DEFENSE LOGISTICS

Improvements Needed 

to Enhance DOD’s 

Management 

Approach and 

Implementation of 

Item Unique 

Identification 

Technology

Report to the Subcommittee on 

Readiness, Committee on Armed 

Services, House of Representatives

May 2012

GAO-12-482

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-482, a report to the 

Subcommittee on Readiness, Committee on 

Armed Services, House of Representatives 

May 2012

DEFENSE LOGISTICS

Improvements Needed to Enhance DOD’s 

Management Approach and Implementation of Item 

Unique Identification Technology

Why GAO Did This Study

IUID technology allows DOD to assign 

a unique number to an item and use 

that number to manage that item in a 

variety of logistics processes. In 2003, 

DOD began implementation of IUID 

and has estimated that it could improve 

the accountability and maintenance of 

its property and equipment and save 

from $3 billion to $5 billion per year. 

Also, integrating and sharing UII data 

across DOD’s enterprise information 

systems could enable DOD to track 

equipment as it moves between its 

components. GAO evaluated the 

extent to which DOD has (1) 

incorporated key elements of best 

management practices into its 

framework for IUID implementation, 

(2) marked items with IUID labels, and 

(3) developed the capability to share 

UII data across DOD in its enterprise 

information systems. GAO reviewed 

documents, interviewed cognizant 

officials, and reviewed DOD and GAO 

key practices for its analysis.

What GAO Recommends

GAO is making nine recommendations 

for enhancing DOD’s implementation 

of IUID. They include actions to 

improve DOD’s management of IUID 

implementation through best practices; 

enable the components to report 

complete data for marking items with 

IUID labels; and enable the 

components to share UII data across 

DOD enterprise information systems. 

DOD concurred with eight 

recommendations and partially 

concurred with one related to updating 

estimated financial costs and benefits 

of IUID implementation. DOD stated it 

will continue to identify such costs, but 

GAO continues to believe that updating 

benefits is also important, as discussed 

more fully in the report.

What GAO Found

The Department of Defense (DOD) has taken some steps to improve its 

approach to managing and implementing Item Unique Identification (IUID) 

technology, but has yet to incorporate some key elements of best management 

practices into its evolving framework for management of IUID implementation. 

These include internal controls and analysis of return on investment. DOD has

included certain internal controls, such as defining key areas of authority for IUID 

implementation, and it is revising policy to incorporate IUID. However, DOD does 

not have performance measures, such as reliable schedules for predicting when 

its enterprise information systems will be able to manage items using IUID data, 

or a full estimate of IUID’s cost and benefits. Without a management framework 

that includes such key practices, DOD has faced challenges in implementing 

IUID technology and may not be well positioned to achieve potential financial and 

nonfinancial benefits. 

DOD’s data on the number of items already in its inventory—legacy items—

marked with IUID labels to date is incomplete and DOD lacks assurance that 

contractors are sufficiently marking newly-acquired items and governmentfurnished property. The military services mark legacy items and have reported 

marking more than 2 million items. However, DOD does not have complete 

information on the total number of legacy items its components have marked and 

must mark in the future; does not have a full set of quantifiable goals or interim 

milestones corresponding to its IUID marking criteria—such as certain items that 

cost $5,000 or more—and does not use consistent criteria among its components 

to track progress. Without the components reporting complete and comparable 

data, DOD’s ability to assess progress in marking legacy items will remain 

limited. Also, DOD does not have assurance that contractors are sufficiently 

marking newly-acquired items and government-furnished property. DOD reported 

that as of January 2012, over 2,500 contractors had marked or registered over 

11 million items. However, DOD does not require the components to examine 

and report on all types of contracts that should include IUID marking clauses, nor 

does it have policies and procedures that provide for systematic assessment of 

the sufficiency of data contained in these items’ labels. Hence, DOD cannot know 

the full extent to which contractors are supplying IUID labels with the data 

needed to track items. 

DOD’s ability to track and share unique item identifier (UII) data across 

components is hampered by the lack of full integration of data into components’

enterprise information systems. DOD has made some progress but faces 

challenges as it proceeds with its integration plans. DOD is revising its supply

chain management policy and guidance to include IUID use, but has not fully 

defined requirements for using UII data, nor developed complete, integrated 

master schedules for integrating IUID, DOD-wide and within components’ 

systems. Such schedules enable agencies to predict the cost and timelines of 

their systems’ development. Without such requirements and schedules, DOD 

cannot adequately predict when the systems will be able to use UII data, or 

whether DOD will meet its fiscal year 2015 goal for using UII data to manage 

View GAO items throughout their life cycle. -12-482. For more information, 

contact Zina Merritt at (202) 512-5257 or

merrittz@gao.gov. 
Page i GAO-12-482 Defense Logistics

Letter 1 

Background 5

DOD Has Taken Some Steps toward Developing a Framework for 

Management of IUID Implementation, but Has Not Yet 

Incorporated Several Key Elements of a Comprehensive 

Management Approach 13

DOD and Contractors Have Made Some Progress Marking Items 

with IUID, but DOD Faces Challenges in Assessing Progress 

toward Goals and Ensuring That Items Are Sufficiently Marked 26

DOD Has Made Some Progress in Preparing to Share UII Data 

Enterprisewide, but Faces Challenges 40

Conclusions 45

Recommendations for Executive Action 46

Agency Comments and Our Evaluation 47

Appendix I Scope and Methodology 52

Appendix II Key IUID Policy Issuances and Implementation Events, Fiscal Year 

2003 to Fiscal Year 2011 55

Appendix III Comments from the Department of Defense 56

Appendix IV GAO Contact and Staff Acknowledgments 60

Related GAO Products 61

Tables

Table 1: Components’ Reported Spending on IUID Implementation 

in Fiscal Years 2004 through 2011 18

Table 2: Number of Legacy Items in Components’ Inventories That 

Meet DOD’s IUID Marking Criteria and That the 

Components Have Marked, as Of October 2011 30

Contents
Page ii GAO-12-482 Defense Logistics

Table 3: DOD’s Methods of Assessing Progress in Legacy Item 

Marking Using Categories Defined by Its IUID Marking 

Criteria, as of October 2011 34

Figures

Figure 1: Data Plate with IUID Data Matrix 8

Figure 2: Electronic Scanner Being Used to Read a Data Plate with 

an IUID Data Matrix 9

Abbreviations

DASD(SCI) Deputy Assistant Secretary of Defense for Supply Chain

 Integration

DFARS Defense Federal Acquisition Regulation Supplement 

DOD Department of Defense

IT information technology

IUID item unique identification

ODASD(SCI) Office of the Deputy Assistant Secretary of Defense 

 for Supply Chain Integration

OUSD(AT&L) Office of the Under Secretary of Defense for Acquisition,

 Technology and Logistics

UII unique item identifier

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Page 1 GAO-12-482 Defense Logistics

United States Government Accountability Office

Washington, DC 20548

May 3, 2012

The Honorable Randy Forbes

Chairman

The Honorable Madeleine Bordallo

Ranking Member

Subcommittee on Readiness

Committee on Armed Services

House of Representatives

The Department of Defense’s (DOD) inventory contains tens of millions of 

items, and it is a DOD priority to provide effective accountability over 

equipment and inventory items.1 One aspect of accountability is asset 

visibility, a key component of DOD’s management of its supply chain. 

DOD describes asset visibility as the ability to provide timely and accurate 

information on the location, quantity, condition, movement, and status of 

items in its inventory.2 Limitations in asset visibility—such as a lack of 

interoperability among information technology (IT) systems, or challenges 

in instituting new technologies for tracking assets3

 

1

Office of the Under Secretary of Defense (Comptroller) and Chief Financial Officer, 

Financial Improvement and Audit Readiness Guidance (Washington, D.C.: Dec. 2011). 

—make it difficult to 

obtain this information in a timely and accurate fashion. One of the tools 

that DOD plans to use to improve asset visibility is a technology called 

item unique identification (IUID). This technology allows DOD to assign a 

unique number to an individual item and then use that unique number to 

manage that item in a variety of logistics processes. For example, 

according to DOD, tracking assets with IUID technology could enhance 

logistical efficiency and improve DOD’s visibility of these assets. We have 

long reported that DOD supply chain management is a high-risk area, due 

in part to ineffective and inefficient inventory management practices and 

procedures, and challenges in achieving widespread implementation of 

2

GAO, Defense Logistics: DOD Needs to Take Additional Actions to Address Challenges 

in Supply Chain Management, GAO-11-569 (Washington, D.C.: July 28, 2011).

3

GAO-11-569. 

 
 

Page 2 GAO-12-482 Defense Logistics

key technologies aimed at improving asset visibility.4 We have also 

previously reported on challenges DOD has faced in instituting new 

technologies for improving asset visibility,5

In 2003, the Office of the Under Secretary of Defense for Acquisition, 

Technology and Logistics issued DOD’s first policy on IUID technology, 

directing DOD components—the Army, Navy, Marine Corps, Air Force, 

and Defense Logistics Agency

and with current technology 

and processes DOD continues to have difficulties in systematically 

identifying and managing individual items throughout their life cycles.

6

—to include IUID marking requirements in 

contracts for certain types of items. In 2004, this office established the 

requirement for DOD components to mark items already in their 

inventories—known as legacy items7

—with IUID labels.8 Contractors and 

components mark items with IUID by placing a label on the item.9

 

4

GAO, High-Risk Series: An Update, 

IUID 

GAO-11-278 (Washington, D.C.: Feb. 16, 2011). The 

title of this high-risk area was initially “DOD inventory management.” Subsequently, our 

work demonstrated that the problems adversely affecting support to the warfighter 

extended beyond DOD’s inventory management system to involve the entire supply chain. 

As a result, we subsequently modified the title to “DOD supply chain management.”

5

GAO, Defense Logistics: Efforts to Improve Distribution and Supply Support for Joint 

Military Operations Could Benefit from a Coordinated Management Approach, 

GAO-07-807 (Washington, D.C.: June 29, 2007).

6

In this report, we are addressing IUID implementation efforts carried out by the Army, 

Navy, Marine Corps, Air Force, and Defense Logistics Agency. According to DOD, these 

five components manage the majority of the items it plans to mark with IUID labels.

7

For the purposes of this report, we have separated qualifying items into two categories: 

legacy items and contractor-marked items. Items are marked with IUID labels either by 

DOD components or by contractors. If an item qualifies for IUID marking, the DOD 

components are responsible for marking the item if it is currently in their inventory (legacy 

items), while contractors are responsible for marking the item if they are delivering it to 

DOD, or are using property furnished to them by the government (contractor-marked 

items).

8

Principal Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics 

memorandum, Policy for Unique Identification (UID) of Tangible Personal Property Legacy 

Items in Inventory and Operational Use, Including Government Furnished Property (GFP)

(Dec. 23, 2004). 

9

For the purposes of this report, “IUID label” is used to refer to the following labeling 

processes: embedding information directly to the item’s surface, affixing through a data 

plate directly to the item, or printing on a label that is attached to the item. These labels 

vary in size and material, depending on the item to which they are attached and the 

durability they require to withstand the environmental conditions to which the item will be 

exposed.
 

Page 3 GAO-12-482 Defense Logistics

labels contain information printed on them, and also encoded in a twodimensional bar code image, referred to as a data matrix. These data 

matrices contain various pieces of information that—when combined—

make up a globally unique string of numbers referred to as the item’s 

unique item identifier (UII). DOD has established criteria for the types of 

items that are required to be marked with IUID labels.10

DOD has reported that the use of IUID could improve the accountability 

and maintenance of its components’ property and equipment. For 

example, by sharing UII data across the components’ IT systems, DOD 

could follow equipment as it moves between components. In addition, a 

component could use these data in its IT systems to more quickly identify 

items that require higher amounts of maintenance. By replacing such 

items with others that require normal amounts of maintenance, DOD 

could potentially save money. In addition, according to DOD’s IUID Task 

Force (task force),

According to 

DOD, it has tens of millions of items in its inventory that meet these 

criteria. It is DOD’s goal for its components to share UII data 

departmentwide, and the components are to use these data for tracking 

these items.

11 managing individual items by their unique 

identification numbers could save DOD an estimated $3 billion to $5 

billion per year. In 2009, we noted that DOD had marked only a fraction of 

the millions of legacy items in its inventory that required IUID labels; had 

experienced delays in integrating IUID with its IT systems; and could not 

adequately track the money it had spent on IUID.12

 

10DOD Instruction 8320.04, Item Unique Identification (IUID) Standards for Tangible 

Personal Property (June 16, 2008). In 2010, the Principal Deputy Under Secretary of 

Defense for Acquisition, Technology and Logistics revised certain aspects of the criteria in 

a memorandum entitled Item Unique Identification (IUID) of Tangible Personal Property—

Policy Refinement for Secondary Items in Use or in Inventory (Dec. 30, 2010).

In response to your 

request, we are reporting on the current status of DOD’s IUID 

implementation efforts. For this report, we are evaluating the extent to 

which DOD has (1) incorporated key elements of best management 

practices into its framework for IUID implementation; (2) marked legacy 

11The task force was formed at the direction of the Joint Logistics Board on July 7, 2009, 

and was tasked to assess IUID implementation across DOD. The Joint Logistics Board 

provides advice and recommendations regarding joint logistics concerns and issues at the 

level of the Office of the Secretary of Defense.

12GAO, Defense Logistics: Lack of Key Information May Impede DOD’s Ability to Improve 

Supply Chain Management, GAO-09-150 (Washington, D.C.: Jan. 12, 2009).
 

Page 4 GAO-12-482 Defense Logistics

items with IUID and taken steps to ensure that newly-acquired items and 

government-furnished property are sufficiently marked by contractors with 

IUID; and (3) developed the capability to share UII data across DOD in its 

enterprise information systems.

To determine the extent to which DOD has a comprehensive 

management approach for its implementation of IUID, we reviewed 

previously published DOD and GAO work to identify best management 

and cost-estimation practices.13

 

13DOD, Product Support Business Case Analysis Guidebook (Washington, D.C.: April 

2011); GAO, Drug Control: DOD Needs to Improve Its Performance Measurement System 

to Better Manage and Oversee Its Counternarcotics Activities, 

One of the best cost-estimation practices 

is that historical data are important for creating credible cost estimates. 

Because the task force used historical cost data in development of IUID 

cost estimates, we collected and reviewed the components’ estimates of 

historical IUID spending. In addition, we collected and reviewed the 

components’ fiscal year 2012 budget requests for IUID implementation, 

and the task force’s analysis of the potential costs and benefits of IUID 

implementation. To determine the extent to which the DOD components 

have marked legacy items with IUID and taken steps to ensure that 

newly-acquired items and government-furnished property are sufficiently 

marked by contractors with IUID, we reviewed DOD’s criteria for IUID 

marking and its plans for marking items. We also gathered data on the 

number of legacy items in components’ inventories, and how many had 

been marked as of October 2011. In addition, we reviewed the Defense 

Federal Acquisition Regulation Supplement clauses that require 

contractors to mark or register newly-acquired items and governmentfurnished property, and we gathered data from DOD on contractormarked items. To determine the extent to which DOD has developed the 

capability to share UII data across DOD in its enterprise information 

systems, we reviewed our previously published work on best practices for 

GAO-10-835 (Washington, 

D.C.: July 21, 2010); GAO, Cost Estimating and Assessment Guide, GAO-09-3SP 

(Washington, D.C.: Mar. 2, 2009); GAO, Afghanistan Security: U.S. Efforts to Develop 

Capable Afghan Police Forces Face Challenges and Need a Coordinated, Detailed Plan 

to Help Ensure Accountability, GAO-08-883T (Washington, D.C.: June 18, 2008); GAO, 

Tax Administration: IRS Needs to Further Refine Its Tax Filing Season Performance 

Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002); GAO, Standards for Internal 

Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999); 

GAO, Executive Guide: Effectively Implementing the Government Performance and 

Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996).
 

Page 5 GAO-12-482 Defense Logistics

developing schedules for these systems;14

We conducted this performance audit between May 2011 and May 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. More detailed information on 

our scope and methodology is provided in appendix I.

reviewed existing schedules 

for these systems; and reviewed other system planning documents. We 

reviewed a variety of DOD’s IUID implementation efforts and visited 

selected sites (based on a non-generalizable, judgmental sample) to 

observe key IUID activities; these sites represent each DOD component 

and were selected in part based on the type of IUID activity performed at 

each. For all our objectives, we interviewed officials knowledgeable about 

DOD’s IUID implementation efforts. We assessed the reliability of data 

provided by DOD by reviewing existing information about the data and the 

systems that produced the data and by interviewing agency officials 

knowledgeable about the data to determine the steps taken to ensure the 

accuracy and completeness of the data. We have determined that the 

data are sufficiently reliable for the purposes of reporting the findings in 

this study.

DOD has established criteria for the types of items that are required to be 

marked with IUID labels.15

 

14GAO, DOD Business Transformation: Improved Management Oversight of Business 

System Modernization Efforts Needed, GAO-11-53 (Washington, D.C.: Oct. 7, 2010).

15DOD Instruction 8320.04, Item Unique Identification (IUID) Standards for Tangible 

Personal Property (June 16, 2008). In 2010, the Principal Deputy Under Secretary of 

Defense for Acquisition, Technology and Logistics revised certain aspects of the criteria in 

a memorandum entitled Item Unique Identification (IUID) of Tangible Personal Property—

Policy Refinement for Secondary Items in Use or in Inventory (Dec. 30, 2010).

Background 

Criteria and Process for 

Using IUID Technology 
 

Page 6 GAO-12-482 Defense Logistics

For principal end items and contractor-marked secondary items, the 

criteria are as follows:16

1. all items for which the government’s unit acquisition cost is $5,000 or 

more;

2. items for which the government’s unit acquisition cost is less than 

$5,000, when identified by the requiring activity as DOD serially 

managed, mission-essential or controlled-inventory;17

3. when the government’s unit acquisition cost is less than $5,000 and the 

requiring activity determines that permanent identification is required; and

4. regardless of value, (a) any DOD serially managed subassembly, 

component, or part embedded within an item and (b) the parent item that 

contains the embedded subassembly, component, or part.

For secondary items in use or in inventory, the criteria are as follows:

1. all DOD serially managed items including, but not limited to: sensitive, 

critical safety, or pilferable items that have a unique item-level traceability 

 

16These criteria vary for different categories of inventory: there are currently four criteria 

for marking principal end items and new secondary items, and two criteria for marking 

secondary items in use or in inventory. According to DOD, end items are a final 

combination of end products, component parts, and/or materials that are ready for their 

intended use, such as a ship, tank, mobile machine shop, or aircraft, while secondary 

items include reparable components, subsystems, and assemblies other than major end 

items, consumable repair parts, bulk items and materiel, subsistence, and expendable end 

items (E.g., clothing and other personal gear).

17According to DOD, serially managed items are tangible items used by DOD that are 

designated by a DOD or Military Service Item Manager to be uniquely tracked, controlled, 

or managed in maintenance, repair, and/or supply by means of their serial number; 

mission-essential items are items that are designated as mission-essential on the basis of 

the composite effect of that item on the overall military mission on the basis of the mostcritical significant application of the item; and controlled-inventory items are those items 

that are designated as having characteristics that require that they be identified, 

accounted for, segregated, or handled in a special manner to ensure their safeguard and 

integrity. 
 

Page 7 GAO-12-482 Defense Logistics

requirement at any point in their life cycle; and all depot-level reparable 

items;18

2. any other item that the requiring activity decides requires unique itemlevel traceability at any point in their life cycle.

and

In order to use IUID technology, four processes must be completed. First, 

each item that qualifies for IUID marking—according to DOD’s criteria—is 

labeled. IUID labels often contain some human-readable information, 

printed as text on the label. The amount and type of human-readable 

information varies,19 but it often contains key details about the item, such 

as its National Stock Number,20

 

18According to DOD, sensitive items are items that require a high degree of protection and 

control due to statutory requirements or regulations, such as narcotics and drug-abuse 

items; precious metals; items that are of a high value, highly technical, or a hazardous 

nature; and small arms, ammunition, explosives, and demolition material. Critical safety 

items are parts, assemblies, installations, or production systems with one or more critical 

or critical safety characteristics that, if missing or not conforming to the design data, 

quality requirements, or overhaul and maintenance documentation, would result in an 

unsafe condition that could cause loss or serious damage to the end item or major 

components, loss of control, uncommanded engine shutdown, or serious injury or death to 

personnel. Pilferable items are items that have a ready resale value or application to 

personal possession and that are, therefore, especially subject to theft. Depot-level 

reparable items are a reparable item of supply that is designated for repair at depot level 

or that is designated for repair below the depot level, but if repair cannot be accomplished 

at that level, shall have its unserviceable carcass either forwarded to the depot for repair 

or condemnation or reported to a materiel management activity for disposition.

part number, or serial number. These are 

categories that DOD components use to identify items in their inventories. 

In certain cases, items do not have labels attached to them, and instead 

are labeled through a process known as direct part marking, in which the 

human- and machine-readable information are applied directly to the 

item. In addition, each individual label contains information about the 

item, encoded in a machine-readable, two-dimensional image printed on 

the label. Known as a data matrix, this image contains various pieces of 

information encoded in a two-dimensional bar code. Figure 1 shows a 

data plate with an IUID data matrix in the lower right-hand corner.

19According to DOD, the item’s acquiring activity has the prime responsibility for 

determining the most effective use of human-readable and machine-readable information 

on an item. See DOD MIL-STD-130N, Standard Practice for the Identification Marking of 

U.S. Military Property (Dec. 17, 2007).

20According to DOD, a National Stock Number is a13-digit number that consists of a 4-

digit code—identifying an item in the federal supply classification system—and a 9-digit 

national item identification number.
 

Page 8 GAO-12-482 Defense Logistics

Figure 1: Data Plate with IUID Data Matrix

When combined, the pieces of information encoded in the data matrix 

make up a globally unique string of numbers referred to as the item’s UII 

number. To ensure that all items marked with IUID labels are globally 

unique, DOD requires that UII numbers be formatted according to 

international standards for syntax format. Further, UII numbers must be 

entered into DOD’s IUID Registry. The registry is a database intended to 

ensure that each UII number is unique. An item’s UII number may be 

entered into the registry in one of two ways: the item is marked with an 

IUID label and the UII number associated with that label is registered, or 

DOD or contractors can establish a “virtual” UII number. According to 

DOD guidance, these virtual UII numbers are assigned to an item that 

has not yet been marked with an IUID label. The guidance states that a 

virtual UII number may be used due to economic or logistical 

considerations. For example, a DOD component may virtually mark one 

item that is embedded in another item, so that DOD does not have to 

remove the embedded item solely to mark the embedded item. For legacy 

items already in a component’s inventory, marking and registration are 

the responsibility of the component. For items that are not yet in DOD’s 

inventory and are being delivered to a component—or for property 

furnished by the government to a contractor—it is the responsibility of the 

contractor to mark or register items. If the UII number in a data matrix is 

improperly formatted, it cannot be used to properly identify the item, and 

the data matrix must be replaced.

Second, personnel must electronically read the label’s data matrix, the 

two-dimensional bar code in which the item’s UII number is encoded. 
 

Page 9 GAO-12-482 Defense Logistics

There are several types of tools than can be used for this process, 

including hand-held scanners and web-based software that can read an 

image of a data matrix. Because data matrices cannot be read visually, 

electronically reading the matrices is the only way to access the UII data 

they contain. Figure 2 shows an electronic scanner being used to read a 

data plate with an IUID data matrix.

Figure 2: Electronic Scanner Being Used to Read a Data Plate with an IUID Data 

Matrix

Third, UII data from a data matrix is passed to an IT system. According to 

DOD officials, there are a variety of IT systems that have a requirement to 
 

Page 10 GAO-12-482 Defense Logistics

use UII data,21 and some of these systems currently have the capability to 

store UII data. Examples include the Army’s Property Book Unit Supply 

Enhanced, the Navy’s Configuration Data Managers Database–Open 

Architecture, the Marine Corps’ Joint Asset Maintenance Integrated 

Support System, and the Air Force’s Automated Inventory Management 

Tool. DOD officials have explained that some of these systems operate in 

“pockets” within the components, and do not share UII data across the 

components or DOD-wide. For instance, the Air Force’s Automated 

Inventory Management Tool contains UII data that is specific to an Air 

Force installation, and does not have the capability to share these data 

with other installations. DOD’s goal is for the components to share UII 

data across each of their individual IT systems, and DOD-wide, between 

components. Within DOD, this type of data sharing is characterized as 

“enterprisewide.” In order to accomplish enterprisewide data sharing of 

UII data, the components intend to use certain IT systems referred to as 

Enterprise Resource Planning systems. These automated systems 

consist of multiple, integrated functional modules that perform a variety of 

business-related tasks, such as general-ledger accounting, payroll, and 

supply chain management. DOD officials have explained that certain 

Enterprise Resource Planning systems will provide the capability to share 

UII data enterprisewide, and in this report we are focusing on DOD efforts 

to integrate IUID with these systems.22

 

21The DOD Investment Review Board has established IUID conditions on certain types of 

IT systems that must be satisfied before these systems can be funded. 

Once UII data is uploaded into an 

IT system, such as an Enterprise Resource Planning system, DOD 

intends to store UII data and share these data within and across DOD 

organizations. In addition, IT systems can use software to analyze these 

22DOD operates a number of Enterprise Resource Planning systems. According to DOD, 

its components plan to use the following Enterprise Resource Planning systems to share 

UII data enterprisewide: The Army plans to use its Logistics Modernization Planning 

System and Global Combat Support System. The Marine Corps plans to use its Global 

Combat Support System. The Air Force plans to use its Expeditionary Combat Support 

System; however, according to Air Force officials, the system is currently being 

reevaluated by the Air Force and the Office of the Secretary of Defense. The Navy was 

planning to use its Navy Enterprise Resource Planning System for Supply. However, in 

October 2011, senior Navy officials stated that the Navy did not have plans to integrate 

IUID with the system. As of April 2012, the Navy stated that it had not integrated IUID with 

the system, and while the latest version of the system’s software had some IUID 

capabilities, the Navy had not upgraded to that version, assessed whether these 

capabilities match DOD IUID requirements, or funded such upgrades. The Defense 

Logistics Agency plans to use its Distribution Standard System. 
 

Page 11 GAO-12-482 Defense Logistics

data to improve logistics processes, such as property accountability and 

maintenance,23

Fourth, to achieve IUID technology’s potential benefits in many logistics 

processes, DOD personnel will have to periodically repeat the previous 

steps, including scanning the matrix on an item’s label; uploading the UII 

data into an IT system; and then storing, sharing, and analyzing the data 

as required by the specific logistics process. For example, in a propertyaccountability process that we observed, each time a weapon was 

checked in or out of an armory, personnel scanned the label’s data 

matrix; the matrix’s UII number was uploaded into an electronic property 

book; and software then matched the weapon’s UII number with data that 

identified the weapon’s owner. For many of the logistics processes in 

which IUID could be used, these steps would be repeated throughout an 

item’s life cycle.

in DOD’s supply chain.

It is DOD’s goal for its components to share UII data departmentwide, and 

the components are to use these data for unique item tracking. The Office 

of the Deputy Under Secretary of Defense for Logistics and Materiel 

Readiness—under the Office of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics—is the focal point for 

implementing IUID capabilities for DOD’s supply chain materiel. As of July 

2011,24

 

23According to DODI 5000.64, property accountability should be enabled by IUID for 

identification, tracking, and management, in accordance with DOD Directive 8320.03, 

Unique Identification (UID) Standards for a Net-Centric Department of Defense (Mar. 23, 

2007), which, among other things, establishes policy and criteria related to use of unique 

item identification in DOD’s IT systems.

that office delegated the responsibility for programmatic lead of 

DOD-wide IUID implementation to the Office of the Deputy Assistant 

Secretary of Defense for Supply Chain Integration (ODASD[SCI]). 

According to component officials, each component has multiple 

organizations carrying out IUID implementation tasks, such as creating 

policy and defining requirements; planning and budgeting for 

implementation of policy; and executing requirements. In addition, 

according to component officials, each component has an office that 

24According to DOD officials, before the Deputy Assistant Secretary of Defense for Supply 

Chain Integration (DASD[SCI]) assumed the programmatic lead for DOD-wide 

implementation of IUID, the Office of Defense Procurement and Acquisition Policy—within 

the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics—

coordinated IUID implementation efforts within the Office of the Secretary of Defense. 

Key Organizations 

Involved in IUID 

Implementation 
 

Page 12 GAO-12-482 Defense Logistics

maintains the lead in IUID implementation policy. These respective offices 

are:

• Army—the Office of Life Cycle Logistics Policy, in the Office of the 

Assistant Secretary of the Army for Acquisition, Logistics and 

Technology;

• Navy—the Office of the Assistant Secretary of the Navy for Research, 

Development, and Acquisition;

• Marine Corps—the Office of the Director, Logistics Plans, Policies, 

and Strategic Mobility, in the office of the Deputy Commandant of the 

Marine Corps for Installations and Logistics;

• Air Force—the Directorate of Transformation, Deputy Chief of Staff for 

Logistics, Installations and Mission Support; and

• Defense Logistics Agency—the Office of Logistics Management 

Standards.

Also, to facilitate intercomponent communication and collaboration, the 

components have established a number of working groups and other 

bodies to facilitate coordination on IUID implementation.

The Joint Logistics Board determined that there were ambiguities 

concerning DOD’s IUID policy, requirements, and proposed value across 

DOD, as well as wide variation in the components’ implementation 

strategies, execution, and funding of IUID implementation. As a result, in 

2009 the board chartered the task force, led by the Assistant Deputy 

Under Secretary of Defense for Maintenance Policy and Programs, and 

including representatives from the components and the Office of the 

Secretary of Defense. The task force had several goals, to include 

assessing the value of IUID within DOD’s supply chain, and 

recommending changes to policy and guidance to adequately align IUID 

implementation with the task force’s evaluation of IUID’s value. The task 

force issued a report with recommendations in June 2010 that estimated 

financial costs of IUID implementation, as well as financial and 

nonfinancial benefits. Specifically, the report stated that DOD could begin 

to achieve net financial benefits of IUID implementation in fiscal year 

2017. In addition, the task force recommended modifying some of DOD’s 

IUID-marking criteria.25

 

25DOD, Logistics Item Unique Identification Task Force, Implementation of Item Unique 

Identification in DOD Logistics Processes (Washington, D.C.: June 8, 2010).

Subsequently, the Office of the Under Secretary 

DOD’s IUID Task Force 
 

Page 13 GAO-12-482 Defense Logistics

of Defense for Acquisition, Technology, and Logistics modified DOD’s 

IUID marking criteria to implement some of the task force’s recommended 

changes, issuing the modification in December 2010.26 In addition, the 

task force issued a revision to its initial estimates, lowering its cost 

estimate. The revision was issued in March 2011.27 DOD’s key IUID 

policy issuances and implementation events from fiscal year 2003 to 

fiscal year 2011 are summarized in appendix II.

DOD has taken some steps to improve its approach to managing and 

implementing IUID technology, but has yet to incorporate some key 

elements of best management practices into its evolving framework for 

management of IUID implementation. These include internal controls and 

analysis of return on investment. According to GAO’s previously 

published work, internal controls are important in helping agencies 

improve operational processes and implement new technological 

developments.28 Internal controls include an organizational structure that 

clearly defines key areas of authority; policies that enforce management 

directives; goals; and performance measures.29 In addition, GAO and 

DOD have identified best practices for analyzing a program’s return on 

investment. The practices identified by GAO include providing estimates 

of all potential costs and the timing of costs.30 DOD has identified best 

practices that include analyzing benefits, and making recommendations, 

based on relevant evaluation criteria.

31

 

26Principal Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics 

Memorandum, Item Unique Identification (IUID) of Tangible Personal Property—Policy 

Refinement for Secondary Items in Use or In Inventory (Dec. 30, 2010).

DOD has defined key areas of 

authority and responsibility for IUID implementation, and is updating 

policy to incorporate changes required by the implementation of IUID. 

However, DOD has not incorporated other key elements of best 

management practices into its evolving framework for management of 

IUID implementation. For example, DOD lacks such key information as 

27DOD, Logistics Item Unique Identification Task Force, Implementation of Item Unique 

Identification in DOD Logistics Processes—an Update (Washington, D.C.: Mar. 11, 2011).

28GAO/AIMD-00-21.3.1. 

29GAO/AIMD-00-21.3.1. 

30GAO-09-3SP. 

31DOD, Product Support Business Case Analysis Guidebook (Apr. 2011). 

DOD Has Taken Some 

Steps toward 

Developing a 

Framework for 

Management of IUID 

Implementation, but 

Has Not Yet 

Incorporated Several 

Key Elements of a 

Comprehensive 

Management 

Approach 
 

Page 14 GAO-12-482 Defense Logistics

quantitatively defined goals for marking legacy items; performance 

measures, such as reliable schedules for predicting when its Enterprise 

Resource Planning systems will have the capability to manage items 

using UII data; and a full estimate of IUID’s cost and benefits. Without a 

management framework that includes quantitatively defined goals, 

performance measures, and a more complete estimate of all associated 

costs and benefits, DOD has faced challenges in implementing IUID 

technology and runs the risk of not fully realizing its potential benefits, 

including financial benefits by fiscal year 2017.

ODASD(SCI) and the components have taken some steps that could 

improve DOD’s management approach for IUID implementation. 

According to the DASD(SCI), his office is in the process of developing a 

framework for managing and implementing IUID, which we reviewed. As 

of March 2012, this framework consisted of two elements. The first 

element is a set of July 2011 briefing slides titled “IUID Game Plan and 

Actions Underway.” The slides include a summary of actions that DOD 

needs to take in key areas of IUID implementation such as the marking of 

items, the use of IUID in business processes, and modifying IT systems 

to incorporate IUID. These slides also indicate that ODASD(SCI) is 

following some best practices of a comprehensive management 

framework. In the slides, DOD clearly defines the Office of the Assistant 

Secretary of Defense for Logistics and Materiel Readiness as the DOD 

organization responsible for leading IUID implementation activities. As 

previously discussed, that office delegated the responsibility to 

ODASD(SCI). In addition, the slides discuss DOD policies that enforce 

management directives concerning IUID implementation and that are 

being updated to incorporate IUID. The second element of DOD’s 

framework for managing and implementing IUID is a January 2012 

timeline listing several planned implementation actions from fiscal years 

2012 through 2017.

The components have also taken some steps toward improving their 

management of IUID implementation. The Army and Marine Corps are 

using some quantifiable goals—and certain IUID marking criteria—to 

track the progress of their legacy marking efforts. In addition, officials 

from some components told us that they had inspected some newlyacquired items to determine whether these items were sufficiently marked 

with IUID labels. For the items they reviewed, those inspections helped to 

detect problems in contractors’ marking of items. Further, the Marine 

Corps and Air Force are planning to integrate IUID elements into 

implementation schedules for their Enterprise Resource Planning 

systems. 

DOD Has Taken Several 

Steps That Could Improve 

Its Management of IUID 

Implementation 
 

Page 15 GAO-12-482 Defense Logistics

DOD has not fully incorporated internal controls, such as quantifiable 

goals or metrics to assess progress, into its framework for management 

of IUID implementation. An agency’s establishment of internal controls is 

key in helping an agency meet its goals, and we have previously reported 

that in the absence of quantifiable targets, it is difficult for officials to 

assess whether goals were achieved, because comparisons cannot be 

made between projected performance and actual results.32

Another key internal control is the use of performance measures, and we 

have previously reported that such metrics for a program’s main efforts—

including interim milestones and schedules—give decision makers the 

information needed to assess progress and estimate realistic completion 

dates.

DOD has 

identified tens of millions of legacy items that meet its IUID marking 

criteria, but has not developed a full set of quantifiable goals or metrics to 

assess its progress in marking these items. The task force has stated that 

DOD will not achieve IUID’s potential benefits unless DOD marks a 

“significant” number of these legacy items, and an ODASD(SCI) official 

stated that DOD needs to mark a “majority” of these legacy items by fiscal 

year 2015. However, the task force and ODASD(SCI) have not 

quantitatively defined the terms “significant” or “majority,” respectively. 

Further, according to the task force report, the number of legacy items 

DOD will mark is an important factor in determining when DOD may begin 

to realize IUID’s projected financial benefits. Therefore, without metrics to 

quantify its progress in marking legacy items, it is unclear whether DOD 

will begin to realize these benefits by fiscal year 2017, the year in which 

the task force report projects these benefits may begin.

33

 

32

In its framework for managing and implementing IUID, 

ODASD(SCI) has an IUID timeline that contains targets for several types 

of IUID implementation efforts, including requirements and business 

rules; legacy-item marking; and Enterprise Resource Planning system 

updates. In addition, the DASD(SCI) stated that he has asked 

components to provide his office with IUID implementation plans that 

contain interim milestones for the marking of legacy items. However, 

ODASD(SCI) and the components have not fully developed interim 

milestones, schedules, or metrics to assess DOD’s progress in IUID 

implementation. For example, neither ODASD(SCI) nor the components 

GAO-10-835. 

33GAO-11-53 and GAO-08-883T. 

DOD Has Not Fully 

Incorporated Certain 

Internal Controls into Its 

Framework for 

Management of IUID 

Implementation 
 

Page 16 GAO-12-482 Defense Logistics

have adequate schedules for the integration of IUID with their Enterprise 

Resource Planning systems.

We have previously reported that an important element of measuring 

performance is the collection of data that are complete and consistent 

enough to document performance and support decision making.34 As 

previously discussed, DOD has established IUID marking criteria for 

different categories of inventory. We found that some components used 

these criteria to track their progress in marking legacy items; however, 

others did not. The DASD(SCI) stated that he has asked the components 

to periodically report on their progress in marking legacy items to his 

office. However, he stated that he has not asked the components to use 

DOD’s IUID marking criteria in their reporting.

We have previously reported that another key element of best 

management practices is analysis of return on investment. A complete 

analysis on the return on investment consists of several best practices 

identified in previously published GAO and DOD work. The practices 

identified by GAO include providing estimates on all potential costs and 

the timing of costs.35 DOD has identified best practices for analyzing 

benefits, and making recommendations, on the basis of relevant 

evaluation criteria as a best practice.36 In addition, GAO has reported that 

performing a sensitivity analysis of these estimates demonstrates the 

effects on the cost and schedule of an assumption that may no longer be 

valid.37

 

34

DOD began implementation of IUID in fiscal year 2003, and in 

fiscal year 2009 the task force estimated some costs and benefits of 

implementation. The task force report discusses how IUID could improve 

DOD’s logistical efficiency and effectiveness. In addition, the report 

provides a “rough order of magnitude” assessment of certain costs and 

GAO/GGD-96-118. 

35GAO-09-3SP. 

36DOD, Product Support Business Case Analysis Guidebook (Apr. 2011). 

37GAO-09-3SP. 

DOD Has Not Completed a 

Full Analysis of IUID’s 

Return on Investment 
 

Page 17 GAO-12-482 Defense Logistics

financial benefits of implementation;38

DOD’s components could not provide complete historical and planned 

spending data for IUID implementation, and ODASD(SCI) has not tracked 

the components’ spending or budget requests for IUID. According to GAO 

best practices for cost estimation, historical data on the cost of a system 

is important for projecting a credible estimate of future costs.

and projects when DOD may begin 

to realize financial benefits. However, the components, ODASD(SCI), and 

the task force did not fully follow certain best practices for the estimation 

of costs and financial benefits. As a result, DOD does not have a full 

analysis of IUID’s potential return on investment.

39

Although the components were not able to provide complete historical 

spending information, according to the information they provided, the 

components spent at least $219 million on IUID implementation from 

fiscal year 2004 through fiscal year 2011. Officials explained that they 

spent this money on a variety of IUID implementation efforts, including the 

acquisition of marking equipment, such as IUID label printers and 

scanners; the marking of legacy items; and the development of software 

to support marking processes. Table 1 summarizes the five components’ 

reported historical spending on IUID over 8 fiscal years.

Although 

the Marine Corps and Air Force provided us with complete estimates of 

the amount of money they have spent in their IUID budgets, the Army and 

Navy provided incomplete estimates of their IUID spending, and the 

Defense Logistics Agency did not provide an estimate. These 

components were not able to provide complete estimates because they 

do not track IUID spending as a distinct budget category. In addition, 

ODASD(SCI) does not track the five components’ historical spending on 

IUID.

 

38According to GAO’s previously published work on cost estimation, a rough order of 

magnitude can be developed when a quick estimate is needed and few details are 

available. Because it is developed from limited data and in a short time, a rough order of 

magnitude analysis should never be considered a budget-quality cost estimate. See 

GAO-09-3SP. 

39GAO-09-3SP. 

DOD Has Not Fully Estimated 

Costs of IUID Implementation
 

Page 18 GAO-12-482 Defense Logistics

Table 1: Components’ Reported Spending on IUID Implementation in Fiscal Years 

2004 through 2011 

Current dollars in millions

Fiscal 

year Army Navy 

Marine 

Corps Air Force 

Defense 

Logistics 

Agency Total

2004 0.2 Did not 

report

0.0 0.0 Did not 

report

0.2

2005 0.2 Did not 

report

0.0 0.0 Did not 

report

0.2

2006 0.8 Did not 

report

0.0 12.3 Did not 

report

13.1

2007 0.6 3.6 0.0 14.1 Did not 

report

18.3

2008 0.6 8.5 7.0 23.1 Did not 

report

39.2

2009 2.2 3.0 27.0 24.4 Did not 

report

56.6

2010 1.9 Did not 

report

23.2 33.4 Did not 

report

58.5

2011 2.5 Did not 

report

21.1 9.3 Did not 

report

32.9

Total 9.0 15.1 78.3 116.6 NA 219

Source: GAO analysis of DOD data.

a

a

The components’ total reported spending in fiscal year 2011 dollars is $226.1 million.

The Army provided an estimate of the money spent on IUID 

implementation in its depots over this period but, as an official explained, 

could not provide an estimate of IUID spending outside of its depots 

because it does not track IUID funding as a distinct budget category. The 

Navy was also able to report on a portion of its IUID spending that was 

executed by one office within the Navy, but Navy officials stated that 

because the Navy has not funded IUID implementation in a centralized 

fashion, the Navy cannot track how much other Navy offices have spent 

in implementing IUID. An official from the Defense Logistics Agency 

explained that while the agency does spend money on IUID 

implementation, it does not have a distinct budget for IUID 

implementation, and so cannot specifically track its IUID costs.

With regard to future spending, the Marine Corps and the Air Force 

reported that they requested a total of $19.2 million (Marine Corps: $10.8 

million; Air Force: $8.4 million) for IUID implementation in fiscal year 

2012. However, the Army and Navy were unable to provide their budget 
 

Page 19 GAO-12-482 Defense Logistics

requests for fiscal year 2012 because they do not budget for IUID 

spending as a distinct budget category. According to officials from the 

Defense Logistics Agency, an office within the agency submitted a 

request for IUID implementation spending, but this request was not 

included in the agency’s final fiscal year 2012 budget request.

In addition to the components not fully tracking their spending on IUID 

implementation, ODASD(SCI) does not track the components’ spending 

on IUID implementation. ODASD(SCI) explained that the office uses a set 

of “scorecards” to track the components’ IUID implementation efforts. In 

2011, ODASD(SCI) received two sets of scorecards, the first in January 

and the second in November. In our review of these scorecards, we found 

that the components do not report information on either the amount of 

money they have spent on IUID implementation, or the amount of money 

that they plan to request for IUID implementation.

In its report, the task force estimates that DOD would need to invest $3.2 

billion to realize the benefits of IUID implementation.40

• The task force could not completely estimate the costs associated 

with how individual logistics processes would need to change to 

incorporate the use of IUID technology, because it did not have 

sufficient information about these changes. As a relatively new 

technology, IUID is not widely used in existing DOD logistics 

processes. That means that the components will have to modify 

existing processes to use IUID. DOD has made some progress in 

defining the type of logistics processes that would need to change to 

incorporate IUID. For example, according to ODASD(SCI), DOD 

intends to modify 10 different categories of logistics processes, such 

as receipt and distribution of items. DOD has made some progress in 

planning for such modifications. For example, the Army Materiel 

Command has determined that 11 of its logistics processes will 

incorporate IUID functionality through one of the Army’s Enterprise 

This estimate 

includes several types of costs, such as the cost of marking legacy items 

and the labor required to perform various implementation tasks. However, 

the estimate does not include the following four costs:

 

40According to officials from the Office of the Under Secretary of Defense for Acquisition, 

Technology, and Logistics; the task force; and components, the estimates of the costs and 

benefits of IUID implementation that have been produced by the task force are the only 

estimates of their kind within DOD.
 

Page 20 GAO-12-482 Defense Logistics

Resource Planning systems. However, according to Army officials, the 

Army has not yet defined the distinct steps at which personnel will use 

IUID, within its logistics processes. Further, according to DOD 

officials, the components have not determined the full number or type 

of business processes within these categories that need to be 

modified. In addition, in their 2011 scorecard updates, the Army, 

Marine Corps, and Air Force reported challenges or concerns with 

progress in defining how their business processes will require 

modification because of IUID. Without information on the number of 

logistics processes that will require modification and the specific steps 

that will need to change to accommodate the incorporation of IUID, 

the task force could not have completely estimated costs. Several 

DOD officials we spoke with agreed with this assessment, explaining 

that without this information, the task force was not able to completely 

estimate IUID implementation costs.

• The task force report states that the task force did not include the cost 

of modifying Enterprise Resource Planning systems to share and use 

UII data because the functionality to use UII data is inherent in these 

systems. However, if DOD is to achieve benefits from IUID, Enterprise 

Resource Planning systems must have the ability to share and 

analyze UII data, and according to DOD officials the ability to perform 

these two functions is not always inherent in these systems. For 

example, the core software package for one of the Army’s Enterprise 

Resource Planning systems has the capability to accept UII data, but 

in its current version this capability is not activated. For the system to 

accept UII data, the capability must be activated in a future update. 

According to DOD officials, such modifications to Enterprise Resource 

Planning systems can incur costs. Navy officials explained that the 

task force report does not include the additional cost that would be 

required to modify the Navy’s systems to communicate with other 

components’ systems, or to analyze UII data to improve logistics 

processes. By not including certain costs to modify the relevant 

Enterprise Resource Planning systems, the task force may have left 

out a substantial set of costs.

• The report did not include the full cost of marking newly-acquired

items with IUID. Because the Defense Federal Acquisition Regulation 

Supplement contract clauses provide that contractors are responsible 

for marking or registering items, contractors are likely to build the cost 

of marking items into their contract pricing. Therefore, while contractor 

personnel are marking the items in question, this cost is borne by 

DOD to the extent that the contractor has built the cost of marking 

qualifying items into the costs of the goods or services provided. 

According to component officials, the components do not know how 

much of a newly-acquired item’s cost is attributable to contractors’ 
 

Page 21 GAO-12-482 Defense Logistics

marking of that item. However, according to estimates in the task 

force report and provided by the Air Force, contractors’ average cost 

to mark a newly-acquired item is about $30 to $50. On the basis of 

GAO analysis of information from the DOD registry on the number 

and rate of contractors’ registration of newly-acquired items in 

January 2012, IUID marking by contractors could result in 

approximately $27 million to $45 million in marking costs to the 

components per year. This cost is not included in the task force’s 

estimate.

• As previously discussed, an IUID label on an item may contain 

human-readable information, such as the item’s National Stock 

Number. In addition, the label has a data matrix that contains 

information about the labeled item. For example, the matrix contains 

various pieces of information that make up the globally unique string 

of numbers referred to as the item’s UII number. Contractors have 

delivered items to DOD that have labels with deficient data matrices. If 

a label has a deficient data matrix, DOD cannot use the label’s data 

matrix to track or manage items. The task force did not include the 

cost to the components of fixing these deficient IUID data matrices on 

contractor-marked items. Although component officials were not able 

to estimate the financial cost of fixing these data matrices, officials 

explained that there is productivity loss associated with fixing them. 

For example, according to Army and Marine Corps officials, their 

verification of a deficient matrix’s missing or incorrect data requires an 

average of 10 to 15 minutes, and sometimes requires significantly 

more time, when additional research into the item is needed. This 

investment of time, multiplied by many thousands of deficient data 

matrices, may result in a substantial amount of lost productivity for 

DOD components’ personnel.

The task force report assessed the potential benefits of IUID 

implementation by examining three categories of logistics processes: 

intensive item management, property accountability, and product life 

cycle management. According to the task force’s analysis, DOD’s 

implementation of IUID is unlikely to result in substantial financial benefit 

in the categories of intensive item management or property accountability. 

However, the report did discuss potential nonfinancial benefits of IUID 

implementation in these two categories. The report states that the use of 

IUID in intensive item management could enable strict accountability and 

control of DOD’s most critical assets—such as nuclear weapon–related

material—across parts of DOD’s supply chain, enhancing the security and 

safety of such assets. Moreover, according to the report, implementing 

IUID into property-accountability processes on the enterprise level could 

enable DOD to track equipment assets throughout their life cycle. The 

DOD May Not Have 

Appropriately Estimated 

Financial Benefits
 

Page 22 GAO-12-482 Defense Logistics

report explains that one benefit of tracking on the enterprise level is that 

DOD may be able to more quickly address equipment losses. Further, 

according to an official from the Office of Defense Procurement and 

Acquisition Policy, the use of IUID in DOD’s logistics processes could 

lead to improved data quality that may result from automatically entering 

data into IT systems, as opposed to manually entering data.

While the report does not estimate substantial savings through the 

integration of IUID with intensive item management or propertyaccountability processes, the report estimates that IUID implementation 

could result in annual savings of $3 billion to $5 billion through the 

implementation of IUID in a collection of maintenance processes referred 

to as product life cycle management.41

The task force estimated achieving substantial financial benefits from 

product life cycle management, but it used a methodology for estimating 

these benefits that may not be appropriate to the scale and complexity of 

DOD’s IUID implementation efforts. The IUID task force report states that 

projected savings will gradually increase as implementation of IUID 

spreads throughout DOD and, by fiscal years 2016 to 2017, DOD may 

reach a break-even point at which its annual financial savings would 

equal its annual spending for implementation of IUID. After fiscal year 

2017, the report projects that DOD may pass the break-even point, and 

could begin to realize the annual savings of $3 billion to $5 billion.

According to our review of the 

report and a task force official, the key to achieving savings through 

product life cycle management is to track and manage individual items by 

a unique identifier. That approach is called serialized item management. 

According to DOD officials and the task force report, DOD can achieve 

serialized item management by using any type of unique identifier, 

including a traditional serial number; a UII number; or a unique identifier 

provided by a different type of technology, such as a radio frequency 

identification device or a contact memory button.

To develop its estimate of cost savings through the use of serialized item 

management in product life cycle management, the task force used the 

following methodology:

 

41According to the task force report, product life cycle management is a collection of 

processes that include reliability-centered maintenance, total-ownership cost 

management, and precision maintenance.
 

Page 23 GAO-12-482 Defense Logistics

• Reviewed case studies of five DOD maintenance programs that use 

serialized item management. The task force observed that by using 

serialized item management,42

• Next, the task force estimated maintenance costs by adding DOD’s 

fiscal year 2008 budget for depot- and field-level maintenance to 

DOD’s fiscal year 2009 budget for maintenance transportation, which 

together total about $83.2 billion.

the maintenance programs reduced 

costs by an average of 4 to 6 percent in labor and materiel costs for 

maintenance, and in the cost to transport items to maintenance 

locations.

• Finally, by applying the 4 to 6 percent reduction to $83.2 billion in 

annual maintenance costs, the task force estimated that an annual 

savings of $3 billion to $5 billion could result from the use of serialized 

item management in product life cycle management maintenance 

processes.

However, three aspects of this methodology call into question whether it 

is reasonable to assume that DOD-wide use of IUID technology in 

maintenance processes would lead to the savings estimated by the task 

force.

• The task force estimated DOD-wide savings on the basis of a limited 

number of case studies, and conclusions developed from these 

studies may not be applicable to the substantial complexity and size 

of the DOD-wide maintenance enterprise. According to the Office of 

the Deputy Assistant Secretary of Defense for Maintenance Policy 

and Programs, DOD’s maintenance operations support a wide range 

of weapon systems including about 280 ships, 14,000 aircraft and 

helicopters, 900 strategic missiles, and 30,000 combat vehicles. Our 

review of the Task Force report indicates the five case studies 

address—in total—five individual weapon systems, whereas DOD 

performs maintenance on hundreds of different systems. Moreover, 

four of the five case studies address either Air Force or Navy 

programs; only one addressed Army programs. Because of the limited 

scope of the case studies used by the task force, conclusions based 

on these case studies may not apply to the DOD-wide maintenance 

budgets that the task force used in its estimation of savings.

• The case studies did not address programs that use IUID as the 

technology that provides a unique identifier to track items through 

 

42We did not validate the cost-savings estimates of the case studies reviewed by the task 

force.
 

Page 24 GAO-12-482 Defense Logistics

serialized item management. Rather, the case studies addressed 

programs that use other means of uniquely tracking items, such as 

contact memory buttons. Thus, the case studies do not consider costs 

that may be specific to IUID technology, such as the cost to purchase 

scanners or software to read data matrices, or the cost to replace 

deficient IUID data matrices. Because of this, it may be inaccurate to 

assume that maintenance programs using IUID technology will 

achieve the same type or amount of savings claimed by the case 

studies of programs using other technologies.

• Even when a logistics program experiences cost savings after 

introducing a new technology or process, it can be difficult to link the 

savings directly to a specific cause or technology. For example, we 

visited an installation that is using a combination of IUID, passive

radio frequency identification, new database software, and a 

reorganization of warehouse space to reduce the cost of managing its 

supply chain. However, an installation official explained that it was not 

possible to determine the extent to which the cost savings were 

attributable to a specific change, such as the introduction of IUID. For 

this reason, it may have been incorrect for the task force to assume a 

link between estimated cost savings and the use of a specific 

technology such as IUID.

We have previously reported that every estimate is uncertain because of 

the assumptions that must be made about future projections, and 

because of this, cost estimators should always perform a sensitivity 

analysis that demonstrates the effects on the cost and schedule of an 

assumption that may no longer be valid.43

There is a substantial amount of uncertainty associated with key 

assumptions on which the task force report’s estimates are based. For 

The task force report estimates 

that DOD could begin to realize financial savings from IUID 

implementation after fiscal year 2017, and explains that its cost and 

benefit estimates are conditional, depending on a number of 

assumptions. However, the task force report does not contain a sensitivity 

analysis for either its cost or its benefit estimates. As a result, the task 

force’s report does not portray the potential effects of changing key 

assumptions on the report’s estimates of cost, financial benefits, or the 

time frames in which the report estimates DOD may realize financial 

benefits.

 

43GAO-09-3SP. 

The Task Force Report Did Not 

Include a Sensitivity Analysis 
 

Page 25 GAO-12-482 Defense Logistics

example, the task force report states that the cost to mark legacy items is 

one of the primary drivers of IUID implementation costs. However, as 

discussed in more detail later, DOD may face challenges in determining 

the total number of legacy items it must mark. The task force’s cost 

estimate does not reflect the range of costs associated with marking a 

population of legacy items that—according to DOD estimates—may 

range between about 60 million and 122 million items. In addition, the 

task force’s estimate of financial benefits assumes that the components’ 

IT systems, including their Enterprise Resource Planning systems, will 

have the capability to use UII data for product life cycle management in 

2015. However, as discussed later in the report, the components cannot 

reliably predict when their Enterprise Resource Planning systems will be 

able to use UII data for product life cycle management. The task force’s 

estimate of when DOD will begin to realize these benefits does not reflect 

the possibility that the components’ Enterprise Resource Planning 

systems will not have this capability in fiscal year 2015.

Also, the task force’s estimates of financial benefits assume IUID 

implementation across each of DOD’s components. However, as 

discussed in more detail later, the Navy, Air Force, and Defense Logistics 

Agency are currently not carrying out key IUID implementation efforts. For 

example, the Navy is not systematically marking legacy items and the 

potential integration of IUID with its Enterprise Resource Planning system 

for Supply is unfunded. In addition, the Air Force is not actively integrating 

IUID into its Enterprise Resource Planning system. Also, the Defense 

Logistics Agency is not marking legacy items. The task force’s estimate of 

financial benefits does not consider that some benefits may not be 

achieved as a result of DOD’s partial implementation of IUID. Without a 

sensitivity analysis of its cost and benefit estimates, the task force report 

does not provide DOD leaders with information about how well the 

estimates may hold up under reasonable changes to the assumptions on 

which the estimates are based. 
 

Page 26 GAO-12-482 Defense Logistics

DOD components and contractors have been marking items with IUID, 

but due to several challenges, it is difficult for DOD to assess its progress 

in marking items or ensuring that contractors are sufficiently marking 

items. DOD components have reported marking more than 2 million 

legacy items,44 and DOD has identified tens of millions of legacy items 

that meet its IUID marking criteria. But, DOD does not have complete 

information on the total number of legacy items that its components have 

marked and must mark in the future. Moreover, DOD has not developed a 

full set of quantifiable goals to assess its progress in marking these items. 

Further, DOD has not set interim milestones to determine the 

components’ progress in marking items, and DOD’s components do not 

use consistent criteria to track progress in legacy item marking. With 

respect to newly-acquired items and pieces of government-furnished 

property, DOD reports that as of January 2012, more than 2,500 

contractors had delivered newly-acquired items to DOD and had 

registered over 11.5 million such items and pieces of governmentfurnished property in DOD’s IUID Registry. However, DOD cannot ensure 

that contractors are sufficiently marking all of the items that require IUID 

labels, for two reasons: DOD reporting requirements do not provide 

assurance that appropriate marking clauses are included in all contracts, 

and DOD components do not have systematic processes to assess the 

sufficiency of IUID data matrices. As a result, DOD may be unable to 

ensure that contractors are marking all newly-acquired items and pieces 

of government-furnished property that require IUID labels, and DOD 

cannot know the extent to which contractors are supplying IUID data 

matrices that the components need to track items with IUID technology.

 

44As previously discussed, we have separated qualifying items into two categories: legacy 

items and contractor-marked items. Items are marked with IUID labels either by DOD 

components or by contractors. If an item qualifies for IUID marking, the DOD components 

are responsible for marking the item if it is currently in their inventory (legacy items), while 

contractors are responsible for marking the item if they are delivering it to DOD, or are 

using property furnished to them by the government (contractor-marked items). 

Contractors either mark items that DOD is purchasing (newly-acquired items), or items 

that DOD has provided to contractors (government-furnished property). 

DOD and Contractors 

Have Made Some 

Progress Marking 

Items with IUID, but 

DOD Faces 

Challenges in 

Assessing Progress 

toward Goals and 

Ensuring That Items 

Are Sufficiently 

Marked 
 

Page 27 GAO-12-482 Defense Logistics

DOD has made some progress in marking legacy items. In late 2004, the 

Office of the Under Secretary of Defense for Acquisition, Technology, and 

Logistics established the requirement for DOD components to mark 

legacy items with IUID labels and for the military services to develop 

plans to accomplish such marking. An Army depot began marking legacy 

items in 2005, and according to information from DOD’s IUID Registry, 

DOD components began registering legacy items in 2006. As of October 

2011, the components reported marking more than 2 million legacy items. 

However, DOD does not have complete information on the total number 

of items to be marked and that have been marked; DOD has not 

quantifiably defined its marking goals according to DOD’s IUID marking 

criteria; DOD has not set interim milestones to determine the 

components’ progress in marking items; and DOD’s components do not 

use consistent criteria to track progress in legacy item marking.

The components provided us with estimates of the total number of items 

that must be marked in the future, according to DOD’s IUID marking 

criteria. According to the components, the total number of items in their 

inventories that meet DOD’s IUID marking criteria is about 122 million. In 

addition, the components provided us with estimates of the total number 

of legacy items they have marked, if estimates were available. As of 

October 2011,45

• The Army reported that its inventory contains about 15 million items 

that meet DOD’s IUID marking criteria, and that it had marked about 

1.2 million legacy items.

the Army, Marine Corps, and Air Force reported that they 

had marked a total of about 2.7 million legacy items. The Navy and 

Defense Logistics Agency did not report the marking of legacy items.

• The Marine Corps reported that its inventory contains about 3.1

million items that meet DOD’s IUID marking criteria, and that it had 

marked about 0.3 million legacy items.

 

45Each of the five DOD components provided data in October 2011. To generate its 

October 2011 data, the Marine Corps used a method that was not consistent with the 

method used by the Army and Air Force to generate their data. To make its data 

consistent with the other two components, the Marine Corps adjusted its method, and in 

January 2012 provided us with data that are consistent with the data provided by the Army 

and Air Force. The Air Force reported additional information in November 2011. We 

included this additional information in the Air Force’s estimate of the total number of 

legacy items in its inventory that meet DOD’s IUID marking criteria. 

DOD Components Have 

Made Some Progress in 

Marking Legacy Items, but 

Several Challenges Make 

Progress toward Marking 

Goals Difficult to Assess

Total Number of Items to Be 

Marked and That Have Been 

Marked Is Uncertain 
 

Page 28 GAO-12-482 Defense Logistics

• The Air Force reported that its inventory contains about 13.3 million 

items that meet DOD’s IUID marking criteria, and that it had marked 

about 1.2 million legacy items.

• The Navy reported that its inventory contains about 60.6 million items 

that meet DOD’s IUID marking criteria. However, the Navy could not 

provide an estimate of the number of legacy items it had marked. 

According to a Navy official, there are “pockets of compliance” within 

the Navy, in which certain organizations had marked legacy items with 

IUID labels. But the Navy does not have a Navy-wide, systematic plan 

or approach to legacy marking; it does not track the number of legacy 

items being marked within these pockets; and it characterized its 

progress in legacy marking as “minimal.”

• The Defense Logistics Agency reported that its inventory contains 

about 30.0 million items that meet DOD’s IUID marking criteria. 

However, according to the agency, it is not currently marking legacy 

items; does not have the capability or required technical information to 

mark the legacy items in its inventory; and does not plan to mark 

legacy items in the future. For example, the agency does not have 

marking equipment. In addition, agency officials explained that the 

agency lacks information on how to appropriately mark legacy items 

with IUID labels.46

With regard to the total number of items to be marked in the future, some 

component officials stated that their estimates are incomplete. For 

example, Army officials explained that their estimate does not include 

certain classified items because the system they used to estimate the 

Army’s legacy item inventory does not interface with systems that track 

those classified items. Navy officials stated that their estimate does not 

include items that are embedded in other items—such as a circuit board 

inside of an aircraft—because of system limitations and the time it would 

have taken to include these items in the Navy’s estimate. Further, 

Defense Logistics Agency officials explained that their estimate does not 

include items that are classified by the components as serially managed. 

Moreover, the components’ estimates of legacy items to be marked in the 

future do not match the estimate of the total number of legacy items to be 

marked according to the task force’s report. According to the report, DOD 

According to the officials, the other components 

must provide this information to the agency, because the components 

manage the items that the agency stores in its inventory.

 

46The components carry out the engineering support activity that determines where the 

label should be placed on the item. Where the IUID mark is placed on the item influences 

the mark’s durability and usefulness. 
 

Page 29 GAO-12-482 Defense Logistics

has a total of about 60 million legacy items to be marked. However, the 

components report that they must mark a total of about 122 million legacy 

items, and the Navy alone estimates it has 60.6 million legacy items to 

mark in the future. Because the task force’s estimate is 49 percent 

smaller than the components’ estimates, DOD may not have complete 

information on the total number of legacy items in its inventory that meet 

IUID marking criteria, and that it must mark in the future.

As stated above, the components reported to us that they had marked 

about 2.7 million legacy items. However, information from the DOD IUID

Registry indicates that about 4.9 million legacy items were registered as 

of October 2011.47 As previously discussed, an item’s UII may be entered 

into the registry in one of two ways. First, the item can be marked with an 

IUID label, and the UII associated with that label is registered. Second, 

DOD or contractors can establish a virtual UII, registering an item before 

it is eventually marked with a label. Because the registry’s estimate of 

legacy items registered is 45 percent larger than the components’ 

estimate, it is unclear how many legacy items that DOD has marked. 

Table 2 summarizes the components’ estimates of the total number of 

legacy items in their inventories that meet DOD’s IUID marking criteria; 

the task force’s estimate of the total number of legacy items in the 

components’ inventories that meet DOD’s IUID marking criteria; the 

components’ estimates of the total number of legacy items they have 

marked; and the total number of legacy items recorded in the DOD IUID 

Registry.

 

47The DOD IUID Registry contains information on legacy items marked by DOD 

organizations other than the five components addressed in this report. However, 

according to an official from the Office of Defense Procurement and Acquisition Policy, the 

five DOD components addressed in this report are conducting the vast majority of legacy 

item marking, and thus it is valid to assume that only a very small fraction of the legacy 

items recorded in the registry were recorded by DOD organizations other than these five 

components.
 

Page 30 GAO-12-482 Defense Logistics

Table 2: Number of Legacy Items in Components’ Inventories That Meet DOD’s IUID 

Marking Criteria and That the Components Have Marked, as Of October 2011

Items in millions

DOD 

component 

Components’ 

estimates of 

number of 

legacy items that 

meet DOD’s IUID 

marking criteriaa

Task force 

estimate of 

number of legacy 

items that meet 

DOD’s IUID 

marking criteria

Components’ 

estimates of 

number of 

legacy items 

marked b

DOD registry 

information 

on number of 

legacy items 

registered

Army 

c

15.0 1.2

Navy 60.6 Did not 

provide

Marine Corps 3.1 0.3

Air Force 13.3 1.2

Defense 

Logistics 

Agency

30.0 0.0

Total 122.0 60.0 2.7 4.9

Size 

difference 

between totals

d

62.0 2.2

Percent 

difference 

between totals

51.0 45.0

Source: GAO analysis of DOD data.

a

The Navy estimate was completed in December 2009. According to Navy officials, the Navy 

developed its estimate on the basis of the task force’s recommended revisions of DOD’s IUID 

marking criteria, which were adopted by DOD in December 2010. The Army, Air Force, and Defense 

Logistics Agency estimates are as of October 2011; the Marine Corps’ estimate is as of January 

2012.

b

The task force first reported its estimate in June 2010 and reported the same estimate in March 

2011.

c

The DOD IUID Registry contains information on legacy items marked by DOD organizations other 

than the five components addressed in this report. However, according to an official from the Office of 

Defense Procurement and Acquisition Policy, the five DOD components addressed in this report are 

conducting the vast majority of legacy item marking, and thus it is valid to assume that only a very 

small fraction of the legacy items recorded in the registry were recorded by DOD organizations other 

than these five components.

d

According to ODASD(SCI), the DOD IUID Registry contained 1.6 million virtual UIIs as of October 

2011. Officials stated that these virtual UIIs may account for a portion of the difference between the 

components’ reported total of 2.7 million items marked and the DOD IUID Registry’s total of 4.9 

million items registered.
 

Page 31 GAO-12-482 Defense Logistics

An agency’s establishment of goals is a key internal control, and we have 

previously reported that in the absence of quantifiable targets, it is difficult 

for officials to assess whether goals were achieved, because 

comparisons cannot be made between projected performance and actual 

results.48 In 2010, the task force recommended that DOD focus its legacy 

marking efforts on those items from which DOD could derive the greatest 

benefit. According to an ODASD(SCI) official, it is DOD’s goal to complete 

the marking of the “majority” of these legacy items by the end of fiscal 

year 2015. In addition, according to the task force’s report, DOD’s 

marking of a “significant” number of legacy items is one of the keys to 

realizing the potential financial benefits of IUID implementation. We have 

previously reported that, where appropriate, to more easily assess 

agency progress, performance goals should have quantifiable, numerical 

targets.49

Once quantifiable goals have been established, we have previously 

reported that metrics for a program’s main efforts—such as interim 

milestones and schedules—give decision makers the information needed 

to assess progress and estimate realistic completion dates.

However, neither ODASD(SCI) nor the task force has quantified 

DOD’s goals of marking a “majority” of legacy items, or a “significant” 

number of legacy items, respectively. Further, while some DOD 

components have quantifiable goals for marking certain legacy items, 

others do not. As previously discussed, DOD has established IUID 

marking criteria for different categories of inventory, such as certain items 

with a unit acquisition cost of $5,000 or greater; certain items that are 

serially managed; certain items that are controlled (sensitive or 

classified); and certain depot-level reparable items. We found that some 

components had set quantifiable goals using these criteria. For instance, 

the Marine Corps has quantifiable goals for each of the categories 

defined by DOD’s IUID marking criteria. The Army has quantifiable goals 

for each of these categories except for items that are controlled (sensitive 

or classified). Neither the Navy nor the Air Force have established 

quantifiable goals defined by DOD’s IUID marking criteria.

50

 

48

As 

previously discussed, we have noted that quantifiable target—such as 

interim milestones—can assist organizations in tracking progress toward 

GAO/AIMD-00-21.3.1 and GAO-10-835. 

49GAO-03-143. 

50GAO-08-883T. 

Not All of the Goals 

Established by DOD for 

Measuring Progress in Marking 

Legacy Items Are Quantifiable 

DOD Has Not Established a 

Full Set of Quantifiable Interim 

Milestones for Measuring 

Progress in Marking Legacy 

Items
 

Page 32 GAO-12-482 Defense Logistics

their goals. For example, quantifiable interim milestones could assist 

DOD in evaluating whether the components are marking legacy items at a 

rate that will allow DOD to meet its fiscal year 2015 goal of marking a 

“majority” or “significant” number of legacy items in its inventory.

As of January 2012, ODASD(SCI), the task force, and the components 

had not fully developed quantifiable interim milestones to track progress 

toward DOD’s goals for marking legacy items. Neither ODASD(SCI) nor 

the task force had set interim milestones for the number of items that 

should be marked in fiscal year 2015, DOD’s target date for marking a 

“majority” of legacy items and a “significant” number of legacy items. 

Further, while some components have set interim milestones for tracking 

their progress in marking certain legacy items, others have not. For 

instance, the Air Force has established interim milestones for the marking 

of some legacy items, such as class VII equipment,51

In January 2012, ODASD(SCI) provided us with an IUID timeline 

containing targets that are not quantified. The IUID timeline indicates that 

ODASD(SCI) expects the components to be marking legacy items at least 

through fiscal year 2017. In addition, ODASD(SCI)’s IUID timeline lays 

out fiscal year 2012 targets for the components to determine the number 

of items they need to mark, and fiscal year 2013 targets for the 

components to report on their legacy marking progress to ODASD(SCI). 

According to ODASD(SCI) officials, the office intends for the components 

to use the Federal Logistics Information System to eventually provide 

but it is still working 

on developing interim milestones for others, such as class II items. The 

Marine Corps has established a goal of completing the marking of about 

34 percent of its legacy items by December 2012. However, it has 

established no interim milestones. Similarly, neither the Navy nor the 

Defense Logistics Agency has developed interim milestones.

 

51DOD organizes its materiel using a number of different categories. One such category is 

classes of supply, in which DOD has defined 10 classes. Among these are class VII, 

which contains items such as aircraft engines; and class II, which contains items such as 

electronics and weapons. 
 

Page 33 GAO-12-482 Defense Logistics

quantifiable reports on their legacy marking efforts.52

We have previously reported that an important element of measuring 

performance is the collection of data that are complete and consistent 

enough to document performance and support decision making.

In addition, the 

DASD(SCI) stated that he has asked the components to develop 

quantifiable interim milestones for legacy marking. The components’ use 

of the system may provide them with a means to report progress in 

regard to these milestones. However, ODASD(SCI) officials stated that 

the system does not yet have this capability and they do not yet have an 

estimate for when the components could begin their reporting. Until 

ODASD(SCI) and the components begin to use such milestones to 

assess DOD’s progress in marking legacy items, it is difficult to know 

whether DOD’s current number of marked legacy items represents what 

DOD intended to achieve, almost 7 years after DOD established the 

requirement to mark legacy items.

53

 

52According to DOD, the Federal Logistic Information System is the primary computer 

system through which users are able to access, maintain, store, and retrieve necessary 

information related to items of supply in the Federal Catalog Program, which provides a

uniform system of item identification; precludes/eliminates different identifications of like 

items; reveals interchangeability among items; aids in parts standardization; facilitates 

intra- and interdepartmental logistics support; and improves materiel management and 

military effectiveness by promoting efficiency and economy in logistics operations.

However, we found that the various DOD components track their 

progress in the marking of legacy items by using different criteria. As 

previously discussed, DOD has established IUID marking criteria for 

different categories of inventory. We found that some components used 

these criteria to track their progress, while others did not. For instance, 

the Army and the Marine Corps currently use DOD’s IUID marking criteria 

to track their progress in marking legacy items. The Air Force defines its 

progress in marking legacy items according to military classes of supply, 

which is not one of the categories of inventory in DOD’s IUID marking 

criteria. ODASD(SCI)’s January 2012 IUID timeline does not indicate 

whether either ODASD(SCI) or the components intend to track and report 

legacy marking progress using consistent criteria. Without the 

components reporting complete and comparable data, DOD’s 

assessment of its progress in marking legacy items will remain limited. 

ODASD(SCI) and the components’ use of numerical goals, interim 

53GAO/GGD-96-118. 

DOD Components Use 

Inconsistent Criteria for 

Tracking Progress 
 

Page 34 GAO-12-482 Defense Logistics

milestones, and the tracking of progress with categories defined by 

DOD’s IUID marking criteria is summarized in table 3.

Table 3: DOD’s Methods of Assessing Progress in Legacy Item Marking Using 

Categories Defined by Its IUID Marking Criteria, as of October 2011

Is organization using categories defined by DOD’s IUID marking 

criteria

Organization

a

Numerical goals

Interim 

milestones Tracking progress

ODASD(SCI) No No No

Army Yes, for 4 categories No 4 categories of DOD’s IUID 

marking criteria 

Navy No No No

Marine Corps Yes, for 5 categories No All categories of DOD’s 

IUID marking criteria

Air Force No No Military class of supply, 

which is not a category of 

DOD’s IUID marking criteria

Defense 

Logistics 

Agency

Yes, for 4 categories No No

Source: GAO analysis of DOD data.

a

As previously discussed, DOD has established criteria for the types of items required to be marked 

with IUID labels. These criteria vary for different categories of inventory: there are currently four 

criteria for marking principal end items and new secondary items, and two criteria for marking 

secondary items in use or in inventory. The criteria include certain items for which the government’s 

unit acquisition cost is $5,000 or more, as well as certain types of items that cost less than $5,000, to 

include those that are serially managed; certain items that are depot-level reparable; and those 

deemed by a DOD component to require unique item-level traceability at any point in their life cycle.
 

Page 35 GAO-12-482 Defense Logistics

While legacy items are marked by DOD, newly-acquired items and 

government-furnished property must be marked by DOD’s contractors. 

DOD has made some progress in ensuring that these types of items are 

marked by contractors. According to the DOD IUID Registry, more than 

2,500 contractors had registered over 11.5 million newly-acquired items in 

the registry as of January 2012. DOD plans to eventually finish marking 

its legacy items, but contractors will continue to mark items that are 

acquired by DOD, or provided by DOD to contractors, and meet its IUID 

marking criteria.54

In order for DOD to use IUID technology to track contractor-marked items 

that qualify for IUID marking, DOD and its contractors must take certain 

steps to help ensure that qualified items are marked, and that the IUID 

marks are usable. These steps are as follows:

According to January 2012 data from the DOD IUID 

Registry, the number of newly-acquired items and government-furnished 

property already exceeds the number of legacy items. If current marking 

trends continue, the ratio of these items to legacy items will continue to 

increase, and newly-acquired items and government-furnished property 

will continue to make up the majority of DOD’s inventory of IUID-labeled 

items. For this reason, the future success of DOD’s IUID implementation 

efforts depends on having contractors sufficiently mark newly-acquired

items and government-furnished property with IUID labels. While DOD 

has made some progress, it cannot currently ensure that contractors are 

sufficiently marking all of the items that require IUID labels, for two 

reasons: reporting requirements do not provide assurance that 

appropriate IUID-marking contract clauses are included, and DOD’s 

inspection efforts are not systematic. Without adequate reporting 

requirements regarding the components’ insertion of IUID clauses into 

applicable contracts, DOD cannot know the extent to which it is requiring 

contractors to mark all items that should have IUID labels. And, without 

sufficient inspection of IUID data matrices, DOD cannot know the extent 

to which contractors are supplying deficient data matrices.

 

54There is no set number of newly-acquired items or pieces of government-furnished

property required to be marked with IUID labels. The number of such items marked 

depends on the number of items acquired by DOD or provided to contractors in a given 

year that meet DOD’s IUID marking criteria. Whatever the number of such items, DOD 

policy holds that all these items meeting the DOD IUID marking criteria should be marked 

with IUID labels by contractors.

DOD Has Taken Some 

Steps to Ensure That 

Contractors Are 

Sufficiently Marking 

Newly-acquired Items and 

Government-Furnished 

Property Requiring IUID, 

but Faces Challenges

Process for Marking, and 

Verifying the Marking, of 

Qualified Items
 

Page 36 GAO-12-482 Defense Logistics

• in contracts for qualified items, the components must ensure that the 

contracts contain appropriate contract clauses and that those clauses 

are correctly completed. These clauses require the contractor to mark 

or register qualified items;

• the contractor must then mark items with an IUID label with a data 

matrix that can be read electronically or establish a virtual UII in some 

cases; and

• the data matrix must contain the necessary information, organized 

with the proper data elements and syntax, which must be registered in 

DOD’s IUID Registry.55

DOD components have processes in place to ensure the sufficiency of 

data matrices in IUID labels the components use to mark legacy items. 

Upon labeling an item, the component personnel electronically read the 

label’s data matrix. If the matrix is not usable, personnel replace it with a 

new label that has a functioning matrix. To ensure that contractors are 

sufficiently marking newly-acquired items and government-furnished 

property with IUID labels, DOD has taken two key steps. The Defense 

Federal Acquisition Regulation Supplement requires DOD components to 

insert specific clauses into contracts that involve newly-acquired items 

and government-furnished property that meet DOD’s IUID marking 

criteria. One clause requires contractors to mark and register specified 

types of items that DOD is acquiring from the contractor (the acquireditems clause),56 and the other clause requires contractors to establish a 

unique identifier for—and register—specified pieces of governmentfurnished property (the government-property clause).57

 

55In this report, we use the term “sufficiently” to describe marking efforts that correspond 

to these steps, and “deficient” to describe data matrices that are not usable because they 

lack necessary attributes identified in these steps. For example, a data matrix that cannot 

be read electronically is considered deficient.

These clauses 

require contractors to mark with IUID labels or register all items meeting 

specified criteria, or otherwise listed in the contract clause; and to format 

the labels’ data matrices according to DOD-wide standards. In addition, 

according to DOD officials, it is a good practice for the components or the 

Defense Contract Management Agency to inspect items acquired from 

contractors to determine whether qualified items are marked with an IUID 

56Defense Federal Acquisition Regulation Supplement section 252.211-7003.

57Defense Federal Acquisition Regulation Supplement section 252.211-7007. The clause 

requires contractors to either mark the item with a DOD-recognized UII or establish a 

virtual identifier for the item in the DOD IUID Registry.
 

Page 37 GAO-12-482 Defense Logistics

label and whether that label’s data matrix is formatted according to DODwide standards. Officials from several components told us that they had 

inspected some newly-acquired items to determine whether these items 

were sufficiently marked with IUID labels. For the items they reviewed, 

those inspections helped to detect problems in contractors’ marking of 

items. Also, since 2009, the Defense Contract Management Agency has 

had a surveillance program in place to inspect newly-acquired items and 

assess contractors’ compliance with the acquired-items clause.

A DOD memorandum requires that the components report to the Office of 

Defense Procurement and Acquisition Policy on only a portion of 

contracts that should include the clauses related to IUID.58

According to DOD officials, it is a good practice for either a DOD 

component or the Defense Contract Management Agency to inspect 

items to ensure that contractors have marked items with IUID labels, and 

that the labels’ data matrices are not deficient. Inspection of newlyacquired items is important because contractors have been delivering 

According to 

the memorandum, components are required to report on, among other 

things, whether the acquired-items clause is present in contracts for 

newly-acquired items. However, they are not required to report on 

whether the government-furnished property clause is present in contracts 

involving government-furnished property. Several components are thus 

reporting only on whether they are including the acquired-items clause in 

contracts. While the Air Force reports on whether it is including both the 

acquired-items clause and the government-property clause in contracts, 

the Army, Navy, Marine Corps, and Defense Logistics Agency report only 

on whether they are including the acquired-items clause. While certain 

components are reviewing contracts for items that cost more than $5,000 

or are serially managed, none of the components are reviewing contracts 

for items that meet other DOD IUID marking criteria, such as those for 

controlled (sensitive or classified) items. Consequently, DOD does not 

know the full extent to which the components are complying with the 

requirements to include IUID-related clauses in contracts. Without this 

information, DOD may be unable to ensure that contractors are marking 

all newly-acquired items and pieces of government-furnished property 

that require IUID labels.

 

58Director of Defense Procurement and Acquisition Policy Memorandum, IUID DFARS 

Rule Compliance Reporting (Dec. 4, 2007). 

Reporting Requirements Do 

Not Provide Assurance That 

Appropriate Contract Clauses 

Are Included

DOD’s Inspection Efforts Are 

Not Systematic
 

Page 38 GAO-12-482 Defense Logistics

IUID labels with deficient data matrices that cannot be used by DOD. 

However, neither the components nor the Defense Contract Management 

Agency have been systematically inspecting the data matrices in IUID 

labels applied to items by contractors. According to both the Marine 

Corps and the Air Force, more than 10 percent of the newly-acquired

items’ data matrices they examined after receipt of the items from the 

contractor have been deficient. For example, one Marine Corps 

installation reported that from January 2010 through October 2011, there 

were 8 months in which more than 10 percent of newly-acquired items 

provided by contractors were marked with deficient data matrices. 

Problems include having matrices in which the syntax of the UII data was 

incorrect or missing key elements; matrices that could not be 

electronically read; and matrices that contained a UII number that had not 

been registered in DOD’s IUID Registry.

Although the Marine Corps and Air Force have assessed a portion of the 

data matrices on newly-acquired items in their inventories, these 

components are not systematically assessing whether contractors are 

sufficiently marking these items. For example, the Marine Corps 

estimates that it has assessed the sufficiency of contractors’ marking for 

about 79 percent of all newly-acquired items’ data matrices in its 

inventory. Officials from both the Marine Corps and Air Force explained, 

however, that neither has developed a systematic approach for inspecting 

these items’ data matrices. According to Army officials, the Army also 

lacks a systematic approach to inspecting these items’ data matrices. For 

example, the two depots identified by the Army as furthest along in IUID 

implementation have not established a policy or set procedures for 

assessing the sufficiency of the data matrices of newly-acquired items in 

their inventories. Defense Logistics Agency officials explained that 

although its personnel do perform various types of inspection and 

acceptance procedures on items delivered to its sites, personnel are not 

inspecting items’ data matrices. In addition, the Navy does not have a 

policy or plans in place to systematically assess newly-acquired items’ 

data matrices. 

According to the Defense Contract Management Agency’s information

memorandum that describes procedures for inspecting contractors’ data 

matrices, the agency’s inspectors are to verify the readability of these 

matrices if a scanner for reading matrices is available at the inspection 

site. However, as previously discussed, the only way to assess the 

functionality of a data matrix is to use a tool that can electronically read 

the matrix. Because its memorandum does not require inspectors to 

electronically read data matrices in all cases, the Defense Contract 
 

Page 39 GAO-12-482 Defense Logistics

Management Agency cannot ensure that the items it inspects have an 

IUID label with a data matrix that can be properly read; that the data 

matrix contains the necessary UII data, organized with the proper syntax; 

and that the item’s UII number is registered in DOD’s IUID Registry. 

Furthermore, officials from the Defense Contract Management Agency 

said their inspectors rely on contractors to provide the technology to 

electronically read data matrices. If contractors do not provide this 

technology, inspectors at those manufacturing sites cannot electronically 

read and verify the sufficiency of data matrices. 

The Office of Defense Procurement and Acquisition Policy and the 

components have taken steps to address some of these challenges. For 

example, in February 2011, the office issued a DOD standard operating 

procedure for assessing the sufficiency of data matrices.59 Also, through 

the Product Quality Deficiency Report process,60 Marine Corps item 

managers are beginning to work with contractors to address the 

contractors’ delivery of deficient data matrices. In addition, in the first 

quarter of fiscal year 2012, the Air Force began to track the number of 

deficient data matrices it is discovering as it assesses the sufficiency of 

newly-acquired items’ data matrices. However, unless all of the 

components and the Defense Contract Management Agency are 

systematically assessing whether contractors are sufficiently marking 

newly-acquired items, DOD cannot know the full extent to which 

contractors are supplying deficient data matrices.

 

59Office of the Director, Defense Procurement and Acquisition Policy, DOD Standard 

Operating Procedure, Acquisition/Procurement Guide for Unique Item Traceability Data 

Integrity (Washington, D.C.: Feb. 25, 2011). 

60A product quality deficiency is a defective or nonconforming condition that limits or 

prohibits the item from fulfilling its intended purpose. These include deficiencies in design, 

specification, materiel, manufacturing, and workmanship. A noncompliant UII mark would 

be reportable. A “Product Quality Deficiency Report” enables the component to report 

contractor noncompliance. The purpose of reporting noncompliance is to determine the 

cause of supply discrepancies and product quality deficiencies, effect corrective action, 

prevent recurrence, and provide a measure for contractor past performance. 

Discrepancies in packaging and deficiencies in marking and registration should be 

reported.
 

Page 40 GAO-12-482 Defense Logistics

DOD has made some progress in developing a capability to share UII 

data enterprisewide and integrating IUID functionality with its Enterprise 

Resource Planning systems.61 For example, DOD is in the process of 

revising key guidance on using IUID technology and UII data across 

DOD, and three components are temporarily storing UII data until they 

are ready to use these data in their Enterprise Resource Planning 

systems. However, DOD faces several challenges in sharing UII data 

enterprisewide, and it is unlikely that it will meet a fiscal year 2015 goal to 

use UII data for the management of items in enterprise information 

systems. Further, DOD cannot reliably predict when it will meet this goal, 

because ODASD(SCI) and the components have not fully scheduled for 

integrating IUID functionality with the IT systems through which the 

components plan to achieve this capability, their Enterprise Resource 

Planning systems.

It is DOD’s goal for its components to share UII data departmentwide, and 

the components are to use these data for unique item tracking. According 

to a DOD instruction,62

 

61As previously discussed, there are a variety of IT systems that have a requirement to 

use UII data, and some of these systems currently have the capability to store UII data. 

DOD officials explained that some of these systems operate in “pockets” within the 

components, and do not share UII data across the components or DOD-wide. DOD’s goal 

is for the components to share UII data across many of their individual IT systems, and 

DOD-wide, between components. In order to accomplish enterprisewide data sharing of 

UII data, DOD officials stated that the components intended to use certain IT systems 

referred to as Enterprise Resource Planning systems. According to officials, certain 

Enterprise Resource Planning systems will provide the capability to share UII data 

enterprisewide, and in this report, we are focusing on DOD efforts to integrate IUID with 

these systems.

the Director for Defense Procurement and 

Acquisition Policy is to ensure unique IUID identifiers are established to 

enable items to be tracked and traced throughout their life cycle in

acquisition and logistics business processes and systems, in an 

integrated approach across DOD. Further, a 2011 IUID implementation 

schedule from ODASD(SCI) states that certain DOD item management 

processes are to be using UII data to manage items by the end of fiscal 

year 2015. Specifically, according to the schedule, by fiscal year 2015, 

two categories of logistics processes—intensive item management and 

product life cycle management—are to use IUID technology.

62DODI 8320.04 (June 16, 2008).

DOD Has Made Some 

Progress in Preparing 

to Share UII Data 

Enterprisewide, but 

Faces Challenges

To Achieve Key Benefits, 

DOD Plans to Use IUID 

Technology in 

Enterprisewide Logistics 

Processes by the End of 

Fiscal Year 2015
 

Page 41 GAO-12-482 Defense Logistics

As previously discussed, the task force report assessed the potential 

benefits of using IUID technology in these logistics processes. In both 

cases, the report explains that sharing UII data across DOD is key to 

realizing the full benefits of these processes. Regarding intensive item 

management, the report states it is clear that DOD requires an 

enterprisewide approach to managing critical items and the largest 

benefits of managing items intensively would be achieved by using UII 

data across the enterprise.

With regard to product life cycle management, the task force report 

estimates that DOD could achieve substantial financial benefits through 

the use of UII data in this process. In our previous discussion, we 

explained that the task force report’s methodology for estimating these 

financial benefits may not be appropriate. However, if DOD is to achieve 

potential benefits of product life cycle management, the report explains 

that benefits would come primarily through analysis of UII data, and that 

DOD should expect to see the full benefit of this analysis as its Enterprise 

Resource Planning systems begin sharing and using these data. As 

previously mentioned, the report states that DOD could begin to achieve 

the net financial benefits of IUID implementation in fiscal year 2017. 

However, in order to do so, the report assumes that DOD will have the 

capability to share and use UII data, enterprisewide, by fiscal year 2015.

Since DOD began its IUID technology implementation efforts in fiscal year 

2004, it has made some progress in preparing to share UII data 

enterprisewide through its Enterprise Resource Planning systems, in two 

main areas. First, DOD is in the process of modifying its supply chain

management policy and guidance to incorporate use of IUID technology 

and UII data across DOD. Second, three of the components have 

developed IT systems to temporarily store data from IUID-labeled items 

until these data can be uploaded into Enterprise Resource Planning 

systems. 

In January 2012, ODASD(SCI) provided us with sections from a draft 

revision to the regulation that establishes DOD’s supply chain

management processes and procedures, including sections pertaining to 

DOD and Its Components 

Have Made Some Progress 

in Integrating IUID with 

Their Enterprise Resource 

Planning Systems

Revisions to Policy and 

Guidance Are Underway 
 

Page 42 GAO-12-482 Defense Logistics

IUID.63 The draft sections we reviewed define standards and procedures 

for using IUID in DOD Enterprise Resource Planning systems. If 

implemented, the revisions would likely help DOD move forward in its 

integration of IUID technology and UII data with its IT systems—including 

its Enterprise Resource Planning systems—in two ways. First, the draft 

revisions would establish standards for acceptable electronic scanners, 

which should help ensure interoperability across DOD organizations that 

are scanning and uploading UII data from IUID labels’ data matrices. 

Second, the draft revisions would require DOD organizations to update 

their UII data-sharing capabilities by adopting a system to share UII data, 

such as the Defense Logistics Management Standards; according to 

DOD officials, this system is replacing an older one that is unable to share 

UII data.64

Because their Enterprise Resource Planning systems are not currently 

capable of accepting or storing UII data at a componentwide level, the 

Army, Marine Corps, and Air Force have developed IT systems to 

temporarily store UII data generated by the labeling of both legacy and 

newly-acquired items.

Adoption of the Defense Logistics Management Standards is 

for that reason essential to IUID implementation.

65

 

63This draft guidance would update DOD 4140.1-R, Supply Chain Materiel Management 

Regulation, (May 23, 2003). As of January 2012, DOD had not issued the revised version 

of DOD 4140.1-R, but ODASD(SCI) officials stated that they expect DOD will release the 

new version in fiscal year 2012.

However, these systems have limited capabilities 

to manage or use UII data. For example, these temporary systems are 

not capable of sharing UII data within or between components. As of 

January 2012, the Air Force’s temporary system was limited to use on 

individual computer workstations, and could not send or receive UII data 

from other Air Force or DOD computers. In addition, the Marine Corps 

used its temporary system to provide us with information on its inventory 

of IUID-labeled legacy items, but the system was not designed to perform 

more complex tasks such as analyzing UII data in support of product life 

cycle management processes.

64According to DOD officials, the Defense Logistics Management Standards are a set of 

data-exchange protocols through which DOD organizations share logistics data. The 

system’s predecessor—the Military Logistics System—is unable to transmit UII data. DOD 

organizations are in the process of transitioning from the older Military Logistics System to 

the newer Defense Logistics Management Standards. 

65These are the Army’s IUID Data Warehouse; the Marine Corps’ Temporary Data 

Storage; and the Air Force’s Automated Inventory Management Tool. 

UII Data Are Being Temporarily 

Stored
 

Page 43 GAO-12-482 Defense Logistics

DOD faces three challenges in sharing UII data enterprisewide and 

integrating IUID functionality with its Enterprise Resource Planning 

systems. First, ODASD(SCI) and the components have not fully defined 

the requirements for using UII data across DOD, or within the 

components’ Enterprise Resource Planning systems. Second, as of April 

2012, the Air Force and the Navy were not actively integrating IUID with 

their Enterprise Resource Planning systems. And third, ODASD(SCI) and 

the components have not fully scheduled for integration of IUID 

functionality with their Enterprise Resource Planning systems. As a result, 

DOD is unlikely to meet its fiscal year 2015 goal to use UII data in 

intensive item management and product life cycle management.

Officials from the Army, Marine Corps, Air Force, and Defense Logistics 

Agency said that their components had not yet fully defined the 

component-specific UII requirements for their respective Enterprise 

Resource Planning systems. A Marine Corps official stated that, as of 

January 2012, requirements for how the Marine Corps system will 

interface with scanners were in draft form. Officials from the Defense 

Logistics Agency explained that because the agency manages items on 

the basis of the requirements of the other components, it could not 

finalize the business rules for using UII data in its system until the other 

components had determined their requirements. According to DOD 

officials, it is unclear when the requirements or related business rules will 

be fully defined and, until they are defined, the components cannot 

complete their integration of IUID technology with their IT systems, 

including their Enterprise Resource Planning systems.

As of April 2012, the Air Force and the Navy were not actively integrating 

IUID with their Enterprise Resource Planning systems. According to Air 

Force officials, because of cost overruns and delays in the development 

of its Enterprise Resource Planning system, the Office of the Secretary of 

Defense and the Air Force are planning to evaluate alternatives to the 

system. Because this system is central to the Air Force’s IUID 

implementation efforts and the Air Force does not know when a decision 

will be made, officials stated that they cannot estimate when—or 

whether—the system will be ready to share and use UII data. According 

to Air Force officials, the Air Force has a data network that provides the 

capability to share UII data within the Air Force, between certain IT 

systems. However, they stated that this data network does not currently 

have the capability to share UII data with other components, across DOD. 

Further, the officials stated that the Air Force’s plan is to eventually share 

UII data enterprisewide through its Enterprise Resource Planning system. 

In October 2011, senior Navy officials stated that the Navy had no plans 

DOD Faces Several 

Challenges in Integrating 

IUID and Is Unlikely to 

Meet Its Fiscal Year 2015 

Goal

Requirements Are Not Fully 

Defined 

Air Force and Navy Were Not 

Actively Integrating IUID with 

Enterprise Resource Planning 

Systems
 

Page 44 GAO-12-482 Defense Logistics

to integrate IUID with its Enterprise Resource Planning system for Supply, 

and will not be ready to share or use UII across its systems—or with other 

components’ systems—by the end of fiscal year 2015. Further, they 

explained that the Navy was not actively integrating IUID with its 

Enterprise Resource Planning system for Supply because strict budget 

conditions compelled Navy leadership to allocate funds to programs the 

Navy considered to be of higher priority than IUID implementation. As of 

April 2012, the Navy stated that proposed integration efforts remained 

unfunded. 

Because neither ODASD(SCI) nor the components have complete 

integrated master schedules for the integration of IUID functionality with 

their Enterprise Resource Planning systems, DOD cannot reliably predict 

when it will be able to use these systems to meet its fiscal year 2015 goal 

to use UII data in intensive item management and product life cycle

management. A key internal control is the use of performance measures, 

and we have previously reported that such metrics for a program’s main 

efforts—including interim milestones and schedules—give decision 

makers the information needed to assess progress and estimate realistic 

completion dates.66 In addition, we have reported that a reliable 

schedule—such as an integrated master schedule—is crucial to 

estimating the overall timeline and cost of IT programs, including 

Enterprise Resource Planning systems. An integrated master schedule is 

the time-phased schedule DOD and other agencies use for assessing 

technical performance. It contains the detailed tasks or work packages 

necessary to ensure program execution. Further, we have reported that 

without fully integrating the distinct activities that make up an IT program 

with such a schedule, an organization will not be able to measure its 

progress toward completion and cannot be held accountable for results.67

Although the Army has integrated master schedules for its two Enterprise 

Resource Planning systems, these schedules lack key elements, such as 

distinct activities for IUID integration and detailed processes for 

transmission of UII data across the systems. The Air Force has an 

integrated master schedule for its Enterprise Resource Planning system, 

and this schedule has distinct activities for IUID integration. However, as 

previously discussed, the Office of the Secretary of Defense and the Air 

 

66GAO/AIMD-00-21.3.1 and GAO-08-883T. 

67GAO-11-53. 

ODASD(SCI) and the 

Components Do Not Have 

Complete Integrated Master 

Schedules for Integration of 

IUID Functionality with Their 

Enterprise Resource Planning 

Systems
 

Page 45 GAO-12-482 Defense Logistics

Force are in the process of evaluating whether to modify, or cancel and 

replace, the Air Force’s Enterprise Resource Planning system. According 

to Air Force officials, the system’s current schedule will need to be 

revised once the future of the system has been determined. The Marine 

Corps has an integrated master schedule for its Enterprise Resource 

Planning system, and Marine Corps officials have stated that they plan to 

amend the schedule to include distinct IUID activities. However, as of 

January 2012, it did not contain them. As discussed previously, the Navy 

is not actively integrating IUID with its Enterprise Resource Planning 

system for Supply and does not have an integrated master schedule for 

integrating IUID with its Enterprise Resource Planning system. 

ODASD(SCI) has produced an IUID timeline that contains general targets 

for the fielding of IUID-capable Enterprise Resource Planning systems. 

However, an ODASD(SCI) official stated that it does not have an 

integrated master schedule to coordinate or track the progress of the 

components’ efforts to integrate IUID with their Enterprise Resource 

Planning systems. Officials from ODASD(SCI) and several components 

have reported that they are unsure of when the components’ Enterprise 

Resource Planning systems will be able to share UII data within their 

networks, a key capability for both intensive item management and 

product life cycle management.

Given the challenges ODASD(SCI) and the components face in sharing 

UII data enterprisewide and integrating IUID with their Enterprise 

Resource Planning systems, DOD likely will face difficulties in meeting its 

IUID integration goals. Without fully defined requirements; resolving the 

challenges posed by the Air Force and the Navy not actively integrating 

IUID with their Enterprise Resource Planning systems; and an integrated 

master schedule that includes IUID integration at the component level 

and at the DOD-wide level, DOD cannot reliably predict whether it will 

meet its goal to use these systems to manage items through intensive 

item management and product life cycle management by the end of fiscal 

year 2015, or predict when these systems will have this capability.

Using UII data could enable DOD to improve accountability and 

management of equipment and materiel, and increase efficiencies in 

maintenance, which could potentially result in cost savings in some 

cases. DOD is in the process of developing a framework for managing 

and implementing IUID technology, but could benefit from fully 

implementing best management practices that would enable the 

department to better determine the costs and benefits of IUID 

implementation, and progress toward goals. DOD components have 

Conclusions 
 

Page 46 GAO-12-482 Defense Logistics

reported marking more than 2 million legacy items, and DOD has made 

some progress in ensuring that its contractors are marking newlyacquired items with IUID. As of January 2012, though, DOD’s 

implementation of IUID technology faces several substantial challenges. 

For example, while the components report marking more than 2 million 

items, DOD does not have quantifiable goals or interim milestones that it 

can use to assess progress in achieving its fiscal year 2015 goal of 

marking a “majority” of legacy items, or the task force’s goal of marking a 

“significant” number of legacy items. With regard to items that must be 

marked by contractors, in the absence of policies and procedures that 

establish a systematic process for assessing the sufficiency of contractorsupplied data matrices, DOD is unable to determine the extent to which 

contractors are sufficiently marking items. This limits DOD’s ability to 

ensure that it can track those items. Also, DOD has not fully developed 

the schedules needed to integrate IUID with existing IT systems, so that 

DOD can share UII data enterprisewide. This impedes its successful 

integration of IUID technology with these systems by the end of fiscal 

year 2015, its stated goal, and prevents the department from determining 

when it might achieve this integration. At a time when the nation faces 

fiscal challenges, and defense budgets are becoming tighter, DOD 

leaders’ lack of key information on IUID implementation could hinder 

sound program management and decision making.

We recommend that the Secretary of Defense direct the Under Secretary 

of Defense for Acquisition, Technology, and Logistics to complete its 

implementation and management framework for IUID by incorporating 

key elements of a comprehensive management approach, such as a 

complete analysis of the return on investment, quantitatively-defined 

goals, and metrics for measuring progress. To do so, we recommend that 

the Secretary of Defense direct the following organizations to take six 

actions:

• The Under Secretary of Defense for Acquisition, Technology, and 

Logistics to update the IUID task force report’s estimates of costs and 

benefits by incorporating key elements of a sound investment analysis 

including a more complete estimate of all associated costs, an 

appropriate methodology for estimating benefits, and a sensitivity 

analysis of these estimates.

• The Under Secretary of Defense for Acquisition, Technology, and

Logistics, in coordination with the components, develop quantitativelydefined goals for the number of legacy items that may allow DOD to 

achieve the Task Force’s estimate of IUID’s potential benefits, by 

Recommendations for 

Executive Action
 

Page 47 GAO-12-482 Defense Logistics

marking a “significant” number of these legacy items, or meet 

ODASD(SCI)’s goal that DOD needs to mark a “majority” of these 

legacy items by fiscal year 2015.

• The Under Secretary of Defense for Acquisition, Technology, and

Logistics, in coordination with the components, establish quantifiable 

interim milestones for marking legacy items that allow DOD to track 

progress toward its goals.

• The Under Secretary of Defense for Acquisition, Technology, and

Logistics, in coordination with the components, track progress using a 

consistent set of criteria, such as DOD’s IUID marking criteria.

• The components and the Defense Contract Management Agency 

develop policies and procedures that provide for systematic 

assessment of the sufficiency of contractor-marked items’ data 

matrices.

• The Under Secretary of Defense for Acquisition, Technology, and

Logistics require the components to examine and report to the Office 

of Defense Procurement and Acquisition Policy on all types of 

contracts that should include the acquired-items and governmentproperty clauses.

In addition, to enable DOD to successfully share UII data enterprisewide 

and integrate IUID functionality with its Enterprise Resource Planning 

systems, we recommend that the Secretary of Defense direct the Under 

Secretary of Defense for Acquisition, Technology, and Logistics to 

coordinate with the military services and the Defense Logistics Agency to 

take the following two actions:

• Define the requirements for using UII data across DOD and within the 

components’ Enterprise Resource Planning systems.

• Develop or revise integrated master schedules for the integration of 

IUID technology with the components’ individual Enterprise Resource 

Planning systems—and between these systems—across DOD. These 

schedules should fully integrate distinct IUID activities.

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

the Navy to develop a plan to share UII data enterprisewide.

In commenting on a draft of this report, DOD concurred with eight 

recommendations and partially concurred with one recommendation. 

DOD’s comments are reprinted in appendix III. DOD also provided 

technical comments, which we considered and incorporated where 

appropriate.

Agency Comments 

and Our Evaluation
 

Page 48 GAO-12-482 Defense Logistics

DOD concurred with our recommendation to develop quantitativelydefined goals for the number of legacy items that may allow DOD to 

achieve the task force’s estimate of IUID’s potential benefits. DOD stated 

that an IUID working group will identify the target population of items that 

qualify for IUID marking in a list of the items’ National Stock Numbers and

DOD will track progress in its marking of individual items on this list 

according to component IUID implementation plans that are due to be 

submitted to the Assistant Secretary of Defense for Logistics and Materiel 

Readiness by September 2012. 

DOD concurred with our recommendation to establish quantifiable interim 

milestones for marking legacy items that allow DOD to track progress 

toward its goals. DOD stated that its IUID working group will establish 

interim milestones to track the progress of marking legacy assets as part 

of the development of component IUID implementation plans to be 

submitted to the Assistant Secretary of Defense for Logistics and Materiel 

Readiness by September 2012. 

DOD concurred with our recommendation to track progress using a 

consistent set of criteria. DOD stated that progress will be tracked using a 

consistent set of criteria, once developed by the IUID working group. 

DOD concurred with our recommendation to develop policies and 

procedures that provide for systematic assessment of the sufficiency of 

contractor-marked items’ data matrices. DOD stated that the Defense 

Contract Management Agency has risk-based assessment policies and 

procedures in place. According to DOD, these include a review of 

contracts to determine whether they contain an IUID requirement; 

surveillance of a contractor’s IUID marking; and an IUID checklist that 

requires agency personnel to examine an item’s data matrix. DOD 

explained that agency personnel assess the sufficiency of a data matrix 

by electronically reading it with a scanner supplied by a contractor or 

through a statement of quality from contractors that the agency has 

determined have adequate quality control. We believe that DOD’s 

concurrence with our recommendation may lead to the components 

improving their capability to systematically assess these matrices, and 

that the agency’s policies and procedures may assist its inspectors in 

doing the same. However, our review of the policies and procedures 

provided by the agency indicate that it does not require inspectors to 

assess the sufficiency of data matrices in all cases. For example, if a 

contractor does not provide evidence that it has marked items with 

sufficient data matrices, and no IUID scanner is available on site, neither 

the agency’s 2009 information memorandum describing procedures for 
 

Page 49 GAO-12-482 Defense Logistics

inspecting contractors’ data matrices, nor its IUID checklist, provide an 

alternative method for inspectors to assess the sufficiency of items’ 

matrices. Because of this, we continue to believe that the agency cannot 

ensure that the items it inspects have IUID labels with sufficient data 

matrices, and that it should continue to develop policies and procedures 

that provide for systematic assessment of the sufficiency of contractormarked items’ data matrices. 

DOD concurred with our recommendation for the components to examine 

and report to the Office of Defense Procurement and Acquisition Policy 

on all types of contracts that should include the acquired-items and 

government-property clauses. DOD stated that the components will 

provide contract evaluation reports—for items meeting any of DOD’s IUID 

criteria, as well as pieces of government-furnished property that meet 

these criteria—and report on compliance with the requirements to include 

the appropriate Defense Federal Acquisition Regulation Supplement IUID 

clauses in contracts. 

DOD concurred with our recommendation to define the requirements for 

using UII data across DOD and within the components’ Enterprise 

Resource Planning systems. DOD stated that the IUID working group will 

define DOD-wide IUID functional requirements. 

DOD concurred with our recommendation to develop or revise integrated 

master schedules for the integration of IUID technology with the 

components’ individual Enterprise Resource Planning systems—and 

between these systems—across the department. DOD stated that the 

components have been tasked to submit revised IUID implementation 

plans to the Assistant Secretary of Defense for Logistics and Materiel 

Readiness by September 2012. We believe that such plans could assist 

DOD in improving its management approach for the implementation of 

IUID. However, as previously discussed, an integrated master schedule 

has specific characteristics that make it distinct from an implementation 

plan. Specifically, an integrated master schedule is a time-phased 

schedule that DOD and other agencies use for assessing technical 

performance. It contains the detailed tasks or work packages necessary 

to ensure program execution. Further, we have reported that without fully 

integrating the distinct activities that make up an IT program with such a 

schedule, an organization will not be able to measure its progress toward 

completion and cannot be held accountable for results. Because of this, 

we continue to believe that integrated master schedules should be 

developed or revised for the integration of IUID technology with the 

components’ Enterprise Resource Planning Systems. 
 

Page 50 GAO-12-482 Defense Logistics

DOD concurred with our recommendation that the Secretary of the Navy 

develop a plan to share UII data enterprisewide. DOD stated that the 

Navy—participating in the IUID working group—will develop IUID 

requirements as part of the working group’s definition of DOD-wide IUID 

functional requirements. Regarding the specific requirement for IUID 

functionality in the Navy’s Enterprise Resource Planning system—Navy 

Enterprise Resource Planning system for Supply—DOD stated that the 

Assistant Secretary of Defense for Logistics and Materiel Readiness will 

continue to work with the Chief of Naval Operations (Deputy Chief of 

Naval Operations [Fleet Readiness and Logistics]) to develop a plan to 

include IUID requirements in this system. 

DOD partially concurred with our recommendation to update the IUID task 

force report’s estimates of costs and benefits by incorporating key 

elements of a sound investment analysis, including a more complete 

estimate of all associated costs, an appropriate methodology for 

estimating benefits, and a sensitivity analysis of these estimates. DOD 

stated that the benefits to DOD of implementing IUID marking are to 

improve asset accountability, tracking, and the life cycle management of 

targeted items. Further, DOD stated that it will continue to identify costs of 

implementing IUID as IUID is implemented across DOD. As previously 

discussed, a best practice for analyzing a program’s return on investment 

is the estimation of all potential costs, and DOD efforts to continue to 

identify costs of IUID implementation may be a positive step in this 

direction. According to DOD, another best practice for analyzing a 

program’s return on investment is analyzing benefits, and making 

recommendations, based on relevant evaluation criteria. DOD has 

estimated that IUID implementation could cost $3.2 billion, and the 

components report that they have already spent at least $219 million on 

implementation efforts. Moreover, DOD has estimated that implementing 

IUID technology could save $3 billion to $5 billion per year. As previously 

discussed, DOD may have used a methodology for estimating these 

benefits that may not be appropriate to the scale and complexity of DOD’s 

IUID implementation efforts. For example, the task force estimated DODwide savings on the basis of a limited number of case studies, these case 

studies did not address programs that use IUID as the technology that 

provides a unique identifier to track items through serialized item 

management, and even when a logistics program experiences cost 

savings after introducing a new technology or process, it can be difficult to 

link the savings directly to a specific cause or technology such as IUID. 

Given IUID’s potential costs and that DOD’s methodology for estimating 

IUID’s potential financial benefits may not be appropriate, we continue to 

believe that an estimate of both IUID’s costs and benefits, based on an 
 

Page 51 GAO-12-482 Defense Logistics

appropriate methodology, and a sensitivity analysis of these estimates, 

would provide DOD leaders with key information to better enable sound 

program management and determine whether continued spending on 

IUID is likely to result in a significant return on investment. 

We are sending copies of this report to the Secretaries of Defense, the 

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

and the Directors of the Defense Logistics Agency and the Defense 

Contract Management Agency. In addition, the report is available at no 

charge on the GAO website at http://www.gao.gov.

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

me at (202) 512-5257 or merrittz@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix IV.

Zina D. Merritt

Director

Defense Capabilities and Management
Appendix I: Scope and Methodology

Page 52 GAO-12-482 Defense Logistics

To determine the extent to which the Department of Defense (DOD) has a 

comprehensive management approach for its implementation of item 

unique identification (IUID), we reviewed previously published DOD and 

GAO work to identify best practices;1

To determine the extent to which DOD components have marked legacy 

items with IUID, we reviewed DOD criteria for the types of items to be 

marked with IUID labels; reviewed DOD’s plans for marking legacy items; 

and gathered data on the number and type of legacy items in 

components’ inventories, and how many had been marked as of October 

2011. To determine the extent to which DOD has taken steps to ensure 

that items are sufficiently marked by contractors with IUID, we reviewed 

the Defense Federal Acquisition Regulation Supplement clauses that 

require contractors to mark items with labels—or establish virtual unique 

item identifiers (UII)—and register the items, and we gathered data from 

the components on the quality of contractors’ IUID data matrices. 

the IUID implementation framework 

documentation provided by the Office of the Deputy Assistant Secretary 

of Defense for Supply Chain Integration (ODASD[SCI]); the DOD IUID 

task force’s analysis of the potential costs and benefits of IUID 

implementation; and the components’ estimates of historical spending 

and fiscal year 2012 budget requests for IUID implementation.

To determine the extent to which DOD has integrated IUID with its 

enterprise information systems, we reviewed our previously published 

work on best practices for the planning of large-scale informationtechnology efforts;2

 

1

DOD, Product Support Business Case Analysis Guidebook (Washington, D.C.: April 

2011); GAO, Drug Control: DOD Needs to Improve Its Performance Measurement System 

to Better Manage and Oversee Its Counternarcotics Activities, 

reviewed DOD-wide and component-level policy on 

the use of UII data in its information technology systems, which include 

DOD Enterprise Resource Planning systems; reviewed DOD-wide and 

GAO-10-835 (Washington, 

D.C.: July 21, 2010).GAO, Cost Estimating and Assessment Guide, GAO-09-3SP 

(Washington, D.C.: Mar. 2, 2009); GAO, Afghanistan Security: U.S. Efforts to Develop 

Capable Afghan Police Forces Face Challenges and Need a Coordinated, Detailed Plan 

to Help Ensure Accountability, GAO-08-883T (Washington, D.C.: June 18, 2008); GAO, 

Tax Administration: IRS Needs to Further Refine Its Tax Filing Season Performance 

Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002); GAO, Standards for Internal 

Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999); 

GAO, Executive Guide: Effectively Implementing the Government Performance and 

Results Act, GAO/GGD-96-118 (Washington, D.C.: June, 1996).

2

GAO, DOD Business Transformation: Improved Management Oversight of Business 

System Modernization Efforts Needed, GAO-11-53 (Washington, D.C.: Oct. 7, 2010).

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

Page 53 GAO-12-482 Defense Logistics

component-level integrated master schedules for the integration of IUID 

technology with these systems, if available; and reviewed other types of 

existing schedules and system planning documents.

In addition, we visited selected sites to observe key IUID activities. To 

select the sites we used a nongeneralizable, judgmental sample based on 

a number of criteria, including DOD component and the type of IUID 

activity performed at the site. For all our objectives, we interviewed 

officials knowledgeable about DOD’s IUID implementation efforts, 

including officials from ODASD(SCI), as well as other officials from the 

Office of the Secretary of Defense, the components, and the Defense 

Contract Management Agency.

We assessed the reliability of all computer-generated data provided by 

DOD for each of our objectives by reviewing existing information about 

the data and the systems that produced the data and by interviewing 

agency officials knowledgeable about the data to determine the steps 

taken to ensure the accuracy and completeness of the data. In the course 

of our assessment, we reviewed estimates provided by the components 

on the number of legacy items marked and to be marked; deficient data 

matrices; and historical and requested IUID spending.

• Each of the components provided estimates on either the number of 

legacy items marked, or to be marked; several of the components 

provided estimates of both. On the basis of our review of the sources 

and methodology used by the Army, Marine Corps, and Air Force to 

produce estimates of the number of legacy items they have marked, 

we determined that these data are sufficiently reliable for the 

purposes of reporting the components’ best estimates of the size of 

this population of items. The Navy was not able to estimate the 

number of legacy items it has marked; the Defense Logistics Agency 

reported that it has not marked legacy items. Based on our review of 

the sources and methodology used by the Marine Corps and Air 

Force to produce estimates of the number of legacy items they must 

mark in the future, we determined that these data are sufficiently 

reliable for the purposes of reporting on the components’ best 

estimates of the size of this population of items. As previously 

discussed, the Army, Navy, and Defense Logistics Agency explained 

that their estimates on the number of legacy items that must be 

marked in the future are not complete. Although not complete, we 

determined that the data on legacy items represent the components’ 

best estimates, and are sufficiently reliable for the purposes of 
Appendix I: Scope and Methodology

Page 54 GAO-12-482 Defense Logistics

reporting on the general size of the population of legacy items they 

must mark in the future.

• The Army, Navy, and Defense Logistics Agency did not provide data 

on deficient data matrices; the Marine Corps and Air Force did provide 

these data. We reviewed the data sources and methodology used by 

the Marine Corps and Air Force to produce data on the number of 

deficient data matrices they have discovered through their review of a 

portion of data matrices on newly-acquired items in their inventories. 

We determined that these data are sufficiently reliable for the 

purposes of reporting on the percentage of data matrices that these 

components classified as deficient, out of the portion of data matrices

in their inventories that they have assessed for sufficiency.

• The Defense Logistics Agency did not provide estimates on either 

historical or requested IUID spending; the Army and Navy provided 

estimates on historical IUID spending; and the Marine Corps and Air 

Force provided estimates of both historical and requested IUID 

spending. We discussed with component officials the sources and 

methodology they used to produce the data on their historical IUID 

spending and fiscal year 2012 budget requests for IUID spending. The 

Marine Corps and Air Force provided data on both their historical and 

future spending. On the basis of our review of their sources and 

methodology for producing these data, we determined that the 

spending data provided by the Marine Corps and Air Force are 

sufficiently reliable for the purposes of reporting on these components’ 

historical spending and fiscal year 2012 IUID budget requests. As 

previously discussed, Army and Navy officials explained that their 

estimates on historical IUID spending are not complete. Although not 

complete, we determined that these data represent the best estimates 

of the Army and Navy on their historical IUID spending, and are 

sufficiently reliable for the purposes of reporting on the historical 

spending data that are available.
Appendix II: Key IUID Policy Issuances and 

Implementation Events, Fiscal Year 2003 to 

Fiscal Year 2011

Page 55 GAO-12-482 Defense Logistics

Appendix II: Key IUID Policy Issuances and 

Implementation Events, Fiscal Year 2003 to 

Fiscal Year 2011
Appendix III: Comments from the Department 

of Defense

Page 56 GAO-12-482 Defense Logistics

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 57 GAO-12-482 Defense Logistics
Appendix III: Comments from the Department 

of Defense

Page 58 GAO-12-482 Defense Logistics
Appendix III: Comments from the Department 

of Defense

Page 59 GAO-12-482 Defense Logistics
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 60 GAO-12-482 Defense Logistics

Zina D. Merritt, (202) 512–5257 or merrittz@gao.gov

In addition to the contact named above, Kimberly Seay, Assistant 

Director; Emily Biskup; Cindy Brown Barnes; Cynthia Grant; Neelaxi 

Lakhmani; Jason Lee; Alberto Leff; John Martin; Charles Perdue; Carol 

Petersen; Karen Richey; Darby Smith; Chris Turner; Cheryl Weissman; 

and Michael Willems made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 61 GAO-12-482 Defense Logistics

Defense Logistics: DOD Needs to Take Additional Actions to Address 

Challenges in Supply Chain Management. GAO-11-569. Washington, 

D.C.: July 28, 2011.

High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 

16, 2011.

DOD’s 2010 Comprehensive Inventory Management Improvement Plan 

Addressed Statutory Requirements, but Faces Implementation 

Challenges. GAO-11-240R. Washington, D.C.: January 7, 2011.

DOD Business Transformation: Improved Management Oversight of 

Business System Modernization Efforts Needed. GAO-11-53. 

Washington, D.C.: October 7, 2010.

DOD’s High-Risk Areas: Observations on DOD’s Progress and 

Challenges in Strategic Planning for Supply Chain Management. 

GAO-10-929T. Washington, D.C.: July 27, 2010.

Department of Defense: Additional Actions Needed to Improve Financial 

Management of Military Equipment. GAO-10-695. Washington, D.C.: July 

26, 2010.

DOD’s High-Risk Areas: Actions Needed to Reduce Vulnerabilities and 

Improve Business Outcomes. GAO-09-460T. Washington, D.C.: March 

12, 2009.

Defense Logistics: Lack of Key Information May Impede DOD’s Ability to 

Improve Supply Chain Management. GAO-09-150. Washington, D.C.: 

January 12, 2009.

DOD’s High-Risk Areas: Efforts to Improve Supply Chain Can Be 

Enhanced by Linkage to Outcomes, Progress in Transforming Business 

Operations, and Reexamination of Logistics Governance and Strategy. 

GAO-07-1064T. Washington, D.C.: July 10, 2007.

Defense Logistics: Efforts to Improve Distribution and Supply Support for 

Joint Military Operations Could Benefit from a Coordinated Management 

Approach. GAO-07-807. Washington, D.C.: June 29, 2007. 

DOD’s High-Risk Areas: Progress Made Implementing Supply Chain 

Management Recommendations, but Full Extent of Improvement 

Unknown. GAO-07-234. Washington, D.C.: January 17, 2007.

Related GAO Products
Related GAO Products

Page 62 GAO-12-482 Defense Logistics

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.

(351612)
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