a

GAO

United States Government Accountability Office

Report to the Chairman, 

Subcommittee on Defense, 

Committee on Appropriations, 

House of Representatives

December 2004 DEFENSE 

INVENTORY

Improvements 

Needed in DOD’s 

Implementation of Its 

Long-Term Strategy 

for Total Asset 

Visibility of 

Its Inventory

GAO-05-15
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-15.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis 

at (202) 512-8365 or solisw@gao.gov. 

Highlights of GAO-05-15, a report to the 

Chairman, Subcommittee on Defense, 

Committee on Appropriations, House of 

Representatives 

December 2004

DEFENSE INVENTORY

Improvements Needed in DOD’s 

Implementation of Its Long-Term Strategy 

for Total Asset Visibility of Its Inventory 

Although DOD, the military services, and the Defense Logistics Agency 

(DLA) made varying degrees of progress toward achieving visibility over instorage assets, DOD did not meet its prior goal to achieve TAV by 2004. In a 

series of reports issued since March 1999, GAO reported that DOD also lacks 

visibility and control over items being shipped from one location to another. 

GAO’s most recent work indicates that the military services and DLA 

generally have inventory management systems that provide visibility over 

specific segments of their inventories, but existing systems cannot always 

share data on a near real-time basis within their organizations or across the 

department. While DOD and the components all have ongoing efforts to 

modernize their business systems and improve the capability to share data 

on a near real-time basis, the requirements, time frames, and cost estimates 

for these additional systems have not been developed. Consequently, DOD’s 

ability to achieve the new TAV goal of 2010 remains uncertain. 

Three significant impediments hinder the achievement of TAV. First, DOD 

does not have a clear long-term strategy for achieving TAV. While DOD has 

identified TAV as a key goal of its departmentwide effort to refine and 

implement a business enterprise architecture, components’ plans and 

initiatives lack a clear link to the architecture and DOD’s long-term business 

management modernization program. Further, while the logistics community 

identified TAV as a key element in its logistics transformation efforts, it did 

not include TAV as a goal within its Future Logistics Enterprise, its mid-term 

logistics transformation plan. Consequently, the components are pursuing 

internal initiatives to attain TAV. Second, DOD lacks the systems integration 

necessary to provide TAV. As GAO recently reported, DOD has made little 

progress in refining its business enterprise architecture, which leaves DOD 

without a long-term strategy needed to successfully guide efforts to achieve 

TAV. Without proper oversight and approval of emerging systems, DOD will 

continue to deploy systems that do not have the ability to provide TAV. 

While DOD plans to address GAO’s recommendations aimed at improving its 

institutional oversight of business system investments, DOD has yet to fully 

implement these recommendations. Third, DOD’s inventory management 

systems have long-standing data accuracy and reliability issues. Without 

accurate, reliable data from these systems, new systems will also contain 

suspect data and not provide TAV. Unless DOD overcomes these 

impediments, it is unlikely that it will meet its goal of achieving TAV by 2010.

DOD has made little progress in assuring that its inventory management 

systems are substantially compliant with federal financial management 

standards. DOD has recognized the weaknesses within its financial 

management and feeder systems, and stated in its Performance and 

Accountability Report for fiscal year 2003 that its systems did not 

substantially comply. GAO’s review of two emerging logistics systems raises 

concerns regarding DOD’s lack of policies and procedures to ensure new 

systems substantially comply with federal standards. 

For more than 30 years, the 

Department of Defense (DOD) has 

worked to achieve full visibility 

over and accessibility to its spare 

parts inventory. This initiative, 

called total asset visibility (TAV), 

aims to provide timely, accurate 

information on the location, 

movement, status, and identity of 

units, personnel, equipment, and 

supplies. In 1999, GAO examined 

DOD’s TAV implementation 

approach and recommended that 

DOD develop a strategic plan to 

guide its efforts. DOD did not 

concur and stated it would rely on 

the components to individually 

achieve TAV. DOD’s current target 

to achieve TAV is 2010. As 

requested, GAO examined DOD’s 

progress towards, and impediments 

to, achieving TAV over its spare 

parts inventory. GAO also assessed 

DOD’s progress in ensuring that its 

inventory management systems 

comply with federal financial 

management standards.

What GAO Recommends

GAO recommends that DOD 

develop a departmentwide strategy 

to ensure TAV is achieved, with 

outcome-oriented goals and 

performance measures. While DOD 

concurred with the intent of our 

recommendations, it stated in 

written comments that it did not 

plan to change its current 

approach. Therefore, GAO has 

added a matter for congressional 

consideration suggesting that the 

Congress may wish to require DOD 

to report annually on TAV 

implementation. 
Page i GAO-05-15 Defense Inventory 

Letter 1

Results in Brief 3 

Background 6 

DOD, the Military Services, and DLA Have Not Achieved TAV over 

Spare and Repair Parts in Storage 9 

Significant Impediments Hinder Achievement of TAV 14 

DOD Has Made Little Progress toward Assuring That Inventory 

Systems Comply with Financial Standards 19 

Conclusions 20 

Recommendations 21 

Matter for Congressional Consideration 21 

Agency Comments and Our Evaluation 22 

Appendix I Scope and Methodology 25 

Appendix II Key Programs and Systems 27 

Appendix III Comments from the Department of Defense 29 

Appendix IV GAO Contacts and Staff Acknowledgments 31 

Tables 

Table 1: Summary of In-Storage Inventory Management Systems 10 

Table 2: Reported DOD Logistics Business Systems by 

Functional Area 16 

Contents 
Page ii GAO-05-15 Defense Inventory 

Abbreviations 

CFO Chief Financial Officers Act of 1990 

DLA Defense Logistics Agency 

DOD Department of Defense 

FFMIA Federal Financial Management Improvement Act of 1996 

GPRA Government Performance and Results Act of 1993 

JFMIP Joint Financial Management Improvement Program 

JTAV Joint Total Asset Visibility 

SGL Standard General Ledger 

TAV Total Asset Visibility 

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Page 1 GAO-05-15 Defense Inventory 

December 6, 2004 

The Honorable Jerry Lewis 

Chairman 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Dear Mr. Chairman: 

We have repeatedly reported that the Department of Defense (DOD) does 

not have adequate visibility and control over the approximately $70 billion 

of inventory, including its spare and repair parts.1

 While DOD has 

recognized the importance of achieving total asset visibility (TAV) for 

more than 30 years, its efforts to improve its capability have fallen short. 

DOD defines TAV as the ability to provide timely and accurate information 

on the location, movement, status, and identity of units, personnel, 

equipment, and supplies and having the ability to act on that information.2

In 1999, we reported that DOD’s efforts to achieve TAV could be improved 

through the development of a strategic plan.3

 DOD responded that the 

department planned to address TAV in the context of improved asset 

management through the business system modernization efforts of its 

military services and the Defense Logistics Agency (DLA). The ability to 

harness such detailed, near real-time4

 information for spare and repair 

parts could significantly improve military readiness by more efficiently 

and effectively getting needed items to the operating forces. If the 

information contained in the inventory management systems is not 

accurate, complete, and timely, ongoing operations could be adversely 

impacted. Although DOD had established a goal of achieving TAV by 2004, 

it recently revised its estimate for achieving this elusive goal to fiscal 

year 2010. 

 1

 GAO, Defense Inventory: Consumption of Inventory Exceeding Current Operating 

Requirements Since September 11, 2001, GAO-04-689 (Washington, D.C.: Aug. 2, 2004). 

2

 DOD 4140.1-R, Supply Chain Materiel Management Regulation, May 23, 2003. 

3

 GAO, Defense Inventory: DOD Could Improve Total Asset Visibility Initiative With 

Results Act Framework, GAO/NSIAD-99-40 (Washington, D.C.: Apr.12, 1999). 

4

 Data or information that has been delayed by the time required for electronic 

communication and automatic data processing. This implies that there are not significant 

delays. 

 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-15 Defense Inventory 

This report responds to your request that we review DOD’s progress 

toward achieving TAV over its spare and repair parts, especially across the 

military services at the wholesale and retail levels of supply.5

 As requested, 

we also discuss the department’s efforts to improve financial management 

reporting on its inventory. For TAV purposes, supplies, which include 

spare and repair parts, are categorized as “in storage,”6

 “in process” (on 

order or in repair), or “in transit.” Because of the recent designation of the 

U.S. Transportation Command as the distribution process owner, the 

many problems identified with in-transit visibility in recent years and the 

magnitude of the in-storage inventory, we agreed to focus this report on 

spare and repair parts in storage. Specifically, we addressed (1) what 

progress DOD, the military services, and DLA have made in implementing 

TAV and (2) what impediments, if any, DOD, the military services, and 

DLA must overcome in order to achieve TAV. In addition, you requested 

that we assess the progress that DOD has made in ensuring that inventory 

management systems are fully compliant with statutory requirements for 

federal financial management systems. 

To accomplish these objectives, we obtained and analyzed information on 

inventory management practices from DOD, the military services, and 

DLA, including DOD’s Supply Chain Materiel Management Regulation.7

 In 

addition, we reviewed previous GAO reports, other audit agency reports, 

and appropriate DOD guidance. We also interviewed knowledgeable 

officials within the military services and DLA to enhance our 

understanding of inventory management practices. Additionally, we 

interviewed officials who establish inventory management policy 

within the Office of the Secretary of Defense. Finally, we reviewed 

documentation on a wide variety of DOD, military service, and DLA 

initiatives and programs addressing inventory management. We conducted 

this assignment in accordance with generally accepted government 

auditing standards. Our scope and methodology are discussed in further 

detail in appendix I. Appendix II contains a list and brief description of key 

programs and systems that are applicable to TAV. 

 5

 DOD maintains spare parts at two levels of inventory. Wholesale level represents 

inventory managed centrally, while retail level inventory represents inventory held for use 

at maintenance activities or operational units.

6

 “In storage” inventory refers to any items being held for future use. This includes items 

held at the wholesale, retail, and unit levels of supply in anticipation of future needs. 

7

 DOD 4140.1-R, Supply Chain Materiel Management Regulation, May 23, 2003. 
Page 3 GAO-05-15 Defense Inventory 

Although DOD, the military services, and DLA have made varying degrees 

of progress toward achieving visibility over in-storage assets, DOD failed 

to meet its goal to achieve TAV by 2004. DOD did not achieve its goal 

because existing inventory systems continue to lack the ability to share 

data on a near real-time basis for all inventory segments. In a series of 

reports issued since March 1999, we have reported numerous weaknesses 

in DOD’s visibility and control over items being shipped from one location 

to another. Our most recent work identified that the military services and 

DLA generally have inventory management systems that provide visibility 

over only specific segments of their inventories, such as wholesale and 

retail inventories. They also have the ability to share data both within their 

respective organizations and among the defense components, although 

this capability does not always exist on a near real-time basis. The 1998 

DOD Logistics Strategic Plan established a goal for attaining 100 percent 

visibility over all assets by 2004. DOD’s definition of visibility also includes 

the capability to act on the information provided by the information 

systems to improve overall logistics operations. While DOD, the military 

services, and DLA all have ongoing efforts to modernize the business 

systems they use to provide visibility over in-storage assets, these systems 

by themselves will not provide TAV because the TAV capability is 

dependent on additional systems that have not yet been developed. In 

some cases, the requirements, time frames, and cost estimates for these 

additional systems have not been developed. Similarly, the capability to 

share data both within the respective organizations and on a 

departmentwide level is currently evolving. Consequently, the 

department’s ability to achieve the new TAV goal of 2010 remains 

uncertain. 

DOD, the military services, and DLA must overcome three significant 

impediments, which present a number of challenges, in order to achieve 

TAV. First, while DOD has identified achieving TAV as one of the 

objectives for its ongoing efforts to refine and implement a business 

enterprise architecture, it continues to lack a clear long-term strategy for 

achieving TAV deparmentwide. In May 2004, we reported that the 

architecture did not provide sufficient descriptive content related to future 

business operations and supporting technology to permit effective 

acquisition of systems solutions and associated operational changes. In 

another recent review, we found that DOD component efforts, including 

the military services and DLA, were not clearly linked to DOD’s long-term 

improvement initiative, the business management modernization program. 

The department is required to report annually to the Congress on the 

progress it is making on refining and implementing the business enterprise 

architecture in support of its business management modernization 

Results in Brief 
Page 4 GAO-05-15 Defense Inventory 

program.8 Further, the logistics community has identified TAV as one of 

the four pillars for its logistics transformation initiative but did not 

specifically include it in its Future Logistics Enterprise—DOD’s mid-term 

strategic plan for logistics transformation. Because DOD has not 

developed a clear long-term strategy, the military services and DLA will 

be exposed to the risk of spending billions of dollars on duplicative, 

stovepiped, nonintegrated systems that do not support the department’s 

business transformation goals, including attaining TAV. In fact, DOD’s goal 

for achieving TAV has slipped from 2004 to 2010 since we reported on this 

issue in 1999. Without a clear long-term strategy, DOD lacks a key 

management control for ensuring that time frames, results-oriented 

performance measures, and accountability mechanisms are established 

and monitored to help achieve TAV. In addition, DOD has not achieved the 

necessary integration or interoperability among its many inventory 

systems to support TAV and, without proper oversight and approval of 

emerging systems, DOD and the defense components will likely continue 

to deploy systems that do not have the ability to provide TAV. In addition 

to deficiencies in DOD’s business enterprise architecture that diminish its 

utility as a blueprint for guiding TAV efforts, in May 2004 we reported that 

two emerging systems intended to transform logistics operations for DLA 

and the Army did not resolve problems associated with TAV and 

integrated systems.9

 For example, the Army system, the Logistics 

Modernization Program, is dependent on two additional systems that are 

under development to attain TAV. However, neither the time frames nor 

cost estimates to develop these systems has been established. Until 

integration or interoperability is achieved and processes and controls are 

improved, DOD will continue to rely on current processes and procedures 

that include the use of multiple data entry points for transactions, which 

can result in data entry errors concerning the amount and location of 

inventory. While DOD has indicated it plans to address our recent 

recommendations aimed at improving DOD’s institutional oversight of 

planned and ongoing business systems investments—steps we have 

previously stated that DOD needs to take in a timely manner—DOD has 

yet to fully implement these recommendations. Finally, DOD, the military 

services, and DLA must overcome long-standing data accuracy and 

 8

 Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. 

No. 108-375, § 332, 118 Stat. 1811 (Oct. 28, 2004) 

9

 GAO, DOD Business Systems Modernization: Billions Continue to Be Invested with 

Inadequate Management Oversight and Accountability, GAO-04-615 (Washington, D.C.: 

May 27, 2004). 
Page 5 GAO-05-15 Defense Inventory 

reliability issues associated with their numerous legacy systems used to 

report the quantity, location, and value of DOD’s inventory. Without 

implementation of efficient and effective business processes and controls 

to ensure accurate, complete, timely, and reliable data, DOD’s systems, 

both legacy and emerging systems, will fail to provide TAV. Recent audit 

reports prepared by the DOD Inspector General and the military services’ 

audit agencies, for example, have identified more than $200 million in 

excess or unrecorded inventory that was not visible to item managers as 

well as significant misstatements in the reported inventory balances. Given 

that DOD has not developed a departmentwide long-term strategy to 

overcome these various impediments, it appears unlikely that it will 

achieve TAV by 2010. 

DOD, the military services, and DLA have made little progress in assuring 

that inventory management systems are substantially compliant with 

statutory requirements for federal financial management systems as 

defined in the Federal Financial Management Improvement Act (FFMIA) 

of 1996.10 The department recognizes the weaknesses within its financial 

management and feeder systems and stated in its Performance and 

Accountability Report for fiscal year 2003 that these systems did not 

substantially comply. While DOD is requiring the military services and 

DLA to certify that emerging systems are substantially compliant with 

federal financial management requirements, we are concerned that the 

department lacks adequate policies and procedures to determine whether 

compliance has been achieved. For example, we recently reported 

weaknesses in the development and testing of systems requirements for 

two new systems, the Business Systems Modernization and the Logistics 

Modernization Program.11 For example, the Army did not perform testing 

on 147 of the systems’ requirements because the core requirements from 

the software package had previously been certified through the Joint 

Financial Management Improvement Program (JFMIP). Relying on the 

JFMIP certification does not provide assurance that federal financial 

management standards are met because the Army had modified the 

commercial software package and did not perform specific transaction 

testing to determine if the modified system software provided the 

anticipated results. Consequently, although these two systems were 

certified as being compliant, the weaknesses identified in the certification 

 10 Pub. L. No. 104-208, div. A, §101 (f), title VIII, 110 Stat. 3009, 3009-389 (Sept. 30, 1996). 

11 GAO-04-615. 
Page 6 GAO-05-15 Defense Inventory 

process make it difficult to determine if the systems do in fact comply with 

the FFMIA requirements. 

We are recommending that DOD develop a comprehensive, long-term 

strategy as part of its Business Enterprise Architecture with key elements 

such as milestones, to assist the department in achieving TAV over its 

spare and repair parts inventory. In commenting on a draft of this report, 

DOD concurred with the intent of three of our recommendations and 

partially concurred with our final recommendation. While recognizing the 

need to improve visibility over spare and repair parts, DOD believes that 

its current approach of modernizing logistics systems and implementing 

an integrated data approach is the way to achieve TAV. We continue to 

believe that DOD needs to place more specific emphasis on attaining TAV. 

Therefore, we have added a matter for congressional consideration 

suggesting that the Congress may wish to require having the Secretary of 

Defense specifically address the plans and progress the department is 

making on attaining TAV in his annual report to the Congress on the 

refinement and implementation of the business enterprise architecture 

pursuant to Sect. 332 of the fiscal year 2005 national defense authorization 

act. 

While total asset visibility (TAV) has been a goal of DOD’s since the early 

1970s, target completion dates of 1980, 1995, and 2004 have not been met. 

In fact, DOD’s target date for achieving TAV has slipped by nearly 30 years, 

most recently being moved from fiscal year 2004 to fiscal year 2010. In 

1972, DOD launched a Logistics Systems Plan to meet its TAV needs with a 

target completion date of 1980. This plan was created to eliminate 

unnecessary duplication of inventories and to establish common use of 

inventories whenever possible; however, it did not succeed. Subsequently, 

in 1992, DOD instituted a second TAV Plan to provide managers with the 

capability to access and act on timely and accurate information regarding 

the location, quantity, condition, movement, and status of DOD materiel 

assets. Once again, the target date was not achieved. In 1996, DOD 

developed a third TAV Implementation Plan, which expanded the scope of 

the 1992 plan. However, this plan had no clear completion date and was 

superceded by the 1998 DOD Logistics Strategic Plan. The 1998 plan was 

created to “...meet total asset tracking requirements established in the 

Background 
Page 7 GAO-05-15 Defense Inventory 

DOD regulation on asset management.”12 This plan’s target completion 

date was 2004. 

In 1999, we reported13 on DOD’s TAV initiative and noted significant 

wartime logistics management problems that had occurred during 

Operations Desert Shield and Desert Storm due to the lack of visibility 

over spare parts and supplies. In our 1999 report, we recommended that 

DOD develop a departmentwide strategic plan and associated component 

implementation plans in accordance with specific outcome-oriented 

management principles embodied in the Government Performance and 

Results Act of 1993 (GPRA)14 and the Clinger-Cohen Act.15 The department, 

however, disagreed with our recommendation that it develop an 

overarching strategic plan and stated that TAV could be attained as each of 

the components proceeds with its own logistics supply chain 

modernization efforts. 

Subsequent to our 1999 report, TAV continued to be an important goal 

within the department. The business support community, under the 

direction of the Under Secretary of Defense (Comptroller) and the Chief 

Information Officer, recognized the importance of realizing TAV and 

included achieving TAV by 2010 as part of its Business Management 

Modernization Program. This program is designed to guide the 

departmentwide business transformation efforts that are ongoing 

throughout the organization through the refinement and implementation 

of a business enterprise architecture. This architecture is intended to serve 

as a blueprint to guide and constrain investments in systems related to 

DOD’s business processes and provide a basis for planning, developing, 

and implementing business management systems. However, as we 

reported in September 2004, DOD components’ mid-term implementation 

plans were not clearly linked to the long-term improvement initiative 

known as the business management modernization program.16 Within the 

logistics community, the Deputy Under Secretary of Defense for Logistics 

 12 DOD Regulation 4140.1-R, version dated May 1998, chapter 4, “Asset Management.” 

13 GAO/NSIAD-99-40. 

14 Pub. L. No. 103-62, Aug. 3, 1993. 

15 40 U.S.C. §§11101-11703 

16 GAO, Financial Management: Further Actions Are Needed to Establish Framework 

to Guide Audit Opinion and Business Management Improvement Efforts at DOD, 

GAO-04-910R (Washington, D.C.: Sept. 20, 2004). 
Page 8 GAO-05-15 Defense Inventory 

and Materiel Readiness published the Future Logistics Enterprise 

document as a mid-term guide for achieving logistics transformation. 

Although TAV was not specifically identified within this document, the 

End-to-End Distribution initiative contained in the document incorporated 

many of the same characteristics as TAV. In the Focused Logistics 

Campaign Plan, the Joint Chiefs of Staff also recognized the importance of 

TAV and identified it as one of four pillars upon which logistics 

transformation must be built. Despite this focus, we recently reported that 

DOD experienced logistics management weaknesses during the build up 

and early phases of Operation Iraqi Freedom due to inadequate asset 

visibility.17 These weaknesses are similar to those experienced during 

Operations Desert Shield and Desert Storm. For example, as Operation 

Iraqi Freedom began, a number of asset visibility weaknesses contributed 

to a $1.2 billion discrepancy between the material shipped to Army 

activities in the Iraqi theater and the material acknowledged as received. 

While Army officials believe that this material was received in theater, 

lapses in asset visibility, in some instances, resulted in units cannibalizing 

major equipment items, submitting duplicate requisitions, and 

circumventing the normal supply systems to obtain needed parts. 

As we have previously reported, accurately reporting the amount of 

inventory, both in terms of the numbers of items on hand and the 

valuation of that inventory, has been a continuing struggle for DOD.18 One 

of the primary factors contributing to this struggle is DOD’s outdated and 

ineffective management information systems. FFMIA19 and other financial 

management reform legislation have emphasized the importance of 

improving financial management, which necessarily encompasses proper 

inventory management, across the federal government. Built upon the 

foundation laid by the Chief Financial Officers (CFO) Act of 1990,20 FFMIA 

emphasizes the need for agencies to have financial management systems 

that can generate timely, accurate, and useful information to make 

informed decisions and to ensure accountability on an ongoing basis. With 

such information, government leaders will be better positioned to invest 

 17 GAO, Defense Logistics: Preliminary Observations on the Effectiveness of 

Logistics Activities during Operation Iraqi Freedom, GAO-04-305R (Washington, D.C.: 

Dec. 18, 2003). 

18 GAO/NSIAD-99-40. 

19 Pub. L. No. 104-208, div. A, §101 (f), title VIII, 110 Stat. 3009, 3009-389 (Sept. 30, 1996). 

20 Pub. L. No. 101-576, 104 Stat. 2838, Nov. 15, 1990. 
Page 9 GAO-05-15 Defense Inventory 

resources, reduce costs, oversee programs, and hold agency managers 

accountable for the way they run government programs. FFMIA requires 

that financial management systems comply substantially with federal 

financial management systems requirements, applicable federal 

accounting standards, and the U.S. Government Standard General Ledger 

at the transaction level in order to help achieve these goals. 

Although DOD, the military services, and DLA have made varying degrees 

of progress toward achieving visibility over in-storage assets, DOD’s most 

recent goal to achieve TAV by 2004 was not met, and the department’s 

ability to achieve the new TAV goal of 2010 remains uncertain. First, while 

the military services and DLA generally have inventory management 

systems that provide visibility over in-storage assets, they do not have, in 

all cases, the capability to share data on a near real-time basis. Second, the 

inability to share data on a near real-time basis negatively affects DOD’s 

ability to make efficient and effective inventory management decisions in 

support of operating forces. Consequently, DOD did not reach the goal 

established in its 1998 Logistics Strategic Plan of achieving 100 percent 

visibility by 2004. Finally, the ongoing business systems modernization 

efforts and other efforts to develop data sharing capability may not be 

completed prior to the new goal of achieving TAV in 2010. 

As shown in table 1, each of the military services and DLA has a variety of 

inventory management systems that provide visibility over the assets 

stored at the various levels of supply throughout the department. 

However, these systems do not always have the capability to share data on 

a near real time basis. 

DOD, the Military 

Services, and DLA 

Have Not Achieved 

TAV over Spare 

and Repair Parts 

in Storage 

Component Inventory 

Management Systems 

Provide Some Visibility 
Page 10 GAO-05-15 Defense Inventory 

Table 1: Summary of In-Storage Inventory Management Systems 

Wholesale supply level Retail intermediate level Retail consumer level Servicewide capability 

Army: 

New system: logistics 

Modernization program 

Legacy systems: commodity 

command standard system, and 

the standard depot system 

Standard Army Retail Supply 

System 

Standard Army Retail Supply 

System 

Army Total Asset Visibility 

Navy: 

Uniform Inventory Control 

Program 

Uniform Automated Data 

Processing System and Force 

Inventory Management Analysis 

Reporting System 

Uniform Automated Data 

Processing System and Force 

Inventory Management Analysis 

Reporting System 

One Touch Support 

Air Force: 

Stock control system (DO35A) Stock Control System (DO35K) Standard Base Supply System Stock Control System 

DLA: 

New system: business systems 

modernization 

Legacy systems: Standard 

Automated Materiel Management 

System, and the Defense 

Integrated Subsistence 

Management System 

N/Aa

 N/Aa N/Aa

Source: GAO analysis. 

a

For the purposes of this comparison, we did not consider the relatively small amount of inventory 

held at DLA retail facilities. 

Table 1 shows the various management tools that the military services and 

DLA have developed to enable data sharing among the levels of supply for 

which they are responsible. These systems generally provide visibility over 

specific segments of inventory, but visibility across different levels of 

supply or across services is dependent upon being able to share data from 

multiple systems. For example, the Navy’s Uniform Inventory Control 

Program System provides the Navy with visibility over assets within its 

wholesale supply system and its Uniform Automated Data Processing 

System and Force Inventory Management Analysis Reporting System 

provide visibility over assets within its retail supply system. While each of 

the components has the ability to share data from existing logistics 

systems throughout its particular organization, the capability to share data 

on a near real time basis does not always exist. Without the ability to share 

data on a near real-time basis, DOD, the military services, and DLA cannot 

be assured that they are making inventory management decisions with 

accurate and timely records. 
Page 11 GAO-05-15 Defense Inventory 

While the capability to share some information on a departmentwide basis 

also exists, this capability is also negatively affected by the lack of near 

real-time data sharing. Specifically, at this time the capability to share data 

is sometimes achieved by reconstructing data from other data sources, 

which can introduce data reliability errors into the system, or batch 

processing of data, which can result in timeliness issues. For example, the 

Navy’s One Touch Support system provides the Navy with the capability to 

access logistics information from a wide variety of Navy data sources as 

well as from DLA and other military service systems. Some of these data 

are provided through near real-time data links, while other data are shared 

among the Army, Air Force, and DLA on a periodic basis through batch 

processing. 

Lateral redistribution also provides the military services and DLA with 

some capability to act upon information provided by the various systems 

within the department. Lateral redistribution is an automated capability 

used to satisfy a requisition through the most efficient and effective 

means. Generally speaking, the lateral redistribution process takes place 

when no assets are available to satisfy the requisition at the appropriate 

wholesale supply source. The item manager uses an automated query 

capability to determine if any of the military services has the item available 

in their retail systems prior to initiating a procurement action. Generally, 

redistribution of assets that exceed an activity’s authorized inventory level 

occur automatically, while redistribution of assets that comprise an 

activity’s authorized inventory level is dependent on a complex matrix of 

priorities. If an asset is found within the retail supply systems of any of the 

military services, then the lateral redistribution business rules are used to 

determine if that asset should be used to satisfy the requisition or whether 

the procurement action should proceed. 

In a series of reports issued between March 1999 and July 2004, we have 

reported numerous weaknesses in DOD’s visibility and control over items 

being shipped from one location to another. Specifically, we reported in 

March 1999 that the Navy had not effectively controlled its in-transit 

inventory and placed enormous amounts of inventory at risk of undetected 

theft or misplacement.21 For example, we found that between fiscal years 

1996 and 1998, the Navy reported that it had lost more than $3 billion in intransit inventory, including some classified and sensitive items such as 

 21 GAO, Defense Inventory: Navy’s Procedures for Controlling In-Transit Items Are Not 

Being Followed, GAO/NSIAD-99-61 (Washington, D.C.: Mar. 31, 1999). 
Page 12 GAO-05-15 Defense Inventory 

aircraft guided-missile launchers, military night vision devices, and 

communications equipment. Similarly, we reported in June 2000 that the 

Army did not know the extent to which shipped inventory was lost or 

stolen because of weaknesses in its inventory controls and financial 

management practices.22 In addition, we reported in July 2002 that the Air 

Force and contractor personnel had largely not complied with DOD and 

Air Force inventory control procedures designed to safeguard material 

shipped to contractors, placing items worth billions of dollars at risk of 

fraud, waste, and abuse.23 Most recently, we reported in July 2004 that the 

Navy had failed to maintain proper accountability and visibility over 

government furnished equipment shipped to repair contractors.24

Each of the components has ongoing efforts for developing new systems 

to improve their inventory management capabilities. For example, both 

DLA and the Army are in the process of fielding their next generation of 

inventory management systems for use at the wholesale level, Business 

Systems Modernization and Logistics Modernization Program, 

respectively. In addition, the Air Force and Navy also have similar ongoing 

efforts to redesign their logistics systems. While these efforts may help to 

attain TAV, we are concerned that DOD’s near term efforts may not be 

consistent with its long-term strategy—Business Management 

Modernization Program. For example, we reported in September 2004 that 

clear links between mid-range and long-range efforts to address 

deficiencies in DOD’s business operations were not yet established.25

Further, recent reviews of two DOD system efforts have raised concerns 

regarding aspects of DOD’s system development oversight and 

monitoring.26 For example, we recently reported that Army and DLA 

systems do not provide a corporate solution for TAV because that solution 

depends on the successful development and implementation of other 

systems for which timeframes and associated costs have not yet been fully 

 22 GAO, Defense Inventory: Army Needs to Strengthen and Follow Procedures to Control 

Shipped Items, GAO/NSIAD-00-109 (Washington, D.C.: June 23, 2000). 

23 GAO, Defense Inventory: Air Force Needs to Improve Control of Shipments to Repair 

Contractors, GAO-02-617 (Washington, D.C.: July 1, 2002). 

24 GAO, Defense Inventory: Navy Needs to Improve the Management Over GovernmentFurnished Material Shipped to Its Repair Contractors, GAO-04-779 (Washington, D.C.: 

July 23, 2004). 

25 GAO-04-910R. 

26 GAO-04-615. 

Continuing Systems 

Development Efforts May 

Not Achieve TAV by 2010 
Page 13 GAO-05-15 Defense Inventory 

defined. Achieving TAV within the Army will require the Logistics 

Modernization Program to be integrated with other Army systems 

currently under development—the Product Lifecycle Management Plus 

and Global Combat Support System-Army. As of May 2004, there were no 

estimates for the cost or time frames for completing the development and 

implementation of the Product Lifecycle Management Plus system. 

Similarly, although the Army’s capital investment program includes 

funding of more than $1 billion for the Global Combat Support SystemArmy through fiscal year 2009, the Army stated that the total cost of the 

program could not be accurately estimated until all process requirements 

are defined at some later date. 

From a departmentwide perspective, joint total asset visibility is an 

evolving process designed to (1) provide users with information on the 

location, movement, status, and identity of units, personnel, equipment, 

and supplies and (2) facilitate the capability of users to act upon the 

information. Currently, this capability is provided through the Joint Total 

Asset Visibility (JTAV) system, which relies on non-integrated inventory 

management systems within the military services and DLA for visibility 

data. While JTAV is available to users throughout the department, it does 

not provide TAV because the system is constrained by reliance on the 

availability, accuracy, and timeliness of information from the military 

services’ and DLA’s information systems. For example, a recent contractor 

study of logistics performance in Operation Iraqi Freedom stated that 

because JTAV will be replaced at the end of fiscal year 2005 and is only 

being funded to support its existing capabilities, little has changed in JTAV 

capability since the DOD Inspector General reported shortfalls in the 

system’s capability in 2002.27 In addition, the contractor study stated that 

JTAV was seen by users as being incomplete and untimely, and therefore, 

could not be relied upon. Consequently, users were accessing component 

information systems separately and integrating the data from multiple 

systems manually. 

At this time, DLA is leading a departmentwide effort called the Integrated 

Data Environment that is intended to provide joint visibility throughout 

the department. This new capability is based on establishing normalized 

data requirements that will have to be supported by existing and new 

business information systems. This capability is expected to be 

operational during fiscal year 2005 within DLA, and is expected to provide 

 27 Science Applications International Corporation, Objective Assessment of Logistics in 

Iraq, March 2004. 
Page 14 GAO-05-15 Defense Inventory 

DLA logistics data to users throughout DLA and the department. DLA’s 

capability is expected to serve as the model for instituting similar data 

environments in the military services that can ultimately be linked to 

provide visibility across the department. This departmentwide capability is 

expected to be available in August 2007. However, because the Integrated 

Data Environment utilizes data from the various military service and DLA 

systems, TAV will not be achieved through the Integrated Data 

Environment until the individual systems are developed and implemented 

within the military services and DLA. 

A number of significant impediments hinder DOD and the components’ 

abilities to attain their goals of achieving TAV. First, DOD lacks a clear 

long-term strategy to guide its TAV efforts and address key issues such as 

systems integration. Second, integration and interoperability of the 

numerous information systems used to support logistics operations and 

inventory management continue to present challenges to DOD, the military 

services, and DLA. Finally, DOD, the military services, and DLA have longstanding data accuracy and reliability issues pertaining to their numerous 

inventory management systems. Given the lack of an overarching plan to 

guide TAV efforts, the continuing integration issues, and the shortcomings 

of the existing systems, it seems unlikely that the military services and 

DLA will meet the department’s target of achieving TAV by 2010. 

Because DOD continues to rely on the individual efforts of DLA and the 

military services to achieve TAV without a clear link to its long-term 

improvement initiative the Business Management Modernization Program, 

it is unlikely DOD will achieve TAV by its 2010 target date. When we 

examined the status of TAV within DOD in 1999, we recommended that 

DOD develop a departmentwide strategic plan or common strategy and 

associated components’ implementation plans to improve the management 

and implementation of TAV. Furthermore, we recommended these plans 

be based on the outcome-oriented principles of GPRA. However, DOD 

responded that better asset management would be attained by each 

component through improvements to their business and inventory systems 

and databases. DOD’s Business Management Modernization Program is 

responsible for oversight and monitoring of the department’s business 

transformation initiatives. As part of this program, DOD is continuing its 

efforts to refine and implement the department’s business enterprise 

architecture to serve as a blueprint to guide business transformation 

efforts and business systems acquisition and development. One of the 

objectives of this architecture is to attain TAV by fiscal year 2010. 

Significant 

Impediments Hinder 

Achievement of TAV 

TAV Hindered by Lack of a 

Clear Long-Term Strategy 
Page 15 GAO-05-15 Defense Inventory 

However, as discussed below, we have previously reported that 

weaknesses exist in the design and content of the most recent version of 

the architecture. Further, we reported in September 2004 that there is no 

clear link between the components’ implementation plans and the longterm objectives of the department’s business transformation program.28

Currently, the department is required to report annually to Congress by 

March 15 of each year on the progress it is making in refining and 

implementing the business enterprise architecture in support of its 

business management modernization program. 

While the logistics community has identified TAV as one of the four pillars 

needed as the foundation for its logistics transformation in its Focused 

Logistics Campaign, it has not established a long-term strategy to focus 

and guide the components’ efforts. However, TAV is not specifically 

included in the Future Logistics Enterprise—the mid-term plan for 

logistics transformation. While the End-to-End Distribution initiative 

within the Future Logistics Enterprise incorporates many of the 

characteristics of TAV, it does not require the components to submit 

supporting plans and does not include some key elements of a 

comprehensive plan necessary to achieve TAV. For example, the 

department still has not defined a management framework, established 

accountability, identified resource requirements, or established 

performance measures in regards to TAV. 

Even when a plan to improve TAV is developed, problems with 

departmentwide implementation still occur. For example, in response to 

Program Budget Decision 422, dated December 2001, each of the military 

services developed separate plans for implementing the decision, which 

reflected a disparity in the extent to which they were willing to implement 

the departmentwide policy. While this document called for the military 

services to eliminate duplicative retail supply operations by returning 

management and ownership of DLA-managed items being held by the 

military services to DLA, the services’ implementation plans each 

interpreted the requirements differently. For example, the Navy plan 

called for a small number of pilot sites where DLA would take over the 

ownership of the DLA-managed items being stored at the Navy retail 

supply activities. The Air Force, on the other hand, did not participate in 

 28 GAO, Financial Management: Further Actions Are Needed to Establish Framework 

to Guide Audit Opinion and Business Management Improvement Efforts at DOD, 

GAO-04-910R (Washington, D.C.: Sept. 20, 2004). 
Page 16 GAO-05-15 Defense Inventory 

any of the pilot projects, and planned only to eliminate co-located 

inventory items at the Air Logistics Centers. 

DOD has not achieved the necessary integration or interoperability of its 

inventory (business) systems to support TAV. TAV cannot be achieved 

unless these multiple business systems provide users such as combatant 

commanders, operating units and inventory managers with accurate data 

on the quantity, location, condition, and movement of inventory. As part of 

its ongoing business systems modernization efforts DOD is creating a 

repository of the department’s existing business systems. As of April 2003, 

this repository contained 210 inventory-related information systems within 

the logistics domain, as shown below in table 2. 

Table 2: Reported DOD Logistics Business Systems by Functional Area 

Logistics 

Functional Area Air Force Army

Navy/

Marine Corps DFASa

 OtherbTotal

Inventory 50 90 42 4 24 210

Logistics 57 44 28 2 29 160

Transportation 8 11 2 0 11 32

Personal property management 6 5 5 0 2 18

Real property management 3 3 4 0 0 10

National defense property 

 management 2 0 1 0 0 3

Other functions combined 51 30 21 5 11 118

Acquisition 3 8 1 0 2 14

Subtotal 180 191 104 11 79 565

Source: GAO analysis of BMMP April 2003 Data. 

a

Defense Finance and Accounting Service. 

b

Includes the Defense Logistics Agency systems. 

Table 2 clearly shows that there are numerous systems operating 

throughout DOD within the logistics domain and the inventory functional 

area. As we reported in May 2004, these systems are not integrated and 

thus have multiple points of data entry, which can result in data reliability 

problems due to data input errors at the various points of data entry.29

 29 GAO-04-615. 

Information Systems 

Integration Challenges 

Hinder TAV Achievement 
Page 17 GAO-05-15 Defense Inventory 

DOD is refining and implementing a business enterprise architecture as 

part of its Business Management Modernization Program in order to define 

the common operating environment and data requirements for its business 

systems including logistics. Under the incremental approach adopted by 

DOD, the target for achieving TAV is fiscal year 2010. In the long-term, this 

architecture could serve to guide business systems investments 

throughout the department and ensure that new business systems are 

designed and built to be integrated. In May 2001, we advocated the 

creation of an architecture to guide and constrain the billions of dollars 

the department planned to spend to modernize its business systems.30 We 

reiterated this recommendation in September 2003 and further 

recommended that DOD provide more sufficient descriptive content 

related to the future business operations and supporting technology 

necessary for refining and implementing a business enterprise 

architecture.31 However, as we recently reported,32 after three years, more 

than $203 million in obligations, and disbursements totaling $111 million, 

there has not been any significant change in the content of DOD’s 

architecture. Consequently the architecture continues to lack many of the 

key elements such as sufficient descriptive content related to future 

business operations and supporting technology to support effective 

acquisition and implementation of systems solutions and associated 

operational changes. In addition, DOD has not established the necessary 

management structure, processes, and controls necessary to refine and 

implement the business enterprise architecture. For example, DOD has 

not yet (1) assigned accountability and responsibility for directing, 

overseeing, and approving the architecture; (2) developed specific 

performance measures needed to evaluate the progress made in 

developing the architecture; (3) developed either near-term or long-term 

plans for developing the architecture that explicitly identify and establish 

a baseline for actions to be taken, milestones to be achieved, cost 

estimates to be met and targeted outcomes to be achieved; and 

(4) established effective management oversight and control over ongoing 

 30 GAO, Information Technology: Architecture Needed to Guide Modernization of DOD’s 

Financial Operations, GAO-01-525 (Washington, D.C.: May 17, 2001). 

31 GAO, DOD Business Systems Modernization: Important Progress Made to 

Develop Business Enterprise Architecture, but Much Work Remains, GAO-03-1018

(Washington, D.C.: Sept. 19, 2003). 

32 GAO, DOD Business Systems Modernization: Limited Progress in Development of 

Business Enterprise Architecture and Oversight of Information Technology Investments, 

GAO-04-731R (Washington, D.C.: May 17, 2001). 
Page 18 GAO-05-15 Defense Inventory 

business systems modernization investments. Finally, as we reported in 

May 2004, DOD has not yet developed the detailed plans that include 

performance measures for the quality, content, and utility of the 

architecture in support of the incremental approached being used to 

develop the business enterprise architecture. 

Problems with data accuracy and reliability of data pertaining to the 

quantity, location, and value of inventory within the numerous inventory 

management systems are long-standing issues that hinder the achievement 

of TAV. For example, military service audit agencies and the DOD 

Inspector General identified various types of inaccurate inventory data in 

the military services’ information systems. Since fiscal year 2002, these 

inaccuracies included more than $200 million of excess or unrecorded 

inventory that was not visible to item managers as well as significant 

misstatements in the reported inventory balances. Since these unrecorded 

inventories were not visible to item managers, they could not be used to 

satisfy current operating requirements and represent an unnecessary cost 

if additional inventory was purchased that was not needed. To illustrate 

this point, the Air Force Audit Agency identified a $3.3 million 

overstatement in the procurement and repair requirements for three 

aircraft systems that resulted from the lack of visibility over $10.8 million 

worth of inventory for these three systems. 

Because DOD does not have integrated systems, methods such as multiple 

points of entry, manual reentry of data, and data interpreters are relied 

upon to enable data sharing among the various DOD, DLA, and military 

service systems. All of these methods introduce the potential for 

inaccurate data. For example, in fielding emerging systems such as the 

Business Systems Modernization and the Logistics Modernization 

Program, numerous interfaces had to be developed with existing systems 

to enable data sharing. When some of these interfaces did not work as 

intended, manual reentry of transactions was relied upon to enable the 

required data transfer. According to DOD officials these, problems were 

only a temporary solution until modifications to the interfaces could be 

made. This problem was not only costly, but could have also led to the 

introduction of inaccurate and unreliable data into emerging systems. 

Long-Standing Data 

Accuracy and Reliability 

Issues Hamper TAV 

Achievement 
Page 19 GAO-05-15 Defense Inventory 

DOD, the military services, and DLA have made little progress in assuring 

that inventory management systems that provide visibility over spare and 

repair parts are substantially compliant with the requirements of the 

Federal Financial Management Improvement Act (FFMIA) of 1996. The 

department recognizes the weaknesses in their financial management 

systems in general and stated in DOD’s Performance and Accountability 

Report for fiscal year 2003 that these systems did not substantially comply 

with Federal financial management systems requirements, generally 

accepted accounting principles, and the U.S. Government Standard 

General Ledger at the transaction level. In addition, the report stated that 

DOD’s financial management and feeder systems could not provide 

adequate evidence to support various material amounts on the financial 

statements. Since 1990, we have identified inventory management as a 

high-risk area within DOD and specifically identified DOD’s outdated and 

ineffective management information systems as a primary factor causing 

this weakness. Inventory management system weaknesses hinder DOD’s 

and components’ efforts to collect accurate, reliable, and timely financial 

information. 

While DOD is currently requiring the military services and DLA to certify 

that emerging systems are in substantial compliance with federal financial 

management requirements, we are concerned that the department lacks 

adequate policies and procedures to determine whether compliance has in 

fact been achieved. For example, we recently reported that in developing 

the Business Systems Modernization and Logistics Modernization 

Program, DLA and the Army, respectively, had not fully defined the 

capabilities required from these systems or how these capabilities would 

be tested to ensure the new systems provided the capabilities needed, 

including whether the systems comply with federal financial management 

requirements.33 In addition we found, in both instances, that testing of 

transactions was not performed to validate that they would be processed 

as intended. For example, to test the Logistics Modernization Program, the 

Army relied upon Joint Financial Management Improvement Program 

(JFMIP)34 testing of the commercial off the shelf software in fiscal year 

 33 GAO-04-615. 

34 The Joint Financial Management Improvement Program is a joint and cooperative 

undertaking of the Department of the Treasury, the GAO, the Office of Management and 

Budget, and the Office of Personnel Management working in cooperation with each other 

and other agencies to improve financial management practices in government. The 

Program Management Office, managed by the Executive Director, tests vendor 

commercial-off-the-shelf packages and certifies that they meet certain federal financial 

management systems requirements for core financial systems. 

DOD Has Made Little 

Progress toward 

Assuring That 

Inventory Systems 

Comply with 

Financial Standards 
Page 20 GAO-05-15 Defense Inventory 

1999 to validate that 147 requirements were satisfied for the Logistics 

Modernization Program. We concluded that JFMIP’s testing should not be 

relied on to validate these requirements because it did not address entityspecific tests of transactions or systems interfaces. In addition, because 

the Army modified the basic commercial software package, the Army 

cannot be assured that these 147 requirements will produce the intended 

results. Consequently, although these two systems were certified as being 

compliant, the weaknesses identified in the certification process raise 

concerns regarding the system’s compliance with the FFMIA 

requirements. 

While considerable efforts were made to increase asset visibility over 

spare and repair parts in storage, DOD did not attain TAV by the end of 

fiscal year 2004. Further, it remains questionable whether DOD will 

achieve TAV by fiscal year 2010. While some efforts have been undertaken 

to increase asset visibility, these efforts have been limited to specific 

components due to the absence of an effective departmentwide long-term 

strategy. As a result, DOD’s efforts to achieve TAV have generally been 

narrow in scope, uncoordinated with other components, not integrated 

with other inventory management systems, and fail to address longstanding data reliability problems. Without an effective long-term strategy 

containing goals, measures, time frames, and accountability, wartime 

logistics problems similar to those encountered in our most recent 

operations in Iraq are likely to continue. These problems could negatively 

impact readiness, could cause operating units to resort to inefficient 

practices such as cannibalization, and could result in the unnecessary 

expenditure of millions or even billions of dollars on unneeded inventory 

or on systems and initiatives that do not attain TAV. In addition, DOD has 

made little progress in assuring that its inventory management systems 

comply with federal financial management standards, and we remain 

concerned that system tests were not conducted to validate that relevant 

data were processed as intended. Until DOD ensures that its inventory 

management systems are fully compliant with federal financial 

management standards, concerns will remain about the quality of the 

financial data reported and its value for making inventory management 

decisions related to procurement and distribution of items. 

Conclusions 
Page 21 GAO-05-15 Defense Inventory 

We continue to believe, as we recommended in April 1999, that DOD 

should develop a cohesive, departmentwide plan to ensure that TAV is 

achieved. Specifically, we recommend that the Secretary of Defense 

develop a departmentwide long-term TAV strategy as part of the Business 

Enterprise Architecture that 

• describes the complete management structure and assigns 

accountability to specific offices throughout the department, with 

milestones and performance measures, for ensuring timely success in 

achieving TAV; 

• identifies the resource requirements for implementing TAV and 

includes related investment analyses that show how the major 

information technology investments will support TAV goals; 

• identifies how departmentwide systems issues that affect 

implementation of TAV will be addressed; and 

• establishes outcome-oriented TAV goals and performance measures for 

all relevant components and closely links the measures with timelines 

for improvement. 

In addition, since 2001, we have made a number of recommendations 

aimed at improving DOD’s refinement and implementation of the business 

management modernization program. Most recently, we identified the 

need to have component plans clearly linked to the long-term objectives of 

the department’s business management modernization program. As they 

relate to TAV, we continue to believe that these recommendations are 

valid. 

If the Congress wants a better understanding of the department’s plans 

and progress for attaining TAV, it may wish to consider having the 

Secretary of Defense include a section specifically addressing TAV 

implementation in its annual report to the Congress on the progress it is 

making in refining and implementing the business enterprise architecture 

in support of the business management modernization program, as 

required by section 332 of the fiscal year 2005 national defense 

authorization act. Specifically, the Congress may wish to consider 

requiring the Secretary of Defense to outline in this annual report the 

department’s plans, milestones, performance measures, and progress for 

attaining TAV throughout the department. 

Recommendations 

Matter for 

Congressional 

Consideration 
Page 22 GAO-05-15 Defense Inventory 

In commenting on a draft of this report, the Acting Deputy Under 

Secretary of Defense for Logistics and Materiel Readiness concurred with 

the intent of our first three recommendations and partially concurred with 

our last recommendation. Specifically, the department acknowledges the 

need to improve visibility over spare and repair parts, but believes that its 

current strategy of modernizing logistics systems and implementing an 

integrated data approach is the way to achieve TAV. In addition, while 

DOD’s comments also recognized the need to place increased emphasis on 

TAV in its modernization program and ensure that the component efforts 

link more closely to long-term objectives like TAV, the comments did not 

include specific actions the department plans to take to address its asset 

visibility weaknesses, nor did it provide milestones for when it plans to 

implement all of its modernization programs. Because DOD does not plan 

to modify its approach to implementing TAV, we have added a matter for 

congressional consideration suggesting that the Congress may wish to 

require the Secretary of Defense to report annually on the Department’s 

plans and progress for attaining TAV. DOD’s comments are reprinted in 

appendix III of this report. 

In concurring with the intent of our recommendations that the Secretary 

of Defense develop a deparmentwide long-term TAV strategy that 

(1) describes the complete management structure and assigns 

accountability to specific offices throughout the department, with 

milestones and performance measures for ensuring timely success in 

achieving TAV, (2) identifies the resource requirements for implementing 

TAV and includes related investment analyses that show how the major 

information technology investments will support TAV goals, and 

(3) identifies how departmentwide systems issues that affect 

implementation of TAV will be addressed, DOD stated that these issues 

would be addressed as part of the ongoing business systems 

modernization programs. However, as discussed in this report, these 

ongoing efforts may not ensure that DOD will attain TAV. For example, we 

reported in May 2004 that DOD had not yet established the necessary 

management structure, processes, or controls necessary to refine and 

implement the business enterprise architecture, a key component of 

DOD’s business management modernization program. In addition, 

component efforts to modernize business systems will not necessarily 

provide solutions to TAV because these efforts rely on the creation of yet 

more systems to attain TAV. Without a departmentwide long-tem strategy 

as part of the Business Enterprise Architecture that clearly identifies how 

business systems modernization programs relate to and address TAV, DOD 

may not achieve its TAV goal. 

Agency Comments 

and Our Evaluation 
Page 23 GAO-05-15 Defense Inventory 

In partially concurring with our recommendation that the Secretary of 

Defense develop a departmentwide long-term TAV strategy that 

establishes outcome-oriented goals and performance measures for all 

relevant components and links the measures with timelines for 

improvement, DOD stated that outcome-oriented goals and measures 

specific to the end-to-end supply chain, such as customer wait time, will 

continue to be monitored. We agree that measures such as customer wait 

time should continue to be monitored. Similarly, we agree that having a 

viable data strategy as part of the Business Enterprise Architecture and a 

sound portfolio management process are also essential to attaining TAV. 

However, as we reported in May 2004, DOD had not yet established an 

effective management oversight and control process for ongoing business 

systems modernization investments. In addition, the integrated data 

environment, which could provide the viable data strategy, is still under 

development. With business systems modernization taking place while 

both the integrated data environment and business enterprise architecture 

are still being developed, a departmentwide long-term strategy becomes 

even more critical to ensure that the modernization efforts support the 

department’s objectives such as TAV. 

We are sending copies of this report to Chairman and Ranking Member, 

House Appropriations Subcommittee on Defense. We are also sending 

copies to the Secretary of Defense; the Director, Office of Management 

and Budget; the Secretary of the Army; the Secretary of the Navy; the 

Secretary of the Air Force; and the Director, Defense Logistics Agency. 

Copies will also be available at no charge on our Web site at 

http://www.gao.gov
Page 24 GAO-05-15 Defense Inventory 

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

at (202)512-8365 or e-mail me at solisw@gao.gov. GAO contacts and key 

contributors to this report are listed in appendix IV. 

Sincerely yours, 

William M. Solis 

Director, Defense Capabilities and Management 
Appendix I: Scope and Methodology 

Page 25 GAO-05-15 Defense Inventory 

To determine what progress has been made in implementing TAV within 

DOD, the military services, and the DLA, we obtained and analyzed 

information on various initiatives pertaining to improving inventory 

management practices. We reviewed these initiatives to identify the 

objectives and scope of the initiatives. We also evaluated whether these 

initiatives would have any impact on the visibility over assets. To learn 

more about the initiatives themselves and what benefits would be derived 

from implementing them, we interviewed knowledgeable officials from the 

following logistics organizations: 

• Department of Air Force: Deputy Chief of Staff Installations & 

Logistics, Directorate of Logistics Readiness, Material Management 

Policy Division; AF/ILFD; Deputy Chief of Staff Installations & 

Logistics, Maintenance Management Division; Air Force Material 

Command; 

• Department of Army: Supply Policy Division, Headquarters, Office of 

the Deputy Chief of Staff, G4; Supply Policy & Logistics Automation 

Task Force, Headquarters, Office of the Deputy Chief of Staff, G4; 

Transportation, Headquarters Army Material Command; Headquarters, 

Office of the Deputy Chief of Staff, G4-LESCO; Headquarters Army 

Material Command; DALO-SMP; DALO-TEO; Headquarters, Army 

Material Command-Logistics Support Activity; 

• Department of Navy: Naval Supply Systems Command; 

• Defense Logistics Agency: DLA/J-333-Supply Chain Integration 

Division; and 

• The Joint Staff Directorate of Logistics (J-4). 

Additionally, we relied on other GAO audit work for information about 

some on-going business systems modernization efforts as they related to 

inventory management. Finally, we analyzed the findings documented in 

audit reports prepared by the DOD Inspector General and the military 

service audit agencies dating back to fiscal year 2001 as another means of 

gauging the amount of progress being made in implementing TAV. 

To identify the impediments that DOD, the military services, and DLA 

must overcome in order to achieve TAV, we reviewed previous GAO 

reports (including the 1999 report on TAV). We also reviewed DOD 

Inspector General reports and military service audit reports pertaining to 

asset visibility and inventory management to determine if additional 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 26 GAO-05-15 Defense Inventory 

impediments existed and whether previously identified impediments 

continue to be a problem. We also discussed impediments to achieving 

TAV with the officials identified above as well as officials from the Supply 

Chain Integration Office and the Transportation Policy Office within the 

Office of Deputy Under Secretary of Defense Logistics Materiel Readiness. 

Also we reviewed policies, rules, and regulations to determine what 

departmentwide guidance are provided for achieving TAV. Lastly, we 

relied on other GAO audit work for information about (1) logistics 

challenges experienced during Operation Iraqi Freedom due to inadequate 

asset visibility, (2) the Business Enterprise Architecture effort underway 

and its relationship to TAV, and (3) the relationship between DOD 

component improvement initiatives and the departments business 

management modernization program. 

To assess what progress has been made in ensuring that inventory 

management systems are fully compliant with statutory requirements for 

federal financial management systems, we reviewed the requirements 

outlined in the Federal Financial Management Improvement Act of 1996 

and the standards prescribed in the Joint Financial Management 

Improvement Program. Additionally, we relied on other GAO audit work 

for information about how DOD is ensuring compliance of existing and 

emerging inventory systems with the federal financial management 

systems requirements. 

We conducted our work from August 2003 to August 2004 in accordance 

with generally accepted government auditing standards. 
Appendix II: Key Programs and Systems 

Page 27 GAO-05-15 Defense Inventory 

Future Logistics Enterprise—DOD’s mid-term vision to accelerate 

logistics improvements, enhance support to the warfighter, and align 

logistics processes with the operational demands of the 21st century. The 

Future Logistics Enterprise builds upon and accelerates specific, ongoing 

service and agency initiatives to meet the requirements of the Quadrennial 

Defense Review and the National Defense Strategy. 

End-to-End Distribution—One of six initiatives contained in the Future 

Logistics Enterprise. End-to-End Distribution is designed to streamline 

warfighter support by providing materiel, including retrograde and 

associated information from the source of supply or point of origin to the 

point of use. 

Focused Logistics Campaign Plan—A comprehensive, integrated 

approach for achieving full spectrum support for the future joint 

warfighter. The plan describes how the full potential of focused logistics 

will be achieved through revolutionary changes to information systems, 

reengineered processes, innovation in organizational structures, and 

advances in transportation technology. 

Business Management Modernization Program—The Business 

Management Modernization Program is the department's business 

transformation initiative and encompasses defense policies, processes, 

people, and systems that guide, perform, or support all aspects of business 

management—including development and implementation of the business 

enterprise architecture. The Under Secretary of Defense (Comptroller) 

established a program management office called Business Modernization 

and Systems Integration (BMSI), to oversee and manage the program. 

Business enterprise architecture—The business enterprise 

architecture is designed to provide a clear and comprehensive picture of 

DOD’s business operations across six domains. This picture consists of a 

snapshot of the current operational and technical environment and its 

target environment, as well as a capital investment roadmap for 

transitioning from the current environment to the target environment. 

Joint Total Asset Visibility—Joint Total Asset Visibility is the Defense 

Department’s evolving process designed to track equipment, personnel, 

and supplies. 

Logistics Modernization Program—The Army Materiel Command 

system that will be used to capture logistics data from the wholesale 

supply system. It will replace two existing materiel management systems, 

Appendix II: Key Programs and Systems 
Appendix II: Key Programs and Systems 

Page 28 GAO-05-15 Defense Inventory 

the Commodity Command Standard System and the Standard 

Depot System. 

Business systems modernization—The DLA system that will replace 

two existing materiel management systems, the Standard Automated 

Materiel Management System and the Defense Integrated Subsistence 

Management System. 

Integrated data environment—This initiative will provide the capability 

to integrate DOD logistics information within DLA. The environment will 

facilitate the sharing of data across the department. 

Global Combat Support System—This is a family of systems that are 

designed to provide an information-centric environment thereby allowing 

DOD users to access shared data and applications regardless of location. 

Standard General Ledger—The Standard General Ledger provides a 

uniform Chart of Accounts and technical guidance to be used in 

standardizing Federal agency accounting. 

Joint Financial Management Improvement Program—The Joint 

Financial Management Improvement Program is a joint and cooperative 

undertaking of the Department of the Treasury, the GAO, the Office of 

Management and Budget, and the Office of Personnel Management 

working in cooperation with each other and other agencies to improve 

financial management practices in government. The Program Management 

Office, managed by the Executive Director, tests vendor commercial-offthe-shelf packages and certifies that they meet certain federal financial 

management systems requirements for core financial systems. 

Virtual Master Stock Inventory Record—The Virtual Master Stock 

Inventory Record is a database managed by the Navy that displays stock 

availability at the major Navy stock points. The Virtual Master Stock 

Inventory Record also provides the capability to view quantity and 

location of specific items. 
Appendix III: Comments from the Department 

of Defense 

Page 29 GAO-05-15 Defense Inventory 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 30 GAO-05-15 Defense Inventory 
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

Page 31 GAO-05-15 Defense Inventory 

David Schmitt (757) 552-8124 

John Wren (757) 552-8235 

In addition to the individuals named above, key contributors to this report 

included Ann DuBois, Shvetal Khanna, Harry Knobler, Katherine Lenane, 

and Janine Prybyla. 

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Acknowledgments 

(350420) 
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