deployment. To do this, GAO reviewed Army
plans and policies related to LMP and met with Army officials at three
Army commands and several third deployment sites.
What GAO Found:
The Army has made improvements to its LMP implementation strategy, but
it may not fully achieve the intended LMP functionality in its third
deployment, which began in October 2010, because it has not corrected
long-standing data inaccuracies and has not fully developed the
software and systems needed to support critical functionality.
Specifically:
* GAO previously recommended that the Army improve testing activities
to obtain reasonable assurance that the data used by LMP can support
the LMP processes. The Army implemented data audits and new testing
activities to improve data accuracy, but data issues persist, which
could impede LMP functionality. According to Army officials, these new
testing activities were designed to assess how well the LMP software
functions but not how well the data work in LMP. Third deployment
locations were also able to perform individual tests on the data, but
these activities were not coordinated or managed by the Army. As a
result, the audits and new testing activities did not provide the Army
reasonable assurance that the data in LMP are of sufficient quality to
achieve the intended LMP functionality once the system has been
deployed. Without this assurance, the Army may experience the same
data-related problems during the third deployment that were
experienced during the second deployment, which prevented Corpus
Christi and Letterkenny Army Depots from using LMP functionality as
intended.
* The Army‘s software development schedule and subsequent testing of
capabilities needed by several locations are not expected to be
delivered until after September 2010, but costly mitigations may be
required if delivery is delayed. Unlike the previous deployments of
LMP, the operations at some of the third deployment locations require
additional capabilities. For example, the Army Sustainment Command and
the Joint Munitions and Lethality Life Cycle Management Command
perform missions that require LMP to interface with existing systems
in order to perform day-to-day missions. If the software capabilities
are not operating as intended, several sites will not have the
necessary LMP functionality to perform their missions. The Army has
mitigation plans to address this functionality gap. For example, the
Joint Munitions and Lethality Life Cycle Management Command plans to
hire 172 additional personnel, and the Tank-automotive and Armaments
Command expects to hire 95 additional personnel to perform manual data
entry until the capability is delivered. The Army expects that these
mitigation plans will increase costs.
Prior to transitioning to LMP, the Army is directed to certify that it
is prepared to make the transition, but it is not required to
regularly report to Congress specifically on LMP implementation.
Congress therefore lacks complete and ongoing information to aid in
its oversight of this program characterized by implementation delays
and long-standing problems that have precluded LMP functionality at
the sites included in the first two LMP deployments.
What GAO Recommends:
GAO previously recommended that the Army address issues related to its
implementation of LMP. GAO recommends further that the Army
periodically report to Congress on the progress of LMP, including its
progress in ensuring that the data used in LMP can support the system,
timelines for the delivery of software necessary to achieve full
benefits, and the costs and time frames of its mitigation strategies.
DOD agreed with GAO‘s findings and recommendation.
View [hyperlink, http://www.gao.gov/products/GAO-11-139] or key
components. For more information, contact William M. Solis at (202)
512-8365 or solisw@gao.gov, Asif A. Khan at (202) 512-9869 or
khana@gao.gov, or Nabajyoti Barkakati at (202) 512-4499 or
barkakatin@gao.gov.
[End of section]
Contents:
Letter:
Background:
The Army Has Improved Its Implementation of LMP but May Not Fully
Achieve the Intended LMP Functionality at Its Third Deployment
Locations:
Conclusion:
Recommendation for Executive Action:
Agency Comments:
Appendix I: Comments from the Department of Defense:
Appendix II: GAO Contacts and Staff Acknowledgments:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
November 18, 2010:
The Honorable Solomon P. Ortiz:
Chairman:
Subcommittee on Readiness:
Committee on Armed Services:
House of Representatives:
Dear Mr. Chairman:
In 1999, the Army initiated the Logistics Modernization Program (LMP)
with the intent of replacing two aging Army systems used to manage its
inventory and its repair operations. LMP, which is an enterprise
resource planning system,[Footnote 1] is also intended to reduce
redundant and stovepiped information technology investments and assist
in driving business transformation across the Army, which is
ultimately envisioned to enable the Army to supply and service the
warfighter more quickly and cost effectively. As of December 2009, the
Army has expended more than $1 billion for LMP implementation and
estimates a total life cycle cost in excess of $2.6 billion to procure
and operate the system. The Army originally intended for LMP to be
fully deployed by 2005, but the Army delayed fielding of LMP after the
first deployment sites--the Communications-Electronics Command and
Tobyhanna Army Depot--experienced significant problems when they
deployed LMP in July 2003, which we detailed in several previous
reports.[Footnote 2] Because of these challenges, the Army modified
its deployment schedule for LMP, and determined that implementation of
LMP would occur in two additional phases: at the Aviation and Missile
Command and its respective Army depots in May 2009, and at the Army
Sustainment Command, the Joint Munitions and Lethality Life Cycle
Management Command, and the Tank-automotive and Armaments Command and
their respective depots and industrial activities on October 21, 2010.
[Footnote 3]
In 2009, we observed the Army's preparation for and implementation of
LMP at the Aviation and Missile Command, Corpus Christi Army Depot,
and Letterkenny Army Depot.[Footnote 4] We reported that the Army was
successful in mitigating some of the previous issues experienced
during the first deployment of LMP and that the second deployment
sites were able to demonstrate the potential for LMP to provide some
benefits for the Army; however, the second deployment sites faced
challenges related to data quality and training that limited their
ability to use LMP as intended. We also reported that the Army did not
have a comprehensive set of performance metrics to enable it to
measure whether the intended LMP functionality had been achieved at
the depots. Because the Army's preparation for the third deployment of
LMP began in 2009, we shared our initial observations with Army
officials beginning in June 2009 and throughout the course of our
audit, and in April 2010, to assist the Army as it prepared for the
third deployment of LMP, we made several recommendations related to
improving data quality and training and establishing performance
measures. The Army concurred with all of these recommendations.
You asked us to continue monitoring the Army's efforts to deploy LMP
and evaluate the Army's progress in addressing the issues that are
critical to successful implementation. Accordingly, the objective of
this review was to evaluate the extent to which the Army will achieve
the intended functionality of LMP during the third deployment.
To address this objective, we reviewed and analyzed the Army plans and
policies that governed LMP implementation. We met with officials at
the LMP program management office in Marlton, New Jersey, to discuss
their plans to assist the sites in preparing for the third deployment
of LMP. We also met with officials at the Army Materiel Command to
discuss how they were managing the third deployment, as well as with
officials at the Army Logistics Support Activity to discuss their role
in monitoring the data. To assess what steps the third deployment
sites were taking with respect to preparing for LMP, we met with
officials at the Army Sustainment Command, the Joint Munitions and
Lethality Life Cycle Management Command, and the Tank-automotive and
Armaments Command. We also visited eight sites that are scheduled to
deploy LMP during the third deployment, specifically, two Army depots,
three Army arsenals, two ammunition storage locations, and an Army
location that manages the Army's pre-positioned stocks. In order to
determine the extent to which the intended functionality of LMP was
being achieved at the sites that deployed LMP in May 2009, we also
visited the Aviation and Missile Command, Corpus Christi Army Depot,
and Letterkenny Army Depot. In addition, because of their role in
providing oversight of the Army's LMP implementation, we provided our
preliminary observations to the Director of the Army's Office of
Business Transformation and the Department of Defense (DOD) Deputy
Chief Management Officer, as well as to officials from the Office of
the Deputy Chief of Staff of the Army for Logistics and the Deputy
Commanding General of the Army Materiel Command. We conducted this
performance audit from May 2010 through November 2010 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 objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
Background:
The Army Materiel Command initiated an effort in 1999 to replace its
existing materiel management systems--the Commodity Command Standard
System and the Standard Depot System--with LMP. In addition to
replacing these systems, which have been used for over 30 years to
manage inventory and depot maintenance operations, the Army intended
for LMP to transform logistics operations in six core processes: order
fulfillment, demand and supply planning, procurement, asset
management, materiel maintenance, and financial management. According
to the Army, the implementation of LMP is intended to help the Army
reduce inventory, improve supply and demand forecast planning, and
provide a single source of data for decision making. When LMP is fully
implemented, it is expected to include approximately 21,000 users at
104 locations and will be used to manage more than $40 billion worth
of goods and services.
LMP became operational at the Army Communications-Electronics Command
and Tobyhanna Army Depot in July 2003 and was originally expected to
be fully deployed by fiscal year 2005. However, because of problems
experienced during the deployment, the Army decided to delay
implementation until the problems were resolved. In May 2009, LMP
became operational at the Army Aviation and Missile Command and Corpus
Christi and Letterkenny Army Depots. The third and final deployment of
LMP began on October 1, 2010, at depots, arsenals, and sites within
the Army Sustainment Command, the Joint Munitions and Lethality Life
Cycle Management Command, and the Tank-automotive and Armaments
Command. Preparations for the third and final deployment of LMP began
in December 2008, and it is the largest of the three deployments,
affecting approximately 11,000 users at 83 sites across the globe. LMP
program management officials told us that 29 of these sites will
significantly use LMP.
The Duncan Hunter National Defense Authorization Act for Fiscal Year
2009 indicates that the executive-level oversight of business systems
modernization and overall business transformation--including defining
and measuring success in enterprise resource planning--is the
responsibility of a military department-level chief management
officer.[Footnote 5] In the case of the Army, the Under Secretary of
the Army serves as the Chief Management Officer. In this capacity, the
Under Secretary of the Army provides oversight for business systems
modernization, such as LMP.
Prior to transitioning to LMP, the Army is directed to certify that
each Army depot is prepared to transition. Specifically, in House
Armed Services Committee Report 110-652 accompanying the Duncan Hunter
National Defense Authorization Act for Fiscal Year 2009, the committee
directed the Secretary of the Army to certify to the Senate Committee
on Armed Services and the House Committee on Armed Services that each
Army depot is prepared for the transition to LMP.[Footnote 6] On
September 20, 2010, the Secretary of the Army certified to the
chairmen and ranking members of the committees that the Tank-
automotive and Armaments Command, the Joint Munitions and Lethality
Life Cycle Management Command, their subordinate industrial sites, and
the Army Sustainment Command were prepared for transition to the LMP
automated information system. According to Army officials, based on
the timing of this memorandum, the Army intended to begin using the
system at the third deployment locations on October 21, 2010, to
manage operations for fiscal year 2011. With the exception of this
certification, the Army is not presently required to report to
Congress other information specifically focused on LMP implementation
on a regular basis.
The Army Has Improved Its Implementation of LMP but May Not Fully
Achieve the Intended LMP Functionality at Its Third Deployment
Locations:
The Army has improved its LMP implementation strategy from the
previous two deployments, but continues to face several problems that
may prevent LMP from fully providing its intended functionality at
each of the third deployment locations. While the Army has improved
its data testing strategy for the third deployment, data quality
problems continue to persist at locations that previously deployed
LMP, which prevent these locations from using LMP as intended.
Furthermore, the Army has yet to develop fully the software
capabilities needed to achieve the intended LMP functionality for some
sites, which may limit their ability to perform certain tasks, such as
maintaining accountability of ammunition. Although the Army has
mitigation plans in place if the software capabilities are not
delivered on time or as intended, these mitigation plans will increase
costs.
The Army Has Achieved Some Improvements to Its LMP Implementation
Strategy:
Our prior reviews of LMP identified weaknesses in the Army's efforts
to effectively implement the processes needed to reduce risks to
acceptable levels. During our current review, we found that the Army
had taken action on some of these areas. For example, we previously
recommended that the Army use system testers that are independent of
the LMP system developers to help ensure that the system is providing
its users the intended capabilities.[Footnote 7] Based on our
observations of the third deployment, the Army implemented this
recommendation and testing activities were being conducted by LMP
users as opposed to the LMP system developers. Additionally, to assist
in the preparation for the third deployment of LMP, we previously
recommended that the Army establish performance metrics that will
enable the Army to assess whether the deployment sites are able to use
LMP as intended.[Footnote 8] The Army developed performance measures
to monitor the progress of LMP implementation and finalized these
measures on September 30, 2010. These measures, if effectively
implemented, should enable the Army to determine the extent to which
the third deployment sites are able to use LMP as intended.
Long-Standing Data Inaccuracies Remain in the LMP System:
The Army does not have reasonable assurance that the data used by LMP
are of sufficient quality to enable the commands, depots, and arsenals
to perform their day-to-day missions using LMP as intended. The Army
initiated a testing strategy to determine data accuracy, but it has
not provided reasonable assurance that the data used by LMP can
support the LMP processes. As we have previously reported, testing is
a critical process utilized by organizations with the intent of
finding errors before a system is implemented.[Footnote 9] Although
the Army implemented new testing activities to support the third
deployment of LMP, these activities were designed to assess whether
the sites could use the software but did not evaluate whether the data
loaded into LMP are of sufficient quality to support the LMP
processes. LMP program management officials told us that these testing
activities were not designed to assess data quality. Instead, the Army
conducted data quality audits to determine whether select data
elements were accurate. Based on our observations, the data quality
audits did not effectively assess whether the data would work in the
LMP system.
Army Testing Activities Do Not Assess Data Quality:
Based on our observations during the second deployment of LMP, we
previously recommended that the Army direct the Army Materiel Command
to improve its testing activities to obtain reasonable assurance that
the data are of a quality that can be used by LMP to support the LMP
processes. The Army concurred with our recommendation and stated that
the third deployment would involve improved testing as well as
additional efforts to enhance the quality of the data. The Army
implemented two new test activities--the Process and Data Integration
Test and the Business Operations Test--for the third deployment of
LMP. According to Army officials, these test activities incorporated
some lessons learned from the second deployment of LMP. The Process
and Data Integration Test, which was conducted from April 2010 through
June 2010, was intended to test an end-to-end business process using
migrated, validated business data from critical weapons systems. The
Business Operations Test, which was conducted from July 2010 through
September 2010, was intended to be an activity where users would
perform transactions in the LMP system using local data, from their
home stations, which would bring data, business processes, standard
operating procedures, and end user training materials together to
ensure success. LMP program management officials told us in January
2010 that these tests were an improvement over the tests used during
the second deployment of LMP. Specifically, LMP program management
officials stated that the Process and Data Integration Test was an
improvement because the test activity would assess the compatibility
of the migrated data to support LMP processes, such as verifying that
invoices and goods receipts can be processed against purchase orders.
Also, LMP program management officials stated that the Business
Operations Test was an improvement because the sites would select
commodities at their sites and then execute an end-to-end process to
ensure that the LMP processes work. According to LMP program
management officials, the two testing activities were linked because
the test scripts used during the Process and Data Integration Test
would be used to develop the test scripts for the Business Operations
Test.[Footnote 10] LMP program management officials also told us in
June 2010 that both tests would be used to determine whether the
software is meeting the operational requirements of the third
deployment locations, and that the Business Operations Test, in
particular, would evaluate whether the data used by LMP can support
the envisioned LMP processes.
Based on our observations at the third deployment sites, the Army's
tests were not effective in evaluating whether the quality of the data
used in LMP could support the LMP processes. Specifically, officials
at several of the sites we visited stated that they had observed
shortcomings in the Process and Data Integration Test. For example,
officials at the Army Sustainment Command told us that at the time the
Process and Data Integration Test activity was conducted, their data
had yet to be loaded into LMP. Accordingly, these officials stated
that the Process and Data Integration Test activity used data from the
second deployment of LMP. Officials at sites from the Joint Munitions
and Lethality Life Cycle Management Command also identified other
problems with the Process and Data Integration Test activity, such as
test scripts that were incorrect or not reflective of their business
processes because the software necessary to support their operations
was still being developed. Officials at a Tank-automotive and
Armaments Command site expressed similar sentiments, noting that the
test scripts used during the Process and Data Integration Test
activity did not reflect some of their business processes, such as
building items in support of foreign military sales. Similarly,
officials at several other sites told us that the test scripts used
were out of sequence, so the test scripts had to be corrected in order
to reflect how the location conducted its business.
We also observed challenges related to the Army's Business Operations
Test activity. Specifically, officials at several sites told us in
July and August 2010 that some of the test scripts they executed
during the Business Operations Test activity were not reflective of
their business processes. For example, during our site visits in
August, officials at one site told us that although manufacturing
represented more than 90 percent of their workload, they spent the
first 5 weeks of the Business Operations Test activity evaluating
whether they could perform repair operations. Additionally, the
officials stated that during the course of this testing, some of the
data necessary to conduct the test were missing and other data did not
load correctly into LMP and had to be generated for the test. For
example, officials told us that in order to test whether they were
able to conduct materiel requirements planning, which is the process
used to determine the number of parts needed to support a repair, the
test managers had to create the data that listed the component parts
for the item so that the test scripts could be executed. At another
site, officials told us that the data that were necessary to assign a
production order to their location were not in LMP, and that in order
to conduct the tests, the test managers directed them to use the data
from a different command.
Site officials also told us that they were limited in the number of
commodities that they could test. For example, officials at one site
told us that they manage more than a thousand different items.
However, because of time constraints, they were only able to test one
item. Furthermore, the Business Operations Test activity did not
exercise the full range of data. For example, officials at one site
told us that an item they tested contained multiple levels of data;
however, the test script directed them to evaluate only the first and
second levels of data. Accordingly, the Business Operations Test
activity did not assess whether the data could support the actual
functions that the site would need to perform once LMP was deployed.
On August 13, 2010, we shared our observations with LMP program
management officials, and on August 18, 2010, LMP program management
officials told us that the Business Operations Test activity was
intended to test the software using the data from the sites and that
this test would identify and document data and training issues.
However, they noted that while the test would provide indicators
related to data issues, it would not provide an overall data accuracy
assessment.
Data Audits Do Not Assess Whether Data Can Work in LMP:
LMP program management officials stated that the data audits being
conducted by the Army Logistics Support Activity were the best
indicator for data accuracy. According to Army officials, these audits
were intended to provide an initial assessment of data accuracy and
then serve as an ongoing measurement as part of the Army's strategy to
ensure the accuracy of the data. LMP program management officials
stated that in response to our observations, the Army would accelerate
the time frame for the data accuracy audits. LMP program management
officials stated that these data accuracy audits were completed on
September 30, 2010. Additionally, LMP program management officials
stated that these audits were not designed to be an automated data
test, but rather an inspection by subject matter experts to ensure
that the data were accurate.
Although an important step, based on our observations at the third
deployment sites, the Army's data audits do not provide reasonable
assurance that the data are of sufficient quality to support the LMP
processes. According to Army officials, the data audits do not include
all data elements. Consequently, when the sites conducted simulations,
they identified data errors that had not been identified by the
audits. Officials at one of the sites we visited told us that they had
conducted an extensive process to build and validate their data,
including having subject matter experts review individual data
elements and compare the data elements against the technical data for
that item. However, the officials stated that they had discovered
through simulations that some of the data that had transferred into
LMP from the legacy systems--and had undergone audits--still contained
errors. The officials stated that these errors, which were related to
an incorrect unit of measure, would have prevented them from using LMP
as intended. Officials at another site we visited in June 2010 told us
that during a simulation they conducted in between the planned testing
activities, they discovered that an item that takes 5 days to repair
was projected to take 5 years to repair. Officials at this site stated
that after they visually inspected and corrected the data elements,
they conducted another simulation, and the projected time to complete
repairs dropped from 5 years to 3 years.
Simulation Testing Has Limitations in Assuring Data Quality:
According to LMP program management officials, the sites would have
the opportunity to conduct simulations to assess their data upon
completion of testing activities. We observed simulations being
conducted at Anniston Army Depot on September 22, 2010, and Red River
Army Depot on September 23, 2010. These simulations were useful, in
part, but also had weaknesses. For example, depot officials told us
that the simulations enabled the depots to identify data errors and
develop processes to correct data errors after LMP is deployed and
provided an opportunity to perform actual tasks in LMP. While these
simulations and the innovative actions taken at both depots--such as
developing mitigation strategies to correct data errors--reduce the
risk that data problems will adversely affect the depots after LMP is
deployed, these simulations also revealed weaknesses in the Army-wide
testing activities. For example, depot officials told us that the
simulations revealed problems with the data audits being conducted by
the Army Logistics Support Activity. Specifically, depot officials
told us that the data reviewed by the Army Logistics Support Activity
were generally considered to be accurate in over 90 percent of the
cases. However, when conducting simulations, depot officials stated
that they found data errors that would have prevented the LMP
processes from being exercised. Additionally, depot officials told us
that the data audits identified data errors that would affect their
ability to use LMP but were also beyond their ability to correct
because the data elements were managed by other Army or DOD
organizations.
While the simulations we observed at Anniston Army Depot and Red River
Army Depot are a positive step, they may not be representative of the
Army's actions. During our visit to these depots in June 2010,
officials at both depots told us that they intended to conduct
simulations as soon as practicable. In contrast, according to the LMP
program management office, other locations would not be able to begin
simulations until October 4, 2010. Additionally, the strategies used
to conduct simulations at both depots we visited were site specific
and different from each other. Depot officials told us that they had
developed their simulation strategy internally and without direction
from the Army or the LMP program management office, and LMP program
management officials told us that there was not a formal requirement
to conduct simulations. As a result, there was likely to be variation
in how the 29 sites conducted simulations, if at all.
Depot officials told us that the simulations did not mirror all of the
functions in LMP that would be used in performing their day-to-day
mission of repairing and overhauling items that were needed by the
warfighter and were not representative of the LMP environment.
Moreover, depot officials told us that they did not expect that the
corrections they made to fix data errors identified during the
simulations would transfer correctly into LMP because based on their
experience the process of migrating data between systems introduces
errors. However, depot officials told us that on September 23, 2010,
officials from the LMP program management office told them that the
depots would have access to the actual LMP environment on October 14,
2010. Depot officials stated that they intended to conduct additional
simulations using LMP until the system was deployed on October 21,
2010. Depot officials also stated that they would continue to correct
the data in LMP after the system was deployed.
Data Problems Persist at Second Deployment Locations:
Persistent data issues have prevented Corpus Christi Army Depot and
Letterkenny Army Depot--the two depots that deployed LMP in May 2009--
from achieving the intended benefits from LMP. Although officials at
both locations acknowledged that the system is an improvement over the
previous legacy systems, officials also told us that they are unable
to always use the system as intended. For example, as we previously
reported, one of the intended benefits that LMP was expected to
provide the depots was the ability to automatically calculate the
materiel requirements for a repair project. According to an Army
regulation,[Footnote 11] this process--known as materiel requirements
planning--works to ensure that repair parts and components are
available to meet the maintenance, repair, overhaul, or fabrication
schedule while maintaining the lowest possible level of inventory.
Officials at both locations told us that while the LMP software was
capable of automatically conducting materiel requirements planning,
the data that LMP uses to conduct the calculations are inaccurate.
Accordingly, officials at both depots told us that they must either
adjust the settings within LMP to ensure that each calculation matches
the planned delivery time or manually input the specific requirements.
Officials at both locations told us that they have developed
strategies and are conducting reviews to address data quality
problems. For example, officials at Letterkenny Army Depot told us
that they have completed addressing data issues for about half of
their major systems since May 2009. Similarly, officials at Corpus
Christi Army Depot told us that they were continuing to address data
quality problems, and that this was a long-term process that could
take years.
Inaccurate data are also affecting the Army's ability to use other
management systems. For example, the Army uses the Army Workload and
Performance System to determine, among other things, whether the
workforce at a depot matches the projected workload. Army officials
told us that because the Army Workload and Performance System relies
on data from LMP in order to generate the reports, inaccurate data in
LMP will result in inaccurate reports. For example, Army officials
showed us a report from the Army Workload and Performance System that
compared the projected workload at Corpus Christi Army Depot and
Letterkenny Army Depot against the planned workforce and, according to
that report, the workforce needed to accomplish the projected workload
was higher than previous levels. Specifically, Letterkenny Army Depot,
which normally requires approximately 1,800 resources per day,
[Footnote 12] was projected to need 6,000 resources per day to address
the projected workload. Similarly, Corpus Christi Army Depot, which
normally requires approximately 2,900 resources per day, was projected
to need nearly 14,500 resources per day. Army officials stated that
these incorrect reports were related, in part, to incorrect data that
had been loaded into LMP. Army officials at the depots also told us
that their ability to use the Army Workload and Performance System was
directly related to the quality of the data in LMP, and that until the
data in LMP are corrected, they do not expect the reports to be
accurate.
Despite the data issues, depot officials at both Corpus Christi Army
Depot and Letterkenny Army Depot stated that LMP is an improvement
over the previous legacy systems because it has increased visibility
over assets and provided a single source of data for decision making.
For example, officials at Corpus Christi Army Depot told us that LMP
has enhanced their ability to share information and interact with
original equipment manufacturers, and that they now have increased
visibility over contractor-managed inventories compared to that under
the legacy systems. Similarly, Letterkenny Army Depot officials told
us that LMP provides the Army increased visibility over items they
maintain in inventory, and depot officials told us that a unit in
Afghanistan was able to identify and requisition an item from the
depot's inventory that was not available in the supply system. As we
previously reported, these capabilities were not available in legacy
systems.[Footnote 13] Additionally, Letterkenny Army Depot officials
told us that as they improve the quality of their data, they expect to
be able to improve their ability to use LMP for evaluating repair
overhaul factors as well as forecasting workloads and parts
requirements.
The Army Has Yet to Fully Develop Software to Achieve Intended LMP
Benefits but Has Mitigations Plans That May Be Costly:
The Army's software development schedule and subsequent testing of
capabilities needed by several locations was not expected to be
delivered until after September 2010. Unlike operations under the
previous deployments of LMP, the operations at some of the third
deployment locations are unique and therefore require additional
capabilities. For example, the Army Sustainment Command and the Joint
Munitions and Lethality Life Cycle Management Command require LMP to
interface with existing systems in order to perform their day-to-day
missions. In contrast, some sites within the Tank-automotive and
Armaments Command use existing systems to collect manufacturing data
that will no longer be available once LMP is deployed. The Army has
developed mitigation plans to address the shortfalls in capability,
but those plans often involve hiring additional staff or employing
time-consuming manual processes.
Software Interface for the Army Sustainment Command Still Being
Developed:
The Army has yet to develop the software functionality needed by the
Army Sustainment Command to perform its mission under LMP, but Army
officials expect the functionality to be delivered prior to LMP
deployment. The Army Sustainment Command uses an automated information
system called the Army War Reserve Deployment System (AWRDS) to track
inventory and transfer accountability of pre-positioned stocks to
units. In a briefing to the Army Materiel Command in December 2009,
officials at the Army Sustainment Command stated that the interface
between LMP and AWRDS was critical to a go-live decision and a key to
the success of Army Sustainment Command operations in Southwest Asia.
During that briefing, officials at the Army Sustainment Command also
stated that full development of the interface between LMP and AWRDS
was scheduled for completion and testing in March 2010, and that the
functionality was scheduled for release in May 2010. However,
development and delivery of the LMP and AWRDS interface was delayed
and, according to LMP program management officials, the Business
Operations Test activity for this interface occurred from August 30,
2010, through September 3, 2010. During the Business Operations Test
activity, LMP program management officials told us that all but one of
the test cases passed, and that this issue is currently under review.
The Army Sustainment Command also requires additional software
functionality to conduct a mass upload--which is the automated
movement of thousands of items of inventory between the Army
Sustainment Command and the warfighter. Army officials stated that LMP
provides this capability, but only through the use of manual processes
that Army officials said are time consuming and staffing resource
intensive. The expected delivery date of this functionality was
October 11, 2010; however, Army officials stated on October 14, 2010,
that testing on the functionality was still in process. Army
Sustainment Command officials stated that without this capability,
users would have to enter information manually into LMP, which would
require certain locations to hire additional staff to accommodate the
workload and mitigate the effects of the missing capability. On August
27, 2010, the Commander of the Army Sustainment Command endorsed the
recommendation to deploy LMP on October 13, 2010, but noted that
AWRDS/LMP interface testing would not be completed until September and
that training materials for the new software had yet to be made
available for end users.
Functionality for the Joint Munitions and Lethality Life Cycle
Management Command Still Being Developed:
The Army is continuing to develop the software functionality that the
Joint Munitions and Lethality Life Cycle Management Command needs to
perform its mission using LMP, but Army officials said that full
functionality will not be available until after LMP has been deployed.
The Joint Munitions and Lethality Life Cycle Management Command
conducts operations related to the production, management, and
maintenance of ammunition. Officials at Joint Munitions and Lethality
Life Cycle Management Command sites told us that LMP--unlike the
systems that they currently have in place that will be replaced once
LMP is deployed--did not enable them to ship, receive, inventory, and
perform stock movements for ammunition. LMP program management
officials told us that this missing functionality was identified in
2009, and that development of this functionality began in January
2010. The Army plans to deliver the ammunition-specific functionality
and interfaces in phases through March 2011.
Joint Munitions and Lethality Life Cycle Management Command officials
stated that they have developed strategies to enable them to conduct
operations in the event that the new software functionality is not
delivered on time or does not provide the intended capability. For
example, in the event that this functionality is not delivered or does
not operate as expected, the Joint Munitions and Lethality Life Cycle
Management Command expects to hire 172 additional personnel to perform
manual data entry until the software can provide the required and
agreed-upon functionality. Joint Munitions and Lethality Life Cycle
Management Command officials stated that this mitigation plan would
enable them to deliver ammunition to the warfighter. However, they
also stated that this mitigation strategy will remove efficiencies
associated with automation of these activities that are present in the
legacy systems being replaced by LMP and lead to a degradation of data
integrity and inventory accuracy.
During our visits to the Joint Munitions and Lethality Life Cycle
Management Command sites, officials provided examples of the effect of
lost visibility and accountability of ammunition on their operations.
Officials at one site told us that the intended benefit from LMP usage
was to provide a common data set and real-time visibility over
ammunition. However, in the event that the software capability is not
delivered, the officials stated that their mitigation strategy would
be to track ammunition using "pencils and index cards." While this
strategy would enable some accountability over ammunition, the site
would not be able to achieve the intended benefit of real-time
visibility over ammunition.
Officials at another site told us that their mitigation strategy would
enable them to continue to ship ammunition to the warfighter. However,
manually entering data into LMP would also reduce their ability to
track ammunition. For example, officials told us that the existing
systems are capable of tracking the serial numbers assigned to
missiles, as well as the serial numbers of a missile's component parts-
-such as the warhead and the guidance system--and that the software
necessary for LMP to be able to provide this capability was expected
to be delivered on October 12, 2010. However, as of October 14, 2010,
development of this capability was only partially completed. The
officials stated that without this capability, their mitigation
strategy of manually entering data into LMP would cause delays in
their ability to track the individual serial numbers and, in the event
that a missile component needed to be recalled, would make finding
missiles that have components that are being recalled difficult,
especially if those missiles had been shipped to a customer.
On August 20, 2010, the Executive Director of the Joint Munitions and
Lethality Life Cycle Management Command signed a memorandum that
stated that the command was prepared for the deployment of LMP. The
memorandum also stated that the tasks that had yet to be completed,
upon which deployment was contingent, were development of, training
on, and testing of the ammunition functionality. The memorandum also
stated that in the event that all ammunition functionality is not in
place by the go-live date, the Joint Munitions and Lethality Life
Cycle Management Command is prepared to exercise its documented
mitigation strategy until such time as the functionality is available
in LMP, with the understanding that the use of the mitigation strategy
will increase costs and decrease inventory accuracy.
Capabilities Missing at Tank-automotive and Armaments Command Arsenals:
Certain functionality that the arsenals under the Tank-automotive and
Armaments Command need to perform their missions will not be deployed
until after LMP is deployed. These arsenals currently have systems--
commonly referred to as manufacturing and execution systems--in place
to report manufacturing data and track the status of items being
manufactured. According to Tank-automotive and Armaments Command
officials, the arsenals will lose this capability once LMP is deployed
until a replacement system is fielded. According to LMP program
management officials, LMP was never intended to provide this
capability. Instead, the Army has another project to develop this
capability and integrate it with LMP. According to Army officials,
this project is expected to provide the needed functionality and be
deployed to the LMP locations that need it in phases. The first phase
of this system improvement effort is expected to occur in February
2011 with the final delivery to occur in July 2011. In order to
compensate for this lost capability, officials at the Tank-automotive
and Armaments Command developed a mitigation strategy that includes
hiring an estimated 95 additional people in order to manually perform
the actions in LMP that were once handled by the legacy systems. Tank-
automotive and Armaments Command officials stated that these personnel
will be needed until the manufacturing and execution system is fielded
and effectively implemented.
In an August 30, 2010, memorandum, the Commander of the Tank-
automotive and Armaments Command confirmed the command's preparedness
to deploy LMP on October 13, 2010, with minimal impact to mission
accomplishment. The memorandum, however, identified a number of the
Commander's concerns, such as the potential requirement to hire an
estimated 95 additional people to manage the manual efforts required
to address the lack of a manufacturing and execution solution, as well
as potential out-of-pocket costs that could approach an unbudgeted
$300 million in the near term.
Conclusion:
The intention behind an enterprise resource planning system, like LMP,
is to enhance the effectiveness and efficiency of an organization.
Implementation of these types of systems is a complex endeavor, and
the ability to gain these efficiencies depends on the quality of the
data in the system. As illustrated by the experiences at the locations
that deployed LMP in May 2009, data quality continues to be a
challenge. The Army, however, has not adopted a testing strategy that
provides adequate insight on whether the data loaded into LMP can
support the LMP processes. Moreover, the functionality that is
required to support some of the locations is still being developed, so
the Army does not have reasonable assurance that the system is meeting
its needs before LMP is deployed. Without software that is working and
data of sufficient quality to use in the system, the Army's ability to
gain the anticipated increase in its effectiveness and efficiency for
its $1 billion investment remains unclear. Although the Army has
mitigation strategies in place that are expected to address potential
shortcomings, the Army expects that these strategies will increase
costs and decrease accuracy of inventory, which are the opposite
effects of what LMP functionality was intended to provide.
Accordingly, given the delays in implementing LMP and the long-
standing problems that have precluded the Army from realizing LMP
functionality, additional oversight and reporting is needed to better
inform Congress of the Army's progress in addressing these problems
and the status and costs of the mitigation strategies the Army is
employing.
Recommendation for Executive Action:
Given the long-standing challenges associated with the Army's
implementation of LMP and the need for mitigation strategies that may
result in increased costs until LMP is fully functional, we are
recommending that the Secretary of Defense direct the Under Secretary
of the Army as the Army's Chief Management Officer to report to
Congress within 90 days of the beginning of the LMP third deployment
on the progress of LMP implementation at the Army depots, arsenals,
and life cycle commands, and provide periodic updates to Congress
until such time as the mitigation strategies are no longer necessary.
This report should identify the extent to which the third deployment
sites are able to use LMP as intended, the benefits that LMP is
providing, an assessment of the Army's progress in ensuring that data
used in LMP can support the LMP processes, timelines for the delivery
of software and additional capabilities necessary to achieve the full
benefits of LMP, and the costs and time frames of the mitigation
strategies.
Agency Comments:
In written comments on a draft of this report, DOD agreed with our
findings with respect to data, software development, and systems, and
also agreed on the need to implement prior LMP recommendations with
which the department has previously concurred. DOD stated that the
Army has established additional oversight of the third deployment of
LMP and has no issues with GAO's facts, observations, or
recommendations, as stated in this report. DOD also stated that the
Army Materiel Command is working closely with the LMP Project Office
and third deployment sites to establish appropriate management
controls. With respect to our recommendation, DOD stated that the
department fully understands Congress's interest in this deployment
and that the Army will comply with GAO's recommendation and the
prescribed reporting timetable and conditions. The department's
written comments are reprinted in appendix I.
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Secretary of the Army; and
the Director, Office of Management and Budget. The report also is
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
Please contact William M. Solis at (202) 512-8365 or solisw@gao.gov,
Asif A. Khan at (202) 512-9869 or khana@gao.gov, or Nabajyoti
Barkakati at (202) 512-4499 or barkakatin@gao.gov if you or your staff
have questions on matters discussed in this report. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix II.
Sincerely yours,
Signed by:
William M. Solis:
Director, Defense Capabilities and Management:
Signed by:
Asif A. Khan:
Director, Financial Management and Assurance:
Signed by:
Nabajyoti Barkakati:
Chief Technologist:
Applied Research and Methods:
Center for Technology and Engineering:
[End of section]
Appendix I: Comments from the Department of Defense:
Deputy Chief Management Officer:
9010 Defense Pentagon:
Washington, DC 20301-9010:
November 5, 2010:
Mr. William M. Solis:
Director, Defense Capabilities and Management:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the Government
Accountability Office's (GAO) draft report GA0-11-139, "Defense
Logistics: Additional Oversight and Reporting for the Army Logistics
Modernization Program (LMP) is Needed," dated October 15, 2010 (GAO
Code 351493). We agree with the findings developed by your audit team
with respect to data, software development and systems. Further, we
agree on the need to implement prior LMP recommendations on which the
Department previously concurred.
The Army, in concert with my staff, established additional oversight
of the third deployment of LMP and has no issue with the facts,
observations or recommendations in the above referenced report. Army
Materiel Command is working closely with the LMP Project Office and
third deployment sites to establish appropriate management controls
which will ensure success of LMP.
The Department fully understands Congress' interest in this deployment
and Army will comply with the prescribed reporting timetable and
conditions, as identified in the "Recommendation for Executive
Action." Please contact Ms. Amy Bruins, at amy.bruins@osd.mil, if
additional information is required.
Sincerely,
Signed by:
Elizabeth A. McGrath:
[End of section]
Appendix II: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
William M. Solis, (202) 512-8365 or solisw@gao.gov:
Asif A. Khan, (202) 512-9869 or khana@gao.gov:
Nabajyoti Barkakati, (202) 512-4499 or barkakatin@gao.gov:
Staff Acknowledgments:
In addition to the contacts named above, J. Chris Martin, Senior-Level
Technologist; David Schmitt, Assistant Director; Darby Smith,
Assistant Director; Jim Melton; Gilbert Kim; Grace Coleman; and
Michael Shaughnessy made key contributions to this report.
[End of section]
Footnotes:
[1] An enterprise resource planning system is an automated system
using commercial off-the-shelf software consisting of multiple,
integrated functional modules that perform a variety of business-
related tasks such as general ledger accounting, payroll, and supply
chain management.
[2] GAO, DOD Business Systems Modernization: Billions Continue to Be
Invested with Inadequate Management Oversight and Accountability,
[hyperlink, http://www.gao.gov/products/GAO-04-615] (Washington, D.C.:
May 27, 2004); Army Depot Maintenance: Ineffective Oversight of Depot
Maintenance Operations and System Implementation Efforts, [hyperlink,
http://www.gao.gov/products/GAO-05-441] (Washington, D.C.: June 30,
2005); and 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).
[3] The scheduled deployment date for LMP was originally October 13,
2010. However, according to Army officials, the Army intended to
deploy LMP to the third deployment locations on October 21, 2010.
[4] GAO, Defense Logistics: Observations on Army's Implementation of
the Logistics Modernization Program, [hyperlink,
http://www.gao.gov/products/GAO-09-852R] (Washington, D.C.: July 8,
2009), and Defense Logistics: Actions Needed to Improve Implementation
of the Army Logistics Modernization Program, GAO-10-461 (Washington,
D.C.: Apr. 30, 2010).
[5] See Duncan Hunter National Defense Authorization Act for Fiscal
Year 2009, Pub. L. No. 110-417, § 908 (2008).
[6] See H.R. Rep. No. 110-652, at 336 (2008).
[7] [hyperlink, http://www.gao.gov/products/GAO-07-860].
[8] [hyperlink, http://www.gao.gov/products/GAO-10-461].
[9] [hyperlink, http://www.gao.gov/products/GAO-04-615].
[10] A test script is a list of sequential actions that users follow
when executing a test. If a test requires that special setup
activities be performed, these actions are identified in the test
script.
[11] Army Regulation 750-1, Army Materiel Maintenance Policy (Sept.
20, 2007).
[12] The resource per day calculation is based on an 8-hour workday,
and is determined by dividing the amount of work scheduled for a month
by the number of work days in that month.
[13] [hyperlink, http://www.gao.gov/products/GAO-10-461].
[End of section]
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