Page 1 GAO-06-366R Defense Logistics

United States Government Accountability Office

Washington, DC 20548 

March 08, 2006 

The Honorable Donald H. Rumsfeld 

Secretary of Defense 

Subject: Defense Logistics: More Efficient Use of Active RFID Tags Could 

Potentially Avoid Millions in Unnecessary Purchases 

Dear Mr. Secretary:

For many years, the Department of Defense (DOD) has been attempting to improve 

visibility over its inventory and equipment. The lack of visibility over inventory and 

equipment shipments increases vulnerability to undetected loss or theft and 

substantially heightens the risk that millions of dollars will be spent unnecessarily. 

Additionally, needed supplies may not reach the warfighter when needed, which may 

impair readiness. In order to improve visibility, DOD began using a technology to 

enable it to track shipments. This technology is known as radio frequency 

identification (RFID). RFID technology consists of active or passive electronic tags 

that are attached to equipment and supplies that are shipped from one location to 

another. This technology is part of a family of automatic information technologies 

used to enable hands-off identification of cargo and inventory. This report focuses on 

active RFID tags, which cost around $100 each and are reusable. 

DOD has been using active RFID technology since the early 1990s to help with intransit visibility of shipments, and, as of January 2005, it officially began to implement 

the use of passive RFID. During the course of our work on the use and 

implementation of passive RFID technology in DOD,1

we observed that active RFID 

tags were not being routinely returned for reuse. This report discusses DOD’s 

efficiency in managing the reuse of active RFID tags, specifically the effectiveness of 

DOD’s RFID policy and the extent of tag reuse and monitoring. DOD’s final RFID 

policy was issued by the Under Secretary of Defense (Acquisition, Technology, and 

Logistics), the defense logistics executive for RFID implementation, on July 30, 2004. 

For this report, we reviewed DOD’s July 30, 2004, RFID implementation policy and its 

concept of operations guidance for DOD components, and interviewed 

knowledgeable officials from the Defense Logistics Agency (DLA); the Army Program 

Executive Office, Enterprise Information Systems, Product Manager Joint – 

 

1

 GAO, Defense Logistics: Better Strategic Planning Can Help Ensure DOD’s Successful 

Implementation of Passive Radio Frequency Identification, GAO-05-345 (Washington, D.C.: Sept. 12, 

2005). 
Page 2 GAO-06-366R Defense Logistics

Automatic Identification Technology Office; the Navy; the Air Force; and the U.S. 

Transportation Command. Although we did not verify the data provided, we 

determined that the data used were sufficiently reliable for the purposes of this 

report. We conducted this assignment in conjunction with our work on passive RFID 

from July 2004 through January 2006 in accordance with generally accepted 

government auditing standards. Our scope and methodology are discussed in further 

detail at the end of this report.

Results in Brief 

DOD’s use of active RFID tags can be more efficiently managed, potentially avoiding 

millions of dollars in unnecessary tag purchases. DOD’s current RFID policy does not 

require active tags to be returned or reused even though these tags are designed for 

repeated reuse. DOD’s July 30, 2004, RFID policy governing active RFID tag return 

and reuse only “encourages” components to return active RFID tags for reuse. The 

policy does not specifically direct that active tags be returned for reuse or require 

military services and other users to reuse tags. Estimates of tag reuse by DOD 

component officials and DOD tag reuse data as of May 2005 indicate that the majority 

of active RFID tags had not been returned or reused more than twice. For example,

Army and DLA officials estimate that 10 percent of active tags were being returned 

for reuse before Operations Iraqi Freedom and Enduring Freedom and only 3 percent 

after. Moreover, during the period May 2002 through May 2005, DOD active tag use 

data for 614,681 tags show that 84 percent of the tags (514,455 tags) had been used 

only one or two times. Only 16 percent of the tags (100,226 tags) were reported as 

being reused more than twice. Furthermore, DOD does not routinely monitor or 

account for reuse of all active RFID tags because it has not developed procedures to 

do this. Officials from the Army and DLA—the largest purchasers of active RFID 

tags—informed us that they are unaware of the status or location of the majority of 

previously used tags. Nonetheless, DOD continues to spend millions of dollars 

purchasing active RFID tags without having procedures to determine whether the 

purchase of new tags is needed or whether the demand could be met through reuse of 

existing tags. If the 84 percent reuse rate is applied to DOD’s total tag purchases since 

December 1997,2

 around 1,101,816 tags, valued at over $110 million, have been used 

only one or two times and are in an unknown status, even though these tags could 

potentially be reused. Without greater efficiency in the reuse of active RFID tags, 

DOD could spend millions of dollars for unnecessary purchases. 

We are recommending that DOD revise its RFID policy and operational guidance to 

require that active tags be returned for reuse and to develop procedures to track and 

monitor use of RFID tags. In commenting on a draft of this report, DOD concurred 

with our first recommendation and partially concurred with our second 

recommendation. DOD stated that it will issue additional guidance on tag reuse by 

 

2

 The Army Program Executive Office, Enterprise Information Systems, Product Manager Joint – 

Automatic Identification Technology Office began recording purchases of active RFID tags in 

December 1997. 
Page 3 GAO-06-366R Defense Logistics

July 2006. DOD’s comments and our evaluation are discussed in detail at the end of 

this report. 

Background 

DOD began implementing active RFID technology in the mid-1990s with Army 

initiatives to better identify and manage its total assets, including those in transit to 

the warfighter. Active RFID technology is used on containers and major pieces of 

equipment for tracking shipments and their contents while in transit over long 

distances. Active RFID tags, which generally use a battery, have transmitters that 

transmit information through radio signals that are read electronically. Active RFID 

tags hold relatively large amounts of data so they are capable of storing detailed 

manifest and transportation data. Active RFID tags cost around $100 each and are 

reusable. By using active RFID tags and associated infrastructure, DOD has sought to 

improve its capability to see timely and accurate information on military units’ 

strategic deployments, troop sustainment cargo, military units’ intra-theater 

movements, and non–military unit cargo movements within the United States. Active 

RFID technology was used to track parts and supplies shipped to and within theater 

during Operation Iraqi Freedom, although not entirely successfully because some of 

the same problems that occurred during Operations Desert Shield and Desert Storm 

were repeated, as we have previously reported and other DOD and military service 

after-action studies have documented.3

 

Active RFID Tags Can Be More Efficiently Managed 

DOD’s use of active RFID tags can be more efficiently managed, potentially avoiding 

millions of dollars in unnecessary tag purchases. DOD’s current RFID policy does not 

require active tags to be returned or reused; DOD tag reuse data indicate that few 

active RFID tags have been returned or reused more than twice, and DOD does not 

routinely monitor reuse of or account for all active RFID tags. 

DOD Policy Does Not Require Return or Reuse of Active Tags

DOD’s current policy on RFID does not require active RFID tags to be returned or 

reused. DOD’s July 30, 2004, policy governing the return and reuse of active RFID 

tags “encourages” components to return these tags for reuse through the Defense 

Logistics Management Supplement Materiel Returns Program to receive 

 

3

 Department of Defense, Conduct of the Persian Gulf War: Final Report to the Congress

(Washington, D.C.: Apr. 1992); GAO, Operation Desert Storm: Lack of Accountability Over Materiel 

During Redeployment, GAO/NSIAD-92-258 (Washington, D.C.: Sept. 23, 1992); U.S. Army Materiel 

Command (USAMC), Operation Iraqi Freedom (OIF), Lessons Learned Conference (Redstone 

Arsenal, Ala.: Sept. 10-11, 2003); GAO, Defense Logistics: Preliminary Observations on the 

Effectiveness of Logistics Activities during Operation Iraqi Freedom, GAO-04-305R (Washington, 

D.C.: Dec. 18, 2003); Department of Defense, Objective Assessment of Logistics in Iraq: 

DUSD(L&MR) and Joint Staff (JSJ4) Sponsored Assessment to Review the Effectiveness and 

Efficiency of Selected Aspects of Logistics Operations During Operation Iraqi Freedom (OIF)

(Washington, D.C.: Mar. 2004); GAO, Defense Inventory: Actions Needed to Improve the Availability 

of Critical Items during Current and Future Operations, GAO-05-275 (Washington, D.C.: Apr. 8, 

2005). 
Page 4 GAO-06-366R Defense Logistics

reimbursement of certain costs.4 The policy also states that the services and other 

requisitioners and users “may opt” to establish their own retail operations for used 

tags. The policy, however, does not specifically direct that active tags be returned for 

reuse or require military services and other users to reuse tags. 

Few Active Tags Have Been Returned or Reused

Army, Navy, Air Force, U.S. Transportation Command, and DLA officials informed us 

that few active RFID tags were being returned or reused. Army and DLA officials 

estimated that rates of tag returns had been 10 percent before Operations Iraqi 

Freedom and Enduring Freedom, and 3 percent after. DOD tag use data for the period 

May 2002 through May 2005, for 614,681 active RFID tags, shows that the majority of 

the tags (514,455 tags, or 84 percent) were used one or two times, while a small 

percentage of the tags (100,226 tags, or 16 percent) were reported to have been 

reused on more than two occasions. These data indicate that about 61 percent 

(372,863) of these active RFID tags had been used one time, and 23 percent (141,592) 

of them had been used twice. The remaining 16 percent (100,226 tags) had been used 

on more than two occasions, ranging from 3 to 51 times. 

DOD Does Not Routinely Monitor or Account for Reuse of Active Tags

The military services and DLA do not routinely monitor or account for the return and 

reuse of active RFID tags because there are no procedures in place to do so.5 For 

example, U.S. Transportation Command and Air Force officials told us that they 

could not account for active RFID tags after the tags have been used because they 

use the tags as if they were consumable or expendable items that have a one-time 

use. Furthermore, officials from the Army and DLA—the largest purchasers of active 

RFID tags—said that they were unaware of the status or location of the majority of 

previously used active RFID tags. However, active RFID tags were designed to be 

reused, and DOD’s RFID policy acknowledges the economic benefits of reusing these 

tags. DLA officials explained that active tags are lost or even discarded, which they 

recognized was not an economical practice. DOD nonetheless continues to spend 

millions of dollars purchasing large quantities of active RFID tags without having 

procedures to determine whether the purchase of new tags is needed or whether the 

demand could be met through reuse of existing tags. 

DOD’s purchases of active RFID tags have increased significantly in recent years. 

Between December 1997 and early June 2005, as shown in table 1, DOD purchased 

over 1.3 million active RFID tags, with an average unit purchase price per tag of about 

$100. DOD’s May 2002 through 2005 tag use data indicate that 84 percent of active 

tags are used only one or two times. If this reuse rate is applied to the total active 

RFID tags DOD has purchased since December 1997, this means that 1,101,816 tags, 

 

4

 If tags are returned through this program, services will be reimbursed for packaging, crating, 

handling, and transportation costs. Services will not be reimbursed for tags returned without going 

through this program. 

5

 DOD policy does not require routine collection of reuse data or that components establish 

procedures to monitor tag reuse. 
Page 5 GAO-06-366R Defense Logistics

valued at over $110 million, have been used only one or two times and are in an 

unknown status. These tags could potentially be reused if DOD revised its policy to 

require reuse of active tags. 

Table 1: DOD Active RFID Tag Purchases from December 1997 through June 3, 2005 

Calendar 

year 

Quantity 

purchased 

Purchase 

costs

1997a 10a $1,400 a

1998 23,762 $3,755,732

1999 78,145 $12,581,345

2000 27,836 $3,857,648

2001 27,733 $3,267,352

2002 58,286 $5,747,210

2003 366,841 $35,212,123

2004 475,717 $47,085,115

2005b 253,356b $19,381,778b

Total 1,311,686 $130,889,703

Average purchase price 

per tag 

$99.79

Source: GAO analysis of data provided by Army Program Executive Office, Enterprise Information Systems, Product Manager Joint - Automatic Identification Technology 

Office. 

a

Data for 1997 reflects purchase quantities in December 1997. 

b

Data for 2005 reflects purchase quantities from January 1, 2005, through June 3, 2005. 

If DOD had more effective policies and procedures governing the reuse of active 

RFID tags, including procedures to track and monitor use, it might avoid millions of 

dollars in unnecessary purchases. 

Conclusions 

DOD spends millions of dollars annually purchasing active RFID tags, which are 

designed for repeated reuse, but most are not being reused by DOD routinely. In the 

absence of a policy requirement to return or reuse active RFID tags, DOD 

components may continue to treat these tags as expendable items and may not return 

or reuse the tags. Without improved procedures to track and monitor tag reuse, DOD 

and its components are likely to continue to invest heavily in the purchase of active 

RFID tags without knowing how many new tags are actually needed to meet overall 

goals, objectives, and strategies. If active tags were returned for reuse, and effective 

procedures established to monitor and track reuse of these tags, DOD could be more 

efficient in its use of existing tags and could avoid unnecessary future purchases of 

active RFID tags. 

Recommendations for Executive Action 

We recommend that the Secretary of Defense direct the Under Secretary of Defense 

(Acquisition, Technology, and Logistics) to take the following two actions: 
Page 6 GAO-06-366R Defense Logistics

• Modify the July 30, 2004, RFID policy and other operational guidance to require 

that active RFID tags be returned for reuse or be reused by the military services 

and other users. 

• Direct the secretaries of each military service and administrators of other 

components to establish procedures to track and monitor the use of active RFID 

tags, to include 

o determining requirements for the number of tags needed, 

o compiling an accurate inventory of the number of tags currently owned, 

and 

o establishing procedures to monitor and track tags, including purchases, 

reuse, losses, repairs, and any other categories that would assist 

management’s oversight of these tags. 

Agency Comments and Our Evaluation

In written comments on a draft of this report, DOD concurred with our first 

recommendation to modify its RFID policy and guidance on active RFID tag return 

and reuse, and partially concurred with our second recommendation to require the 

services and other tag users to develop procedures to track and monitor use of active 

RFID tags. DOD’s written comments are reprinted in their entirety in enclosure I. 

DOD concurred with our recommendation to modify the July 30, 2004, RFID policy 

and other operational guidance to require that active RFID tags be returned for reuse 

or be reused by the military services and other users. The department stated that it 

recognizes the importance of reusing these tags to the maximum extent possible and 

that its policy establishes procedures for the return of tags. DOD also stated that its 

policy implicitly addresses that these tags should be reused at the local level and, 

when no longer required for local reuse, the policy directs that the tags be returned to 

the wholesale level for reuse. We disagree that DOD’s RFID policy specifically directs 

components to return tags to the wholesale level for reuse. The existing policy only 

“encourages” components to use the Defense Logistics Management Supplement 

Materiel Returns Program to return tags no longer required and receive 

reimbursement for packaging, crating, handling, and transportation costs. The 

department stated that it will issue additional guidance on tag reuse by July 2006. The 

department said that its July 30, 2004, RFID policy will be institutionalized in the next 

update of the DOD 4140.1-R, DOD Supply Chain Materiel Management Regulation, in 

fiscal year 2007, which will make explicit reference to reuse of the tags. We believe 

that this action will satisfy our recommendation if the explicit reference in the 

updated policy guidance actually requires the services and other users to return tags 

for reuse or to reuse tags locally. 

DOD partially concurred with our second recommendation directing the secretaries 

of each military service and administrators of other components to establish 

procedures to track and monitor the use of active RFID tags to include (1) 

determining requirements for the number of tags needed; (2) compiling an accurate 

inventory of the number of tags currently owned; and (3) establishing procedures to 
Page 7 GAO-06-366R Defense Logistics

monitor and track tags, including purchases, reuse, losses, repairs, and any other 

categories that would assist management’s oversight of these tags. The department 

stated, as it said when concurring with our first recommendation, that it will direct 

the military services and U.S. Transportation Command to develop procedures by 

July 2006 to address the reuse of tags as well as procedures for return of the tags no 

longer required. The department also stated that active tag reuse is monitored by the 

Army Program Executive Office, Enterprise Information Systems, Product Manager 

Joint - Automatic Identification Technology Office and reports are generated that 

provide last tag read locations. The department said that it will ensure the 

components are aware of this capability so that they may better use these reports in 

managing RFID tag use. The department further stated that although many tags have 

been written to only once, there may be legitimate operational reasons for these 

occurrences and that the Office of the Assistant Deputy Under Secretary of Defense 

and the components will investigate the causes for low instances of tag reuse and the 

business processes contributing to the low reuse of tags. 

The department, however, disagreed with the need to establish procedures to 

account for procurement, inventory, repairs, or losses of existing tags. It stated that 

active RFID tags are consumable items. Nonetheless, we continue to believe that 

DOD can potentially avoid millions of dollars in unnecessary active RFID tag 

purchases if the department and its components would establish accountability 

procedures to track and monitor active tag requirements, inventory, purchases, reuse, 

losses, and repairs as we recommended. DOD’s July 20, 2004, RFID policy does not 

define active RFID tags as consumable items. Also, its policy emphasizes the 

capability of active tags to be reused and to even be refurbished. Moreover, the 

capability of active RFID tags to be reused would seem to preclude these tags from 

meeting DOD’s definition of a “consumable item.” For example, DOD regulation 

4140.1-R defines a consumable item as “[a]n item of supply (except explosive 

ordnance and major end items of equipment) that is normally expended or used up 

beyond recovery in the use for which it is designed or intended.” Because active RFID 

tags can be reused, they are not expended or used up beyond recovery, and thus we 

do not believe that they should be treated as consumable items in general operating 

environments. Consequently, we continue to believe our recommendation is merited 

and DOD should develop procedures to track and monitor its use of active RFID tags 

so that it has a sound basis for determining its current and future requirements and 

procurement actions for active RFID tags. 

Scope and Methodology 

To evaluate DOD’s reuse of active RFID tags, we relied on data gathered through our 

visits and interviews with key personnel within DLA; the Army Program Executive 

Office, Enterprise Information Systems, Product Manager Joint – Automatic 

Identification Technology Office; the Navy; the Air Force; and the U.S. Transportation 

Command. We reviewed DOD’s RFID implementation policy and its concept of 

operations guidance for DOD components, and we obtained briefings to understand 

DOD’s strategy for implementing active RFID technology into its supply chain 

processes. Additionally, we visited and observed the use of active RFID technology at 

DLA’s Defense Distribution Depot in Susquehanna, Pennsylvania, and the Norfolk 
Page 8 GAO-06-366R Defense Logistics

Ocean Terminal initiative at the Navy’s Fleet and Industrial Supply Center in Norfolk, 

Virginia. Although we did not verify the data provided, we determined that the data 

used were sufficiently reliable for the purposes of this review. Subsequent to our exit 

meeting, DOD provided us with a snapshot of active RFID tag reuse data covering 

May 2002 through May 2005. Because these new data were provided after audit work 

was completed, we did not assess their accuracy or examine the methodology by 

which the data were collected. We conducted our work in conjunction with our work 

on passive RFID from July 2004 to January 2006 in accordance with generally 

accepted government auditing standards. 

We are sending copies of this report to the appropriate congressional committees; the 

Secretaries of the Army, Air Force, and the Navy; the Commandant of the Marine 

Corps; the Commander, U.S. Transportation Command; and the Director, Defense 

Logistics Agency. We will also make copies available to others upon request. In 

addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Please contact me at (202) 512-8365 or solisw@gao.gov if you or your staff have any 

questions concerning this report. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. Key 

contributors to this report were David A. Schmitt, Assistant Director; Renee S. 

Brown; James A. Driggins; Jeffrey R. Hubbard; Shvetal Khanna; Nicole Harms; Louis 

V. Modliszewski; Kenneth E. Patton; Charles W. Perdue; Keith A. Rhodes; Dudley C. 

Roache, Jr.; Yong Song; and Cheryl A. Weissman. 

Sincerely yours, 

William M. Solis, Director 

Defense Capabilities and Management 

Enclosure 
Enclosure I 

Page 9 GAO-06-366R Defense Logistics

Comments from the Department of Defense 
Enclosure I 

Page 10 GAO-06-366R Defense Logistics
Enclosure I 

Page 11 GAO-06-366R Defense Logistics

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