GAO

United States General Accounting Office

Report to Congressional Committees

February 2000 DEFENSE 

INVENTORY

Plan to Improve 

Management of 

Shipped Inventory 

Should Be 

Strengthened

GAO/NSIAD-00-39

Page 1 GAO/NSIAD-00-39 Defense Inventory

Contents

Letter 3

Appendixes Appendix I: Analysis of Plan Regarding End Items 20

Appendix II: Analysis of Plan Regarding Secondary Items 24

Appendix III: Comments From the Department of Defense 31

Related GAO Products 36

Tables Table 1: Does the Plan Comply With the Provisions of the Statute? 7

Table 2: Summary of DOD’s 18 Actions Proposed in the Plan 8

Table 3: GAO Analysis of Information Provided in the Plan 9

Table 4: Management Elements Not Adequately Addressed in

the Plan 10

Abbreviations

CFO Chief Financial Officer

DOD Department of Defense

GAO General Accounting Office
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-283681 Letr

February 22, 2000

Congressional Committees

The Department of Defense (DOD) annually ships inventory valued at 

billions of dollars to various locations around the world. For years, the 

Department has had difficulty tracking this inventory from origin to 

destination. Concerns about the vulnerability of these shipments to fraud, 

waste, and abuse led the Congress to enact section 349 of the Strom 

Thurmond National Defense Authorization Act for Fiscal Year 1999 (P.L. 

105-261), which requires the Department of Defense to develop a 

comprehensive plan for tracking inventory while it is being shipped. The 

Department refers to these inventory shipments as “in-transit inventory.” 

The statute required that the Department’s plan include actions to address 

these tracking problems, statements of objectives for the actions, 

performance measures and schedules, and an identification of any 

resources necessary for implementing the required actions, together with 

an estimate of annual costs. This statute also required that our office 

review the plan and provide to the Congress any comments we consider 

appropriate. This report is in response to that requirement.

As agreed with your offices, we determined whether the plan (1) responds 

to the provisions of the statute, (2) contains the management elements 

needed for guiding effective implementation, and (3) adequately addresses 

other underlying weaknesses that led to ineffective control of inventory 

shipments.

Results in Brief The Department of Defense’s plan is generally responsive to the statute and 

represents a necessary first step toward improving the Department’s 

control over inventory shipments. Specifically, the plan includes 18 

proposed actions to improve the tracking of inventory shipments. As 

required by the statute, the plan also includes statements of objectives for 

the actions, performance measures, and schedules for implementation. The 

Department intends to complete 14 of the proposed actions between fiscal 

year 2000 and 2006; the remaining four proposed actions are ongoing, with 

no specific completion date provided. The plan only briefly addresses the 

issue of resources necessary to implement the proposed actions, and it 

does not contain an estimate of the annual costs involved, as required by 

the statute.
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The plan does not contain some key management elements needed to 

effectively implement the proposed actions. The Government Performance 

and Results Act, commonly referred to as the Results Act, offers a model 

for developing an effective management framework to improve the 

likelihood of successfully implementing initiatives and assessing results. 

Although the statute did not require that DOD’s plan conform to the Results 

Act, congressional reports and administrative guidance regarding the 

Results Act indicate that activities such as inventory management should 

be subject to these results-oriented principles. DOD’s plan does not fully 

reflect these principles. Specifically, in most cases the actions, objectives, 

and performance measures in the plan are not specific enough to guide 

implementation. The performance measures do not identify how the 

Department will assess progress using baseline data, benchmarks (i.e. 

interim targets), or actual results compared to desired outcomes. Also, the 

plan does not assign accountability within the Department or the military 

services for implementing the individual initiatives. Lastly, the plan does 

not describe the operational processes, skills, technology, human capital, 

or other resources required to implement each of the specific actions. 

Without identifying the resources required, the Department is not in a 

position to determine the cost-effectiveness or feasibility of its proposed 

actions.

The plan does not adequately address underlying weaknesses that have led 

to the lack of control over inventory shipments. For example, the plan does 

not fully address how the Department will correct errors in the automated 

systems the military services use to manage this inventory. These 

weaknesses and related data errors, if not corrected, will limit the 

Department’s ability to control inventory shipments and prepare accurate 

financial reports. Moreover, the plan does not address the widespread 

problem of military supply activities that do not consistently follow 

existing departmental policies and procedures. This lack of adherence 

often occurs because personnel are not being adequately trained or are not 

fully aware of the procedures. Furthermore, the plan does not show how 

the Department will address the cultural resistance to change that has 

hampered its prior initiatives. More specifically, the plan does not 

demonstrate a strong commitment to change. For example, the Department 

states in the plan that it does not believe weaknesses in the visibility over 

items being shipped are significant when viewed in the context of the 

overall security of its worldwide inventories.

We are recommending that the Department improve the plan by modifying 

it to include (1) key management elements for monitoring implementation 
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and measuring progress and (2) specific actions to address underlying 

weaknesses in the controls over inventory being shipped.

Background Inventory being transported between two locations typically involves the 

following types of material.

• Warehoused material: material redistributed between storage activities, 

broken items shipped from consolidation points to a commercial or 

other military repair facility, and material returned from a commercial 

or other military repair facility or an end user.

• Purchased material: new material shipped from a commercial source to 

a storage activity.

• End-user material: material ordered from a storage activity or 

commercial source by a unit that expects to use it.

Since at least 1990, our office has considered DOD inventory management 

a high-risk area because its inventory management systems and procedures 

are ineffective. The lack of control1

 over inventory shipments and the 

resulting vulnerability of inventory to undetected loss and theft have been 

major areas of concern. The lack of adequate controls over inventory 

shipments substantially increases the risk that millions of dollars will be 

spent unnecessarily. For example, we reported in March 1999 that the Navy 

was unable to account for over $3 billion in inventory shipments during 

fiscal years 1996 through 1998.2

 We also reported in February 1998 that 

DOD did not have receipts for about 60 percent of its 21 million shipments 

to end users in fiscal year 1997.3

Because DOD has not fully corrected these problems, section 349 of the 

Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 

required DOD to submit a comprehensive plan to the Congress addressing 

1

 DOD uses the term “visibility” to describe its ability to track the identity, status, and 

location of items being shipped from one location to another.

2 Defense Inventory: Navy’s Procedures for Controlling In-Transit Items Are Not Being 

Followed (GAO/NSIAD-99-61, Mar. 31, 1999).

3 Department of Defense: In-Transit Inventory (GAO/NSIAD-98-80BR, Feb. 27, 1998).
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how it will ensure visibility over shipments of all end items and secondary 

items.4

 The statute requires that the plan address the specific mechanisms 

to be used to enable DOD to identify at any time the quantity and location 

of all end items. Regarding shipments of secondary items, the statute 

requires that the plan address the following problems in DOD’s inventory 

management:

• the vulnerability of secondary items to loss through fraud, waste, and 

abuse;

• the loss of oversight of secondary items, including any loss of oversight 

when items are being transported by commercial carriers; and

• the loss of accountability for secondary items due to either a delay of 

delivery of the items or a lack of notification of a delivery of the items.

The statute further requires that, for both end items and secondary items, 

the plan include (1) actions to address weaknesses in the control over 

items being shipped, (2) statements of objectives, (3) performance 

measures and schedules, and (4) an identification of any resources 

necessary for implementing the required actions together with an estimate 

of the annual costs. 

The statute required that DOD submit its plan to the Congress on March 1, 

1999. On March 4, 1999, DOD informed the Congress that it needed 

additional time to complete its plan due to, among other things, the broad 

scope of the requirement. The Under Secretary of Defense for Acquisition 

and Technology submitted the plan to the Congress on September 14, 1999.

DOD’s Plan Generally 

Responds to 

Requirements of the 

Statute

The plan is generally responsive to the requirements of the statute and is a 

necessary first step to improving DOD’s oversight of inventory shipments. 

It contains 18 proposed actions, along with individual objectives, 

performance measures, and implementation schedules. DOD states in the 

plan that it is not requesting any additional resources at this time to cover 

the costs of implementing the plan, but that additional resources may be 

required at a later time. The plan did not identify an annual cost estimate 

for implementing each action, as was required by the statute. In 

commenting on a draft of this report, DOD officials stated that they were 

4

 End items are major equipment items such as ships, tanks, and aircraft. Secondary items 

include spare parts, clothing, medical supplies, and other such items to support DOD 

operating forces worldwide.
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not able to reliably estimate the individual costs associated with 

implementing each specific action because of limitations in DOD’s current 

accounting systems. DOD’s compliance in the plan with the requirements 

of the statute is summarized in table 1.

Table 1: Does the Plan Comply With the Provisions of the Statute?

a

Of the 18 proposed actions, 8 actions related to the control over end items and the remaining 10 

actions relate to control over secondary items. DOD’s actions for end items are detailed in its plan by 

military service, whereas the actions for secondary items are subdivided into the individual problem 

areas specified in the statute.

Source: GAO analysis.

A summary of the 18 proposed actions is shown in table 2. A more detailed 

listing of the actions, objectives, and performance measures, along with 

our analyses, is contained in appendixes I and II.

Provisions of the statute

Subject area Actions (Number)a Objectives Measures Schedules Resources

Annual cost 

Estimates

End items Yes (8) Yes Yes Yes Yes No

Secondary items Yes (10) Yes Yes Yes Yes No

Vulnerability Yes (1) Yes Yes Yes Yes No

Oversight Yes (4) Yes Yes Yes Yes No

Accountability Yes (5) Yes Yes Yes Yes No
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Table 2: Summary of DOD’s 18 Actions Proposed in the Plan

Source: DOD’s in-transit visibility plan.

Actions related to end items:

1. The Army plans to improve inventory tracking with the development of the Global 

Combat Supply System. 

2. The Army plans to expand the use of advanced identification technology in its 

transportation systems. 

3. The Army plans to continue improving its Logistics Intelligence File and Logistics 

Integrated Database. 

4. The Navy will continue to monitor systems that provide end-item visibility. 

5. The Air Force is revising its Combat Ammunition System to maintain visibility of its 

inventory shipments. 

6. The Marine Corps plans to continue deployment and enhancement of its Asset 

Tracking Logistics and Supply System. 

7. The Marine Corps plans to develop a messaging application programming interface 

that facilitates the exchange of data among the inventory shipment systems that 

provide source data. 

8. The Marine Corps plans to field a final Total Asset Visibility capability that includes an 

enhanced Logistics Bases Inventory Visibility System. 

Actions related to secondary items: 

1. Provide timely and accurate delivery information.

2. Strengthen oversight of shipments directly from commercial suppliers to DOD 

activities.

3. Examine the adequacy of policy, procedures, and training related to shipment 

documentation, movement, and delivery, and revise as necessary.

4. Complete and implement the DOD plan to integrate automatic identification 

technology into DOD logistics operations.

5. Examine the adequacy of policy, procedures, and training for receipt notification 

processing and revise as necessary.

6. Provide for policy and procedures that fully account for unserviceable items that have 

been received at a commercial repair site.

7. Implement the recommendations of the Joint Logistics Commanders’ Material 

Management Group task force to revise the DOD Disposal In-Transit Control System 

and enhance procedures and training.

8. Measure the time to record a receipt and make it visible to all requiring activities, 

including DOD financial and accounting systems.

9. Bring DOD management information systems associated with shipment control into 

compliance with the Chief Financial Officers Act. 

10. Improve current discrepancy reporting and investigating for shipments between DOD 

and commercial locations.
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The Plan Does Not 

Contain Some Key 

Management Elements

The plan does not contain some key management elements necessary for 

achieving effective implementation or for appropriate congressional 

oversight. Although the statute did not specifically require DOD’s plan to 

conform to the Results Act, we found that the plan could be enhanced if it 

contained more of the results-oriented principles embodied in the Results 

Act. Table 3 summarizes our analysis of the quality of the information DOD 

provided in its plan. Overall, we found that the plan addresses most of the 

basic requirements of the statute, but lacks detail in defining

• specific actions that include steps for achieving goals;

• results-oriented objectives that are directly linked to the actions;

• performance measures that include clearly stated performance targets, 

information on the use of baseline data, and benchmarks (i.e., interim 

measures) for monitoring progress;

• specific schedules that include completion dates and interim milestones 

for actions that are long term;

• accountability within DOD and the military services for implementing 

each action; and 

• resources required, including an estimated annual cost, for 

implementing each action.

Table 3: GAO Analysis of Information Provided in the Plan

Actions Objectives Performance measures Schedules Accountability

Resources 

and annual 

cost estimates

Action item

Need to be 

more 

specific

Need to be 

more specific

Need to 

be more 

specific

Baseline 

data 

needed

Interim 

steps 

Needed

Completion 

date needed

Needs to be 

assigned

Need to be 

identified

End Items

1 X X XX X X X

2 X X XX X X X X

3 X X XX X X X X

4 X X XX X X X X

5 X X XX X X X

6 X XX X X X

7 X XX X X X

8 X XX X X X

Continued
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Source: GAO analysis.

Table 4 provides our analysis of these elements and the extent to which 

they were addressed in the plan. More detail regarding our analysis is 

provided in appendix I for end items and appendix II for secondary items.

Table 4: Management Elements Not Adequately Addressed in the Plan

Actions Objectives Performance measures Schedules Accountability

Resources 

and annual 

cost estimates

Action item

Need to be 

more 

specific

Need to be 

more specific

Need to 

be more 

specific

Baseline 

data 

needed

Interim 

steps 

Needed

Completion 

date needed

Needs to be 

assigned

Need to be 

identified

Secondary items

1 XX X X X

2 XX X X X

3 X X XX X X X

4 X XX X X

5 X XX X X X

6 X XX X X X

7 X XX X X X

8 XX X X X

9 X XX X X X

10 X X X X X X X

Continued from Previous Page

Elements of a management 

framework Summary of GAO analysis

Actions could be more specific. We found that 12 of the 18 proposed actions could be more specific to address the problem areas. In 

general, the actions are stated as goals and do not identify specific steps to attain those goals. For 

example, for one action related to end items, DOD states that the “Navy will continue to monitor systems 

that provide end item visibility to prevent gaps in visibility.” In another example, DOD states that it will 

“bring DOD management information systems associated with in-transit items into compliance with the 

Chief Financial Officers’ Act.” Neither of these actions identify the steps DOD will follow to accomplish 

these goals or the specific problem areas they will address.

Continued
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Source: GAO analysis.

Elements of a management 

framework Summary of GAO analysis

Objectives could be more 

specific.

For all 8 actions related to end items and 1 of the 10 actions related to secondary items, the statements 

of objectives could be more clearly stated and specific. For example, DOD’s plan includes only one 

objective for end items. This objective is for each of the military services to achieve 100 percent visibility 

of end items at all times. This objective, however, could be more directly linked to the eight proposed 

action items. Similarly, the objective for action 3 related to secondary items (to “ensure that shippers, 

carriers, and consignees are in full compliance with policy and procedures related to shipment 

documentation, movement, and delivery”) is not directly linked to the proposed action. The proposed 

action is to “examine the adequacy of policy, procedures, and training related to shipment 

documentation, movement, and delivery and revise as necessary”. There is no link, however, to identify 

how DOD’s proposed action of reviewing policies, procedures, and training will ensure that shippers, 

carriers and consignees are in full compliance.

Performance measures could 

be more specific by including 

baseline data and benchmarks.

In all cases but one, the performance measures could be strengthened by including quantifiable goals 

for measuring progress and a method for comparing actual results with desired outcomes. Performance 

measures in the plan are not results-oriented and do not include clearly stated performance targets or 

provisions for using baseline data or benchmarks. For example, most of DOD’s performance measures 

for the actions regarding secondary items identify data that DOD plans to collect. These performance 

measures, however, do not identify how the data will be used, the level of performance DOD hopes to 

attain, or the interim measures for assessing progress.

Schedules need completion 

dates and interim milestones.

Four of the 18 proposed actions are ongoing and no completion date is specified. For the other 14 

proposed actions, the completion dates extend from fiscal years 2000 through 2006 without any 

identification of interim milestones DOD will use to monitor progress. For example, for action 5 regarding 

end items, the Air Force plans to revise its Combat Ammunition System by fiscal year 2006. However, 

the Air Force does not identify interim milestones it will use to ensure the action is on schedule and will 

likely be completed on time.

Accountability needs to be 

assigned.

DOD’s plan does not assign accountability for any of the 18 proposed actions. DOD states in the plan 

that the Deputy Under Secretary of Defense for Logistics will oversee implementation of the plan, but 

does not assign accountability to the military services, the United States Transportation Command, or 

the Defense Logistics Agency for implementing specific proposed actions. Consequently, DOD cannot 

ensure that the actions will be implemented as intended.

Resources need to be 

identified.

DOD’s plan does not describe the operational processes, skills, technology, human capital, information, 

or other resources required for any of the 18 proposed actions. DOD states in the plan that it is not 

requesting additional resources at this time, but that additional funding may be required at a later date.

Annual cost estimates need to 

be identified.

DOD’s plan does not provide an annual cost estimate for implementing the 18 proposed actions, as 

required by the statute. DOD has not identified the costs associated with implementing the proposed 

actions, such as the number of staff or staff days required. As a result, it is unclear whether DOD has 

identified the resources that will be required or whether it is devoting adequate resources to correcting 

the problems. DOD officials stated that inadequate resources have contributed to the Department’s 

inability to correct its in-transit visibility weaknesses.

Continued from Previous Page
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Plan Could Be 

Improved By More 

Fully Addressing 

Underlying 

Weaknesses

While the plan addresses many of the weaknesses regarding DOD’s lack of 

control over items being shipped, it does not adequately address the 

underlying problems that have been consistently highlighted in prior GAO 

and DOD audit reports. For example, GAO reported in January 1999 that 

the Department’s plans for improving financial management do not clearly 

address how data should be shared among DOD’s various functional areas, 

such as accounting and property management (which includes inventory 

management).5

 Defining how data should be shared among functions is 

vital to ensure that DOD’s financial systems facilitate accurate financial 

reporting and maintain proper controls over assets. Specifically, DOD has 

had difficulties for many years in obtaining timely and accurate information 

on the location, movement, and status of material being shipped. The 

underlying causes of this lack of visibility include (1) uncorrected errors in 

the systems DOD uses to manage its inventory shipments, (2) military 

supply activities’ failure to consistently follow existing DOD policies, and 

(3) a DOD-wide cultural resistance to change.

Weaknesses in Inventory 

Management Systems

The plan does not fully address how DOD will correct the errors in the 

automated logistics systems it uses to manage inventory shipments. 

Examples of these logistics systems weaknesses are presented below:

• DOD states in its plan that the Global Transportation Network will be 

the primary DOD-wide tool to collect and provide visibility information 

for items being shipped. However, this system has not been fully 

developed, and it relies on more than 20 DOD automated logistics 

systems to provide inventory shipment data that our reports and DOD 

audit reports have found inaccurate. Unless substantive improvements 

are made in these systems, DOD’s inventory records and financial 

reports will continue to be inaccurate. For example, the Army Audit 

Agency reported in 1998 that shipment visibility problems have existed 

in recent years primarily due to interface problems among its inventory 

management systems and related weaknesses in its logistics processes. 

As a result, the Army did not have reliable data on the value of inventory 

being shipped, and it reported that a significant number of its inventory 

shipment records were invalid. Similarly, the Air Force Audit Agency 

reported in September 1998 that the Air Force did not accurately 

5 Financial Management: Analysis of DOD’s First Biennial Financial Management 

Improvement Plan (GAO/AIMD-99-44, January 29, 1999).
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account for its items being shipped and did not know the value of this 

inventory. This report further stated that these weaknesses in the lack of 

control over Air Force inventory while it is being shipped impairs DOD’s 

ability to (1) maintain central visibility over assets; (2) safeguard assets 

from physical deterioration, theft, or loss; and (3) prevent the purchase 

of assets already on hand.

• The Army Audit Agency reported in 1996 that approximately 69 percent 

of the material shipments recorded in the Army’s Continuing Balance 

System-Expanded (the Army’s primary system for visibility of end 

items) had been received at the shipping destinations, but that the 

receipt documents had not been properly processed to close the 

shipping transaction.6

 A number of reasons were cited in the Army Audit 

Agency report for the invalid shipment records, including system 

interface problems, use of duplicate unit identification codes, and 

shipments that were redirected to another destination after the 

shipment was initiated. In February 1998 we reported that DOD did not 

have receipts for about 60 percent of its 21 million shipments in fiscal 

year 1997.7

Lack of Adherence to 

Policies and Procedures

Our prior reports and DOD audit reports have consistently identified the 

primary cause of DOD’s lack of visibility over inventory shipments as the 

failure of military supply activities to follow DOD policies and procedures 

for ensuring that items being shipped are accounted for. Specifically, DOD 

supply activities have failed to properly process receipt documents and 

follow up on items that are reported as not received. While DOD states in 

the plan that it intends to review its policies and procedures in these areas, 

the plan does not include any actions to ensure the military services 

comply with the standard DOD-wide policies and procedures.

In March 1999, we reported that Navy units had not always reported as 

required that they received requested items and that the Navy’s shipping 

and receiving activities had not adequately investigated unreported 

receipts.8

 Similarly, our July 1999 report on property being shipped to 

6 Financial Reporting of Equipment In Transit, U.S. Army Audit Agency, AA 96-156 

(Alexandria, VA: June 17, 1996).

7 Department of Defense In-Transit Inventory (GAO/NSIAD-98-80R, Feb. 27, 1998).

8 Defense Inventory: Navy’s Procedures for Controlling In-Transit Items Are Not Being 

Followed (GAO/NSIAD-99-61, Mar. 31, 1999).
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disposal sites states that DOD does not know the status of this property 

because the accuracy of inventory shipment data is questionable and 

control procedures are not adhered to.9

 We found that these control 

procedures were not being followed because service and disposal office 

personnel were not adequately trained and did not always understand the 

procedures. (A listing of related GAO products discussing these problems 

is provided at the end of this report.)

Cultural Resistance to 

Change

Although each of the military services has a number of ongoing initiatives 

to improve in-transit visibility, the plan does not address how the 

Department will successfully overcome its long-standing cultural 

resistance to change. The plan itself expresses this resistance when it 

states in the executive summary that DOD does not believe that 

weaknesses in its visibility over inventory shipments are significant when 

viewed in the context of the overall security of its worldwide inventories. 

At the same time the Department acknowledged, in commenting on our 

March 1999 report, that the Navy reported over $3 billion in inventory 

shipments for fiscal years 1996-98 that remain unaccounted for, including 

some classified and sensitive items such as aircraft guided munitions, 

missile launchers, military night vision devices, and communications 

equipment.10 In addition, DOD’s statement that these visibility weaknesses 

are not significant is inconsistent with the military services’ Federal 

Managers’ Financial Integrity Act reports and the reports of various 

defense audit agencies, which identify DOD’s lack of control over inventory 

shipments as a serious weakness.

Our prior work has shown that a key factor for implementing change is top 

management commitment and that cultural changes within DOD have been 

difficult to effect. Consequently, DOD’s prior initiatives to improve 

inventory management have progressed slowly. DOD’s statement in the 

plan raises questions as to whether such a commitment exists on this issue.

9 Defense Inventory: Property Being Shipped to Disposal Is Not Properly Controlled

(GAO/NSIAD-99-84, July 1, 1999).

10Defense Inventory: Navy’s Procedures for Controlling In-Transit Items Are Not Being 

Followed (GAO/NSIAD-99-61, Mar. 31, 1999).
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Conclusions DOD’s plan for improving its control over inventory being shipped 

generally responds to the requirements of the statute and represents a 

necessary first step for improving the management of this inventory. 

However, the likelihood of the plan achieving its goal could be enhanced by 

adding key management elements that are consistent with principles 

embodied in the Results Act, such as specific actions, results-oriented 

objectives, detailed performance measures, completion dates that include 

interim milestones, accountability for oversight and implementation, and 

an identification of required resources. The plan could also be enhanced by 

addressing underlying weaknesses such as problems and errors in the 

military services’ automated inventory shipment systems, the failure of the 

military supply activities to follow existing DOD policies and procedures, 

and a perceived lack of commitment among DOD managers. By making 

these improvements to the plan, the Congress and DOD management will 

be able to better measure progress and focus actions on weaknesses that 

need to be addressed. Without these improvements and the necessary 

implementation, DOD’s in-transit inventory will continue to remain 

vulnerable to fraud, waste, and abuse.

Recommendations To increase the likelihood that DOD’s plan will enhance control over 

inventory shipments, we recommend that the Secretary of Defense direct 

the Under Secretary of Defense for Acquisition and Technology to revise 

the Department’s plan to include

• actions that more specifically address inventory shipment visibility 

weaknesses and the specific steps necessary for attaining DOD’s goals;

• statements of objectives that are directly linked to each action;

• performance measures that contain quantifiable goals, methods for 

comparing actual results with desired outcomes, baseline data, interim 

measures, and clearly stated performance targets;

• implementation schedules that contain specific completion dates and 

interim milestones for monitoring long-range actions;

• accountability for overseeing and implementing each action;

• an identification of the resources necessary for implementing each 

action, together with an estimate of the annual costs;

• actions to address the errors in the systems that the military services 

use to manage inventory shipments;

• actions to address the problem of military supply activities failing to 

consistently follow existing DOD policies and procedures, including 

adequate training for supply personnel; and 
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• actions that address how the Department will successfully overcome its 

long-standing cultural resistance to change to ensure consistent 

implementation by the military services.

We also recommend that the Secretary of Defense submit the Department’s 

detailed implementation plans, scheduled to be completed in April 2000, to 

the Congress to facilitate appropriate congressional oversight.

Agency Comments and 

Our Evaluation

DOD provided written comments on a draft of this report. They are 

reprinted in appendix III. DOD also provided detailed technical comments 

that we included in the report where appropriate.

For the most part, the Department concurred with the report and its 

recommendations. However, with regard to our recommendation that DOD 

revise its plan to improve inventory tracking, DOD believes the level of 

detail we are recommending is not appropriate for a plan submitted to the 

Congress. The Department stated it intends to develop Department-level 

implementation plans that will include the specific information that we 

recommended DOD include in a revised plan. The Department intends to 

complete these implementation plans in April 2000. We endorse this effort 

because these detailed plans would be helpful to DOD as it implements the 

planned actions. Furthermore, they will be useful to the Congress in 

carrying out its oversight of DOD inventory management programs. 

Therefore, we have added a new recommendation to the report that calls 

for DOD to provide copies of the April 2000 implementation plans to the 

appropriate congressional committees. We also plan to review DOD’s 

implementation plans when they are completed.

DOD also commented that, because of the limits in its current accounting 

systems, the Department is not able to reliably estimate the individual costs 

associated with implementing each specific action. We have consistently 

reported that DOD’s accounting systems contain numerous weaknesses, 

and we recognize these limitations. However, DOD’s current budget and 

accounting systems contain sufficient data to estimate the resources 

needed to implement the plan. Therefore, we made no revisions to our 

recommendation on this issue.

Finally, DOD also stated it does not perceive the same long-standing 

cultural resistance to change cited in our report. We found, however, that 

prior DOD initiatives to correct in-transit visibility weaknesses have been 

hindered by the military services’ reluctance to implement 
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Department-wide corrective actions. We continue to believe DOD’s plan 

should include a strategy to address this parochialism within the military 

services. Therefore, we made no revisions to our recommendation on this 

issue.

Scope and 

Methodology

Our analysis of DOD’s plan was based on the requirements of section 349 of 

the Strom Thurmond National Defense Authorization Act for Fiscal Year 

1999 (P.L. 105-261), information contained in the plan, discussions with 

DOD officials, and prior work regarding DOD’s control over its inventory 

shipments. Specifically, to ascertain the extent DOD’s plan responds to the 

legislative mandate, we compared the plan to each of the key requirements 

set forth in the statute.

To determine whether the plan contains an appropriate management 

framework for implementation, we used the requirements of the 

Government Performance Results Act, commonly referred to as the Results 

Act,11 as a model for the types of information the plan should contain. We 

compared the contents of the plan and the requirements of the Results Act. 

Additionally, we reviewed the plan in terms of outcome-oriented Results 

Act principles and identified areas in which it could be improved to achieve 

successful implementation. Congressional reports and administrative 

guidance regarding the Results Act indicate that activities such as 

inventory management should be subject to the outcome-oriented 

principles of the Results Act. We did not assess the merits of DOD’s 

proposed actions or the likelihood of success for these actions.

To determine whether the plan adequately addressed the underlying 

weaknesses that led to DOD’s ineffective control of its items being shipped, 

we reviewed the results of prior DOD internal studies, DOD Inspector 

General reports, related GAO reports and testimonies, and other related 

documentation. Specifically, we reviewed the plan to identify any gaps in 

DOD’s coverage of these weaknesses and to establish the degree to which 

the plan addressed these weaknesses.

11 The Results Act provides the primary guiding principles agencies should use to develop a 

successful management framework. Its key elements require each agency to (1) define its 

mission and goals, (2) develop quantifiable performance measures that will indicate how 

well goals are being achieved, and (3) include a description of required resources (i.e., staff 

operational roles, skills, schedules, and other costs). Additionally, the Results Act requires 

agencies to report actual performance against performance goals, the reasons certain goals 

were not met, and future actions they plan to take to meet these goals.
B-283681

Page 18 GAO/NSIAD-00-39 Defense Inventory

We performed our work at DOD activities in the Washington, D.C., area and 

discussed the contents of the plan and its implementation with appropriate 

DOD officials.

We conducted our review from August 1999 to November 1999 in 

accordance with generally accepted government auditing standards.

We are sending copies of this report to the appropriate congressional 

committees; the Honorable William Cohen, Secretary of Defense; the 

Honorable Louis Caldera, Secretary of the Army; the Honorable Richard 

Danzig, Secretary of the Navy; the Honorable F. Whitten Peters, Secretary 

of the Air Force; General James L. Jones, Commandant of the Marine 

Corps; Lieutenant General Henry T. Glisson, Director, Defense Logistics 

Agency; and the Honorable Jacob Lew, Director, Office of Management and 

Budget.

If you or your staff have any questions regarding this report, please contact 

me or Charles I. Patton, Jr., at (202) 512-8412. Key contributors to this 

report were Lawson Gist, Jr.; David Schmitt; and Patricia Blowe.

David R. Warren, Director

Defense Management Issues
B-283681

Page 19 GAO/NSIAD-00-39 Defense Inventory

List of Congressional Committees

The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

The Honorable Ted Stevens

Chairman

The Honorable Daniel Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Jerry Lewis

Chairman

The Honorable John Murtha

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Page 20 GAO/NSIAD-00-39 Defense Inventory

Appendix I

Analysis of Plan Regarding End Items ApendxiI

This appendix provides the Department of Defense’s (DOD) eight proposed 

actions, statement of objective, and performance measures to address the 

lack of control over shipments of end items (i.e., ships, tanks, and aircraft), 

and our analysis of these elements. DOD’s actions for end items are 

detailed in its plan by military service. The page references in brackets 

refer to the page numbers in DOD’s plan where the actions, objectives, and 

performance measures are discussed.

In its plan DOD identifies one objective for all eight proposed actions. DOD 

states that each military service has the same objective, which is to achieve 

100 percent visibility of end items at all times. We believe that this objective 

and five of the eight proposed actions could be stated more specifically to 

define the mechanisms the Department will use to identify the quantity and 

location of end items. The proposed actions for the Army and the Marine 

Corps include plans to improve the systems for controlling items being 

shipped, whereas the proposed actions for the Air Force and Navy do not. 

Also, DOD’s performance measures for all eight proposed actions are not 

stated as results-oriented goals. These performance measures could be 

more specific by including baseline data, interim measures, and 

performance targets. In addition, DOD does not provide a completion date 

for three of the proposed actions and states that the actions are ongoing. 

Lastly, DOD did not assign accountability for implementing each action and 

did not identify the resources required or an estimated annual cost for 

implementing any of the proposed eight actions.

DOD’s Overall Objective:

All military departments have the same goal—to achieve 100 percent 

visibility of end items at all times.

Army Action 1: Improve tracking with the development of a Global Combat 

Supply System-Army1

 (estimated completion date—fourth quarter of fiscal 

year 2002). [page 2-7]

Action 2: Expand the use of advanced identification technology in Army 

transportation systems (estimated completion date—ongoing). [page 2-7]

1

 An integrated retail supply system that combines the functions of the Standard Property 

Book System-Redesign.
Appendix I

Analysis of Plan Regarding End Items

Page 21 GAO/NSIAD-00-39 Defense Inventory

Action 3: Continue to improve the Logistics Intelligence File2 and Logistics 

Integrated Database, with potential application of the Logistics Intelligence 

File and the Army Total Asset Visibility to identify more closely the location 

of in-transit end items (estimate completion date—on-going). [page 2-7]

DOD’s Proposed Performance Measures:

• Number of discrepancies between the Standard Property Book System 

Redesign transactions submitted and the Army’s Logistics Support 

Activity confirmation of receipts. [page 2-7]

• Number of discrepancies between the Continuing Balance SystemExpanded balance and the Standard Property Book System-Redesign 

balance. [page 2-7]

GAO Analysis:

These actions are broadly stated goals and do not specify the steps 

necessary to improve the Army’s systems used for controlling inventory 

shipments. For example, the Army states in action 2 that it plans to expand 

its use of advanced identification technology, but it does not identify how 

this technology will be used to improve the Army’s transportation systems.

The three proposed actions and the two performance measures are not 

directly related. In addition, the performance measures do not specify 

baseline data, interim steps, or measurable goals for monitoring progress 

toward achieving the objective. For example, DOD plans to determine the 

number of discrepancies among the various Army systems for tracking 

visibility over end items, but does not include interim targets or goals for 

monitoring the Army’s progress in correcting weaknesses in its systems. 

The Army’s primary tracking system for end-item visibility is the 

Continuing Balance System-Expanded, but no measures have been 

included in the plan to assess the Army’s progress in correcting the invalid 

data in this system. DOD has not identified the data sources that it will use 

to compile this data or how the data will be utilized to rectify the number of 

discrepancies. Also, two of the three proposed actions do not include a 

completion date. Without a completion date, it will be difficult for DOD to 

measure progress or determine when the actions are completed.

2

 Logistics Intelligence File tracks the status of an item from the time the unit submits the 

requisition through various departments in the pipeline until the receiving unit transmits a 

receipt document.
Appendix I

Analysis of Plan Regarding End Items

Page 22 GAO/NSIAD-00-39 Defense Inventory

Navy Action 4: The Navy will continue to monitor systems that provide end-item 

visibility to prevent gaps in visibility. [page 2-7]

DOD’s Proposed Performance Measure:

• The Navy will continue to maintain 100 percent asset visibility in its enditem reporting systems. [page 2-7]

GAO Analysis:

This action is too generic to determine how the Navy will improve visibility 

of end items being shipped. This action does not identify the specific steps 

the Navy will follow to monitor its systems or attain 100 percent visibility.

Similarly, DOD’s proposed performance measure is simply a goal and does 

not include baseline data or interim steps for implementing the Navy’s 

initiatives. DOD does not identify what data sources or analyses it will use 

to measure shipment visibility for Navy end items. Without identifying the 

data sources and strategies for analysis, DOD is unable to ensure that it is 

collecting the right data for controlling end-item shipments. Lastly, DOD 

does not identify the projected completion date and will be unable to 

measure progress toward attaining its goal.

Air Force Action 5: The Air Force is revising the Combat Ammunition System to 

maintain asset visibility of in-transit shipments (estimated completion 

date—fiscal year 2006). [page 2-8]

DOD’s Proposed Performance Measure:

• The plan being developed will include performance measures and its 

status will be briefed quarterly to senior Air Force managers. [page 2-8]

GAO Analysis:

This action item is not comprehensive regarding the Air Force’s visibility 

systems for controlling items being shipped. The Combat Ammunition 

System is only one of many systems the Air Force relies on to support 

visibility of end items. However, the plan does not include actions to 

enhance the other systems. For example, the Air Forces uses its Reliability 

and Maintainability Information System to provide asset accountability and 

control. GAO has previously reported that this system contains inaccurate 

data that limits the usefulness of this system. 
Appendix I

Analysis of Plan Regarding End Items

Page 23 GAO/NSIAD-00-39 Defense Inventory

DOD has not developed performance measures for this proposed action. 

Therefore, the department has no baseline data or interim steps to measure 

progress.

Marine Corps Action 6: Continue deployment and enhancement of the Asset Tracking 

Logistics and Supply System (ATLASS II+) to migrate from a mainframe 

batched processing system into a client-server environment (estimated 

completion date—fourth quarter of fiscal year 2002). [page 2-8]

Action 7: Develop a messaging application programming interface that 

facilitates the exchange of data among in-transit visibility source systems, 

to specifically include the Asset Tracking Logistics and Supply System and 

a functional capability similar to the Transportation Coordinator’s 

Automated Information for Movement System II (TC AIMS II). Use 

automated identification technology with the two systems to capture all 

asset movement at the source (estimated completion date—fourth quarter 

of fiscal year 2003). [page 2-8]

Action 8: Field a final Marine Corps Total Asset Visibility capability that 

includes an enhanced Logistics Bases Inventory Visibility System with 

information from the Logistics Intelligence File to maintain asset visibility 

in all stages including in-transit, in-process, and in-storage (estimated 

completion—fourth quarter of fiscal year 2004). [page 2-8]

DOD’s Proposed Performance Measure:

• Completion of the above actions will allow for real-time in-transit 

visibility, including the status of customer requisitions to retail and 

wholesale sources of supply. [page 2-8]

GAO Analysis:

DOD provides one performance measure for these three proposed actions, 

and the performance measure and the actions are not directly related. This 

proposed performance measure is simply a statement of intent and does 

not include baseline data or interim steps for implementing the Marine 

Corps’ initiatives. DOD does not identify what data sources or analyses it 

will use to measure visibility for Marine Corps end items being shipped. 

Without identifying the data sources and strategies for analysis, DOD is 

unable to make certain that it is collecting the right data for ensuring 

visibility over end items being shipped.
Page 24 GAO/NSIAD-00-39 Defense Inventory

Appendix II

Analysis of Plan Regarding Secondary Items ApendxiI

This appendix provides DOD’s 10 proposed actions, statements of 

objectives, and performance measures to address the lack of control over 

secondary items being shipped (e.g., spare parts, clothing, and medical 

supplies), and our analysis of these elements. DOD’s actions for secondary 

items are detailed in its plan by the following problem areas specified in the 

statute:

• the loss of oversight of secondary items, including any loss of oversight 

when items are being transported by commercial carriers; 

• the loss of accountability for secondary items due to either a delay of 

delivery of the items or a lack of notification of a delivery of the items; 

and

• the vulnerability of secondary items to loss through fraud, waste, and 

abuse.

The page references in brackets refer to the page numbers in DOD’s plan 

where the actions, objectives, and performance measures are discussed.

Of the 10 proposed actions, 7 were not adequately specific to address the 

problems. In addition, 1 of the 10 objectives was not directly related to the 

action. Also, the proposed performance measures generally lacked criteria 

for measuring progress, baseline data, and interim measures for 

accomplishing the objectives. Lastly, DOD did not assign accountability for 

implementing each action and did not identify the resources required or an 

estimated annual cost for implementing any of the proposed 10 actions.

Loss of Oversight of Secondary 

Items

Action 1: Provide timely and accurate delivery information by the following 

times:

• Near term: obtain carrier electronic data interchange (EDI) messages. 

[page 3-2]

• Long term: complete development and fielding of the Transportation 

Coordinator’s Automated Information for Movement System II. [page 3-

2]

Objectives:

• For the near-term action, the goal is for 28 air, motor, and rail carriers 

and 7 ocean carriers to submit electronic data interchange status 

messages (estimated completion date—fourth quarter of fiscal year 

1999). [page 3-2]
Appendix II

Analysis of Plan Regarding Secondary Items

Page 25 GAO/NSIAD-00-39 Defense Inventory

• For the long-term action, the goal is worldwide deployment to 443 

locations; 7,337 sites; and 14,584 users (estimated completion date—

ongoing; initial module fielding fiscal year 2001). [page 3-2]

DOD’s Proposed Performance Measure:

• Percent of shipments with delivery information. [page 3-2]

Action 2: Strengthen oversight of shipments directly from commercial 

suppliers to DOD activities by

• developing a vendor in-transit implementation plan that identifies 

schedules and milestones for fielding in-transit techniques for vendors 

that perform direct deliveries (estimated completion—fourth quarter of 

fiscal year 1999) and

• completing the direct vendor delivery pilot with a DOD pharmaceutical 

vendor to provide the Global Transportation Network information via 

electronic data interchange (estimated completion—third quarter of 

fiscal year 2000). [page 3-2]

Objective:

• Ensure visibility of direct shipments from commercial sources to DOD 

consignees, including items in-transit to and from contractor repair 

facilities. [page 3-3]

DOD’s Proposed Performance Measures:

• Successful fielding of the direct vendor delivery in-transit visibility pilot 

effort. [page 3-3]

• Development and implementation of the vendor in-transit 

implementation plan, which will include other metrics for expanding intransit visibility of vendor shipments. [page 3-3]

• Percent of commercial contracts with shipping notification and 

documentation requirements. [page 3-3]

Action 3: Examine the adequacy of policy, procedures, and training related 

to shipment documentation, movement, and delivery and revise as 

necessary (estimated completion date—third quarter of fiscal year 2000). 

[page 3-3]

Objectives:

• Ensure that shippers, carriers, and consignees are in full compliance 

with policy and procedures related to shipment documentation, 

movement, and delivery. [page 3-3]
Appendix II

Analysis of Plan Regarding Secondary Items

Page 26 GAO/NSIAD-00-39 Defense Inventory

• Ensure timely and accurate information from shippers, carriers, and 

consignees. [page 3-3]

DOD’s Proposed Performance Measure:

• Percent of shipments with shipment notification. [page 3-3]

• Percent of shipments arriving with proper documentation. [page 3-3]

Action 4: Complete and implement the DOD plan to integrate automatic 

identification technology into DOD logistics operations (estimated 

completion date—fourth quarter fiscal year 2002. [page 3-3]

Objective:

• Improve the accuracy and speed of identification as items move through 

shipping and receiving nodes as well as transportation nodes. [page 3-4]

DOD’s Proposed Performance Measure:

• Data timeliness that uses the following standards:

• Sustainment airlift cargo arrivals and departures at all nodes are 

visible in the Global Transportation Network within 1 hour of the 

event. [page 3-4]

• Sustainment sealift cargo arrivals and departures at all nodes are 

visible in the Global Transportation Network within 4 hours of the 

event. [page 3-4]

• Shipments both originating and terminating in an operating theater or 

in the Continental United States are visible in the Global 

Transportation Network within 2 hours of the event. [page 3-4]

GAO Analysis:

For the 4 actions DOD proposes regarding the loss of oversight of 

secondary items, actions 3 and 4 could be more specific. For example, 

action 3 does not identify what steps or criteria DOD will use to examine 

and revise its policies, procedures, and training related to shipment 

documentation, movement, and delivery. Similarly, action 4 does not 

identify how DOD will integrate its automatic identification technology into 

its logistics operations.

The objective for action 3 does not provide a link to identify how examining 

the adequacy of DOD’s policies, procedures, and training will ensure full 

compliance. 
Appendix II

Analysis of Plan Regarding Secondary Items

Page 27 GAO/NSIAD-00-39 Defense Inventory

The proposed performance measures for actions 1 through 3 do not include 

measurable data elements or a structure for assessing progress, such as 

comparing historic and current data. These performance measures do not 

include baseline data or interim steps for monitoring progress or ensuring 

that valid information is collected. With the exception of the performance 

measures for action 4, DOD did not include near- or long-term goals or 

specific performance indicators for assessing whether implementation is 

on target.

Loss of Accountability for 

Secondary Items

Action 5: Examine the adequacy of policy, procedures, and training for 

receipt notification processing and revise as necessary (estimated 

completion date—third quarter of fiscal year 2000). [page 3-5]

Objectives:

• Ensure that consignees are in full compliance with receipt 

acknowledgment policies and procedures. [page 3-5]

• Reconcile system and system interface problems that deter receipt 

acknowledgment. [page 3-5]

• Ensure proper financial accountability of receipts. [page 3-5]

DOD’s Proposed Performance Measure:

• Percent of shipments closed with a receipt acknowledgment or a 

closure notification. [page 3-5]

Action 6: Provide for policy and procedures that fully account for 

unserviceable items that have been received at a commercial repair site 

(estimated completion date—third quarter of fiscal year 2000). [page 3-5]

Objective:

• Maintain proper accountability of unserviceable assets shipped to 

commercial facilities for repair. [page 3-5]

DOD’s Proposed Performance Measure:

• Number and value of unserviceable items shipped to commercial sites 

without receipt notification as percentages of total numbers and values 

of unserviceable items shipped to commercial sites. [page 3-5]

Action 7: Implement the recommendations of the task force established 

under the Joint Logistics Commanders’ Materiel Management Group to 

revise the DOD Disposal In-Transit Control System and enhance associated 

procedures and training (estimated completion—ongoing; 

recommendations due by second quarter of fiscal year 2000). [page 3-5]
Appendix II

Analysis of Plan Regarding Secondary Items

Page 28 GAO/NSIAD-00-39 Defense Inventory

Objectives:

• Ensure visibility of items shipped to disposal. [page 3-5]

• Ensure the proper documentation of shipments of controlled items to 

disposal. [page 3-5]

DOD’s Proposed Performance Measure:

• For items in-transit to disposal, the following apply [pages 3-5 and 3-6]:

• discrepant receipt numbers and values as percentages of total 

numbers and values of shipments to disposal,

• discrepant receipts and mismatches resolved within established 

timeframes, and

• duration of unresolved discrepancies.

Action 8: Measure the time to record a receipt and make it visible to all 

requiring activities, including DOD financial and accounting systems 

(estimated completion date—fourth quarter of fiscal year 2001). [page 3-6]

Objective:

• Ensure that consignees are in full compliance with receiving policies 

and procedures, especially as they relate to timeliness. [page 3-6]

DOD’s Proposed Performance Measure:

• Percent of receipts processed within established time. [page 3-6]

Action 9: Bring DOD management information systems associated with intransit items into compliance with the Chief Financial Officers (CFO) Act 

(estimated completion date—fiscal year 2005). [page 3-6]

Objective:

• Ensure systems and internal controls associated with in-transit 

inventory meet CFO accountability standards.

DOD’s Proposed Performance Measure:

• Percent of systems that are compliant with the Chief Financial Officers 

Act. [page 3-6]

GAO Analysis:

With the exception of action 8, DOD’s actions could be more specific to 

address how DOD will correct weaknesses related to the loss of 

accountability for shipments of secondary items. For example, actions 5 

and 6 do not identify the procedures DOD will use to determine whether its 
Appendix II

Analysis of Plan Regarding Secondary Items

Page 29 GAO/NSIAD-00-39 Defense Inventory

policies, procedures, and training are adequate. Similarly, action 7 does not 

identify how implementing the recommendations of the Joint Logistics 

Commanders’ Materiel Management Group will correct accountability 

weaknesses.

The proposed performance measures for these 5 actions identify the type 

of data to be collected, but do not identify how this data will be used to 

measure performance. The performance measures lack baseline data and 

do not specify interim steps for assessing progress.

Vulnerability of Secondary Items 

to Loss Through Fraud, Waste, 

and Abuse

Action 10: Improve current in-transit discrepancy reporting and 

investigating for shipments between DOD locations and between 

commercial locations and DOD locations by

• examining the effectiveness and efficiency of current procedures and 

systems for discrepancy reporting and make necessary changes 

(estimated completion—third quarter of fiscal year 2000);

• enhancing the preparation and submission of discrepancy reports 

through automated, on-line capabilities; and

• developing a program for monitoring discrepancies (estimated 

completion date—first quarter of fiscal year 2001). [page 3-7]

Objective:

• Ensure that discrepancies in item, quantity, and location are reported 

and investigated in accordance with established policies and 

procedures. [page 3-8]

DOD’s Proposed Performance Measure:

• The quantity and value of receipts with a discrepancy. [page 3-8]

• Percent of discrepancies resolved. [page 3-8]

GAO Analysis: 

This action is an important first step to improving discrepancy reporting 

and follow up procedures for shipments reported as not received at the 

intended destination. However, the plan does not go far enough to identify 

how DOD will use its discrepancy reporting procedures to eliminate the 

vulnerability of shipments of secondary items to loss through fraud, waste, 

and abuse. The DOD Inspector General has found that these discrepancy 

reports are primarily used to grant customers credit for the value of lost 

material instead of determining the causes for lost items. This proposed 
Appendix II

Analysis of Plan Regarding Secondary Items

Page 30 GAO/NSIAD-00-39 Defense Inventory

action could be enhanced by including actions for using the discrepancy 

reporting process to identify and eliminate the causes of lost inventory.

The proposed performance measures for this action identify the types of 

data to be collected, but do not identify how this data will be used to 

measure performance. The performance measures lack baseline data and 

do not specify interim steps for assessing progress.
Page 31 GAO/NSIAD-00-39 Defense Inventory

Appendix III

Comments From the Department of Defense ApendxiI

Note: GAO comments 

supplementing those in the 

report text appear at the 

end of this appendix.
Appendix III

Comments From the Department of Defense

Page 32 GAO/NSIAD-00-39 Defense Inventory
Appendix III

Comments From the Department of Defense

Page 33 GAO/NSIAD-00-39 Defense Inventory

See comment 1.
Appendix III

Comments From the Department of Defense

Page 34 GAO/NSIAD-00-39 Defense Inventory

See comment 3.

See comment 2.
Appendix III

Comments From the Department of Defense

Page 35 GAO/NSIAD-00-39 Defense Inventory

The following are GAO’s comments on the Department of Defense’s (DOD) 

letter dated January 21, 2000.

GAO Comments 1. As DOD stated in its cover letter, our draft report acknowledged that 

the statute did not require that DOD’s plan conform to the Results Act. 

However, congressional reports and administrative guidance regarding 

the Results Act indicate that activities such as inventory management 

should be subject to the results-oriented principles contained in this 

Act. The Results Act offers a model for developing an effective 

management framework to improve the likelihood of successfully 

implementing initiatives and assessing results. We believe that the 

likelihood of the plan achieving its goal will be enhanced by adding key 

management elements, consistent with principles embodied in the 

Results Act, such as specific actions, results-oriented objectives, 

detailed performance measures, completion dates that include interim 

milestones, accountability for oversight and implementation, and an 

identification of required resources.

2. We are aware of the limitations in DOD’s accounting systems, and we 

understand the difficulties of estimating specific annual costs 

associated with each of DOD’s proposed actions. However, DOD’s prior 

initiatives to correct in-transit visibility weaknesses have been hindered 

by funding limitations. We believe that DOD’s implementation plans 

must accurately reflect the estimated annual costs for implementing its 

proposed actions to ensure that these actions are feasible and can be 

implemented as scheduled within current funding levels.

3. Although DOD has begun a number of initiatives to correct in-transit 

visibility weaknesses in response to several of our recent reports, it has 

not addressed the Department’s long-standing inability to implement 

far-reaching, department-wide improvements in this area. Prior GAO 

reports have consistently highlighted the military services’ reluctance 

to implement DOD-wide initiatives aimed at correcting in-transit 

visibility weaknesses. This resistance to change is among the most 

prominent reasons that defense inventory management has for many 

years been deemed a high risk area within the federal government. We 

believe, therefore, that DOD’s implementation plans must include a 

strategy for ensuring that the Department’s initiatives will be embraced 

and fully implemented throughout the Department.
Page 36 GAO/NSIAD-00-39 Defense Inventory

Related GAO Products

Defense Inventory: Property Being Shipped to Disposal Is Not Properly 

Controlled (GAO/NSIAD-99-84, July 1, 1999). 

DOD Financial Management: More Reliable Information Key to Assuring 

Accountability and Managing Defense Operations More Efficiently

(GAO/T-AIMD/NSIAD-99-145, Apr. 14, 1999).

Defense Inventory: DOD Could Improve Total Asset Visibility Initiative 

With Results Act Framework (GAO/NSIAD-99-40, Apr. 12, 1999).

Defense Inventory: Navy Procedures for Controlling In-Transit Items Are 

Not Being Followed (GAO/NSIAD-99-61, Mar. 31, 1999).

Performance and Accountability Series: Major Management Challenges and 

Program Risks—Department of Defense (GAO/OCG-99-4, Jan. 1999).

High-Risk Series: An Update (GAO/HR-99-1, Jan. 1999).

Department of Defense: Financial Audits Highlight Continuing Challenges 

to Correct Serious Financial Management Problems

(GAO/T-AIMD/NSIAD-98-158, Apr. 16, 1998).

Department of Defense: In-Transit Inventory (GAO/NSIAD-98-80R, Feb. 27, 

1998).

Inventory Management: Vulnerability of Sensitive Defense Material to Theft

(GAO/NSIAD-97-175, Sept. 19, 1997).

Defense Inventory Management: Problems, Progress, and Additional 

Actions Needed (GAO/T-NSIAD-97-109, Mar. 20, 1997).

High-Risk Series: Defense Inventory Management (GAO/HR-97-5, Feb. 

1997).

High-Risk Series: Defense Financial Management (GAO/HR-97-3, Feb. 

1997).

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