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58–404 PDF 2011

S. Hrg. 111–877 

HIGH-RISK LOGISTICS PLANNING: PROGRESS ON 

IMPROVING DEPARTMENT OF DEFENSE SUPPLY 

CHAIN MANAGEMENT 

HEARING 

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 27, 2010 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk and GPO Detailee 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

MARY L. LANDRIEU, Louisiana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

GEORGE V. VOINOVICH, Ohio 

SCOTT P. BROWN, Massachusetts 

LINDSEY GRAHAM, South Carolina 

LISA M. POWELL, Staff Director 

ROGER YEE, Legislative Fellow 

EVAN W. CASH, Professional Staff Member 

JENNIFER A. HEMINGWAY, Minority Staff Director 

SEAN M. STIFF, Minority Professional Staff Member 

AARON H. WOOLF, Chief Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Akaka .................................................................................................. 1 

Senator Voinovich ............................................................................................. 2 

WITNESSES 

TUESDAY, JULY 27, 2010 

Alan F. Estevez, Principal Deputy Assistant Secretary of Defense for Logistics 

and Materiel Readiness, U.S. Department of Defense ...................................... 5 

Jack E. Edwards, Director, Defense Capabilities and Management, U.S. Government Accountability Office, accompanied by William M. Solis, Director, 

Defense Capabilities and Management, U.S. Government Accountability 

Office ..................................................................................................................... 7 

ALPHABETICAL LIST OF WITNESSES

Edwards, Jack E.: 

Testimony .......................................................................................................... 7 

Joint prepared statement with Mr. Solis ........................................................ 34 

Estevez, Alan F.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 19 

Solis, William M.: 

Testimony .......................................................................................................... 7 

Joint prepared statement with Mr. Edwards ................................................. 34 

APPENDIX 

Background .............................................................................................................. 52 

Questions and responses for the Record from: 

Mr. Estevez ....................................................................................................... 58 

Mr. Edwards ..................................................................................................... 71 

(1) 

HIGH-RISK LOGISTICS PLANNING: PROGRESS 

ON IMPROVING DEPARTMENT OF DEFENSE 

SUPPLY CHAIN MANAGEMENT 

TUESDAY, JULY 27, 2010 

U.S. SENATE,

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT

MANAGEMENT, THE FEDERAL WORKFORCE,

AND THE DISTRICT OF COLUMBIA,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:31 p.m., in room 

SR–418, Russell Senate Office Building, Hon. Daniel K. Akaka, 

Chairman of the Subcommittee, presiding. 

Present: Senators Akaka and Voinovich. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Good afternoon everyone. This hearing of the 

Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia is called to order. 

Aloha and welcome to our witnesses and guests. I would like to 

thank you all for joining us here today for this hearing, which is 

on High-Risk Logistics Planning: Progress on Improving the Department of Defense Supply Chain Management. 

Senator Voinovich and I have held several hearings on the Department of Defense (DOD) supply chain management, an issue 

critical to making sure our brave men and women serving in Afghanistan, Iraq, and elsewhere have what they need to be safe and 

successful. At our most recent hearing in July 2007, DOD was 

making progress, but there were still challenges that needed to be 

addressed. Three years later, DOD’s supply chain management still 

remains on the Government Accountability Office’s High-Risk List, 

where it first appeared in 1990. 

It is true that DOD’s logistics operations are complex and extend 

throughout the world, but we must remain focused on moving forward to resolve the remaining weaknesses. Longstanding issues 

such as inefficient inventory management, poor responsiveness to 

war-fighting requirements, and weak demand forecasting result in 

high costs. 

In May 2010, the Government Accountability Office (GAO) reported that the Defense Logistics Agency (DLA) had over $1 billion 

worth of excess spare secondary inventory in fiscal year 2008. We 

must exercise better stewardship over taxpayer money. 

2 

Even more importantly, DOD’s supply chain management is essential to our military forces. It is critical that DOD effectively supply our warfighters, who risk their lives every day, with the right 

materiel in the right place at the right time. 

DOD supply chain management still suffers from inadequate 

strategic planning. DOD must formulate a comprehensive and integrated Strategic Plan that addresses all of DOD’s current and future logistics capabilities and challenges. This is vital to give senior 

leaders a means to effectively guide logistics programs across the 

Department and measure results. 

DOD has produced multiple strategic plans over the years aimed 

at improving supply chain management. However, it is unclear how 

these plans align with each other. The plans also lack some key 

elements. For example, at this Subcommittee’s urging, DOD released a Logistics Roadmap in July 2008. According to GAO, the 

Roadmap failed to identify the scope of logistic problems, lacked 

outcome-based performance measures, and did not clearly define 

how the Roadmap would be incorporated into the overall DOD decisionmaking processes. 

In September 2009, Senator Voinovich and I sent a letter to Deputy Secretary of Defense William Lynn expressing our continued 

concerns about DOD’s ability to effectively and efficiently deliver 

critical supplies to military personnel. We also noted that DOD still 

had not included outcome-based performance measures in the 

Roadmap more than a year after its release. DOD responded that 

the Department was developing a 2010 Logistics Strategic Plan 

that would update the Roadmap and address GAO’s findings. DOD 

recently released this plan. Although it includes specific logistics 

measures and key initiatives, I am concerned with how it can be 

used to achieve DOD’s supply chain management goals. 

Despite the remaining challenges, I do commend DOD for making progress on important issues. For example, the Joint Regional 

Inventory Materiel Management Initiative on the Island of Oahu, 

in my home State of Hawaii, has proven a success. It improves support to the warfighter by reducing customer wait times, providing 

better asset visibility, eliminating duplicate inventories, and 

streamlining delivery of parts to end users. The principles learned 

with J–RIMM have now been applied to other key areas, such as 

the Inventory Management and Stock Positioning Initiatives at the 

Defense Logistics Agency. 

Again, I want to thank our witnesses for being here today to discuss the 2010 Logistics Strategic Plan and what DOD is doing in 

working toward removing supply chain management from GAO’s 

High-Risk List. 

Senator Voinovich has championed this issue for many years and 

he is due much of the credit for the progress that has been made. 

With that, I would like to call on Senator Voinovich for his opening 

remarks. Senator Voinovich. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Senator Akaka. Thank you very 

much for holding this hearing. 

This is, I think, the fourth hearing that we have had in the Subcommittee on this issue, and over the years, I have met with people 

3 

at the Department of Defense and in my office and I am glad to 

see that some progress has been made in this. As I said to Lieutenant General Durbin when he was in to see me recently, I would 

really like to know from the time that former Under Secretary of 

Defense Ken Krieg was involved just what we have accomplished. 

Are we more efficient? Have we saved any money? Are we working 

harder and smarter? 

I will say this, that last month, I had the opportunity to travel 

to Iraq, and while I was in Baghdad, we visited with Lieutenant 

General Kenneth Hunzeker and Lieutenant General Robert Cone, 

and they briefed the delegation on the gradual transition of personnel and equipment out of Iraq. I was encouraged by how the Department is addressing the great challenge posed by the simultaneous drawdown in Iraq and surge in Afghanistan. For those 

tasked with delivering the right materiel to the right place at the 

right time, sustaining more than 100,000 troops in Afghanistan, 

poses a great challenge to everyone. 

I just saw the route used to get equipment out of Iraq and to Afghanistan. I can’t believe the way they have to go in order to get 

it in there, because they can’t go through Iran, so they have to go 

all over the moon. 

As the supply chain increasingly shifts to Afghanistan, the Department will face a critical test to determine whether the dangerous logistical gaps that emerged during the early days of Operation Iraqi Freedom have been closed and whether progress will 

continue in the areas of requirements forecasting, asset visibility, 

and materiel distribution. Again, I was impressed that they seemed 

to know where everything was. They had it categorized as either 

going to Afghanistan, coming back to the United States so that we 

can do some rehabilitation to it, and they are going to leave stuff 

in Iraq. 

The Department must have an effective strategic plan that decisionmakers can use to prioritize, coordinate, fund, and account for 

the hundreds of existing supply chain initiatives. 

In anticipation of this hearing, Senator Akaka and I sent a letter 

to the Department in September 2009 in which we posed a number 

of questions about the new Administration’s supply chain management priorities. We focused on shortcomings in the Logistics Roadmap that were identified by a January 2009, and Senator Akaka 

has already mentioned this GAO report. 

The response that we got back from Dr. Ashton Carter, Under 

Secretary of Defense for Acquisition, Technology and Logistics indicated that a new DOD Logistics Strategic Plan would soon be 

issued and would serve as an update of the existing Roadmap. And 

again, I am being repetitious, but we are really interested to know 

about the Department’s approach to strategic planning in this area. 

You had the Roadmap. Now you have the Logistics Strategic Plan. 

How do they relate to each other? Mr. Estevez, you have been 

around here for a while and I will be interested, because you were 

there at the beginning of this, how does this kind of segue into the 

Strategic Plan that you folks have put together? 

Finally, I look forward to hearing from the Department about the 

measurable improvements in the supply chain management that 

have resulted from several years of concerted effort. I would like 

4 

you to brag a little bit, Mr. Estevez. What increased supply chain 

efficiencies can the Department demonstrate? What cost savings? 

Most importantly, though, how are deployed personnel better able 

to accomplish their missions as a result of past logistics planning? 

These are the real questions that have to be asked. 

I am glad that Mr. Solis will aid in the discussion by providing 

insight into how many of the initiatives contained in the Department’s logistics planning documents are being applied in the field, 

particularly in Afghanistan. 

When we started with this, Secretary Rumsfeld said we would 

save about $26 billion if we managed the supply chain right, and 

you know that this function has been on the High-Risk List since 

1990. For the new people on board with the Obama Administration, 

I have to say that if I were the President of the United States, one 

of the things that I would do is look at this High-Risk List to see 

how I could impact it and get items off the list. DOD supply chain 

management, I think, is one of the most important things that we 

need to get off the list and I am prayerful that you all understand 

that and you will give it the very best that you have. 

I am pleased that there has been some continuity here, because 

one of the things that bothered me, and one of the things Senator 

Akaka and I have been trying to do is to get everybody to put together some kind of a strategic plan over a 5- or 6-year period, because transformation takes a long time. I know that because I was 

a mayor and I was a governor. It just takes a long time. And so 

often around here, one Administration comes in, they have a plan. 

The next generation comes in and they start all over again. But it 

appears we have continuity, and I am going to be really interested 

to hear from you how this thing is moving along and where do you 

see the light at the end of the tunnel. 

Thank you very much, Senator Akaka, for holding this hearing. 

Senator AKAKA. Thank you very much, Senator Voinovich. 

Now you have heard the history of our work along these lines, 

and the reason for the history is it is changing, but we want to 

move it as quickly as we can here. 

I would like to at this time recognize and introduce our panel, 

so it is my pleasure to welcome Alan Estevez, Principal Deputy Assistant Secretary of Defense for Logistics and Materiel Readiness, 

and Jack Edwards, Director of Defense Capabilities and Management at the Government Accountability Office. Mr. Edwards is accompanied by William Solis, also Director of Defense Capabilities 

and Management in the Government Accountability Office. Mr. 

Solis, it is good to see you again, always. 

Mr. SOLIS. Thank you. 

Senator AKAKA. It is the custom, as you know, of this Subcommittee to swear in the witnesses, so I ask you to please stand 

and raise your right hands. 

Do you solemnly swear that the testimony you are about to give 

this Subcommittee is the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Mr. ESTEVEZ. I do. 

Mr. EDWARDS. I do. 

Mr. SOLIS. I do. 

5 

1The prepared statement of Mr. Estevez appears in the Appendix on page 19. 

Senator AKAKA. Thank you. Let the record show that the witnesses answered in the affirmative. 

I want our witnesses to know that although your remarks are 

limited to 7 minutes, your full statements will be included in the 

record. 

Mr. Estevez, will you please proceed with your statement. 

TESTIMONY OF ALAN F. ESTEVEZ,1 PRINCIPAL DEPUTY 

ASSISTANT SECRETARY OF DEFENSE FOR LOGISTICS AND 

MATERIEL READINESS, U.S. DEPARTMENT OF DEFENSE 

Mr. ESTEVEZ. Thank you, Chairman Akaka and Senator 

Voinovich. Thank you for the opportunity to appear before you to 

discuss the current status of DOD’s supply chain management and 

logistics processes and to review with you the efforts we have taken 

to address areas of risk. As you mentioned, I have been here for 

all four of the hearings and we are dedicated to doing this, like 

both of you do. 

DOD has made significant measurable progress over the past 3 

years, since the Department was last before this Subcommittee, 

and I believe my testimony today will show our continued dedication toward implementing a comprehensive end-to-end logistics 

strategy that provides effective support for our deployed 

warfighters and provides value to the American taxpayers who pay 

for that support. 

Before I address those areas, I would like to compliment your respective staffs, your Office of Management and Budget (OMB), and 

GAO, who continue to work with us in addressing the Department’s supply chain management. I would also like to specifically 

acknowledge from GAO, both Bill Solis and Jack Edwards. Our collaboration has contributed significantly to the successful improvements in the Department’s supply chain and logistics support. 

The DOD supply chain is unparalleled in its scope of operations 

and the complexity of its mission. Over one million uniformed civilian and contract employees support all aspects of the Department’s 

supply chain, managing $90 billion in inventory, processing over 

117,000 national orders for materiel daily, keeping 15,000 aircraft, 

285 ships, and 30,000 combat vehicles capable of fulfilling their 

mission, and in many cases performing this mission while deployed 

in harm’s way. 

The DOD logistics mission is to provide globally responsive, operationally precise, and cost effective joint logistics support for the 

projection and sustainment of America’s warfighters. Every day, 

DOD logisticians support troops forward deployed in some of the 

world’s demanding environments and are frequently called upon to 

support operations on short notice in parts of the world where we 

have little or no presence. 

Most notably today, DOD logisticians are key enablers to simultaneously executing the drawdown of our forces in Iraq and to providing full spectrum support to our mission in Afghanistan. Since 

the President announced the Iraq drawdown time line, we have 

systemically been responsibly drawing down our force in Iraq. To 

date, we have moved out 32,000 pieces of rolling stock, closed over 

6 

300 bases, and are on track to bring the force down to 50,000 

troops by August 31, 2010. This has been accomplished by simultaneously sustaining and rotating the remaining force in Iraq, no 

small feat. At the same time, we have moved the majority of the 

30,000 troops and their equipment to Afghanistan as the President 

directed last December while providing the needed sustainment in 

food, fuel, medical supplies, construction materials, clothing, and 

spare parts. 

I just returned from Afghanistan 2 weeks ago, along with Dr. 

Carter, I might add, who was looking at the logistics lay-down. 

Every place I visited, the troops and their commanders reported 

that, for the most report, they are receiving the materiel as they 

need it, when they need it. 

Since the troop increase was announced, we have moved over 

17,000 relocatable buildings to house our forces. We are meeting a 

1.1 million gallon-a-day demand for fuel for United States and coalition forces while feeding 435,000 meals a day to U.S. troops on 

the ground. In addition to moving the force, their equipment, and 

their needed supplies to a landlocked country, we have also moved 

approximately 4,000 mine-resistant, ambush protected all-terrain 

vehicles (MATVs), and a significant number of Mine resistant Ambush Protected (MRAP) variants to protect our forces as they perform their mission. We are sustaining the readiness of all MATV 

and MRAP vehicles at over 90 percent, and that is with battle 

damage as the major factor in decreased readiness. 

Even with this enormous challenge on our plate, DOD logisticians were still able and ready to support disaster relief earlier this 

year in Haiti. 

Since we last appeared before this Subcommittee, we have issued 

the DOD Logistics Strategic Plan incorporating our major supply 

chain initiatives. This plan is synchronized and consistent with 

both the 2010 Quadrennial Review and the DOD Strategic Management Plan published in July 2009. It incorporates logistics-related 

priorities, outcomes, goals, measures, and key initiatives depicted 

in the DOD Strategic Management Plan while adding more detailed information relating to logistics strategy. Actual progress 

against each of the plans’ top-level performance targets will be collected and reported via the DOD Chief Management Officer level 

dashboard and reviewed quarterly. 

The Logistics Strategic Plan incorporates and builds on our previous efforts, including the 2005 Supply Chain Improvement Plan 

and the 2008 Logistics Roadmap, while simultaneously guiding our 

future actions as there are successes and improvements in the 

three GAO supply chain high-risk areas: Forecasting, asset visibility, and distribution. 

With respect to forecasting, we have made considerable progress 

in plan accuracy with the measurement of forecasting demand 

when compared to actual need. The Defense Logistics Agency 

(DLA), which satisfies 95 percent of customer demands, has seen 

demand forecast accuracy improve by 24 percent for key items. 

That is complemented by improvements we have seen in our readiness-based sparing efforts, which use analytics to establish inventory levels and locations to maximize readiness. 

7 

1The joint prepared statement of Mr. Edwards and Mr. Solis appears in the Appendix on page 

34. 

Using a commercial readiness-based sparing tool, the Navy is 

currently determining aviation on-board spares for several of its 

aircraft carriers and has noted $216 million in cost savings per carrier for the six carriers outfitted and a 50 percent reduction in 

high-priority requisitions. This was achieved during a 7 percent increase in operational tempo flight hours. 

In the area of asset visibility, we continue to use active Radio 

Frequency Identification (RFID) technology, to provide us with 

needed visibility for our critical cargo moving to Iraq and Afghanistan. At DLA’s Defense Distribution Depot-San Joaquim, where we 

are using passive RFID, we have seen a 62 percent decrease in receiving process errors for small parcel shipments on passive RFIDenabled receiving lanes, and at Pearl Harbor, we have seen a tenday reduction in response time for our most critical requisitions. 

The Distribution Process Center is driving process improvements 

that have significantly enhanced overall materiel distribution for 

our deployed forces and in the United States. For example, the Defense Transportation Coordinator Initiative has produced $91 million in cost avoidance in key transportation expenses while on-time 

delivery is running better than 96 percent. 

In closing, as we press forward with executing the Logistics Strategic Plan, the Department remains committed at the most senior 

levels to addressing our supply chain processes in order to support 

our warfighters at best value for the taxpayer. We continue to 

make real and measurable improvements to that end. 

Again, I thank you, Mr. Chairman and Senator Voinovich, for the 

opportunity to testify today on the important issues associated with 

the DOD supply chain and logistics and I will be happy to answer 

any of your questions. 

Senator AKAKA. Thank you very much, Mr. Estevez. 

Mr. Edwards, will you please proceed with your statement. 

TESTIMONY OF JACK E. EDWARDS,1 DIRECTOR, DEFENSE 

CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTING OFFICE, ACCOMPANIED BY WILLIAM M. SOLIS, 

DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, U.S. 

GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. EDWARDS. Mr. Chairman and Senator Voinovich, thank you 

for this opportunity to discuss DOD’s progress and challenges in 

strategic planning to resolve longstanding problems in the supply 

chain management area. 

As you are aware, supply chain management and other logistics 

functions are critical to supporting military forces in Iraq, Afghanistan, and elsewhere. Also, they constitute a substantial investment 

of resources. I am here today with my colleague, Bill Solis, that you 

mentioned earlier. Our GAO reviews cover supply chain management and other logistics areas. Mr. Solis’s work tends to focus on 

the Combatant Command’s and supporting the warfighter in operational situations. I am responsible for issues such as inventory 

management and also weapon system sustainment. 

8 

As requested, we will focus on three issues today: One, DOD’s 

prior strategic planning efforts; two, key elements in the new plan; 

and three, opportunities to improve that plan. 

Regarding DOD’s prior efforts, DOD has issued strategic plans 

for logistics and supply chain management since at least the 1980s. 

The 2008 Logistics Roadmap that we have been talking about is 

one example of such a plan. While it documented goals, joint capabilities, objectives, and numerous initiatives and programs, we 

found that it was missing some elements that we would expect in 

a strategic plan. Those missing elements included things that you 

just mentioned earlier, such as outcome-based performance measures and descriptions of problems and capability gaps. We recommended to DOD that it include these missing elements in future 

updates to the Roadmap and DOD concurred with that, and we 

have had discussions with them. 

Earlier this month, DOD issued its new Logistics Strategic Plan, 

our second issue that we would like to discuss. The new plan identifies the Department’s logistics mission and its vision. It also reiterates Department priorities that have been stated in important 

documents such as Quadrennial Defense Review and in the Strategic Management Plan for business operations. The Logistics Strategic Plan contains high-level goals. There are four of those, and 

for each one of the goals, it has success indicators, performance 

measures, and key initiatives. And the goals and initiatives that 

are mentioned in there, many of those we have investigated in the 

past and we have identified some of those needing management attention. 

While all four goals do touch on supply chain management, goal 

four explicitly deals with that issue. The discussion of goal four 

very briefly lists four success indicators, three performance measures, and 12 key initiatives. 

Now that we discussed some of what the plan has, let us move 

to the third area or third topic, and that is opportunities that we 

see that might help move this plan along a little more. The opportunities fall into two general categories or types. First, the plan 

lacks detailed information on how and when the goals and initiatives will be achieved. For example, the plan does not identify performance targets or timetables. It does not include logistics problems or capability gaps. And also, there is no mention made of 

what types of resources are going to be required in order to implement this plan. 

The other area of improvement concerns addressing the absence 

of linkages between DOD’s DOD-wide Logistics Strategic Plan and 

the service-specific and other types of plans and activities for accomplishing and improving supply chain management. Similarly, it 

is not clear how this plan will be used within DOD’s existing logistics governance framework to help make budgetary and other decisions. 

The continued absence of important details from the Logistics 

Strategic Plan may make it difficult for DOD to efficiently implement this plan and to fulfill the Department’s vision of providing 

a cost effective joint logistics support for the warfighter. 

Mr. Chairman and Senator Voinovich, Mr. Solis and I would be 

happy to answer any questions that you have at this time. 

9 

Senator AKAKA. Thank you very much, Mr. Edwards. 

Mr. Estevez, I commend DOD’s efforts to improve the efficiency 

of its logistics processes, but the recently released 2010 DOD Logistics Strategic Plan is intended to provide strategic direction on future logistics improvement efforts. Would you please describe the 

plan’s goals and key measures and how the plan will be used by 

senior leadership in the logistics decisionmaking process? 

Mr. ESTEVEZ. I will be happy to, Senator. Thank you. Let me 

start off by saying the Logistics Strategic Plan encompasses the 

gamut of logistics activities, more than just the supply chain activity that we are focused on, because it is a holistic continuum if you 

look at it. You can’t have a good logistics system unless you have 

a good supply chain. 

It has four goals in it. First, there is support for the warfighter, 

support for our deployed forces and what is going on in our current 

contingency operations. 

Second, related to that is management of the contractor workforce that we have out there and doing that better in the future. 

We all know that we have had some problems in the past and we 

believe we have got our arms around that going forward, but not 

just for this contingency, for future contingencies past this one. So 

we put in a process. We put in planning processes out at our 

CoComs, recognizing that we are going to have a contractor workforce on the battlefield with us going forward. 

Third, is looking at the acquisition process for our weapons platforms and building in a sustainment capability so that when you 

design a platform, you are thinking about the long-term operating 

costs of that platform and what you need to do today in the acquisition process. Acquisition people tend to focus on it until it is bought 

and then my folks worry about it after that. But the design affects 

the long-term costs, so we are trying to instill logistics and 

sustainment thought into the early part of that process, and Dr. 

Carter recently signed out a memo to the service acquisition executives ensuring that at Defense Acquisition Boards, we will be discussing sustainment strategies as well as the acquisition strategy 

for a particular platform. 

And fourth, are the initiatives related to the supply chain. 

Inside that and for each of those, we have what the measures of 

our success will be, and then there are initiatives under each one 

of those goals. Frankly, under each one of those initiatives, there 

will be sub-targets that will relate up to the higher target. 

I co-chair with the Director of Logistics for the Joint Staff, Lieutenant General Kathy Gainey, something called the Joint Logistics 

Board, which brings together the senior logisticians in the Department of Defense from the service staffs, from the service Materiel 

Commands, from U.S. Transportation Command, and from the Defense Logistics Agency, and at that board we discuss how we are 

going forward and the issues that we need to resolve to make all 

those things come into compliance, and then the services manage 

their budgets and how they do their business underneath that 

structure. 

Senator AKAKA. You last mentioned about the supply chain, Mr. 

Estevez. What are some of the major supply chain management 

challenges that DOD still needs to address? 

10 

Mr. ESTEVEZ. Let me start off by saying, and it is going to be 

mostly in the area of inventory management and procurement of 

that inventory. So our ability to forecast demand needs to be better. We have a number of initiatives, things like I discussed in my 

opening statement, readiness-based sparing, to do that. We are 

drafting, as required in last year’s National Defense Authorization 

Act, a comprehensive Inventory Management Strategy. We are 

using that opportunity to actually go after some focused areas so 

that management not only of the forecast, and the forecast should 

be better at our industrial activities, at our maintenance depots, in 

other words, than out in the deployed force, where things like environment and battle damage and unintended consequences change 

the demand plan accuracy. But collaboration between the buyers, 

the Defense Logistics Agency and the Materiel Commands, and the 

users of that materiel, that is probably No. 1. 

Using our systems, and we have issues in some of our systems— 

DLA probably has the best Enterprise Resource Planning (ERP) 

that is out there—other services are working to implement—to 

gather the data needed to more timely affect buys, so that we don’t 

buy more than we need. Even though that materiel may be consumed down the road, it is a lost opportunity cost that the money 

could have gone to something more important. So that is probably 

the biggest area that I say that we can really affect big change to 

the benefit of both the warfighter and the taxpayer. 

The final area we continue to work on is visibility. We have pretty good visibility, and frankly, I think our inventory accuracy is as 

good as anyone out there in the commercial sector, given the 

amount of materiel we have and given the fact that we deploy to 

places like Helmand Province, where tracking it can be difficult. 

But we continue to work those processes, as well. 

Senator AKAKA. Thank you. Let me call on Senator Voinovich for 

his questions. 

Senator VOINOVICH. I guess the first question I would have is 

that you got started with this process. You had the Roadmap. Now 

you have the Strategic Plan. The Department has been criticized 

in terms of including outcome-based performance metrics in strategic planning documents and, GAO says, failed to include adequate outcome-based performance metrics in both the Roadmap 

and Logistics Strategic Plan. Why is this the case and how can this 

be remedied? Although I can’t believe that, Mr. Estevez, if I said 

to you, how have you judged your performance over the last several 

years and what criteria did you use? Now, I know that one of the 

criteria is customer wait time, but what would you point to to show 

what metrics were used to evaluate the performance of your operation in achieving the goals that were set? And do you have a difference of opinion with GAO in terms of their analysis of the issue 

of metrics that you are using? 

Mr. ESTEVEZ. Let me start at the top of that, how I would measure, and as you pointed out, customer wait time has been our consistent measure throughout. But I would go past that to readiness 

and a customer satisfaction metric. So if I look at our capabilities, 

if I look at the performance of a logistics system as what it is doing 

right now in sustaining our forces and deploying our forces to AfVerDate Nov 24 2008 10:57 Mar 02, 2011 Jkt 058404 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\DOCS\58404.TXT SAFFAIRS PsN: PAT
11 

ghanistan, which is about as hard a place as we could have picked 

to go to war, short of Antarctica, maybe—— 

Senator VOINOVICH. In fact, this morning on the plane coming in, 

I had a public document that shows the circuitous route you have 

to go through. It is just amazing. OK. Go ahead. 

Mr. ESTEVEZ. And there are dangerous countries around there 

that we are going through and diplomatically problematic countries, to say the least. So nonetheless, and let me just give you an 

example, in May of this year, the Marines in Helmand had a fire 

in their supply support activity, in the activity that sustains a good 

chunk of the Marine forces. There are other ones in Helmand Province. A massive fire destroyed a big chunk of the materiel that was 

there. Nonetheless, we were able to reconstitute that in pretty 

much no time and we had a 1 percent uptick in readiness while 

we were doing that reconstitution to the point where—and I was 

talking when I was there 2 weeks ago—to the Marine Logistics 

Command, a Marine one-star on the ground, who told me he had 

to put the brakes on the logistics system for pushing the supplies 

to him so that he could target the supplies he really needed right 

now and get them out into the field. That, to me, shows a logistics 

system that is working the way it is supposed to work for our deployed forces. I can likewise give you good stories on Iraq—— 

Senator VOINOVICH. Have you ever sat down with anybody that 

was in Iraq in the beginning to kind of compare and contrast the 

situation that you had there versus what you have in Afghanistan? 

Mr. ESTEVEZ. In fact, today, and I guess he wasn’t there right at 

the beginning, the Director of Logistics for General Rodriguez, the 

U.S. Forces Director of Logistics, was also General Petraeus’s Director of Logistics and is still there in Afghanistan, in Iraq in the 

2007 and 2008 time frame. So that is not the beginning. And certainly I am around many logisticians who were there and it is 

leaps and bounds better than we are doing. 

There are a number of reasons for that. Some of those are political reasons and some of those are just that we are looking long 

and that we have learned lessons and we are more flexible and 

more adaptable, and that is all good. To me, going forward, the 

trick is to codify those good things so that we incorporate them, 

recognizing that you don’t want to get down to fighting the last 

war, the next war, and everything has to be dynamic. And frankly, 

if you go to the commercial sector and look at great supply chains, 

they have to adapt, as well. 

But there is a massive difference between what we were doing 

early on and what we are able to do right now in Afghanistan and 

what we are doing drawing down, including putting in depots and 

looking at those capabilities. 

Going back to your measurements, that would be how I would 

say, yes, we are doing great. With that said, I would also say GAO 

has some legitimate arguments that there are areas we could do 

better. I would call those the efficiency areas, more of the business 

operations versus direct support for the warfighter. Again, that is 

my No. 1 metric. 

But I will go back to those things I talked about. Forecast accuracy, we could do much better and we are driving to do that. Some 

of those are not necessarily outcome-based metrics, so it is cusVerDate Nov 24 2008 10:57 Mar 02, 2011 Jkt 058404 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 P:\DOCS\58404.TXT SAFFAIRS PsN: PAT
12 

tomer readiness is the outcome-based metric. I need a cross-metric 

underneath that and driving that relationship is not as easy as one 

would like in our business. 

So, I think you had a third question in there that I may not have 

answered. 

When I look at the way these plans have been drafted, we drafted the first plan to address some of the things that were laid out 

on the High-Risk List and we are still driving to those initiatives 

and they are consistent over time. As you point out, this is a complex area and transformation is not overnight. I wish it was, so I 

wish we could get off this list more than anyone probably out there 

right now. 

Second, the Roadmap was a list of all initiatives across the Department, not just the ones directed at that list. They are encapsulated inside the Strategic Plan. So there is a continuum of efforts 

as we move forward, and I personally think this is a pretty good 

plan. Mr. Edwards has laid out some areas where we could improve. We will look at those going forward. But as I have discussed 

with him, I would also look at the initiatives and how we are doing 

and driving them underneath, the cost savings that we are garnering, the increases in the response time, etc., and I think that 

is what we need to be measured on. 

Senator VOINOVICH. In my next round of questions, I will give 

you an opportunity, Mr. Edwards and Mr. Solis, to comment on 

what Mr. Estevez had to say. 

Senator AKAKA. Thank you. Yes, we will have another round 

here. 

Mr. Edwards, DOD supply chain management has been on the 

GAO High-Risk List for 20 years. DOD, GAO, and this Subcommittee have been committed to this issue. Can you tell us what 

key factors GAO plans to examine when deciding whether to retain 

DOD supply chain management in its upcoming High-Risk List series update? 

Mr. EDWARDS. Thank you, Mr. Chairman. We have mentioned 

some of those issues in the past, and also Mr. Estevez has mentioned some of them. We have had numerous conversations. You 

have urged us to talk to one another. Recently, Mr. Estevez and I 

met with Beth McGrath, Deputy Chief Management Officer, to discuss what types of steps might need to go forward. We recognize 

that there are some issues that are still out there, such as visibility 

over some of the assets, also looking at the supply chain projections 

of what are we going to need into the future. And Mr. Solis will 

talk about some of the things that he has recently observed in 

some of his trips to Iraq and Afghanistan to complement the things 

that I am talking about. 

But as we move forward, one of the things that we are particularly looking for, Mr. Estevez has mentioned that they will be 

issuing a mandated report that was part of the National Defense 

Authorization Act of 2010. In that report, DOD is required to address eight issues, and among those issues are some of those very 

things that originally led DOD to have the supply chain management or initially, at least, the inventory part of supply chain management put onto the High-Risk List. So we hope to see that plan 

13 

when it comes out and hope that some of these issues will be addressed. 

Mr. SOLIS. Could I just jump in here just a little bit, too? 

Senator AKAKA. Mr. Solis. 

Mr. SOLIS. I think a couple other things, just very quickly, and 

I think Mr. Estevez alluded to one. I think we can focus on Iraq 

and Afghanistan, and let me say, I think for Iraq, I think in terms 

of the briefings that you got, Senator Voinovich, I am in agreement 

that I think the drawdown is moving ahead as scheduled and I 

think everything from the disposition of equipment to the movement of personnel, those things, I think, are on time and moving 

quite well. 

I think Afghanistan, I think from my view and some of the work 

that we have done, the preliminary work, granted, it was back in 

December, we still have to see how that is going to turn out. I have 

some different things in terms of some of the unit readiness pieces 

that I have picked up which I testified about. Again, that was back 

in December. We are at a different point in time and we are going 

to be taking a look at that. So again, we will be looking at that in 

terms of making the assessment of the high risk. 

I think the other piece, and I haven’t thought this through completely, but the other thing I think, not only just for logistics but 

particularly the supply chain, in terms of the workforce, that has 

become a contractor workforce, particularly for the current operation. When you look at the transportation, the distribution, that 

is all becoming very integral in terms of the fuel and supplies. How 

is that going to be built into future operations? 

And so I think the kind of thing that Mr. Estevez talked about 

in terms of codification of these kinds of things, I think are the 

kinds of things that we are going to be looking for, as well. 

Senator AKAKA. Mr. Solis, distribution of materiel to deployed 

forces in Afghanistan presents distinct challenges due to the country’s location, infrastructure, and its terrain. Would you please discuss some of these key challenges. 

Mr. SOLIS. And again, as Mr. Estevez alluded to, Afghanistan is 

probably the worst nightmare for a logistician to try to plan an operation, and so by many accounts, they have done a great job. In 

terms of some of the challenges going into this, I mean, there were 

things like limited visibility over shipments. I think there is limited RFID capability coming out of Pakistan. I think on the Northern distribution route, because of security concerns by other countries, there is limited visibility over that. It takes a number of days 

to get those shipments from the United States through those different routes. And then when they get within country, there are 

even periods of time where they may have to wait outside the gates 

because of security considerations. So there is a long stretch of time 

just to get the equipment and supplies in. 

I think in terms of just working in the North Atlantic Treaty Organizations (NATO) environment, our priorities are not necessarily 

the other NATO countries’ priorities in terms of getting key equipment or key supplies within a particular base. 

There were limits on the infrastructure at the air fields, the 

ramp space. Some of that was going to be taken care of during the 

surge, but there were some other things that were not going to be 

14 

addressed during the surge. We still had reports of some units, and 

this is going back to the prior surge, to the spring and the summer, 

that still had not received all of its equipment and supplies. Again, 

we haven’t looked at that going forward, and let me say I have attended different drills or planning conferences where I think the 

Department and the Army and the Marine Corps have sat together 

to figure out how they are going to do this. So we are going to have 

to take a look at that as to how it is working. 

But I think there are a number of challenges. Afghanistan is so 

much different than Iraq in terms of those challenges, but I think 

there are a number of things that are there that could limit the 

ability of the supply chain to work effectively. 

Senator AKAKA. Thank you very much, Mr. Solis. 

Senator Voinovich, do you have further questions? 

Senator VOINOVICH. Yes, I do. 

You have heard the testimony of Mr. Estevez. Your testimony is 

very impressive, Mr. Estevez, about what has happened. On a scale 

of 1 to 10, Mr. Edwards, going back to, say, 2006 or 2007—you pick 

the date and tell me where it is—what would you rate the improvement in their performance in terms of the supply chain management challenge? 

Mr. EDWARDS. I think I would rather defer this one to Mr. Solis. 

He has had a lot more of the time over in Afghanistan and he is 

better positioned to answer the specific issue about how Afghanistan has changed, if that is all right with you, Senator. 

Senator VOINOVICH. That is fine. I mean, I go back to anecdotal 

stuff, when we were buying and selling supplies at surplus, not 

having a lot of the equipment that was needed for the warfighter, 

etc. That was really awful. So, Mr. Solis, why don’t you share with 

me what you think is really going on and if they really wanted to 

do a better job, where would you focus in on? 

Mr. SOLIS. Well, let me just start, again, with the plan, if I may 

first. The plan itself, I think was alluded to, that there are metrics 

out there. In fact, one of the things that I still think is lacking are 

overarching metrics. I will give you one example. 

One of the things that is in the plan is cost effective, yet I can’t 

find anything in the plan—— 

Senator VOINOVICH. Wasn’t that the same thing you had to say 

about the Roadmap? 

Mr. SOLIS. Yes, sir. 

Senator VOINOVICH. OK. 

Mr. SOLIS. And so let me say this. I was pleased to see a lot of 

the overarching plan that is there today covers a lot of the same 

things that we have recommended that the Department look into 

beyond just the supply chain, planning for the use of contractors 

in future contingencies, not just Iraq and Afghanistan, looking at 

their business processes for urgent needs, supply chain management. So there are a lot of things that are very positive in that 

plan from maybe the priorities. 

But it is hard even there to tell which are the largest priorities. 

It is hard to tell which ones are going to provide the most cost effective solutions. For example, I think RFID—— 

Senator VOINOVICH. I was just going to ask about that. 

15 

Mr. SOLIS [continuing]. Is one that has a dual purpose, an increase in visibility and potentially providing cost effectiveness. And 

we are still looking for some of that. And I think those are the 

kinds of things that if they were added to the plan, and I know 

those are things that are going to be added, I think, at some point, 

according to even the latest version I see now, I think it would go 

a long way in terms of the plan itself. And I think that would be 

very helpful in terms of Members of Congress, different folks who 

have vested interests, decisionmakers, about how the Department 

is doing overall with respect to a lot of the initiatives and the goals 

now that they have set out in this plan. 

So I think there are still things, there are still some details, particularly the metrics. I think another one might be in terms of how 

they will continue to evaluate this, which is one of the things that 

we talk about in any plan, you have to be able to evaluate it. But 

again, there are a lot of things out there in this current plan that 

I see as positives in terms of the priorities and the kinds of things 

that they are going after. But I don’t know—and one more, if I 

could give—in the planning part for future contingencies, I think 

the metric is—all the contractor equities will be reviewed, but it 

doesn’t say by when. It doesn’t say how it is going to be done. So 

I think there are some of these details, and even if it was in an 

appendix somehow or something where folks could look at that, I 

think that would help a lot. 

Senator VOINOVICH. How often do the two of you talk, Mr. 

Estevez and Mr. Solis and Mr. Edwards? 

Mr. SOLIS. We talk quite a bit. 

Mr. ESTEVEZ. We do talk quite a bit. 

Mr. SOLIS. In fairness, I think we have a running conversation 

on different things. We agree and disagree on different things. I try 

to tell them where I think things are moving well. I think, again, 

the Iraq drawdown is moving pretty well. I still am not sure about 

Afghanistan. I mean, I know there are a lot of positives that are 

happening there. Don’t get me wrong. But I think in terms of is 

it as good as it could be or are we doing the things—everything 

that we should be doing, I think that—and we are doing some work 

that will try to shed some light on the current efforts. 

Senator VOINOVICH. One of the things that Senator Akaka and 

I have done on a couple of instances is we have really worked with 

GAO and the agency that GAO is reviewing. I think in the whole 

Department of Homeland Security, for example, the question was, 

are they moving forward, are they making progress, in integrating 

the Department’s functions? We had hearings where DHS said, we 

are doing one thing and GAO said DHS was doing another thing 

and there wasn’t a meeting of the minds. So we have been trying 

to get them together to kind of get a consensus on what needs to 

be done. A more narrow initiative would be security clearance process, which we are hoping gets off the GAO High-Risk List. 

But the fact is that the agency and GAO have sat down. They 

have talked to each other. They have reconciled some differences. 

They have a plan. There is a meeting of the minds as to what 

needs to be done, and then you have something that you can look 

at and there is an agreement on what the metrics should be. Now, 

I am sure that is a lot of work, but it seems to me that if you 

16 

haven’t gone through that exercise, you ought to begin it and figure 

out just here is what we are doing, and you talk to each other and 

try to get, as I say, some meeting of the minds in terms of what 

the metrics are going to be and what is going to be accomplished, 

and from my selfish point of view and Senator Akaka’s and the 

country’s, when are you going to get off the High-Risk List and 

what is it going to take in order for it to happen? 

Mr. SOLIS. And I would say again, I think for us, we can make 

the recommendations. I can talk to Mr. Estevez. Ultimately, Mr. 

Estevez, and the Department have to decide which route they are 

going to go. 

Senator VOINOVICH. Yes, and the other thing I am interested in 

knowing if you are not able to hit your targets, is it because you 

are not getting the budget support that you are supposed to be getting from the Department, or are we doing something over here in 

Congress that is standing in your way. What are the hurdles that 

you are having to get over, that if you didn’t have those hurdles, 

you could be moving at a quicker pace than you currently are? 

Mr. ESTEVEZ. Let me just address a couple of things there. If you 

go back in time when we first developed the High-Risk Implementation Plan, Mr. Solis, I, and OMB, crafted that together, and at 

one point, we were meeting probably quarterly, if not more. We are 

not quite at that point now, though we see each other quite often. 

When the Secretary announced his effort to drive efficiencies in the 

Department, I asked both of these gentlemen to come over and 

meet with me and look for ideas on where we could do it. So there 

is definite collaboration going on inside the Department. 

When we agree, that is easy. When we disagree, we disagree on 

some of the metrics, we are going to go where the Department 

needs to go. And we think we are doing the right thing. So it is 

not that I am trying to not do what GAO says. It is where we have 

a disagreement over technique. 

For some of the things, I would love to get a cost metric. That 

is easier said than done, on how you put a cost on management of 

inventory inside the Department. It is easy if you are Wal-Mart. 

Your hold time versus your sales, it is done. For us, holding a 

bunch of inventory that I am holding for war reserve, I am holding 

inventory that I bought for economic buy, so I bought more than 

we needed over the objective, we are holding Navy inventory. We 

have weapons systems that are raging that we are just going to 

hold on to. So it is a more difficult thing. 

On the other hand, I would also say in that case, for example, 

that I would rather have the inventory that I might need for that 

person in Iraq or Afghanistan than not have it. It is worse not to 

have it. 

So there are areas where we need to work through. We continue 

to work with GAO on honing the metrics. As you know, we made 

a run at getting off the list back when Ken Krieg was the AT&L. 

Mr. Solis and I were over at OMB pushing through that, didn’t 

quite get there. Nonetheless, my view is the work that we are 

doing is not about a list. It really still goes back to what is right 

to do for the warfighter or what is right for the taxpayer. I would 

love to get off the list at the same time that we are doing that. 

17 

Senator VOINOVICH. Well, I would encourage you to get together 

a little bit more and try to dot the ‘‘i’’s and cross the ‘‘t’’s and move 

ahead, not only for the betterment of the warfighter, but I think 

that with the financial situation that we have in our country today, 

with this unbelievable national debt, with budgets that are not 

being balanced, the American people finally are realizing that last 

year, out of every dollar we spent, we borrowed 41 cents. 

I mean, our fiscal situation is really ratcheting up and I think 

that in terms of our Defense Department, there is going to be a lot 

more scrutiny about what you are doing, how efficient you are, 

what are you doing with your budget, with acquisitions and what 

are some of the tradeoffs and so forth. The big light, I think, in the 

next several years is going to be more on you than ever before. The 

more that you can demonstrate progress, the better. And you have 

made progress. The efficiencies that you brought to bear, which are 

important to the warfighter, will need to continue. 

Second of all, you need to try to identify the cost savings to the 

Department that have resulted from supply chain improvement efforts. For example, we started out with this and today we are over 

here. And I don’t mean fudge on the numbers, but to be able to 

identify, these are specific things that you can do, even though, as 

you point out, that may be difficult on occasion. 

Mr. ESTEVEZ. And I would say that my guidance from the Secretary, from Secretary Lynn and certainly from Secretary Carter, 

who I see daily, is to do just that. So we will take you up and I 

will work with these gentlemen to press forward, sir. 

Senator VOINOVICH. Thank you. 

Senator AKAKA. I want to thank you very much. 

Let me just follow this up. Of course, there is no question that 

whatever the troops need, we need to move them. The supply chain 

has to be used and we just hope that it gets there in a timely manner. 

During the last discussion, talking about metrics, let me just ask 

this question. Can you tell us how your efforts and the metrics 

being used to gauge effectiveness of these actions, can you explain 

a little more about that? What do you do with those metrics? 

Mr. ESTEVEZ. Sure, and again, different initiatives have different 

looks. Every one of them were, every single initiative to drive cost 

out versus an initiative to drive effectiveness. We are calculating 

the savings. So something like the Defense Transportation Coordination Initiative (DTCI), we have identified savings out of the 

transportation accounts. Those are real savings that the services 

accrue. And people are getting their stuff faster, so that is a true 

benefit. 

Even in areas like movement to Iraq, for every 500 MRAPs that 

we move what we call intermodal move—most MRAPs we were flying in out of Charleston direct into Afghanistan, a fairly expensive 

move but important to get those vehicles out there for the force. 

Once we had enough on the ground, we moved to something we 

called intermodal movement. So we move them through countries 

in the Middle East where we then fly them on a leg. You can turn 

the airplane that much faster put more on the ground. It is actually operationally more effective in getting more MRAPs on the 

ground, and $55 million for every 500 MRAPs moved. 

18 

That is one of the ways, even though in January when we looked 

at it and said, to close the force, there is no white space. How are 

we going to move all these MATVs, which was the contract in August, over 4,000 on the ground being used in Afghanistan today. 

But we managed to squeeze them into the flow at a rate that they 

are out there, plus other MRAPs. We moved from what we thought 

was going to be 500 a month to, at some points, 1,200 a month 

being fielded in Afghanistan, and calculating cost savings while 

they are doing it. 

So it is a variety of things, looking at readiness, if it is a direct 

readiness output, like the readiness base sparing, and calculating 

those cost savings. Now, what happens, of course, is that in the 

services, they take those savings and apply them to other places. 

I don’t necessarily see them in the logistics budget because that is 

not where they are. They are operation and maintenance, or operational and support account savings. Those monies can be fluctuating. If it is a direct acquisition program, then we can calculate 

that, or if it is in the working capital fund, I can see how that 

moves around. So it is tracking those things, customer wait time, 

readiness, either savings or cost avoidances would probably be the 

three areas that I look most. 

Senator AKAKA. Well, I want to thank you very much. We have 

further questions that we will send to you. But I want to thank you 

for appearing here today. 

As we have heard, supply chain management is critical and directly affects our men and women in uniform in the field. The Department of Defense must continue to improve its ability to deliver 

the right materiel to the right place at the right time. Although 

much progress has been made in addressing the DOD supply chain 

management weaknesses, many challenges remain, and I am so 

glad to hear that you continue to talk to each other. 

As always, I want to thank Senator Voinovich, who has been a 

leader on this issue. While our time together grows shorter with 

each passing week, we have a joint commitment to improve supply 

chain management and remove it off the GAO’s High-Risk List. 

The hearing record will be open, as I said, for 2 weeks for additional statements or questions that other Members may have. 

This hearing is adjourned. 

[Whereupon, at 3:35 p.m., the Subcommittee was adjourned.] 

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