a

GAO

United States Government Accountability Office

Report to the Subcommittee on Oversight 

of Government Management, the Federal 

Workforce, and the District of Columbia, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate

January 2007 DOD’S HIGH-RISK 

AREAS

Progress Made 

Implementing Supply 

Chain Management 

Recommendations, 

but Full Extent of 

Improvement 

Unknown

GAO-07-234
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2007

DOD’S HIGH-RISK AREAS 

Progress Made Implementing Supply 

Chain Management Recommendations, 

but Full Extent of Improvement Unknown 

Highlights of GAO-07-234, a report to the 

Subcommittee on Oversight of 

Government Management, the Federal 

Workforce, and the District of Columbia, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

Military operations in Iraq and 

Afghanistan have focused attention 

on the Department of Defense’s 

(DOD) supply chain management. 

The supply chain can be critical to

determining outcomes on the

battlefield, and the investment of 

resources in DOD’s supply chain is 

substantial. In 2005, with the

encouragement of the Office of

Management and Budget (OMB),

DOD prepared an improvement

plan to address some of the 

systemic weaknesses in supply 

chain management. GAO was 

asked to monitor implementation 

of the plan and DOD’s progress 

toward improving supply chain

management. GAO reviewed (1) 

the integration of supply chain 

management with broader defense 

business transformation and 

strategic logistics planning efforts; 

and (2) the extent DOD is able to

demonstrate progress. In addition, 

GAO developed a baseline of prior 

supply chain management 

recommendations. GAO surveyed 

supply chain-related reports issued

since October 2001, identified

common themes, and determined

the status of the recommendations. 

What GAO Recommends

GAO recommends that DOD 

complete its logistics strategy and 

develop and implement outcomefocused performance metrics and 

cost metrics for supply chain 

management. DOD concurred with

GAO’s recommendations. 

DOD’s success in improving supply chain management is closely linked with 

its defense business transformation efforts and completion of a 

comprehensive, integrated logistics strategy. Based on GAO’s prior reviews 

and recommendations, GAO has concluded that progress in DOD’s overall 

approach to business defense transformation is needed to confront problems 

in other high-risk areas, including supply chain management. DOD has taken 

several actions intended to advance business transformation, including the 

establishment of new governance structures and the issuance of an 

Enterprise Transition Plan aligned with the department’s business enterprise 

architecture. As a separate effort, DOD has been developing a strategy—

called the “To Be” logistics roadmap—to guide logistics programs and 

initiatives across the department. The strategy would identify the scope of 

logistics problems and capability gaps to be addressed and include specific 

performance goals, programs, milestones, and metrics. However, DOD has 

not identified a target date for completion of this effort. According to DOD 

officials, its completion is pending the results of the department’s ongoing 

test of new concepts for managing logistic capabilities. Without a 

comprehensive, integrated strategy, decision makers will lack the means to 

effectively guide logistics efforts, including supply chain management, and 

the ability to determine if these efforts are achieving desired results. 

DOD has taken a number of actions to improve supply chain management, 

but the department is unable to demonstrate at this time the full extent of its 

progress that may have resulted from its efforts. In addition to implementing 

audit recommendations, DOD is implementing initiatives in its supply chain 

management improvement plan. However, it is unclear how much progress 

its actions have resulted in because the plan generally lacks outcomefocused performance metrics that track progress in the three focus areas 

and at the initiative level. DOD’s plan includes four high-level performance 

measures, but these measures do not explicitly relate to the focus areas, and 

they may be affected by many variables, such as disruptions in the 

distribution process, other than DOD’s supply chain initiatives. Further, the 

plan does not include overall cost metrics that might show efficiencies 

gained through the efforts. Therefore, it is unclear whether DOD is meeting 

its stated goal of improving the provision of supplies to the warfighter and 

improving readiness of equipment while reducing or avoiding costs. 

Over the last 5 years, audit organizations have made more than 400

recommendations that focused specifically on improving certain aspects of 

DOD’s supply chain management. About two-thirds of the recommendations 

had been closed at the time GAO conducted its review, and most of these 

were considered implemented. Of the total recommendations, 41 percent 

covered the focus areas in DOD’s supply chain management improvement 

plan: requirements forecasting, asset visibility, and materiel distribution. The 

recommendations addressed five common themes—management oversight, 

performance tracking, planning, policy, and processes. 

www.gao.gov/cgi-bin/getrpt?GAO-07-234.

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. 
Page i GAO-07-234 DOD’s High-Risk Areas

Contents

Letter 1

Results in Brief 3

Background 6

Improvements to Supply Chain Management Are Linked with 

Overall Defense Business Transformation and Completion of a 

Comprehensive, Integrated Logistics Strategy 7

DOD Is Unable to Demonstrate the Full Extent of Its Progress 

Toward Improving Supply Chain Management 12

DOD’s Supply Chain Management Plan Does Not Track Performance 

Outcomes and Costs Metrics Associated with Focus Areas and 

Initiatives 14

DOD Has Implemented Recommendations for Improving Aspects of 

Supply Chain Management 16

Conclusions 22

Recommendations for Executive Action 23

Agency Comments and Our Evaluation 23

Scope and Methodology 24

Appendixes

Appendix I: Supply Chain Management: Summary of GAO Report 

Recommendations 28

Appendix II: Supply Chain Management: Summary of 

DOD-IG Report Recommendations 60

Appendix III: Supply Chain Management: Summary of 

Army Audit Agency Report Recommendations 84

Appendix IV: Supply Chain Management: Summary of 

Air Force Audit Agency Report Recommendations 124

Appendix V: Supply Chain Management: Summary of 

Naval Audit Service Report Recommendations 138

Appendix VI: Supply Chain Management: Summary of 

Non-audit Organization Report Recommendations 146

Appendix VII: Comments from the Department of Defense 157

Appendix VIII: GAO Contact and Staff Acknowledgments 159

Table Table 1: Audit Recommendations to Improve Supply Chain 

Management 20
Contents

Page ii GAO-07-234 DOD’s High-Risk Areas

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Page 1 GAO-07-234 DOD’s High-Risk Areas

United States Government Accountability Office

Washington, D.C. 20548

A

January 17, 2007 Letr

The Honorable Daniel K. Akaka

Chairman

The Honorable George V. Voinovich

Ranking Minority Member

Subcommittee on Oversight of Government Management, the Federal

Workforce, and the District of Columbia

Committee on Homeland Security and Governmental Affairs

United States Senate

Military operations in Iraq and Afghanistan have focused attention on the 

performance of the Department of Defense’s (DOD) supply chain 

management in support of deployed U.S. troops. The availability of spare 

parts and other critical supply items affects the readiness and operational 

capabilities of U.S. military forces, and the supply chain can be a critical 

link in determining outcomes on the battlefield. Moreover, the investment 

of resources in the supply chain is substantial, amounting to more than 

$150 billion a year according to DOD. As a result of weaknesses in DOD’s 

management of supply inventories and responsiveness to warfighter 

requirements, supply chain management has been on our list of high-risk 

federal government programs since 1990. We initially focused on inventory 

management and later determined that problems extended to other parts of 

the supply chain, to include requirements forecasting, asset visibility, and 

materiel distribution.1

In 2005, with the encouragement of the Office of Management and Budget 

(OMB), DOD developed a plan to address some of the systemic weaknesses 

as a first step toward removing supply chain management from our highrisk list. Since then we have reviewed and commented on DOD’s progress 

toward implementing its supply chain management improvement plan, the 

linkage of this plan with other DOD logistics2

 plans, and the extent to which 

DOD has incorporated performance metrics for tracking and

1

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).

2

DOD defines “logistics” as the science of planning and carrying out the movement and 

maintenance of forces. Logistics has six functional areas: supply, maintenance, 

transportation, civil engineering, health services, and other services.
Page 2 GAO-07-234 DOD’s High-Risk Areas

demonstrating progress.3 We have stated that, overall, DOD’s plan 

addressing supply chain management is a good first step toward putting 

DOD on a path toward resolving long-standing supply chain management 

problems, but that the department faces a number of challenges and risks 

in fully implementing its proposed changes across the department and 

measuring progress.

In response to your Committee’s request, we have continued to monitor 

DOD’s progress toward resolving supply chain management problems. 

Specifically, this report discusses (1) the integration of supply chain 

management with broader defense business transformation and strategic 

logistics planning efforts and (2) the extent to which DOD is able to 

demonstrate progress toward improving supply chain management. In 

addition, we developed a baseline of recommended improvements to 

DOD’s supply chain management that have been made over the past 5 

years.

Our discussion of the integration of supply chain management with broader 

defense business transformation efforts is based primarily on our prior 

reports and testimonies. We obtained information from officials in the 

Office of the Secretary of Defense on their efforts to develop an 

overarching strategy to guide departmentwide logistics programs and 

initiatives. We met regularly with DOD and OMB officials to discuss the 

overall status of the supply chain management improvement plan, the 

implementation schedules of the plan’s individual initiatives, and the plan’s 

performance measures. We visited and interviewed officials from U.S. 

Transportation Command, the Defense Logistics Agency, the military 

services, and the Joint Staff to gain their perspectives on improving supply 

chain management. In developing a baseline of recommended supply chain 

management improvements, we surveyed audit reports issued between 

October 2001 and September 2006 by our office, the Department of Defense 

Office of the Inspector General (DOD-IG), and the military service audit 

agencies. We selected this time period because it corresponds with the 

onset of recent military operations that began with Operation Enduring 

Freedom. For each audit recommendation contained in these reports, we 

determined its status and focus. In analyzing the status of 

3

GAO, DOD’s High-Risk Areas: High-Level Commitment and Oversight Needed for DOD 

Supply Chain Plan to Succeed, GAO-06-113T (Washington, D.C.: Oct. 6, 2005) and DOD’s 

High-Risk Areas: Challenges Remain to Achieving and Demonstrating Progress in Supply 

Chain Management, GAO-06-983T (Washington, D.C.: July 25, 2006).
Page 3 GAO-07-234 DOD’s High-Risk Areas

recommendations, we determined whether DOD or the component 

organization4

 concurred with the recommendations, whether the 

recommendations were closed, and whether closed recommendations had 

been implemented. We determined that the data we obtained from the 

DOD-IG and the service audit agencies were sufficiently reliable for our 

purposes. In analyzing the focus of recommendations, we identified those 

addressing three specific areas—requirements forecasting, asset visibility, 

and materiel distribution—as well those addressing other supply chain 

management concerns. We selected these three focus areas as the 

framework for our analysis based on our prior work in this high-risk area 

and because DOD has structured its supply chain management 

improvement plan around them. While we included recommendations by 

non-audit organizations in our analysis, we did not determine the extent to 

which DOD concurred with or implemented them because their status is 

not systemically tracked. Additional information on our analysis, including 

further explanation of the terms used in describing the status of 

recommendations, is discussed in the scope and methodology section. We 

conducted our review from January through November 2006 in accordance 

with generally accepted government auditing standards.

Results in Brief DOD’s success in improving supply chain management is closely linked 

with its overall defense business transformation efforts and completion of 

a comprehensive, integrated logistics strategy. Our prior reviews and 

recommendations have addressed business management problems that 

adversely affect the economy, efficiency, and effectiveness of DOD’s 

operations, and that have resulted in a lack of adequate accountability 

across several of DOD’s major business areas. We have concluded that 

progress in DOD’s overall approach to business transformation—identified 

as a high-risk area in 2005—is needed to confront other high-risk areas, 

including supply chain management. We have made a number of 

recommendations to address defense business transformation, including 

strengthening the management of DOD’s business systems modernization 

through the adoption of enterprise architecture and investment 

management best practices. In response, DOD has taken several actions 

intended to advance transformation, such as establishing governance 

structures like the Business Transformation Agency and developing an 

Enterprise Transition Plan aligned with its business enterprise 

4

Depending on the nature of the recommendation, the component organization responding 

to it may be a military service, defense agency, command, or another office within DOD.
Page 4 GAO-07-234 DOD’s High-Risk Areas

architecture. As a separate effort, DOD has been developing a strategy to 

guide logistics programs and initiatives across the department. Called the 

“To Be” logistics roadmap, this strategy would identify the scope of 

logistics problems and capability gaps to be addressed and include specific 

performance goals, programs, milestones, resources, and metrics to guide 

improvements in supply chain management and other areas of DOD 

logistics. DOD has not established a target date for completing the “To Be” 

logistics roadmap. According to DOD officials, its completion is pending 

the results of the department’s ongoing test of new concepts for managing 

logistics capabilities. Initial results of this test are expected to be available 

in the spring of 2007. We have also noted previously that while DOD and its 

component organizations have developed multiple plans for improving 

aspects of logistics, the linkages among these plans have not been clearly 

shown. Without a comprehensive, integrated logistics strategy, decision 

makers will lack the means to effectively guide logistics efforts, including 

supply chain management, and the ability to determine if these efforts are 

achieving the desired results.

DOD has taken a number of actions to improve supply chain management, 

but the department is unable to demonstrate at this time the full extent of 

progress that may have resulted from its efforts. In addition to 

implementing audit recommendations, as discussed below, DOD is 

implementing initiatives in its supply chain management improvement 

plan. However, it is unclear how much progress its actions have resulted in 

because the plan generally lacks outcome-focused performance metrics 

that track progress in the three focus areas and at the initiative level. 

Performance metrics are essential for demonstrating progress toward 

achieving goals and providing information on which to base organizational 

and management decisions. Moreover, outcome-focused performance 

metrics show results or outcomes related to an initiative or program in 

terms of its effectiveness, efficiency, impact, or all of these. DOD’s plan 

includes four high-level performance measures that are being tracked 

across the department, but these measures do not explicitly reflect the 

performance of the initiatives or relate to the focus areas. Additionally, 

these measures may be affected by many variables other than DOD’s supply 

chain initiatives. For example, changes in customer wait time could result 

from wartime surges in requirements or disruption in the distribution 

process; hence, improvements in the high-level performance measures do 

not necessarily reflect the success of an initiative in DOD’s supply chain 

management improvement plan. Further, the plan does not include overall 

cost metrics that might show efficiencies gained through improvement 

efforts. Although DOD faces challenges to developing departmentwide 
Page 5 GAO-07-234 DOD’s High-Risk Areas

supply chain performance measures, such as the difficulty of obtaining 

standardized, reliable data from noninteroperable systems, without 

outcome-focused performance and cost metrics, it is unclear whether DOD 

is progressing toward meeting its stated goal of improving the provision of 

supplies to the warfighter and improving readiness of equipment while 

reducing or avoiding costs through its supply chain initiatives.

In developing a baseline of recommended supply chain management 

improvements, we identified 478 recommendations that audit 

organizations have made between October 2001 and September 2006. DOD 

or the component organization concurred with 411 (86 percent) of the total 

recommendations. In addition, 315 (66 percent) recommendations had 

been closed, and 275 (87 percent) of the closed recommendations had been 

implemented at the time we conducted our review. The three focus areas of 

requirements forecasting, asset visibility, and materiel distribution 

accounted for 196 (41 percent) of the total recommendations, while other 

inventory management issues accounted for most of the remaining 

recommendations. In addition, we further grouped the recommendations 

into five common themes—management oversight, performance tracking, 

planning, policy, and processes. Most of the recommendations addressed 

processes (38 percent), management oversight (30 percent), or policy (22 

percent), with comparatively fewer addressing planning (7 percent) and 

performance tracking (4 percent).5

 Studies conducted by non-audit 

organizations, such as the Center for Strategic and International Studies 

and the Defense Science Board, made recommendations that address 

supply chain management as part of a broader review of DOD logistics. For 

example, both these organizations have suggested the creation of a 

departmentwide logistics command responsible for end-to-end supply 

chain operations.

We are making recommendations to the Secretary of Defense to improve 

DOD’s ability to guide logistics programs and initiatives across the 

department and to demonstrate the effectiveness, efficiency, and impact of 

its efforts to resolve supply chain management problems. In commenting 

on a draft of this report, DOD concurred with our recommendations.

5

Percentages in this report do not always add to 100 due to rounding.
Page 6 GAO-07-234 DOD’s High-Risk Areas

Background For 16 years, DOD’s supply chain management processes have been on our 

list of high-risk areas needing urgent attention because of long-standing 

systemic weaknesses that we have identified in our reports. We initiated 

our high-risk program in 1990 to report on government operations that we 

identified as being at high risk for fraud, waste, abuse, and 

mismanagement. The program serves to identify and help resolve serious 

weaknesses in areas that involve substantial resources and provide critical 

services to the public.

Removal of a high-risk designation may be considered when legislative and 

agency actions, including those in response to our recommendations, result 

in significant and sustainable progress toward resolving a high-risk 

problem.6

 Key determinants include a demonstrated strong commitment to 

and top leadership support for addressing problems, the capacity to do so, 

a corrective action plan that provides for substantially completing 

corrective measures in the near term, a program to monitor and 

independently validate the effectiveness of corrective measures, and 

demonstrated progress in implementing corrective measures.

Beginning in 2005, DOD developed a plan for improving supply chain 

management that could reduce its vulnerability to fraud, waste, abuse, and 

mismanagement and place it on the path toward removal from our list of 

high-risk areas. This supply chain management improvement plan, initially 

released in July 2005, contains 10 initiatives proposed as solutions to 

address the root causes of problems we identified from our prior work in 

the areas of requirements forecasting, asset visibility, and materiel 

distribution.

DOD defines requirements as the need or demand for personnel, 

equipment, facilities, other resources, or services in specified quantities for 

specific periods of time or at a specified time. Accurately forecasted supply 

requirements are a key first step in buying, storing, positioning, and 

shipping items that the warfighter needs. DOD describes asset visibility as 

the ability to provide timely and accurate information on the location, 

quantity, condition, movement, and status of supplies and the ability to act 

on that information. Distribution is the process for synchronizing all 

6

GAO, Determining Performance and Accountability Challenges and High Risks, GAO-01-

159SP (Washington, D.C.: November 2000).
Page 7 GAO-07-234 DOD’s High-Risk Areas

elements of the logistics system to deliver the “right things” to the “right 

place” at the “right time” to support the warfighter.

Improvements to 

Supply Chain 

Management Are 

Linked with Overall 

Defense Business 

Transformation and 

Completion of a 

Comprehensive, 

Integrated Logistics 

Strategy

DOD’s success in improving supply chain management is closely linked 

with its overall defense business transformation efforts and completion of 

a comprehensive, integrated logistics strategy. In previous reports and 

testimonies, we have stated that progress in DOD’s overall approach to 

business transformation is needed to confront problems in other high-risk 

areas, including supply chain management. DOD has taken several steps 

intended to advance business transformation, including establishing new 

governance structures and aligning new information systems with its 

business enterprise architecture. Another key step to supplement these 

ongoing transformation efforts is completion of a comprehensive, 

integrated logistics strategy that would identify problems and capability 

gaps to be addressed, establish departmentwide investment priorities, and 

guide decision making.

DOD Is Taking Steps to 

Advance Business 

Transformation

DOD’s success in improving supply chain management is closely linked 

with overall defense business transformation. Our prior reviews and 

recommendations have addressed business management problems that 

adversely affect the economy, efficiency, and effectiveness of DOD’s 

operations, and that have resulted in a lack of adequate accountability 

across several of DOD’s major business areas.7

 We have concluded that 

progress in DOD’s overall approach to business transformation is needed to 

confront other high-risk areas, including supply chain management. DOD’s 

overall approach to business transformation was added to the high-risk list 

in 2005 because of our concern over DOD’s lack of adequate management 

accountability and the absence of a strategic and integrated action plan for 

the overall business transformation effort. Specifically, the high-risk 

designation for business transformation resulted because (1) DOD’s 

business improvement initiatives and control over resources are 

7

GAO, Department Of Defense: Sustained Leadership Is Critical to Effective Financial 

and Business Management Transformation, GAO-06-1006T (Washington, D.C.: Aug. 3, 

2006); GAO, Business Systems Modernization: DOD Continues to Improve Institutional 

Approach, but Further Steps Needed, GAO-06-658 (Washington, D.C.: May 15, 2006); GAO, 

DOD’s High-Risk Areas: Successful Business Transformation Requires Sound Strategic 

Planning and Sustained Leadership, GAO-05-520T (Washington, D.C.: Apr. 13, 2005).
Page 8 GAO-07-234 DOD’s High-Risk Areas

fragmented; (2) DOD lacks a clear strategic and integrated business 

transformation plan and investment strategy, including a well-defined 

enterprise architecture to guide and constrain implementation of such a 

plan; and (3) DOD has not designated a senior management official 

responsible and accountable for overall business transformation reform 

and related resources.

In response, DOD has taken several actions intended to advance 

transformation. For example, DOD has established governance structures 

such as the Business Transformation Agency and the Defense Business 

Systems Management Committee. The Business Transformation Agency 

was established in October 2005 with the mission of transforming business 

operations to achieve improved warfighter support and improved financial 

accountability. The agency supports the Defense Business Systems 

Management Committee, which is comprised of senior-level DOD officials 

and is intended to serve as the primary transformation leadership and 

oversight mechanism. Furthermore, in September 2006, DOD released an 

updated Enterprise Transition Plan that is intended to be both a business 

transformation roadmap and management tool for modernizing its business 

process and underlying information technology assets. DOD describes the 

Enterprise Transition Plan as an executable roadmap aligned to DOD’s 

business enterprise architecture. In addition, as required by the National 

Defense Authorization Act for Fiscal Year 2006, DOD is studying the 

feasibility and advisability of establishing a Deputy Secretary for Defense 

Management to serve as DOD’s Chief Management Officer and advise the 

Secretary of Defense on matters relating to management, including defense 

business activities.8

Business systems modernization is a critical part of DOD’s transformation 

efforts, and successful resolution of supply chain management problems 

will require investment in needed information technology. DOD spends 

billions of dollars to sustain key business operations intended to support 

the warfighter, including systems and processes related to support 

infrastructure, finances, weapon systems acquisition, the management of 

contracts, and the supply chain. We have indicated at various times that 

modernized business systems are essential to the department’s effort in

8

National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, § 907 (2006).
Page 9 GAO-07-234 DOD’s High-Risk Areas

addressing its supply chain management issues.9 In its supply chain 

management improvement plan, DOD recognizes that achieving success in 

supply chain management is dependent on developing interoperable 

systems that can share critical supply data. One of the initiatives included 

in the plan is business system modernization,10 an effort that is being led by 

DOD’s Business Transformation Agency and includes achieving materiel 

visibility through systems modernization as one of its six enterprisewide 

priorities.

Improvements in financial management are also integrally linked to DOD’s 

business transformation. Since our first report on the financial statement 

audit of a major DOD component over 16 years ago, we have repeatedly 

reported that weaknesses in business management systems, processes, and 

internal controls not only adversely affect the reliability of reported 

financial data, but also the management of DOD operations.11 Such 

weaknesses have adversely affected the ability of DOD to control costs, 

ensure basic accountability, anticipate future costs and claims on the 

budget, measure performance, maintain funds control, and prevent fraud. 

In December 2005, DOD issued its Financial Improvement and Audit 

Readiness Plan to guide its financial management improvement efforts. 

The Financial Improvement and Audit Readiness Plan is intended to 

provide DOD components with a roadmap for (1) resolving problems 

affecting the accuracy, reliability, and timeliness of financial information; 

and (2) obtaining clean financial statement audit opinions. It uses an 

incremental approach to structure its process for examining operations, 

diagnosing problems, planning corrective actions, and preparing for audit. 

The plan also recognizes that it will take several years before DOD is able 

to implement the systems, processes, and other changes necessary to fully 

address its financial management weaknesses. Furthermore, DOD has 

developed an initial Standard Financial Information Structure, which is 

9

GAO-06-1006T; GAO-06-658; GAO, DOD Business Systems Modernization: Important 

Progress Made in Establishing Foundational Architecture Products and Investment 

Management Practices, but Much Work Remains, GAO-06-219 (Washington, D.C.: Nov. 23, 

2005).

10This program was previously called the Business Management Modernization Program, but 

it ceased to exist as a program with the establishment of the Business Transformation 

Agency.

11GAO-06-1006T; GAO-06-658; GAO, Defense Management: Foundational Steps Being Taken 

to Manage DOD Business Systems Modernization, but Much Remains to be Accomplished 

to Effect True Business Transformation, GAO-06-234T (Washington, D.C.: Nov. 9, 2005).
Page 10 GAO-07-234 DOD’s High-Risk Areas

DOD’s enterprisewide data standard for categorizing financial information. 

This effort focused on standardizing general ledger and external financial 

reporting requirements.

While these steps are positive, defense business transformation is much 

broader and encompasses planning, management, organizational 

structures, and processes related to all key business areas. As we have 

previously observed, business transformation requires long-term cultural 

change, business process reengineering, and a commitment from both the 

executive and legislative branches of government. Although sound 

strategic planning is the foundation on which to build, DOD needs clear, 

capable, sustained, and professional leadership to maintain continuity 

necessary for success. Such leadership would provide the attention 

essential for addressing key stewardship responsibilities—such as strategic 

planning, performance management, business information management, 

and financial management—in an integrated manner, while helping to 

facilitate the overall business transformation effort within DOD. As DOD 

continues to evolve its transformation efforts, critical to successful reform 

are sustained leadership, organizational structures, and a clear strategic 

and integrated plan that encompasses all major business areas, including 

supply chain management.

Completion of a 

Comprehensive, Integrated 

Logistics Strategy Could 

Supplement Business 

Transformation Efforts

Another key step to supplement ongoing defense business transformation 

efforts is completion of a comprehensive, integrated logistics strategy that 

would identify problems and capability gaps to be addressed, establish 

departmentwide investment priorities, and guide decision making. Over the 

years, we have recommended that DOD adopt such a strategy, and DOD 

has undertaken various efforts to identify, and plan for, future logistics 

needs. However, DOD currently lacks an overarching logistics strategy. In 

December 2005, DOD issued its “As Is” Focused Logistics Roadmap, which 

assembled various logistics programs and initiatives associated with the 

fiscal year 2006 President’s Budget and linked them to seven key joint 

future logistics capability areas. The roadmap identified more than $60 

billion of planned investments in these programs and initiatives, yet it also 

indicated that key focused logistics capabilities would not be achieved by 

2015. Therefore, the Under Secretary of Defense for Acquisition, 

Technology, and Logistics directed the department to prepare a rigorous 

“To Be” roadmap that would present credible options to achieve focused 

logistics capabilities.
Page 11 GAO-07-234 DOD’s High-Risk Areas

According to officials with the Office of the Secretary of Defense, the “To 

Be” logistics roadmap will portray where the department is headed in the 

logistics area and how it will get there, and will allow the department to 

monitor progress toward achieving its objectives, as well as institutionalize 

a continuous assessment process that links ongoing capability 

development, program reviews, and budgeting. It would identify the scope 

of logistics problems and capability gaps to be addressed and include 

specific performance goals, programs, milestones, resources, and metrics 

to guide improvements in supply chain management and other areas of 

DOD logistics. Officials anticipate that the initiatives in the supply chain 

management improvement plan will be incorporated into the “To Be” 

logistics roadmap.

DOD has not established a target date for completing the “To Be” roadmap. 

According to DOD officials, its completion is pending the results of the 

department’s ongoing test of new concepts for managing logistics 

capabilities. The Deputy Secretary of Defense initiated this joint capability 

portfolio management test in September 2006 to explore new approaches 

for managing certain capabilities across the department, facilitating 

strategic choices, and improving the department’s ability to make 

capability trade-offs. The intent of joint capability portfolio management is 

to improve interoperability, minimize redundancies and gaps, and 

maximize effectiveness. Joint logistics is one of the four capability areas 

selected as test cases for experimentation. The joint logistics test case 

portfolio will include all capabilities required to project and sustain joint 

force operations, including supply chain operations. According to DOD 

officials, initial results of the joint logistics capability portfolio 

management test are expected to be available in late spring 2007, and the 

results of the test will then be used to complete the “To Be” logistics 

roadmap. The results of the test are also expected to provide additional 

focus on improving performance in requirements determination, asset 

visibility, and materiel distribution, officials said.

We have also noted previously that while DOD and its component 

organizations have had multiple plans for improving aspects of logistics, 

the linkages among these plans have not been clearly shown. In addition to 

the supply chain management improvement plan, current DOD plans that 

address aspects of supply chain management include the Enterprise 

Transition Plan and component-level plans developed by the military 

services and the Defense Logistics Agency. Although we are encouraged by 

DOD’s planning efforts, the department lacks a comprehensive, integrated 

strategy to guide logistics programs and initiatives across the department. 
Page 12 GAO-07-234 DOD’s High-Risk Areas

Without such a strategy, decision makers will lack the means to effectively 

guide program efforts and the ability to determine if these efforts are 

achieving the desired results.

DOD Is Unable to 

Demonstrate the Full 

Extent of Its Progress 

Toward Improving 

Supply Chain 

Management

Although DOD is making progress implementing supply chain management 

initiatives, it is unable to demonstrate at this time the full extent to which it 

is improving supply chain management. DOD has established some highlevel performance measures but they do not explicitly address the focus 

areas, and an improvement in those measures cannot be directly attributed 

to the initiatives. Further, the metrics in DOD’s supply chain management 

improvement plan generally do not measure performance outcomes and 

costs.

DOD Is Making Progress 

Implementing Supply Chain 

Management Initiatives

In addition to implementing audit recommendations, as discussed in the 

next section of this report, DOD is making progress improving supply chain 

management by implementing initiatives in its supply chain management 

improvement plan. For example, DOD has met key milestones in its Joint 

Regional Inventory Materiel Management, Radio Frequency Identification, 

and Item Unique Identification initiatives.

• Through its Joint Regional Inventory Materiel Management initiative, 

DOD began to streamline the storage and distribution of defense 

inventory items on a regional basis, in order to eliminate duplicate 

materiel handling and inventory layers. Last year, DOD completed a 

pilot for this initiative in the San Diego region and, in January 2006, 

began a similar transition for inventory items in Oahu, Hawaii, which 

was considered operational in August 2006.

• In May 2006, DOD published an interim Defense Federal Acquisition 

Regulation clause governing the application of tags to different classes 

of assets being shipped to distribution depots and aerial ports for the 

Radio Frequency Identification initiative.

• The Item Unique Identification initiative, which provides for marking of 

personal property items with a set of globally unique data items to help 

DOD value and track items throughout their life cycle, received approval 

by the International Organization for Standardization/International 

Electrotechnical Commission in September 2006 for an interoperable 
Page 13 GAO-07-234 DOD’s High-Risk Areas

solution for automatic identification and data capture based on widely 

used international standards.

DOD has sought to demonstrate significant improvement in supply chain 

management within 2 years of the plan’s inception in July 2005; however, 

the department may have difficulty meeting its July 2007 goal. Some of the 

initiatives are still being developed or piloted and have not yet reached the 

implementation stage, others are in the early stages of implementation, and 

some are not scheduled for completion until 2008 or later. For example, 

according to DOD’s plan, the Readiness Based Sparing initiative, an 

inventory requirements methodology that the department expects will 

enable higher levels of readiness at equivalent or reduced inventory costs 

using commercial off-the-shelf software, is not expected to begin 

implementation until January 2008. The Item Unique Identification 

initiative, which involves marking personal property items with a set of 

globally unique data elements to help DOD track items during their life 

cycles, will not be completed until December 2010 under the current 

schedule.

While DOD has generally stayed on track, it has reported some slippage in 

meeting scheduled milestones for certain initiatives. For example, a 

slippage of 9 months occurred in the Commodity Management initiative 

because additional time was required to develop a departmentwide 

approach. This initiative addresses the process of developing a systematic 

procurement approach to the department’s needs for a group of items. 

Additionally, according to DOD’s plan, the Defense Transportation 

Coordination initiative experienced a slippage in holding the presolicitation 

conference because defining requirements took longer than anticipated.12

Given the long-standing nature of the problems being addressed, the 

complexities of the initiatives, and the involvement of multiple 

organizations within DOD, we would expect to see further milestone 

slippage in the future.

12 A bid protest has been filed with GAO concerning the terms of the solicitation.
Page 14 GAO-07-234 DOD’s High-Risk Areas

DOD’s Supply Chain 

Management Plan Does 

Not Track Performance 

Outcomes and Costs 

Metrics Associated 

with Focus Areas and 

Initiatives

The supply chain management improvement plan generally lacks outcomefocused performance metrics that track progress in the three focus areas 

and at the initiative level. Performance metrics are critical for 

demonstrating progress toward achieving results, providing information on 

which to base organizational and management decisions, and are important 

management tools for all levels of an agency, including the program or 

project level. Moreover, outcome-focused performance metrics show 

results or outcomes related to an initiative or program in terms of its 

effectiveness, efficiency, impact, or all of these. To track progress toward 

goals, effective performance metrics should have a clearly apparent or 

commonly accepted relationship to the intended performance, or should be 

reasonable predictors of desired outcomes; are not unduly influenced by 

factors outside a program’s control; measure multiple priorities, such as 

quality, timeliness, outcomes, and cost; sufficiently cover key aspects of 

performance; and adequately capture important distinctions between 

programs. Performance metrics enable the agency to assess 

accomplishments, strike a balance among competing interests, make 

decisions to improve program performance, realign processes, and assign 

accountability. While it may take years before the results of programs 

become apparent, intermediate metrics can be used to provide information 

on interim results and show progress towards intended results. In addition, 

when program results could be influenced by external factors, intermediate 

metrics can be used to identify the program’s discrete contribution to the 

specific result.

DOD’s plan does include four high-level performance measures that are 

being tracked across the department, and while they are not required to do 

so, these measures do not explicitly relate to the focus areas. The four 

measures are as follows:

• Backorders—number of orders held in an unfilled status pending 

receipt of additional parts or equipment through procurement or repair.

• Customer wait time—number of days between the issuance of a 

customer order and satisfaction of that order.

• On-time orders—percentage of orders that are on time according to 

DOD’s established delivery standards.
Page 15 GAO-07-234 DOD’s High-Risk Areas

• Logistics response time—number of days to fulfill an order placed on 

the wholesale level of supply from the date a requisition is generated 

until the materiel is received by the retail supply activity.

Additionally, these measures may be affected by many variables; hence, 

improvements in the high-level performance measures cannot be directly 

attributed to the initiatives in the plan. For example, implementing RFID at 

a few sites at a time has only a very small impact on customer wait time. 

However, variables such as natural disasters, wartime surges in 

requirements, or disruption in the distribution process could affect that 

measure. DOD’s supply chain materiel management regulation requires 

that functional supply chain metrics support at least one enterprise-level 

metric.13

DOD’s plan also lacks outcome-focused performance metrics for 6 of the 10 

specific improvement initiatives contained in the plan. For example, while 

DOD intended to have RFID implemented at 100 percent of its U.S. and 

overseas distribution centers by September 2007—a measure indicating 

when scheduled milestones are met—it had not yet identified outcomefocused performance metrics that could be used to show the impact of 

implementation on expected outcomes, such as receiving and shipping 

timeliness, asset visibility, or supply consumption data. Two other 

examples of improvement initiatives that lack outcome-focused 

performance metrics are War Reserve Materiel, which aims to more 

accurately forecast war reserve requirements by using capability-based 

planning and incorporating lessons learned in Operation Iraqi Freedom, 

and Joint Theater Logistics, which is an effort to improve the ability of a 

joint force commander to execute logistics authorities and processes 

within a theater of operations.

One of the challenges in developing departmentwide supply chain 

performance measures, according to a DOD official, is obtaining 

standardized, reliable data from noninteroperable systems. For example, 

the Army currently does not have an integrated method to determine 

receipt processing for Supply Support Activities, which could affect asset 

visibility and distribution concerns. Some of the necessary data reside in 

the Global Transportation Network while other data reside in the Standard 

Army Retail Supply System. These two databases must be manually 

reviewed and merged in order to obtain the information for accurate 

13 DOD 4140.1-R, DOD Supply Chain Materiel Management Regulation (May 23, 2003).
Page 16 GAO-07-234 DOD’s High-Risk Areas

receipt processing performance measures. Nevertheless, we believe that 

intermediate measures, such as outcome-focused measures for each of the 

initiatives or for the focus areas, could show near-term progress.

According to a DOD official, in September 2006, DOD awarded a year-long 

supply chain benchmarking contract to assess commercial supply chain 

metrics. The official indicated that six outcome measures were chosen for 

the initial effort: on-time delivery, order fulfillment cycle time, perfect order 

fulfillment, supply chain management costs, inventory days of supply, and 

forecast accuracy. Furthermore, the specific supply chains to be reviewed 

will be recommended by the various DOD components and approved by an 

executive committee. According to the same DOD official, the contractor 

will be looking at the specific supply chains approved and the industry 

equivalent; and a set of performance scorecards mapping the target supply 

segment to average and best-in-class performance from the comparison 

population will be developed for each supply chain and provided to the 

component. This assessment is a good step but it is too early to determine 

the effectiveness of this effort in helping DOD to demonstrate progress 

toward improving its supply chain management.

Further, we noted that DOD has not provided cost metrics that might show 

efficiencies gained through supply chain improvement efforts. In addition 

to improving the provision of supplies to the warfighter and improving 

readiness of equipment, DOD’s stated goal in its supply chain management 

improvement plan is to reduce or avoid costs. However, 9 of the 10 

initiatives in the plan lack cost metrics. Without outcome-focused 

performance and cost metrics for each of the improvement initiatives that 

are linked to the focus areas, such as requirements forecasting, asset 

visibility, and materiel distribution, it is unclear whether DOD is 

progressing toward meeting its stated goal.

DOD Has Implemented 

Recommendations for 

Improving Aspects of 

Supply Chain 

Management

Over the last 5 years, audit organizations have made more than 400 

recommendations that focused specifically on improving certain aspects of 

DOD’s supply chain management. DOD or the component organization 

concurred with almost 90 percent of these recommendations, and most of 

the recommendations that were closed as of the time of our review were 

considered implemented. We determined that the three focus areas of 

requirements forecasting, asset visibility, and materiel distribution 

accounted for 41 percent of the total recommendations made, while other 

inventory management and supply chain issues accounted for the 

remaining recommendations. We also grouped the recommendations into 
Page 17 GAO-07-234 DOD’s High-Risk Areas

five common themes—management oversight, performance tracking, 

policy, planning, and processes. Several studies conducted by non-audit 

organizations have made recommendations that address supply chain 

management as part of a broader review of DOD logistics.

Appendixes I through V summarize the audit recommendations we 

included in our baseline. Appendix VI summarizes recommendations made 

by non-audit organizations.

DOD or the Component 

Organization Concurred 

with Most of the 

Recommendations

In developing a baseline of supply chain management recommendations, 

we identified 478 supply chain management recommendations made by 

audit organizations between October 2001 and September 2006. DOD or the 

component organization concurred with 411 (86 percent) of the 

recommendations; partially concurred with 44 recommendations (9 

percent); and nonconcurred with 23 recommendations (5 percent).

These recommendations cover a diverse range of objectives and issues 

concerning supply chain management. For example, one recommendation 

with which DOD concurred was contained in our 2006 report on 

production and installation of Marine Corps truck armor. To better 

coordinate decisions about what materiel solutions are developed and 

procured to address common urgent wartime requirements, we 

recommended—and DOD concurred—that DOD should clarify the point at 

which the Joint Urgent Operational Needs process should be utilized when 

materiel solutions require research and development.14

In another case, DOD partially concurred with a recommendation in our 

2006 report on Radio Frequency Identification (RFID), which consists of 

electronic tags that are attached to equipment and supplies being shipped 

from one location to another, enabling shipment tracking. To better track 

and monitor the use of RFID tags, we recommended—and DOD partially 

concurred—that the secretaries of each military service and the 

administrators of other components should determine requirements for the 

number of tags needed, compile an accurate inventory of the number of 

tags currently owned, and establish procedures to monitor and track tags,

14GAO, Defense Logistics: Lack of a Synchronized Approach between the Marine Corps 

and Army Affected the Timely Production and Installation of Marine Corps Truck Armor, 

GAO-06-274 (Washington, D.C.: June 22, 2006).
Page 18 GAO-07-234 DOD’s High-Risk Areas

including purchases, reuse, losses, and repairs.15 In its response to our 

report, DOD agreed to direct the military services and the U.S. 

Transportation Command to develop procedures to address the reuse of 

the tags as well as procedures for the return of tags no longer required. 

However, the department did not agree to establish procedures to account 

for the procurement, inventory, repair, or losses of existing tags in the 

system.

On the other hand, an example of a recommendation that DOD did not 

concur with was contained in our 2005 report on supply distribution 

operations. To improve the overall efficiency and interoperability of 

distribution-related activities, we recommended—but DOD did not 

concur—that the Secretary of Defense should clarify the scope of 

responsibilities, accountability, and authority between U.S. Transportation 

Command’s role as DOD’s Distribution Process Owner and other DOD 

components.16 In its response to our report, DOD stated that the 

responsibilities, accountability, and authority of this role were already 

clear.

Most Closed 

Recommendations Were 

Considered Implemented

The audit organizations had closed 315 (66 percent) of the 478 

recommendations at the time we conducted our review. Of the closed 

recommendations, 275 (87 percent) were implemented and 40 (13 percent) 

were not implemented as reported by the audit agencies. For example, one 

closed recommendation that DOD implemented was in our 2005 report on 

oversight of prepositioning programs. To address the risks and 

management challenges facing the department’s prepositioning programs 

and to improve oversight, we recommended that the Secretary of Defense 

direct the Chairman, Joint Chiefs of Staff assess the near-term operational 

risks associated with current inventory shortfalls and equipment in poor

15GAO, Defense Logistics: More Efficient Use of Active RFID Tags Could Potentially Avoid 

Millions in Unnecessary Purchases, GAO-06-366R (Washington, D.C.: Mar. 8, 2006).

16GAO, Defense Logistics: DOD Has Begun to Improve Supply Distribution Operations, 

but Further Actions Are Needed to Sustain These Efforts, GAO-05-775 (Washington, D.C.: 

Aug. 11, 2005).
Page 19 GAO-07-234 DOD’s High-Risk Areas

condition should a conflict arise.17 In response to our recommendation, the 

Joint Staff conducted a mission analysis on several operational plans based 

on the readiness of prepositioned assets. On the other hand, an example of 

a closed recommendation that DOD did not implement was in our 2003 

report on Navy spare parts shortages. To provide a basis for management to 

assess the extent to which ongoing and planned initiatives will contribute 

to the mitigation of critical spare parts shortages, we recommended that 

the Secretary of Defense direct the Secretary of the Navy to develop a 

framework that includes long-term goals; measurable, outcome-related 

objectives; implementation goals; and performance measures as a part of 

either the Navy Sea Enterprise strategy or the Naval Supply Systems 

Command Strategic Plan. DOD agreed with the intent of the 

recommendation, but not the prescribed action. The recommendation was 

closed but not implemented because the Navy did not plan to modify the 

Naval Supply Systems Command Strategic Plan or higher-level Sea 

Enterprise Strategy to include a specific focus on mitigating spare parts 

shortages.18

Recommendations to 

Improve Supply Chain 

Management Address Five 

Common Themes

Audit recommendations addressing the three focus areas in DOD’s supply 

chain management improvement plan—requirements forecasting, asset 

visibility, and materiel distribution—accounted for 196 (41 percent) of the 

total recommendations. The fewest recommendations were made in the 

focus area of distribution, accounting for just 6 percent of the total. Other 

inventory management issues accounted for most of the other 

recommendations. In addition, a small number of recommendations, less 

than 1 percent of the total, addressed supply chain management issues that 

could not be grouped under any of these other categories. In further 

analyzing the recommendations, we found that they addressed five 

common themes—management oversight, performance tracking, policy, 

planning, and processes. Table 1 shows the number of audit 

recommendations made by focus area and theme.

17 GAO, Defense Logistics: Better Management and Oversight of Prepositioning Programs 

Needed to Reduce Risk and Improve Future Programming, GAO-05-427 (Washington, D.C.: 

Sept. 6, 2005). 

18 GAO, Defense Inventory: Navy Logistics Strategy And Initiatives Need To Address 

Spare Parts Shortages, GAO-03-708 (Washington, D.C.: June 27, 2003).
Page 20 GAO-07-234 DOD’s High-Risk Areas

Table 1: Audit Recommendations to Improve Supply Chain Management

Source: GAO analysis.

a

These recommendations address aspects of supply chain management that could not be grouped 

into one of the three focus areas or as inventory management.

Most of the recommendations addressed processes (38 percent), 

management oversight (30 percent), or policy (22 percent), with 

comparatively fewer addressing planning (7 percent) and performance 

tracking (4 percent). The management oversight theme includes any 

recommendations involving compliance, conducting reviews, or providing 

information to others. For example, the Naval Audit Service recommended 

that the Office of the Commander, U.S. Fleet Forces Command should 

enforce existing requirements that ships prepare and submit Ship 

Hazardous Material List Feedback Reports and Allowance Change 

Requests, whenever required.19 The performance tracking theme includes 

recommendations with performance measures, goals, objectives, and 

milestones. For example, the Army Audit Agency recommended that 

funding for increasing inventory safety levels be withheld until the Army 

Materiel Command develops test procedures and identifies key 

performance indicators to measure and assess its cost-effectiveness and 

Management 

oversight 

Performance 

tracking Policy Planning Processes Total

Recommendations 

addressing focus areas in 

DOD’s supply chain 

management plan

Requirements forecasting 24 0 25 6 41 96

Asset visibility 27 5 15 7 19 73

Materiel distribution 10 3 7 1 6 27

Subtotal 61 8 47 14 66 196

Recommendations 

addressing other inventory 

management issues

82 9 56 17 114 278

Recommendations 

addressing other supply chain 

issuesa

1 0 0 3 0 4

Total 144 17 103 34 180 478

19Naval Audit Service, Hazardous Material Inventory Requirements Determination and 

Offloads on Aircraft Carriers and Amphibious Assault Ships, N2005-0027 (Feb. 17, 2005).
Page 21 GAO-07-234 DOD’s High-Risk Areas

impact on operational readiness.20 The policy theme contains 

recommendations on issuing guidance, revising or establishing policy, and 

establishing guidelines. For example, the DOD-IG recommended that the 

Defense Logistics Agency revise its supply operating procedures to meet 

specific requirements.21 The planning theme contains recommendations 

related to plan, doctrine, or capability development or implementation, as 

well as any recommendations related to training. For example, the Army 

Audit Agency recommended the Defense Supply Center in Philadelphia 

implement a Quality Assurance Surveillance Plan that encompasses all 

requirements of the prime vendor contract.22 The largest theme, processes, 

consists of recommendations that processes and procedures should be 

established or documented, and recommendations be implemented. For 

example, we recommended that the Secretary of Defense direct the service 

secretaries to establish a process to share information between the Marine 

Corps and Army on developed or developing materiel solutions.23

Non-audit Organizations’ 

Recommendations Address 

Supply Chain Management 

as Part of a Broader Review 

of DOD Logistics

Studies conducted by non-audit organizations contain recommendations 

that address supply chain management as part of a broader review of DOD 

logistics. For example, the Center for Strategic and International Studies 

and the Defense Science Board suggested the creation of a departmentwide 

logistics command responsible for end-to-end supply chain operations. In 

July 2005, the Center for Strategic and International Studies issued a report, 

“Beyond Goldwater-Nichols: U.S. Government and Defense Reform for a 

New Strategic Era,” which addressed the entire U.S. national security 

structure, including the organization of logistics support. In this report, the 

study team acknowledged that recent steps, such as strengthening joint 

theater logistics and the existence of stronger coordinating authorities 

have significantly increased the unity of effort in logistical support to 

ongoing operations. However, according to the study, much of this reflects 

the combination of exemplary leadership and the intense operational pull 

of Operation Iraqi Freedom, and has not been formalized and 

20Army Audit Agency, Increasing Safety Levels for Spare Parts, Office of the Deputy Chief 

of Staff, G-4, A-2006-0063-ALR (Jan. 31, 2006).

21DOD-IG, Logistics: Defense Logistics Agency Processing of Other Nonrecurring 

Requirements, D-2004-018 (Nov. 7, 2003).

22Army Audit Agency, Subsistence Prime Vendor Contract, Audit of Logistics Civil 

Augmentation Program, A-2006-0168-ALL (Aug. 4, 2006).

23GAO-06-274.
Page 22 GAO-07-234 DOD’s High-Risk Areas

institutionalized by charter, doctrine, or organizational realignment. It 

further noted that the fact that a single Distribution Process Owner was 

needed to overcome the fragmented structure of DOD’s logistical system 

underscores the need for fundamental reform. The study team 

recommended the integration of the management of transportation and 

supply warehousing functions under a single organization such as an 

integrated logistics command. The report noted that the Commission on 

Roles and Missions also had recommended the formation of a logistics 

command back in 1995.

In 2005, the Summer Study Task Force on Transformation, under the 

direction of the Under Secretary of Defense for Acquisition, Technology, 

and Logistics, convened to assess DOD’s transformation progress, 

including the transformation of logistics capabilities. In this assessment, 

issued in February 2006, the Defense Science Board suggested that each 

segment in the supply chain is optimized for that specific function. For 

example, in the depot shipping segment of the supply chain, packages are 

consolidated into truck-size loads in order to fill the trucks for efficiency. 

Yet, optimizing each segment inevitably suboptimizes the major objective 

of end-to-end movement from source to user. The Defense Science Board 

report further indicated that although the assignment of the U.S. 

Transportation Command as the Distribution Process Owner was an 

important step towards addressing an end-to-end supply change, it did not 

go far enough to meet the objective of an effective supply chain. The 

necessary step is to assign a joint logistics command the authority and 

accountability for providing this essential support to global operations.

Unlike recommendations made by audit agencies, DOD does not 

systematically track the status of recommendations made by non-audit 

organizations. Hence, in our analysis, we did not determine the extent to 

which DOD concurred with or implemented recommendations from these 

organizations.

Conclusions Overcoming systemic, long-standing problems requires comprehensive 

approaches. Improving DOD’s supply chain management will require 

continued progress in defense business transformation, including 

completion of a comprehensive, integrated strategy to guide the 

department’s logistics programs and initiatives. In addition, while DOD has 

made a commitment to improving supply chain management, as 

demonstrated by the development and implementation of the supply chain 

management improvement plan, the plan generally lacks outcome-focused 
Page 23 GAO-07-234 DOD’s High-Risk Areas

performance metrics that would enable DOD to track and demonstrate the 

extent to which its individual efforts improve supply chain management or 

the extent of improvement in the three focus areas of requirements 

forecasting, asset visibility, and materiel distribution. Furthermore, without 

cost metrics, it will be difficult to show efficiencies gained through supply 

chain improvement initiatives.

Recommendations for 

Executive Action

To improve DOD’s ability to guide logistics programs and initiatives across 

the department and to demonstrate the effectiveness, efficiency, and 

impact of its efforts to resolve supply chain management problems, we 

recommend that the Secretary of Defense direct the Under Secretary of 

Defense for Acquisition, Technology, and Logistics to take the following 

two actions:

Complete the development of a comprehensive, integrated logistics 

strategy that is aligned with other defense business transformation efforts, 

including the Enterprise Transition Plan. To facilitate completion of the 

strategy, DOD should establish a specific target date for its completion. 

Further, DOD should take steps as appropriate to ensure the supply chain 

management improvement plan and component-level logistics plans are 

synchronized with the department’s overall logistics strategy.

Develop, implement, and monitor outcome-focused performance and cost 

metrics for all the individual initiatives in the supply chain management 

improvement plan as well as for the plan’s focus areas of requirements 

forecasting, asset visibility, and materiel distribution.

Agency Comments and 

Our Evaluation

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

recommendations. The department’s response are reprinted in appendix 

VII. 

In response to our recommendation to complete the development of a 

comprehensive, integrated logistics strategy, DOD stated that the strategy 

is under development and is aligned with other defense business 

transformation efforts. DOD estimated that the logistics strategy would be 

completed 6 months after it completes the logistics portfolio test case in 

the spring of 2007. DOD did not address whether it would take steps to 

ensure the supply chain management improvement plan and componentlevel logistics plans are synchronized with the department’s overall 
Page 24 GAO-07-234 DOD’s High-Risk Areas

logistics strategy. We continue to believe that these plans must be 

synchronized with the overall logistics strategy to effectively guide 

program efforts across the department and to provide the means to 

determine if these efforts are achieving the desired results. 

In response to our recommendation to develop, implement, and monitor 

outcome-focused performance and cost metrics, the department indicated 

it has developed and implemented outcome-focused performance and cost 

metrics for logistics across the department. However, DOD acknowledged 

that more work needs to be accomplished in linking the outcome metrics to 

the initiatives in the supply chain management improvement plan as well as 

for the focus areas of requirements forecasting, asset visibility, and 

materiel distribution. DOD stated that these linkages will be completed as 

part of full implementation of each initiative. We are pleased that the 

department recognized the need for linking outcome-focused metrics with 

the individual initiatives and the three focus areas in its supply chain 

management improvement plan. However, it is unclear from DOD’s 

response how and under what timeframes the department plans to 

implement this goal. As we noted in the report, DOD lacks outcomefocused performance metrics for supply chain management, in part 

because one of the challenges is obtaining standardized, reliable data from 

noninteroperable systems. In addition, initiatives in the supply chain 

management plan are many years away from full implementation. If DOD 

waits until full implementation to incorporate outcome-based metrics, it 

will miss opportunities to assess progress on an interim basis. We also 

continue to believe that cost metrics are critical for DOD to assess progress 

toward meeting its stated goal of improving the provision of supplies to the 

warfighter and improving readiness of equipment while reducing or 

avoiding costs through its supply chain initiatives.

Scope and 

Methodology

Our discussion of the integration of supply chain management with broader 

defense transformation efforts is based primarily on our prior reports and 

testimonies. We obtained information on DOD’s “To Be” logistics roadmap 

and the joint logistics capabilities portfolio management test from senior 

officials in the Office of the Deputy Under Secretary of Defense for 

Logistics, Materiel, and Readiness. We met regularly with DOD and OMB 

officials to discuss the overall status of the supply chain management 

improvement plan, the implementation schedules of the plan’s individual 

initiatives, and the plan’s performance measures. We visited and 

interviewed officials from U.S. Transportation Command, the Defense 
Page 25 GAO-07-234 DOD’s High-Risk Areas

Logistics Agency, the military services, and the Joint Staff to gain their 

perspectives on improving supply chain management.

To develop a baseline of recommended supply chain management 

improvements, we surveyed audit reports covering the time period of 

October 2001 to September 2006. We selected this time period because it 

corresponds with recent military operations that began with the onset of 

Operation Enduring Freedom and, later, Operation Iraqi Freedom. We 

surveyed audit reports issued by our office, the DOD-IG, the Army Audit 

Agency, the Naval Audit Service, and the Air Force Audit Agency.

For each audit recommendation contained in these reports, we determined 

its status and focus. To determine the status of GAO recommendations, we 

obtained data from our recommendation tracking system. We noted 

whether DOD concurred with, partially concurred with, or did not concur 

with each recommendation. In evaluating agency comments on our reports, 

we have noted instances where DOD agreed with the intent of a 

recommendation but did not commit to taking any specific actions to 

address it. For the purposes of this report, we counted these as concurred 

recommendations. We also noted whether the recommendation was open, 

closed and implemented, or closed and not implemented. In a similar 

manner, we worked with DOD-IG and the service audit agencies to 

determine the status of their recommendations. We verified with each of 

the audit organizations that they agreed with our definition that a 

recommendation is considered “concurred with” when the audit 

organization determines that DOD or the component organization fully 

agreed with the recommendation in it entirety and its prescribed actions, 

and “partially concurred with” is when the audit organization determines 

that DOD or the component organization agreed to parts of the 

recommendation or parts of its prescribed actions. Furthermore, we 

verified that a recommendation is officially “closed” when the audit 

organization determines that DOD or the component organization has 

implemented its provisions or otherwise met the intent of the 

recommendation; when circumstances have changed, and the 

recommendation is no longer valid; or when, after a certain amount of time, 

the audit organization determines that implementation cannot reasonably 

be expected. We also verified that an “open” recommendation is one that 

has not been closed for one of the preceding reasons. We assessed the 

reliability of the data we obtained from DOD-IG and the service audit 

agencies by obtaining information on how they track and follow up on 

recommendations and determined that their data were sufficiently reliable 

for our purposes.
Page 26 GAO-07-234 DOD’s High-Risk Areas

In analyzing the focus of recommendations, we identified those addressing 

three specific areas—requirements forecasting, asset visibility, and 

materiel distribution—as well those addressing other supply chain 

management concerns. We selected these three focus areas as the 

framework for our analysis based on our prior work in this high-risk area 

and because DOD has structured its supply chain management 

improvement plan around them. We then analyzed the recommendations 

and further divided them into one of five common themes: management 

oversight, performance tracking, planning, process, and policy. To identify 

the focus area and theme for each report and recommendation, three 

analysts independently labeled each report with a focus area and identified 

a theme for each recommendation within the report. The team of analysts 

then reviewed the results, discussed any discrepancies, and reached 

agreement on the appropriate theme for each recommendation. In the 

event of a discrepancy which could not be immediately resolved, we 

referred to the original report to clarify what the intent of the report had 

been in order to decide on the appropriate focus area and theme. For the 

purpose of our analysis, if a recommendation consisted of multiple actions, 

we counted and classified each action separately. We excluded from our 

analysis recommendations that addressed only a specific piece of 

equipment or system. We also excluded recommendations that addressed 

other DOD high-risk areas, such as business systems modernization and 

financial management. While we included recommendations by non-audit 

organizations in our analysis, we did not determine the extent to which 

DOD concurred with or implemented them because their status is not 

systemically tracked.

We conducted our review from January through November 2006 in 

accordance with generally accepted government auditing standards.

We are sending copies of this report to the Director, Office of Management 

and Budget; the Secretary of Defense; the Deputy Secretary of Defense; the 

Under Secretary of Defense for Acquisition, Technology, and Logistics; and 

other interested parties. This report will also be available at no charge on 

our Web site at http://www.gao.gov.
Page 27 GAO-07-234 DOD’s High-Risk Areas

Should you or your staff have any questions concerning this report, please 

contact me at (202) 512-8365 or solisw@gao.gov. Key contributors to this 

report are listed in appendix VIII.

William M. Solis

Director

Defense Capabilities and Management
Page 28 GAO-07-234 DOD’s High-Risk Areas

Appendix I

Supply Chain Management: Summary of GAO Apendxies

Report Recommendations ApendxiI

Report title, number, date Recommendations

Defense Logistics: Lack of a 

Synchronized Approach between the 

Marine Corps and Army Affected the 

Timely Production and Installation of 

Marine Corps Truck Armor (GAO-06-

274, June 22, 2006)

To ensure that the services 

make informed and 

coordinated decisions about 

what materiel solutions are 

developed and procured to 

address common urgent 

wartime requirements, GAO 

recommended that the 

Secretary of Defense take 

the following two actions:

(1) Direct the service secretaries to establish a process to 

share information between the Marine Corps and the Army 

on developed or developing materiel solutions, and

(2) Clarify the point at which the Joint Urgent Operational 

Needs process should be utilized when materiel solutions 

require research and development.

Defense Management: Attention Is 

Needed to Improve Oversight of DLA 

Prime Vendor Program (GAO-06-739R, 

June 19, 2006)

GAO recommended that the Secretary of Defense direct the 

Under Secretary of Defense, Acquisition, Technology and 

Logistics to ensure that the Director of the Defense Logistics 

Agency provide continual management oversight of the 

corrective actions to address pricing problems in the prime 

vendor program.

Defense Inventory: Actions Needed to 

Improve Inventory Retention 

Management (GA0-06-512, May 25, 

2006)

GAO recommended that the 

Secretary of Defense take 

the following seven actions: 

To ensure DOD inventory 

management centers 

properly assign codes to 

categorize the reasons to 

retain items in contingency 

retention inventory, direct 

the Under Secretary of 

Defense for Acquisition, 

Technology, and Logistics to:

(1) Direct the Secretary of the Army to instruct the Army 

Materiel Command to modify the Commodity Command 

Standard System so it will properly categorize the reasons 

for holding items in contingency retention inventory.

(2) Direct the Secretary of the Air Force to instruct the Air 

Force Materiel Command to correct the Application 

Programs, Indenture system’s deficiency to ensure it 

properly categorizes the reasons for holding items in 

contingency retention inventory.

To ensure that the DOD 

inventory management 

centers retain contingency 

retention inventory that will 

meet current and future 

operational requirements, 

direct the Under Secretary 

of Defense for Acquisition, 

Technology, and Logistics to:

(3) Direct the Secretary of the Army to instruct the Army 

Materiel Command to require the Aviation and Missile 

Command to identify items that no longer support 

operational needs and determine whether the items need to 

be removed from the inventory. The Army Materiel 

Command should also determine whether its other two 

inventory commands, the Communications-Electronics 

Command and Tank-automotive and Armaments Command, 

are also holding obsolete items, and if so, direct those 

commands to determine whether the disposal of those items 

is warranted.
Appendix I

Supply Chain Management: Summary of GAO 

Report Recommendations

Page 29 GAO-07-234 DOD’s High-Risk Areas

Focus area Theme Status of recommendations

Requirements forecasting Process Partially concurred, open

Process Concurred, open

Inventory management Management oversight Concurred, open

Inventory management Process Partially concurred, open

Process Concurred, open

Process Concurred, open
Appendix I

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Report Recommendations

Page 30 GAO-07-234 DOD’s High-Risk Areas

To ensure that DOD 

inventory management 

centers conduct annual 

reviews of contingency 

retention inventory as 

required by DOD’s Supply 

Chain Materiel Management 

Regulation, direct the Under 

Secretary of Defense for 

Acquisition, Technology, and 

Logistics to:

(4) Direct the Director of the Defense Logistics Agency to 

require the Defense Supply Center Richmond to conduct 

annual reviews of contingency retention inventory. The 

Defense Logistics Agency should also determine whether its 

other two centers, the Defense Supply Center Columbus 

and the Defense Supply Center Philadelphia, are conducting 

annual reviews, and if not, direct them to conduct the 

reviews so they can ensure the reasons for retaining the 

contingency retention inventory are valid.

(5) Direct the Secretary of the Navy to instruct the Naval 

Inventory Control Point Mechanicsburg to conduct annual 

reviews of contingency retention inventory. The Naval 

Inventory Control Point should also determine if its other 

organization, Naval Inventory Control Point Philadelphia, is 

conducting annual reviews and if not, direct the activity to 

conduct the reviews so it can ensure the reasons for 

retaining the contingency retention inventory are valid.

(6) Direct the Secretary of the Army to instruct the Army 

Materiel Command to require the Aviation and Missile 

Command to conduct annual reviews of contingency 

retention inventory. The Army Materiel Command should 

also determine if its other two inventory commands, the 

Communications-Electronics Command and Tankautomotive and Armaments Command, are conducting 

annual reviews and if not, direct the commands to conduct 

the reviews so they can ensure the reasons for retaining the 

contingency retention inventory are valid.

To ensure that DOD 

inventory management 

centers implement 

departmentwide policies 

and procedures for 

conducting annual reviews 

of contingency retention 

inventories, direct the Office 

of the Deputy Under 

Secretary of Defense for 

Logistics and Materiel 

Readiness to take the 

following action:

(7) Revise the DOD’s Supply Chain Materiel Management 

Regulation to make clear who is responsible for providing 

recurring oversight to ensure the inventory management 

centers conduct the annual reviews of contingency retention 

inventory.

Defense Logistics: Several Factors 

Limited the Production and Installation of 

Army Truck Armor during Current 

Wartime Operations (GAO-06-160, 

March 22, 2006)

To ensure funding needs for urgent wartime requirements 

are identified quickly, requests for funding are well 

documented, and funding decisions are based on risk and 

an assessment of the highest priority requirements, GAO 

recommended the Secretary of Defense direct the Secretary 

of the Army to establish a process to document and 

communicate all urgent wartime funding requirements for 

supplies and equipment at the time they are identified and 

the disposition of funding decisions.

(Continued From Previous Page)

Report title, number, date Recommendations
Appendix I

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Report Recommendations

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Management oversight Concurred, open

Management oversight Concurred, open

Management oversight Concurred, open

Policy Concurred, open

Requirements forecasting Process Concurred with intent, open

Focus area Theme Status of recommendations
Appendix I

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Report Recommendations

Page 32 GAO-07-234 DOD’s High-Risk Areas

Defense Logistics: More Efficient Use of 

Active RFID Tags Could Potentially Avoid 

Millions in Unnecessary Purchases 

(GAO-06-366R, March 8, 2006)

GAO recommended that the 

Secretary of Defense direct 

the Under Secretary of 

Defense (Acquisition, 

Technology, and Logistics) 

to take the following two 

actions:

(1) 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.

(2) 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

• determining requirements for the number of tags needed,

• compiling an accurate inventory of the number of tags 

currently owned, and

• 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.

Defense Inventory: Army Needs to 

Strengthen Internal Controls for Items 

Shipped to Repair Contractors (GAO-06-

209, December 13, 2005)

To improve accountability of 

inventory shipped to Army 

repair contractors, GAO 

recommended that the 

Secretary of Defense direct 

the Secretary of the Army to 

instruct the Commanding 

General, Army Materiel 

Command, to take the 

following six actions:

(1) Establish systematic procedures to obtain and document 

contractors’ receipt of secondary repair item shipments in 

the Army’s inventory management systems, and to follow up 

on unconfirmed receipts within 45 days of shipment.

(2) Institute policies, consistent with DOD regulations, for 

obtaining and documenting contractors’ receipt of 

government-furnished materiel shipments in the Army’s 

inventory management systems.

(3) Provide quarterly status reports of all shipments of Army 

government-furnished materiel to Defense Contract 

Management Agency, in compliance with DOD regulations.

(4) Examine the feasibility of implementing DOD guidance 

for providing advance notification to contractors at the time 

of shipment and, if warranted, establish appropriate policies 

and procedures for implementation.

(5) Analyze receipt records for secondary repair items 

shipped to contractors and take actions necessary to update 

and adjust inventory management data prior to transfer to 

the Logistics Modernization Program. These actions should 

include investigating and resolving shipments that lack 

matching receipts to determine their status.

(6) To ensure consistent implementation of any new 

procedures arising from the recommendations in this report, 

provide periodic training to appropriate inventory control 

point personnel and provide clarifying guidance concerning 

these new procedures to the command’s repair contractors.

(Continued From Previous Page)

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Report Recommendations

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Asset visibility Policy Concurred, open

Process Partially concurred, open

Inventory management Process Concurred, open

Policy Concurred, open

Management oversight Concurred, open

Policy Concurred, open

Process Concurred, open

Planning Concurred, open

Focus area Theme Status of recommendations
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Defense Logistics: DOD Has Begun to 

Improve Supply Distribution Operations, 

but Further Actions Are Needed to 

Sustain These Efforts (GAO-05-775, 

August 11, 2005)

To enhance DOD’s ability to 

take a more coordinated and 

systemic approach to 

improving the supply 

distribution system, GAO 

recommended that the 

Secretary of Defense take 

the following three actions:

(1) Clarify the scope of responsibilities, accountability, and 

authority between the Distribution Process Owner and the 

Defense Logistics Executive as well as the roles and 

responsibilities between the Distribution Process Owner, the 

Defense Logistics Agency, and Joint Forces Command.

(2) Issue a directive instituting these decisions and make 

other related changes, as appropriate, in policy and doctrine.

(3) Improve the Logistics Transformation Strategy by 

directing the Under Secretary of Defense (Acquisition, 

Technology, and Logistics) to include specific performance 

goals, programs, milestones, and resources to achieve 

focused logistics capabilities in the Focused Logistics 

Roadmap. 

To address the current underfunding of the Very Small 

Aperture Terminal and the Mobile Tracking System, GAO 

recommended that the Secretary of Defense direct the 

Secretary of the Army to determine whether sufficient 

funding priority has been be given to the acquisition of these 

systems and, if not, to take appropriate corrective action.

Defense Logistics: Better Management 

and Oversight of Prepositioning 

Programs Needed to Reduce Risk and 

Improve Future Programs (GAO-05-427, 

September 6, 2005)

To address the risks and 

management challenges 

facing the department’s 

prepositioning programs and 

improve oversight, GAO 

recommended that the 

Secretary of Defense take 

the following five actions:

(1) Direct the Chairman, Joint Chiefs of Staff, to assess the 

near-term operational risks associated with current inventory 

shortfalls and equipment in poor condition should a conflict 

arise.

(2) Direct the Under Secretary of Defense for Acquisition, 

Technology, and Logistics to provide oversight over the 

department’s prepositioning programs by fully implementing 

the department’s directive on war reserve materiel and, if 

necessary, revise the directive to clarify the lines of 

accountability for this oversight.

(3) Direct the Secretary of the Army to improve the 

processes used to determine requirements and direct the 

Secretary of the Army and Air Force to improve the 

processes used to determine the reliability of inventory data 

so that the readiness of their prepositioning programs can 

be reliably assessed and proper oversight over the programs 

can be accomplished.

(4) Develop a coordinated departmentwide plan and joint 

doctrine for the department’s prepositioning programs that 

identifies the role of prepositioning in the transformed 

military and ensures these programs will operate jointly, 

support the needs of the war fighter, and are affordable.

(5) Report to Congress, possibly as part of the mandated 

October 2005 report, how the department plans to manage 

the near-term operational risks created by inventory 

shortfalls and management and oversight issues described 

in this report.

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Materiel distribution Management oversight Nonconcurred, open

Policy Nonconcurred, open

Performance tracking Concurred, open

Process Concurred, open

Inventory management Process Partially concurred, closed, implemented

Management oversight Partially concurred, open

Process Partially concurred, open

Planning Partially concurred, open

Management oversight Concurred, open

Focus area Theme Status of recommendations
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Report Recommendations

Page 36 GAO-07-234 DOD’s High-Risk Areas

Defense Logistics: Better Strategic 

Planning Can Help Ensure DOD's 

Successful Implementation of Passive 

Radio Frequency Identification (GAO-05-

345, September 12, 2005)

GAO recommend that the 

Secretary of Defense take 

the following three actions:

(1) Direct the Under Secretary of Defense (Acquisition, 

Technology, and Logistics) to expand its current RFID 

planning efforts to include a DOD-wide comprehensive 

strategic management approach that will ensure that RFID 

technology is efficiently and effectively implemented 

throughout the department. This strategic management 

approach should incorporate the following key management 

principles:

• an integrated strategy with goals, objectives, and results for 

fully implementing RFID in the DOD supply chain process, 

to include the interoperability of automatic information 

systems;

• a description of specific actions needed to meet goals and 

objectives;

• performance measures or metrics to evaluate progress 

toward achieving the goals;

• schedules and milestones for meeting deadlines;

• identification of total RFID resources needed to achieve full 

implementation; and

• an evaluation and corrective action plan.

(2) Direct the secretaries of each military service and 

administrators of other DOD military components to develop 

individual comprehensive strategic management 

approaches that support the DOD-wide approach for fully 

implementing RFID into the supply chain processes.

(3) Direct the Under Secretary of Defense (Acquisition, 

Technology, and Logistics), the secretaries of each military 

service, and administrators of other military components to 

develop a plan that identifies the specific challenges 

impeding passive RFID implementation and the actions 

needed to mitigate these challenges. Such a plan could be 

included in the strategic management approach that GAO 

recommended they develop.

Defense Logistics: Actions Needed to 

Improve the Availability of Critical Items 

during Current and Future Operations 

(GA0-05-275, April 8, 2005)

To improve the effectiveness 

of DOD’s supply system in 

supporting deployed forces 

for contingencies, GAO

recommended that the 

Secretary of Defense direct 

the Secretary of the Army to 

take the following three 

actions and specify when 

they will be completed:

(1) Improve the accuracy of Army war reserve requirements 

and transparency about their adequacy by:

• updating the war reserve models with OIF consumption 

data that validate the type and number of items needed,

• modeling war reserve requirements at least annually to 

update the war reserve estimates based on changing 

operational and equipment requirements, and

• disclosing to Congress the impact on military operations of 

its risk management decision about the percentage of war 

reserves being funded.

(Continued From Previous Page)

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Report Recommendations

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Asset visibility Planning Nonconcurred, open

Planning Concurred, open

Planning Nonconcurred, open

Requirements forecasting Process Concurred with intent, open

Focus area Theme Status of recommendations
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Page 38 GAO-07-234 DOD’s High-Risk Areas

(2) Improve the accuracy of its wartime supply requirements 

forecasting process by:

• developing models that can compute operational supply 

requirements for deploying units more promptly as part of 

prewar planning and 

• providing item managers with operational information in a 

timely manner so they can adjust modeled wartime 

requirements as necessary.

(3) Reduce the time delay in granting increased obligation 

authority to the Army Materiel Command and its subordinate 

commands to support their forecasted wartime requirements 

by establishing an expeditious supply requirements 

validation process that provides accurate information to 

support timely and sufficient funding.

(4) GAO also recommended that the Secretary of Defense 

direct the Secretary of the Navy to improve the accuracy of 

the Marine Corps’ wartime supply requirements forecasting 

process by completing the reconciliation of the Marine 

Corps’ forecasted requirements with actual OIF 

consumption data to validate the number as well as types of 

items needed and making necessary adjustments to their 

requirements. The department should also specify when 

these actions will be completed.

GAO recommended that the 

Secretary of Defense direct 

the Secretary of the Army 

and Director of the Defense 

Logistics Agency to take the 

following two actions:

(5) Minimize future acquisition delays by assessing the 

industrial-base capacity to meet updated forecasted 

demands for critical items within the time frames required by 

operational plans as well as specify when this assessment 

will be completed, and

(6) Provide visibility to Congress and other decision makers 

about how the department plans to acquire critical items to 

meet demands that emerge during contingencies.

GAO also recommended the 

Secretary of Defense take 

the following three actions 

and specify when they 

would be completed:

(7) Revise current joint logistics doctrine to clearly state, 

consistent with policy, who has responsibility and authority 

for synchronizing the distribution of supplies from the United 

States to deployed units during operations;

(8) Develop and exercise, through a mix of computer 

simulations and field training, deployable supply receiving 

and distribution capabilities including trained personnel and 

related equipment for implementing improved supply 

management practices, such as radio frequency 

identification tags that provide in-transit visibility of supplies, 

to ensure they are sufficient and capable of meeting the 

requirements in operational plans; and

(9) Establish common supply information systems that 

ensure the DOD and the services can requisition supplies 

promptly and match incoming supplies with unit requisitions 

to facilitate expeditious and accurate distribution.

(Continued From Previous Page)

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Report Recommendations

Page 39 GAO-07-234 DOD’s High-Risk Areas

Process Concurred with intent, open

Process Concurred with intent, open

Process Concurred with intent, open

Planning Concurred with intent, open

Management oversight Concurred with intent, open

Policy Concurred with intent, open

Planning Concurred with intent, open

Process Concurred with intent, open

Focus area Theme Status of recommendations
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Page 40 GAO-07-234 DOD’s High-Risk Areas

Defense Inventory: Improvements 

Needed in DOD’s Implementation of Its 

Long-Term Strategy for Total Asset 

Visibility of Its Inventory (GA0-05-15, 

December 6, 2004)

GAO continued to believe, 

as it did in April 1999, that 

DOD should develop a 

cohesive, departmentwide 

plan to ensure that total 

asset visibility is achieved. 

Specifically, GAO 

recommended that the 

Secretary of Defense 

develop a departmentwide 

long-term total asset 

visibility strategy as part of 

the Business Enterprise 

Architecture 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 total asset visibility;

(2) Identifies the resource requirements for implementing 

total asset visibility and includes related investment analyses 

that show how the major information technology investments 

will support total asset visibility goals;

(3) Identifies how departmentwide systems issues that affect 

implementation of total asset visibility will be addressed; and

(4) Establishes outcome-oriented total asset visibility goals 

and performance measures for all relevant components and 

closely links the measures with timelines for improvement. In 

addition, since 2001, GAO made a number of 

recommendations aimed at improving DOD’s refinement and 

implementation of the business management modernization 

program. Most recently, GAO 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 total asset visibility, GAO 

continued to believe that these recommendations were valid.

Foreign Military Sales: DOD Needs to 

Take Additional Actions to Prevent 

Unauthorized Shipments of Spare Parts

(GAO-05-17, November 9, 2004)

To reduce the likelihood of 

releasing classified and 

controlled spare parts that 

DOD does not want to be 

released to foreign 

countries, GAO 

recommended that the 

Secretary of Defense take 

the following three actions:

(1) Direct the Under Secretary of Defense for Policy, in 

conjunction with the Secretaries of the Army and the Navy, 

and direct the Secretary of the Air Force to develop an 

implementation plan, such as a Plan of Actions & 

Milestones, specifying the remedial actions to be taken to 

ensure that applicable testing and review of the existing 

requisition-processing systems are conducted on a periodic 

basis.

(2) Direct the Under Secretary of Defense for Policy, in 

conjunction with the Secretaries of the Army, the Air Force, 

and the Navy, to determine whether current plans for 

developing the Case Execution Management Information 

System call for periodic testing and, if not, provide for such 

testing.

(3) Direct the Under Secretary of Defense for Policy, in 

conjunction with the Secretary of the Navy, and direct the 

Secretary of the Air Force to determine if it would be 

beneficial to modify the Navy’s and the Air Force’s 

requisition-processing systems so that the systems reject 

requisitions for classified or controlled parts that foreign 

countries make under blanket orders and preclude country 

managers from manually overriding system decisions, and 

to modify their systems as appropriate.

(Continued From Previous Page)

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Appendix I

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Report Recommendations

Page 41 GAO-07-234 DOD’s High-Risk Areas

Asset visibility Performance tracking Concurred with intent, closed, implemented

Planning Concurred with intent, open

Planning Concurred with intent, closed, implemented

Performance tracking Partially concurred, open

Inventory management Planning Partially concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, not implemented

Focus area Theme Status of recommendations
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Defense Inventory: Navy Needs to 

Improve the Management Over 

Government- Furnished Material 

Shipped to Its Repair Contractors (GAO04-779, July 23, 2004)

To improve the control of 

government-furnished 

material shipped to Navy 

repair contractors, GAO 

recommended that the 

Secretary of Defense direct 

the Secretary of the Navy to 

instruct the Commander, 

Naval Inventory Control 

Point, to implement the 

following three actions:

(1) Require Navy repair contractors to acknowledge receipt 

of material that is received from the Navy’s supply system as 

prescribed by DOD procedure.

(2) Follow up on unconfirmed material receipts within the 45 

days as prescribed in the DOD internal control procedures to 

ensure that the Naval Inventory Control Point can reconcile 

material shipped to and received by its repair contractors.

(3) Implement procedures to ensure that quarterly reports of 

all shipments of government-furnished material to Navy 

repair contractors are generated and distributed to the 

Defense Contract Management Agency.

Defense Inventory: Analysis of 

Consumption of Inventory Exceeding 

Current Operating Requirements Since 

September 30, 2001 (GA0-04-689, 

August 2, 2004)

To address the inventory 

management shortcomings 

that GAO identified, GAO 

recommended that the 

Secretary of Defense take 

the following three actions:

(1) Direct the military services and the Defense Logistics 

Agency to determine whether it would be beneficial to use 

the actual storage cost data provided by Defense Logistics 

Agency in their computations, instead of using estimated 

storage costs, and include that data in their systems and 

models as appropriate;

(2) Direct the Secretary of the Air Force to establish and 

implement a systemwide process for correcting causes of 

inventory discrepancies between the inventory for which 

item managers are accountable and the inventory reported 

by bases and repair centers; and 

(3) Direct the Secretary of the Air Force to revise its policy to 

require item managers to code inventory so that the 

inventory is properly categorized.

Foreign Military Sales: Improved Navy 

Controls Could Prevent Unauthorized 

Shipments of Classified and Controlled 

Spare Parts to Foreign Countries (GAO04-507, June 25, 2004)

To improve internal controls 

over the Navy’s foreign 

military sales program and 

to prevent foreign countries 

from obtaining classified and 

controlled spare parts under 

blanket orders, GAO 

recommended that the 

Secretary of Defense 

instruct the Secretary of the 

Navy to take the following 

six actions:

(1) Consult with the appropriate officials to resolve the 

conflict between the DOD and Navy policies on the Navy’s 

use of waivers allowing foreign countries to obtain classified 

spare parts under blanket orders.

(2) Determine and implement the necessary changes 

required to prevent the current system from erroneously 

approving blanket order requisitions for classified spare 

parts until the new system is deployed.

(3) Establish policies and procedures for the Navy’s country 

managers to follow when documenting their decisions to 

override the system when manually processing blanket 

order requisitions.

(4) Require that the Navy’s country managers manually 

enter blanket order requisitions into the Navy’s system to 

correctly represent foreign-country-initiated orders versus 

U.S. government-initiated orders so the Navy’s system will 

validate whether the foreign countries are eligible to receive 

the requested spare parts.

(Continued From Previous Page)

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Report Recommendations

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Inventory management Process Concurred, open

Process Concurred, open

Process Concurred, closed, implemented

Inventory management Process Concurred, closed, implemented

Process Concurred, closed, implemented

Policy Concurred, closed, implemented

Inventory management Process Concurred, closed, implemented

Process Partially concurred, closed, implemented

Policy Concurred, closed, implemented

Management oversight Partially concurred, closed, implemented

Focus area Theme Status of recommendations
Appendix I

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Page 44 GAO-07-234 DOD’s High-Risk Areas

(5) Establish policies and procedures to follow for blanket 

orders when the Navy’s country managers replace spare 

parts requested by manufacturer or vendor part numbers 

with corresponding government national stock numbers.

(6) Establish interim policies and procedures, after 

consulting with appropriate government officials, for 

recovering classified or controlled spare parts shipped to 

foreign countries that might not have been eligible to receive 

them under blanket orders until the Defense Security 

Cooperation Agency develops guidance on this issue.

To improve the Navy 

system’s internal controls 

aimed at preventing foreign 

countries from obtaining 

classified and controlled 

spare parts under blanket 

orders, GAO recommended 

that the Secretary of 

Defense direct the Under 

Secretary of Defense for 

Policy to require the 

appropriate officials to take 

the following two actions:

(7) Modify the Navy’s system to revalidate blanket order 

requisitions when the Navy’s country manager replaces 

spare parts that are requested by manufacturer or vendor 

part numbers.

(8) Periodically test the system to ensure that it is accurately 

reviewing blanket order requisitions before approving them.

(Continued From Previous Page)

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Report Recommendations

Page 45 GAO-07-234 DOD’s High-Risk Areas

Policy Concurred, closed, implemented

Policy Partially concurred, closed, not implemented

Process Concurred, closed, implemented

Process Concurred, closed, implemented

Focus area Theme Status of recommendations
Appendix I

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Report Recommendations

Page 46 GAO-07-234 DOD’s High-Risk Areas

Foreign Military Sales: Improved Army 

Controls Could Prevent Unauthorized 

Shipments of Classified Spare Parts and 

Items Containing Military Technology to 

Foreign Countries (GAO-04-327, April 

15, 2004)

To improve internal controls 

over the Army’s foreign 

military sales program and 

to prevent foreign countries 

from being able to obtain 

classified spare parts or 

unclassified items 

containing military 

technology that they are not 

eligible to receive under 

blanket orders, GAO 

recommended that the 

Secretary of Defense 

instruct the Secretary of the 

Army to take the following 

two actions:

(1) Modify existing policies and procedures, after 

consultation with the appropriate government officials, to 

cover items shipped in lieu of items ordered to also ensure 

the recovery of classified spare parts that have been 

shipped to foreign countries that may not be eligible to 

receive them under blanket orders.

(2) Modify existing policies and procedures covering items, 

after consultation with the appropriate government officials, 

to cover items shipped in lieu of items ordered to also ensure 

the recovery of unclassified items containing military 

technology that have been shipped to foreign countries that 

may not be eligible to receive them under blanket orders. 

To improve the Army 

system’s internal controls 

aimed at preventing foreign 

countries from obtaining 

classified spare parts or 

unclassified items 

containing military 

technology under blanket 

orders, GAO recommended 

that the Secretary of 

Defense direct the Under 

Secretary of Defense for 

Policy to require the 

appropriate officials to take 

the following two actions:

(3) Modify the system so that it identifies blanket order 

requisitions for unclassified items containing military 

technology that should be reviewed before they are 

released.

(4) Periodically test the system and its logic for restricting 

requisitions to ensure that the system is accurately reviewing 

and approving blanket order requisitions.

Defense Inventory: Opportunities Exist 

to Improve Spare Parts Support Aboard 

Deployed Navy Ships (GAO-03-887, 

August 29, 2003)

In order to improve supply 

availability, enhance 

operations and mission 

readiness, and reduce 

operating costs for deployed 

ships, GAO recommended 

the Secretary of Defense 

direct the Secretary of the 

Navy to:

(1) Develop plans to conduct periodic ship configuration 

audits and to ensure that configuration records are updated 

and maintained in order that accurate inventory data can be 

developed for deployed ships;

(2) Ensure that demand data for parts entered into ship 

supply systems are recorded promptly and accurately as 

required to ensure that onboard ship inventories reflect 

current usage or demands;

(3) Periodically identify and purge spare parts from ship 

inventories to reduce costs when parts have not been 

requisitioned for long periods of time and are not needed 

according to current and accurate configuration and parts 

demand information; and 

(4) Ensure that casualty reports are issued consistent with 

high priority maintenance work orders, as required by Navy 

instruction, to provide a more complete assessment of ship’s 

readiness.

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Inventory management Policy Nonconcurred, closed, not implemented

Policy Nonconcurred, closed, not implemented

Process Concurred, closed, implemented

Process Concurred, closed, implemented

Requirements forecasting Planning Concurred, open

Process Concurred, open

Process Concurred, open

Management oversight Concurred with intent, closed, implemented

Focus area Theme Status of recommendations
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Defense Inventory: Several Actions Are 

Needed To Further DLA’s Efforts to 

Mitigate Shortages of Critical Parts 

(GA0-03-709, August 1, 2003)

To improve the supply 

availability of critical 

readiness degrading spare 

parts that may improve the 

overall readiness posture of 

the military services, GAO 

recommended that the 

Secretary of Defense direct 

the Director of the Defense 

Logistics Agency to:

(1) Submit, as appropriate, requests for waiver(s) of the 

provisions of the DOD Supply Chain Materiel Management 

Regulation 4140.1-R that limit the safety level of supply parts 

to specific demand levels. Such waivers would allow 

Defense Logistics Agency to buy sufficient critical spare 

parts that affect readiness of service weapon systems to 

attain an 85 percent minimum availability goal; 

(2) Change the agency’s current aggregate 85 percent 

supply availability goal for critical spare parts that affect 

readiness, to a minimum 85 percent supply availability goal 

for each critical spare part, and because of the long lead 

times in acquiring certain critical parts, establish annual 

performance targets for achieving the 85 percent minimum 

goal; and 

(3) Prioritize funding as necessary to achieve the annual 

performance targets and ultimately the 85 percent minimum 

supply availability goal.

Foreign Military Sales: Improved Air 

Force Controls Could Prevent 

Unauthorized Shipments of Classified 

and Controlled Spare Parts to Foreign 

Countries (GAO-03-664, July 29, 2003)

To improve internal controls 

over the Air Force’s foreign 

military sales program and 

to minimize countries’ 

abilities to obtain classified 

or controlled spare parts 

under blanket orders for 

which they are not eligible, 

GAO recommended that the 

Secretary of Defense 

instruct the Secretary of the 

Air Force to require the 

appropriate officials to take 

the following steps:

(1) Modify the Security Assistance Management Information 

System so that it validates country requisitions based on the 

requisitioned item’s complete national stock number.

(2) Establish policies and procedures for recovering 

classified or controlled items that are erroneously shipped.

(3) Establish polices and procedures for validating 

modifications made to the Security Assistance Management 

Information System to ensure that the changes were 

properly made. 

(4) Periodically test the Security Assistance Management 

Information System to ensure that the system’s logic for 

restricting requisitions is working correctly.

(5) Establish a policy for command country managers to 

document the basis for their decisions to override Security 

Assistance Management Information System or foreign 

military sales case manager recommendations.

Defense Inventory: Navy Logistics 

Strategy and Initiatives Need to Address 

Spare Parts Shortages (GA0-03-708, 

June 27, 2003)

GAO recommended that the 

Secretary of Defense direct 

the Secretary of the Navy to:

(1) Develop a framework for mitigating critical spare parts 

shortages that includes long-term goals; measurable, 

outcome-related objectives; implementation goals; and 

performance measures as a part of either the Navy Sea 

Enterprise strategy or the Naval Supply Systems Command 

Strategic Plan, which will provide a basis for management to 

assess the extent to which ongoing and planned initiatives 

will contribute to the mitigation of critical spare parts 

shortages; and 

(2) Implement the Office of the Secretary of Defense’s 

recommendation to report, as part of budget requests, the 

impact of funding on individual weapon system readiness 

with a specific milestone for completion.

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Inventory management Process Concurred, closed, implemented

Performance tracking Concurred with intent, closed, not implemented

Performance tracking Concurred with intent, closed, not implemented

Inventory management Process Concurred, closed, implemented

Policy Concurred, open

Policy Concurred, open

Process Partially concurred, closed, implemented

Policy Concurred, closed, implemented

Inventory management Performance tracking Concurred with intent, closed, not implemented

Process Concurred with intent, closed, implemented

Focus area Theme Status of recommendations
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Defense Inventory: The Department 

Needs a Focused Effort to Overcome 

Critical Spare Parts Shortages (GA0-03-

707, June 27, 2003)

In order to improve the 

department’s logistics 

strategic plan to achieve 

results for overcoming spare 

parts shortages, improve 

readiness, and address the 

long-standing weaknesses 

that are limiting the overall 

economy and efficiency of 

logistics operations, GAO 

recommended that the 

Secretary of Defense direct 

the Under Secretary for 

Acquisition, Technology, and 

Logistics to:

(1) Incorporate clear goals, objectives, and performance 

measures pertaining to mitigating spare parts shortages in 

the Future Logistics Enterprise or appropriate agencywide 

initiatives to include efforts recommended by the Under 

Secretary of Defense, Comptroller in his August 2002 study 

report.

GAO also recommended 

that the Secretary of 

Defense direct the Under 

Secretary of Defense, 

Comptroller to

(2) Establish reporting milestones and define how it will 

measure progress in implementing the August 2002 

Inventory Management Study recommendations related to 

mitigating critical spare parts shortages.

Defense Inventory: Air Force Plans and 

Initiatives to Mitigate Spare Parts 

Shortages Need Better Implementation 

(GA0-03-706, June 27, 2003)

GAO recommended that the 

Secretary of Defense direct 

the Secretary of the Air 

Force to take the following 

steps:

(1) Incorporate the Air Force Strategic Plan’s performance 

measures and targets into the subordinate Logistics Support 

Plan and the Supply Strategic Plan.

(2) Commit to start those remaining initiatives needed to 

address the causes of spare parts shortages or clearly 

identify how the initiatives have been incorporated into those 

initiatives already underway. 

(3) Adopt performance measures and targets for its 

initiatives that will show how their implementation will affect 

critical spare parts availability and readiness. 

(4) Direct the new Innovation and Transformation Directorate 

to establish plans and priorities for improving management 

of logistics initiatives consistent with the Air Force Strategic 

Plan.

(5) Request spare parts funds in the Air Force’s budget 

consistent with results of its spare parts requirements 

determination process.

Defense Inventory: The Army Needs a 

Plan to Overcome Critical Spare Parts 

Shortages (GA0-03-705, June 27, 2003)

GAO recommended that the 

Secretary of Defense direct 

the Secretary of the Army 

to:

(1) Modify or supplement the Transformation Campaign 

Plan, or the Army-wide logistics initiatives to include a focus 

on mitigating critical spare parts shortages with goals, 

objectives, milestones, and quantifiable performance 

measures, such as supply availability and readiness-related 

outcomes and

(2) Implement the Office of Secretary of Defense 

recommendation to report, as part of budget requests, the 

impact of additional spare parts funding on equipment 

readiness with specific milestones for completion.

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Inventory management Performance tracking Concurred with intent, closed, not implemented

Performance tracking Partially concurred, closed, not implemented

Inventory management Performance tracking Concurred with intent, closed, implemented

Process Concurred with intent, closed, not implemented

Performance tracking Concurred with intent, closed, implemented

Planning Concurred with intent, closed, implemented

Process Concurred with intent, closed, implemented

Inventory management Planning Concurred with intent, closed, not implemented

Process Concurred with intent, closed, implemented

Focus area Theme Status of recommendations
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Defense Inventory: Overall Inventory and 

Requirements Are Increasing, but Some 

Reductions in Navy Requirements Are 

Possible (GA0-03-355, May 8, 2003)

To improve the accuracy of the Navy’s secondary inventory 

requirements, GAO recommended that the Secretary of 

Defense direct the Secretary of the Navy to require the 

Commander, Naval Supply Systems Command, to require 

its inventory managers to use the most current data 

available for computing administrative lead time 

requirements.

Defense Inventory: Better Reporting on 

Spare Parts Spending Will Enhance 

Congressional Oversight (GA0-03-18, 

October 24, 2002)

Given the importance of 

spare parts to maintaining 

force readiness, and as 

justification for future budget 

requests, actual and 

complete information would 

be important to DOD as well 

as Congress. Therefore, 

GAO recommended that the 

Secretary of Defense:

(1) Issue additional guidance on how the services are to 

identify, compile, and report on actual and complete spare 

parts spending information, including supplemental funding, 

in total and by commodity, as specified by Exhibit OP-31 and 

(2) Direct the Secretaries of the military departments to 

comply with Exhibit OP-31 reporting guidance to ensure that 

complete information is provided to Congress on the 

quantities of spare parts purchased and explanations of 

deviations between programmed and actual spending.

Defense Management: Munitions 

Requirements and Combatant 

Commanders’ Needs Require Linkage

(GAO-03-17, October 15, 2002)

GAO recommended that the Secretary of Defense establish 

a direct link between the munitions needs of the combatant 

commands—recognizing the impact of weapons systems 

and munitions preferred or expected to be employed—and 

the munitions requirements determinations and purchasing 

decisions made by the military services.

Defense Inventory: Improved Industrial 

Base Assessment for Army War Reserve 

Spares Could Save Money (GA0-02-

650, July 12, 2002)

In order to improve the 

Army’s readiness for 

wartime operations, achieve 

greater economy in 

purchasing decisions, and 

provide Congress with 

accurate budget 

submissions for war reserve 

spare parts, GAO 

recommended that the 

Secretary of Defense direct 

the Secretary of the Army to 

have the Commander of 

Army Material Command 

take the following actions to 

expand or change its current 

process consistent with the 

attributes in this report:

(1) Establish an overarching industrial base capability 

assessment process that considers the attributes in this 

report.

(2) Develop a method to efficiently collect current industrial 

base capability data directly from industry itself.

(3) Create analytical tools that identify potential production 

capability problems such as those due to surge in wartime 

spare parts demand.

(4) Create management strategies for resolving spare parts 

availability problems, for example, by changing acquisition 

procedures or by targeting investments in material and 

technology resources to reduce production lead times.

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Requirements forecasting Process Concurred, closed, implemented

Inventory management Policy Partially concurred, closed, implemented

Management oversight Partially concurred, closed, implemented

Requirements forecasting Process Concurred, closed, implemented

Inventory management Process Partially concurred, closed, not implemented

Process Partially concurred, closed, not implemented

Process Partially concurred, closed, not implemented

Process Partially concurred, closed, not implemented

Focus area Theme Status of recommendations
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Defense Inventory: Air Force Needs to 

Improve Control Of Shipments to Repair 

Contractors (GA0-02-617, July 1, 2002)

To improve the control of 

inventory being shipped, 

GAO recommended that the 

Secretary of Defense direct 

the Secretary of the Air 

Force to undertake the 

following: Improve 

processes for providing 

contractor access to 

government-furnished 

material by:

(1) Listing specific stock numbers and quantities of material 

in repair contracts (as they are modified or newly written) 

that the inventory control points have agreed to furnish to 

contractors. 

(2) Demonstrating that automated internal control systems 

for loading and screening stock numbers and quantities 

against contractor requisitions perform as designed. 

(3) Loading stock numbers and quantities that the inventory 

control points have agreed to furnish to contractors into the 

control systems manually until the automated systems have 

been shown to perform as designed.

(4) Requiring that waivers to loading stock numbers and 

quantities manually are adequately justified and 

documented based on cost-effective and/or mission-critical 

needs.

Revise Air Force supply 

procedures to include 

explicit responsibility and 

accountability for:

(5) Generating quarterly reports of all shipments of Air Force 

material to contractors.

(6) Distributing the reports to Defense Contract 

Management Agency property administrators. 

(7) Determine, for the contractors in our review, what actions 

are needed to correct problems in posting material receipts.

(8) Determine, for the contractors in our review, what actions 

are needed to correct problems in reporting shipment 

discrepancies.

(9) Establish interim procedures to reconcile records of 

material shipped to contractors with records of material 

received by them, until the Air Force completes the transition 

to its Commercial Asset Visibility system in fiscal year 2004.

(10) Comply with existing procedures to request, collect, and 

analyze contractor shipment discrepancy data to reduce the 

vulnerability of shipped inventory to undetected loss, 

misplacement, or theft.

Defense Inventory: Control Weaknesses 

Leave Restricted and Hazardous Excess 

Property Vulnerable to Improper Use, 

Loss, and Theft (GAO-02-75, January 

25, 2002)

For all programs, GAO 

recommended that the 

Secretary of Defense direct 

the Director of the Defense 

Logistics Agency to take the 

following actions:

(1) As part of the department’s redesign of its activity code 

database, establish codes that identify the type of excess 

property—by federal supply class—and the quantity that 

each special program is eligible to obtain and provide 

accountable program officers access to appropriate 

information to identify any inconsistencies between what 

was approved and what was received.

(2) Reiterate policy stressing that Defense reutilization 

facility staff must notify special program officials of the 

specific tracking and handling requirements of hazardous 

items and items with military technology/applications.

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Inventory management Process Concurred, closed, implemented

Process Nonconcurred, closed, not implemented

Process Partially concurred, closed, not implemented

Process Partially concurred, closed, implemented

Process Concurred, closed, implemented

Process Concurred, closed, implemented

Process Concurred, closed, not implemented

Process Concurred, closed, not implemented

Process Concurred, closed, implemented

Management oversight Partially concurred, closed, not implemented

Inventory management Process Partially concurred, closed, implemented

Management oversight Concurred, closed, implemented

Focus area Theme Status of recommendations
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GAO also recommended that the Secretary of Defense 

ensure that accountable program officers within the 

department verify, prior to approving the issuance of excess 

property, the eligibility of special programs to obtain specific 

types and amounts of property, including items that are 

hazardous or have military technology/applications. This 

could be accomplished, in part, through the department’s 

ongoing redesign of its activity code database.

For each individual program, 

GAO further recommended 

the following: 

(1) With regard to the 12th Congressional Regional 

Equipment Center, that the Secretary of Defense direct the 

Director of the Defense Logistics Agency to review and 

amend, as necessary, its agreement with the Center in the 

following areas: 

(a) The Center’s financial responsibility for the cost of 

shipping excess property obtained under the experimental 

project,

(b) The ancillary items the Center is eligible to receive,

(c) The rules concerning the sale of property and 

procedures for the Center to notify the Agency of all 

proposed sales of excess property,

(d) The Center’s responsibility for tracking items having 

military technology/application and hazardous items, and

(e) The need for Agency approval of the Center’s orders for 

excess property.

(2) With regard to the Army, the Navy, and the Air Force 

Military Affiliate Radio Systems, GAO recommended that the 

Secretary of Defense direct the Chairman of the Joint Chiefs 

of Staff to have the Joint Staff Directorate for Command, 

Control, Communications, and Computer Systems review 

which items these systems are eligible to receive, on the 

basis of their mission and needs, and direct each of the 

Military Affiliate Radio Systems to accurately track excess 

property, including pilferable items, items with military 

technology/ applications, and hazardous items.

(3) With regard to the Civil Air Patrol, GAO recommended 

that the Secretary of Defense direct the Secretary of the Air 

Force to have the Civil Air Patrol-Air Force review which 

items the Patrol is eligible to receive, on the basis of its 

mission and needs, and direct the Patrol to accurately track 

its excess property, including pilferable items, items with 

military technology/applications, and hazardous items.

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Process Partially concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Process Concurred, closed, implemented

Process Concurred, open

Focus area Theme Status of recommendations
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Defense Logistics: Strategic Planning 

Weaknesses Leave Economy, Efficiency, 

and Effectiveness of Future Support 

Systems at Risk (GA0-02-106, October 

11, 2001)

To provide the military 

services, the Defense 

Logistics Agency, and the 

U.S. Transportation 

Command with a framework 

for developing a 

departmentwide approach 

to logistics reengineering, 

GAO recommended that the 

Secretary of Defense direct 

the Under Secretary of 

Defense for Acquisition, 

Technology, and Logistics to 

revise the departmentwide 

Logistics Strategic Plan to 

provide for an overarching 

logistics strategy that will 

guide the components’ 

logistics planning efforts. 

Among other things, this 

logistics strategy should:

(1) Specify a comprehensive approach that addresses the 

logistics life-cycle process from acquisition through support 

and system disposal, including the manner in which logistics 

is to be considered in the system and equipment acquisition 

process and how key support activities such as 

procurement, transportation, storage, maintenance, and 

disposal will be accomplished.

(2) Identify the logistics requirements the department will 

have to fulfill, how it will be organized to fulfill these 

requirements, and who will be responsible for providing 

specific types of logistics support.

(3) Identify the numbers and types of logistics facilities and 

personnel the department will need to support future 

logistics requirements.

(4) GAO also recommended that the Under Secretary of 

Defense for Acquisition, Technology, and Logistics establish 

a mechanism for monitoring the extent to which the 

components are implementing the department’s Logistics 

Strategic Plan. Specifically, the Under Secretary of Defense 

for Acquisition, Technology, and Logistics should monitor the 

extent to which the components’ implementation plans are 

(a) consistent with the departmentwide plan, (b) directly 

related to the departmentwide plan and to each other, and 

(c) contain appropriate key management elements, such as 

performance measures and specific milestones.

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Source: GAO.

Other: Strategic Planning Concurred, closed, implemented

Planning Concurred, closed, implemented

Planning Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Focus area Theme Status of recommendations
Page 60 GAO-07-234 DOD’s High-Risk Areas

Appendix II

Supply Chain Management: Summary of 

DOD-IG Report Recommendations ApendxiI

Report title, number, date Recommendations

Logistics: Defense Logistics Agency 

Processing of Special Program 

Requirements (D-2005-020, 

November 17, 2004) 

The Director, Defense Logistics 

Agency should:

Prepare quarterly statistic reports quantifying the cost 

effectiveness of the special program requirement initiative 

to reduce or cancel procurement actions by the use of 

adjusted buy-back rates, segregated by Defense Supply 

Centers. 

Logistics: Navy Controls Over 

Materiel Sent to Defense Reutilization 

and Marketing Offices 

(D-2004-095, June 24, 2004) 

1.(A) The Commander, Naval 

Supply Systems Command 

should establish controls to 

ensure that Navy organizations 

comply with Naval Supply 

Command Publication P-485, 

“Ashore Policy,” June 1998, 

requirements to:

A.1. Transmit shipment notification transactions to the 

Defense Reutilization and Marketing Service when 

materiel is shipped to the Defense Reutilization and 

Marketing Office and ensure the data in the shipment 

notification are accurate.

A.2. Review and research Defense Reutilization and 

Marketing Service follow-up transactions for materiel 

reported as shipped but not received, and respond to the 

Defense Reutilization and Marketing Service follow-up 

transactions in a timely manner. 

1.(B-D) The Commander, Naval 

Supply Systems Command 

should:

B. Establish controls to ensure that Navy organizations 

either demilitarize materiel or provide demilitarization 

instructions to the Defense Logistics Agency Depots, prior 

to requesting the depot ship materiel to disposal, and 

respond to depot requests for demilitarization instructions 

in a timely manner. 

C. Validate that the Realtime Reutilization Asset 

Management Program Office reprograms its computer 

system to ensure that disposal shipment notifications, 

rather than disposal shipment confirmations, are sent to 

Defense Reutilization and Marketing Service for disposal 

shipments. 

D. Request that the Defense Reutilization and Marketing 

Service provide management reports which identify Navy 

organizations that are not responding to disposal follow-up 

transactions for materiel reported as shipped but not 

received and that are not sending disposal shipment 

notifications for materiel shipped to disposal. 
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Focus area Theme Status Of Recommendations

Inventory management Management oversight Partially concurred, open 

Inventory management Management oversight Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, open

Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 
Appendix II

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DOD-IG Report Recommendations

Page 62 GAO-07-234 DOD’s High-Risk Areas

2. The Director, Defense 

Logistics Agency should:

A. Establish controls to ensure that Defense Distribution 

Depot personnel request the required demilitarization 

instructions for all materiel awaiting disposal instructions 

and reverse the disposal transactions if the required 

instructions are not received. 

B. Establish controls to ensure that the Defense 

Reutilization and Marketing Service reviews and analyzes 

management data to identify Navy organizations that are 

not routinely preparing shipment disposal notifications or 

are not routinely responding to follow-up transactions and 

identify to the Naval Supply Systems Command potential 

problems with data in the in-transit control system in order 

for the Naval Supply Systems Command to ensure that 

Navy organizations comply with disposal procedures. 

Logistics: Accountability and Control 

of Materiel at the Marine Corps 

Logistics Base Albany, Georgia 

(D-2004-077, April 29, 2004) 

The Commanding General, 

Marine Corps Logistics 

Command should:

1. Identify all excess materiel and return the materiel to the 

supply system, as required by Marine Corps Order 

P4400.151B, “Intermediate-Level Supply Management 

Policy Manual,” July 9, 1992.

2. Perform physical inventories of all materiel in all storage 

locations and adjust inventory records accordingly. 

Logistics: Defense Logistics Agency 

Cost to Maintain Inactive National 

Stock Numbers Items (D-2004-024, 

November 19, 2003)

The Director, Defense Logistics 

Agency should:

1. Reevaluate the cost categories for determining the 

average annual cost for maintaining an inactive national 

stock number item in the Defense Logistics Agency supply 

system and recalculate the average annual cost consistent 

with other pricing and cost methodologies.

2. Discontinue application of the draft Defense Logistics 

Agency Office of Operations Research and Resource 

Analysis report, “Cost of a DLA Maintained Inactive 

National Stock Number,” July 2002, to any authorized 

programs of DOD or the Defense Logistics Agency until all 

applicable cost categories are fully evaluated and the 

applicable costs of those relevant categories are 

incorporated into the cost study. 

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Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented

Inventory management Process Concurred, closed, implemented

Process Concurred, closed, implemented 

Inventory management Process Partially concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
Appendix II

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DOD-IG Report Recommendations

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Logistics: Defense Logistics Agency 

Processing of Other Nonrecurring 

Requirements 

(D-2004-018, November 7, 2003) 

1. The Director, Defense 

Logistics Agency should revise 

Defense Logistics Agency 

Manual 4140.2, Volume II, 

“Defense Operations Manual, 

Defense Supply Center, Supply 

Operating

Procedures,” April 2002, to 

specifically:

A. Identify the circumstances or conditions under which 

other nonrecurring requirements are authorized for 

processing.

B. Identify the requirements for documenting the 

methodology and rationale for using other nonrecurring 

requirement transactions.

C. Establish requirements for identifying the supply center 

personnel who enter other nonrecurring requirements in 

the Defense Logistics Agency supply system and retaining 

other nonrecurring requirement records after the support 

dates have passed.

2. The Director, Defense 

Logistics Agency should:

Establish a timeline for the Defense supply centers to 

validate outstanding other nonrecurring requirement 

transactions in the Defense Logistics Agency supply 

system. Other nonrecurring requirement transactions that 

do not have sufficient supporting documentation or that 

cannot be validated should be canceled or reduced and 

reported to the Defense Logistics Agency. The report 

should include the total number of other nonrecurring 

requirement transactions that were deleted and the dollar 

value of procurement actions that were canceled as a 

result.

Logistics: Accountability and Control 

of Materiel at the Ogden Air Logistics 

Center

(D-2003-130, September 5, 2003)

The Commander, Ogden Air 

Logistics Center should 

immediately:

1. Comply with the guidance in Air Force Manual 23-110, 

“U.S. Air Force Supply Manual,” and Air Force Materiel 

Command Instruction 21-130, “Equipment Maintenance 

Materiel Control,” regarding the management of 

maintenance materiel stored at the Air Logistics Center.

 2. Perform an annual physical inventory of all materiel 

recorded in the D035K Wholesale and Retail and Shipping 

System that is the responsibility of the Maintenance 

Directorate, reconcile the results, and turn in excess 

materiel to supply. 

3. Perform a physical count of all materiel located on the 

maintenance shop floors and in storage areas to identify 

unaccountable and excess materiel, reconcile the physical 

count to the D035K Wholesale and Retail and Shipping 

System, and turn in excess materiel to supply.

4. Complete the review of courtesy storage materiel listed 

in the materiel processing system and either turn in the 

excess to supply, move to the D035K Wholesale and Retail 

and Shipping System, or dispose of the materiel. 

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Requirements forecasting Policy Partially concurred, closed, implemented 

Policy Partially concurred, closed, implemented

Policy Partially concurred, closed, implemented

Management oversight Partially concurred, closed, implemented 

Inventory management Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
Appendix II

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DOD-IG Report Recommendations

Page 66 GAO-07-234 DOD’s High-Risk Areas

Logistics: Follow-up Audit of DepotLevel Repairable Assets at Selected 

Army and Navy Organizations 

(D-2003-098, June 5, 2003) 

1. The Commander, Army 

Materiel Command should:

A. Expedite funding and the deployment of the Commercial 

Asset Visibility system to Army commercial repair facilities. 

Funding and deployment should be prioritized based 

primarily on the dollar value of repairable assets at the 

commercial repair facilities. 

B. Perform oversight of compliance with DoD 4000.25-2-M, 

“Military Standard Transaction Reporting and Accounting 

Procedures,” March 28, 2002, to conduct annual location 

reconciliations between inventory control point records and 

storage depot records. 

2. The Commander, 

Communications-Electronics

Command should:

A. Determine whether the items with inventory records that 

were adjusted as a result of the October 2002 

reconciliation between the Communications-Electronics 

Command and the Defense Depot Tobyhanna 

Pennsylvania are obsolete or excess to requirements. That 

determination should be made before requesting special 

inventories or performing other costly causative research 

procedures.

B. Dispose of those assets that are identified as obsolete 

or excess to projected requirements. 

3. The Commander, Naval 

Inventory Control Point should:

A. Develop in-house procedures to provide management 

information reports to the inventory accuracy officer, 

comparable to the management information reports 

required in the February 2003 contract awarded to 

Resources Consultant Incorporated, to assist in reducing 

in-transit inventory. 

B. Establish controls to ensure that all in-transit items that 

meet the criteria in Naval Supply Systems Command 

Publication 723, “Navy Inventory Integrity Procedures,” 

April 19, 2000, are reviewed prior to writing them off as an 

inventory loss. 

Logistics: Accountability and Control 

of Materiel at the Warner Robins Air 

Logistics Center 

(D-2003-064, March 20, 2003) 

The Commander, Warner Robins 

Air Logistics Center should 

immediately:

1. Comply with Air Force guidance regarding the 

management of maintenance materiel stored at the Air 

Logistics Center. 

2. Issue guidance regarding materiel management reports 

for management review. 

3. Perform an annual physical inventory of all materiel 

recorded in the D035K Wholesale and Retail and Shipping 

System that is the responsibility of the Maintenance 

Directorate, reconcile the results, and turn in excess 

materiel to supply.

4. Perform a physical count of all materiel located on the 

maintenance shop floors and in storerooms, reconcile the 

physical count to the D035K Wholesale and Retail and 

Shipping System, and turn in excess materiel to supply. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

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Inventory management Process Concurred, open 

Management oversight Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, open

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Inventory management Management oversight Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
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Supply Chain Management: Summary of 

DOD-IG Report Recommendations

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5. Update or complete Air Force Materiel Command Form 

100 for each line of floating stock and spares inventory. 

Submit to the floating stock and spares monitor for 

processing those forms in which the authorization level 

changes. 

6. Perform semi-annual reviews of materiel stored in the 

courtesy storage area and turn in excess materiel to 

supply.

7. Perform quarterly reviews of bench stock materiel in the 

Low Altitude Navigation and Targeting Infrared for Night 

shop of the Avionics Division and turn in excess materiel to 

supply.

Logistics: Accountability and Control 

of Materiel at the Naval Air Depot, 

Jacksonville 

(D-2003-057, March 5, 2003) 

1. The Commander, Naval Air 

Systems Command should:

A. Enforce the requirements of Naval Air Systems 

Command Instruction 4400.5A to identify excess materiel 

that has been inactive for more than 270 days for routine 

use materiel and 12 months for long lead-time or low 

demand materiel.

B. Require quarterly reporting of excess of materiel at 

Naval Air Depots to ensure excess materiel does not 

accumulate.

C. Develop policy for point of use inventory. 

2. The Commander, Naval Air 

Depot, Jacksonville should:

A. Perform physical inventories of materiel stored in all 

storage locations and adjust inventory records accordingly. 

B. Perform the required quarterly reviews of materiel 

stored in maintenance storerooms to determine whether 

valid requirements exist for the materiel. 

C. Identify all excess materiel stored in maintenance 

storerooms and return the materiel to the supply system. 

Supply Inventory Management: 

Accountability and Control of Materiel 

at the Naval Air Depot, North Island 

(D-2003-033, December 6, 2002) 

1. The Commander, Naval Air 

Systems Command

should ensure that the Naval Air 

Depot, North Island should:

A. Comply with Navy guidance regarding the storage of 

maintenance materiel at the depot, performance of 

quarterly reviews of maintenance materiel on hand, and 

submission of management reports for review. 

B. Develop and implement an effective management 

control program. 

2. The Commander, Naval Air 

Depot, North Island should 

immediately:

A. Inventory materiel stored in work center storerooms, 

record all of the on-hand materiel on accountable records, 

identify the materiel for which a valid need exists, and 

return the items with no known requirement to the supply 

system.

B. Review jobs at closeout to determine whether a need 

exists for leftover materiel. Leftover, unneeded materiel 

should be made visible to item managers and disposed of 

in a timely manner. 

C. Perform the required quarterly reviews of materiel 

stored in work center storerooms to determine whether 

valid requirements exist for the materiel. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

Page 69 GAO-07-234 DOD’s High-Risk Areas

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Inventory management Management oversight Concurred, closed, implemented 

Management oversight Concurred, open

Policy Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Process Concurred, open

Inventory management Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
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D. Perform physical inventories of materiel stored in all 

storage locations and adjust inventory records accordingly. 

Supply Inventory Management: 

Defense Logistics Agency Managed 

Items Supporting Air Force Weapon 

Systems 

(D-2002-149, September 18, 2002)

1. The Director, Defense 

Logistics Agency should 

establish controls to ensure that 

national stock number items 

supporting current weapon 

systems are not deleted from the 

supply system. Those controls 

should include procedures to:

A. Comply with the Defense Logistics Agency Manual 

4140.2 requirement that Defense Logistics Agency item 

managers contact the supply center monitor for the 

weapon system support program to coordinate the deletion 

of the code that identifies the national stock number item 

as a weapon system item.

B. Comply with the Defense Logistics Agency Manual 

4140.3 requirement that the supply center monitor for the 

weapon system support program notify the Military 

Departments when a national stock number item 

supporting a weapon system is to be deleted from the 

supply system as a result of the Defense Inactive Item 

Program process. 

2. The Director, Defense 

Logistics Agency, in coordination 

with the Air Force, should:

Determine the most efficient and cost-effective method to 

reinstate national stock number items that were 

inappropriately deleted from the supply system. 

3. The Commander, Air Force 

Materiel Command should:

A. Review the revised procedures for processing Defense 

Inactive Item Program transactions when the FY 2002 

process is complete to ensure the procedures are working 

as intended and that inactive item review notifications are 

being promptly returned to the Defense Logistics Agency. 

B. Establish controls to ensure that inactive item review 

notifications are reviewed by the user and are returned to 

the Defense Logistics Agency before an automatic retain 

notification is provided to the Defense Logistics Agency.

C. Establish controls to review Defense Logistics Agency 

transactions deleting national stock numbers from Air 

Force systems so that the inappropriate deletion of 

required data from the Air Force supply system is 

prevented. 

Supply Inventory Management: 

Defense Logistics Agency Aviation 

Investment Strategy Program 

(D-2002-136, July 31, 2002) 

1. The Director, Defense 

Logistics Agency should direct 

the Defense Supply Center 

Richmond to revise the Aviation 

Investment Strategy 

implementation plan to more fully 

express how the program 

execution process should be 

accomplished to ensure 

appropriate additive investments. 

Specifically, the plan should:

A. Describe the factors to be used by the Military 

Departments and supply centers to evaluate the validity of 

potential candidates for additive investment. 

B. Require that additive safety level requirements be based 

on consistent and up-to-date supply availability data.

C. Require regular reviews to determine whether additive 

safety levels continue to be appropriate. Establish a 

frequency for when and how often reviews should be made 

and the criteria for making necessary safety level 

adjustments and reinvesting funds.

D. Establish a method for maintaining safety level 

increases that adheres to the DoD safety level limitation 

while recognizing and adjusting to changes in the supply 

system. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

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Process Concurred, closed, implemented 

Inventory management Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Planning Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Inventory management Planning Concurred, closed, implemented 

Planning Partially concurred, closed, implemented 

Planning Concurred, closed, implemented 

Planning Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
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Supply Chain Management: Summary of 

DOD-IG Report Recommendations

Page 72 GAO-07-234 DOD’s High-Risk Areas

E. Establish a time frame for continuous program 

evaluation and a resolution process that includes a flag or 

general officer from each Military Department whenever 

problem elevation is needed. 

2. The Director, Defense 

Logistics Agency should:

Approve and coordinate with the Military Departments the 

revised implementation plan. 

Supply Inventory Management: 

Terminal Items Managed by the 

Defense Logistics Agency for the 

Navy 

(D-2002-131, July 22, 2002)

1. The Director, Defense 

Logistics Agency should:

A. Revise Defense Logistics Agency Manual 4140.2, 

“Supply Operations Manual,” July 1, 1999, to include 

terminal national stock number items with registered users 

in the Defense Inactive Item Program. 

B. Maintain and report statistics on how many terminal 

national stock number items are deleted from the supply 

system after the North Atlantic Treaty Organization and 

foreign governments review the items. 

2. The Commander, Naval 

Supply Systems Command 

should:

Establish controls to ensure that the Navy is removed as a 

registered user of Defense Logistics Agency-managed 

national stock number items that are no longer required. 

Supply Inventory management: 

Industrial Prime Vendor Program at 

the Air Force Air Logistics Centers 

(D-2002-112, June 20, 2002)

A.1. The Commander, Defense 

Supply Center Philadelphia 

should require Industrial Prime 

Vendor Program officials to:

A. Discontinue the use of the market basket approach to 

determine which bench-stock items are placed on the 

industrial prime vendor contract. Instead, evaluate each 

item separately and select the most economical source to 

supply material.

B. Review inventory levels and discontinue placing items 

on the industrial prime vendor contract with more than 3 

years of inventory. 

C. Take appropriate action in accordance with contract 

terms to remove items with more than 3 years of inventory 

and start using existing depot inventories as the first choice 

to fill contract demand. 

A.2. The Director, Defense 

Logistics Agency should:

Convene a performance improvement team composed of 

representatives from all relevant stakeholders, including 

appropriate oversight agencies, to plan and execute a 

reengineered best value approach to manage bench-stock 

material for all customers that addresses competition and 

restriction on contract bundling. 

B. The Commander, Defense 

Supply Center Philadelphia 

should:

1. Implement procedures to ensure that future spot buy 

material procurements are priced and paid for in 

accordance with the terms of the contract. 

2. Obtain a full refund from the Science Application 

International Corporation for erroneous charges, including 

lost interest, and take appropriate steps to reimburse the 

air logistics centers for the full amount of the contract 

overcharges. 

(Continued From Previous Page)

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Supply Chain Management: Summary of 

DOD-IG Report Recommendations

Page 73 GAO-07-234 DOD’s High-Risk Areas

Planning Concurred, closed, implemented 

Planning Concurred, closed, implemented 

Inventory management Policy Nonconcurred, open 

Management oversight Nonconcurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Inventory management Process Partially concurred, closed, implemented 

Process Partially concurred, closed, implemented 

Process Partially concurred, closed, implemented 

Planning Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
Appendix II

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DOD-IG Report Recommendations

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Supply Inventory Management: 

Accountability and Control of Materiel 

at the Corpus Christi Army Depot 

(D-2002-091, May 21, 2002) 

1. The Commander, Aviation and 

Missile Command should:

Direct the Corpus Christi Army Depot to comply with Army 

guidance regarding the storage of maintenance materiel at 

the depot and the preparation and submission of 

management reports for review. 

2. (A-F) The Commander, 

Corpus Christi Army Depot 

should immediately:

A. Price the materiel stored in the Automated Storage and 

Retrieval System that has no extended dollar value or that 

has been added to the physical inventory, and identify the 

value of inventory excess to prevailing requirements. 

B. Inventory materiel stored in work centers on the 

maintenance shop floors, record the materiel on 

accountable records, identify the materiel for which a valid 

need exists, and turn in or transfer to other programs 

excess materiel.

C. Perform an annual physical inventory of all of the 

materiel stored in the Automated Storage and Retrieval 

System. 

D. Perform the required quarterly reviews of materiel 

stored in the Automated Storage and Retrieval System to 

determine if valid requirements exist for the stored 

materiel. 

E. Review projects at the 50-percent, 75-percent, and 90-

percent completion stages to determine if a need exists for 

materiel in storage. 

F. Perform a reconciliation between the Automated Storage 

and Retrieval System and Maintenance Shop Floor 

System files, at a minimum monthly, to determine if files 

are accurate. A physical inventory should be performed to 

correct any deficiencies. 

2. (G) The Commander, Corpus 

Christi Army Depot should 

immediately prepare and submit 

the following report to 

management for review:

1. A monthly total dollar value for materiel stored in the 

Automated Storage and Retrieval System.

2. Items stored in the Automated Storage and Retrieval 

System with no demand in the last 180 days.

3. Materiel stored in the Automated Storage and Retrieval 

System against closed program control numbers.

4. Materiel stored against overhead program control 

numbers.

5. Potential excess materiel by program control number.

Logistics: Delivery and Receipt of 

DOD Cargo Inbound to the Republic 

of Korea

(D-2002-079, April 5, 2002)

A. The Commander, U.S. Forces 

Korea should:

1. Establish guidance for delivery of cargo from ports of 

debarkation within the theater using Uniform Materiel 

Movement and Issue Priority System standards or U.S. 

Forces Korea supplemental standards to the Uniform 

Materiel Movement and Issue Priority System criteria more 

applicable to theater requirements. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

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Inventory management Management oversight Concurred, closed, implemented 

Process Concurred, open 

Process Concurred, closed, implemented

Process Concurred, closed, implemented 

Process Concurred, closed, implemented

Process Concurred, closed, implemented 

Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented 

Management oversight Partially concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented

Management oversight Concurred , closed, implemented 

Materiel distribution Policy Concurred, open 

Focus area Theme Status Of Recommendations
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DOD-IG Report Recommendations

Page 76 GAO-07-234 DOD’s High-Risk Areas

2. Establish procedures for using and maintaining 

documentation that provides evidence of delivery times 

and the accuracy of the delivered cargo. 

3. Prepare or amend commercial carrier contracts that 

contain delivery provisions for weekend and holiday 

deliveries, and penalties for nonperformance compliance 

with the standards established by the provisions of 

Recommendation A.1. 

4. Establish procedures to ensure that the priority of the 

cargo to be delivered from a port of debarkation is 

matched with a commercial carrier contract that has the 

necessary provisions that will ensure delivery within the 

standards established by Recommendation A.1.

5. Establish procedures, metrics, and surveillance plans 

that will monitor and ensure carrier performance of 

contract specifications and reconcile movement control 

documents received from commercial carriers to ensure 

consignees received prompt and accurate delivery of all 

cargo. 

B. The Commander, U.S. Forces 

Korea should revise U.S. Forces 

Korea Regulation 55-355 to 

require:

1. Supply Support Activities to maintain dated and signed 

truck manifests and pickup sheets to confirm receipt. 

2. Supply Support Activities immediately contact end users 

for pickup of high priority cargo within the same day the 

cargo is made available for end user. 

Supply Inventory Management: 

Management of Terminal Items at the 

Defense Logistics Agency 

(D-2002-060, March 13, 2002) 

The Director, Defense Logistics 

Agency should:

1. Revise Defense Logistics Agency Manual 4140.2, 

“Supply Operations Manual,” July 1, 1999, to include 

terminal national stock number items with no registered 

users in the Defense Inactive Item Program last user 

withdrawn process. 

2. Maintain and report statistics on how many terminal 

national stock number items are deleted from the supply 

system after the North Atlantic Treaty Organization and 

foreign governments review the items.

Information Technology: Effectiveness 

of the Joint Total Asset Visibility 

Program 

(D-2002-057, March 11, 2002)

The Deputy Under Secretary of 

Defense (Logistics and Materiel 

Readiness) should:

Ensure that the Joint Total Asset Visibility Program is 

funded until sufficient operational capabilities of the Global 

Combat Support System have been fielded and can 

provide capabilities that are at least equivalent to the 

existing Joint Total Asset Visibility Program. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

Page 77 GAO-07-234 DOD’s High-Risk Areas

Process Concurred, open

Process Concurred, open 

Process Concurred, closed, implemented 

Performance tracking Concurred, closed, implemented 

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Inventory management Policy Concurred, open 

Management oversight Nonconcurred, open 

Asset visibility Management oversight Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
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DOD-IG Report Recommendations

Page 78 GAO-07-234 DOD’s High-Risk Areas

Government Performance and 

Results Act: Performance Measure 

for DOD Total Asset Visibility (D2002-016, November 21, 2001) 

The Deputy Under Secretary 

of Defense (Logistics and 

Materiel Readiness) should:

1. Evaluate the usefulness of the DoD Total Asset Visibility 

performance measure. 

2. Issue specific, written, performance measure guidance 

that standardizes and clarifies the required data elements 

for the Total Asset Visibility measure consistent with the 

evaluation of the usefulness of the measure. 

3. Establish and institutionalize a process to evaluate and 

verify data submitted by DoD Components for the Total 

Asset Visibility performance measure, consistent with the 

evaluation of the usefulness of the measure. 

Accountability and Control of Materiel 

at the Tobyhanna Army Depot (D2002-003, October 4, 2001)

A.1. The Army Deputy Chief of 

Staff for Logistics should:

Reassess guidance regarding the 60-day storage and 

requisitioning of fabrication materiel at maintenance 

depots and revise Army Regulation 750-2. The guidance 

should state the following:

• the appropriate number of days depots should be allowed 

for storing and requisitioning fabrication materiel.

• quarterly reviews should be performed to determine if 

materiel is still required. 

(Continued From Previous Page)

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Supply Chain Management: Summary of 

DOD-IG Report Recommendations

Page 79 GAO-07-234 DOD’s High-Risk Areas

Asset visibility Management oversight Concurred, closed, implemented 

Performance tracking Concurred, closed, not implemented 

Process Concurred, closed, not implemented 

Inventory management Policy Concurred, closed, not implemented 

Focus area Theme Status Of Recommendations
Appendix II

Supply Chain Management: Summary of 

DOD-IG Report Recommendations

Page 80 GAO-07-234 DOD’s High-Risk Areas

A.2. The Commander, 

Communications-Electronics 

Command should:

Issue guidance regarding management of the Automated 

Storage and Retrieval System at Tobyhanna. The guidance 

should include the following:

• all materiel stored in the Automated Storage and 

Retrieval System shall be, at a minimum, identified by 

owning cost center; national stock number/part number; 

program control number; quantity; acquisition source 

code; nomenclature; and condition code.

• a review of any materiel with a date of last activity more 

than 6 months shall be performed.

• an annual physical inventory of any materiel stored in the 

Automated Storage and Retrieval System shall be 

performed.

• items stored in mission stocks must represent a bona fide 

potential requirement for performance of a maintenance 

or fabrication requirement.

• availability of materiel from previously completed 

fabrication orders must be determined before placing 

new requisitions.

• projects shall be reviewed at the 50 percent, 75 percent, 

and 90 percent completion stages to determine if a need 

exists for materiel still in storage.

• reclaimed materiel, materiel removed from assets in 

maintenance, and work in process may be stored until 

reutilized on the maintenance program. Excess reclaimed 

materiel shall be turned in or transferred to a valid funded 

program.

• materiel shall not be stored in Automated Storage and 

Retrieval System in an overhead account.

• quarterly reviews shall be performed on materiel stored in 

the Automated Storage and Retrieval System to 

determine if requirements still exist.

• prior to closing a depot maintenance program, any 

associated remaining repair parts, spares, and materiel 

on hand shall be transferred to an ongoing program or a 

program that will begin within 180 days or turned in to the 

installation supply support activity within 15 days.

•The gaining program must be funded, open, and valid.

•The transferred materiel must be a bona fide potential 

requirement of the gaining program. 

(Continued From Previous Page)

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DOD-IG Report Recommendations

Page 81 GAO-07-234 DOD’s High-Risk Areas

Policy Concurred, closed, implemented

Focus area Theme Status Of Recommendations
Appendix II

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DOD-IG Report Recommendations

Page 82 GAO-07-234 DOD’s High-Risk Areas

A.3. The Commander, 

Communications-Electronics 

Command should direct 

Tobyhanna to immediately:

a. Price the materiel stored in the Automated Storage and 

Retrieval System that has no extended dollar value or that 

has been added to the physical inventory, identify the value 

of inventory excess to prevailing requirements, and

notify the Inspector General, DoD, of the corrected dollar 

value of the inventory and value of inventory excess to the 

requirements. 

b. Limit the storage of materiel in the Automated Storage 

and Retrieval System under overhead accounts. 

Specifically, remove materiel obtained from the 

Sacramento Air Logistic Center from the overhead account 

program control numbers. 

c. Record the Tactical Army Combat Computer System 

equipment on accountable records and inventory and turn 

in the computer equipment to the supply system because 

no requirement for the equipment exists at Tobyhanna. 

B.1. The Commander, 

Communications-Electronics 

Command should:

Issue guidance regarding reports that should be submitted 

to management for review. The guidance should require 

the following reports:

• an annual physical inventory of all materiel stored in 

Automated Storage and Retrieval System.

• a reconciliation between the Automated Storage and 

Retrieval System and Maintenance Shop Floor System 

files, at a minimum monthly, to determine if files are 

accurate.

• a physical inventory should be performed to correct any 

deficiencies. Reports should be prepared for 

management review.

• a monthly total dollar value for materiel stored in the 

Automated Storage and Retrieval System.

• items stored in the Automated Storage and Retrieval 

System with no demand in the last 180 days.

• materiel stored in the Automated Storage and Retrieval 

System against closed program control numbers. 

• materiel stored against overhead program control 

numbers.

• potential excess materiel by program control number. 

B.2. The Commander, 

Communications-Electronics 

Command should:

Direct the Tobyhanna Army Depot to immediately perform 

a physical inventory and reconcile the Automated Storage 

and Retrieval System records with the Maintenance Shop 

Floor System records to verify the accuracy of inventory 

records and submit report for review. 

(Continued From Previous Page)

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Appendix II

Supply Chain Management: Summary of 

DOD-IG Report Recommendations

Page 83 GAO-07-234 DOD’s High-Risk Areas

Source: DOD-IG.

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status Of Recommendations
Page 84 GAO-07-234 DOD’s High-Risk Areas

Appendix III

Supply Chain Management: Summary of 

Army Audit Agency Report RecommendationsApendxiI

Report title, number, date Recommendations

Management of Army Prepositioned 

Stocks – U.S. Army Materiel 

Command (A-2006-0200-ALL, 

August 23, 2006)

For the Commander, U.S.

Army Materiel Command

A-1. Include placement of stocks (malpositioned) as part of the 

Army Pre-positioned Stocks program performance metrics. As a 

minimum:

• clearly define malpositioned stocks and establish procedures for 

calculating the data to minimize inconsistency or data 

misrepresentation reported by the subordinate activities.

• establish long-term goals for correcting the problems and 

annually monitor the progress in meeting the goals to ensure the 

situation doesn’t deteriorate.

• examine the feasibility of correcting the Web Logistics Integrated 

Database limitations and shortfalls identified within this report so 

the system can be used to produce reliable performance data.

A-2. Improve shelf-life management controls and oversight. As a 

minimum:

• develop stock rotation plans for items in long-term storage 

outside Continental U.S. or remove the items from outside 

Continental U.S. storage.

• prepare an annual list of all Army Pre-positioned Stocks items 

due to expire within 12 and 24 months and have U.S. Army Field 

Support Command ensure stock rotation plans are adequate to 

minimize expired assets. Use the data to formulate funding 

requirements for test and inspection.

• use critical data fields within information management systems to 

assist in shelf-life stock rotations. Require U.S. Army Field 

Support Command to monitor shelf-life data—such as dates of 

manufacture and expiration dates—provided by its Army Prepositioned Stocks sites to ensure it is current and complete.

Perform quarterly reconciliations.

• include shelf-life management metrics as part of the Army Prepositioned Stocks program performance assessment. Establish 

goals and develop methods to track and minimize the loss of 

items due to the expired shelf-life.
Appendix III

Supply Chain Management: Summary of Army 

Audit Agency Report Recommendations

Page 85 GAO-07-234 DOD’s High-Risk Areas

Focus area Theme Status of recommendations

Inventory management Performance tracking Concurred, open

Management oversight Concurred, open
Appendix III

Supply Chain Management: Summary of Army 

Audit Agency Report Recommendations

Page 86 GAO-07-234 DOD’s High-Risk Areas

A-3. Strengthen accountability controls and enhance data integrity, 

reliability, and visibility of pre-positioned stocks. Specifically:

• require U.S. Army Communications-Electronics Life Cycle 

Management Command and U.S. Army Tank-automotive and 

Armaments Life Cycle Management Command to incorporate 

controls similar to U.S. Army Aviation and Missile Life Cycle 

Management Command that will identify and track unauthorized 

transactions—that is, situations where the ownership purpose 

code of an item was changed from a war reserve purpose code 

to a general issue code without first receiving approval from Army 

Pre-positioned Stocks personnel.

• execute the required steps to place data associated with loan 

transactions onto the Army knowledge online account to facilitate 

oversight of loan transactions.

• numerically sequence each approved request and use the 

number to cross-reference back to the approved request.

• include all Open Army Pre-positioned Stocks loan transactions 

issued to item managers that weren’t paid back as part of the 

Army Pre-positioned Stocks program performance assessment.

• require U.S. Army Communications-Electronics Life Cycle 

Management Command and U.S. Army Tank-automotive and 

Armaments Life Cycle Management Command to track the 

paybacks by establishing a scheduled payback target date so 

they can be proactive in pursuing collections.

• track inventory loss adjustment statistics as a potential source for 

benchmarking progress on reducing repetitive errors and 

identifying performance problems.

• establish dollar values for supply class VII inventory adjustments 

in Logistics Modernization Program so loss adjustments meeting 

the causative research criteria are researched.

• randomly sample 25 percent of the inventory loss adjustment 

transactions to verify the adjustments are supported by evidence 

of documented causative research and an adequate explanation 

is documented.

A-4. Track Army Pre-positioned Stocks site weekly data 

reconciliations to evaluate performance and data reliability.

Asset Visibility in Support of 

Operation Iraqi Freedom and 

Operation Enduring Freedom (A2006-0188 ALL, August 11, 2006)

For the Commander, 10th

Mountain Division (Light 

Infantry)

A-1. Provide unit commanders with a block of instructions that 

explain the process and importance of accurately accounting for 

assets and maintaining the property book.

A-2. Establish a reminder system to notify gaining and losing units 

when equipment transfers occur.

A-3. Develop and distribute guidance to operations personnel 

stressing the need to follow established procedures for accounting 

for assets and the importance of providing necessary 

documentation to property book officers.

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Process Concurred, open

Process Concurred, closed, implemented

Asset visibility Management oversight Concurred, open

Process Concurred, closed, implemented

Policy Concurred, closed, implemented

Focus area Theme Status of recommendations
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A-4. Research each discrepancy with equipment transfers and 

turn-in documents and make appropriate adjustments to the 

property book records for the 1st and 2nd BCTs. If the missing 

vehicles can’t be located in a reasonable time period, initiate an 

AR 15-6 investigation and, if warranted, take further appropriate 

action.

B-1. Research the discrepancies we found with the 1st, 2nd, and 

3rd BCT vehicles and make appropriate adjustments to the 

respective property books.

Procurement Lead Times US Army 

Aviation and Missile Life Cycle 

Management Command (A-2006-

0156-ALR, July 17, 2006)

For the Commander, U.S.

Army Aviation and Missile 

Life Cycle Management 

Command

1. Require:

• item managers to consider historical procurement data in the 

Master Data Record’s Sector 10 when justifying values they enter 

for the Requirements System to use as representative estimates 

of procurement lead time.

• integrated Materiel Management Center second-level 

supervisors to review and explicitly approve the procurement 

lead time values entered into the Master Data Record by item 

managers.

2. Require contract specialists to adhere to Army and Aviation and 

Missile Life Cycle Management Command guidance on 

considering the extent of delay in awarding procurements to 

vendors when justifying if a procurement should be identified as a 

representative estimate of a future procurement’s administrative 

lead time.

Increasing Safety Levels for Spare 

Parts, Office of the Deputy Chief of 

Staff, G-4 (A-2006-0063-ALR,

January 31, 2006)

For the Deputy Chief of 

Staff, G-4

A-1. Initiate DA staff action to withhold funding for increasing safety 

levels until Army Materiel Command develops test procedures and 

identifies key performance indicators to measure and assess the 

cost-effectiveness and impact on operational readiness.

Subsistence Prime Vendor Contract, 

Audit of Logistics Civil Augmentation 

Program (A-2006-0168-ALL, 

August 4, 2006)

For the Commander, 

Defense Supply Center 

Philadelphia

1. Monitor the contractor’s progress to ensure the contractor 

completes the reorganization of the bulk storage warehouses with 

a location grid plan and subsequent warehousing of operational 

rations with specific location areas in the warehouses. Then 

ensure contractor records updated locations of these rations in the 

warehouse management system database to ensure physical 

location of products match the database.

2. Complete and implement the software change package to 

ensure operational rations containing more than one national stock 

number are allocated from inventory based on the first-to-expire 

inventory method.

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Process Concurred, open

Process Concurred, open

Inventory management Management oversight Concurred, open

Management oversight Concurred, open

Inventory management Performance tracking Concurred, open

Inventory management Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Focus area Theme Status of recommendations
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3. Develop and implement guidance for the contractor regarding 

the requirements for the destruction of government-owned 

operational rations which have been deemed unfit for human 

consumption. Require the contracting officer representative to 

certify the destruction certification package only when adequate 

documentation is attached to support the operational rations being 

destroyed. Also, require the contracting officer representative to 

ensure products are destroyed in a reasonable time frame after the 

Army Veterinarians recommend destruction of the products. If 

Implemented, this recommendation should result in monetary 

savings to the government.

4. Before shipping excess to theater, review the worldwide excess 

stock of operational rations and identify the expiration dates on 

products that may be considered for shipping to replenish 

operational ration stock in theater. Before shipping stock, 

coordinate with the Theater Food Advisor to ensure the products 

can be incorporated into the existing stock on hand and be 

effectively managed. Also, don’t consider for shipment any 

products with less than 4-months’ remaining shelf life unless the 

Army Veterinarians have inspected and extended the shelf life of 

the products. In such cases, ensure the documentation 

accompanies the shipments.

5. Implement a Quality Assurance Surveillance Plan that 

encompasses all requirements of the prime vendor contract.

Require the Administrative Contracting Officer and the contracting 

officer representative located at the prime vendor’s location in 

Kuwait to monitor and document the contractor’s performance 

using the Quality Assurance Surveillance Plan on a scheduled 

basis. Upon completion of each review, the Contracting Officer 

should review the results of the Quality Assurance Surveillance 

Plan and determine if any actions are required to correct the areas 

of concern.

For the Commander, 

Defense Supply Center 

Philadelphia and for the 

Commander, Coalition 

Forces Land Component 

Command

6. Require the Theater Food Advisor and Defense Supply Center 

Philadelphia to review the quantities of operational rations that are 

currently excess in the prime vendor’s warehouses and ensure 

none of these products have orders placed until the excess 

quantities are projected to be depleted. If implemented, this 

recommendation will result in funds put to better use.

For the Commander, 

Coalition Forces Land 

Component Command

7. Require the Theater Food Advisor to periodically review the 

inventory of government-owned operational rations and ensure 

appropriate action is taken when products reach their expiration 

date but remain in the prime vendor’s inventory. If implemented, 

this recommendation should result in monetary savings to the 

government.

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Process Nonconcurred, closed, implemented

Planning Concurred, open

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Focus area Theme Status of recommendations
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Logistics Civil Augmentation 

Program, US Army Materiel 

Command

(A-2006-0022-ALL,

November 28, 2005)

For the Commander, U.S.

Army Field Support 

Command

A-1. Ensure that the Defense Contract Audit Agency remains 

actively involved in monitoring the contractor’s costs.

For the Assistant Secretary 

of the Army (Acquisition, 

Logistics and Technology)

B-1. Develop Army guidance for approving contract requirements 

for deployment operations to include acquisition approval 

thresholds, members of joint acquisition review boards, and 

documentation of board actions.

For the Deputy Chief of 

Staff, G-4

C-1. Establish guidance addressing how to transfer government 

property to contractors in the absence of a government property 

officer to conduct a joint inventory.

C-2. Issue specific policy on (i) screening the contingency stocks 

at Fort Polk for possible use on current and future Logistics Civil 

Augmentation Program contracts, and (ii) returning commercialtype assets to the contingency stocks at Fort Polk after specific 

contract operations/task orders are completed.

For the Commander, U.S.

Army Field Support 

Command

C-3. Update Army Materiel Command Pamphlet 700-30 to include

specific procedures on:

• screening the contingency stocks at Fort Polk for possible use on

current and future Logistics Civil Augmentation Program 

contracts.

• returning commercial-type assets to the contingency stocks at 

Fort Polk after contracts are completed.

• disposing of obsolete or unusable property.

For the Deputy Chief of 

Staff, G-4

D-1. Include in an annex to AR 715-9 (Contractors Accompanying 

the Force) the key management controls related to Logistics Civil 

Augmentation Program, or specify another method for determining

whether the management controls related to the program are in 

place and operating.

Class IX Spare Parts-Operation 

Iraqi Freedom (A-2005-0250-ALE, 

August 15, 2005)

For the Deputy Chief of 

Staff, G-4

1. Authorized Stockage Lists (Inventory On-Hand): Army should 

issue a change to policy and update AR 710-2 to require forward 

distribution points in a deployed environment to hold review boards

for authorized stockage lists when they deploy and no less often 

than quarterly thereafter. Require review boards to accept 

recommendations from dollar cost banding analyses or justify why

not. Improvements needed to better meet supply parts demand.

Aviation Assets Office of the 

Program Executive Officer, Aviation 

(A-2005-0240-ALW, 

August 9, 2005)

For the Deputy Chief of 

Staff, G-4

A-1. Develop policy and procedures for the program executive 

office community to follow to identify, declare, and return excess 

components to the Army supply system.

A-2. Develop and issue guidance that states ownership of Army 

Working Capital Fund (AWCF) components that subordinate 

management offices possess and control through modification, 

conversion, and upgrade programs resides with the Army supply 

system.

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Inventory management Management oversight Concurred, closed, implemented

Policy Concurred, open

Policy Nonconcurred, closed, not implemented

Policy Nonconcurred, closed, not implemented

Policy Partially concurred, closed, not implemented

Policy Concurred, closed, implemented

Inventory management Policy Concurred, open

Inventory management Policy Concurred, open

Policy Concurred, open

Focus area Theme Status of recommendations
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A-3. Make sure policy is clear on the responsibilities of program 

executive offices and their subordinate management offices in 

complying with established Army policy and procedures for asset 

accountability. Specifically, record and account for all Army assets 

in a standard Army system that interfaces with the Army system of 

accountability. As a minimum, make sure item managers:

• have all transactions and information on acquisition, storage, and 

disposition of their assets.

• are notified of any direct shipments so that the item managers 

can record the direct shipments to capture demand history for 

requirements determination.

Asset Visibility and Container 

Management-Operation Iraqi

Freedom (A-2005-0197-ALE, 

July 5, 2005)

For the Commanding 

General, U.S. Central 

Command

A-1. Construct permanent or semipermanent facilities in Kuwait 

and Iraq in locations where a continued presence is expected and 

that have a large number of containers being used for storage, 

force protection, and other requirements. For those locations 

where construction of permanent or semipermanent facilities isn’t 

feasible, use government-owned containers to meet storage, force 

protection, and other requirements.

A-2. Align the Theater Container Management Agency at the 

appropriate command level to give it the authority to direct and 

coordinate container management efforts throughout the Central 

Command area of responsibility.

A-3. Direct the Theater Container Management Agency to develop 

and maintain a single theater container management database.

Issue guidance that requires all activities in the area of 

responsibility to use this database for their container management.

For the Deputy Chief of 

Staff, G-4

A-4. Coordinate with Military Surface Deployment and Distribution 

Command to purchase commercial shipping containers in the 

Central Command area of responsibility that are currently accruing 

detention. In addition, discontinue use of the Universal Service 

Contract and only use government-owned containers or containers 

obtained under long-term leases for future shipment of equipment 

and supplies into the Central Command area of responsibility.

Ensure any long-term lease agreements entered into include 

provisions to purchase the containers.

A-5. Coordinate with Military Surface Deployment and Distribution 

Command to either get possession of the 917 government-owned 

containers still in the carriers’ possession, obtain reimbursement 

from the carriers for the $2.1 million purchase price of the 

containers, or negotiate with the carriers to reduce future detention 

bills by $2.1 million.

A-6. Coordinate with Military Surface Deployment and Distribution 

Command to reopen the 6-month review period under the postpayment audit clause to negotiate with commercial carriers to 

either obtain reimbursement of $11.2 million for detention 

overcharges on the 29 February 2004 detention list, or negotiate 

with the carriers to reduce future detention bills by $11.2 million.

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Policy Concurred, open

Asset visibility Process Concurred, open

Management oversight Concurred, closed, implemented

Policy Concurred, closed, implemented

Process Concurred, open

Process Concurred, closed, implemented

Process Concurred, open

Focus area Theme Status of recommendations
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For the Commanding 

General, Military Surface 

Deployment and Distribution 

Command

A-7. Perform either a 100-percent review of future detention bills or 

use statistical sampling techniques to review carrier bills prior to 

payment.

For the Commander, 

Coalition Forces Land 

Component Command

B-1. Include the minimum data requirements identified in the July 

2004 DOD memorandum that established policy for the use of 

radio frequency identification technology in the statements of work 

for task order 58 and all other applicable task orders.

Rapid Fielding Initiative 

Accountability Procedures, Program 

Executive Office, Soldier (A-2005-

0182–ALS, May 12, 2005)

For the Deputy Chief of 

Staff, G-4

1. Clarify accountability requirements for rapid fielding initiative 

(RFI) property distributed through program executive officer (PEO) 

Soldier; specifically, accountability requirements for organizational 

clothing and individual equipment (OCIE) items when not issued 

by a central issued facility (CIF).

For the Program Executive 

Officer, Soldier and For the 

Executive Director, U.S.

Army Research, 

Development and 

Engineering Command 

Acquisition Center

2. Instruct the appropriate personnel at the rapid fielding initiative 

warehouse to complete and document causative research within 

30 days of inventory. Have the causative research:

• identify documents used in the causative research process and 

the procedures followed to resolve the error in the results of the 

causative research.

• identify the circumstances causing the variance.

• make changes to operating procedures to prevent errors from 

recurring.

• include government approval signatures before processing 

inventory adjustments and a system for tracking inventory 

adjustments so managers can cross-reference adjustments and 

identify those representing reversals. 

3. Assign a quality assurance representative to the rapid fielding 

initiative warehouse that can provide the appropriate contract 

oversight and prompt feedback to the contractor on accountability 

and performance issues. Direct the individual to coordinate with 

the contracting officer to ensure the contracting officer 

incorporates instructions for evaluating contract requirements into 

key documents, such as a surveillance plan and an appointment 

letter.

4. Coordinate with the contracting officer to instruct the contractor 

to include the results of performance metrics related to inventory 

adjustments, location accuracy, inventory accuracy, and inventory 

control in the weekly deliverables or other appropriate forum. Have 

the contractor also include a spreadsheet with the overall 

accountability metric in the weekly reports for each line item and a 

continental United States (CONUS) fielding accountability 

spreadsheet after each fielding is completed. The data fields would 

include:

• overall inventory control accountability would include: Prior week 

ending inventory balance + all receipts and returns for the current 

week = all shipments from the warehouse + ending inventory on 

hand.

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Management oversight Concurred, open

Process Concurred, closed, implemented

Materiel distribution Policy Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Management oversight Concurred, open

Performance tracking Concurred, closed, implemented

Focus area Theme Status of recommendations
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5. Direct the RFI contracting officer technical representative from 

program executive officer Soldier to work together with the 

contracting officer to develop a surveillance plan and provide the 

plan to the contract monitor. Include in the plan provisions for spotchecks if developers rely on the contractor’s quality control plan.

Functionality of Logistics Automated 

Systems-Operation Iraqi Freedom 

(A-2005-0172-ALE, April 27, 2005)

For the Deputy Chief of 

Staff, G-4

A-1. Coordinate with the Deputy Chief of Staff, G-3 to develop 

guidance that instructs deploying units on protecting automation 

equipment from voltage differences and extreme environmental 

temperature conditions.

For Commanding General, 

Coalition Forces Land 

Component Command

A-2. Direct all units in the Kuwaiti area of operations to provide 

controlled temperature conditions for automation equipment.

A-3. Instruct all units arriving in the Kuwaiti area of operations on 

how to protect automation equipment from voltage differences.

B-1. Declassify the order that identifies which combat service 

support automation management office units should contact for 

assistance.

Theater Distribution CapabilitiesOperation Iraqi Freedom (A-2005-

0168-ALE, April 26, 2005)

For the Deputy Chief of 

Staff, G-3/5/7

A-1. Evaluate lessons learned from Operation Iraqi Freedom. As 

appropriate, adjust force structure requirements for military police 

and transportation personnel during the Total Army Analysis and 

contingency operations planning processes.

For Commander, Coalition 

Forces Land Component 

Command

A-2. Reduce the number of trucks assigned to the aerial port of 

debarkation to better reflect actual daily requirements. Coordinate 

with the Air Force at the aerial port of debarkation to obtain 

advanced notice of air shipments on a daily basis. Monitor use 

periodically to determine if future adjustments are required.

A-3. Reestablish a theater distribution management center and 

make it responsible for synchronizing overall movement control 

operations for the Iraqi theater of operations. Coordinate with the 

Multi-National Force-Iraq to establish a standardized convoy 

tracking and reporting procedure.

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Management oversight Concurred, closed, implemented

Inventory management Policy Concurred, open

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Nonconcurred, closed, implemented

Materiel distribution Management oversight Concurred, open

Process Concurred, open

Management oversight Concurred, open

Focus area Theme Status of recommendations
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Management Controls of Wholesale 

Munitions (A-2005-0099-FFG, 

February 4, 2005)

For the Joint Munitions 

Command

A-1. Coordinate with depots currently using local databases to 

track receipt transactions and develop a standard database that 

can be used by all depots to effectively track receipts from arrival 

date to posting. Each depot should be required to use this 

comprehensive database to track receipts and monitor the 

suspense dates to ensure receipts are posted to the Standard 

Depot System within the time standards. At a minimum, this 

database should include:

• start and completion dates for key management controls.

• date of arrival.

• receipt control number and date assigned.

• cross Reference Number assigned by the Standard Depot 

System.

• suspense dates (when receipt should be posted to record).

• date of physical count and reconciliation to receipt 

documentation.

• if receipt required Report of Discrepancy be sent to shipper and 

date report was sent if required.

• daily review control (list of receipts that are approaching required 

posting date).

• date stored.

• date posted.

• reason for not posting within required time frame.

A-2. Initiate a change to Army Materiel Command Regulation 740-

27 to incorporate steps for identifying misplaced or lost labels in 

depot quality control checks, command assessments, and other 

tools used to measure depot performance.

A-3. Fully use performance indicators (Depot Quality Control 

Checks, 304 Reports, and command assessments) as 

management tools to ensure necessary management controls are 

in place and operating for all depots’ receipt process. Also, ensure 

depots have effective training programs that consist of both on-thejob training and formal training to ensure depot personnel are 

aware of key controls and their responsibilities. Provide training on 

weaknesses and negative trends identified during biannual 

command assessments.

For the Blue Grass Army 

Depot and McAlester Army 

Ammunition Depot

A-4. Assign receipt control numbers based on the date the receipt 

arrived, and accountability transfers from transporter to depot.

A-5. Submit Reports of Discrepancy to shipper for all 

discrepancies between physical counts and receipt documents, 

including when no receipt documents are received.

A-6. Post receipts to records in temporary location, when it meets 

the requirement for a reportable storage location, to ensure receipt 

transactions are posted so that munitions can be made visible for 

redistribution in a timely manner.

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Asset visibility Process Concurred, open

Policy Concurred, open

Performance tracking Concurred, closed, implemented

Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Focus area Theme Status of recommendations
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Asset Visibility Of Military 

Equipment During Conversions U.S.

Army Communications- Electronics 

Command 

(A-2004-0529-FFG, 

September 30, 2004)

For the Commander, U.S.

Army CommunicationsElectronics Command

1. Reemphasize to item managers to use supply document 

transactions, as specified in AR 725-50, to generate due-ins in 

command’s wholesale asset visibility system when directing the 

movement of military equipment items to a conversion contractor.

2. Direct item managers to use a GM fund code in disposition 

instructions to troop turn-in units and materiel release orders to 

storage activities directing shipments of equipment items to 

conversion contractors or to an Army depot maintenance facility.

3. Request the Logistics Support Activity to assign Routing 

Identifier Codes and related DOD Activity Address Codes for all 

conversion contractor operating locations where the contractor 

maintains quantities of items in the conversion process, but doesn’t 

presently have the codes. For future conversion contracts develop 

a process to ensure that all required codes are assigned 

immediately following contract award.

4. Reemphasize to item managers to:

• monitor asset visibility system management reports for creation 

of due-ins.

• require immediate corrective actions when due-ins aren’t created 

in the asset visibility system.

5. Reemphasize to item managers the requirement to perform 

follow up on due-ins when receipts aren’t posted in command’s 

asset visibility system within time periods stated in AR 725-50.

6. Incorporate into the current and all future conversion contracts, 

in coordination with the appropriate Project/Program Managers, 

the requirement for conversion contractors to transmit supply 

document transactions to the asset visibility system at 

Communications-Electronics Command in order to report:

• receipts of assets upon arrival at the contractor’s plant.

• changes in item configurations during the conversion process.

• shipments to gaining activities following conversion operations.

7. Until the conversion contracts are modified as detailed in 

Recommendation 6, require operating personnel to obtain all 

necessary supply documents and manually enter all necessary 

transactions into command’s asset visibility system to report 

receipts at contractor locations from turn-in units and storage 

activities, changes in equipment item configurations, and 

shipments of converted items to gaining activities.

8. Take appropriate actions to ensure unused component parts 

returned from conversion programs are not improperly reported in 

command’s asset visibility system as complete military equipment 

systems. Specifically, for National Stock Number 5840-01-009-

4939:

• request an inventory at the depot storage activity to identify all 

component parts improperly returned as complete systems.

• use the inventory results to adjust on-hand quantities in 

command’s asset visibility system to ensure accurate balances.

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Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Focus area Theme Status of recommendations
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9. Direct the Tobyhanna Army Depot maintenance facility to take 

all actions necessary to ensure appropriate supply document 

transactions are processed when equipment items are received, 

converted, and transferred back to storage ready for issue.

10. Direct operating personnel to evaluate all CommunicationsElectronics Command equipment items undergoing disassembly, 

conversion, modification, or overhaul programs to determine if the 

same processes used for the items discussed in this report are 

applicable to them. If so, require operating personnel to apply the 

recommendations in this report to those affected items.

Selected Asset Holding Projects

(A-2004-0333-AML, June 9, 2004)

For the Commander, U.S.

Army Materiel Command

1. Establish Army guidance requiring integrated materiel 

managers to perform annual reviews of holding project assets and 

follow up on redistribution actions.

2. Direct commodity commands to redistribute holding project 

assets to other pre-positioned stock projects or to general issue.

3. Direct commodity commands to dispose of excess, 

unserviceable, and obsolete assets in holding projects. Direct 

materiel managers to review the 38 bulky items in holding projects 

to identify excess assets and dispose of them.

4. Establish guidance on the use of holding projects that requires 

managers to either provide a documented rationale for retaining 

excess assets in holding projects or dispose of them. Include in the 

guidance the requirement that inventory management 

commanders or their designees review the retention rationales for 

approval or disapproval.

5. Establish guidance that requires materiel managers to review 

holding projects annually to identify unserviceable (condemned, 

economically unrepairable, and scrap) and obsolete assets in 

holding projects. Include in the guidance the requirement that the 

identified assets be disposed of within 12 months.

Management Controls for 

Wholesale Munitions Inventories 

Integration of Automatic 

Identification Technology (A-2004- 

0261-FFG, May 18, 2004)

For the Joint Munitions 

Command

1. Use the integration plan to manage the integration of automatic 

identification technology in receiving and shipping processes, as 

well as the seal site program. At a minimum, the plan should be 

periodically reviewed to make sure:

• adequate workforces are dedicated for integration tasks in the 

future.

• equipment and software are thoroughly tested and determined to 

be functional before being fielding to ammunition storage 

activities.

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Management oversight Concurred, closed, implemented

Inventory management Policy Concurred, open

Management oversight Concurred, open

Management oversight Concurred, closed, implemented

Policy Concurred, open

Policy Concurred, open

Asset visibility Management oversight Concurred, closed, implemented

Focus area Theme Status of recommendations
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2. Require contractor to use Standard Depot System’s composition 

rules and traditional edit checks in software development for the 

remaining applications to automatic identification technology. The 

development should include the:

• use of established performance measures to ensure that all the 

contractor’s products and services meet Joint Munitions 

Command’s automatic identification technology needs, such as 

appropriate edit checks before fielding.

• development of specific tasks with timelines to ensure that 

established implementation goals are met in the most effective 

and efficient manner. This should include penalties to ensure 

timely delivery of necessary equipment and software applications 

from contractors.

Ammunition and Small Arms 

California Army National Guard 

(A-2004-0269-IMT, April 30, 2004)

For the Adjutant General, 

California National Guard

A-1. Establish procedures that ensure commands and units reduce 

training ammunition forecasts when units determine that training 

ammunition requirements have changed.

B-1. Make sure ammunition supply point personnel follow 

procedures to post all ammunition supply transactions in the 

Training Ammunition Management System on the day the 

transaction occurs.

B-2. Make sure the ammunition supply point has procedures to 

maintain updated plan-o-graphs that show the locations and lot 

numbers of the ammunition stored in the ammunition supply point 

bunkers and includes the procedures in the supply point’s standing 

operating procedures.

B-3. Develop a plan to establish a reliable quality assurance 

specialist (ammunition surveillance) capability for the ammunition 

supply point and California Army National Guard units. Include in 

the plan an evaluation of whether the California Guard should have 

an internal quality assurance capability instead of relying on a 

memorandum of agreement with Fort Hunter-Liggett.

B-4. Correct the contingency ammunition control problems at 

California Guard units by:

• identifying all contingency ammunition that is currently on-hand 

at all California Guard units and establishing proper 

accountability over the ammunition.

• preparing a serious incident report if the amount of ammunition 

unaccounted for that is identified at the units meets the criteria in 

AR 190-40.

• ensuring that units and the ammunition supply point follow 

established procedures for maintaining all issue and turn-in 

documentation for security ammunition to support the quantities 

recorded on the units’ hand receipt.

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Management oversight Concurred, closed, implemented

Inventory management Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Planning Concurred, open

Process Concurred, closed, implemented

Focus area Theme Status of recommendations
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B-5. Follow procedures for reviewing and updating security and 

contingency ammunition requirements. At a minimum:

• determine ammunition requirements based on threat 

assessments, potential missions and force structure available to 

provide a response.

• coordinate and establish a current ammunition distribution plan.

• conduct an annual review of ammunition requirements.

• maintain a list of where ammunition is being stored for State 

contingency by type and quantity.

B-6. Make sure units follow the requirement to provide all small 

arms supply transactions to the U.S. Property and Fiscal Office 

within 5 working days so that the DA central registry can be 

updated within 10 working days.

B-7. Make sure units follow the checklist in AR 190-11 related to 

physical security over the storage of small arms and document the

results of their inspections.

Operational Projects Summary 

Eighth U.S. Army (A-2004-0224-

FFP, April 8, 2004) 

For the Commander, Eighth 

U.S. Army

1. Take appropriate action to perform and document required 

Operational Project reviews. Specifically:

• establish and prescribe guidelines and criteria that will inject 

more discipline into the Operational Project review and validation

process. Prescribe key factors, best practices, and methods for 

determining and documenting Operational Project requirements.

• have each project proponent perform an analysis each year in 

accordance with the annual review process in Army Regulation 

710-1 and whenever the Operational Plan changes. The project 

proponent should include an updated letter of justification that 

references where each project’s list of requirements originated 

and how the quantities for each item were computed.

• after receiving the official response from the project proponent, 

Eighth Army, G-4, War Reserve, should submit a memorandum 

to Headquarters, DA, G-4 for the purpose of documenting the 

annual review.

2. Have the War Reserve Branch track completion of annual 

reviews and 5-year revalidations; periodically review 

documentation of reviews and revalidations to evaluate their 

sufficiency.

Operational Project Stocks Phase II 

(A-2004-0108-AML, 

February 12, 2004)

For the Deputy Chief of 

Staff, G-3

1. Develop and apply detailed criteria to assess the adequacy of 

operational project packages and the validity of related 

requirements, and approve only those projects that meet the 

criteria.

2. Establish criteria and guidelines that require proponent 

commands to identify and prioritize mission essential equipment in

operational projects. Establish a policy to fund the higher priority 

items first.

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Process Concurred, closed, implemented

Management oversight Concurred, closed, not implemented

Management oversight Concurred, open

Requirements forecasting Management oversight Concurred, open

Management oversight Concurred, closed, implemented

Requirements forecasting Policy Concurred, open

Policy Concurred, open

Focus area Theme Status of recommendations
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For the Deputy Chief of 

Staff, G-3 and For the 

Deputy Chief of Staff, G-4

3. Establish and prescribe guidelines and criteria that will inject 

more discipline into the operational project requirements 

determination process. Prescribe key factors, best practices, and 

methods for determining and documenting operational project 

requirements.

For the Deputy Chief of 

Staff, G-4

4. Designate only commands with clear or vested interest in 

projects as the proponents.

5. Provide guidance to project proponents that outline strategies 

and methodologies for reviewing and revalidating operational 

projects.

6. Track completion of reviews and 5-year revalidations, 

periodically review documentation of reviews and revalidations to 

evaluate its sufficiency, and reestablish the enforcement policy that 

would allow cancellation of operational projects when proponents 

don’t perform timely, adequate reviews or revalidations. Consider 

having a formal Memorandum of Agreement with Army Materiel 

Command to track operational project reviews and revalidations.

7. Revise guidance requiring annual reviews for all operational 

projects to consider the individual characteristics of projects when 

scheduling the frequency of reviews.

Aviation Spare Parts Requirements 

Supply Control Studies U.S. Army 

Aviation and Missile Command 

(A-2004-0109-AMW 

December 31, 2003)

For the U.S. Army Aviation 

and Missle Command

1. Instruct the responsible item managers to:

• initiate actions to dispose of quantities that exceed documented 

requirements for the seven items identified.

• determine if it’s economical to reduce the planned procurement 

quantities excess to requirements for the five items identified. For 

those that are economically feasible, take action to reduce 

planned procurement quantities.

If these actions are implemented, we estimate they will result in 

potential monetary savings of about $1.7 million.

Operation Enduring Freedom—

Management and Use of Shipping 

Containers (A-2004-0066-IMU, 

December 9, 2003)

For the Commanding 

General, Combined Joint 

Task Force 180

1. Build semi-permanent storage facilities for class I supplies at 

Bagram and Kandahar, including facilities for dry and frozen goods 

storage.

2. Direct base operations commanders to record all containers 

purchased with Operation Enduring Freedom funds in the 

installation property books. In addition:

• conduct a 100-percent physical inventory of shipping containers 

at each installation.

• record all leased and purchased containers in the property book.

Make sure the serial numbers of the shipping containers are 

recorded, too.

• establish procedures with the contracting office to ensure that the 

installation property book officer is given documentation when 

containers are purchased or leased.

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Policy Concurred, open

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Policy Concurred, open

Inventory management Management oversight Concurred, closed, implemented

Materiel distribution Process Concurred, open

Management oversight Concurred, open

Focus area Theme Status of recommendations
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Operation Enduring Freedom—

Class IX Aviation Spare Parts

(A-2004-0013-IMU, 

October 7, 2003)

For the Commander, 

Combined Joint Task Force 

180 

1. Increase the size of the supply support activity in Bagram to 

1,700 line items of authorized stockage list to ensure the 

availability of critical aviation spare parts.

2. Require the supply support activity officer to hold inventory 

reviews every 30 days or less with aviation maintenance units to 

ensure adequate inventory levels of items on the authorized 

stockage list.

3. Place Army expeditors—“the go-to guys”—familiar with class IX

aviation spare parts at choke points located in Germany in the 

Army and Air Force delivery system to prioritize pallets and 

shipments.

Operation Enduring Freedom—

Class IX Aviation Spare Parts

(A-2003-0400-IMU, 

August 19, 2003)

For the Deputy Chief of 

Staff, G-4

1. Establish theater DOD activity address codes for units to fall in 

on when assigned to Operation Enduring Freedom.

Operation Enduring Freedom—Use 

of Automatic Identification 

Technology for In-Transit Visibility

(A-2003-0371-IMU, July 24, 2003)

For the Deputy Chief of 

Staff, G-4

1. Issue guidance directing activities to attach radio frequency tags

to shipments en route to the Operation Enduring Freedom area of 

responsibility. Enforce requirements to tag shipments by directing 

transportation activities not to allow the movement of cargo without

a radio frequency tag attached.

2. Direct Military Traffic Management Command to obtain radio 

frequency tag numbers from activities shipping goods and to report

those tag numbers to transportation officers by including them in 

the in-transit visibility (ITV) Stans report.

3. Issue additional guidance to activities clarifying procedures they

should follow for the retrograde of radio frequency tags and to 

replenish their supply of tags.

Operation Enduring Freedom—InTransit Visibility (A-2003 -0370-IMU, 

July 24, 2003) 

For the Joint Logistics 

Command

1. Make sure movement control teams tag shipments as required 

by US Central Command guidance to ensure that improvements 

continue during future rotations.

Operational Projects in Europe, U.S. 

Army Europe and Seventh Army (A2003-0354-IMU, July 10, 2003)

For the Commanding 

General, U.S. Army, Europe 

and Seventh Army

A-1. Direct responsible activities to:

• validate current requirements for subproject PCA (authorizing 

chemical defense equipment for 53,000 troops) to augment U.S.

Army Europe’s second set deficiencies and submit the 

requirements to DA for approval in accordance with AR 710-1.

• revalidate requirements for chemical defense equipment for 

project PCS (see PCA), including the addition of equipment 

decontamination kits. Revise requirements for chemical defense 

equipment for the Kosovo Force mission and submit the changes

to DA.

A-2. Ask Army Materiel Command to fully fill revised requirements

for chemical defense equipment for operational project PCS and to

redistribute or dispose of excess items from operational projects 

PCA and PBC.

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Inventory management Process Partially concurred, open

Management oversight Partially concurred, open

Process Partially concurred, open

Inventory management Process Concurred, closed, implemented

Asset visibility Policy Concurred, closed, implemented

Management oversight Nonconcurred, closed, implemented

Policy Concurred, closed, implemented

Asset visibility Management oversight Concurred, closed, implemented

Requirements 

Forecasting

Management oversight Concurred, closed, not implemented

Process Concurred, closed, not implemented

Focus area Theme Status of recommendations
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B-1. Direct responsible activities to review and validate all project 

requirements for collective support systems as required by AR 

710-1.

C-1. Direct responsible activities to:

• ask DA to cancel subprojects PZP and PZQ (project codes to 

provide equipment for reception of reinforcing forces deploying to 

Europe and other theaters).

• develop requirements and request a new receiving, staging, 

onward movement and integration operational project, if needed, 

in accordance with AR 710-1.

D-1. Ask DA to cancel operational subproject PYN (project code) 

for aircraft matting.

D-2. Submit new operational project requirements for aircraft 

matting to DA in accordance with AR 710-1.

Army Total Asset visibility Capability

(A-2003-0303-AML, June 18, 2003)

For the Deputy Chief of 

Staff, G-4

A-1. Develop a system of metrics, to include performance goals, 

objectives, and measures, for evaluating the reliability of data in 

the capability. Establish processes for comparing actual 

performance to the metrics and taking remedial action when 

performance goals and objectives aren’t met. (Recommendation 

B-3 calls for a process to compare data in the capability and feeder 

systems. The results of these comparisons would constitute the 

actual data reliability performance.)

A-2. Develop goals and objectives for use in evaluating the 

success of redistribution actions for Army assets. Develop 

procedures for identifying and correcting the causes for referral 

denials that exceed the established goals.

For the Deputy Chief of 

Staff, G-4

B-1. Issue guidance to project and product managers detailing the 

proper use of bypass codes on procurement actions.

B-2. Include definitive guidance on the use of bypass codes into 

appropriate guidance documents on The Army’s business 

processes, such as AR 710-1. Make sure the guidance explains 

the ramifications of using the different codes.

For the Commander, U.S.

Army Materiel Command

B-3. Direct the Logistics Support Activity to perform periodic 

reviews of data in the capability to ensure that it agrees with data in 

feeder systems, and take action to identify and correct the causes 

for any differences.

B-4. Require commodity commands to use the Post-award 

Management Reporting System to help manage contract receipts.

Also, make sure the Logistics Modernization Program has the 

capability to manage invalid due-in records.

B-5. Direct commodity commands to delete all procurement due-in 

records with delivery dates greater than 2 years old. Have the 

commodity commands research and resolve due-in records with 

delivery dates more than 90 days old but less than 2 years old.

B-6. Direct commodity commands to review and remove invalid 

due-in records for field returns with delivery dates over 180 days.

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Management oversight Concurred, closed, not implemented

Management oversight Concurred, closed, not implemented

Process Concurred, closed, not implemented

Management oversight Concurred, closed, not implemented

Asset visibility Performance tracking Concurred, open

Planning Nonconcurred, closed, not implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Management oversight Concurred, open

Management oversight Concurred, open

Management oversight Concurred, open

Management oversight Concurred, open

Focus area Theme Status of recommendations
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B-7. Require commodity commands to periodically scan the 

Commodity System for procurement actions issued with bypass 

codes. Ask project and program managers to explain the decision 

to use a bypass code. Report the results of the review to the 

Assistant Secretary of the Army (Acquisition, Logistics and 

Technology). If the Logistics Modernization Program continues to 

employ bypass codes or other methods that prevent the creation of 

a due-in record, conduct similar reviews when the Logistics 

Modernization Program is implemented.

For the Commander, U.S.

Army Materiel Command

C-1. Incorporate instructions on the use of the capability into 

appropriate guidance documents on The Army’s logistics business 

processes, such as AR 710-1. These instructions should address 

topics such as reviewing the capability for excess items before 

procuring additional stocks.

C-2. Direct the Logistics Support Activity to review data in the 

Army Total Asset visibility capability for potentially erroneous data.

Establish a procedure for reporting the potentially erroneous data 

to the activities responsible for the data and performing research to 

determine the validity of the data.

For the Deputy Chief of 

Staff, G-4

D-1. Revise AR 710-2 and 710-3 to comply with the requirements 

of AR 11-2. Specifically:

• develop management control evaluation checklists addressing 

the accuracy and reliability of data in the Army Total Asset 

visibility capability and publish these controls in the governing 

Army regulations, or

• identify other evaluation methods and include these in the 

applicable Army regulations.

Asset Status Transactions (A-2003- 

0289-AML, June 13, 2003)

For the Commander, U.S.

Army Materiel Command

1. Emphasize to the commodity commands the need to 

periodically review the process for creating asset status 

transactions in the Commodity Command Standard System to 

ensure the transactions are properly created and forwarded to the 

Logistics Support Activity.

2. Revise Automated Data Systems Manual 18-LOA-KCN-ZZZ-UM 

to require activities to promptly submit monthly asset status 

transactions to the Logistics Support Activity.

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Management oversight Concurred, open

Policy Concurred, closed, implemented

Management oversight Concurred, open

Policy Concurred, closed, implemented

Asset visibility Management oversight Concurred, open

Policy Concurred, closed, implemented

Focus area Theme Status of recommendations
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For the Commander, U.S.

Army Materiel Command 

Logistics Support Activity

3. Establish procedures for notifying source activities when the 

capability rejects asset status transactions. Make sure that 

rejected and deleted transactions are reviewed to identify reasons 

for the transactions being rejected or deleted. If appropriate, 

correct the rejected transactions and resubmit them for processing 

to the capability. Based on the results of the reviews, take 

appropriate action to correct systemic problems.

4. Establish a control log to monitor participation of Army activities 

in the monthly asset status transaction process. Use the log to 

identify activities that didn’t submit a monthly update and 

determine why an update wasn’t submitted. Report frequent 

abusers of the process through appropriate command channels.

5. Report to the Deputy Chief of Staff, G-4 that AR 710-3 needs to 

be revised to require activities to promptly submit monthly asset 

status transactions to the Logistics Support Activity.

6. Document the process used to update information in the asset 

visibility module of the Logistics Integrated Data Base.

Operation Enduring Freedom-- 

Property Accountability (A-2003-

0294-IMU, June 2, 2003)

For the Defense Logistics 

Agency

A-1. Obtain a document number from the installation property book

office before ordering installation property or organizational 

clothing and individual equipment. Order only equipment and 

vehicles for valid requirements approved by the Joint Acquisition 

Review Board.

A-2. Include written justification, analyses and study results in 

documentation for purchase requests and commitments before 

acquisition decisions are made.

A-3. Determine the number of vehicles required for the mission.

Consider adjusting dollar thresholds for approval by the Joint 

Acquisition Review Board.

A-4. Establish written policy to secure explosives using the interim 

plan. Build a permanent secure area for explosives awaiting 

movement as soon as possible.

Criteria Used to Stock Repair Parts 

in the Army's Wholesale Supply 

System (A-2003-0223-AMA, 

April 30, 2003)

For the Commander, U.S.

Army Materiel Command

A-1. When updating the variable cost-to-procure factor, make sure 

the following steps are completed until a system like activit-based 

costing is available to capture costs:

• develop cost data for each functional area using groups of welltrained, function experts.

• properly document the process used to develop costs.

• research and substantiate variances in cost data among buying 

activities.

A-2. Make sure updates to the variable cost-to procure factor are 

given to each buying activity and properly input into the materiel 

management decision file in the Commodity Command Standard 

System.

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Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Policy Concurred, closed, implemented

Process Concurred, closed, implemented

Requirements forecasting Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Policy Concurred, open

Inventory management Process Concurred, open

Process Concurred, open

Focus area Theme Status of recommendations
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A-3. Review the variable cost-to-procure elements in the materiel 

management decision file and determine which of the three 

variable cost-to-procure cost categories should be used to update 

each element. Provide this information to the buying activities for 

implementation. Do periodic checks to make sure the elements are 

updated properly.

A-4. Review the other factors in the materiel management decision 

file mentioned in this report for accuracy, especially those that 

haven’t been updated in the past 2 years. Specifically make sure 

the buying activities update the following factors using data related 

to the commodity they manage:

• Variable Cost to Hold (General Storage Cost, Discount Rate, 

Storage Loss Rate, and Disposal Value).

• Probability of No Demands.

• Depot Cost Elements (Stock Issue Cost, Fixed Cost, Receipt 

Cost for Stocked Item, and Non-Stocked Cost).

• Percent Premium Paid.

• Add-Delete Demands.

B-1. Have the Requirements Integrity Group (or a similar working 

group) periodically review the factors used in the economic order 

quantity/variable safety level model for accuracy—especially those 

discussed in this objective. Provide guidance to buying activities 

for properly updating factors and make sure updated factors are 

processed in the automated system.

Development and Integration of 

Automatic Identification Technology 

Into Logistics Processes 

(A-2003- 0192-AML, 

March 21, 2003) 

For the Assistant Secretary 

of the Army (Acquisition, 

Logistics and Technology)

1. Issue written policy prescribing the specific roles and 

responsibilities, processes, and key management controls for 

developing and integrating automatic identification technology into 

logistics processes. As a minimum, include requirements for 

funding, milestone decisions, in-process reviews, test and 

evaluation plans, life-cycle cost estimates, benefit analyses, 

coordination with other system developments, and transfer of 

finished products. Also, consider subjecting the Army’s 

development of automatic identification technology to the 

prescribed acquisition procedures of AR 70-1.

2. Prepare a business case analysis for each automatic 

identification technology application that the Army has ongoing 

and planned. Adjust applications, if appropriate, based on the 

results of the business case analyses.

3. Establish a central oversight control within the Army for 

automatic identification technology. As a minimum, set up a 

process to:

• monitor all development and funding within the Army for 

automatic identification technology.

• verify that similar developments aren’t duplicative.

For the Commander, U.S.

Army Training and Doctrine 

Command

4. Update the operational requirements document for automatic 

identification technology. As a minimum, determine the Army-wide 

need for standoff, in-the-box visibility and document the results in 

an updated operational requirements document.

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Management oversight Concurred, open

Management oversight Concurred, open

Management oversight Concurred, open

Asset visibility Policy Concurred, open

Planning Concurred, open

Management oversight Concurred, open

Policy Nonconcurred, open

Focus area Theme Status of recommendations
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Methodology for Computing 

Authorized Stockage Lists (A-2003 -

0106-AML, December 31, 2002)

For the Deputy Chief of 

Staff, G-4

Revise the current version of AR 710-2 to make Dollar-Cost 

Banding mandatory. Set a date for implementing Dollar-Cost 

Banding that will allow for gradual implementation by major 

commands, divisions, and other activities with supply support 

activities.

Repair Parts Support to Alert 

Forces 

(A-2002 -0423-AML, June 7, 2002) 

For the Deputy Chief of 

Staff, G-4

A-1. Issue a message to all major command and subordinate 

activities informing them of problems and best practices identified 

during our audit. Use the draft advisory message as a guide for 

preparing the message (Annex E). Advise major commands and 

divisions responsible for maintaining units on alert status for rapid 

deployment in response to a crisis to ensure their local policies 

(such as major command regulations or division Readiness 

Standing Operating Procedures) include the provisions outlined in 

the message.

A-2. Modify AR 710-2 to include guidance for major commands 

and subordinate activities responsible for maintaining units on alert

status for rapid deployment to follow to ensure adequate repair 

parts support during the initial period of deployment. As a 

minimum, require that divisions with alert units have:

• an assumption process in place that includes procedures for 

detailed planning of Class IX requirements.

• a deployment notification process in place with procedures for 

conducting a summary review of Class IX stocks planned for 

deployment, considering such factors as the deployment 

environment, anticipated operating tempo, or intensity of the 

operations.

A-3. Modify DA Pamphlets 710-2-1 and 710-2-2 to include detailed

procedures for divisions to follow to ensure alert forces have 

adequate Class IX repair parts support. Review the best practices 

outlined in this report (and the draft advisory message in Annex E) 

as a starting point for revising the pamphlets.

A-4. Update Field Manual 10-15 (Basic Doctrine Manual for Supply

and Storage) to reflect current policies and address the key 

procedures discussed earlier in this report. Additionally, update the

field manual to provide guidance on such issues as:

• how to identify Class IX repair part requirements for alert forces.

• how to identify repair parts shortages and whether to requisition 

shortage items.

• what priority designator code to use for requisitioning parts 

during the assumption process and when in alert status.

• when to use pre-packaged inventories.

• when to pre-position parts at airfields (with alert force 

equipment).

B-1. Include key management controls for alert forces in an 

appendix of AR 710-2 as prescribed by AR 11-2 or incorporate 

these controls into the existing Command Supply Discipline 

Program. Consider our list of key controls contained in Annex H to 

identify controls for inclusion in the regulation.

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Source: Army Audit Agency.

Inventory management Policy Concurred, closed, implemented

Inventory management Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Focus area Theme Status of recommendations
Page 124 GAO-07-234 DOD’s High-Risk Areas

Appendix IV

Supply Chain Management: Summary of 

Air Force Audit Agency Report 

Recommendations ApendxiIV

Report title, number, date Recommendations

Adjusted Stock Levels (F2006-0010-

FC4000, September 5, 2006)

The Director of Logistics 

Readiness, Air Force 

Deputy Chief of Staff for 

Installations, Logistics and 

Mission Support should:

a. Require Air Force personnel to delete all invalid adjusted stock 

levels identified in the audit.

b. Establish procedures to improve adjusted stock level 

management. Specifically, revise Air Force Manual 23-110 to:

• address the role of the Logistics Support Centers. Specifically, 

require Logistics Support Center personnel only approve baseinitiated adjusted stock levels with sufficient justification on the 

Air Force Forms 1996, maintain all Air Force Forms 1996, and 

initiate the revalidation process.

• improve the revalidation process. Specifically, the guidance 

should contain the following controls:

• a revalidation checklist detailing procedures logistics 

personnel should use to revalidate adjusted stock levels.

• ensure personnel accomplish the revalidation every 2 years.

• a requirement to use Air Force Form 1996 to establish each 

adjusted stock level (including MAJCOM-directed adjusted 

stock levels) and include a detailed justification of the adjusted 

stock level purpose and duration.

Due Out To Maintenance Additives 

(F2006-0008-FC4000, August 22, 

2006)

A.1. The Air Force Materiel 

Command Director of 

Logistics should:

a. Direct air logistics center shop personnel to delete the invalid 

Credit Due In From Maintenance details identified by audit 

(provided separately).

b. Establish procedures requiring an effective quarterly Credit 

Due In From Maintenance Reconciliation. Specifically, Air Force 

Manual 23-110, US Air Force Supply Manual, and Air Force 

Materiel Command Instruction 23-130, Depot Maintenance 

Material Control, should require maintenance personnel to 

provide written documentation for each Credit Due In From 

Maintenance detail (i.e., supported by a “hole” in the end item). If 

such supporting documentation is not provided, require retail 

supply personnel to delete the unsupported Credit Due In From 

Maintenance details.

c. Develop training for air logistics center shop personnel 

regarding proper spare part turn-in and Credit Due In From 

Maintenance Reconciliation procedures. Specifically, the training 

should define the various ways to turn spare parts in, and the 

differences between each method, to include the impact of 

improperly turning in spare parts. In addition, proper Credit Due 

In From Maintenance Reconciliation procedures should be 

covered in depth to include training on what constitutes 

appropriate supporting documentation.

A.2. The Air Force Materiel 

Command Director of 

Logistics should:

a. Establish detailed procedures in Air Force Manual 23-110 on 

how an item manager should validate Due Out to Maintenance 

additives (i.e., what constitutes a Due Out To Maintenance 

additive, where the item manager can validate the additive, which 

priority backorders are associated with Due Out To Maintenance, 

etc.).
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Recommendations

Page 125 GAO-07-234 DOD’s High-Risk Areas

Focus area Theme Status of recommendations

Requirements forecasting Management oversight Concurred, open

Policy Concurred, open

Requirements forecasting Management oversight Concurred, open

Policy Concurred, open

Planning Concurred, open

Policy Concurred, open
Appendix IV

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Force Audit Agency Report 

Recommendations

Page 126 GAO-07-234 DOD’s High-Risk Areas

b. Direct Warner Robins Air Logistics Center to rescind local 

policy allowing item managers to increase the Due Out To 

Maintenance additive quantity to account for install 

condemnations.

c. Issue a letter to item managers reemphasizing the requirement 

to document the methodology used to validate changes to Due 

Out to Maintenance additives, and retain adequate support for 

the Due Out To Maintenance additive quantity.

Reparable Item Requirements – 

Condemnations 

(F2006-0006-FC4000,

April 18, 2006)

A.1. Air Force Materiel 

Command Directorate of 

Logistics and Sustainment 

personnel should update Air 

Force Materiel Command 

Manual 23-1, Requirements 

for Secondary Item, to:

a. Include instruction on what information should be developed 

and retained to support estimated condemnation rates. The 

guidance should include maintaining documentation on key 

assumptions, facts, specific details, decision makers’ names and 

signatures, and dates of decisions so the condemnation 

percentage can be recreated.

b. Establish sufficient guidance to instruct equipment specialists 

on managing parts replacement forecasting.

Specifically, develop a standardized method to plan for 

replacement part acquisition while phasing out the old parts.

Shop Flow Time Data Accuracy 

(F2006-0004-FC4000,

December 2, 2005)

The Air Force Materiel 

Command Director of 

Logistics and Sustainment 

should:

a. Correct the shop flow times for the 211 items with requirements 

discrepancies. 

b. Revise the process for computing shop flow times to adhere to 

DoD 4140.1-R, which requires the removal of awaiting 

maintenance and awaiting parts times from requirements 

computations. 

c. Evaluate the D200A Secondary Item Requirements System 

computer program to identify and correct the programming 

deficiencies adversely impacting the shop flow times 

computation. 

d. Complete the ongoing automation effort designed to eliminate 

manual processing errors.

Supply Discrepancy Report Program

(F2006-0003-FC4000,

November 15, 2005)

A.1. The Air Force Deputy 

Chief of Staff, Installations 

and Logistics, should:

a. Revise Air Force Manual 23-110 to: (1) Provide supply 

discrepancy report missing shipment procedures consistent with 

Air Force Joint Manual 23-215 guidance. (2) Establish supply 

discrepancy report dollar value criteria consistent with DoD 

4500.9-R guidance. 

b. Establish base supply personnel training requirements on 

supply discrepancy report procedures and communicate those 

requirements to the field.

A.2. The Air Force Deputy 

Chief of Staff, Installations 

and Logistics, should:

Request Defense Logistics Agency comply with procedures 

requiring depot supply personnel inspect packages and submit 

supply discrepancy reports when appropriate.

Readiness Spares Package 

Requirements (F2006-0002-

FC4000,

November 15, 2005)

A.1. The Air Force Deputy 

Chief of Staff, Installations 

and Logistics, should: 

a. Revise Air Force Manual 23-110 to (1) describe more 

thoroughly documentation requirements for data elements used 

to compute readiness spares package item requirements and (2) 

require all readiness spares package managers to attend training 

that includes an adequate explanation of data element 

documentation requirements.

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Policy Concurred, open

Management oversight Concurred, open

Requirements forecasting Policy Concurred, open

Policy Concurred, open

Requirements forecasting Process Concurred, open

Process Concurred, open

Management oversight Concurred, open

Process Concurred, open

Materiel distribution Policy Concurred, open

Planning Concurred, open

Management oversight Concurred, open

Requirements forecasting Policy Concurred, open

Focus area Theme Status of recommendations
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b. Upgrade the Weapons System Management Information 

System Requirements Execution Availability Logistics Model to 

(1) accept mechanical data element transfers directly from other 

source systems and (2) prompt readiness spares package 

managers to input documentation notations supporting the 

rationale of changes in readiness spares package data elements. 

Depot Stock Level Days (F2006-

0001-FC4000,

November 9, 2005)

A.1. The Air Force Materiel 

Command Directorate of 

Logistics and Sustainment 

personnel should:

a. Reduce the stock level day standard value from 10 days to 4 

days in the D200A Secondary Item Requirements System. 

b. Develop and implement an automated method in the Advanced 

Planning and Scheduling system to measure the actual order and 

ship time needed to replenish depot level maintenance 

serviceable stock inventories. 

c. Develop and implement an interim method to measure or 

estimate depot order and ship time until an automated method is 

developed.

Cargo Processing 

(F2005-0007-FC4000,

July 14, 2005)

A.1. The Deputy Chief of 

Staff, Installations and 

Logistics, Directorate of 

Logistics Readiness should 

require the Distribution and 

Traffic Management Division 

to:

a. Direct Transportation Management Office personnel to 

communicate to the consignors the cost and timing benefits to 

move shipments via door-to-door commercial air express carrier 

service when eligible based on DoD and Air Force guidance. If 

the consignor refuses the cost-effective mode, require a waiver 

letter expressing the need to use the Air Mobility Command 

carrier. 

b. Develop criteria to allow consignors to adequately identify 

priority requirements and assign appropriate priority designator 

codes when shipping assets via Air Mobility Command airlift. 

This criteria should be included in Air Force Instruction 24-201. 

c. Instruct Transportation Management Office personnel to 

properly review all shipping documentation to ensure all required 

information is completed by the consignor prior to accepting 

cargo for movement to the Air Mobility Command aerial port.

Mission Direct Additive 

Requirements 

(F2005-0006-FC4000, July 11, 2005)

A.1. The Air Force Materiel 

Command Director of 

Logistics and Sustainment 

should: 

a. Establish procedures to properly budget for delayed 

discrepancy repair requirements by accounting for the eventual 

return and repair of unserviceable items in the 

requirements/budget process starting with the March 2005 

computation cycle. 

b. Develop procedures or include an edit in the new system that 

flags additives and prompts the item manager to perform 

thorough reviews of additive requirements. 

c. Develop a process that requires program managers, item 

managers, and other applicable program directorate personnel to 

periodically review program and mission direct additive 

requirements to verify that duplication has not occurred. 

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Recommendations

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Process Concurred, open

Requirements forecasting Process Concurred, open

Process Concurred, open

Process Concurred, open

Materiel distribution Management oversight Concurred, open

Policy Concurred, open

Management oversight Concurred, open

Requirements forecasting Process Concurred, closed, implemented

Process Concurred, open

Process Concurred, open

Focus area Theme Status of recommendations
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d. Inform all item managers and air logistics center managers that 

it is an inappropriate use of mission direct additives to retain 

excess inventory or preclude contract terminations. Additionally, 

reiterate regulatory guidance delineating the approved process 

for retaining excess materiel and preventing contract 

terminations.

Low Demand Item Requirements 

Computation Accuracy 

(F2005-0005-FC4000,

March 18, 2005)

A.1. The Air Force Materiel 

Command Director of 

Logistics and Sustainment 

should: 

a. Direct item managers to correct erroneous requirements 

identified during this review.

b. Revise Air Force Materiel Command Manual 23-1 to clarify 

procedures for adjusting low demand item requirements. 

Specifically, ensure the guidance clearly states item managers 

may restore previously decreased requirements to their original 

level.

Reparable Item Requirements - 

Repair Cycle Times 

(F2005-0004-FC4000,

February 2, 2005)

A.1. The Air Force Materiel 

Command Director of 

Logistics and Sustainment 

should:

a. Direct item managers to correct all erroneous requirements 

computations and related budgets identified during this review. 

b. Revise Air Force Materiel Command Manual 23-1 to correct 

guidance conflicts. Specifically, ensure the guidance only 

contains the correct standards requirements (3 days for base 

processing times and 10 days for reparable intransit times).

Indenture Relationship Impact on 

Secondary Item Requirements 

Computations 

(F2004-0006-FC4000,

May 21, 2004)

A.1. The Air Force Materiel 

Command Director of 

Logistics should revise Air 

Force Materiel Command 

Manual 23-1 to:

a. Require item managers review and identify excess next higher 

assemblies that could be used to satisfy indentured item repair, 

as well as buy, requirements.

b. Provide specific procedures for item managers to follow to 

satisfy the indentured item buy and repair requirements.

A.2. The Air Force Materiel 

Command Director of 

Logistics should:

Revise training, and then train item managers to use indentures 

system data to identify excess next higher assemblies that could 

be used to satisfy indentured item requirements.

B.1. The Air Force Material 

Command Director of 

Logistics should:

a. Require equipment specialists correct inaccurate indentures 

system data.

b. Publish the draft guidance requiring equipment specialists 

ensure indentures system data accuracy. 

c. Train equipment specialists to maintain indentures system data 

accuracy.

Contractor Assets and Price Controls

(F2004-0005-FC4000,

May 10, 2004)

The Air Force Materiel 

Command Director of 

Logistics should:

a. Collect the unserviceable parts identified during the audit from 

the contractors or adjust the price of those parts (FY 2000-2002, 

$238.9 million and estimated FY 2003, $79.6 million).

b. Establish a mechanism to track the issue and return of parts 

issued to customers who subsequently provide those parts to 

contractors as prescribed in Air Force Manual 23-110, Volume I, 

Part 3, Chapter 7. 

c. Either revise the policy to issue parts to customers who 

subsequently provide those parts to contractors at standard price 

or develop a due-in-from-maintenance-like control to adjust the 

part’s price if the unserviceable parts are not returned.

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Recommendations

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Management oversight Concurred, closed, implemented

Requirements forecasting Management oversight Concurred, closed, implemented

Policy Concurred, closed, implemented

Requirements forecasting Management Oversight Concurred, closed, implemented

Policy Concurred, closed, implemented

Requirements forecasting Management oversight Concurred, open

Process Concurred, open

Planning Concurred, open

Management oversight Concurred, open

Process Concurred, open

Planning Concurred, open

Asset visibility Process Concurred, open

Management oversight Concurred, open

Policy Concurred, open

Focus area Theme Status of recommendations
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Page 132 GAO-07-234 DOD’s High-Risk Areas

Propulsion Requirements System 

Computation Accuracy (F2004-

0003-FC4000, November 12, 2003)

A.1. The Deputy Chief of 

Staff, Installations and 

Logistics should:

a. Revise Air Force Instruction 21-104 to require engine 

managers to input a follow-on tasked unit into the requirements 

computation system as a single unit. 

b. Modify PRS software to compute spare engine needs based on 

the combined flying hours for follow-on tasked units. 

Other War Reserve Materiel (F2003-

0010-FC4000, May 2, 2003)

A.1. The Air Force Materiel 

Command Supply 

Management Division 

should:

a. Implement corrective software changes to the Secondary Item 

Requirements System and Central Secondary Item Stratification 

Subsystem systems to remove the Other War Reserve Materiel 

requirements from the Peacetime Operating Spares requirements 

and report Other War Reserve Materiel requirements separately. 

b. Implement interim procedures to remove Other War Reserve 

Materiel requirements from the Peacetime Operating Spares 

requirements and budget and report Other War Reserve Materiel 

requirements separately until they implement Recommendation 

A.1.a.

Programmed Depot Maintenance 

Materiel Support 

(F2003-0008-FC4000,

February 21, 2003)

A.1. The Air Force Materiel 

Command Director of 

Logistics should: 

a. Direct maintenance management personnel to provide 

adequate oversight to ensure maintenance personnel turn in all 

aircraft parts to the Weapon System Support Center or courtesy 

storage areas. 

b. Revise Air Force Materiel Command Instruction 21-130 

directing air logistics center Weapon System Support Center 

management to establish a supply inventory monitor to oversee 

maintenance work areas ensuring excess parts are turned in to 

Weapon System Support Center or courtesy storage areas. 

A.2. The Air Force Materiel 

Command Director of 

Logistics should:

Reemphasize the regulatory requirement (Air Force Materiel 

Command Instruction 21-130) to the air logistics center 

maintenance supervisors to assign a maintenance inventory 

control monitor to oversee the maintenance areas and ensure 

maintenance personnel tag and label all parts with the applicable 

aircraft number and the serviceability condition. 

Air Mobility Command Forward 

Supply System (F2002-0009-

C06100,

September 26, 2002)

A.1. The Army Materiel 

Command Director of 

Logistics should:

Request that the Air Force Materiel Command Director of 

Logistics include Air Force Logistics Management Agency 

Stocking Policy 11 in the Readiness Base Leveling system to 

calculate C-5 forward supply location spare parts stock levels. 

B. 1. The Air Force Materiel 

Command Director of 

Logistics should:

Instruct item manager specialists that Air Force Form 1996 is not 

required to maintain Army Materiel Command Forward supply 

secondary item requirements in the Secondary Item 

Requirements System.

Asset Variance, 

(F2002-0008-C06200,

September 18, 2002)

A.1. The Air Force Materiel 

Command Director of 

Logistics should:

a. Remove the D200A Secondary Item Requirements System 

automatic asset balance variance adjustment.

b. Establish training requirements for air logistics center 

personnel on how to research and resolve D200A Secondary 

Item Requirements System asset balance variances.

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Force Audit Agency Report 

Recommendations

Page 133 GAO-07-234 DOD’s High-Risk Areas

Requirements forecasting Policy Concurred, closed, implemented

Process Concurred, closed, not implemented

Requirements forecasting Process Concurred, closed, not implemented

Process Concurred, closed, implemented

Inventory management Management oversight Concurred, closed, implemented

Policy Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Inventory management Policy Concurred, closed, not implemented

Management oversight Concurred, closed, implemented

Inventory management Process Concurred, closed, implemented

Planning Concurred, closed, implemented

Focus area Theme Status of recommendations
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Page 134 GAO-07-234 DOD’s High-Risk Areas

c. Revise the Air Force Materiel Command Manual 23-1 to require 

that item managers defer an item’s buy and/or repair requirement 

until reconciling any asset balance variance greater than a 

specified threshold (variance percent, quantity, and/or dollar 

value).

d. Establish asset balance variance oversight procedures to verify 

item managers resolve asset balance variances.

Air National Guard Small Arms 

Management 

(F2002-0005-C06100,

May 20, 2002)

A.1. The Air National Guard, 

Deputy Chief of Staff, 

Logistics, should: 

a. Address to subordinate units the importance of following Air 

Force equipment guidance related to small arms accountability, 

inventory, documentation, storage, and disposal, and the 

competitive marksmanship program. 

b. Request the Air National Guard Inspector General to include 

small arms accountability, inventory, documentation, storage, and 

disposal requirements as a special emphasis area in unit 

inspections.

B.1. The Air National Guard, 

Deputy Chief of Staff, 

Logistics, should: 

a. Direct all Air National Guard units revalidate small arms and 

conversion kit requirements using Allowance Standard 538.

b. Recompute requirements (including M-16 conversion kits), 

reallocate small arms on-hand based on adjusted authorizations, 

and adjust requirements and requisitions, as needed, following 

the reallocations.

Material Management Transition 

(F2002-0006-C06200,

April 29, 2002)

A.1. The Air Force Materiel 

Command Director of 

Logistics should revise Air 

Force Manual 23-110 to 

include specific material 

management transition 

guidance. Specifically, the 

guidance should require:

a. Transition gaining locations to have a training plan in place to 

ensure personnel are adequately trained before working asset 

buy and repair requirement computations.

b. Air Force Materiel Command personnel to establish a transition 

team to monitor all stages of the transition, to include ensuring 

personnel are adequately trained and providing additional 

oversight over requirement computations worked by new item 

managers.

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Recommendations

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Policy Concurred, closed, implemented

Process Concurred, closed, implemented

Inventory management Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Process Concurred, closed, implemented

Requirements forecasting Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Focus area Theme Status of recommendations
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Force Audit Agency Report 

Recommendations

Page 136 GAO-07-234 DOD’s High-Risk Areas

Base-Level Reparable Item 

Transactions (F2002-0004-C06100, 

March 22, 2002)

A.1. The Deputy Chief of 

Staff, Installations and 

Logistics, should:

Revise Standard Base Supply System transaction processing 

procedures to automatically select special requisition Air Force 

routing identifier codes. 

B.1. The Deputy Chief of 

Staff, Installations and 

Logistics should:

Issue guidance to base supply personnel reminding them of 

proper receipt transaction procedures. 

C.1. The Air Combat 

Command, Director of 

Maintenance and Logistics, 

should:

Discontinue the automated transaction deletion program since 

the revised Standard Base Supply System procedures render the 

program obsolete. 

C.2. The Deputy Chief of 

Staff, Installations and 

Logistics should:

a. Revise Air Force Manual 23-110 to direct working capital fund 

managers to input reversing entries that will correct erroneous 

transactions identified during monthly M01 list reviews. 

b. Direct all base supply working capital fund managers to: (1) 

Review the most current M01 list to evaluate the propriety of all 

transactions affecting the Purchases at Cost account. (2) Input 

reversing entries to correct any erroneous transactions identified 

during the M01 list review. This will correct all deficiencies, 

including those described in Results-A and Results-B. 

Air Force Reserve Small Arms 

Management (F2002-0001-C06100, 

January 2, 2002)

A.1. The Air Force Reserve 

Command, Deputy Chief of 

Staff, Logistics, should:

 a. Address to subordinate units the importance of following Air 

Force equipment guidance related to small arms accountability, 

inventory, documentation, storage, and disposal.

b. Request the Air Force Reserve Command Inspector General to 

include small arms accountability, inventory, documentation, 

storage, and disposal requirements as a special emphasis area in 

unit inspections.

B.1. Air Force Reserve 

Command, Deputy Chief of 

Staff, Logistics, should:

a. Request all Air Force Reserve Command units revalidate small 

arms and conversion kit authorizations using Allowance Standard 

538.

b. Recompute requirements (including M-16 conversion kits), 

reallocate small arms on-hand based on recomputed 

authorizations, and adjust requirements and requisitions, as 

needed, following the reallocations.

Unserviceable Secondary Item 

Control Activity Assets, (01062016, 

November 9, 2001)

A.1. The Air Force Materiel 

Command Director of 

Logistics should:

Finalize and issue the revised Air Force Manual 23-110 requiring 

personnel to identify and timely return secondary items to the 

primary control activity.

B.1. The Air Force Materiel 

Command Director of 

Logistics should:

Finalize and issue the revised Air Force Manual 23-110 requiring 

personnel to research and validate credit due on repairable items 

returned to the primary control activity.

(Continued From Previous Page)

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Force Audit Agency Report 

Recommendations

Page 137 GAO-07-234 DOD’s High-Risk Areas

Source: Air Force Audit Agency.

Inventory management Process Concurred, closed, implemented

Policy Concurred, closed, implemented

Process Concurred, closed, implemented

Policy Concurred, closed, implemented

Management Oversight Concurred, closed, implemented

Inventory management Management oversight Concurred, closed, implemented

Management oversight Concurred, closed, implemented

Management oversight Concurred closed, implemented

Process Concurred, closed, implemented

Inventory management Policy Concurred, closed, implemented

Policy Concurred, closed, implemented

Focus area Theme Status of recommendations
Page 138 GAO-07-234 DOD’s High-Risk Areas

Appendix V

Supply Chain Management: Summary of 

Naval Audit Service Report 

Recommendations ApendxiV

Report title, number, date Recommendations

Hazardous Material Inventory 

Requirements Determination and 

Offloads on Aircraft Carriers and 

Amphibious Assault Ships (N2005-

0027, February 17, 2005)

The Office of the 

Commander, U.S. Fleet 

Forces Command should:

1. Emphasize Chief of Naval Operations requirements that all ships 

maintain proper inventory levels based on authorized allowances and 

demand history. 

2. Emphasize Chief of Naval Operations and Naval Supply Systems 

Command internal control procedures to ensure inventory levels in 

the Hazardous Material Minimization Centers remain within the 

authorized limits, and return material exceeding requisitioning 

objectives to the supply system. 

3. Emphasize Chief of Naval Operations requirements that ships 

requisition only hazardous materials authorized for shipboard use, 

and return unauthorized material to the supply system.

4. Enforce Naval Supply Systems Command requirements that 

ships prepare and submit Ship’s Hazardous Material List Feedback 

Reports and Allowance Change Requests, whenever required. 

The Naval Supply 

Systems Command 

should:

5. Establish an interface between authorized allowance documents 

and the Type-specific Ship’s Hazardous Material List to ensure that 

hazardous material items authorized for shipboard use also have 

authorized allowance levels. 

6. Establish procedures to validate Hazardous Material Minimization 

Centers low and high inventory levels with those inventory levels in 

Relational Supply for the same items to ensure Hazardous Material 

Minimization Centers high limits do not exceed Relational Supply 

high limits. 

7. Establish procedures that require unissued hazardous material in 

the Hazardous Material Minimization Centers be counted as on-hand 

inventory before reordering Relational Supply stock. 

8. Develop and implement a hazardous material usage database 

that accumulates and retains data on supply system hazardous 

material ordered and used by the ship for use in planning future 

hazardous material requirements.

9. Establish procedures to ensure that Enhanced Consolidated 

Hazardous Material Reutilization and Inventory management 

Program Afloat Program technicians perform tasks in accordance 

with the Enhanced Consolidated Hazardous Material Reutilization 

and Inventory management Program Afloat Program Desk Guide. 

10. Establish a working group to determine the feasibility for the 

development of ship-specific allowance-control documents for all 

items managed in the Hazardous Material Minimization Centers not 

already on an approved allowance list. 

The Office of the 

Commander, U.S. Fleet 

Forces Command should:

11. Return the prohibited undesignated hazardous material items to 

the supply system for credit. 
Appendix V

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Naval Audit Service Report 

Recommendations

Page 139 GAO-07-234 DOD’s High-Risk Areas

Focus area Theme Status of recommendations

Inventory management Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, open 

Process Concurred, closed, implemented 

Planning Concurred, closed, implemented 

Process Concurred, closed, implemented 
Appendix V

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Naval Audit Service Report 

Recommendations

Page 140 GAO-07-234 DOD’s High-Risk Areas

The Naval Sea Systems 

Command, with the 

assistance of Naval 

Supply Systems 

Command should:

12. Establish formal written guidance stating what system allowance 

list hazardous material is designated for and their current quantities 

allowed. Guidance should include requisitioning metrics that cross 

check hazardous material items against designated system designs 

as generated by Naval Inventory Control Point and Naval Surface 

Warfare Center Carderock Division – Ship System Engineering 

Station, technical manuals, and one-time General Use Consumable 

List. 

13. Clarify Naval Sea Systems Command Instruction 4441.7B/Naval 

Supply Systems Command Instruction 4441.29A to measure the 

quality of hazardous material load outs instead of the quantity or 

percentage of hazardous material loaded on ships. 

The Office of the 

Supervisor of 

Shipbuilding, Conversion, 

and Repair Newport News 

should:

14. Discontinue requisitioning aircraft cleaning, maintenance, and 

preservation hazardous material for actual aircraft before Post 

Shakedown Availability. 

15. Establish formal written local procedures that require detailed 

support, justification, and audit documentation for system validation 

on all hazardous material requisitions received from ship personnel 

after Load Coordinated Shipboard Allowance List delivery. This 

support should indicate the specific system the item is required for 

and the document numbers for Preventative Maintenance Schedule, 

Maintenance Request Cards, Allowance Equipage List, Allowance 

Parts List, General Use Consumables List, and technical manuals. 

An Allowance Change Request should be included, if applicable. 

16. Use Outfitting Support Activity when requisitioning all hazardous 

material items for ship initial outfitting to minimize local procurement 

as required by the Navy Outfitting Program Manual of September 

2002. 

The Naval Supply 

Systems Command 

should:

17. Enforce compliance with established guidance for material 

offloads to ensure a uniform use of DD Form 1348 documents 

among ships and the proper processing of Transaction Item 

Reporting documents to ensure inventory accuracy. 

18. Update the Enhanced Consolidated Hazardous Material 

Reutilization and Inventory management Program Afloat Program 

Desk Guide to include specific requirements for the Enhanced 

Consolidated Hazardous Material Reutilization and Inventory 

management Program Afloat Program technician when offloading 

Naval Supply Systems Command-owned hazardous material. 

Aircraft Engine/Module Containers 

(N2004-0029, February 18, 2004) 

The Naval Inventory 

Control Point should:

1. In coordination with Naval Air Systems Command, update policy 

and procedures issued to field activities on managing and reporting 

aircraft engine/module container inventory. 

2. Require Fleet activities to provide a daily transaction item report 

of all intra-activity receipts and issues of engine/module containers to 

item managers. 

3. Establish controls to ensure containers are not procured in excess 

of requirements.

(Continued From Previous Page)

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Recommendations

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Policy Concurred, closed, implemented 

Policy Concurred, open

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Inventory management Policy Concurred, closed, implemented 

Management oversight Nonconcurred, closed, implemented

Management oversight Concurred, closed, implemented 

Focus area Theme Status of recommendations
Appendix V

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Naval Audit Service Report 

Recommendations

Page 142 GAO-07-234 DOD’s High-Risk Areas

4. Include the Aircraft Engine Container Program as an assessable 

unit in Naval Inventory Control Point’s Management Control Program. 

The Naval Air Systems 

Command should:

5. Fully fund the engine/module repair container program in 

accordance with requirements generated by Naval Inventory Control 

Point. 

6. Report any engine/module containers costing $5,000 or more in 

the Defense Property Accounting System.

The Naval Inventory 

Control Point and Naval 

Air Systems Command 

should:

7. Require Naval Aviation Depots, Aircraft Intermediate Maintenance 

Depots, and Fleet activities to perform periodic inventories of 

engine/module containers, and report the results to Naval Inventory 

Control Point’s item managers. 

The Norway Air-Landed Marine 

Expeditionary Brigade 

Prepositioning Program (N2003-

0079, September 2, 2003) 

The Commandant of the 

Marine Corps should: 

1. Terminate the Norway Air-Landed Marine Expeditionary Brigade 

program. 

2. Prepare a comprehensive statement encompassing disposal 

costs, equipment condition, and status of outstanding procurements 

and repairs of the excess onhand ground equipment and supplies, 

and identify Norway Air-Landed Marine Expeditionary Brigade 

program items that would satisfy outstanding procurements and 

repairs for fiscal year 2003 and the out years. 

3. Cancel the planned modernization procurements associated with 

the replacement of Norway Air-Landed Marine Expeditionary 

Brigade equipment, subject to negotiated termination costs for one of 

the six modernization projects.

4. Cancel all procurements that replenish Norway Air-Landed Marine 

Expeditionary Brigade preposition inventory shortages. 

Department of the Navy Aircraft 

Engine and Component 

Requirements Determination 

Process (N2003-0041, April 29, 

2003) 

The Deputy Chief of Naval 

Operations, Warfare and 

Requisitions Programs 

should:

1. Perform analyses to establish validated engine readiness 

requirements, incorporate ready-for-training engine readiness rates 

for training aircraft engines, and establish separate requirements for 

different categories of aircraft (such as combat, support, and 

training). 

2. Formally document the engine requirements and supporting 

rationale in Department of the Navy guidance.

The Deputy Chief of Naval 

Operations, Fleet 

Readiness and Logistics 

should:

3. Coordinate with Naval Inventory Control Point and Naval Air 

Systems Command to require more realistic parameter inputs to the 

Retail Inventory Model for Aviation while encouraging engine 

maintenance strategies that will ultimately reduce turn around time 

and increase reliability (mean time between removal). 

4. Issue written guidance to assign responsibility for calculating 

engine war reserve requirements and the need to compute additional 

war reserve engine/module requirements. 

The Deputy Chief of Naval 

Operations, Warfare 

Requirements and 

Programs should:

5. Adjust out-year F414-GE-400 engine and module procurement 

requirements (to be reflected in the President’s 2004 Budget) to 

agree with Naval Inventory Control Point’s revised Baseline 

Assessment Memorandum 2004 requirements. 

(Continued From Previous Page)

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Naval Audit Service Report 

Recommendations

Page 143 GAO-07-234 DOD’s High-Risk Areas

Management oversight Concurred, closed, implemented 

Process Concurred, closed, implemented 

Management oversight Concurred, open 

Management oversight Concurred, closed, implemented 

Inventory management Process Nonconcurred, closed, implemented

Process Nonconcurred, closed, implemented

Process Nonconcurred, closed, implemented

Process Nonconcurred, closed, implemented

Requirements forecasting Process Concurred, closed, implemented 

Process Partially concurred, closed, implemented 

Process Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Process Concurred, closed, implemented 

Focus area Theme Status of recommendations
Appendix V

Supply Chain Management: Summary of 

Naval Audit Service Report 

Recommendations

Page 144 GAO-07-234 DOD’s High-Risk Areas

The Commander, Naval 

Inventory Control Point 

should:

6. Reiterate Secretary of the Navy policy that documentation 

supporting official Baseline Assessment Memorandum submissions 

be retained for no less than 2 years. 

The Deputy Chief of Naval 

Operations, Fleet 

Readiness and Logistics 

should:

7. In coordination with Deputy Chief of Naval Operations, Warfare 

Requirements and Programs, establish policy and adjust the 

procurement strategy for F414-GE-400 engines and modules to 

procure (based on current audit analyses) approximately 30 percent 

whole engines and 70 percent separate engine modules and thereby 

improve the engine/module repair capability. 

8. Issue guidance requiring Naval Air Systems Command to 

determine, and annually reevaluate, the engine-to-module 

procurement mix for the F414-GE-400. 

The Commander, Naval 

Air Systems Command 

should:

9. Reduce out-year AE1107C spare engine procurement by 12 

(changed to 8 after receipt of management comments) through fiscal 

year 2008. 

10. Adhere to the Chief of Naval Operations-approved model (Retail 

Inventory Model for Aviation) for calculations of spare engine 

requirements. 

The Deputy Chief of Naval 

Operations, Warfare 

Requirements and 

Programs should:

11. Adjust planned out-year Aircraft Procurement, Navy-6 (APN-6) 

procurement requirements to reduce the quantities of T700-401C 

Cold and Power Turbine Modules by 10 each. 

Marine Corps Equipment 

Deployment Planning (N2002-

0054, June 12, 2002)

The Commandant of the 

Marine Corps should:

1. Validate the Time-Phased Force Deployment Database 

equipment requirements and determine how the Marine Corps will 

source (make available) the equipment required and determine if the 

equipment required is on the unit’s table of equipment.

2. Evaluate the Asset Tracking Logistics and Supply System II+ to 

determine if it adequately meets user needs and, if not, take 

sufficient action to correct identified deficiencies. 

3. Perform onsite technical assessments to determine the extent of 

required maintenance/repair. 

4. Provide dedicated organic or contract resources to reduce 

maintenance backlogs. 

5. Establish an acceptable level of noncombat deadline equipment 

relative to the total combat deadline equipment and total equipment 

possessed and report outside the unit to the Marine Expeditionary 

Force commander. This would help ensure that the extent of 

nonmajor maintenance/repair requirements receives appropriate 

visibility and support requests for resources to reduce maintenance 

backlogs. 

(Continued From Previous Page)

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Appendix V

Supply Chain Management: Summary of 

Naval Audit Service Report 

Recommendations

Page 145 GAO-07-234 DOD’s High-Risk Areas

Source: Navel Audit Service.

Policy Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Policy Concurred, closed, implemented 

Process Partially concurred, closed, implemented 

Process Partially concurred, closed, implemented 

Process Concurred, closed, implemented 

Requirements forecasting Process Concurred, closed, implemented 

Management oversight Concurred, closed, implemented 

Process Nonconcurred, closed, implemented 

Process Concurred, closed, implemented 

Process Concurred, open 

Focus area Theme Status of recommendations
Page 146 GAO-07-234 DOD’s High-Risk Areas

Appendix VI

Supply Chain Management: Summary of 

Non-audit Organization Report 

Recommendations ApendxiVI

Report title, 

author, date Recommendations Focus area Theme

Defense Science 

Board Summer Study 

on Transformation: A 

Progress Assessment, 

Volume 1

Office of the Under 

Secretary of Defense 

For Acquisition, 

Technology, and 

Logistics (February 

2006)

The Secretary of 

Defense should: 

Create a Joint Logistics Command:

• Responsible for global end-to-end supply chain,

• That includes the U.S. Transportation Command mission, 

Defense Logistics Agency, service logistics and 

transportation commands as components to Joint Logistics 

Command with:

• Regional Combatant Commanders retaining operational 

control of the flow of in-theater logistics; and

• Program managers retaining responsibility for lifecycle 

logistics support plan and configuration control. 

All focus 

areas

Management 

oversight

The Under 

Secretary of 

Defense for 

Acquisition, 

Technology, and 

Logistics should:

• Lead the work to create an integrated logistics information 

system.

• Appoint an external advisory board of relevant industry 

experts to assist in guiding this effort.

All focus 

areas

Management 

oversight

Sustainment of Army 

Forces in Operation 

Iraqi Freedom

Major Findings and 

Recommendations 

RAND (2005)

Specific 

recommendations 

made for tactical 

supply, theater 

distribution, 

strategic 

distribution, 

national- and 

theater-level 

supply, and 

command and 

control.

Overarching 

recommendations:

• Supply chain planning needs to be better integrated with a 

common supply chain vision.

• The newly designated distribution process owner (U.S. 

Transportation Command), in concert with the Army, the 

other services, and the Defense Logistics Agency, should 

develop and promulgate a common vision of an integrated 

supply chain. The complementary, not redundant roles, of 

each inventory location, distribution node, and distribution 

channel should be defined.

• Every joint logistics organization should examine and refine 

its processes to ensure detailed alignment with this vision. 

Review doctrine, organizational designs, training, 

equipment, information systems, facilities, policies, and 

practices for alignment with the supply chain vision and 

defined roles within the supply chain.

• The assumptions embedded within the design of each 

element of the supply chain with regard to other parts of the 

supply chain should be checked to ensure that they reflect 

realistic capabilities.

• Improve the joint understanding of the unique field 

requirements of the services. Likewise, the services need to 

understand the Defense Logistics Agency, the U.S. 

Transportation Command, and the General Services 

Agency processes and information requirements, as well as 

those of private-sector providers.

• Metrics should be adopted to maintain alignment with the 

vision.

Distribution Processes, 

performance 

tracking
Appendix VI

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Page 147 GAO-07-234 DOD’s High-Risk Areas

• Logistics information systems need adequate levels of 

resources to provide non-line-of-sight mobile 

communications and effective logistics situational awareness 

in order to make new and emerging operational and logistics 

concepts feasible.

Distribution Planning

• Deliberate and contingency planning should include 

improved consideration of the logistics resource 

requirements necessary to execute sustained stability and 

support operations.

Distribution Planning

• Resourcing processes should consider uncertainty and 

implications of capacity shortages.

• The flexibility of financial and resource allocation processes 

to rapidly respond to the need for dramatic changes in 

logistics capacity that sometimes arises from operational 

forecast error should be improved.

• Logistics resource decisions should more explicitly consider 

how much buffer capacity should be provided in order to 

handle typical operational and demand variability without 

the development of large backlogs.

Distribution Planning

• Joint training should be extended to exercise the entire 

logistics system.

• The Army should review all wartime and contingency 

processes from the tactical to the national level to 

determine which are not exercised in training with all 

requisite joint organizations participating. Such processes 

range from setting up tactical logistics information systems 

to planning a theater distribution architecture to determining 

national level spare parts distribution center capacity 

requirements.

• Review which tasks and processes do not have adequate 

doctrine and mission training plans.

Distribution Processes

• Planning tools and organizational structures need to better 

support expeditionary operations.

• Automation should more effectively support the 

identification of logistics unit requirements to support a 

given operation.

• Unit “building blocks” should be the right size and modular 

to quickly and effectively provide initial theater capabilities 

and then to facilitate the seamless ramp-up of capacity and 

capability as a deployment matures.

Distribution Planning

(Continued From Previous Page)

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Page 148 GAO-07-234 DOD’s High-Risk Areas

Logistics 

Transformation: Next 

Steps to 

Interoperability and 

Alignment

Lexington Institute 

(July 2005)

Conclusions and 

recommendations 

fall into three 

categories: 

programmatic, 

constructive, and 

operational. 

Programmatic 

conclusions and 

recommendations 

include:

• Existing funding mechanisms act as disincentives for joint 

logistics transformation and interoperability. If interoperability 

is important to transformation, the Office of the Secretary of 

Defense must fund it adequately and specifically, not just the 

component systems and organizations being integrated. 

Services and agencies will be reluctant to act against their 

own financial interest.

All focus 

areas

Management 

oversight

• Title 10 can be used to prevent joint logistics transformation 

and interoperability, and needs clarification. If a Logistics 

Command is created, Title 10 may need to be amended.

All focus 

areas

Policy

• Expanded Office of the Secretary of Defense leadership 

(beyond technical standardization) for joint logistics 

transformation is necessary to effect change. The Logistics 

Systems Modernization office efforts to realign business 

processes and to prioritize rapid return on investment 

initiatives are a good start and can be expanded.

All focus 

areas

Management 

oversight

(Continued From Previous Page)

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Page 149 GAO-07-234 DOD’s High-Risk Areas

• A 4-Star Combatant Command – U.S. Logistics Command – 

in charge of logistics needs to be created, following the 

example of the U.S. Strategic Command. The responsibilities 

and enforcement powers of this Logistics Command may be 

significantly different than the U.S. Strategic Command 

model and require clear specification. Some responsibilities 

that this Command could undertake include:

• Defining the distribution authorities, scenarios, business 

processes and process ownership at the “hand-off” from 

U.S. Transportation Command distribution to services 

distribution.

• Developing doctrine and implementing joint business 

processes and rules for logistics interoperability between 

services, prioritizing known problem and conflict areas, and 

assigning ownership of business processes across the 

broader Supply Chain Operations Reference-defined 

supply chain.

• Identifying budget requirements for logistics interoperability, 

and requiring logistics interoperability to be adequately 

funded and planned as part of the acquisition process of 

any logistics systems.

• Accelerating interoperability testing of all Global Combat 

Support System implementations both within and across 

services and agencies, with a spiral development 

methodology.

• Coordinating and communicating various isolated ongoing 

efforts in defining logistics Extensible Markup Language 

schema, business processes, databases, published web 

services and other joint logistics projects, with the 

Integrated Data Environment and Enterprise Resource 

Planning programs underway in the services and agencies. 

Where conflicts, redundancies or gaps are identified, the 

U.S. Logistics Command may function as an “honest 

broker” to develop an interoperable solution, or as a 

“sheriff” to enforce an interoperable solution.

All focus 

areas

Management 

oversight

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Constructive 

conclusions and 

recommendations 

include:

• A single logistics business process modeling needs to be 

created as a common reference, with the understanding that 

the modeling effort will be descriptive rather than 

prescriptive, due to Services’ autonomy and the need to 

continue migrating legacy systems and building new logistics 

capability. Since all Services, Agencies and the Office of the 

Secretary of Defense are employing the Supply Chain 

Operations Reference Model for logistics, some degree of 

commonality should already exist. If the process modeling 

effort can build on existing U.S. Transportation 

Command/Defense Logistics Agency business process 

models, and incorporate business process models from each 

of the Services, it may be available earlier and used more 

effectively. A “greenfield” effort may have limited utility and 

never get beyond the requirements stage. Efforts to align 

logistics data are underway within the Joint Staff Logistics 

Directorate, and in the ongoing U.S. Transportation 

Command/Defense Logistics Agency modeling. The 

touchpoints between these alignment efforts and the actual 

Enterprise Resource Planning implementations within the 

services and joint agencies could be expanded. A variety of 

“to-be” logistics business process models must be generated 

to meet the requirements of varying future war fighting 

scenarios. For example, loss of space assets or enemy use 

of electromagnetic pulse will create significant constraints on 

logistics interoperability, and contingency business 

processes should be designed for those scenarios.

All focus 

areas

Processes

• The logistics business process must be defined from end-toend at the DOD level, and then Services and Agencies must 

assess how they will or will not align with those processes. 

Alignment, interoperability and jointness are consensus 

goals for system development, but some Service decisions 

not aligned with specific DOD level processes may provide 

net benefits and increase the robustness of the overall 

logistics System of Systems (the federated supply chain, or 

loosely-coupled approach). The ongoing questions that the 

U.S. Logistics Command will address are these: Should the 

default state for interoperability be alignment, with nonalignment developed as a scenario-based exception? Or 

should the default state for interoperability be non-alignment, 

with occasional moments of alignment (specific data feeds of 

a finite duration)?

All focus 

areas

Processes

Operational 

conclusions and 

recommendations 

include: 

• Some form of charter or statutory legislation is needed to 

prevent joint logistics transformation from backsliding into 

non-interoperable organizations and systems, when 

leadership changes.

All focus 

areas

Policy

• Change management for joint logistics needs to be 

resourced specifically, in addition to current resources for 

logistics transformation within services and joint agencies.

All focus 

areas

Management 

Oversight

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Page 151 GAO-07-234 DOD’s High-Risk Areas

Beyond GoldwaterNichols: U.S. 

Government and 

Defense Reform for a 

New Strategic Era - 

Phase 2 Report

Center for Strategic 

and International 

Studies (July 2005)

The Beyond 

Goldwater-Nichols 

study team 

recommends:

• Fuse the logistics and transportation functions into an 

integrated U.S. Logistics Command.

All focus 

areas

Management 

oversight

• Implement the Beyond Goldwater-Nichols Phase I 

recommendation to merge much of the Joint Staff Directorate 

of Logistics with its Office of the Secretary of Defense 

counterpart, the Deputy Under Secretary of Defense 

(Logistics & Material Readiness) into an office that reports to 

both the Under Secretary for Technology, Logistics, and 

Acquisition Policy.

All focus 

areas

Management 

oversight

Evaluating the 

Security of the Global 

Containerized Supply 

Chain

RAND (2004)

Three 

recommendations 

suggest three 

complementary 

paths for improving 

the security of the 

global container 

supply chain while 

maintaining its 

efficiency:

• The public sector should seek to bolster the fault tolerance 

and resilience of the global container supply chain.

• The closure of a major port-for whatever reason-would have 

a significant effect on the U.S. economy. The federal 

government should lead the coordination and planning for 

such events for two reasons. First, the motivation of the 

private sector to allocate resources to such efforts is 

subject to the market failures of providing public goods. 

Second, the government will be responsible for assessing 

security and for decisions to close and reopen ports.

Distribution Policy

• Security efforts should address vulnerabilities along supplychain network edges.

• Efforts to improve the security of the container shipping 

system continue to be focused on ports and facilities 

(although many ports around the world still failed to meet 

International Ship and Port Security Code guidelines even 

after the July 1, 2004, deadline.) Unfortunately, the route 

over which cargo travels is vast and difficult to secure. 

Measures to keep cargo secure while it is en route are 

essential to a comprehensive strategy to secure the global 

container supply chain.

Distribution Planning

• Research and development should target new technologies 

for low-cost, high-volume remote sensing and scanning.

• Current sensor technologies to detect weapons or illegal 

shipments are expensive and typically impose significant 

delays on the logistics system. New detection technologies 

for remote scanning of explosives and radiation would 

provide valuable capabilities to improve the security of the 

container shipping system.

Distribution Planning

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Page 152 GAO-07-234 DOD’s High-Risk Areas

Final Report: IntraTheater Logistics 

Distribution in the 

CENTCOM AOR 

Army Science Board 

FY2004 Task Force 

(October 2004)

Specific 

recommendations 

made for theater 

opening and 

logistics 

operations, 

Deployment 

Distribution 

Operation Center, 

Radio Frequency 

Identification and 

in-transit visibility

• Doctrine and structure:

• Codify in joint doctrine the distinction between joint theater 

level logistics and Army/Land component logistics 

requirements and the need for a joint theater-level logistics 

commander.

• Document a Joint Theater Sustainment Command and 

assign to Combatant Commands.

All focus 

areas

Management 

oversight

• Implement useful practices of other services. All focus 

areas

Processes

• Don’t preclude early use of Logistics Civilian Augmentation 

Program.

All focus 

areas

Processes

• Complete a thorough business-based cost/benefit analysis of 

Radio Frequency Identification before spending more money 

on it.

All focus 

areas

Planning

Objective Assessment 

of Logistics in Iraq 

Deputy Under 

Secretary of Defense 

(Logistics and Materiel 

Readiness) and Joint 

Staff (JSJ4) 

Sponsored 

Assessment to Review 

the Effectiveness and 

Efficiency of Selected 

Aspects of Logistics 

Operations During 

Operation Iraqi 

Freedom (March 

2004)

Summary of 

recommendations:

• Make directive authority for the Combatant Command real. 

Joint doctrine must:

• Be prescriptive in its language, purging words like “should” 

and “attempt” and replacing them with specific direction.

• Be joint and comprehensive. It must explicitly address the 

joint organizational structure and staffing, develop and 

institutionalize joint processes and procedures, and 

specifically require, not assume, the necessary 

communications infrastructure and information tools to 

support this vision.

• Support an expeditionary logistics capability to enable rapid 

deployment and sustainment of flexible force structures in 

austere theaters around the globe.

• Reconcile with the emerging concepts of net-centric warfare 

and sense and respond logistics, balancing past lessons 

with the needs for the future. Joint doctrine must be based 

on today’s capabilities, not tomorrow’s promises.

• Continue to identify the combatant commander as the locus 

of control for logistics in support of deployed forces, and 

specify the tools, forces, processes, and technologies 

required from supporting commands.

Distribution Management 

oversight

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Page 153 GAO-07-234 DOD’s High-Risk Areas

• Develop a true expeditionary logistics capability.

• Develop logistics systems able to support expeditionary 

warfare. Logistics systems must be designed, tested, and 

developed to support a mobile, agile warfighter.

• Logistics capabilities need to be native to an expeditionary 

unit for swift and agile deployment. The people, equipment, 

and systems that accompany these small, cohesive units 

must be able to integrate data within the services and 

commands as well as among the coalition partners.

• Logistics communications planning and infrastructure are 

an integral part of any operation, and must be robust, fully 

capable, and deployable in both austere to developed 

environments. Planning and development of the required 

infrastructure must consider the issues of bandwidth, 

mobility, security and aggregation of logistics data.

Distribution Planning

• Retool the planning processes.

• A follow-on replacement for the current Time-Phased Force 

and Deployment Data /Joint Operation Planning and 

Execution System process is required, with the necessary 

improvements in task structures and planning speed. This 

process should directly drive sustainment planning, 

including acquisition and distribution decisions.

• The challenge of requirements identification and fulfillment 

in a deployed environment is a joint challenge. Planning 

tools must be developed that recognize and fuse the 

consumption of materiels and fulfillment of warfighter 

requirements across the joint force.

• The speed and flexibility of future operations demand that a 

closer and more dynamic relationship be developed with 

suppliers in the industrial base and prime vendor partners.

Distribution Planning, 

Processes

• Create an integrated theater distribution architecture

• Theater distribution capability must be embedded in a 

permanent organization within the theater or at least rapidly 

deployable to any global location. The balance of reserve 

forces and the implications of the activation cycle must be 

considered in the development of this organizational 

structure and manning.

• The need for a joint in-theater distribution cross dock, 

staging, and break-bulk operation must be explicitly 

recognized in every Combatant Command Area of 

Responsibility. Rapid maneuver and task reorganization 

precludes a 100% “pure pallet” shipment. Retrograde and 

reverse logistics capabilities must also be embedded.

• Leadership must recognize that the growth and 

development of “joint logisticians” who can operate and 

lead effectively in the theater environment will take time and 

effort, potentially altering established career progression 

plans.

Distribution Planning

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Page 154 GAO-07-234 DOD’s High-Risk Areas

• Resolve the technology issues.

• Rationalize logistics systems. Current battlefield and 

deployment realities include the existence of multiple 

systems for logistics support. DOD must complete and 

deploy an integrated architecture, including operational, 

systems, technical, and data elements to streamline the 

systems capabilities to the joint warfighter, and manage the 

portfolio of systems to eliminate those that cannot support 

the future state.

• Create visibility within logistics and supply systems that 

extends to the tactical units. Today’s warfighting mission 

includes mobile expeditionary engagements. Support 

systems need to include the ability to communicate and 

synchronize with rear support units and systems 24 hours a 

day, 365 days a year in both austere and developed 

environments.

• Ensure communications capability and availability for 

logistics, the environment. Logistics is an informationintensive function with constant requirements for updated 

information. Logistics support planning needs to include 

communications-level planning and should be completed 

before deployment.

Distribution Processes

• Development of the foundational role of the Distribution 

Process Owner.

• The Distribution Process Owner concept must be 

implemented swiftly and should recognize the potential 

resource requirements in the near- and mid-term to 

complete this task. This is a necessary first step, 

addressing distribution challenges, and should facilitate the 

establishment of an integrated, end-to-end logistics 

architecture, eliminating the confederation of stovepipes.

• Financial and transactional systems should not be a 

hindrance to going to war: They must be designed so that 

the transition from peace to war is seamless; the ability to 

employ these systems in a deployed environment must take 

precedence over garrison requirements. More emphasis 

needs to be placed on managing retrograde and 

repairables.

• Processes must be synchronized and integrated across the 

stovepipes.

Distribution Planning, 

Processes

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Page 155 GAO-07-234 DOD’s High-Risk Areas

• Synchronize the chain: from Continental United States to 

Area of Responsibility.

• Capacities across the distribution nodes and distribution 

links, and across the entire logistics network but particularly 

in theater, must be reviewed, understood, and actively 

managed. The ability to determine and manage practical 

and accurate throughput capacities for air and seaports, 

along with an understanding of the underlying commercial 

infrastructure is essential to future planning. The ability to 

evaluate possible scenarios for host nation support is also 

critical.

Distribution Processes

• Deploy Performance Based Logistics agreements more 

comprehensively.

• Standardize Performance Based Logistics implementation. 

Implementation of Performance Based Logistics must 

become more standard to prevent confusion with other 

contractor support services and activities. To the extent 

possible, common metrics and terms must be developed 

and applied.

• Implement Performance Based Logistics across total 

weapons systems.

• Support broad end-to-end application. Much integration and 

synchronization is required to ensure full system 

synchronization of performance metrics but the end 

capability of tracking total system performance to both cost 

and “power by the hour” is a significant potential 

advancement in warfighter support.

Distribution Processes, 

performance 

tracking

• Make Radio Frequency Identification real.

• Extend Radio Frequency Identification to the warfighter. 

Asset tracking system capabilities, infrastructure, and 

support must extend to the farthest reaches of the logistics 

supply chain, even in austere environments.

Asset 

Visibility

Planning

TRANSCOM-DLA 

Task Group

Defense Business 

Practice 

Implementation Board 

(June 17, 2003)

The task group 

developed 3 

summary 

recommendations:

• Do not combine U.S. Transportation Command and Defense 

Logistics Agency.

• Roles, missions and competencies of the two organizations 

are too diverse to create a constructive combination.

• Organizational merger would not significantly facilitate 

broader transformational objectives of supply chain 

integration.

• Both organizations perform unique activities/functions in the 

supply chain. The real problem is not that the two 

organizations are separate, but that their activities are not 

well integrated.

Distribution Management 

oversight

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Page 156 GAO-07-234 DOD’s High-Risk Areas

Source: Defense Science Board, RAND, Lexington Institute, Center for Strategic and International Studies, Army Science Board FY2004 

Task Force, Deputy Under Secretary of Defense and Joint Staff, Defense Business Practice Implementation Board.

• Elevate leadership for Department of Defense global 

supplies chain integration.

• Designate a new Under Secretary of Defense for Global 

Supply Chain Integration reporting directly to the Secretary 

of Defense.

• Ensure the Global Supply Chain Integration is a civilian with 

established credibility in the field of supply chain 

management.

• Establish the Global Supply Chain Integration’s 

appointment as a fixed term for a minimum of 6 years.

• Direct the U.S. Transportation Command and the Defense 

Logistics Agency to report to Global Supply Chain 

Integration.

• Create a working relationship for the Global Supply Chain 

Integration with the Chairman of the Joint Chiefs of Staff.

• Build the Global Supply Chain Integration’s staff from 

existing staffs in the Office of the Secretary of Defense, the 

U.S. Transportation Command, and the Defense Logistics 

Agency.

All focus 

areas

Management 

oversight

• Empower a Global Supply Chain Integrator with the required 

authority and control to effect integration. The Global Supply 

Chain Integrator should be granted authority to:

• Build end-to-end integrated supply chains through the 

establishment of policies and procedures.

• Enable privatization and partnering with global commercial 

distributors.

• Oversee program management decisions related to major 

systems vendor support.

• Establish/authorize organizations and processes to control 

flow during deployment/wartime scenarios.

• Control budgetary decisions affecting the U. S. 

Transportation Command, the Defense Logistics Agency, 

and the distribution budgets of the services.

All focus 

areas

Management 

oversight

(Continued From Previous Page)

Report title, 

author, date Recommendations Focus area Theme
Page 157 GAO-??-?? Document Name

Appendix VII

Comments from the Department of Defense ApendxiVI
Appendix VII

Comments from the Department of Defense

Page 158 GAO-??-?? Document Name
Page 159 GAO-07-234 DOD’s High-Risk Areas

Appendix VIII

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact William M. Solis (202) 512-8365

Acknowledgments In addition to the contacts named above, key contributors to this report 

were Thomas W. Gosling, Assistant Director, Susan C. Ditto, Amanda M. 

Leissoo, Marie A. Mak, and Janine M. Prybyla.

(350780)
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