Defense Logistics: Additional Oversight and Reporting for the Army Logistics Modernization Program Are Needed
Published: 2010-11-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Logistics Modernization Program (LMP) is an Army business system that is intended to replace the aging Army systems that manage inventory and depot repair operations. From 1999 through 2009, the Army expended more than $1 billion for LMP. LMP was originally scheduled to be completed by 2005, but after the first deployment in July 2003, the Army delayed fielding because of significant problems. The Army later decided to field the system in two additional deployments: the second in May 2009 and the third in October 2010. GAO was asked to evaluate the extent to which the Army will achieve the intended functionality (e.g., supply chain management and materiel maintenance) from LMP for the commands, depots, and arsenals participating in the third deployment. To do this, GAO reviewed Army plans and policies related to LMP and met with Army officials at three Army commands and several third deployment sites.
section_title: What GAO Found
paragraphs: The Army has made improvements to its LMP implementation strategy, but it may not fully achieve the intended LMP functionality in its third deployment, which began in October 2010, because it has not corrected long-standing data inaccuracies and has not fully developed the software and systems needed to support critical functionality. Specifically: (1) GAO previously recommended that the Army improve testing activities to obtain reasonable assurance that the data used by LMP can support the LMP processes. The Army implemented data audits and new testing activities to improve data accuracy, but data issues persist, which could impede LMP functionality. According to Army officials, these new testing activities were designed to assess how well the LMP software functions but not how well the data work in LMP. Third deployment locations were also able to perform individual tests on the data, but these activities were not coordinated or managed by the Army. As a result, the audits and new testing activities did not provide the Army reasonable assurance that the data in LMP are of sufficient quality to achieve the intended LMP functionality once the system has been deployed. Without this assurance, the Army may experience the same data-related problems during the third deployment that were experienced during the second deployment, which prevented Corpus Christi and Letterkenny Army Depots from using LMP functionality as intended. (2) The Army's software development schedule and subsequent testing of capabilities needed by several locations are not expected to be delivered until after September 2010, but costly mitigations may be required if delivery is delayed. Unlike the previous deployments of LMP, the operations at some of the third deployment locations require additional capabilities. For example, the Army Sustainment Command and the Joint Munitions and Lethality Life Cycle Management Command perform missions that require LMP to interface with existing systems in order to perform day-to-day missions. If the software capabilities are not operating as intended, several sites will not have the necessary LMP functionality to perform their missions. The Army has mitigation plans to address this functionality gap. For example, the Joint Munitions and Lethality Life Cycle Management Command plans to hire 172 additional personnel, and the Tank-automotive and Armaments Command expects to hire 95 additional personnel to perform manual data entry until the capability is delivered. The Army expects that these mitigation plans will increase costs. Prior to transitioning to LMP, the Army is directed to certify that it is prepared to make the transition, but it is not required to regularly report to Congress specifically on LMP implementation. Congress therefore lacks complete and ongoing information to aid in its oversight of this program characterized by implementation delays and long-standing problems that have precluded LMP functionality at the sites included in the first two LMP deployments. GAO previously recommended that the Army address issues related to its implementation of LMP.
section_title: What GAO Recommends
paragraphs: GAO recommends further that the Army periodically report to Congress on the progress of LMP, including its progress in ensuring that the data used in LMP can support the system, timelines for the delivery of software necessary to achieve full benefits, and the costs and time frames of its mitigation strategies. DOD agreed with GAO's findings and recommendation.

section_title: Letter
paragraphs: In 1999, the Army initiated the Logistics Modernization Program (LMP)  with the intent of replacing two aging Army systems used to manage its  inventory and its repair operations. LMP, which is an enterprise resource  planning system, is also intended to reduce redundant and stovepiped  information technology investments and assist in driving business  transformation across the Army, which is ultimately envisioned to enable  the Army to supply and service the warfighter more quickly and cost  effectively. As of December 2009, the Army has expended more than   $1 billion for LMP implementation and estimates a total life cycle cost in  excess of $2.6 billion to procure and operate the system. The Army  originally intended for LMP to be fully deployed by 2005, but the Army  delayed fielding of LMP after the first deployment sites—the  Communications-Electronics Command and Tobyhanna Army Depot— experienced significant problems when they deployed LMP in July 2003,  which we detailed in several previous reports. Because of these  challenges, the Army modified its deployment schedule for LMP, and  determined that implementation of LMP would occur in two additional  phases: at the Aviation and Missile Command and its respective Army  depots in May 2009, and at the Army Sustainment Command, the Joint  Munitions and Lethality Life Cycle Management Command, and the Tank- automotive and Armaments Command and their respective depots and  industrial activities on October 21, 2010.
In 2009, we observed the Army’s preparation for and implementation of  LMP at the Aviation and Missile Command, Corpus Christi Army Depot,  and Letterkenny Army Depot. We reported that the Army was successful  in mitigating some of the previous issues experienced during the first  deployment of LMP and that the second deployment sites were able to  demonstrate the potential for LMP to provide some benefits for the Army;  however, the second deployment sites faced challenges related to data  quality and training that limited their ability to use LMP as intended. We  also reported that the Army did not have a comprehensive set of  performance metrics to enable it to measure whether the intended LMP  functionality had been achieved at the depots. Because the Army’s  preparation for the third deployment of LMP began in 2009, we shared our  initial observations with Army officials beginning in June 2009 and  throughout the course of our audit, and in April 2010, to assist the Army as  it prepared for the third deployment of LMP, we made several  recommendations related to improving data quality and training and  establishing performance measures. The Army concurred with all of these  recommendations.
You asked us to continue monitoring the Army’s efforts to deploy LMP and  evaluate the Army’s progress in addressing the issues that are critical to  successful implementation. Accordingly, the objective of this review was  to evaluate the extent to which the Army will achieve the intended  functionality of LMP during the third deployment.
To address this objective, we reviewed and analyzed the Army plans and  policies that governed LMP implementation. We met with officials at the  LMP program management office in Marlton, New Jersey, to discuss their  plans to assist the sites in preparing for the third deployment of LMP. We  also met with officials at the Army Materiel Command to discuss how they  were managing the third deployment, as well as with officials at the Army  Logistics Support Activity to discuss their role in monitoring the data. To  assess what steps the third deployment sites were taking with respect to  preparing for LMP, we met with officials at the Army Sustainment  Command, the Joint Munitions and Lethality Life Cycle Management  Command, and the Tank-automotive and Armaments Command. We also  visited eight sites that are scheduled to deploy LMP during the third  deployment, specifically, two Army depots, three Army arsenals, two  ammunition storage locations, and an Army location that manages the  Army’s pre-positioned stocks. In order to determine the extent to which  the intended functionality of LMP was being achieved at the sites that  deployed LMP in May 2009, we also visited the Aviation and Missile  Command, Corpus Christi Army Depot, and Letterkenny Army Depot. In  addition, because of their role in providing oversight of the Army’s LMP  implementation, we provided our preliminary observations to the Director  of the Army’s Office of Business Transformation and the Department of  Defense (DOD) Deputy Chief Management Officer, as well as to officials  from the Office of the Deputy Chief of Staff of the Army for Logistics and  the Deputy Commanding General of the Army Materiel Command. We  conducted this performance audit from May 2010 through November 2010  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 objective. We believe that the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objective.
subsections: section_title: Background
paragraphs: The Army Materiel Command initiated an effort in 1999 to replace its  existing materiel management systems—the Commodity Command  Standard System and the Standard Depot System—with LMP. In addition  to replacing these systems, which have been used for over 30 years to  manage inventory and depot maintenance operations, the Army intended  for LMP to transform logistics operations in six core processes: order  fulfillment, demand and supply planning, procurement, asset management,  materiel maintenance, and financial management. According to the Army,  the implementation of LMP is intended to help the Army reduce inventory,  improve supply and demand forecast planning, and provide a single source  of data for decision making. When LMP is fully implemented, it is expected  to include approximately 21,000 users at 104 locations and will be used to  manage more than $40 billion worth of goods and services.
LMP became operational at the Army Communications-Electronics  Command and Tobyhanna Army Depot in July 2003 and was originally  expected to be fully deployed by fiscal year 2005. However, because of  problems experienced during the deployment, the Army decided to delay  implementation until the problems were resolved. In May 2009, LMP  became operational at the Army Aviation and Missile Command and  Corpus Christi and Letterkenny Army Depots. The third and final  deployment of LMP began on October 1, 2010, at depots, arsenals, and  sites within the Army Sustainment Command, the Joint Munitions and  Lethality Life Cycle Management Command, and the Tank-automotive and  Armaments Command. Preparations for the third and final deployment of  LMP began in December 2008, and it is the largest of the three  deployments, affecting approximately 11,000 users at 83 sites across the  globe. LMP program management officials told us that 29 of these sites  will significantly use LMP.
The Duncan Hunter National Defense Authorization Act for Fiscal Year  2009 indicates that the executive-level oversight of business systems  modernization and overall business transformation—including defining  and measuring success in enterprise resource planning—is the  responsibility of a military department-level chief management officer. In  the case of the Army, the Under Secretary of the Army serves as the Chief  Management Officer. In this capacity, the Under Secretary of the Army  provides oversight for business systems modernization, such as LMP.
Prior to transitioning to LMP, the Army is directed to certify that each  Army depot is prepared to transition. Specifically, in House Armed  Services Committee Report 110-652 accompanying the Duncan Hunter  National Defense Authorization Act for Fiscal Year 2009, the committee  directed the Secretary of the Army to certify to the Senate Committee on  Armed Services and the House Committee on Armed Services that each  Army depot is prepared for the transition to LMP. On September 20, 2010,  the Secretary of the Army certified to the chairmen and ranking members  of the committees that the Tank-automotive and Armaments Command,  the Joint Munitions and Lethality Life Cycle Management Command, their  subordinate industrial sites, and the Army Sustainment Command were  prepared for transition to the LMP automated information system.  According to Army officials, based on the timing of this memorandum, the  Army intended to begin using the system at the third deployment locations  on October 21, 2010, to manage operations for fiscal year 2011. With the  exception of this certification, the Army is not presently required to report  to Congress other information specifically focused on LMP  implementation on a regular basis.
section_title: The Army Has Improved Its Implementation of LMP but May Not Fully Achieve the Intended LMP Functionality at Its Third Deployment Locations
paragraphs: The Army has improved its LMP implementation strategy from the  previous two deployments, but continues to face several problems that  may prevent LMP from fully providing its intended functionality at each of  the third deployment locations. While the Army has improved its data  testing strategy for the third deployment, data quality problems continue  to persist at locations that previously deployed LMP, which prevent these  locations from using LMP as intended. Furthermore, the Army has yet to  develop fully the software capabilities needed to achieve the intended  LMP functionality for some sites, which may limit their ability to perform  certain tasks, such as maintaining accountability of ammunition. Although  the Army has mitigation plans in place if the software capabilities are not  delivered on time or as intended, these mitigation plans will increase  costs.
subsections: section_title: The Army Has Achieved Some Improvements to Its LMP Implementation Strategy
paragraphs: Our prior reviews of LMP identified weaknesses in the Army’s efforts to  effectively implement the processes needed to reduce risks to acceptable  levels. During our current review, we found that the Army had taken  action on some of these areas. For example, we previously recommended  that the Army use system testers that are independent of the LMP system  developers to help ensure that the system is providing its users the  intended capabilities. Based on our observations of the third deployment,  the Army implemented this recommendation and testing activities were  being conducted by LMP users as opposed to the LMP system developers.  Additionally, to assist in the preparation for the third deployment of LMP,  we previously recommended that the Army establish performance metrics  that will enable the Army to assess whether the deployment sites are able  to use LMP as intended. The Army developed performance measures to  monitor the progress of LMP implementation and finalized these measures  on September 30, 2010. These measures, if effectively implemented, should  enable the Army to determine the extent to which the third deployment  sites are able to use LMP as intended.
section_title: Long-Standing Data Inaccuracies Remain in the LMP System
paragraphs: The Army does not have reasonable assurance that the data used by LMP  are of sufficient quality to enable the commands, depots, and arsenals to  perform their day-to-day missions using LMP as intended. The Army  initiated a testing strategy to determine data accuracy, but it has not  provided reasonable assurance that the data used by LMP can support the  LMP processes. As we have previously reported, testing is a critical  process utilized by organizations with the intent of finding errors before a  system is implemented. Although the Army implemented new testing  activities to support the third deployment of LMP, these activities were  designed to assess whether the sites could use the software but did not  evaluate whether the data loaded into LMP are of sufficient quality to  support the LMP processes. LMP program management officials told us  that these testing activities were not designed to assess data quality.  Instead, the Army conducted data quality audits to determine whether  select data elements were accurate. Based on our observations, the data  quality audits did not effectively assess whether the data would work in  the LMP system.
subsections: section_title: Army Testing Activities Do Not Assess Data Quality
paragraphs: Based on our observations during the second deployment of LMP, we  previously recommended that the Army direct the Army Materiel  Command to improve its testing activities to obtain reasonable assurance  that the data are of a quality that can be used by LMP to support the LMP  processes. The Army concurred with our recommendation and stated that  the third deployment would involve improved testing as well as additional  efforts to enhance the quality of the data. The Army implemented two new  test activities—the Process and Data Integration Test and the Business  Operations Test—for the third deployment of LMP. According to Army  officials, these test activities incorporated some lessons learned from the  second deployment of LMP. The Process and Data Integration Test, which  was conducted from April 2010 through June 2010, was intended to test an  end-to-end business process using migrated, validated business data from  critical weapons systems. The Business Operations Test, which was  conducted from July 2010 through September 2010, was intended to be an  activity where users would perform transactions in the LMP system using  local data, from their home stations, which would bring data, business  processes, standard operating procedures, and end user training materials  together to ensure success. LMP program management officials told us in  January 2010 that these tests were an improvement over the tests used  during the second deployment of LMP. Specifically, LMP program  management officials stated that the Process and Data Integration Test  was an improvement because the test activity would assess the  compatibility of the migrated data to support LMP processes, such as  verifying that invoices and goods receipts can be processed against  purchase orders. Also, LMP program management officials stated that the  Business Operations Test was an improvement because the sites would  select commodities at their sites and then execute an end-to-end process  to ensure that the LMP processes work. According to LMP program  management officials, the two testing activities were linked because the  test scripts used during the Process and Data Integration Test would be  used to develop the test scripts for the Business Operations Test. LMP  program management officials also told us in June 2010 that both tests  would be used to determine whether the software is meeting the  operational requirements of the third deployment locations, and that the  Business Operations Test, in particular, would evaluate whether the data  used by LMP can support the envisioned LMP processes.
Based on our observations at the third deployment sites, the Army’s tests  were not effective in evaluating whether the quality of the data used in  LMP could support the LMP processes. Specifically, officials at several of  the sites we visited stated that they had observed shortcomings in the  Process and Data Integration Test. For example, officials at the Army  Sustainment Command told us that at the time the Process and Data  Integration Test activity was conducted, their data had yet to be loaded  into LMP. Accordingly, these officials stated that the Process and Data  Integration Test activity used data from the second deployment of LMP.  Officials at sites from the Joint Munitions and Lethality Life Cycle  Management Command also identified other problems with the Process  and Data Integration Test activity, such as test scripts that were incorrect  or not reflective of their business processes because the software  necessary to support their operations was still being developed. Officials  at a Tank-automotive and Armaments Command site expressed similar  sentiments, noting that the test scripts used during the Process and Data  Integration Test activity did not reflect some of their business processes,  such as building items in support of foreign military sales. Similarly,  officials at several other sites told us that the test scripts used were out of  sequence, so the test scripts had to be corrected in order to reflect how  the location conducted its business.
We also observed challenges related to the Army’s Business Operations  Test activity. Specifically, officials at several sites told us in July and  August 2010 that some of the test scripts they executed during the  Business Operations Test activity were not reflective of their business  processes. For example, during our site visits in August, officials at one  site told us that although manufacturing represented more than 90 percent  of their workload, they spent the first 5 weeks of the Business Operations  Test activity evaluating whether they could perform repair operations.  Additionally, the officials stated that during the course of this testing,  some of the data necessary to conduct the test were missing and other  data did not load correctly into LMP and had to be generated for the test.  For example, officials told us that in order to test whether they were able  to conduct materiel requirements planning, which is the process used to  determine the number of parts needed to support a repair, the test  managers had to create the data that listed the component parts for the  item so that the test scripts could be executed. At another site, officials  told us that the data that were necessary to assign a production order to  their location were not in LMP, and that in order to conduct the tests, the  test managers directed them to use the data from a different command.
Site officials also told us that they were limited in the number of  commodities that they could test. For example, officials at one site told us  that they manage more than a thousand different items. However, because  of time constraints, they were only able to test one item. Furthermore, the  Business Operations Test activity did not exercise the full range of data.  For example, officials at one site told us that an item they tested contained  multiple levels of data; however, the test script directed them to evaluate  only the first and second levels of data. Accordingly, the Business  Operations Test activity did not assess whether the data could support the  actual functions that the site would need to perform once LMP was  deployed.
On August 13, 2010, we shared our observations with LMP program  management officials, and on August 18, 2010, LMP program management  officials told us that the Business Operations Test activity was intended to  test the software using the data from the sites and that this test would  identify and document data and training issues. However, they noted that  while the test would provide indicators related to data issues, it would not  provide an overall data accuracy assessment.
section_title: Data Audits Do Not Assess Whether Data Can Work in LMP
paragraphs: LMP program management officials stated that the data audits being  conducted by the Army Logistics Support Activity were the best indicator  for data accuracy. According to Army officials, these audits were intended  to provide an initial assessment of data accuracy and then serve as an  ongoing measurement as part of the Army’s strategy to ensure the  accuracy of the data. LMP program management officials stated that in  response to our observations, the Army would accelerate the time frame  for the data accuracy audits. LMP program management officials stated  that these data accuracy audits were completed on September 30, 2010.  Additionally, LMP program management officials stated that these audits  were not designed to be an automated data test, but rather an inspection  by subject matter experts to ensure that the data were accurate.
Although an important step, based on our observations at the third  deployment sites, the Army’s data audits do not provide reasonable  assurance that the data are of sufficient quality to support the LMP  processes. According to Army officials, the data audits do not include all  data elements. Consequently, when the sites conducted simulations, they  identified data errors that had not been identified by the audits. Officials at  one of the sites we visited told us that they had conducted an extensive  process to build and validate their data, including having subject matter  experts review individual data elements and compare the data elements  against the technical data for that item. However, the officials stated that  they had discovered through simulations that some of the data that had  transferred into LMP from the legacy systems—and had undergone  audits—still contained errors. The officials stated that these errors, which  were related to an incorrect unit of measure, would have prevented them  from using LMP as intended. Officials at another site we visited in June  2010 told us that during a simulation they conducted in between the  planned testing activities, they discovered that an item that takes 5 days to  repair was projected to take 5 years to repair. Officials at this site stated  that after they visually inspected and corrected the data elements, they  conducted another simulation, and the projected time to complete repairs  dropped from 5 years to 3 years.
section_title: Simulation Testing Has Limitations in Assuring Data Quality
paragraphs: According to LMP program management officials, the sites would have the  opportunity to conduct simulations to assess their data upon completion  of testing activities. We observed simulations being conducted at Anniston  Army Depot on September 22, 2010, and Red River Army Depot on  September 23, 2010. These simulations were useful, in part, but also had  weaknesses. For example, depot officials told us that the simulations  enabled the depots to identify data errors and develop processes to  correct data errors after LMP is deployed and provided an opportunity to  perform actual tasks in LMP. While these simulations and the innovative  actions taken at both depots—such as developing mitigation strategies to  correct data errors—reduce the risk that data problems will adversely  affect the depots after LMP is deployed, these simulations also revealed  weaknesses in the Army-wide testing activities. For example, depot  officials told us that the simulations revealed problems with the data  audits being conducted by the Army Logistics Support Activity.  Specifically, depot officials told us that the data reviewed by the Army  Logistics Support Activity were generally considered to be accurate in  over 90 percent of the cases. However, when conducting simulations,  depot officials stated that they found data errors that would have  prevented the LMP processes from being exercised. Additionally, depot  officials told us that the data audits identified data errors that would affect  their ability to use LMP but were also beyond their ability to correct  because the data elements were managed by other Army or DOD  organizations.
While the simulations we observed at Anniston Army Depot and Red River  Army Depot are a positive step, they may not be representative of the  Army’s actions. During our visit to these depots in June 2010, officials at  both depots told us that they intended to conduct simulations as soon as  practicable. In contrast, according to the LMP program management  office, other locations would not be able to begin simulations until  October 4, 2010. Additionally, the strategies used to conduct simulations at  both depots we visited were site specific and different from each other.  Depot officials told us that they had developed their simulation strategy  internally and without direction from the Army or the LMP program  management office, and LMP program management officials told us that  there was not a formal requirement to conduct simulations. As a result,  there was likely to be variation in how the 29 sites conducted simulations,  if at all.
Depot officials told us that the simulations did not mirror all of the  functions in LMP that would be used in performing their day-to-day  mission of repairing and overhauling items that were needed by the  warfighter and were not representative of the LMP environment.  Moreover, depot officials told us that they did not expect that the  corrections they made to fix data errors identified during the simulations  would transfer correctly into LMP because based on their experience the  process of migrating data between systems introduces errors. However,  depot officials told us that on September 23, 2010, officials from the LMP  program management office told them that the depots would have access  to the actual LMP environment on October 14, 2010. Depot officials stated  that they intended to conduct additional simulations using LMP until the  system was deployed on October 21, 2010. Depot officials also stated that  they would continue to correct the data in LMP after the system was  deployed.
section_title: Data Problems Persist at Second Deployment Locations
paragraphs: Persistent data issues have prevented Corpus Christi Army Depot and  Letterkenny Army Depot—the two depots that deployed LMP in May  2009—from achieving the intended benefits from LMP. Although officials  at both locations acknowledged that the system is an improvement over  the previous legacy systems, officials also told us that they are unable to  always use the system as intended. For example, as we previously  reported, one of the intended benefits that LMP was expected to provide  the depots was the ability to automatically calculate the materiel  requirements for a repair project. According to an Army regulation, this  process—known as materiel requirements planning—works to ensure that  repair parts and components are available to meet the maintenance,  repair, overhaul, or fabrication schedule while maintaining the lowest  possible level of inventory. Officials at both locations told us that while the  LMP software was capable of automatically conducting materiel  requirements planning, the data that LMP uses to conduct the calculations  are inaccurate. Accordingly, officials at both depots told us that they must  either adjust the settings within LMP to ensure that each calculation  matches the planned delivery time or manually input the specific  requirements. Officials at both locations told us that they have developed  strategies and are conducting reviews to address data quality problems.  For example, officials at Letterkenny Army Depot told us that they have  completed addressing data issues for about half of their major systems  since May 2009. Similarly, officials at Corpus Christi Army Depot told us  that they were continuing to address data quality problems, and that this  was a long-term process that could take years.
Inaccurate data are also affecting the Army’s ability to use other  management systems. For example, the Army uses the Army Workload  and Performance System to determine, among other things, whether the  workforce at a depot matches the projected workload. Army officials told  us that because the Army Workload and Performance System relies on  data from LMP in order to generate the reports, inaccurate data in LMP  will result in inaccurate reports. For example, Army officials showed us a  report from the Army Workload and Performance System that compared  the projected workload at Corpus Christi Army Depot and Letterkenny  Army Depot against the planned workforce and, according to that report,  the workforce needed to accomplish the projected workload was higher  than previous levels. Specifically, Letterkenny Army Depot, which  normally requires approximately 1,800 resources per day, was projected  to need 6,000 resources per day to address the projected workload.  Similarly, Corpus Christi Army Depot, which normally requires  approximately 2,900 resources per day, was projected to need nearly  14,500 resources per day. Army officials stated that these incorrect reports  were related, in part, to incorrect data that had been loaded into LMP.  Army officials at the depots also told us that their ability to use the Army  Workload and Performance System was directly related to the quality of  the data in LMP, and that until the data in LMP are corrected, they do not  expect the reports to be accurate.
Despite the data issues, depot officials at both Corpus Christi Army Depot  and Letterkenny Army Depot stated that LMP is an improvement over the  previous legacy systems because it has increased visibility over assets and  provided a single source of data for decision making. For example,  officials at Corpus Christi Army Depot told us that LMP has enhanced their  ability to share information and interact with original equipment  manufacturers, and that they now have increased visibility over  contractor-managed inventories compared to that under the legacy  systems. Similarly, Letterkenny Army Depot officials told us that LMP  provides the Army increased visibility over items they maintain in  inventory, and depot officials told us that a unit in Afghanistan was able to  identify and requisition an item from the depot’s inventory that was not  available in the supply system. As we previously reported, these  capabilities were not available in legacy systems. Additionally,  Letterkenny Army Depot officials told us that as they improve the quality  of their data, they expect to be able to improve their ability to use LMP for  evaluating repair overhaul factors as well as forecasting workloads and  parts requirements.
section_title: The Army Has Yet to Fully Develop Software to Achieve Intended LMP Benefits but Has Mitigations Plans That May Be Costly
paragraphs: The Army’s software development schedule and subsequent testing of  capabilities needed by several locations was not expected to be delivered  until after September 2010. Unlike operations under the previous  deployments of LMP, the operations at some of the third deployment  locations are unique and therefore require additional capabilities. For  example, the Army Sustainment Command and the Joint Munitions and  Lethality Life Cycle Management Command require LMP to interface with  existing systems in order to perform their day-to-day missions. In contrast,  some sites within the Tank-automotive and Armaments Command use  existing systems to collect manufacturing data that will no longer be  available once LMP is deployed. The Army has developed mitigation plans  to address the shortfalls in capability, but those plans often involve hiring  additional staff or employing time-consuming manual processes.
subsections: section_title: Software Interface for the Army Sustainment Command Still Being Developed
paragraphs: The Army has yet to develop the software functionality needed by the  Army Sustainment Command to perform its mission under LMP, but Army  officials expect the functionality to be delivered prior to LMP deployment.  The Army Sustainment Command uses an automated information system  called the Army War Reserve Deployment System (AWRDS) to track  inventory and transfer accountability of pre-positioned stocks to units. In a  briefing to the Army Materiel Command in December 2009, officials at the  Army Sustainment Command stated that the interface between LMP and  AWRDS was critical to a go-live decision and a key to the success of Army  Sustainment Command operations in Southwest Asia. During that briefing,  officials at the Army Sustainment Command also stated that full  development of the interface between LMP and AWRDS was scheduled for  completion and testing in March 2010, and that the functionality was  scheduled for release in May 2010. However, development and delivery of  the LMP and AWRDS interface was delayed and, according to LMP  program management officials, the Business Operations Test activity for  this interface occurred from August 30, 2010, through September 3, 2010.  During the Business Operations Test activity, LMP program management  officials told us that all but one of the test cases passed, and that this issue  is currently under review.
The Army Sustainment Command also requires additional software  functionality to conduct a mass upload—which is the automated  movement of thousands of items of inventory between the Army  Sustainment Command and the warfighter. Army officials stated that LMP  provides this capability, but only through the use of manual processes that  Army officials said are time consuming and staffing resource intensive.  The expected delivery date of this functionality was October 11, 2010;  however, Army officials stated on October 14, 2010, that testing on the  functionality was still in process. Army Sustainment Command officials  stated that without this capability, users would have to enter information  manually into LMP, which would require certain locations to hire  additional staff to accommodate the workload and mitigate the effects of  the missing capability. On August 27, 2010, the Commander of the Army  Sustainment Command endorsed the recommendation to deploy LMP on  October 13, 2010, but noted that AWRDS/LMP interface testing would not  be completed until September and that training materials for the new  software had yet to be made available for end users.
section_title: Functionality for the Joint Munitions and Lethality Life Cycle Management Command Still Being Developed
paragraphs: The Army is continuing to develop the software functionality that the Joint  Munitions and Lethality Life Cycle Management Command needs to  perform its mission using LMP, but Army officials said that full  functionality will not be available until after LMP has been deployed. The  Joint Munitions and Lethality Life Cycle Management Command conducts  operations related to the production, management, and maintenance of  ammunition. Officials at Joint Munitions and Lethality Life Cycle  Management Command sites told us that LMP—unlike the systems that  they currently have in place that will be replaced once LMP is deployed— did not enable them to ship, receive, inventory, and perform stock  movements for ammunition. LMP program management officials told us  that this missing functionality was identified in 2009, and that development  of this functionality began in January 2010. The Army plans to deliver the  ammunition-specific functionality and interfaces in phases through March  2011.
Joint Munitions and Lethality Life Cycle Management Command officials  stated that they have developed strategies to enable them to conduct  operations in the event that the new software functionality is not delivered  on time or does not provide the intended capability. For example, in the  event that this functionality is not delivered or does not operate as  expected, the Joint Munitions and Lethality Life Cycle Management  Command expects to hire 172 additional personnel to perform manual  data entry until the software can provide the required and agreed-upon  functionality. Joint Munitions and Lethality Life Cycle Management  Command officials stated that this mitigation plan would enable them to  deliver ammunition to the warfighter. However, they also stated that this  mitigation strategy will remove efficiencies associated with automation of  these activities that are present in the legacy systems being replaced by  LMP and lead to a degradation of data integrity and inventory accuracy.
During our visits to the Joint Munitions and Lethality Life Cycle  Management Command sites, officials provided examples of the effect of  lost visibility and accountability of ammunition on their operations.  Officials at one site told us that the intended benefit from LMP usage was  to provide a common data set and real-time visibility over ammunition.  However, in the event that the software capability is not delivered, the  officials stated that their mitigation strategy would be to track ammunition  using “pencils and index cards.” While this strategy would enable some  accountability over ammunition, the site would not be able to achieve the  intended benefit of real-time visibility over ammunition.
Officials at another site told us that their mitigation strategy would enable  them to continue to ship ammunition to the warfighter. However,  manually entering data into LMP would also reduce their ability to track  ammunition. For example, officials told us that the existing systems are  capable of tracking the serial numbers assigned to missiles, as well as the  serial numbers of a missile’s component parts—such as the warhead and  the guidance system—and that the software necessary for LMP to be able  to provide this capability was expected to be delivered on October 12,  2010. However, as of October 14, 2010, development of this capability was  only partially completed. The officials stated that without this capability,  their mitigation strategy of manually entering data into LMP would cause  delays in their ability to track the individual serial numbers and, in the  event that a missile component needed to be recalled, would make finding  missiles that have components that are being recalled difficult, especially  if those missiles had been shipped to a customer.
On August 20, 2010, the Executive Director of the Joint Munitions and  Lethality Life Cycle Management Command signed a memorandum that  stated that the command was prepared for the deployment of LMP. The  memorandum also stated that the tasks that had yet to be completed, upon  which deployment was contingent, were development of, training on, and  testing of the ammunition functionality. The memorandum also stated that  in the event that all ammunition functionality is not in place by the go-live  date, the Joint Munitions and Lethality Life Cycle Management Command  is prepared to exercise its documented mitigation strategy until such time  as the functionality is available in LMP, with the understanding that the  use of the mitigation strategy will increase costs and decrease inventory  accuracy.
section_title: Capabilities Missing at Tank- automotive and Armaments Command Arsenals
paragraphs: Certain functionality that the arsenals under the Tank-automotive and  Armaments Command need to perform their missions will not be deployed  until after LMP is deployed. These arsenals currently have systems— commonly referred to as manufacturing and execution systems—in place  to report manufacturing data and track the status of items being  manufactured. According to Tank-automotive and Armaments Command  officials, the arsenals will lose this capability once LMP is deployed until a  replacement system is fielded. According to LMP program management  officials, LMP was never intended to provide this capability. Instead, the  Army has another project to develop this capability and integrate it with  LMP. According to Army officials, this project is expected to provide the  needed functionality and be deployed to the LMP locations that need it in  phases. The first phase of this system improvement effort is expected to  occur in February 2011 with the final delivery to occur in July 2011. In  order to compensate for this lost capability, officials at the Tank- automotive and Armaments Command developed a mitigation strategy  that includes hiring an estimated 95 additional people in order to manually  perform the actions in LMP that were once handled by the legacy systems.  Tank-automotive and Armaments Command officials stated that these  personnel will be needed until the manufacturing and execution system is  fielded and effectively implemented.
In an August 30, 2010, memorandum, the Commander of the Tank- automotive and Armaments Command confirmed the command’s  preparedness to deploy LMP on October 13, 2010, with minimal impact to  mission accomplishment. The memorandum, however, identified a  number of the Commander’s concerns, such as the potential requirement  to hire an estimated 95 additional people to manage the manual efforts  required to address the lack of a manufacturing and execution solution, as  well as potential out-of-pocket costs that could approach an unbudgeted  $300 million in the near term.
section_title: Conclusion
paragraphs: The intention behind an enterprise resource planning system, like LMP, is  to enhance the effectiveness and efficiency of an organization.  Implementation of these types of systems is a complex endeavor, and the  ability to gain these efficiencies depends on the quality of the data in the  system. As illustrated by the experiences at the locations that deployed  LMP in May 2009, data quality continues to be a challenge. The Army,  however, has not adopted a testing strategy that provides adequate insight  on whether the data loaded into LMP can support the LMP processes.  Moreover, the functionality that is required to support some of the  locations is still being developed, so the Army does not have reasonable  assurance that the system is meeting its needs before LMP is deployed.  Without software that is working and data of sufficient quality to use in the  system, the Army’s ability to gain the anticipated increase in its  effectiveness and efficiency for its $1 billion investment remains unclear.  Although the Army has mitigation strategies in place that are expected to  address potential shortcomings, the Army expects that these strategies  will increase costs and decrease accuracy of inventory, which are the  opposite effects of what LMP functionality was intended to provide.  Accordingly, given the delays in implementing LMP and the long-standing  problems that have precluded the Army from realizing LMP functionality,  additional oversight and reporting is needed to better inform Congress of  the Army’s progress in addressing these problems and the status and costs  of the mitigation strategies the Army is employing.
section_title: Recommendation for Executive Action
paragraphs: Given the long-standing challenges associated with the Army’s  implementation of LMP and the need for mitigation strategies that may  result in increased costs until LMP is fully functional, we are  recommending that the Secretary of Defense direct the Under Secretary of  the Army as the Army’s Chief Management Officer to report to Congress  within 90 days of the beginning of the LMP third deployment on the  progress of LMP implementation at the Army depots, arsenals, and life  cycle commands, and provide periodic updates to Congress until such  time as the mitigation strategies are no longer necessary. This report  should identify the extent to which the third deployment sites are able to  use LMP as intended, the benefits that LMP is providing, an assessment of  the Army’s progress in ensuring that data used in LMP can support the  LMP processes, timelines for the delivery of software and additional  capabilities necessary to achieve the full benefits of LMP, and the costs  and time frames of the mitigation strategies.
section_title: Agency Comments
paragraphs: In written comments on a draft of this report, DOD agreed with our  findings with respect to data, software development, and systems, and also  agreed on the need to implement prior LMP recommendations with which  the department has previously concurred. DOD stated that the Army has  established additional oversight of the third deployment of LMP and has  no issues with GAO’s facts, observations, or recommendations, as stated  in this report. DOD also stated that the Army Materiel Command is  working closely with the LMP Project Office and third deployment sites to  establish appropriate management controls. With respect to our  recommendation, DOD stated that the department fully understands  Congress’s interest in this deployment and that the Army will comply with  GAO’s recommendation and the prescribed reporting timetable and  conditions. The department’s written comments are reprinted in appendix  I.
We are sending copies of this report to interested congressional  committees; the Secretary of Defense; the Secretary of the Army; and the  Director, Office of Management and Budget. The report also is available at  no charge on the GAO Web site at http://www.gao.gov.
Please contact William M. Solis at (202) 512-8365 or solisw@gao.gov, Asif  A. Khan at (202) 512-9869 or khana@gao.gov, or Nabajyoti Barkakati at  (202) 512-4499 or barkakatin@gao.gov if you or your staff have questions  on matters discussed in this report. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix II.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, J. Chris Martin, Senior-Level  Technologist; David Schmitt, Assistant Director; Darby Smith, Assistant  Director; Jim Melton; Gilbert Kim; Grace Coleman; and Michael  Shaughnessy made key contributions to this report.