Defense Logistics: Improvements Needed to Accurately Assess the Performance of DOD's Materiel Distribution Pipeline
Published: 2015-02-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD operates a complex, multibillion-dollar distribution system for delivering supplies and equipment to U.S. forces globally. DOD's goal in operating this global distribution pipeline is to deliver the right item to the right place at the right time, at the right cost. GAO has reported on weaknesses in DOD's distribution performance and has identified management of DOD's entire supply chain as a high-risk area.
This review assesses the extent to which DOD (1) has established metrics for its distribution performance, (2) is able to accurately measure its performance against distribution standards, and (3) has taken actions to identify causes and develop solutions for any gaps in distribution. GAO analyzed DOD's distribution metrics, DOD's responses to data-reliability questionnaires, and corrective actions, and interviewed DOD officials.
section_title: What GAO Found
paragraphs: To measure the performance of its global distribution pipeline, the Department of Defense (DOD) has established three metrics:(1) logistics response time—number of days between the time a customer submits an order and receives it, (2) customer wait time—number of days between the time a maintenance unit, a subset of customers, submits an order and receives it, and (3) time-definite delivery—a measure of the probability (e.g., 85 percent) that a customer will receive an order within an established logistics response time. However, these metrics do not provide decision makers with a complete representation of performance across the entire global distribution pipeline. DOD's definitions of its metrics and guidance for using them do not address cost, although DOD officials stated that cost is included in metrics used to assess other aspects of the supply chain, and the Marine Corps has not established a customer wait time metric. Further, although joint doctrine has set efficient and effective distribution “from the factory to the foxhole” as a priority, these metrics do not always include performance for the final destination. Unless DOD's guidance is revised to ensure the three distribution performance metrics include cost information for decision making and the Marine Corps establishes a customer wait time metric, and DOD incorporates metric performance to the final destination, it will be difficult for DOD to achieve a comprehensive view of the performance of its entire global distribution pipeline.
DOD may not have sufficiently reliable data to accurately determine the extent to which it has met the standards it has established for distribution performance, because it has not developed policy for requiring regular comprehensive assessments to be conducted of its distribution data-collection and reporting processes. Several DOD organizations indicated that they had not conducted this type of review that would be consistent with standards for internal control in the federal government. Specifically, the Air Force indicated that it had not conducted a risk assessment of its data, a part of assessing data reliability. Officials GAO spoke with from U.S. Transportation Command (TRANSCOM), the services, and other DOD components described a number of potential inaccuracies, such as delivery dates recorded after deliveries were actually made, in the data TRANSCOM uses to evaluate distribution performance. Without a policy requiring regular comprehensive data-reliability assessments, DOD lacks reasonable assurance that organizations will conduct such assessments and that data will be sufficiently reliable to effectively measure DOD's performance in distribution.
Although DOD has taken several actions to address gaps in its distribution performance, including conducting performance reviews, and holding workshops to assess problems and develop solutions, these efforts focus on specific areas of distribution, and DOD has not developed a comprehensive corrective action plan for the entire distribution pipeline that identifies the scope and root causes of capability gaps and other problems, solutions, and actions to be taken. In July 2011, GAO recommended DOD develop such a corrective action plan. DOD did not concur, citing several ongoing efforts. However, these efforts do not address gaps across all distribution operations. Thus, implementing GAO's prior recommendation would help identify root causes of and solutions to distribution challenges and better position DOD to address distribution performance.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD (1) revise guidance to ensure its metrics incorporate cost, (2) revise guidance to ensure the Marine Corps establishes a customer wait time metric, (3) incorporate performance information from the final destination, and (4) develop policy requiring data-reliability assessments. DOD concurred with the second and fourth recommendations and partially concurred with the first, stating that there would be no value to affix cost to time-definite delivery. DOD did not concur with the third recommendation, stating that data to the final destination should not be incorporated into DOD's performance metrics. GAO continues to believe the recommendations are valid, as discussed in the report.

section_title: Letter
paragraphs: The Department of Defense (DOD) operates a complex, multibillion-dollar  distribution system for delivering needed supplies and equipment to U.S.  forces across the world, known as its global distribution pipeline. DOD’s  goal in operating its global distribution system is to deliver the right item to  the right place at the right time, and also at the right cost. The materiel  distribution system covers multiple legs, from the movement of supplies in  the continental United States to tactical movement on the battlefield, and  must be capable of reaching its military customers whether they are  located on large, well-established bases or at small, remote outposts. As  we have reported, the federal government is facing serious long-term  fiscal challenges, and DOD may confront increased competition over the  next decade for federal discretionary funds. Given the fiscal environment  DOD is operating in now and into the future, it is important that the  distribution of supplies and equipment to the warfighter be performed as  effectively and efficiently as possible to ensure the best use of limited  resources. Strategic guidance issued by the Secretary of Defense in  January 2012 emphasized that DOD must continue to reduce the cost of  doing business, in particular finding further efficiencies in overhead,  business practices, and support activities.
Since 1990, we have identified DOD supply chain management as a high- risk area, with materiel distribution as one focus area for improvement.
Our prior work has identified challenges DOD faced in distributing  materiel to the warfighter in Iraq and Afghanistan, which contributed to  shortages of some critical items and limited DOD’s ability to track the  status and location of cargo shipments. For example, in July 2011 we  found that in its high-level logistics and supply chain management plans,  DOD highlighted the need to improve materiel distribution and identified  various improvement initiatives, but these high-level plans did not specify  how DOD would integrate, guide, and measure the outcomes. Therefore,  we recommended that DOD develop a comprehensive corrective action  plan for improving materiel distribution that included key elements to  maximize its usefulness.citing ongoing improvement efforts as sufficient. We continue to believe  the recommendation is valid, as discussed later in the report.
GAO, Warfighter Support: DOD Has Made Progress, but Supply and Distribution  Challenges Remain in Afghanistan, GAO-12-138 (Washington, D.C.: Oct. 7, 2011).
We recommended that DOD revise its instructions to provide clear  guidance on how TRANSCOM is to oversee the overall effectiveness,  efficiency, and alignment of DOD-wide distribution activities, to include  the last leg of distribution. DOD did not concur with our recommendation  due to its view, based on the guidance at that time, that TRANSCOM as  Distribution Process Owner does not and should not have any oversight  over the last leg of distribution. We responded that DOD’s view indicated  confusion within and outside of DOD regarding TRANSCOM’s role,  including as Distribution Process Owner. Moreover, we responded that  DOD’s approach of limiting the Distribution Process Owner’s oversight to  only the first three distribution legs leaves a fragmented process without  any comprehensive oversight or visibility over the entire DOD-wide global  distribution pipeline. Additionally, in our October 2011 report, we found  that data reliability was limited for some of DOD’s metrics because of  missing delivery information and that DOD had not assessed the reasons  for the missing data or taken action to address those limitations.  Therefore, we recommended that DOD direct the combatant command to,  among other things, ensure that periodic inspections of data entries are  performed. DOD partially concurred, responding that while the combatant  command has a role in ensuring compliance, the primary responsibility  has been assigned to TRANSCOM.
In light of these long-standing issues and congressional interest in DOD’s  distribution performance, we prepared this report under the authority of  the Comptroller General to conduct evaluations to assist Congress with  its oversight responsibilities. In this report, we assess DOD’s efforts to  support the timely and cost-effective delivery of supplies and equipment  to its global operations. This report determines the extent to which DOD  (1) has established metrics to measure its distribution performance, (2) is  able to accurately measure its performance against its distribution  standards, and (3) has taken actions to identify causes and develop  solutions for any gaps in distribution.
To determine the extent to which DOD has established metrics to  measure its distribution performance, we reviewed DOD guidance  identifying distribution policies and priorities, such as DOD Manual  4140.01, DOD Supply Chain Materiel Management Procedures, and DOD  Instruction 5158.06, Distribution Process Owner. We additionally  reviewed the Government Performance and Results Act (GPRA) as  amended by the GPRA Modernization Act of 2010 and our prior work  that identifies elements that constitute a comprehensive oversight  framework. We identified the definition and scope of DOD’s distribution  performance measures and compared them to leading practices for  achieving results in government and the successful attributes of  performance measures. We also interviewed officials from the Office of  the Deputy Assistant Secretary of Defense for Supply Chain Integration  (DASD SCI), TRANSCOM, the Defense Logistics Agency (DLA), and  each of the four military services to determine how they measure  distribution performance and what data they collect and report.
To determine the extent to which DOD is able to accurately measure its  performance against its distribution standards, we sent data-reliability  questionnaires to each of the military services and TRANSCOM. The  standard set of questions we circulated asked detailed and technical  questions about the relevant systems, such as the corresponding system  architecture, the scope of user access, data quality controls and  limitations, and the respondents’ perceptions of data quality and  limitations. We compared the responses to Standards for Internal Control  in the Federal Government, which state that controls should be aimed at  validating the propriety and integrity of performance measures. We reviewed TRANSCOM’s 2012 annual report and spoke with agency  officials from the Office of the DASD SCI, the services, TRANSCOM, and  DLA to better understand these data. We also reviewed prior GAO  reports related to distribution performance.
To determine the extent to which DOD has taken actions to identify  causes and develop solutions for any gaps in distribution, we analyzed  documentation, such as DOD’s documentation of new distribution-related  initiatives and policies. We also interviewed officials from the Office of the  Under Secretary of Defense for Acquisition, Technology and Logistics,  the Office of the DASD SCI, the Joint Staff J-4 Logistics Directorate, and  each of the four military services to discuss DOD’s planning, policy, and  to the degree which DOD has taken actions to identify causes and  develop solutions for any gaps in distribution performance. Appendix I  provides further information on our scope and methodology.
We conducted this performance audit from November 2013 to February  2015 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.
subsections: section_title: Background
subsections: section_title: The DOD Supply Chain
paragraphs: DOD defines its logistics mission, including supply chain management, as  supporting the projection and sustainment of a ready, capable force  through globally responsive, operationally precise, and cost-effective joint  logistics support for America’s warfighters. Supply chain management is  the operation of a continuous and comprehensive logistics process, from  initial customer order for materiel or services to the ultimate satisfaction of  the customer’s requirements. According to DOD, its goal is to have an  effective and efficient supply chain, and the department’s current  improvement efforts are aimed at improving supply chain processes,  synchronizing the supply chain from end to end, and adopting challenging  but achievable standards for each element of the supply chain.
To this end, DOD has identified the following aspects of the supply chain  for ongoing attention: materiel readiness, responsiveness, reliability,  planning and precision, and costs. Integral to the supply chain’s  responsiveness and reliability is DOD’s global distribution pipeline, which  encompasses deploying units and their equipment, such as vehicles and  materiel owned by the unit and brought from the home station; delivering  sustainment items, which are supplies such as food, water, construction  materiel, parts, and fuel that are requisitioned by units already deployed;  and executing the retrograde of repairable items to support maintenance  activities.
section_title: The DOD Distribution Pipeline
paragraphs: DOD policy states that all organizations in the supply chain must  recognize and emphasize the importance of time in accomplishing their  respective functions and be structured to be responsive to customer  requirements during peacetime and war. Joint doctrine identifies  distribution as a critical element of joint operations that synchronizes all  elements of the logistics system to deliver the “right things” to the “right  place” at the “right time” to support the geographic combatant  commander.coordinate and synchronize the fulfillment of joint force requirements from  the point of origin to the point of need.
Accordingly, DOD mapped out the distribution pipeline to  To measure the timeliness of the logistics system from the point of origin  to the point of need, DOD divided the distribution pipeline into four  segments—source, supplier, transporter, and theater. DOD further  subdivided these four segments into a total of 12 subsegments (see fig.  1). Each subsegment accounts for a specific step—and period—in  processing an order, such as container consolidation-point processing  and transportation to point of debarkation. The total time expended by  DOD’s distribution pipeline to fulfill the order, from the submission of the  order to the receipt of the materiel ordered, is determined by combining  the times of all of the subsegments.
Within the theater segment of the pipeline, DOD conducts distribution  from the points of need (e.g., supply support activities at a major aerial  port or seaport of debarkation) to the points of employment. According to  DOD, the distribution pipeline between the point of origin and the point of  need is under the authority and is the oversight responsibility of  TRANSCOM. Furthermore, DOD has stated that in line with internal  guidance and Title 10 of the United States Code, TRANSCOM’s purview  ends at the point of need, and the given geographic combatant  commander in that theater is responsible for distribution between the   DOD established these  point of need and the point of employment.authorities and responsibilities because the point of employment is a  physical location designated by the commander at the tactical level where  force employment and commodity consumption occurs or where unit  formations come directly into contact with enemy forces. The nominal  distance between the point of need and the point of employment is also  known as the “last tactical mile.” Unit equipment and sustainment items  may subsequently be transported between these two points using a  combination of surface and air transportation modes.
section_title: DOD Organizations Responsible for the Global Distribution Pipeline
paragraphs: Many organizations within DOD have important roles and responsibilities  regarding the global distribution pipeline, and these responsibilities are  spread across multiple entities, each with its separate funding and  management of logistics resources and systems. For example, the Under  Secretary of Defense for Acquisition, Technology and Logistics serves as  the principal staff assistant and advisor to the Secretary of Defense for all  matters related to defense logistics, among other duties. The Assistant  Secretary of Defense for Logistics and Materiel Readiness, under the  authority, direction, and control of the Under Secretary of Defense for  Acquisition, Technology and Logistics, serves as the principal logistics  official within the senior management of the department. Within the  Office of the Assistant Secretary for Logistics and Materiel Readiness, the  DASD SCI improves the integration of DOD’s supply chain through policy  development and oversees the adoption of metrics. Subject to the  authority, direction, and control of the Secretary of Defense, the  Secretaries of the military departments are responsible for, among other  things, organizing, training, and equipping their forces. Another  important organization in supply chain management is DLA, which  purchases and provides nearly all of the consumable items needed by the  military, including a majority of the spare parts needed to maintain and  ensure the readiness of weapon systems and other equipment.
TRANSCOM is designated as the distribution process owner for DOD and  is responsible for transporting equipment and supplies in support of  military operations. The role of the distribution process owner is, among  other things, to oversee the overall effectiveness, efficiency, and  alignment of department-wide distribution activities, including force  projection and sustainment operations. As DOD’s single manager for  transportation (other than for transportation of service-unique or theater- assigned assets), TRANSCOM is responsible for providing common-user  and commercial air, land, and sea transportation and terminal  management.
section_title: DOD Global Distribution Information Systems and Reporting
paragraphs: DLA maintains the Logistics Metric Analysis Reporting System (LMARS),  a database and collection of reports that serve as the authoritative source  of data on the performance of the logistics pipeline. The information that  DLA collects and archives provides managers with the ability to track  trends, identify areas requiring improvement, and compare actual  performance against established goals. The information collected and  archived in LMARS encompasses all orders, beginning with their  submission as customer orders and ending with the receipt of the ordered  materiel. DLA additionally maintains the Strategic Distribution Database,  which combines supplier and transportation data for use by TRANSCOM.  Every month, DLA transmits the latest data to TRANSCOM, which then  incorporates data from other information systems to calculate and  analyze the distribution pipeline’s performance in fulfilling all orders in a  timely manner.
The Office of the Assistant Secretary of Defense for Logistics and  Materiel Readiness receives scheduled reports on distribution  performance from DLA and TRANSCOM throughout the year. The office  has a contract with the Logistics Management Institute to maintain an  internal repository of received data and to complete various analyses.  The Office of the DASD SCI uses this information to update the DOD  Performance Management Database quarterly. This is a part of the  performance budget tracking and is reported to the Office of Management  and Budget, which then determines whether to report the information to  Congress.
section_title: DOD Has Established Metrics for Distribution Performance, but They Do Not Provide Decision Makers with a Comprehensive View of the Global Distribution Pipeline
paragraphs: DOD has established three metrics for distribution to measure the  performance of its global distribution pipeline—logistics response time,  customer wait time, and time-definite delivery. However, DOD’s three  distribution performance metrics do not provide decision makers with a  comprehensive view of performance across the entire global distribution  pipeline as they do not incorporate costs, cover all the military services, or  extend to the “last tactical mile.”
subsections: section_title: DOD Has Established Three Metrics to Measure Its Distribution Performance
paragraphs: To measure the performance of its global distribution pipeline, DOD has  established three metrics—logistics response time, customer wait time,  and time-definite delivery. DOD Manual 4140.01, volume 10, DOD Supply  Chain Materiel Management Procedures, and DOD Instruction 5158.06,  Distribution Process Owner, define the three metrics and identify the DOD  organizations responsible for monitoring them, as shown in table 1.
Leading practices state that achieving results in government requires a  comprehensive oversight framework that includes metrics for assessing  progress, consistent with the framework established in GPRA.  Furthermore, DOD policy requires that all organizations in the supply  chain recognize and emphasize the importance of time in accomplishing  their respective functions. Accordingly, each of the three DOD metrics  measures time expressed in days. All three performance metrics begin  with the submission of a customer order and end with the receipt of the  ordered materiel by the support supply activity that ordered it. For  example, logistics response time measures the entire processing time of  the customer order through each of the 12 subsegments in the  distribution system, from the date the order is submitted to the date the  customer posts the materiel received to the record of inventory at the  supply support activity. Logistics response time is the broadest of the  three metrics, and DOD has identified it as a key performance measure to  monitor the effectiveness of the supply chain. In contrast, customer wait  time measures the processing time for a subset of customer orders— specifically, customer orders from organizational maintenance units. If  an organizational maintenance unit’s order cannot be fulfilled by the local  retail supply system, the unit will then place a new request with the  wholesale supply system. Similar to logistics response time, customer  wait time measures the total elapsed time between the submission and  the receipt of an order. Time-definite delivery measures the entire  processing time of an order and determines whether the distribution  system is capable of delivering an order to the customer within a given  period.
In general, we found that each of the three metrics is used to assess  performance in terms of time, such as the maximum number of days to  complete an order (customer wait time) or the likelihood that a delivery  will be received within that number of days (time-definite delivery). DOD  does not measure against a standard for logistics response time as,  according to DOD, decision makers examine the data on logistics  response time to determine whether the average number of days it takes  to process orders is increasing or decreasing. DOD has established  customer wait time standards for the Air Force, Army, and Navy (see  table 2); however, the Marine Corps has not established a service-wide  customer wait time standard, as discussed later in the report.
Standards for time-definite delivery vary according to the mode of  transportation used to deliver the shipments and the geographic  destination. For example, DOD has set as a time-definite delivery  standard that 85 percent of all items ordered from the United States for  delivery to Germany by military air transport should be delivered within 18  days. Similarly, DOD has set as a time-definite delivery standard that 85  percent of all items ordered from the United States for delivery to Japan  by ocean transport should be delivered within 57 days.
section_title: DOD’s Metrics Do Not Provide a Comprehensive View of Distribution Performance
paragraphs: DOD’s three distribution performance metrics do not provide decision  makers with a comprehensive view of performance across the entire  global distribution pipeline. According to leading practices, relying on a  set of performance measures that address multiple priorities, such as  timeliness, quality, and cost, and that provide useful information for  decision making that helps alert managers and other stakeholders to the  existence of problems can help leading organizations respond when  problems arise. However, because DOD’s three metrics do not  incorporate costs, cover all the military services, or extend to the “last  tactical mile,” they do not provide the department with a comprehensive  view of the distribution system’s performance.
subsections: section_title: Cost
paragraphs: DOD guidance establishing the customer wait time and time-definite  delivery performance measures states that organizations in the supply  chain must accomplish their respective functions in an efficient and cost- effective manner. Furthermore, DOD guidance regarding supply chain  materiel management states that corresponding policy should balance  risk and total cost. However, DOD’s definitions of its three metrics and  its guidance for using them to measure distribution performance do not  address cost. Officials from the Office of the DASD SCI explained that  although cost is not an element in these three metrics for assessing the  performance of the distribution system—which are time-based—it is an  element in other metrics, such as customer price change and logistics  cost baseline, two metrics that are used to assess other aspects of the  supply chain. They told us that they currently consider cost in evaluating  the performance of the entire supply chain but not in evaluating  distribution performance specifically. Office of the Secretary of Defense  officials noted the department continually attempts to balance cost with  the importance of responding to critical orders in a timely fashion. For  example, Office of the Secretary of Defense officials stated that the  department’s economic movement quality model minimizes total logistics  costs by identifying the trade-offs among inventory, transportation, and  materiel handling. However, officials from the Office of the DASD SCI and  TRANSCOM stated that DOD does not collect information about cost or  consider cost when compiling, analyzing, and reporting the data  generated by logistics response time, customer wait time, and time- definite delivery. Officials from the Office of the DASD SCI and  TRANSCOM acknowledged that cost in the context of distribution could  become more important, depending on the fiscal environment.  Considering cost as a part of distribution performance is also important as  DOD looks to effectively manage all of its distribution operations  throughout the world, especially as current wartime efforts are drawing  down.
As previously stated, DOD has demonstrated the ability to consider costs  for evaluating aspects of the overall supply chain. Since some cost  analysis is available throughout DOD, distribution performance may be  able to incorporate those cost analyses related to the three distribution  performance metrics. For example, according to DOD officials, reviews of  distribution performance for the preceding period in terms of time-definite  delivery compliance occur on a regularly scheduled basis. Similarly, DOD  publicly reports the performance of the services against their customer  wait time standards on an annual basis. DOD could help ensure cost is  considered as part of its overall evaluation of distribution performance if it  were able to identify and report the corresponding costs for distribution for  the preceding period when reviewing time-definitely delivery compliance  or when reporting customer wait time performance. As we found in April  2013, the federal government is facing serious long-term fiscal  challenges, and DOD likely will encounter considerable budget pressures  over the next decade. Further, under DOD’s Financial Management  Regulation, cost information is essential to the department’s compliance  with the Government Performance and Results Act (GPRA) of 1993 as  cost accounting information coupled with performance measures are  essential in evaluating and reporting on efficiency and effectiveness of  DOD missions and functions.
section_title: Marine Corps Does Not Have a Customer Wait Time Standard
paragraphs: As of December 2014, customer wait time standards have been  established for the Army, the Navy, and the Air Force, but not for the  Marine Corps. The DOD guidance establishing the customer wait time  performance measure requires that the military departments (e.g., the  Departments of the Air Force, the Army, and the Navy) use the customer  wait time measurement to assess the performance of the supply chain,  but does not require that each of the military services establish a  customer wait time standard to assess its distribution performance.  According to officials from the Office of the DASD SCI, their office and the  military services agreed on a customer wait time standard after  coordinating with each other, but that the Marine Corps has “not  established a goal at this time.”
DOD officials explained that the Marine Corps has not established a  service-wide standard because it maintains a different logistics structure  than the other services because of its expeditionary mission. According to  DOD officials, in the course of military operations, Marine Corps units will  deploy with their requisite supplies and then become “customers” of  whatever service has its distribution system available. For example,  according to these officials, when the Marine Corps is deployed and is the  customer of another service, only the other service’s distribution  operations can be measured. However, when the Marine Corps is not  deployed, it uses its own distribution system to operate and sustain units  inside and outside the United States. However, this system does not have  a service-wide customer wait time standard against which to measure  distribution performance.
Marine Corps officials explained the service has not established a single  customer wait time standard at the service level but that standards exist  and are applied at the operational and tactical levels. According to  Marine Corps Order 4400.16H, current DOD time-definite delivery  standards serve as the basis for customer wait time standards at the  operational and tactical levels. However, these operational and tactical  standards apply only at the level of specific Marine Corps units, not  service-wide, and they are not reported as a single customer wait time  metric for overall distribution performance as is done for the other three  services. Having such a service-wide customer wait time standard for the  Marine Corps that covers its distribution system would help ensure that  DOD has complete visibility over distribution performance across the four  services.
Moreover, unless DOD’s guidance is revised to help ensure the three  distribution performance metrics address multiple priorities and provide  useful information for decision making on matters such as cost and  unless a service-wide customer wait time standard is established and  used for the U.S. Marine Corps, it will be difficult for DOD to form a  comprehensive view of the performance of its entire global distribution  pipeline.
section_title: Last Tactical Mile
paragraphs: In overseeing distribution performance, TRANSCOM and DOD  organizations have limited the reporting of the three time-based metrics  up to the “point of need”—the location in the distribution system just  prior to the “point of employment.” The nominal distance between the  point of need and the point of employment is also known as the “last  tactical mile.” As discussed earlier, according to DOD guidance,  TRANSCOM and other responsible organizations are responsible for  measuring the time between the submission of a customer order and  receipt of the materiel by the supply support activity. In its role as the  Distribution Process Owner, TRANSCOM interprets its authority and  oversight responsibility to extend to the point of need but not to the point  of employment. Overseeing distribution performance from the point of  need to the point of employment is the responsibility of the given  geographic combatant command in that theater. As discussed earlier,  DOD established these authorities and responsibilities because the point  of employment is a physical location designated by the commander at the  tactical level where force employment and commodity consumption  occurs or where unit formations come directly into contact with enemy  forces.
However, DOD’s definitions of its three metrics and its guidance for using  them to measure distribution performance are silent on whether to  measure the time for delivery to the point of employment or the point of  need. Furthermore, officials from the Office of the DASD SCI,  TRANSCOM, the Army, and the Marine Corps confirmed that the  distribution performance data they report are up to the point of need and  not to the point of employment, and therefore do not include the “last  tactical mile.” According to combatant-command and military-service  officials we spoke with, their oversight omits the last tactical mile  because, in some instances, servicemembers responsible for ensuring  that the receipt of the ordered materiel is completely and accurately  documented may designate it a lesser priority compared to fulfilling their  combat missions. We acknowledge servicemembers may and, in some  cases, should place a higher priority on the unit’s mission, but taking  action to ensure information at this level is collected, to the extent  practical, would help provide decision makers with more-accurate and  comprehensive data on distribution performance across the entire  distribution pipeline.
In our October 2011 report,visibility to the last tactical mile in Afghanistan. Specifically, we found that  because neither the Distribution Process Owner guidance nor joint  doctrine explains clearly how TRANSCOM is to exercise oversight of the  entire distribution pipeline, TRANSCOM has focused primarily on  overseeing the effectiveness only for delivery to the point of need in  Afghanistan, while the performance up to the point of employment is the  responsibility of U.S. Forces–Afghanistan and its subordinate units.  However, DOD officials stated that U.S. Forces–Afghanistan did not  report this performance assessment to TRANSCOM. Accordingly, we  recommended that DOD revise the applicable guidance to clarify how  TRANSCOM is to oversee the overall effectiveness, efficiency, and  alignment of DOD-wide distribution activities, to include this last leg of  distribution between the point of need and the point of employment. DOD  did not concur with the recommendation, stating that TRANSCOM’s  authority and oversight responsibility, based on internal guidance and  Title 10 of the United States Code, extend to the point of need but not all  the way to the point of employment. We acknowledged the department’s  response, but stated that DOD’s distribution joint publication, its directive  establishing TRANSCOM as the Distribution Process Owner, and the  Joint Logistics (Distribution) Joint Integrating Concept suggest that  TRANSCOM does have a role in overseeing efficiency and   we found issues concerning the lack of  synchronization DOD-wide, throughout the global distribution pipeline,  including the last tactical mile.
Furthermore, in this same report, we noted that DOD and its components  have many transportation information systems and processes to track the  movement of supplies and equipment to Afghanistan at the tactical level.  For example, U.S. Forces–Afghanistan and its subordinate units use  many systems and processes, such as the Battle Command Sustainment  Support Structure, to track cargo delivery between locations in  Afghanistan. However, this type of distribution information is currently not  being incorporated into the three distribution metrics used by DOD for  measuring performance of the entire distribution pipeline because the  distribution metrics measure performance to the point of need.  Incorporating available information at this level into DOD’s distribution  metrics would help allow decision makers to more accurately and  comprehensively measure distribution performance across the entire  distribution pipeline.
section_title: DOD May Not Have Sufficiently Reliable Data to Accurately Determine Whether It Has Met Its Established Distribution Standards
paragraphs: DOD may not have sufficiently reliable data to accurately determine the  extent to which it has met the standards it has established for distribution  performance, because it has not conducted regular comprehensive  assessments of its data collection and reporting processes. Standards for  Internal Control in the Federal Government state that control activities  need to be established to monitor performance measures and indicators.  These controls call for comparisons and assessments relating different  sets of data to one another and state that a variety of control activities can  be used in information processing, including edit checks of data.  Moreover, internal control activities need to be clearly documented, and  the documentation should be readily available for examination. Further,  controls should be aimed at validating the propriety and integrity of  performance measures.
The questionnaires consisted of 24 questions regarding the timeliness, completeness,  and accuracy of the data used by TRANSCOM and the military services to measure  DOD’s performance against established time-definite delivery and customer wait time  standards. responding to our data-reliability questionnaire, indicated that it had not  conducted a risk assessment of its data. Questionnaire responses to the  same questions from the Navy indicated that it had conducted a risk  assessment, but the Army did not answer whether it had conducted a risk  assessment of its data.
In our past work, we identified several issues that indicate DOD’s  distribution data may not be sufficiently reliable for measuring  performance against its standards. For example, in our 2011 report on  materiel distribution in Afghanistan, with some deliveries into Afghanistan that had missing delivery dates,  which limited the usefulness of DOD’s distribution metrics. Specifically,  we found that 42 percent of unit surface shipments and 19 percent of  sustainment surface shipments with required delivery dates in 2008  through 2010 did not have a documented delivery date in the database.  DOD concurred with our recommendation to develop an ongoing,  systematic approach to identify the reasons why delivery dates for  delivered surface shipments are not documented and implement  corrective actions to improve the documentation of delivered surface  shipments, and to develop an ongoing, systematic approach to  investigate cases of undelivered surface shipments to determine their  status and update the database with the most-current information.  However, DOD did not provide any details as to how and when it would  implement our recommendation, and based on the results of our current  data-reliability questionnaires, it is not clear whether DOD has addressed  these prior issues.
GAO-12-138.
DOD. For example, in questionnaire responses provided to us by the  Army, officials stated that there are no controls separate from their data  collection system to ensure accuracy and that errors sometimes occur,  such as data indicating negative customer wait times (times of less than 0  days). The Navy and Air Force responded that they did have controls  separate from their data-collection systems.
In addition, officials we spoke with from TRANSCOM, the services, and  several other DOD components told us of a number of potential  inaccuracies in the data TRANSCOM uses to evaluate distribution  performance. DOD officials said that in some cases units in combat zones  delay entering records of new deliveries because personnel responsible  for this task have other, higher-priority duties. Specifically, on forward  operating bases, DOD officials stated that the priority was to complete the  mission rather than completing paperwork as soon as a delivery is made.  In these cases, the delivery data may be inaccurate because the  recorded delivery date may be after the actual delivery was made.  However, DOD officials said that delays in logging deliveries also occur in  noncombat areas. Sometimes the logging of deliveries is delayed  because the personnel responsible for this task are not present at the  time of the deliveries. For example, an employee who teleworks or takes  leave on a Friday may not log a delivery made on that Friday until the  following Monday. As a result, the recording of the delivery date is  delayed by 3 days. Such a delay would have the effect of adding 3 days  to the logistics response time and time-definite delivery times recorded for  that delivery. Additionally, DOD officials stated that some DOD personnel  responsible for logging deliveries wait until several deliveries have been  received and log them all at once rather than as they arrive. For example,  DOD officials stated that some may set aside a time every week to log  deliveries for that week, so that deliveries from earlier in the week are  logged later than they actually were received. Setting aside time every  week is a reasonable approach; however, in doing so, it is important that  the actual date of delivery be captured and collected to ensure accuracy  of the data to aid in assessing the performance of the delivery system.
Moreover, we identified several concerns with regard to the data used to  measure customer wait time. For example, in 2007, the DOD Inspector  General reported that DOD officials lacked uniform results for measuring  customer wait times because of differences in how the services measured  and reported data. As previously mentioned, in the questionnaire  responses provided to us by the Army, Navy, and Air Force, each service  lacked at least some of the documentation that would be needed to  provide assurance that internal controls were met. Notably, none of the  services indicated, as a part of assessing data reliability, that they had  documentation to support that they had conducted tests or evaluations of  their data systems to collect and report customer wait time.
Because DOD does not conduct and document regular comprehensive  data-reliability assessments, the extent to which these or other data  issues might affect the reliability of DOD distribution performance data is  uncertain. Further, without data reliability assessments, it will be difficult  for DOD to fully identify and correct any data gaps by taking appropriate  actions to ensure that data supporting its distribution performance metrics  are sufficiently reliable. In questionnaire responses, TRANSCOM stated  that it relies on the systems that feed data to TRANSCOM to have its own  data-quality processes in place. Therefore, TRANSCOM officials told us  that one reason they do not assess the reliability of distribution data is  that they have no authority to evaluate and address issues with respect to  the military services’ systems and processes. DOD officials also  acknowledged this lack of authority, but stated that the Office of the  Secretary of Defense did have the necessary authority. However, the  Office of the Secretary of Defense has not developed and enforced any  policies to require data-reliability assessments to be conducted by DOD  organizations involved in the collection and reporting of distribution  performance data. Without a policy requiring regular comprehensive data- reliability assessments, DOD lacks reasonable assurance that  organizations will conduct such assessments and data will be sufficiently  reliable to effectively measure DOD’s performance in distribution.
section_title: DOD Has Taken Some Actions to Address Gaps in Its Distribution Performance but Does Not Have a Comprehensive Corrective Action Plan to Manage Distribution
paragraphs: DOD has taken some actions to address gaps in its distribution  performance, including establishing a distribution performance branch,  combatant command performance reviews, and various workshops and  boards. However, DOD has not developed a comprehensive corrective  action plan that identifies and addresses root causes for gaps within its  distribution performance.
subsections: section_title: DOD Has Experienced a Number of Challenges in the Area of Distribution but Has Taken Some Actions to Address Them
paragraphs: DOD has experienced a number of challenges in the area of distribution  that have contributed to the department not being able to meet its  performance standards. However, DOD has taken some actions to  address these challenges. As previously mentioned, DOD’s supply chain  management area—which includes distribution—has been on our high- risk list since 1990, in part because of issues with distribution  performance. DOD has also reported in the past that it has consistently  not met the department-wide standards it has established for itself.  Reasons DOD cited for being unable to meet these standards include  reception delays at supply warehouses and processing delays at aerial  ports resulting from limited storage space for incoming cargo and  available personnel to process the cargo. To address some of these  gaps, DOD, specifically TRANSCOM and DLA, have developed and  implemented targeted efforts that focus on improving specific areas of  distribution. These include establishing a distribution performance  management branch, combatant command performance reviews, and  various workshops and boards.
subsections: section_title: TRANSCOM Has Established Several Efforts to Address Gaps in Distribution
paragraphs: In order to address gaps in distribution, TRANSCOM has established  several efforts.
In August 2010, TRANSCOM issued guidance for a Distribution  Performance Management Branch within its Strategy, Policy, Programs,  and Logistics Directorate. The Distribution Performance Management  Branch’s responsibilities include assessing global distribution performance and working with national  partners to resolve problems; measuring and evaluating the effectiveness of distribution-process participating in the combatant command distribution conferences to  assess distribution performance and collaborate to address and  resolve problems; being the lead for negotiating distribution performance standards with maintaining and monitoring performance reviews; providing analyses for TRANSCOM and DOD performance being the focal point for development of strategic metrics to be used  by TRANSCOM, the Joint Staff, and components; and maintaining visibility of TRANSCOM Distribution Strategic Metrics.
The Distribution Performance Management Branch is to perform the  above responsibilities specifically for DOD’s time-definite delivery  distribution metric. Since the collection and analysis of distribution data  are focused primarily on this distribution metric, the identification of  distribution gaps and associated solutions is also primarily supported by  analysis of performance data related to the time-definite delivery  distribution metric.
Distribution Performance Reviews and Workshops  TRANSCOM also conducts monthly and quarterly reviews—with officials  from the combatant commands and other stakeholders—of the combatant  commands’ performance against the time-definite delivery standards.  TRANSCOM holds monthly meetings with U.S. Central Command and  quarterly meetings with each of the other geographic combatant  commands. TRANSCOM collects and assesses the distribution  performance of each geographic combatant command area of operation  by segment (i.e., source, supplier, transporter, and theater), type (military  or commercial), and mode of transportation (i.e., air, land, or sea) against  the established time-definite delivery standards. According to  TRANSCOM, this performance review aims to determine root causes for  issues in performance, promote process improvement, explain variations  within the system, and make any necessary changes to the business  rules for distribution, rather than a comprehensive assessment of all  capability gaps as discussed later in this report.
In addition, TRANSCOM conducts time-definite delivery standards  workshops with DOD distribution stakeholders to review past time-definite  delivery performance and standards and develop revised standards.  These workshops are attended by officials from the Office of the  Secretary of Defense, the military services, the combatant commands,  DLA, and other stakeholders; TRANSCOM serves as the focal point.  Based on process improvements that were identified at the time-definite  delivery workshop held in June 2014, officials informed us that DOD  recently approved four distribution performance process improvements.  These process improvement areas are: (1) analyzing extended theater  performance, (2) understanding continental United States group small  package process, (3) aligning Marine Corps afloat units with Navy afloat  time-definite delivery standards, and (4) analyzing extended direct vendor  delivery performance. Although these performance reviews and  workshops are intended to improve distribution performance, they are  focused on time-definite delivery performance and standards. As a result,  the outcomes of these efforts, such as decisions made regarding  standards, identification of root causes, and process improvement, are  primarily based on, and limited to, data and information collected related  to the time-definite delivery metric.
Distribution Process Owner Strategic Opportunities Program  In its role as the Distribution Process Owner, TRANSCOM also continues  to implement the Distribution Process Owner Strategic Opportunities  program, which began in 2008 as an effort to identify opportunities to  significantly improve the performance of distribution processes DOD- wide. This effort was intended to identify an actionable set of  opportunities—approximately five—that would generate substantial cost  avoidances and significant improvements in DOD’s supply chain. In 2008,  a Distribution Process Owner Strategic Opportunities project team began  a process for identifying potential opportunities to pursue. The team first  developed criteria for defining a potential “strategic opportunity.” Some of  these criteria included falling within the scope of authority granted to the  Distribution Process Owner, being based on strategies and processes  proven to generate results in leading supply chains and applicable in the  DOD environment, having a plausible path to implementation, and being  able to produce measurable improvements. The project team identified  over 38 possible strategic opportunities and, by September 2008, had  narrowed the list down to five actionable efforts. In March 2009, the  Distribution Process Owner Executive Board approved the five  Distribution Process Owner Strategic Opportunities for implementation.  As of November 2014, according to TRANSCOM officials, these efforts  have resulted in $1 billion in cost avoidances through April 2013.  However, although TRANSCOM officials cite significant cost avoidances,  these avoidances are based on improvements made to capabilities and  authorities that TRANSCOM has as the Distribution Process Owner. In  this role, TRANSCOM is focused on a portion of distribution, not the  entire distribution pipeline.
section_title: DOD Has Established Multiple Distribution Boards and Groups
paragraphs: DOD has also established multiple boards and groups at various levels  for addressing distribution issues. The activities of these boards and  groups include conducting discussions regarding distribution metrics and  performance. The Distribution Steering Group is a working level group  cochaired by TRANSCOM and DLA that comprises representatives from  TRANSCOM, the Office of the Secretary of Defense, DLA, the military  services, and the combatant commands. The group meets quarterly, or  as deemed necessary by its membership, to discuss distribution topics  and issues. The Distribution Oversight Council is an oversight body for  distribution that meets at least twice a year, or as necessary, and is one  level above the Distribution Steering Group. It comprises representatives  from the same organizations as the Distribution Steering Group. The  Distribution Process Owner Executive Board is a senior-level group  chaired by the TRANSCOM Commander that is above the Distribution  Oversight Council, with representatives from the same organizations as  the two lower-level groups. Although these boards and groups meet  annually, or as necessary, to discuss specific issues related to  distribution, there is no focal point within DOD that oversees all three of  DOD’s distribution metrics for the entire distribution pipeline. In our  October 2011 report, we noted the importance of having a focal point in  order to effectively provide oversight for distribution. We recommended  that TRANSCOM, as DOD’s Distribution Process Owner, serve as that  focal point to oversee the overall effectiveness, efficiency, and alignment  of DOD-wide distribution activities. DOD did not agree with our  recommendation and stated that the Distribution Process Owner’s  authority and oversight responsibility extends to the point of need, not to  the point of employment. However, we continue to maintain that language  in DOD’s doctrine and policy documents suggests a role for TRANSCOM,  as Distribution Process Owner or more broadly under its mission as a  combatant command, to oversee activities within the DOD-wide global  distribution pipeline and we continue to believe that DOD should  implement the recommendation.
DOD also has established a senior-level governance body for logistics  called the Joint Logistics Board. The Joint Logistics Board reviews the  status of the logistics portfolio and the effectiveness of the defense-wide  logistics chain in providing support to the warfighter. The Joint Logistics  Board is cochaired by the Assistant Secretary of Defense for Logistics  and Materiel Readiness and the Joint Staff Director of Logistics, and has  senior-level participants from the military services, combatant commands,  and DLA.
section_title: DLA Has Begun to Implement Its Distribution Effectiveness Effort
paragraphs: In an effort to reduce transportation costs to improve distribution, DLA  began, in fiscal year 2014, implementation of Phase 1 of its Distribution  Effectiveness effort, formerly known as the Strategic Network  Optimization project, in collaboration with the military services and  TRANSCOM. The project’s purpose is to optimize the global distribution  network supporting the warfighter. The Distribution Effectiveness effort  has three phases: network, inventory, and infrastructure. According to  DLA, implementation of Phase 2 is underway as of November 2014. The  program’s current goal is to achieve a total savings of $402 million in  fiscal years 2014 through 2019, to include savings in infrastructure,  inventory, and transportation. Other goals include increasing the  utilization of dedicated truck routes and maintaining/improving customer  service levels.
section_title: DOD Does Not Have a Comprehensive Corrective Action Plan for Identifying Problem Areas in Distribution Performance and Taking Corrective Actions
paragraphs: In July 2011,implement a corrective action plan to address challenges in materiel  distribution. Specifically, we stated that the corrective action plan should  (1) identify the scope and root causes of capability gaps and other  problems, effective solutions, and actions to be taken to implement the  solutions; (2) include the characteristics of effective strategic planning,  including a mission statement; goals and related strategies (for example,  objectives and activities); performance measures and associated  milestones, benchmarks, and targets for improvement; resources and  investments required for implementation; key external factors that could  affect the achievement of goals; and the involvement of all key  stakeholders in a collaborative process to develop and implement the  plan; and (3) document how the department will integrate these plans with  its other decision-making processes; delineate organizational roles and  responsibilities; and support department-wide priorities identified in  higher-level strategic guidance. DOD disagreed with our recommendation  and stated that the department is already engaged in major efforts to  improve materiel distribution.   we recommended, among other things, DOD develop and  In our July 2011 report, we responded that while DOD for many years has  had improvement initiatives for certain challenges within these areas,  these challenges continue to plague DOD. Thus, developing and  implementing a corrective action plan is critical to resolving supply chain  management problems with a systemic, integrated, and enterprisewide  approach. Our criteria for removing the high-risk designation—for supply  chain management and other programs—specifically call for corrective  action plans that identify the root causes of problems, solutions to these  problems, and steps to achieve these solutions. Moreover, an effective  strategic planning process that results in a high-quality corrective action  plan can provide clear direction to addressing DOD’s weaknesses in  supply chain management.
DOD further commented that its involvement in major efforts to improve  materiel distribution negates the need for a corrective action plan. DOD  specifically referred to three efforts—(1) the Distribution Strategic  Opportunities initiative, (2) the Strategic Network Optimization initiative,  and (3) the Comprehensive Inventory Management Improvement Plan.  DOD stated that each of these efforts has specific goals, milestones, and  targets, and involves key stakeholders. However, the 2010 Logistics  Strategic Plan, which was, at the time, the department’s most-recent high- level strategy for addressing supply chain management issues, as well as  other logistics issues, describes the Distribution Strategic Opportunities  initiative as an effort “to improve distribution across the enterprise” and  included it among several other initiatives the department has to improve  supply chain processes. The Logistics Strategic Plan provided no other  explanation of this initiative; provided no goals, milestones, or targets  associated with the initiative; and did not show how this initiative was to  enable it to achieve high-level outcomes such as operating supply chains  more effectively and efficiently. The plan, moreover, made no specific  mention of the second effort—the Strategic Network Optimization  initiative—although information provided separately by the department  indicated it was a subinitiative under the Distribution Strategic  Opportunities initiative.
We have previously concluded that without a strategic planning process  that examines root problems and capability gaps and results in a  corrective action plan, it was unclear whether these initiatives alone would  be sufficient for addressing all major challenges in materiel distribution.  We further stated that DOD had demonstrated an ability to carry out a  collaborative strategic planning process resulting in the issuance of its  Comprehensive Inventory Management Improvement Plan. That plan  identified corrective actions that could, when implemented, effectively  address the requirements-forecasting focus area and other aspects of  inventory management. We stated that following a similar collaborative  approach that results in a corrective action plan for materiel distribution  would result in significant progress in addressing remaining challenges in  the supply chain management high-risk area.
Although DOD has taken several actions to address its distribution  challenges and improve distribution processes, these efforts to improve  distribution are focused on a specific portion or segment of the process  and are not based on an assessment of the entire distribution pipeline.  Many of these efforts, such as the Distribution Process Owner Strategic  Opportunities program and the Distribution Effectiveness effort, began in  response to various issues or opportunities for improvement in distribution  where solutions were developed without a strategy or plan for the  distribution pipeline as a whole. Individual efforts to address identified  gaps in distribution may lead to additional costs and other unanticipated  results that may also affect DOD’s ability to effectively manage its  distribution operations. Implementing our previous recommendation that  DOD develop a comprehensive corrective action plan for distribution  would help to identify and address root causes of distribution challenges  and better position DOD to address distribution performance.
section_title: Conclusions
paragraphs: DOD continues to make improvements in the area of distribution. The  department has established metrics and standards, gathered data to  measure its performance, and developed efforts to make improvements  and address gaps in distribution. However, without revised guidance to  help ensure the three distribution performance metrics address multiple  priorities and provide useful information for decision making on matters  such as cost, and without establishing and using a customer wait time  standard for the U.S. Marine Corps, it will be difficult for DOD to form a  complete picture of the performance of its entire global distribution  pipeline. Further, without incorporating available distribution information at  the last tactical mile into the distribution metrics, DOD may not have all  the information it needs to effectively manage distribution. Moreover,  without assurance that the data being gathered are reliable, DOD is not  fully aware of how its distribution pipeline is performing against  established standards. Until these issues are addressed, DOD is likely to  continue to face challenges in effectively and efficiently managing its  distribution pipeline.
section_title: Recommendations for Executive Action
paragraphs: To help improve the management of DOD’s distribution performance, we  recommend that the Secretary of Defense take the following four actions.
To address the limitations of existing distribution performance metrics, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense for Acquisition, Technology and Logistics, in conjunction with  TRANSCOM, to revise guidance to ensure that  the three distribution performance metrics incorporate cost; and a customer wait time standard is established and used for the Marine  Corps.
To address the limitations of existing distribution performance metrics and  to begin gaining visibility over the last tactical mile, we recommend that  the Secretary of Defense direct the Under Secretary of Defense for  Acquisition, Technology and Logistics and TRANSCOM, in collaboration  with the geographic combatant commands, to incorporate available  distribution performance information at the last tactical mile level into the  three key distribution metrics of logistics response time, time-definite  delivery, and customer wait time.
To ensure the reliability of DOD’s distribution performance data, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense for Acquisition, Technology and Logistics to develop and enforce  policies to require data-reliability assessments to be conducted by DOD  organizations involved in the collection and reporting of distribution  performance data, such as TRANSCOM and the military services, to  evaluate and address any gaps in its distribution performance data.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for review and comment. In its  written comments, which are summarized below and reprinted in  appendix II, DOD concurred with two of the four recommendations,  partially concurred with one recommendation, and did not concur with one  recommendation. DOD also provided technical comments, which we  incorporated as appropriate.
DOD partially concurred with the recommendation to revise guidance to  ensure that the three distribution metrics incorporate cost. Specifically,  DOD agreed that two of the three distribution performance metrics— logistics response time and customer wait time—should incorporate cost.  DOD stated that the Assistant Secretary of Defense for Logistics and  Materiel Readiness is identifying and capturing defense transportation  data sources, supporting cost and performance metrics. DOD also stated  that TRANSCOM fully supports these efforts, especially as cost might  pertain to or be influenced by logistics response time and customer wait  time. However, DOD did not agree that there would be value in any  parallel effort to incorporate cost into the third distribution performance  metric—time-definite delivery—because it maintains that this metric  provides the standards to measure whether logistics response time  performance is meeting expectations. DOD stated that it will instead use  cost as a function of logistics response time to inform future assessments  of and goals for time-definite delivery. According to DOD, this would  better synchronize efforts to facilitate consistency in metrics reporting.
Moreover, DOD stated that TRANSCOM has published policy and  guidance reflecting the strategic requirement to understand cost and that  current data and systems are often not conducive to cost analysis down  to the level of individual shipments. DOD stated TRANSCOM is currently  pursuing a major initiative to restructure and consolidate data systems to  include a Common Record Movement which will, regardless of the mode  of transportation, include cost estimates for each cargo movement. The  effort also includes the development of an automated tool leveraging  existing data systems that, once completed, should enable a better  understanding of cost.
We acknowledge that DOD’s readiness to incorporate cost into logistics  response time and customer wait time will help address limitations in the  measurement of distribution performance. However, we believe that  incorporating cost into the time-definite delivery metric would be of value  because the time-definite delivery metric is a distinct measure that is  managed and reported separately from logistics response time.  Specifically, as discussed in the report, logistics response time is  monitored by the DASD SCI and time-definite delivery is monitored by  TRANSCOM. Furthermore, according to the draft Supply Chain Metrics  Guide used to evaluate DLA's Distribution Effectiveness initiative, the two  metrics have different definitions, business values, goals, and  computations. Since these two measures are separate, cost  considerations should be included in both time-definite delivery and  logistics response time. Until DOD’s guidance is revised to help ensure  each of the three distribution performance metrics provide useful  information for decision making on cost, it will be difficult for DOD to  effectively manage and improve the performance of its entire global  distribution pipeline.
DOD concurred with the recommendation to revise guidance to ensure  that a customer wait time standard is established and used for the Marine  Corps. DOD stated that the Marine Corps has a service-wide customer  wait time standard and, according to DOD, the average executed  customer wait time is 15 days, based on the priority of the maintenance  unit's request. DOD stated that this standard is published in Marine Corps  Order 4400.16H, Uniform Materiel Movement and Issue Priority System.  As of February 2015, the order does not state a set standard but  estimates 15 days as the amount of time for delivery within the  continental United States of an item that a unit requires for immediate use  and without which the unit could not perform its mission. DOD stated that  the Marine Corps will change the order within 180 days to more  accurately reflect the definition and standard contained in DOD policy. We  believe that this action, if fully implemented, would address the  recommendation.
DOD did not concur with the recommendation to incorporate available  distribution performance information at the last tactical mile level into the  three key distribution metrics. DOD cited its previous response to a  similar recommendation in the October 2011 report, GAO-12-138,  Warfighter Support: DOD Has Made Progress, but Supply and  Distribution Challenges Remain in Afghanistan, stating that the  Distribution Process Owner's (e.g., TRANSCOM’s) authority and  oversight extend to the point of need, not the point of employment. DOD  also stated that this distinction is made in DOD guidance, doctrine, and  policy, and that the responsibility for the last tactical mile resides with the  geographic combatant commander in the operational area. We  acknowledge DOD’s position on the matter, but we continue to believe  that this interpretation of the roles and responsibilities of the Distribution  Process Owner results in fragmentation, because no one single DOD  entity has visibility into the performance of the global distribution pipeline  as a whole. As we noted in the report, DOD and its components have  many transportation information systems and processes to track the  movement of supplies and equipment to Afghanistan at the tactical level.  However, this type of distribution information is currently not being  incorporated into the three distribution metrics used by DOD for  measuring performance of the entire distribution pipeline, because the  distribution metrics measure performance only to the point of need.  However, the point of need is not always the final destination, and  materiel may require transportation beyond the point of need to  customers in more remote locations. We continue to believe that  incorporating available information at this level into DOD’s distribution  metrics would help allow DOD to more accurately and comprehensively  measure distribution performance across the entire distribution pipeline.
DOD concurred with the recommendation to develop and enforce policies  to require that data reliability assessments be conducted by DOD  organizations involved in the collection and reporting of distribution  performance data. To further improve distribution performance, DOD  stated that it will develop a comprehensive, integrated approach to  address systematic issues across the distribution network. DOD stated  that this approach will include an assessment of distribution performance  metrics data along with associated policy and guidance. We believe that  these actions, if fully implemented, would address the recommendation.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the Under Secretary of Defense  for Acquisition, Technology and Logistics, the Secretary of the Air Force,  the Commandant of the Marine Corps, and the TRANSCOM Commander.  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) 512-5431 or russellc@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 III.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which the Department of Defense (DOD) has  established metrics to measure its distribution performance, we reviewed  DOD guidance identifying distribution policies and priorities, such as DOD  Instruction 4140.01, DOD Supply Chain Materiel Management Policy, and  DOD Instruction 5158.06, Distribution Process Owner. We additionally  reviewed the Government Performance and Results Act (GPRA) as  amended by the GPRA Modernization Act of 2010 and our prior work that  identifies elements that constitute a comprehensive oversight framework.  We identified the definition and scope of DOD’s distribution performance  measures and compared them to leading practices for achieving results in  government and the successful attributes of performance measures.also interviewed officials from the Office of the Deputy Assistant  Secretary of Defense for Supply Chain Integration (DASD SCI), U.S.  Transportation Command (TRANSCOM), the Defense Logistics Agency  (DLA), and each of the four military services to determine how they  measure distribution performance and what data they collect and report.
To determine the extent to which DOD is able to accurately measure its  performance against its distribution standards, we obtained  documentation on DOD data systems, such as TRANSCOM’s Strategic  Distribution Database. We also sent data-reliability questionnaires to the  military services and TRANSCOM. The standard set of questions we circulated asked detailed and technical questions about the relevant  systems, such as the corresponding system architecture, the scope of  user access, data-quality controls and limitations, and the respondents’  perceptions of data quality and limitations. We reviewed TRANSCOM’s  2012 annual report and spoke with agency officials from the Office of the  DASD SCI, the services, TRANSCOM, and DLA to better understand  these data. We compared the responses to standards for internal control  within the federal government. We also reviewed prior GAO reports  related to distribution performance.
To determine the extent to which DOD has taken actions to identify  causes and develop solutions for any gaps in distribution, we reviewed  documents provided by TRANSCOM, including from TRANSCOM’s  Distribution Performance Management Branch within its Strategy, Policy,  Programs, and Logistics Directorate. Documents we reviewed to assess  DOD distribution improvement efforts include TRANSCOM’s 2012 Annual  Report and DOD’s Comprehensive Inventory Management Improvement  Plan. We also observed TRANSCOM’s 2014 time-definite delivery  standards workshop where TRANSCOM reviewed distribution  performance and standards by working with officials from the Office of the  Secretary of Defense, the military services, combatant commands, DLA,  and other stakeholders. We spoke with officials from DLA, TRANSCOM,  and the Office of the DASD SCI, Army, Navy, Air Force, and Marine  Corps to discuss DLA’s Distribution Effectiveness effort. We met with  officials from the Office of the Under Secretary of Defense for Acquisition,  Technology and Logistics, Office of the DASD SCI, Joint Staff J-4  Logistics Directorate, U.S. Central Command, and each of the four  military services to discuss DOD’s planning, policy, and the degree to  which DOD has taken actions to identify causes and develop solutions for  any gaps in distribution performance.
We conducted this performance audit from November 2013 to February  2015 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.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Kimberly Seay (Assistant  Director), Mitchell Karpman, Joanne Landesman, Ricardo A. Marquez,  Christopher Miller, Mike Silver, Yong Song, Amie Steele, and Sabrina  Streagle made key contributions to this report.
section_title: Related GAO Products
paragraphs: High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February  11, 2015.
High-Risk Series: An Update. GAO-13-283. Washington, D.C.: February  14, 2013.
Defense Logistics: DOD Has Taken Actions to Improve Some Segments  of the Materiel Distribution System. GAO-12-883R. Washington, D.C.:  August 3, 2012.
Warfighter Support: DOD Has Made Progress, but Supply and  Distribution Challenges Remain in Afghanistan. GAO-12-138.  Washington, D.C.: October 7, 2011.
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.
Warfighter Support: Preliminary Observations on DOD’s Progress and  Challenges in Distributing Supplies and Equipment to Afghanistan.   GAO-10-842T. Washington, D.C.: June 25, 2010.
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.