United States General Accounting Office

GAO Report to the Acting Secretary 

of the Army

January 1998 ARMY LOGISTICS

SYSTEMS

Opportunities to

Improve the Accuracy

of the Army’s Major

Equipment Item

System

GAO/AIMD-98-17

GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-275187 

January 23, 1998

The Honorable Robert M. Walker

The Acting Secretary of the Army

Dear Mr. Secretary:

As part of our responsibility to audit the consolidated financial statements

of the federal government, we are reviewing the accuracy of data in the

military services’ financial/logistical systems that are used to provide

property, plant, and equipment information to the financial statements.

The Army uses the Continuing Balance System-Expanded (CBSX) as its

central logistics system for reporting the types, quantities, and location of

equipment; monitoring the equipment readiness of its warfighting units;

and filling equipment shortages in those units scheduled for mobilization.

In addition, information in this system is used for financial reporting.

In the past, we and the Army Audit Agency (AAA) have reported

inaccuracies in CBSX data.1

 Inaccurate CBSX data have hampered Army

readiness and decision-making by causing equipment distribution delays

and affecting efforts to identify major items that require accelerated

procurement. For this review, our objectives were to determine (1) the

primary causes for the numerous adjustments to correct discrepancies

between the Army’s CBSX system and its primary property book system,

(2) whether the Army’s ongoing improvement efforts will correct the

causes of these discrepancies, and (3) whether the Army’s current method

of assessing CBSX accuracy, referred to as the compatibility rate, is

adequate.

Results in Brief While the Army ensures that CBSX equipment balances accurately reflect

the balances in its primary property book system twice a year, the Army

does not identify the causes of adjustments made to CBSX balances to

correct discrepancies. Our analysis of the causes of CBSX adjustments has

identified opportunities to correct process weaknesses and computer

software problems that would reduce the number of adjustments and,

consequently, increase the accuracy of CBSX throughout the year. In

particular, the Army does not have an effective process to ensure that

equipment transactions from Army units are received by CBSX. Our

1

Financial Management: Army Lacks Accountability and Control Over Equipment (GAO/AIMD-93-31,

September 30, 1993), Financial Reporting of Equipment In Transit (AAA audit report AA 96-156,

June 17, 1996), and Total Asset Visibility: U.S. Army, Europe and Seventh Army (AAA audit report 

AA 97-233, June 30, 1997).

Page 1 GAO/AIMD-98-17 Army Logistics Systems
B-275187 

statistically projectable sample of adjustments made to CBSX to bring it into

agreement with the Army’s primary property book system, showed that

over 40 percent of the adjustments were due to transactions not received

by CBSX. Other reasons for adjustments included software errors and

incorrectly posted transactions by CBSX analysts and Army units. The lack

of reconciliations performed between CBSX and unit property books, an

outdated regulation, and incomplete training also were underlying factors

that contributed to differences between CBSX and the primary property

book system.

The Army’s ongoing efforts to improve CBSX address some of the causes of

adjustments such as those related to certain software errors and

incorrectly posted transactions. However, these efforts do not fully

address property book transactions that were not received by CBSX, the

largest cause of adjustments. Without addressing improvements in unit

processes to ensure that transactions are received by CBSX in a timely

manner, the Army’s efforts to improve CBSX will not correct the largest

cause of CBSX adjustments.

The Army also does not have an effective mechanism to measure CBSX

performance. The Army-wide CBSX compatibility rate, the factor used to

measure the extent to which CBSX and property book records agree, is

overstated because it does not count all adjustments made to CBSX

balances to correct discrepancies. Moreover, the Army does not measure

other relevant CBSX characteristics, such as the timeliness of transaction

submissions.

Background CBSX provides worldwide asset visibility over the Army’s reportable

equipment items, including the Army’s most critical war fighting

equipment. The objective of CBSX is to provide accurate, timely, and

auditable equipment balances for major items2

 necessary for the direct

support of troops, such as armored personnel carriers, battle tanks,

helicopters, rifles, and gas masks. Operated and maintained by the Army’s

Logistics Support Activity (LOGSA), CBSX furnishes the Army with an official

inventory figure used to assess the overall preparedness of the force,

determine the validity of unit equipment requisitions,

distribute/redistribute equipment throughout the Army, and maintain

worldwide asset visibility of deployed assets.

2

A major item, such as a main battle tank, is a final combination of parts and materiel ready for its

ultimate use. In contrast, a secondary item is a component of a major item, such as a transmission.

Page 2 GAO/AIMD-98-17 Army Logistics Systems
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As a result, if CBSX equipment balances are overstated, the Army may

procure too few items, possibly resulting in reduced readiness.

Conversely, if CBSX equipment balances are understated, the Army may

procure too many items, potentially creating excess and wasting financial

resources that could have been otherwise used to maintain and improve

readiness. Moreover, Army planners and logisticians use equipment

balances originating from CBSX to redistribute equipment to deploying

units and estimate secondary item and other requirements to sustain this

equipment. Therefore, if unit equipment balances are misstated,

mobilization and deployment planning could be more difficult and

inefficient.

CBSX covers over 9,300 National Stock Numbers, which are primarily major

items but also include other selected items, such as medical equipment,

for which the Army requires worldwide visibility. CBSX seeks to mirror the

official accountable records of equipment balances, such as property book

records, held by various types of Army activities, including divisions

subject to deployment, depots that repair or upgrade equipment, and

storage sites. As of September 30, 1996, CBSX contained information on

13.5 million items whose reported value was over $116 billion. While some

of this property is held at wholesale distribution centers, such as depots,

the vast majority of these items, valued at about $94 billion, are maintained

at the retail level.3

 Of this retail equipment, about 80 percent, valued at a

reported $75 billion, was accounted for by units that use the Standard

Property Book System - Redesign (SPBS-R), an automated property book

system, which is maintained by the U.S. Army Information Systems

Software Development Center, Fort Lee, Virginia (see figure 1).

3

Retail-level assets are those held by field user-level activities in the Active Army, Army Reserve, and

Army National Guard.

Page 3 GAO/AIMD-98-17 Army Logistics Systems
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Figure 1: Relationship of Army Equipment Maintained Under SPBS-R to Total Army Equipment in CBSX (reported as of

September 30, 1996)

Total CBSX Assets Total Retail Assets

0

20

40

60

80

100

Equipment in Transit 1.8%

Wholesale Assets 17.5%

Retail Assets 80.7%

80% SPBS-R

20% Other Systems

Source: Extract of CBSX data from LOGSA’s Requisition and Validation System. We did not

independently verify this information.

Since CBSX is the Army’s centralized equipment asset visibility system, the

Army plans to use it as a primary source for supplementary stewardship

information, as prescribed by the Statement of Federal Financial

Accounting Standard No. 8, Supplementary Stewardship Reporting.

Beginning in fiscal year 1998, this standard requires agencies with federal

mission property, plant, and equipment to disclose the value and condition

of these assets as supplemental stewardship information.4

 The standard

specifically includes military weapons as federal mission property, plant,

and equipment. In the past, military equipment has been misstated on the

4

The Statement of Federal Financial Accounting Standard No. 8, Supplementary Stewardship

Reporting defines federal mission property, plant, and equipment as possessing at least one of the

following characteristics related to (1) its use, in that it has no expected nongovernmental uses, is held

for use in the event of emergency, war, or natural disaster, or is specifically designed for use in a

program for which there is no other program or entity using similar property, plant, and equipment

with which to compare costs and (2) its useful life, in that it has an indeterminate or unpredictable

useful life or is at a very high risk of being destroyed during use or of premature obsolescence.

Page 4 GAO/AIMD-98-17 Army Logistics Systems
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Army’s financial statements. For example, according to AAA, the Army’s

fiscal year 1996 financial statements misstated its property, plant, and

equipment by a material but unknown amount and major problems with

the processes used to report and value military equipment precluded AAA

from attesting to the reported value of military equipment.5

Army regulations require all activities to maintain accurate property books

and ensure that they agree with CBSX. However, past audits by AAA and GAO

found that CBSX balances for equipment items fluctuated for reasons that

responsible officials could not explain, differed from records maintained

by the units possessing equipment, and were substantially inaccurate for

equipment in transit between units (see footnote 1). Moreover, a

January 1992 Army Materiel Command Lessons Learned report on

Operation Desert Storm demonstrated that inaccurate or unreliable CBSX

data (1) hampered equipment distribution decisions, resulting in some

deployed units receiving equipment in excess of their authorizations while

others were short critical equipment, (2) delayed the distribution of major

items to units that did not deploy to Southwest Asia, thus diminishing the

readiness of those units, and (3) significantly affected efforts to identify

major items that required accelerated procurement.

SPBS-R is a stand-alone personal computer system operated independently

at over 2,000 Army units. Figure 2 illustrates the three methods units can

use to provide SPBS-R data to CBSX: (1) downloading data to diskettes that

are hand-carried to another computer, which transmits the data to CBSX,

(2) transmitting via modem from the property book computer directly to

CBSX, and (3) downloading data to diskettes that are mailed to LOGSA where

the data is loaded into CBSX. For submissions provided electronically to

CBSX (methods 1 and 2 above), the system transmits a confirmation of

receipt that contains the total number of transactions received by CBSX. In

addition, listings of transactions that affect unit balances are printed by

CBSX and mailed to the units by LOGSA monthly.

5

Army’s Principal Financial Statements for Fiscal Years 1996 and 1995: Report on Internal Controls and

Compliance With Laws and Regulations (AAA audit report AA 97-145, June 30, 1997).

Page 5 GAO/AIMD-98-17 Army Logistics Systems
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Figure 2: Methods of Sending SPBS-R Data to CBSX

SPBS-R

Unit Property

Book

Direct Transmission

to CBSX

1 3 2

Download data

to disk and hand

carry to central

collection point to

transmit

to LOGSA

Download data to

disk and mail

to LOGSA

LOGSA analyst

transactions CBSX

LOGSA inputs

unit

transactions

Mailed

transaction?

Yes

No

LOGSA

transmits

confirmations

to units

LOGSA mails

reports to

units monthly

SPBS-R

reports

Monthly CBSX

reports

Confirmation

of receipt

Page 6 GAO/AIMD-98-17 Army Logistics Systems
B-275187 

Figure 3 shows the three types of SPBS-R data units sent to CBSX during the

time the adjustments in our review were made: catalog data, transaction

data, and validation data.

• Catalog Data: The Army provides units with an updated automated catalog

semiannually that designates which supply items in SPBS-R are reportable to

CBSX.

6

 When a unit runs the catalog update process in SPBS-R, the system

generates a listing of the unit’s equipment balances for items that have

become reportable due to catalog changes. Units are supposed to transmit

these balances to CBSX, which, in turn, records the new balances.

• Transaction Data: Units are required to transmit their SPBS-R equipment

transactions (such as additions and transfers) to LOGSA at least monthly to

update CBSX. If these transactions pass various edits to detect common

types of errors, CBSX updates unit asset balances.

• Validation Data: Units transmit SPBS-R balances to CBSX (called validation

data) twice a year. As part of the validation process, CBSX compares these

SPBS-R balances to CBSX balances, identifies discrepancies, and adjusts the

CBSX balances to agree with SPBS-R. CBSX is adjusted to agree with SPBS-R

because SPBS-R is the Army’s official accountable record.

As also shown in figure 3, in September 1996, after the time frame of the

adjustments that we reviewed, SPBS-R was changed to allow units to begin

providing SPBS-R unit identifier data to CBSX.

7

 Both CBSX and SPBS-R contain

unit identifier data, which are used to ensure that unit transactions are

posted to the proper accounts. If SPBS-R and CBSX unit identifier data are

inconsistent, property book transactions will be either rejected by CBSX or

posted to the wrong accounts. In the past, CBSX and SPBS-R unit identifier

data have been inconsistent, which has led to differences between the two

systems. Consequently, in the new process, CBSX compares the data from

the SPBS-R unit file to the unit identifier data in CBSX and provides LOGSA

analysts with a report of differences for review.

6

The Army requires CBSX reporting for certain equipment items for which worldwide asset visibility is

desired. The Army’s Supply Bulletin 700-20, commonly referred to as the catalog, specifies which items

are centrally reportable.

7

The unit identifier data include the Unit Identification Code and the Department of Defense Activity

Address Code. The Unit Identification Code represents authorized Army units with their individual

mission, structure, personnel, and equipment requirements. The Department of Defense Activity

Address Codes are used by units for requisitioning, receipt, issue, shipment, and billing of materiel.

Page 7 GAO/AIMD-98-17 Army Logistics Systems
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Figure 3: Types of SPBS-R Data Sent to CBSX

Type of Data SPBS-R CBSX Process

Catalog

data

Transaction

data

Validation

data

Unit identifier

data

(as of

September 1996)

SPBS-R

catalog

update

data

Establish

beginning

equipment

balances

SPBS-R

reportable

transactions

Update

equipment

balances

Reject

transaction

Passes CBSX

edits?

Yes

No

SPBS-R

validation

(balance)

data

End

Change CBSX

balances to

equal SPBS-R

SPBS-R

validation

data = CBSX

balance?

Yes

No

Compare

SPBS-R

validation data

to CBSX

balances

SPBS-R

unit

identifier

data

End

LOGSA 

Report of

Differences

SPBS-R unit

data = CBSX

unit data?

Yes

No

Compare

SPBS-R and

CBSX unit

identifier

data

Page 8 GAO/AIMD-98-17 Army Logistics Systems
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After the validation process, LOGSA calculates a compatibility rate, which

measures the extent to which CBSX and the unit records agree.8

 According

to the CBSX user manual, Army headquarters adopted the compatibility rate

as the yardstick to measure the degree of property book officer

compliance with CBSX asset reporting requirements.

Scope and

Methodology

To determine the primary causes for adjustments to correct discrepancies

between CBSX and SPBS-R, we analyzed a statistically projectable sample of

150 adjustments from our sample universe of 32,649 adjustments. The

sample was selected to identify common, recurring problems that caused

adjustments to CBSX between January 1996 and August 1996 as a result of

the validation process. We chose this time period in order to cover a

complete validation period, from the time units submitted validation

balances until the semiannual CBSX validation process was completed. We

excluded adjustments that were made during the conversion of manual

property books to SPBS-R because we considered these adjustments as

nonrecurring. We also excluded adjustments to non-equipment National

Stock Numbers, such as clothing.

Our analysis consisted of reviewing applicable SPBS-R reports, such as the

CBSX Transaction Listing, and CBSX reports, such as the Proof of Shipment

report. We also provided documentation to, and discussed the results of

our analysis with, applicable property book officers, LOGSA officials, and/or

Software Development Center, Fort Lee, officials and reached consensus

with these officials about the causes of adjustments. Appendix I identifies

the various Army activities that were part of our sample. We also

interviewed officials from the Office of the Deputy Chief of Staff for

Logistics, LOGSA, and the Army Quartermaster Center and School.

To determine if the Army’s improvement efforts adequately address the

causes of CBSX errors, we reviewed and analyzed the Army’s plans and

related documentation. We also interviewed LOGSA, Software Development

Center at Fort Lee, and contractor officials.

To determine whether the CBSX compatibility rate is an adequate measure

of performance, we reviewed LOGSA compatibility reports, which quantify

the extent to which CBSX agrees with unit records, analyzed LOGSA’s

methodology for calculating the rate, and interviewed LOGSA officials.

8

The CBSX compatibility rate is the ratio of the total number of adjusted equipment items to the total

number of equipment items on hand, expressed as a percentage. The Army’s management goal is for

CBSX to maintain 98-percent compatibility with unit records.

Page 9 GAO/AIMD-98-17 Army Logistics Systems
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We conducted our review between July 1996 and October 1997 in

accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from the Secretary of

Defense or his designee. On December 18, 1997, the Army’s Deputy Chief

of Staff for Logistics provided us with written comments, which are

discussed in the “Agency Comments and Our Evaluation” section and are

reprinted in appendix II.

Causes for Large

Unreconciled

Differences Between

CBSX and SPBS-R

From January 1996 through August 1996, LOGSA made more than 32,000

adjustments to CBSX to bring it into agreement with SPBS-R balances. We

reviewed a representative sample of 150 adjustments and identified the

causes of 124 of them. The adjustments in our sample covered differences

between CBSX and SPBS-R for items such as M-16 rifles, night vision goggles,

howitzers, and cargo trucks. As shown in figure 4, the principal causes of

adjustments were transactions not received by CBSX, software problems,

and erroneous transactions posted by LOGSA or units.

Page 10 GAO/AIMD-98-17 Army Logistics Systems
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Figure 4: Causes of CBSX

Adjustments Number of adjustments

0

10

20

30

40

50

60

70

Transactions not received

Software problems

LOGSA errors

Unit errors

Causes of adjustments

64

35

14 14

Note: This figure shows 127 causes of the 124 adjustments we identified causes for (3 of these

adjustments had 2 causes).

We could not determine the causes for 26 of the adjustments primarily

because units had not retained all of the records to establish the audit trail

needed to perform the analysis. In most cases, Army regulations did not

require units to retain the records needed to determine the underlying

causes for these adjustments or the Army’s record retention period had

expired. For example, the CBSX confirmations of receipt are not required to

be retained and the SPBS-R manual requires that one critical SPBS-R report,

the listing of transactions reportable to CBSX, be retained for only 60 days

after the validation process. Also, in some cases, units did not retain

records in accordance with Army regulations. Specifically, units are

required to retain the inactive document register (a listing of all archived

transactions that were posted to the property book) for 2 years but units

could not find these documents in 12 cases. If units do not determine the

causes of their adjustments prior to discarding the records needed to

Page 11 GAO/AIMD-98-17 Army Logistics Systems
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assess these causes, the Army is left with little information on specific

causes of these adjustments so that corrective actions can be taken to

prevent their recurrence.

The following sections provide additional detail for each of the causes of

adjustments identified.

SPBS-R Transactions Not

Received by CBSX

Army regulations require that LOGSA and Army Major Commands ensure

that units submit complete and accurate data to CBSX. However, our

sample of 150 adjustments found that 64 (43 percent) occurred because

SPBS-R transactions were not received by CBSX9 and thus were posted to

SPBS-R, but not CBSX, causing discrepancies between CBSX and SPBS-R

balances. We could not determine with certainty whether property book

officers failed to send their transactions to CBSX or if some other event in

the process prevented CBSX from receiving the transactions because

neither LOGSA nor the units had effective monitoring processes to ensure

that transactions were sent and received in a timely manner. Examples

include the following.

• Army Regulation 710-3, Asset and Transaction Reporting System, requires

LOGSA to (1) ensure that activities submit CBSX input data by the date

scheduled and that the data are correct and (2) take appropriate follow-up

action if data are not accurate or submitted by the scheduled date.

However, LOGSA had neither scheduled dates for units to report their CBSX

transactions nor kept a log or schedule of expected transmissions.

Therefore, without such reporting schedules, LOGSA could not detect when

units failed to submit transactions and the major commands lacked

appropriate data to measure unit compliance. Moreover, according to

LOGSA’s analysts, they have not routinely followed up on and corrected

rejected transactions. In addition, while LOGSA requested that units submit

transactions weekly (exactly when transactions are submitted is left to the

discretion of the unit), in practice, we found that reporting frequency

varied greatly. Some units reported several times a week while others did

not report to CBSX for months.

• Although LOGSA transmits to units confirmations of receipt that contain the

total number of transactions received, neither Army regulations nor their

implementing guidance require units to verify the total, investigate

9

The range of our confidence interval at a 95-percent confidence level is that between 11,705 and

16,230 of the 32,649 CBSX adjustments in our sample universe made during the 8-month period of our

review were due to transactions not received by CBSX.

Page 12 GAO/AIMD-98-17 Army Logistics Systems
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discrepancies, and retain the receipt confirmations.10 Property Book

Officers for several units in our sample told us that while they review and

retain for various periods the LOGSA receipt confirmations, they do not

always compare these confirmations with their lists of CBSX-reportable

transactions to ensure that all data transmitted were received by CBSX.

Moreover, in cases where units provided their data to a central collection

point which transmitted data to CBSX (see figure 2), the central collection

point often did not provide the units with the receipt confirmation. Unless

units verify and retain their receipt confirmations, they are unlikely to

discover that transactions were not received by CBSX and therefore will not

be in a position to take corrective action such as retransmitting the

transactions. Also, the SPBS-R report that lists the CBSX-reportable

transactions—which units could use to verify the total number of

transactions transmitted—does not display a total. Therefore, when large

numbers of transactions are sent, verifying the CBSX confirmation totals of

transactions received can be onerous because property book officers must

manually count the total number of SPBS-R reportable transactions. This

can involve hundreds of transactions.

• LOGSA mails to each property book officer monthly reports showing

transactions posted to CBSX. LOGSA expects property book officers to

review these reports to ensure that their property book transactions were

posted to CBSX and to review transactions rejected or questioned by CBSX

edit checks. By performing this procedure, the property book officer could

detect when reportable transactions were not received by CBSX or other

problems that prevented transactions from posting to CBSX. However,

many property book officers we interviewed told us that they did not

perform this review process. Further, this process can be burdensome.

Specifically, (1) these reports contain all transactions submitted

throughout the month (which can involve hundreds of transactions) rather

than reporting exceptions separately and (2) transactions with errors may

not be readily identifiable. Further, the error codes in these reports are

difficult to interpret. For example, the report does not define the

error-type codes it contains.

Software Problems Thirty-five adjustments (23 percent) in our sample were caused by

problems in CBSX or SPBS-R software.11 Because of these software errors,

10When data are electronically transmitted to CBSX, LOGSA returns to the sender a confirmation of

receipt showing the number of records received, which the property book officer can compare to the

number sent. Only three of the units in our review did not electronically transmit data to CBSX.

11The range of our confidence interval at a 95-percent confidence level is that between 5,798 and 9,703

of the 32,649 CBSX adjustments in our sample universe made during the 8-month period of our review

were due to software problems.

Page 13 GAO/AIMD-98-17 Army Logistics Systems
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CBSX (1) posted incorrect adjustments, (2) posted invalid transactions, or

(3) did not post valid transactions. In some of these cases, errors in the

validation process itself created inaccurate balances in CBSX that were not

corrected until LOGSA conducted its next 6-month validation process. The

following were the specific software problems found.

CBSX Validation Process Error Twenty-one adjustments were caused by a software error in the CBSX

validation process which resulted in invalid adjustments being posted to

unit balances. The CBSX validation process compares the unit’s SPBS-R

equipment balances to the unit’s adjusted equipment balances in CBSX and

changes the CBSX balances to mirror the SPBS-R balances. For validation

purposes, the CBSX equipment balance is adjusted to remove transactions

received after the unit’s validation cutoff date, which is the date when

each unit runs the SPBS-R validation process for submission of balance data

to LOGSA. This process is necessary to account for timing differences

between the dates the units and CBSX ran their respective validation

processes.

However, when a unit’s asset balances were reduced to zero in CBSX by

transactions subsequent to the unit validation date, the CBSX validation

process did not adjust the unit’s equipment balances for these

transactions. Therefore, in these cases, the unit’s unadjusted CBSX balances

were compared to the semi-annual SPBS-R balance data, which caused CBSX

to post erroneous adjustments, record inaccurate Army unit equipment

balances, and report inaccurate unit compatibility rates. For example, in

one sample case, a unit submitted to CBSX a validation balance of seven for

a particular equipment item as of April 25, 1996, and CBSX ran its validation

process on June 4, 1996. That unit also submitted a transaction for that

item on May 17, 1996, which reduced the balance for the equipment item in

CBSX to zero. A software problem caused CBSX not to add back this

transaction in order to calculate the adjusted CBSX balance (which is

compared to the SPBS-R validation data). As a result, the CBSX validation

process adjusted CBSX to agree with the April 25, 1996, SPBS-R validation

balance, thereby overstating the unit’s balance for that particular

equipment item by seven. After we brought this problem to LOGSA’s

attention, they completed a software change to fix the problem.

Valid Transactions Rejected as

Duplicates

Five adjustments were due to CBSX rejecting valid property book

transactions because edit processes incorrectly identified them as

duplicate transactions. For example, if the unit corrected an error in a

transaction (i.e., if the wrong serial number was entered) and the original

and corrected transaction was sent in the same submission to CBSX, CBSX

Page 14 GAO/AIMD-98-17 Army Logistics Systems
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would reject one of the transactions as a duplicate. The Army was aware

of this software problem. To fix it, in 1997, the Software Development

Center, Fort Lee, modified SPBS-R to add new data fields to the SPBS-R input

to CBSX that will include the date and time of transactions. These SPBS-R

software modifications, along with planned modifications to CBSX to use

these data, are expected to correct this problem.

SPBS-R Caused Errors Four adjustments were caused by software errors in SPBS-R that resulted in

invalid transactions being posted to CBSX. Three adjustments occurred

when a software error in SPBS-R caused it to report a wrong activity address

code to CBSX. When a unit is reorganized and transfers assets to a different

unit identification code, the unit inputs the gaining and losing units’ unit

identification codes in SPBS-R, which uses them to automatically record

both the gaining and losing units’ Department of Defense Activity Address

Codes. However, a software problem in SPBS-R caused the system to assign

the gaining unit’s activity address code to the losing unit. As a result, the

wrong activity address code was reported to CBSX, which caused CBSX to

mistakenly post the loss transaction to the gaining rather than losing unit.

Neither LOGSA nor the Software Development Center, Fort Lee, were aware

of this SPBS-R software problem. The CBSX Project Manager told us that this

error is a significant problem, particularly during times of frequent

deployments when these types of transactions are common.

The fourth adjustment caused by a software error in SPBS-R occurred when

a unit incorrectly posted a transaction to reverse a prior transaction. While

SPBS-R edits prevented the transaction from updating the SPBS-R asset

balance, SPBS-R did not reject this transaction, instead passing along the

incorrect reversal transaction as a valid CBSX reportable transaction. While

researching another adjustment (which was caused by a transaction not

received by CBSX), we found a second unit that performed an incorrect

reversal transaction. Neither LOGSA nor the Software Development Center,

Fort Lee, were aware of this SPBS-R software problem. An SPBS-R analyst

stated that a software change would correct this problem.

Because the Software Development Center, Fort Lee, plans to replace

SPBS-R, additional software improvements are not being made to SPBS-R

except for changes related to the Year 2000 problem.12 However, the errors

in SPBS-R discussed in this section, which caused CBSX to have incorrect

asset balance data, could be fixed in conjunction with the planned

modification to SPBS-R to correct the Year 2000 problem.

12See Year 2000 Computing Crisis: Time Is Running Out for Federal Agencies to Prepare for the New

Millennium (GAO/T-AIMD-97-129, July 10, 1997) for a discussion on the Year 2000 problem.

Page 15 GAO/AIMD-98-17 Army Logistics Systems
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CBSX Catalog Update Process

Error

Three adjustments caused by the catalog update process resulted in

invalid transactions being posted to CBSX. As previously discussed, when a

unit runs the catalog update process in SPBS-R, the system generates a

listing of the unit’s equipment balances for newly reportable items, which

the unit is supposed to transmit to CBSX. CBSX then records these new

balances as part of the unit’s asset balance. In three cases, units

transmitted catalog balances for items with existing CBSX balances.13 As a

result, CBSX added the newly reported and existing balances together, thus

overstating the units’ equipment balances in CBSX. We brought this

problem to the attention of the CBSX Project Manager, who stated that

LOGSA would fix this problem by adding an edit to the CBSX catalog update

process to check whether the unit had a preexisting balance for the

catalog item.

CBSX Erroneously Posted

Transactions

Two adjustments were caused when CBSX erroneously posted transactions.

In these cases, transactions were processed in SPBS-R prior to the unit

running the validation process (therefore the transactions were included

in the unit’s validation balances) but were not received and processed by

CBSX until after LOGSA ran the CBSX validation process. According to a LOGSA

programmer, this error occurred because CBSX was reading the incorrect

validation date. The programmer further stated that LOGSA had discovered

and, in early 1996, fixed this error.

LOGSA Posted Erroneous

Transactions

Fourteen adjustments (9 percent) were caused by LOGSA actions.14 For 13

of these adjustments, LOGSA analysts posted erroneous transactions to unit

asset balances in CBSX. LOGSA analysts can manually enter transactions in

CBSX to adjust unit asset balances. Analysts input these transactions when

units notify LOGSA of changes to their unit identification or activity address

codes or when analysts identify cases where unit property book

transactions were not posted correctly in CBSX. For example, when a unit

requested that LOGSA change its unit identifier codes, LOGSA analysts often

also transferred the asset balances for the affected units without

investigating whether the units had already submitted the appropriate

SPBS-R unit transfer transactions. Therefore, if the unit had performed the

13These items had existing CBSX balances because (1) the unit erroneously reported the same catalog

transaction twice and (2) one item had been previously reported as a substitute item for another

reportable item. Units are authorized certain types of equipment for which they can substitute similar

items. When units make such substitutions, these items are reported to CBSX even though the

substituted item may not be designated as a CBSX reportable item.

14The range of our confidence interval at a 95-percent confidence level is that between 1,871 and 4,639

of the 32,649 CBSX adjustments in our sample universe made during the 8-month period of our review

were due to LOGSA errors.

Page 16 GAO/AIMD-98-17 Army Logistics Systems
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transfer transactions in SPBS-R and submitted this data to CBSX, the

LOGSA-generated transaction doubled the unit’s asset balances in CBSX. The

final adjustment in this category occurred because LOGSA did not update

the unit identifier data in CBSX in a timely manner.

The CBSX Project Manager agreed that LOGSA-generated transactions can

cause adjustments and said that LOGSA should only make these

transactions when units do not submit SPBS-R unit transfer transactions.

The Project Manager said that LOGSA plans to institute an internal review

process to approve LOGSA-generated changes to unit balances. This process

will include determining whether units have submitted the appropriate

unit transfer transactions. However, unless this process includes

coordinating with the applicable unit prior to making changes to unit asset

balances, units could still submit duplicate unit transfer transactions at a

later time.

Units Posted Transactions

Incorrectly

Fourteen adjustments (9 percent) we reviewed were caused when units

incorrectly entered property book transactions.15 Some of these

transactions related to unit reorganizations that caused a lack of

synchronization between unit identifier data in CBSX and SPBS-R. Other

incorrectly entered transactions were due to various other errors such as

the unit entering an invalid unit identification code. Errors such as these

can be reduced by placing additional emphasis on training, which we

discuss in the next section.

Deployment situations often cause unit reorganizations. As a result of

these reorganizations, new unit identifier codes are created and existing

unit assets are moved to these new unit identifier codes. These changes

are made in order to maintain asset accountability when units are

deployed. Therefore, if CBSX and SPBS-R do not contain the same unit

identifier data, visibility over these assets is lost. For example, one unit’s

reorganization adjustments occurred as a result of its deployment to Haiti.

During the deployment, the unit transferred a large number of its assets to

another property book in Haiti. However, CBSX did not recognize this

transfer because the unit did not follow the designated procedure for

posting to a new unit identification code established for the deployment.

As a result, when the unit submitted its validation balances, which no

longer included the assets deployed to Haiti, CBSX deleted those assets in

order to match the property book balances submitted. These deleted

15The range of our confidence interval at a 95-percent confidence level is that between 1,871 and 4,639

of the 32,649 CBSX adjustments in our sample universe made during the 8-month period of our review

were due to unit errors.

Page 17 GAO/AIMD-98-17 Army Logistics Systems
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assets, which included 6 trucks, 12 ambulances, 13 pistols, and 62 M-16

rifles, remained unreported in CBSX until the next validation was

performed 4 months later—after the deployed equipment had been

transferred back to the unit’s original property book.

In another example of an adjustment caused by a unit reorganization, a

unit property book officer attempted to transfer assets between two Army

companies. However, the property book officer performed this transfer

incorrectly, which resulted in both companies’ assets being incorrectly

combined in CBSX in one company’s account.

Other incorrectly entered transactions were due to a variety of

circumstances such as the unit entering an invalid unit identification code.

For example, in one case, the unit incorrectly used a unit identification

code assigned to another unit, which resulted in transactions being

incorrectly posted to the other unit’s account.

Underlying Factors

Affecting the Accuracy of

Data in CBSX

In addition to the specific cause of each adjustment, we believe other

underlying factors contributed to CBSX not being compatible with SPBS-R.

These factors primarily related to the lack of reconciliations, outdated and

unclear regulations, and the lack of training.

First, although Army Regulation 710-3, Asset and Transaction Reporting

System, requires all activities to maintain accurate asset balances in CBSX,

the regulation is unclear about the respective roles of LOGSA and the

property book officer for reconciling automated property books with CBSX

and refers to a reconciliation process that LOGSA no longer conducts.

Instead, LOGSA’s practice is to adjust the CBSX database to agree with SPBS-R

without a detailed analysis of the causes for these adjustments. In

addition, as previously discussed, many units do not retain the documents,

such as the inactive transaction register and the receipt confirmations,

that would be necessary to perform such reconciliations. As a result, the

Army has little of the information it would need on specific causes of

adjustments to take corrective actions to prevent their recurrence.

Moreover, reconciliations could detect instances where CBSX balances

were incorrectly changed. For example, as previously discussed, 21

adjustments in our sample (14 percent) resulted from software problems

that led to erroneous adjustments that caused CBSX balances to be

incorrect. In addition, Army record retention periods with respect to CBSX

contain time frames associated with the validation process that may not be

sufficient to support a reconciliation process. Procedures only require that

Page 18 GAO/AIMD-98-17 Army Logistics Systems
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units retain applicable records until a period of time subsequent to the

time when adjustments are processed.

Second, Army Regulation 710-3, which contains requirements for reporting

to CBSX, has not been updated since May 1992 and does not reflect current

CBSX reporting processes. For example, the regulation requires property

book officers to report to CBSX once a month, whereas LOGSA requests

weekly reporting. In addition, the regulation does not require confirming

LOGSA’s receipt of the unit’s property book transactions (i.e., using the

confirmation of receipt report). According to Department of Army

officials, Army Regulation 710-3, Asset and Transaction Reporting System,

is under revision and is scheduled to be completed shortly. We reviewed

the draft regulation and it includes new requirements such as requiring

unit data to be submitted to LOGSA weekly during peacetime and daily

during wartime. However, the draft regulation does not require units to

(1) verify their receipt confirmations and research any differences,

(2) perform reconciliations of the differences discovered during the

validation process, (3) review the monthly reports they receive from LOGSA,

or (4) follow up on transactions that were rejected by CBSX.

Finally, we found that several issues related to training contributed to the

problems we identified. For example, property book officers in about

12 percent of the units in our sample, primarily those in the Army Reserves

and Army medical activities, had received no formal training on how to

operate SPBS-R. For example, one property book officer did not know he

was required to send transactions to CBSX. In addition, the Army’s SPBS-R

training does not cover analyzing CBSX reports such as confirmations of

receipt and monthly transaction listings. According to Army training

officials at the Army Quartermaster Center and School, these subjects are

not covered because receiving these reports from LOGSA cannot be

simulated and other topics would not be covered if CBSX reporting was

emphasized. The CBSX Project Manager stated that the Office of the Deputy

Chief of Staff for Logistics was responsible for working with the

Quartermaster Center and School to obtain additional emphasis on CBSX.

Officials from the Office of the Deputy Chief of Staff for Logistics stated

that they had not started this effort. In its comments on the draft report,

the Army stated that the Office of the Deputy Chief of Staff for Logistics

would request that SPBS-R training be revised to incorporate how to analyze

CBSX reports and confirmations of receipt.

Another training issue related to LOGSA’s annual conference. Property book

officers at 16 units in our sample did not attend the conference, and other

Page 19 GAO/AIMD-98-17 Army Logistics Systems
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methods to disseminate the training provided at this conference, such as

videotape, were not employed. LOGSA’s annual conferences are an

important mechanism to obtain information on current CBSX processes and

problems. Accordingly, it may be beneficial to videotape and distribute the

tapes of these conferences to the property book officers not in attendance.

In its response to the draft report, the Army stated that LOGSA is developing

a training video based on its annual conference that will be used as a

training aid for property book officers.

Also, in 1994, LOGSA discontinued site visits to property book officers to

provide technical assistance and training. LOGSA’s CBSX Project Manager

stated that, in 1997, CBSX analysts began performing site visits and that

they would continue these visits as funding permits. However, LOGSA has

not established a formal site visit program to visit sites with low CBSX

compatibility rates.

CBSX Improvement

Initiatives Are

Worthwhile but

Additional Efforts Are

Needed

LOGSA and the Software Development Center, Fort Lee, have initiated a

CBSX improvement effort to correct problems in keeping the CBSX asset

balances current and compatible with SPBS-R. This improvement effort

contains worthwhile initiatives. At the same time, the modifications being

made under this improvement effort will not correct many of the causes of

adjustments to CBSX that we identified. In particular, adjustments caused

by transactions not received by CBSX, the largest problem, will not be

corrected unless additional efforts are made.

In 1995, the Army established an Improvement Team (which included

representatives from LOGSA and the Software Development Center, Fort

Lee) to develop initiatives to improve data accuracy in CBSX. According to

the team, among the most significant contributing factors to CBSX

inaccuracies were (1) the lack of synchronization of unit identifier data

between CBSX and SPBS-R, (2) data lag time in reporting and update

processes, and (3) nonsubmission or incomplete reporting. These

contributing factors were consistent with some of the previously

discussed causes of sample adjustments, such as incorrectly posted

transactions that resulted from unit reorganizations that caused a lack of

synchronization between unit identifier data in CBSX and SPBS-R. In

September 1996, the Army awarded a contract to address the problems the

Improvement Team had identified that could be corrected at LOGSA.

To fix the CBSX problems identified by the Improvement Team, the

Software Development Center, Fort Lee, and LOGSA (and its contractor)

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initiated several improvement efforts. For example, to fix the lack of

synchronization between CBSX and SPBS-R unit identifier information, the

Software Development Center, Fort Lee, and a LOGSA contractor modified

SPBS-R and CBSX, respectively. In the case of SPBS-R, a July 1997 change

allowed units to download the CBSX Customer Identification Control File

(which includes the unit identification and activity address codes) that

SPBS-R uses to edit transactions. This edit causes units to receive an

automated notice when they enter an unrecognized unit identifier code.

However, units can override this edit and the frequency that units update

the CBSX unit file in SPBS-R is at the discretion of the unit. As part of a

September 1996 SPBS-R change, units now transmit unit identification and

activity address codes to CBSX. In May 1997, the LOGSA contractor

completed a CBSX modification that compares the CBSX and SPBS-R unit

identification and activity address codes and provides reports of

differences to LOGSA analysts. According to the CBSX Project Manager, desk

procedures will be written requiring LOGSA analysts to resolve these

differences.

LOGSA has recognized that CBSX had problems maintaining current

information because updates were too infrequent. To address this data lag

problem, in October 1997, LOGSA’s CBSX contractor completed a CBSX

modification to allow more frequent SPBS-R batch updates to the CBSX asset

balances.16 In addition, the contractor, in conjunction with LOGSA

programmers, is also implementing an automated error correction

process. Currently, units receive information on rejected transactions in

hard copy reports that are mailed to the units monthly and there is no

automated mechanism for units to resubmit corrected transactions to

CBSX. Under the automated error correction process being developed, CBSX

would electronically transmit rejected transactions to applicable SPBS-R

users, who would be expected to correct and retransmit these transactions

to CBSX, where applicable. To be effective, this unit error correction

process should be combined with LOGSA follow-up to ensure that rejected

transactions are corrected and resubmitted. The CBSX modification, which

will encompass reporting CBSX transaction errors electronically to the

units, is expected to be completed shortly. However, in order for units to

correct these errors electronically, LOGSA will have to modify another

system—LOGSA’s Distribution Execution System—that it uses to obtain

SPBS-R data. The CBSX Project Manager stated that a time frame for

modifying the Distribution Execution System has not been set.

16While units can transmit SPBS-R data to LOGSA anytime, LOGSA generally ran the batch CBSX asset

update process twice a week. Under the improvement plan, LOGSA runs the batch CBSX asset update

process every 2 hours during LOGSA business hours for SPBS-R transactions.

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These improvements are worthwhile and will improve the accuracy of

CBSX when combined with changes LOGSA and the Software Development

Center, Fort Lee, have made or agreed to make to fix software problems

and erroneous LOGSA transactions previously discussed. However, we

remain concerned that the main cause of CBSX adjustments, transactions

not received by CBSX, will continue to be a problem. As illustrated in figure

2, CBSX and SPBS-R are not integrated and, therefore, CBSX will continue to

rely on units to submit data in a timely manner. As previously discussed,

our review of adjustments caused by transactions not received by CBSX

indicated that the Army’s processes were neither adequately controlled

nor documented to ensure that all transactions were transmitted to CBSX.

This is consistent with the CBSX Improvement Team’s finding that

nonsubmission or incomplete reporting was a significant contributing

factor to CBSX inaccuracies. LOGSA’s CBSX contractor is developing a report

identifying units that have not submitted data in a given period which will

be provided to CBSX analysts for follow up action. However, this report

would not identify transactions that were not received by CBSX if the unit

had other CBSX transmissions received during the period covered.

Therefore, to eliminate the adjustments caused by transactions not

received by CBSX, this LOGSA report would need to be coupled with other

control mechanisms, such as unit review and reconciliation of

confirmations of receipt and reconciliations of differences between CBSX

and SPBS-R data.

The CBSX

Compatibility Rate Is

an Incomplete

Performance

Indicator

The Army’s initiatives to improve CBSX discussed in the previous section

are intended to help the Army achieve its management goal of a 98-percent

compatibility rate, which the Army uses to measure the extent that CBSX

and property book records agree. However, the Army’s current method of

calculating this rate is flawed and until this method is changed, the Army

will not know whether its improvement efforts will achieve its 98-percent

goal. Moreover, the compatibility rate is an incomplete indicator of CBSX

performance because it does not address other types of measurements,

such as the frequency of unit submissions. LOGSA plans to implement other

types of performance measures.

As of July 1997, the Army reported an Army-wide CBSX compatibility rate of

about 92 percent. However, that rate is overstated because LOGSA assigns a

100-percent compatibility rate to those units where (1) LOGSA believes the

validation adjustments were not the fault of the local property book officer

(such as cases where a unit incorrectly posted a transaction to another

unit’s account) or (2) the validation adjustments occurred when the unit

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converted from a manual system to SPBS-R. If these units were factored into

the compatibility rate, the Army-wide rate would fall to about 87 percent.

In addition, if a unit does not submit current balances for validation, the

Army continues to report the unit’s prior compatibility rate, which can be

several years out of date, thus distorting the Army-wide compatibility rate.

In the April 1997 validation process, 191 reporting entities in the Active

Army and Army Reserve did not provide validation data to LOGSA. As of

March 1997, there were 1,096 Active Army and Army Reserve entities

reporting to CBSX, meaning that current performance data were unavailable

for over 17 percent of these entities.

In addition, even if the compatibility rate measured all current differences

between CBSX and unit property books, it does not serve as a complete

indicator of CBSX accuracy. The compatibility rate does not measure

(1) the degree to which CBSX agrees with non-property book systems, such

as those that account for wholesale-level assets and (2) errors associated

with equipment in-transit between locations.17 The in-transit exclusion is

significant, since in June 1996, the Army Audit Agency reported a

69-percent error rate in CBSX balances of in-transit assets resulting from

problems with system interfaces, duplicate unit identification codes,

redirected shipments, shipment performance notification procedures, and

document number changes (see footnote 1). LOGSA also does not measure

other indicators of performance, such as the timeliness of unit transaction

submissions.

LOGSA has drafted proposed additional CBSX performance measures, such

as timeliness of unit submissions and frequency of errors, which it plans to

implement shortly. We believe that these additional performance measures

are more indicative of compliance with CBSX reporting requirements than

the compatibility rate alone. Further, if implemented, these measures

could be used to help evaluate property book officers’ and their

commanders’ performance. However, the proposed performance measures

do not include a measure of LOGSA and Army units’ abilities to successfully

close in-transit transactions, which is needed to measure the Army’s

progress in reducing its 69-percent in-transit error rate. Moreover, the

proposed measures do not include a measurement of planned new

processes resulting from the Army’s CBSX improvement effort, such as the

planned error correction process. Such performance indicators could

include measuring the timeliness of units in correcting transaction errors.

17As illustrated by figure 1, wholesale equipment and in-transit equipment constituted 17.5 percent and

1.8 percent, respectively, of CBSX total assets as of September 30, 1996.

Page 23 GAO/AIMD-98-17 Army Logistics Systems
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Conclusion Until the Army addresses the major causes for CBSX adjustments, its

system for providing worldwide asset visibility for major equipment assets

will continue to contain inaccurate, untimely, and incomplete data, which

may cause erroneous monitoring of equipment status and improper

equipment acquisition or redistribution decisions. Financial statements

will also continue to be misstated. To its credit, LOGSA, both at its own

initiative and as a result of our bringing previously unknown problems to

its attention, plans to make software and process changes to address many

of the causes of CBSX adjustments. However, these changes do not address

the primary cause of CBSX adjustments—transactions not received by CBSX.

The responsibility for ensuring that CBSX contains accurate, timely, and

complete data rests jointly with property book officers under the Army’s

major commands and LOGSA. However, neither the major commands nor

LOGSA have established adequate processes to ensure that property book

officers correctly report all transactions. Accordingly, the Army’s property

book officers do not ensure that all reportable transactions are received by

CBSX or identify specific causes of validation adjustments so that

corrective actions can be taken to prevent their recurrence.

Recommendations To ensure that CBSX receives applicable SPBS-R transactions, we

recommend that the Secretary of the Army ensure that

• LOGSA establish a standard SPBS-R reporting schedule and follow up on

missing submissions;

• the major commands require property book officers to, following each

data transmission to CBSX, (1) compare the total number of SPBS-R

transactions transmitted to the LOGSA confirmation of receipt,

(2) investigate and resolve discrepancies, and (3) retain the confirmations;

• the Software Development Center, Fort Lee, add a total line to the SPBS-R

CBSX reportable transaction report to readily permit it to be matched to the

CBSX receipt confirmation; and

• LOGSA redesign CBSX reports to unit property book officers to make them

more user friendly, such as by providing exception reports with easily

understood error codes.

To correct software problems in CBSX and SPBS-R causing incompatibilities

between the two systems, we recommend that the Secretary of the Army

ensure that

Page 24 GAO/AIMD-98-17 Army Logistics Systems
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• LOGSA proceed with its planned modification to CBSX to correct the

adjustments that were caused by valid transactions being incorrectly

rejected as duplicate transactions;

• the Software Development Center, Fort Lee, add edits to SPBS-R software to

prevent (1) SPBS-R from reporting incorrect activity address codes for unit

transfer transactions and (2) incorrect reversal transactions; and

• LOGSA add edits to CBSX software to identify instances where units submit

catalog beginning balances for items that have an existing balance in CBSX.

To prevent inaccurate transactions from being posted to unit accounts in

CBSX by LOGSA, we recommend that the Secretary of the Army ensure that,

prior to LOGSA modifying unit data in CBSX, LOGSA proceed with its planned

implementation of an approval and documentation process which should

include coordinating with applicable units before making changes to unit

balances.

To improve the transaction audit trail and enhance unit understanding of

CBSX reporting, we recommend that the Secretary of the Army ensure that

• LOGSA update Army Regulation 710-3, Asset and Transaction Reporting

System, to require units to (1) verify their confirmations of receipt and

research and resolve any differences, (2) reconcile differences between

property books and CBSX and investigate reasons for adjustments,

(3) retain property book transaction records (including receipt

confirmations) relating to CBSX to determine the causes of adjustments and

support the reconciliation, (4) review the monthly reports they receive

from LOGSA, and (5) follow up on transactions that were rejected by CBSX;

• the major commands require that all property book officers using SPBS-R,

including those assigned to medical and Reserve units, successfully

complete SPBS-R training;

• the Army Quartermaster Center and School revise the SPBS-R training to

include how to analyze CBSX confirmations and monthly reports;

• the major commands enhance property book officer training by requiring

ongoing and up-to-date CBSX training such as that provided by LOGSA’s

annual CBSX conference or, alternatively, LOGSA videotape its annual CBSX

conference and provide on-site training using this tape at Army units to

train those unable to attend the CBSX conference; and

• LOGSA establish a formal site visit program to conduct periodic

assistance/training for property management personnel.

To improve the effectiveness of LOGSA’s plans to improve CBSX, we

recommend that the Secretary of the Army ensure that LOGSA (1) proceed

Page 25 GAO/AIMD-98-17 Army Logistics Systems
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with the planned development of desk procedures to require LOGSA

analysts to resolve differences between CBSX and SPBS-R unit identification

and activity address codes, (2) require its analysts to follow up on rejected

transactions to ensure that they are corrected, and (3) modify the

Distribution Execution System to allow units to correct and resubmit

rejected CBSX transactions.

To improve the effectiveness of CBSX performance measurement, we

recommend that the Secretary of the Army ensure that

• LOGSA calculate the Army-wide CBSX compatibility rate based on all

differences between property books and CBSX;

• LOGSA proceed with the planned implementation of additional CBSX

performance measures and (1) develop and implement CBSX performance

indicators that measure LOGSA and Army unit abilities to successfully close

in-transit transactions and the timeliness of corrections of unit transaction

errors and (2) provide results to Army major commands for their use in

evaluating the property book function; and

• the major commands include performance measurement data related to

CBSX, such as the timeliness and accuracy of transaction submissions, in

overall commander and property book officer performance criteria.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, the Army stated that it concurred

with the intent of all of the recommendations and that it will do all that it

can in as timely a manner as possible to satisfy them. In particular, the

Army stated that some of the recommendations will be implemented when

the CBSX Improvement Plan, Phase I, is completed in April 1998. To address

several other recommendations, the Army plans to produce, and seek

funding for, a CBSX Improvement Plan, Phase II. In addition, the Army

stated that it plans to meet in February 1998 to determine what can be

done to satisfy our recommendations with current resources while funding

is being sought to implement the CBSX Improvement Plan, Phase II.

The Army partially concurred with two of our recommendations related to

modifying SPBS-R. These modifications are necessary to correct software

errors that caused incorrect data to be reported to CBSX. The Army plans to

replace SPBS-R with the Integrated Combat Service Support System, which

Army stated will be a seamless, integrated retail supply system that will

combine the functions of several existing systems. Because it plans to

replace SPBS-R, the Army has decided not to modify SPBS-R, except for

changes pertaining to the Year 2000 problem. However, the Army said that

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software change requests will be submitted to incorporate our

recommendations into the Integrated Combat Service Support System.

This system is currently scheduled to be fielded by the end of fiscal year

2003, although the Army stated that if funding is accelerated, it will be

fielded by the end of fiscal year 2001. In addition, the Army stated that

LOGSA, the Office of the Deputy Chief of Staff for Logistics, and property

book officers will meet before April 1998 to determine if there are any

workarounds that can be implemented to accomplish these

recommendations.

Because the errors in the SPBS-R software cause inaccuracies in CBSX, which

the Army uses to monitor the equipment readiness of its warfighting units

and fill equipment shortages, these errors must be corrected expeditiously.

We are particularly concerned with the software error that caused SPBS-R

to report the wrong activity address code to CBSX during unit

reorganizations, which in turn caused incorrect unit balances in CBSX. The

CBSX Project Manager told us that this error is a significant problem,

particularly during times of frequent deployments when such transactions

are common. Army planners and logisticians use equipment balances

originating from CBSX to redistribute equipment to deploying units;

therefore, inaccurate unit equipment balances in CBSX could hinder the

Army’s assessment of the equipment needs of the deployed unit.

We support the Army’s plans to try to develop workarounds to accomplish

the goals of our recommendations. If the Army can develop effective

workarounds to use until the Integrated Combat Service Support System is

fielded, then it can avoid modifying SPBS-R. However, if the Army

determines that such workarounds cannot be developed, it must modify

SPBS-R software promptly because the Integrated Combat Service Support

System may not be fielded until 2003. While we did not independently

estimate the effort required to correct the SPBS-R errors, an October 1997

Software Development Center, Fort Lee, proposal to modify SPBS-R to fix

the most significant problem—the software error that caused SPBS-R to

report the wrong activity address code to CBSX during unit

reorganizations—included a recommended solution which indicated that

only a minor software modification was needed. Therefore, while

modifying SPBS-R to fix the Year 2000 problem, the Software Development

Center, Fort Lee, could also correct the errors found in our review without

significantly impacting Army’s plans to ensure that SPBS-R is Year 2000

compliant.

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We are sending copies of this report to the Chairmen and Ranking

Minority Members of the Senate Committee on Armed Services, the House

Committee on National Security, the Senate and House Committees on

Appropriations, the Senate Committee on Governmental Affairs, the House

Committee on Government Reform and Oversight, and the Secretary of

Defense; and the Director of the Office of Management and Budget. Copies

will be made available to others upon request.

The head of a federal agency is required by 31 U.S.C. 720 to submit a

written statement on actions taken on these recommendations to the

Senate Committee on Governmental Affairs and the House Committee on

Government Reform and Oversight within 60 days of the date of this

report. You must also send a written statement to the House and Senate

Committees on Appropriations with the agency’s first request for

appropriations more than 60 days after the date of this report.

Please contact me at (202) 512-9095 if you or your staff have any questions

concerning this letter. Major contributors to this report are listed in

appendix III.

Sincerely yours,

Lisa G. Jacobson

Director, Defense Audits

Page 28 GAO/AIMD-98-17 Army Logistics Systems
Page 29 GAO/AIMD-98-17 Army Logistics Systems
Contents

Letter 1

Appendix I 

List of Army Activities

in Our Sample

32

Appendix II 

Comments From the

Department of

Defense

35

Appendix III 

Major Contributors to

This Report

47

Figures Figure 1: Relationship of Army Equipment Maintained Under

SPBS-R to Total Army Equipment in CBSX

4

Figure 2: Methods of Sending SPBS-R Data to CBSX 6

Figure 3: Types of SPBS-R Data Sent to CBSX 8

Figure 4: Causes of CBSX Adjustments 11

Abbreviations

AAA Army Audit Agency

CBSX Continuing Balance System-Expanded

LOGSA Logistics Support Activity

SPBS-R Standard Property Book System-Redesign

Page 30 GAO/AIMD-98-17 Army Logistics Systems
Page 31 GAO/AIMD-98-17 Army Logistics Systems
Appendix I 

List of Army Activities in Our Sample

U.S. Army Central

Command

Army Central Command-Kuwait, Doha, Kuwait

U.S. Army Forces

Command

4th Mechanized Infantry Division, Ft. Hood, Texas

1st Cavalry Division, Ft. Hood, Texas

10th Transportation Battalion, Ft. Eustis, Virginia

31st Air Defense Artillery Brigade, Ft. Bliss, Texas

108th Air Defense Artillery Brigade, Ft. Bliss, Texas

III Corps Artillery, Ft. Sill, Oklahoma

19th Maintenance Battalion, Ft. Sill, Oklahoma

3rd Mechanized Infantry Division, Ft. Stewart, Georgia

10th Mountain Division, Ft. Drum, New York

546th Ordnance Battalion, Ft. Sam Houston, Texas

46th Engineer Battalion, Ft. Polk, Louisiana

519th Military Police Battalion, Ft. Polk, Louisiana

2nd Armored Cavalry Regiment, Ft. Polk, Louisiana

937th Engineer Group, Ft. Riley, Kansas

Directorate of Information Management, Ft. McPherson, Georgia

3rd Brigade, 2nd Infantry Division, Ft. Lewis, Washington

85th Medical Evacuation Battalion, Ft. Lewis, Washington

29th Signal Battalion, Ft. Lewis, Washington

1st Brigade, 25th Infantry Division, Ft. Lewis, Washington

19th Engineer Battalion, Ft. Knox, Kentucky

XVIII Airborne Corps Artillery, Ft. Bragg, North Carolina

189th Maintenance Battalion, Ft. Bragg, North Carolina

507th Corps Support Group, Ft. Bragg, North Carolina

20th Engineer Brigade, Ft. Bragg, North Carolina

55th Medical Group, Ft. Bragg, North Carolina

50th Signal Battalion, Ft. Bragg, North Carolina

82nd Airborne Division, Ft. Bragg, North Carolina

5th Mobile Army Surgical Hospital, Ft. Bragg, North Carolina

28th Combat Support Hospital, Ft. Bragg, North Carolina

Aviation Brigade, 4th Mechanized Infantry Division, Ft. Carson, Colorado

3rd Armored Cavalry Regiment, Ft. Carson, Colorado

101st Airborne Division, Ft. Campbell, Kentucky

U.S. Army Intelligence

and Security

Command

297th Military Intelligence Battalion, Ft. Gordon, Georgia

Page 32 GAO/AIMD-98-17 Army Logistics Systems
Appendix I 

List of Army Activities in Our Sample

U.S. Army Special

Operations Command

JFK Special Warfare Center, Ft. Bragg, North Carolina

528th Special Operations, Support Battalion, Ft. Bragg, North Carolina

7th Psychological Operations Group, Ft. Bragg, North Carolina

5th Special Forces Group, Ft. Campbell, Kentucky

160th Special Operations Aviation Regiment, Ft. Campbell, Kentucky

U.S. Army Training

and Doctrine

Command

282nd Army Band, Ft. Jackson, South Carolina

U.S. Army Reserves 388th Medical Logistics Battalion, Hays, Kansas

100th Battalion, 442nd Infantry, Ft. Derussy, Hawaii

324th Signal Battalion, Ft. Gordon, Georgia

172nd Support Group, Broken Arrow, Oklahoma

316th Quartermaster Battalion, Okmulgee, Oklahoma

7th Squadron, 6th Cavalry Regiment, Conroe, Texas

448th Engineer Battalion, Ft. Buchanan, Puerto Rico

1st Battalion, 158th Aviation Regiment, Grand Prairie, Texas

313th Transportation Battalion, Baltimore, Maryland

77th Army Reserve Command, Ft. Totten, New York

854th Engineer Battalion, Kingston, New York

804th Hospital Center, Ft. Devens, Massachusetts

378th Corps Support Battalion, Ft. Indiantown Gap, Pennsylvania

143rd Medical Company, Salt Lake City, Utah

592nd Ordnance Company, Billings, Montana

24th Military Intelligence Battalion, Ft. Wadsworth, New York

854th Quartermaster Company, Logan, Utah

463rd Engineer Battalion, Wheeling, West Virginia

844th Engineer Battalion, Knoxville, Tennessee

337th Military Intelligence Battalion, Atlanta, Georgia

841st Engineer Battalion, Miami, Florida

326th Maintenance Battalion, Owings Mills, Maryland

475th Quartermaster Group, Farrell, Pennsylvania

138th Military Intelligence Battalion, Rosemont, Illinois

3rd Battalion, 92nd Field Artillery, Akron, Ohio

352nd Evacuation Hospital, Oakland, California

521st Maintenance Battalion, Milwaukee, Wisconsin

391st Engineer Battalion, Greenville, South Carolina

842nd Signal Company, Pensacola, Florida

Page 33 GAO/AIMD-98-17 Army Logistics Systems
Appendix I 

List of Army Activities in Our Sample

U.S. Army Europe and

Seventh U.S. Army

32nd Signal Battalion, Darmstadt, Germany

22nd Signal Brigade, Darmstadt, Germany

233rd Base Support Battalion, Darmstadt, Germany

94th Air Defense Artillery Brigade, Darmstadt, Germany

417th Base Support Battalion, Kitzingen, Germany

1st Mechanized Infantry Division, Kitzingen, Germany

100th Area Support Group, Grafenwoehr, Germany

Combat Maneuver Training Center, Hohenfels, Germany

302nd Military Intelligence Battalion, Wiesbaden, Germany

212th Mobile Army Surgical Hospital, Wiesbaden, Germany

12th Aviation Brigade, Wiesbaden, Germany

39th Transportation Battalion, Kaiserslautern, Germany

Kaiserslautern Industrial Center, Kaiserslautern, Germany

51st Maintenance Battalion, Mannheim, Germany

22nd Area Support Group, Vicenza, Italy

3rd Battalion, 325th Infantry, Vicenza, Italy

U.S. Army Pacific Light Infantry Brigade (North), Ft. Wainwright, Arkansas

Light Infantry Brigade (South), Ft. Richardson, Arkansas

59th Signal Battalion, Ft. Richardson, Arkansas

25th Infantry Division, Schofield Barracks, Hawaii

58th Signal Battalion, Okinawa, Japan

U.S. Army Garrison, Schofield Barracks, Schofield Barracks, Hawaii

Eighth U.S. Army 2nd Infantry Division, Tongduchon, Korea

21st Transportation Company, Seoul, Korea

1st Battalion, 501st Aviation Regiment, Seoul, Korea

175th Finance Center, Seoul, Korea

U.S. Army Garrison, Camp Page, Chunchon, Korea

23rd Chemical Battalion, Taegu, Korea

168th Area Support Medical Battalion, Taegu, Korea

1st Battalion, 43rd Air Defense Artillery, Suwon, Korea

U.S. Army Southern

Command

228th Aviation Regiment, Ft. Clayton, Panama

106th Signal Brigade, Ft. Clayton, Panama

Page 34 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Page 35 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Page 36 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Page 37 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 24.

Now on p. 24.

Page 38 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 24.

Page 39 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 24.

Now on p. 25.

Now on p. 25.

Page 40 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 25.

Now on p. 25.

Now on p. 25.

Page 41 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 25.

Page 42 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 25.

Now on p. 25.

Page 43 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 25.

Now on pp. 25-26.

Page 44 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 26.

Now on p. 26.

Page 45 GAO/AIMD-98-17 Army Logistics Systems
Appendix II 

Comments From the Department of Defense

Now on p. 26.

Page 46 GAO/AIMD-98-17 Army Logistics Systems
Appendix III 

Major Contributors to This Report

Accounting and

Information

Management Division,

Washington, D.C.

Janett P. Smith, Assistant Director

Linda J. Lambert, Senior Auditor

Dallas Field Office James D. Berry, Jr., Senior Evaluator

Ronald M. Haun, Senior Evaluator

Cary B. Russell, Senior Auditor

Elaine C. Coleman, Evaluator

(918875) Page 47 GAO/AIMD-98-17 Army Logistics Systems
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