Defense Logistics: Enhanced Policy and Procedures Needed to Improve Management of Sensitive Conventional Ammunition
Published: 2016-02-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD manages a stockpile of more than 226,000 SRC I missiles and rockets in the continental United States. SRC I conventional ammunition, which refers to nonnuclear, portable missiles and rockets in a ready-to-fire configuration, is managed as a higher risk than other conventional ammunition and serves as a potential threat if it were obtained by unauthorized individuals or groups.
Senate Report 113-176 (2014) included a provision for GAO to review aspects of DOD's management of SRC I ammunition. This report addresses the extent to which the military services have maintained (1) accountability and (2) visibility (i.e., access to accurate information) of SRC I ammunition in the continental United States. GAO reviewed DOD and military service policies, regulations, and guidance on physical inventories and shipping of SRC I ammunition; conducted visits at a non-generalizable sample of 11 military service locations selected based on inventory size and number of shipments of SRC I ammunition; interviewed officials; and analyzed data on SRC I on-hand assets as of April 30, 2015, and on non-generalizable samples of SRC I shipments from November 1, 2013, to April 30, 2015.
section_title: What GAO Found
paragraphs: The military services maintained accountability (i.e., accurate records) of Security Risk Category (SRC) I conventional ammunition at 11 sampled locations within the continental United States; however, GAO identified gaps in some service-level guidance and procedures for how SRC I ammunition is accounted for across locations. GAO identified instances in which the Navy and Army had taken actions to enhance the accountability of the physical inventories of SRC I ammunition, such as the Army evaluating its methodology to ensure contractors with SRC I ammunition in their custody submit documentation to verify completion of inventories. However,
GAO identified 55 SRC I ammunition items that were in the physical custody of the Air Force—though owned by the Army or Marine Corps—but accountability was not maintained in any service's system of record while at the Air Force location. Department of Defense (DOD) policy requires that the DOD component having physical custody of materiel maintain accountability in its records regardless of the owner, but the Air Force's guidance requires that ammunition owned by other services be tracked only in a “non-accountable” program. If the Air Force does not revise its guidance to require that accountability be maintained regardless of ownership, the Air Force and the owning service will not have complete records of management of the ammunition and the owning service will not have full assurance that accountability was maintained.
GAO found that Army and Marine Corps guidance does not specify a time frame for receipting shipments of SRC I ammunition. Records showed that 12 of 21 shipments to Army depots and 5 of 30 shipments to Marine Corps locations were receipted more than 2 business days after truck arrival. Until Army and Marine Corps officials finalize and implement guidance on required time frames for receipting SRC I ammunition, officials cannot reasonably assure accountability for all shipped SRC I ammunition.
The military services have not consistently ensured timely, complete, and accurate information to maintain full visibility of SRC I ammunition in the continental United States. For example, 93 of 1,008 shipments GAO examined were not entered in DOD's Defense Transportation Tracking System (DTTS) at the time of departure. Also, 9 of 104 shipments GAO examined in more detail had inaccurate controlled inventory item codes and were not identified in DTTS as SRC I shipments. The Military Surface Deployment and Distribution Command and the military services have not collaboratively determined the specific information required for the military services to ensure timely data entry into DTTS. Further, the military services, with the aid of the Military Surface Deployment and Distribution Command, have not conducted analysis of the completeness and accuracy of data entered into DTTS by shippers on SRC I ammunition shipments. Until these actions are taken, the Military Surface Deployment and Distribution Command will not have full visibility of shipments of SRC I ammunition and the military services will not be well positioned to improve their oversight of the timeliness, completeness, and accuracy of data entered in DTTS.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD revise and finalize guidance and improve the timeliness, completeness, and accuracy of information to maintain full accountability and visibility of SRC I ammunition. DOD concurred with all six recommendations and identified specific steps it has already taken as well as plans to address them.

section_title: Letter
paragraphs: The Department of Defense (DOD) manages a stockpile of sensitive  conventional ammunition valued at nearly $112 billion as of October  2015. One category of this sensitive conventional ammunition is  identified as Security Risk Category (SRC) I ammunition, which is  nonnuclear, portable missiles and rockets in a ready-to-fire configuration.  SRC I ammunition is treated as a higher risk than other conventional  ammunition and serves as a potential threat if it were obtained and used  by unauthorized individuals or groups. SRC I ammunition requires a  higher level of protection and security than that provided for SRC II  through SRC IV conventional ammunition. Examples of SRC I  ammunition include: Stinger and Javelin missiles, the 66-mm Light Anti- Tank Weapon, and the M136 Anti-Armor Weapon. As of April 30, 2015,  there were at least 226,000 SRC I ammunition items located in the  continental United States. To help to adequately protect these items and  minimize the risk of loss or theft, the military services have a critical role  to maintain accountability and visibility of SRC I ammunition upon  acquisition until use or demilitarization. DOD has issued guidance on how  the military services should physically safeguard, track, inventory, and  ship SRC I ammunition within and between services and to contractors  for repair.
Senate Report 113-176 (2014), accompanying S. 2410, the Carl Levin  National Defense Authorization Act for Fiscal Year 2015, included a  provision for us to review aspects of DOD’s management of SRC I  ammunition. This report addresses the extent to which the military  services have maintained (1) accountability and (2) visibility of SRC I  ammunition in the continental United States.
To determine the extent to which the military services have maintained  accountability of SRC I ammunition in the continental United States, we  reviewed DOD policy and military service guidance, including DODM  5100.76, among others, that outline accountability, physical inventories,  and shipping of SRC I ammunition in the continental United States. We  visited three Army depots, eight military service locations—such as  military service installations, bases, and ammunition supply points—and a  contractor with a current production contract for SRC I missiles. We  selected these locations based on a number of factors including the size  of SRC I inventory, the number of shipments to and from the location, and  the variety of SRC I ammunition being stored. We collected identifying  information on a non-generalizable random sample of over 600 SRC I  ammunition items and conducted a comparative analysis of this sample  against information in the military services’ SRC I accountability systems.
While the results cannot be generalized, they provided insights on how  accountability is maintained at military service and contractor locations.  For all Army depots, we reviewed documentation of physical inventories  completed in fiscal years 2012, 2013, and 2014. In addition to our site  visits, we randomly selected additional Air Force locations and obtained  documentation for their last three completed physical inventories to verify  completion, as discussed later in this report. Further, we selected a non- generalizable sample of 104 SRC I ammunition shipments sent from or to  our site visit locations. For these shipments, we obtained and reviewed  shipping documents and analyzed how the shipments were tracked to  assess whether the military services complied with DOD policy and  service-level guidance on shipping and receipting SRC I ammunition. We  also interviewed relevant officials at the Office of the Secretary of  Defense and each of the military services, which have responsibilities for  SRC I ammunition to gain an understanding of how officials maintain  accountability, complete physical inventories, and process in-bound and  out-bound shipments of SRC I ammunition. While we identified some  limitations with the overall data on SRC I ammunition by military service,  we determined it is sufficiently reliable to indicate the broad order of  magnitude of the items held by the Army, Navy, Marine Corps and Air  Force as of April 30, 2015.The data on the number of locations in the  continental United States that hold SRC I ammunition represents a  snapshot in time, as ammunition can be shipped to different locations,  and are subject to the same limitations we have noted. This data provides  a broad indication of the relative number of locations in the continental  United States by military service.
To determine the extent to which DOD has maintained visibility of SRC I  ammunition in the continental United States, we obtained and analyzed  SRC I ammunition data from each of the military services’ automated  information systems as of April 30, 2015. We compared this data, based  on a number of elements—including type of SRC I ammunition, location  in the continental United States, condition of the SRC I ammunition, and  military service ownership codes—to data in the department’s National  Level Ammunition Capability (NLAC) system, a DOD-wide repository that  provides visibility of SRC I ammunition data. We also analyzed data from  the Defense Transportation Tracking System (DTTS) about 1,008 SRC I  shipments reported to us by the Military Surface Deployment and  Distribution Command between November 1, 2013, and April 30, 2015 to  understand how the system provides visibility of SRC I ammunition  shipments. Using this data and additional data we obtained for our non- generalizable sample of 104 shipments described above, we assessed  whether the military services complied with requirements in the Defense  Transportation Regulation regarding the use of DTTS to track shipments  of SRC I ammunition. We interviewed relevant officials at the Office of the  Secretary of Defense, the U.S. Transportation Command  (USTRANSCOM), the Military Surface Deployment and Distribution  Command, and the military service officials to gain an understanding of  visibility of SRC I ammunition in their automated information systems,  how SRC I ammunition is defined and the elements used to extract data  from the automated information systems, and how SRC I ammunition  data is entered into their automated information systems. While we  identified some issues related to the accuracy and completeness of DTTS  data that are described in this report and may affect the reliability of the  overall number of SRC I shipments during this time frame, we determined  that the data were sufficiently reliable for our purposes of analyzing  information about individual shipments in our sample and general trends  in the timeliness, accuracy, and completeness of data entry in DTTS.  Appendix I discusses our objectives, scope, and methodology in greater  detail.
We conducted this performance audit from September 2014 to February  2016 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: Overview of SRC I Ammunition Management
paragraphs: Supply Chain Integration, an office under the Office of the Assistant  Secretary of Defense for Logistics & Materiel Readiness, Under Secretary  of Defense for Acquisition, Technology and Logistics, is the department- wide office responsible for leading the development of DOD supply chain  policies as well as improving accountability, visibility, and control of all  critical assets, including SRC I ammunition. In addition, the Army has a  prominent role in managing SRC I ammunition, as the Army procures a  majority of the department’s ammunition and provides wholesale storage  for the other military services at Army depots. The Army depots ship  SRC I ammunition owned by the other military services to their respective  locations at their request. Also, Army depots conduct semiannual physical  inventories of all SRC I ammunition as required of all installations storing  SRC I ammunition. SRC I ammunition may also be located—generally in  small quantities—at retail locations, such as military service installations,  bases, and ammunition supply points. Each military service has entities  responsible for the accountability, physical inventory, and transportation  of SRC I ammunition. According to military service ammunition data, the  Army, Navy, Marine Corps, and Air Force collectively had approximately  226,000 SRC I missiles and rockets in the continental United States, as of  April 30, 2015, as shown in table 1.
In addition, USTRANSCOM is designated by DOD Directive as the DOD’s  single manager for transportation, other than Service-unique or theater- assigned assets and as the DOD Distribution Process Owner. This  designation includes transportation of SRC I ammunition. The Military  Surface Deployment and Distribution Command, which falls under  USTRANSCOM, tracks the movement of SRC I ammunition. Additionally,  according to DOD officials, the Military Surface Deployment and  Distribution Command coordinates responses to transportation issues of  SRC I ammunition while in transit. Table 2 shows key stakeholders and  roles in the transportation of SRC I ammunition.
section_title: Policy and Guidance for SRC I Ammunition
paragraphs: DODM 5100.76, Physical Security of Sensitive Conventional Arms,  Ammunition, and Explosives (AA&E) sets forth DOD policy on the  physical security of sensitive conventional AA&E. According to DODM  5100.76, continuous program and policy oversight is required to ensure  protection of AA&E within DOD, and DOD components are required to  track and conduct physical inventories of SRC I ammunition by serial  number. Further, DOD policy requires SRC I ammunition to have a  higher level of protection and security than that provided for SRC II  through SRC IV conventional ammunition. DOD and the military  services have policy and guidance on how to account for, safeguard,  conduct physical inventories, adjust if necessary, track, and ship SRC I  ammunition within and between services and to contractors for repair.  Appendix III provides additional detail on DOD policy and military service  guidance relevant to the management of SRC I ammunition.
section_title: Automated Information Systems for SRC I Ammunition
paragraphs: The military services have several automated information systems for  managing accountability and visibility of SRC I ammunition. These  automated information systems also maintain various item-specific data  such as serial number, production lot number, DOD identification codes,  serviceability, reporting location, ownership, quantity, and shipment  information. Figure 1 shows the automated information systems.
The department is in the final stages of evaluating various automated  information systems, including NLAC, to be designated as the DOD-wide  authoritative source of data for conventional ammunition, including SRC I  ammunition. DOD’s evaluation to select one authoritative information  system for conventional ammunition comes in response to our March  2014 recommendation that the department designate an authoritative  source of data on conventional ammunition, which includes SRC I  ammunition. Also, the evaluation is in response to a congressional  mandate to issue department-wide guidance by September 2015 to  designate an authoritative source of data for conventional ammunition.  According to OSD officials, the to-be-designated visibility system will  serve as a repository of ammunition data collected through regular data  feeds from the military services’ automated information systems.
section_title: GAO’s Prior Work on SRC I Ammunition
paragraphs: Since 1994, we have issued several reports about the management of  SRC I ammunition, focusing on serial-number registration, physical  inventories, and transportation issues. In 1994, we found that while the  Navy and the Marine Corps began controlling missiles by serial number in  1990 and 1992, respectively, the Army was working on obtaining control  of SRC I missiles by serial number. Further, we found that the military  services were not regularly conducting physical inventories of SRC I  missiles and we made recommendations to strengthen inventory  accountability, which the department concurred with and implemented. In  our September 1997 report, we found the military services had different  procedures and requirements for maintaining oversight of SRC I rockets.  Specifically, we found that the Marine Corps maintained oversight and  visibility of its weapons by serial number, whereas the Army and the Navy  managed their SRC I rockets by production lot and quantity. DOD  concurred with our recommendation to manage SRC I rockets by serial  number and reissued DOD policy in 2000. In our 2000 report, we found  internal controls weaknesses at an Army ammunition depot that resulted  in a loss of accountability and control over SRC I rockets. For example,  serial number control of SRC I rockets was lost at the time of shipment  from the contractor because serial numbers listed on receiving reports  that accompanied shipments did not correspond to the actual items and  quantities of the respective shipments.
In March 2014, we reported on DOD’s management of conventional  ammunition, and found, among other things, some limitations of the  military services’ use of automated information systems that affected their  ability to facilitate efficient management of conventional ammunition. We  found that NLAC, the department-wide repository of ammunition data,  had limitations in providing visibility of ammunition and recommended that  the department select an authoritative source of department-wide  ammunition data to improve DOD’s ability to provide total asset visibility  over conventional ammunition. DOD concurred and stated that it would  assess the alternatives and designate the appropriate solution by the  fourth quarter of fiscal year 2015. Also, we recommended that DOD  identify and implement internal controls, consistent with federal internal  control standards, that would provide reasonable assurance that NLAC  collects comprehensive, accurate data from other service ammunition  systems. DOD concurred and stated in its agency response to our report  that the Army updated the performance work statement for NLAC to  include analyzing new data sources to identify improved system  interfacing that will improve data accuracy, completeness, quality  assurance, and auditability. For more details of our findings,  recommendations, and the status of actions taken by DOD relating to  DOD’s management of SRC I ammunition, see appendix IV.
section_title: Military Services Have Maintained Accountability of SRC I Ammunition at Sampled Locations, but Gaps Exist in Some Service-Level Guidance and Procedures for How SRC I Ammunition Is Accounted for Across Locations
paragraphs: The military services have maintained accountability of SRC I ammunition  at 11 sampled locations in the continental United States; however, we  identified gaps in some service-level guidance and procedures for how  SRC I ammunition is accounted for across locations. We found that the  Air Force does not track SRC I ammunition by serial number but has  plans to revise its guidance. Also, we found Air Force procedures have  not maintained accountability for items owned by other services and  stored at Air Force locations. Further, the military services generally  recorded shipment and receipt in their accountability systems, but the  receipt was not always recorded in a timely manner. Finally, we found  that Army processes and information systems do not provide full  accountability for in-transit items.
subsections: section_title: Military Services Have Maintained Accountability of SRC I Ammunition at Sampled Locations and Conducted Physical Inventories
paragraphs: We found that the military services have maintained accountability in their  automated information systems of SRC I ammunition at the 11 sampled  locations we reviewed. DOD policy calls for continuous program and  policy oversight to ensure protection of AA&E, to include SRC I  ammunition, within DOD. Likewise, military service guidance details  accountability of AA&E, including maintenance of records. We found  that, for our sample of 616 SRC I ammunition items, 612 of the 616  records matched the military services’ automated information systems  and the remaining 4, although not recorded as required, were accounted  for by service officials. Additionally, as part of our sample, we observed  SRC I ammunition that was being readied for rapid deployment, as shown  in figure 2, and documented the serial number and other identifying  information, and verified the information in the Army’s systems.
Additionally, we found that, in accordance with DOD policy and military  service guidance and at required frequencies, the military services  conducted physical inventories of SRC I ammunition to ensure  accountability at 22 selected military service locations in the continental  United States. We analyzed inventory memorandums from all Army  depots storing SRC I ammunition, as well as selected military service  locations, and found that the physical inventories were recorded as being  conducted. Inventory personnel stated there were no delays or  challenges in completing the physical inventories of SRC I ammunition  because of sequestration or other budgetary concerns.
Further, during our review, we identified instances in which the Navy and  Army had taken actions to enhance the accountability of their physical  inventories.
First, we found that the Army, Marine Corps, and Air Force certify  completion of the physical inventory of SRC I ammunition through a  signed memorandum. According to Navy officials, Navy policy does  not require certification through a signed memorandum. Rather, the  Navy OIS system captures a Date of Last Inventory; however, Navy  officials acknowledged they did not have a business process to use  this data point. After we identified this, Navy officials took action to  begin developing a business process to identify late inventories.
Second, according to Navy officials, in an effort to better align with  DOD policy, the Navy revised guidance in April 2015 to align with  requirements in DODM 5100.76 so it would reflect specific intervals  for completing physical inventories: monthly for unit levels and  semiannually for non-unit level.
Third, we examined the physical inventory process at a contractor  location. We found the contractor had completed physical  inventories of SRC I missiles in its custody, although the contract did  not specify the frequency or approach for conducting physical  inventories. When we asked Army officials to provide documentation  from the contractor verifying that physical inventories were completed,  the officials acknowledged they do not receive verification from the  contractor upon completion of physical inventories, but stated they  have taken action and are evaluating methodology to ensure they  receive documentation to verify that the contractor has completed  physical inventories in the future.
section_title: Air Force, Army, and Marine Corps Have Gaps in Some Service-Level Guidance and Procedures for How SRC I Ammunition Is Accounted for Across Locations
subsections: section_title: Air Force Does Not Track SRC I Ammunition by Serial Number but Has Plans to Do So
paragraphs: We found that the military services, except the Air Force, track SRC I  ammunition by serial number in their respective accountability systems,  and the Air Force has plans to revise its guidance regarding tracking. The  Air Force tracks SRC I ammunition in its accountability system, CAS, by  quantities within production lot numbers. CAS does not have the  capability to track SRC I ammunition by serial number because CAS does  not have a field to enter serial numbers. With this limitation, the Air Force  also cannot conduct physical inventories of SRC I ammunition by serial  number. We found in September 1997 that the military services did not  uniformly track SRC I rockets by serial number and recommended that  the services manage SRC I rockets by serial number to have total  visibility over the numbers and locations of rockets. The department  concurred and reissued policy in 2000 to require DOD components to  track and conduct physical inventories of SRC I ammunition by serial  number. However, Air Force guidance reissued in June 2015 recognizes  that CAS cannot track SRC I ammunition by serial number and will  instead track by quantities within production lot numbers.
Air Force officials have recognized that they are not meeting DOD  requirements for tracking SRC I ammunition by serial number, but are in  the process of modernizing CAS to track by serial number. According to  Air Force officials, the Air Force previously focused on the development of  another enterprise information system to track, among other things,  ammunition; however, the Air Force cancelled the system and is now in  the process of upgrading CAS. The Air Force provided supporting  documentation to confirm plans for CAS modernization by 2017.  According to Air Force officials, this upgrade will modernize the system  through technological upgrades that also includes provisions to improve  auditability of CAS. Upon upgrading CAS to track SRC I ammunition by  serial number, Air Force officials plan to reissue Air Force guidance to  ensure that the Air Force tracks and conducts physical inventories of SRC  I ammunition by serial number. If the Air Force does not modify CAS to  include serial numbers, the Air Force will continue to lack serial number  traceability of SRC I ammunition and will not meet DOD requirements. By  tracking SRC I ammunition by quantities within production lot numbers,  the Air Force will not have detailed information to support life-cycle  traceability requirements, such as a transactional history including  inventory, maintenance, repair, service records and/or supply, for each  serial number, which may affect their ability to investigate instances of  lost or stolen SRC I ammunition.
section_title: Air Force Policy Does Not Require Accountability in Its System of Record for Items Owned by Other Services and Stored at Air Force Locations
paragraphs: Air Force policy does not require accountability in its system of record for  items owned by other services and stored at Air Force locations. We  identified 55 SRC I ammunition items owned by the Army or Marine  Corps that were in the physical custody of the Air Force, but the Air Force  did not maintain accountability of these items in its system of record— CAS. DOD policy requires that the DOD component that has physical  custody of materiel in storage maintain accountability for that materiel in  the component’s system of record, regardless of which DOD component  owns the materiel. However, we found that Air Force guidance does not  require personnel to maintain accountability in its system of record for  SRC I ammunition items owned by other services but in the physical  custody of the Air Force, and instead allows ammunition owned by other  services to be tracked in a “non-accountable” program within CAS. This  non-accountable program tracks information such as net explosive weight  and asset visibility; however, according to Air Force officials, the non- accountable program does not maintain an audit trail or history that would  document receipt and provide a record of how the SRC I ammunition was  managed while at the Air Force location. We found that, consistent with  DOD policy, Army, Navy, and Marine Corps guidance generally requires  that accountability for ammunition in the physical custody of the service  be maintained in the service’s system of record, regardless of which  service owns the ammunition.
Accountability for the 55 SRC I ammunition items we identified that were  owned by the Army or Marine Corps that were shipped to and in the  physical custody of the Air Force was not maintained in any service’s  system of record while at the Air Force location. These items included:
40 Marine Corps-owned SRC I ammunition items that were stored at  an Air Force location for approximately 11 months. Marine Corps  officials were able to provide evidence that these items were shipped  back to a Marine Corps location after the 11 months of storage at the  Air Force location.
5 Army-owned AT4 anti-armor weapons that were shipped to an Air  Force installation for Army training purposes. According to Air Force  officials, these SRC I ammunition items have been expended, but  Army and Air Force officials did not provide us related documentation.
10 additional Army-owned AT4 anti-armor weapons that were shipped  to an Air Force installation for Army training purposes. For these 10  items, Army information systems show that the items were expended  and turned in 2 and a half months after shipment, but Army and Air  Force officials did not provide us documentation of accountability for  the assets during the time they were in Air Force custody.
Air Force officials stated that these ammunition items were managed on  the non-accountable program because the ammunition was Marine Corps  or Army property of which the Air Force did not intend to take ownership.  According to Air Force officials, the assets had been deleted once the  items were removed from the munitions storage area. Air Force officials  could not provide us key information about these shipments, such as the  date the shipments were accepted into the munitions storage area, to  whom the ammunition items were issued, or when the ammunition items  were issued because they said that information was no longer available in  the non-accountable program. Marine Corps and Army officials told us  that the ammunition items would likely have been managed by the unit— for example, by using a separate system or a manual process such as a  spreadsheet. However, they did not provide a copy of the document that  was used.
Air Force officials updated guidance in June 2015 to place more  restrictions on the use of the non-accountable program, including for SRC  I ammunition items, but the guidance continues to allow the use of the  non-accountable record when the Air Force does not intend to take  ownership of the ammunition. According to Air Force officials, the  decision of whether to maintain accountability for ammunition owned by  other services in CAS depends on the operational situation and tactical  environment. For example, for 20 additional SRC I ammunition items we  reviewed that were owned by the Army but in the physical custody of the  Air Force for testing purposes, Air Force officials maintained  accountability in CAS and were able to provide transaction history.  Officials told us that the Air Force is in the process of updating CAS to  facilitate tracking of SRC I ammunition by owner and will move toward  having most assets in CAS. However, if the Air Force does not revise  guidance to clarify that accountability for all SRC I ammunition items in  the Air Force’s custody—regardless of ownership—should be maintained  in the Air Force’s system of record, both the Air Force and the owning  service will lack a record of receipt and management of the SRC I  ammunition while at the Air Force location; also the owning service will  not have full assurance that accountability was maintained.
section_title: Army Depot and Marine Corps Guidance Do Not Specify a Time Frame for Receipting Shipments of SRC I Ammunition
paragraphs: We found that the military services generally recorded shipment and  receipt of SRC I ammunition in their accountability systems; however, we  found that existing Army depot and Marine Corps guidance do not specify  a time frame for receipting shipments of SRC I ammunition. Marine Corps  officials told us they generally adhere to the Navy’s guidance, which  requires receipting of shipments within 1 business day, but Marine Corps  installations are not required to follow that guidance. DOD policy  emphasizes the need for continuous oversight to ensure protection of  sensitive conventional arms, ammunition and explosives given that if  these items are left vulnerable they have the potential to jeopardize the  safety and security of personnel, activities, missions, and installations  worldwide. DOD policy delegates to DOD component heads the  responsibility to implement the procedures of DODM 5100.76, Physical  Security of Sensitive Conventional Arms, Ammunition, and Explosives  (AA&E) (Feb. 28, 2014) and develop supplemental guidance for the  protection of arms, ammunition, and explosives in accordance with DODI  5100.76 Safeguarding Conventional Arms, Ammunition, and Explosives  (AA&E) (May 20, 2010).
However, the military services varied in the extent to which they have  developed guidance that addresses the time frame within which SRC I  ammunition should be receipted on the accountable record. Air Force  guidance specifies SRC I ammunition be receipted on the accountable  record immediately; Army guidance for retail locations specifies within 24  hours; and Navy guidance specifies within 1 business day. In contrast,  Army, at the depot-level, and the Marine Corps have not finalized  guidance that addresses the required time frame for receipting SRC I  ammunition. In our review, we found that, generally, for those services  with guidance, SRC I ammunition was receipted on the accountable  record within specified time frames, while the services without guidance  were more likely to receipt SRC I ammunition days after arrival, and in  some instances, more than 5 days after arrival.
In a non-generalizable sample of 104 shipments that we reviewed, we  found the record of shipment in the shipper’s accountability system. For  100 of the 104 shipments, we found a corresponding receipt in the  receiver’s accountability system. Of the four shipments for which we did  not find a corresponding receipt, two were shipments of Army-owned  items to the Air Force locations that the Air Force did not maintain in its  accountable system because it did not own the items, and other two were  shipments of Navy-owned SRC I items to a contractor for inspection.  However, we found that approximately 20 percent of shipments of SRC I  ammunition in our non-generalizable sample were not receipted within the  time frames stated in military service policy or described as standard  practice by military service officials.
Of the 104 shipments we reviewed, we were able to compare receipt  information to arrival time for 99 shipments, and we found that 21 of these  99 shipments were not receipted on the services’ accountability system  within 2 business days after the arrival of the shipment. All of the military  services either have documented policy that requires receipting SRC I  ammunition on the accountable record within 1 business day or less or  told us that they generally adhere to that time frame, but in our analysis,  we allowed for 2 business days because military services’ information  systems may take an additional business day to record transactions.  Table 3 provides additional details of receipting time frames for each  service.
Air Force locations and Army retail locations are required by service  guidance to adhere to established time frames for receipting SRC I  ammunition, and all shipments we reviewed at Air Force locations for  which we located receipts and all but 2 shipments we reviewed at the  Army retail locations were receipted on the accountable record within 2  business days, as shown in table 3 above. In contrast, we found that the  Army, at the depot-level, and the Marine Corps have not finalized  guidance that addresses the required time frame for receipting SRC I  ammunition. As identified in table 3, 12 of 21 shipments to Army depots  and 5 of 30 shipments to Marine Corps locations were receipted more  than 2 business days after arrival. An Army official told us that depots are  required to receipt inbound shipments within 24 hours based on a policy  letter issued prior to 2010, and that this requirement has also been in  draft guidance since 2013, but that the guidance has not yet been  finalized. Similarly, the Marine Corps does not have a receipting  timeframe for SRC I ammunition in its guidance. Marine Corps officials  told us they generally adhere to the Navy’s guidance, which requires  receipting of shipments within 1 business day, but Marine Corps  installations are not required to follow that guidance. Marine Corps  officials told us that as of October 2015 they were in the process of  incorporating a required time frame for receipting SRC I ammunition in  Marine Corps guidance but did not provide a specific time frame for  revising the guidance. Until the Army, at the depot-level, and the Marine  Corps finalize and implement guidance that addresses the required time  frame for receipting SRC I ammunition, Army and Marine Corps officials  will not have the data they need to help assure accountability for all  shipped SRC I ammunition.
section_title: Army Processes and Information Systems Do Not Provide Full Accountability for In-Transit Items
paragraphs: The Air Force and Navy have policies regarding maintaining in-transit  accountability for shipped SRC I ammunition that generally adhere to  DOD requirements, and the Marine Corps has planned system updates to  adhere to requirements; however, the Army’s policy and processes do not  fully adhere. DOD policy requires that the DOD component directing  materiel into an in-transit status will retain accountability within the  logistics records for that materiel until there is a formal acknowledgment  of receipt. The Air Force and Navy maintain in-transit tables in their  accountability systems that can be used to track ammunition that has  been shipped but not yet receipted. Additionally, the Navy requires all in- transit materiel remain accountable to the issuing activity until properly  receipted or resolved, and Air Force policy requires that each receiver  acknowledge—orally or in writing or through other automated means— that the shipped SRC I items were received, and the date the assets were  received.
The Marine Corps has planned system updates to adhere to DOD  requirements to maintain accountability for in-transit SRC I ammunition  items. According to Marine Corps officials, the Marine Corps tracks  Marine Corps-owned assets in transit until formal acknowledgement of  receipt in its OIS-MC system, but Marine Corps ammunition supply points  do not maintain accountability for SRC I ammunition in transit to another  service. Marine Corps officials told us that the system of record used by  Marine Corps ammunition supply points is being upgraded in fiscal year  2016 to facilitate compliance with in-transit requirements.
The Army does not maintain accountability for all in-transit items within  the logistics records for that materiel until there is a formal  acknowledgement of receipt. Army regulations require the Joint Munitions  Command to track shipments of SRC I ammunition from depot to depot,  depot to unit, or unit to depot using DTTS and to monitor shipping  documents and receipts to ensure they are closed or posted in a timely  manner. However, officials from the Joint Munitions Command told us  they do not receive confirmation of receipt from some entities, including  other military services and some contractors. The Army’s systems do not  maintain in-transit tables that show items that have been shipped out of  one location and are due in to another. When the Army ships SRC I  ammunition from depots or retail locations, it drops those items from its  accountable systems without a requirement to confirm or document that  the shipment was received. For SRC I ammunition shipments to other  Army locations, the Army retains visibility of shipments by maintaining a  record of SRC I ammunition items that have been shipped in its  Worldwide Ammunition Reporting System-New Technology (WARS-NT)  database, and matches up shipped items and receipted items by serial  number to confirm that the items were received. However, for shipments  to other military services, Army officials told us that the Army clears  shipped items from its WARS-NT records upon receiving confirmation  that the items were shipped.
Army officials told us that limitations in their depot-level system, called  LMP, and in their retail-level system, called the Standard Army  Ammunition System, prevent them from maintaining full accountability for  in-transit items, and that this deficiency, which affects all classes of  supply, has been identified by the Army since 2012 at both the depot and  retail level but that a solution has not yet been developed because, in  part, of technical complexities. However, Army officials have not  evaluated or identified actions that the Army could take to enable it to  retain accountability for in-transit items until acknowledgment of receipt.  Unless the Army evaluates and identifies actions to retain accountability  for in-transit items until acknowledgement of receipt, the Army will not  have a path forward to ensure that accountability for in-transit SRC I  ammunition was maintained and the ammunition was received, thereby  creating a potential gap in accountability and visibility of this ammunition.
section_title: The Military Services Have Not Consistently Ensured Timely, Complete, and Accurate Information to Maintain Full Visibility of SRC I Ammunition
paragraphs: The military services have not consistently ensured timely, complete, and  accurate information to maintain full visibility of SRC I ammunition in the  continental United States. We found the Army has not ensured timely and  complete information of SRC I ammunition returned to the contractor, but  has begun to take action to ensure reporting to WARS-NT to improve  visibility. We also found the Army had inaccurately categorized two  variants of SRC I rockets, but took immediate action to add the rocket  variants to the catalog listing of SRC I ammunition. Further, we identified  examples of the military services not entering timely information in the  Defense Transportation Tracking System (DTTS) on shipments to aid  Military Surface Deployment and Distribution Command tracking by  satellite, and of the services entering inaccurate or incomplete data about  shipments of SRC I ammunition, which affects visibility of SRC I  ammunition in transit.
subsections: section_title: The Army Did Not Have Timely, Complete, and Accurate Information of All Its SRC I Ammunition, but Has Taken Action to Improve Visibility
paragraphs: We found that the Army did not have timely, complete, or accurate  information of its SRC I ammunition, but has taken action in two areas in  order to improve visibility. In one area, we found Army officials had not  ensured timely and complete information of SRC I ammunition returned to  the contractor for repair, upgrade, maintenance, or testing and had not  followed guidance for maintaining visibility of SRC I missiles. While the  Army’s WARS-NT system, which is the Army’s official system for tracking  SRC I ammunition, provided visibility of SRC I missiles located at the  contractor facility, WARS-NT did not have timely or complete records to  show visibility of all SRC I missiles at the contractor’s site. In January  2015, we identified an October 2014 shipment of 58 SRC I missiles sent  from an Army depot to a contractor facility for repair. Although we  confirmed during our site visit that the 58 missiles were located at the  contractor’s facility and that the contractor’s automated information  system accounted for the missiles, we found that WARS-NT did not have  timely or complete data about the shipped 58 SRC I missiles. After we  identified the discrepancies in records systems, Army officials  acknowledged that while it is an Army requirement for a contractor to  report the receipt of these items to the WARS-NT program office, this  requirement was not included in the contract. Army officials are taking  action and are coordinating a modification to the contract to require the  prime contractor to routinely report receipt of shipments to WARS-NT per  Army regulation. In the second area, we found that WARS-NT had  inaccurately categorized two variants of SRC I rockets. Specifically, we  found 55 SRC I ammunition items—variants of the M72 rocket—were not  included in the WARS-NT system as SRC I ammunition items. After we  noted the omission of the rocket variants in WARS-NT as SRC I  ammunition, Army officials took action in August 2015 to add the rocket  variants to the catalog listing of SRC I ammunition and in the WARS-NT  system as SRC I ammunition.
section_title: The Military Services Used Satellite Tracking for Shipments of SRC I Ammunition in Our Sample, but Did Not Consistently Provide Timely, Complete, and Accurate Information to Aid Tracking
paragraphs: We found that the military services, as required by DOD regulation, used  satellite tracking for nearly all of the 104 shipments of SRC I ammunition  that we reviewed; however, the services did not always enter timely,  accurate, and complete information that is required to aid tracking. The  Defense Transportation Regulation requires satellite tracking of  shipments of SRC I ammunition via the Defense Transportation Tracking  System (DTTS). We found that 103 of 104 shipments of SRC I  ammunition in a non-generalizable sample we reviewed were tracked in  DTTS using satellite monitoring. DTTS, which is maintained by the  Military Surface Deployment and Distribution Command, which falls under  the U.S Transportation Command, provides satellite tracking capability of  shipments of sensitive conventional arms, ammunition and explosives,  including SRC I ammunition items, from the point of departure until the  point of arrival. However, we observed problems with the timeliness,  accuracy, and completeness of the data provided by the military services  in DTTS, which limited the information available to aid the Military  Surface Deployment and Distribution Command’s tracking of these  shipments and its ability to facilitate responses to any incidents, if  necessary.
subsections: section_title: Timeliness of Shipping Entries
paragraphs: We found that the military services did not always enter timely information  in DTTS on SRC I ammunition shipments to aid the Military Surface  Deployment and Distribution Command’s tracking of SRC I ammunition  by satellite. We observed timeliness problems both at the point of  shipment departure and the point of shipment arrival.
Shipment departure: The Defense Transportation Regulation specifies  that the military services’ shipping offices must enter shipping  information in DTTS prior to carrier departure. Data provided by the  Military Surface Deployment and Distribution Command showed that  information about 93 of 1,008 shipments identified as containing SRC  I items between November 1, 2013, and April 30, 2015, were not in  DTTS at the time of carrier departure. According to Military Surface  Deployment and Distribution Command’s data, information was  entered more than 1 hour after carrier departure for 68 of the 93  shipments. On average, information about these 68 shipments was  not entered until approximately 8 hours after departure. According to  Military Surface Deployment and Distribution Command officials,  when information is not entered in the DTTS at the time of carrier  departure, the command is still notified that these shipments are on  the road when drivers turn on their satellite monitoring devices.  However, the command does not have information about the contents  of these shipments and therefore DTTS is unable to provide essential  information to initiate rapid emergency response to in-transit accidents  or incidents to minimize effect. Additionally, if a driver did not turn on  the satellite monitoring device, the command would not be alerted to  that situation since it would be unaware that a shipment was  expected.
Shipment arrival: The Defense Transportation Regulation requires  entry into DTTS of confirmation of receipt of SRC I shipments within 2  hours of the offloading of each shipment. Data provided by the Military  Surface Deployment and Distribution Command for SRC I shipments  between November 1, 2013, and April 30, 2015, showed that 572 of  992 shipments to the military services containing SRC I items were  not confirmed within the calendar month that they arrived. Further,  as of April 30, 2015, Military Surface Deployment and Distribution  Command data shows a backlog of 364 SRC I shipments to the  military services dating as far back as November 2011 that had not  been confirmed. According to Military Surface Deployment and  Distribution Command officials, shipments that are not confirmed in  DTTS as required hinder their ability to ensure successful  transportation of SRC I ammunition because it requires the command  to rely solely on the carrier to confirm that SRC I ammunition has  been delivered.
The Military Surface Deployment and Distribution Command and the  military services have taken steps to improve the timeliness of data in  DTTS. The Military Surface Deployment and Distribution Command works  with designated military service representatives on transportation issues,  and provides reports to the military representatives on timeliness of  confirmation of individual SRC I shipments and SRC I shipments from  prior months that have not been confirmed. Military Surface Deployment  and Distribution Command officials also told us that they have been  working to try to reduce systemic causes of shipments not being in DTTS  at the time of shipment departure, such as system interface delays.  Similarly, military service representatives told us that they have also tried  to address issues of timeliness of reporting in DTTS. For example, the  Army issued guidance in May 2014 reminding transportation offices and  ammunition supply points of their responsibilities with regard to entering  information in DTTS.
However, both Military Surface Deployment and Distribution Command  officials and the military service representatives acknowledged their  collaboration could be improved to determine what information is needed  to improve the military services’ oversight of the timeliness of data entry in  DTTS. For example:
With regard to shipments not entered in the system in a timely  manner, Military Surface Deployment and Distribution Command  officials told us that they provided reports to the military service  representatives on shipments not in the system at the time of  departure; however, they stopped notifying the military service  representatives through emails to request assistance because they  did not observe a decrease in the number of such shipments.
With regard to shipment confirmations, while the Military Surface  Deployment and Distribution Command continues to provide reports  on SRC I shipments that were not confirmed in a timely manner,  military service representatives told us that the information they are  provided does not include sufficient detail for them to work with  receiving locations to improve compliance with confirmation  requirements. For example, the report provided by the Military Surface  Deployment and Distribution Command does not identify the office  responsible for confirmation, and it provides arrival time rather than  offload time, although confirmation requirements in the Defense  Transportation Regulation cite time elapsed from offload time.
Until the Military Surface Deployment and Distribution Command and the  military services collaboratively determine the specific information  required for the military services to ensure timely data entry into DTTS, in  accordance with the Defense Transportation Regulation, the Military  Surface Deployment and Distribution Command will continue to lack full  visibility of shipments of SRC I ammunition at certain points during the  shipping process and the military services will not be well positioned to  improve their oversight of the timeliness of data entry.
section_title: Completeness and Accuracy of Data on Shipments
paragraphs: We identified examples of the military services entering incomplete or  inaccurate data in DTTS about shipments of SRC I ammunition.
Incomplete information:
The transportation control number for 8 of 104 shipments in our  sample was not listed in DTTS, which limits the information available  to the Military Surface Deployment and Distribution Command about  individual shipments being tracked. For example, if one or more  transportation control numbers associated with a shipment are not  listed in DTTS, the Military Surface Deployment and Distribution  Command may not have accurate information about the type,  quantity, and security risk category of ammunition being tracked.
164 of 1,008 SRC I shipments from November 1, 2013, through April  30, 2015, which were reported to us by the Military Surface  Deployment and Distribution Command, were missing data in the  Department of Defense Identification Code field, which provides  information about the specific type of ammunition being shipped.  Inaccurate information—9 of 104 shipments in our sample had  inaccurate controlled inventory items codes and were not identified in  DTTS as SRC I shipments, which required us to go back to the  Military Surface Deployment and Distribution Command to obtain  additional information to confirm the shipment had been tracked by  satellite.
According to Standards for Internal Control in the Federal Government,  agencies should have relevant, reliable, and timely information for  decision-making and external reporting purposes. Completeness and  accuracy are key characteristics of reliable data and refer to (1) the extent  to which relevant records are present and that fields in each record are  populated appropriately; (2) recorded data reflect the actual underlying  information. Military Surface Deployment and Distribution Command  officials told us that they attempted to address completeness and  accuracy issues on a shipment-by-shipment basis. According to the  officials, when an operator responsible for tracking an individual shipment  notices missing or inaccurate information—such as when information in  the paperwork given to the driver does not match information in the  system—the operator attempts to work with the military service’s shipping  office to correct that information for the shipment. However, neither the  military services nor the Military Surface Deployment and Distribution  Command have conducted an analysis of the problems the Military  Surface Deployment and Distribution Command has observed with the  completeness and accuracy of data entered by the military services to  identify areas for improvement on a broader scale. Until the military  services, with the aid of the Military Surface Deployment and Distribution  Command, conduct analysis of the completeness and accuracy of data  entered into DTTS by shippers on SRC I ammunition shipments, DOD will  continue to lack full visibility of shipments of SRC I ammunition and the  military services will not be well positioned to improve their oversight of  the completeness and accuracy of the data.
section_title: Conclusions
paragraphs: SRC I ammunition is treated as a higher risk than other conventional  ammunition and serves as a potential threat if it were obtained and used  by unauthorized individuals or groups. We found that the military services  maintained accountability in their automated information systems of SRC  I ammunition at 11 sampled locations. However, we found examples of  SRC I ammunition items that were in the physical custody of the Air Force  but owned by other services and accountability was not maintained on the  Air Force’s system of record. If the Air Force does not revise guidance to  clarify that accountability of all SRC I ammunition items in the Air Force’s  custody—regardless of ownership—is maintained in the Air Force’s  system of record, both the Air Force and the owning service will not have  full assurance that accountability was maintained. Also, we found that the  military services generally recorded shipment and receipt of SRC I  ammunition in their accountability systems, but the Army and Marine  Corps do not have guidance that required the receipting of SRC I  ammunition in a timely manner, in accordance with DOD policy. Until the  Army, at the depot-level, and the Marine Corps finalize and implement  guidance that addresses the required time frame for receipting SRC I  ammunition, Army and Marine Corps officials will not have the data they  need to help assure accountability for all shipped SRC I ammunition.  Further, the Air Force, Navy, and Marine Corps have policies or plans  regarding maintaining in-transit accountability for shipped SRC I  ammunition to generally adhere to DOD requirements, but the Army’s  policy and processes do not fully adhere. Unless the Army evaluates and  identifies actions to retain accountability for in-transit items until  acknowledgment of receipt, the Army will not have a path forward to  ensure that accountability for in-transit SRC I ammunition was maintained  and the ammunition was received, thereby creating a potential gap in  accountability and visibility of this ammunition.
In addition, we found that the military services have not always entered  timely information in DTTS on SRC I ammunition shipments, as specified  in the Defense Transportation Regulation, to aid the Military Surface  Deployment and Distribution Command’s tracking and visibility of SRC I  ammunition by satellite. However, the Military Surface Deployment and  Distribution Command and the military services have not agreed on the  specific information required for the military services to ensure timely data  entry into DTTS, in accordance with the Defense Transportation  Regulation. Moreover, we identified examples of the military services  entering incomplete or inaccurate data in DTTS about shipments of SRC I  ammunition. Until the Military Surface Deployment and Distribution  Command and the military services collaboratively determine the specific  information required for the military services to ensure timely data entry  into DTTS, and the military services, with the aid of the Military Surface  Deployment and Distribution Command, conduct analysis of the  completeness and accuracy of data entered into DTTS military services’  shipping offices on SRC I ammunition shipments, the Military Surface  Deployment and Distribution Command will continue to lack full visibility  of shipments of SRC I ammunition and the military services will not be  well positioned to improve their oversight of the timeliness, completeness,  and accuracy of data entered in DTTS.
section_title: Recommendations for Executive Action
paragraphs: We are making six recommendations to enhance the department’s policy  and procedures and improve the accountability and visibility of SRC I  ammunition.
To ensure the accountability and protection of SRC I ammunition, in  accordance with DOD policy, we recommend the Secretary of Defense  direct the Secretary of the Air Force to revise guidance to clarify that  accountability for all SRC I ammunition items in the Air Force’s custody— regardless of ownership—should be maintained in the Air Force’s system  of record.
To ensure the Army and Marine Corps record the receipt of shipped SRC  I ammunition in their accountability systems, and in accordance with DOD  policy, we recommend the Secretary of Defense direct:  the Secretary of the Army to finalize and implement guidance that  addresses the required time frame for receipting SRC I ammunition at  the depot level.  the Commandant of the Marine Corps to finalize and implement  guidance that addresses the required time frame for receipting SRC I  ammunition at Marine Corps locations.
To ensure the Army retains accountability of SRC I ammunition in an in- transit status, consistent with DOD policy, we recommend the Secretary  of Defense direct the Secretary of the Army to evaluate and identify  actions to enable the Army to retain accountability for in-transit items until  acknowledgment of receipt.
To help improve visibility and tracking of SRC I ammunition shipments,  we recommend the Secretary of Defense direct the Secretaries of the  military departments and the Military Surface Deployment and Distribution  Command, through the Commander of the U.S. Transportation  Command, to collaboratively determine the specific information required  for the military services to ensure timely data entry into DTTS, in  accordance with the Defense Transportation Regulation.
To help improve the completeness and accuracy of data provided by the  military services to the Military Surface Deployment and Distribution  Command in accordance with federal internal control standards, we  recommend the Secretary of Defense direct the Secretaries of the military  departments, with the aid of the Military Surface Deployment and  Distribution Command, to conduct analysis of the completeness and  accuracy of the data entered into DTTS.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for review and comment; the  department provided technical comments that we considered and  incorporated as appropriate. DOD also provided written comments on our  recommendations, which are reprinted in appendix V. In commenting on  this draft, DOD concurred with all six of our recommendations.
With respect to the first recommendation to ensure the accountability and  protection of SRC I ammunition, DOD stated that the Air Force released a  memorandum on December 24, 2015, directing Air Force units to account  for all SRC I ammunition items in their custody, regardless of ownership,  and to maintain them in the Combat Ammunition System. Additionally,  DOD stated that such procedures will be included in Air Force guidance  by September 30, 2016.  With respect to our second and third  recommendations to ensure the Army and Marine Corps record the  receipt of shipped SRC I ammunition in their accountability systems within  the required timeframes, DOD stated that the Army will include  procedures on the required time frame for receipting SRC I ammunition at  the depot-level in their guidance by September 30, 2016. Further, DOD  stated that the Marine Corps has issued interim guidance via a Naval  Message in January 2016 to address SRC I ammunition accountability  along with required receipt times and that such procedures will be  included in their guidance by June 30, 2016. Regarding our fourth  recommendation to ensure the Army retains accountability of SRC I  ammunition in an in-transit status, DOD stated that the Army will evaluate  and identify by June 30, 2016, actions to enable the Army to retain  accountability for in-transit items until acknowledgment of receipt. Further,  DOD stated the proposed actions will then be prioritized for incorporation  into any required follow-on work with Army Class V management  systems, such as the Logistics Modernization Program and the Standard  Army Ammunition System.
Regarding our fifth recommendation to help improve visibility and tracking  of SRC I ammunition shipments, DOD stated that the military services  and the Military Surface Deployment and Distribution Command will  collaboratively determine the specific information the Military Surface  Deployment and Distribution Command can provide to the military  services to correct data missing in DTTS at the time of shipment, and to  complete shipment receipts. Furthermore, to provide greater oversight of  the DTTS data, DOD stated the military services and the Military Surface  Deployment and Distribution Command will develop the processes  required to ensure regular feedback on accuracy and timeliness. Finally,  with respect to our sixth recommendation to help improve the  completeness and accuracy of data provided by the military services to  the Military Surface Deployment and Distribution Command, DOD stated  that the military services and the Military Surface Deployment and  Distribution Command will complete the necessary analysis of the  completeness and accuracy of the data entered into DTTS.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense; the Secretaries of the Army, the  Navy, and the Air Force; and the Commandant of the Marine Corps. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff has any questions about this report, please contact me  at (202) 512-5257 or merrittz@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff members who made key contributions to this  report are listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: Our review of the Department of Defense’s (DOD) management of SRC I  ammunition focused on the four military services— Army, Navy, Marine  Corps, and Air Force— because each military service owns, stores, and  ships SRC I ammunition. To determine the extent to which the military  services have maintained accountability of SRC I ammunition in the  continental United States, we reviewed DOD policy and military service  guidance, including Department of Defense Manual (DODM) 5100.76,  Physical Security of Sensitive Conventional Arms, Ammunition, and  Explosives (AA&E), (Apr. 17, 2012), among others, detailing: continuous  accountability, frequency and process for conducting physical inventories,  process for making adjustments to the electronic record if necessary,  tracking of SRC I ammunition by serial number, and the shipment of SRC  I ammunition in the continental United States. During our review, we  visited 11 military locations—including 3 Army depots and 8 military  service locations, such as military service installations, bases, and  ammunition supply points, with SRC I ammunition—selected based on a  number of factors including the size of SRC I inventory, the number of  shipments to and from the location, and the variety of SRC I ammunition  being stored. We also visited a contractor with a current production  contract for SRC I missiles as SRC I ammunition items are in the  contractor’s custody while at the contractor’s facility for repair,  maintenance, or upgrade. Additionally, we interviewed OSD and military  services officials responsible for the management of SRC I ammunition,  including inventory personnel and transportation officials, to gain an  understanding of the frequency and process for conducting physical  inventories and how shipments of SRC I ammunition are coordinated.
We compared a non-generalizable sample of over 600 SRC I ammunition  items against the records in the military services’ automated information  systems to verify accountability. For the Army we used the Logistics  Modernization Program (LMP), Standard Army Ammunition System- Modernization (SAAS-MOD), and Worldwide Ammunition Reporting  System-New Technology (WARS-NT). For the Navy and Marine Corps  we used Ordnance Information System- Wholesale (OIS-W), Ordnance  Information System-Retail (OIS-R), and Ordnance Information System- Marine Corps (OIS-MC). For the Air Force we used Combat Ammunition  System (CAS). Specifically, during our site visits to 11 military locations  and 1 contractor location, we went through storage buildings with SRC I  ammunition and selected SRC I ammunition from different pallets to  include a range of SRC I items as well as items from recent shipments,  and documented identifying information including serial and production lot  number. We verified the Army, Navy, and Marine Corps SRC I  ammunition items by serial and lot number. Due to the way the Air Force  maintains its records, we verified their SRC I ammunition to records  based on lot number and quantity.
We analyzed DOD policy and military service guidance on frequency and  process for conducting physical inventories and reviewed supporting  documentation to determine whether the services were maintaining  accountability by conducting physical inventories according to  requirements. For Army depots, we collected documentation of completed  physical inventories for three fiscal years prior to our audit work— 2012,  2013, and 2014 and conducted site visits to three Army depots to observe  a walk-through of their physical inventory process. We selected the three  Army depots to visit based on a number of factors, including range in  quantity and type of SRC I in storage and recent shipments. To  supplement our site visits, we also interviewed inventory personnel at the  remaining depots regarding the physical inventory process and process  for adjusting the electronic record, if necessary. For five military service  locations we visited, we requested documentation of the last three  completed physical inventories to obtain a variety of physical inventories  (e.g., monthly, quarterly, annually, or change in command) and we also  observed a walk-through of their physical inventory process. Further, to  supplement our site visits, we randomly selected 10 additional Air Force  locations and obtained documentation for their last three completed  physical inventories. We reviewed the inventories for our non- generalizable sample of 22 selected locations to determine whether  physical inventories were being conducted in accordance with DOD policy  and military service guidance and at required frequencies. Finally, during  our site visit with the contractor, we confirmed the contractor had  completed physical inventories of SRC I missiles in its custody as well as  discussed with officials how they conduct physical inventories of SRC I  ammunition at their location.
We also examined the military services’ guidance and procedures for  maintaining accountability for items owned by one service but in the  physical custody of another service. We analyzed DOD policy and military  service guidance on maintaining accountability for ammunition to  determine the extent to which military services’ guidance aligned with  DOD policy. We also analyzed data and documents obtained from the Air  Force, Army, and Marine Corps on 55 SRC I items from 4 shipments of  SRC I ammunition in the continental United States that contained  ammunition owned by the Army or Marine Corps that was shipped to and  held in the physical custody of the Air Force but for which we had found  that accountability was not maintained on the Air Force’s system of  record. We identified these items because we were unable to locate  receipts for certain shipments in the Air Force’s system of record when  we reviewed it for our analysis of the timeliness of receipt of shipments of  SRC I ammunition described below. Information we report about the  number of SRC I items or shipments we identified as being owned by  another service but in the physical custody of the Air Force and not  maintained on the Air Force’s accountable record is non-generalizable to  the overall universe of SRC I items but provides insights on how the Air  Force manages items in its physical custody that are owned by another  service.
Further, we analyzed shipping documents and military service data for a  non-generalizable sample of 104 SRC I shipments, and compared  receipting time frames for these shipments to military service guidance to  analyze how accountability was maintained. When the military services  did not have documented guidance on receipting time frames, we  obtained information from military service officials about standard  procedures followed by the military service. Our sample was comprised of  shipments that occurred between November 1, 2013, and April 30, 2015,  and that were shipped to or from locations we visited or interviewed. We  selected these time frames to provide an 18-month window that provided  one prior year’s data and six months that coincided with the period when  we were conducting field work. Further, we selected our sample to reflect  shipments to or from a variety of military services, locations, and location  types. Because our sample of shipments is non-generalizable, results of  our analysis cannot be used to make inferences about all SRC I  shipments within the continental United States but they provide insights  on the military services’ adherence to DOD policy and service-level  guidance or standard practice regarding the shipment of SRC I  ammunition. For the 104 shipments in our sample, we obtained and  reviewed shipping documents and receipt data from the receiving military  services’ accountability systems. We compared the receipt data from the  receiving military service’s accountability systems to data on shipment  arrival time at the receiving location that we obtained from the Defense  Transportation Tracking System (DTTS), maintained by the Military  Surface Deployment and Distribution Command. For our analysis, we  analyzed whether shipments were receipted within 2 business days of the  day of arrival of the shipment even though either service guidance or  standard practice generally required receipting within 1 business day or  less. We allowed for 2 business days because military services’  information systems may take an additional business day to record  transactions.
Also, we analyzed military service guidance related to providing  accountability for in-transit items and compared that guidance to DOD  policy to assess whether the military services’ policies and processes for  maintaining accountability for in-transit SRC I ammunition items enabled  the military services to maintain accountability of SRC I ammunition in the  continental United States. When we determined that a military service’s  guidance and processes did not align with DOD policy, we requested and  reviewed additional documentation, such as analyses of gaps in  information system capabilities and documentation of planning of system  upgrades, and conducted interviews with military service officials to  determine the reasons for the differences.
To determine the extent to which DOD has maintained visibility of SRC I  ammunition in the continental United States, we reviewed DOD policy and  military service guidance, including DODM 5100.76 and the Defense  Transportation Regulation, among others, detailing procedures to  maintain visibility of SRC I ammunition, including in-transit visibility during  shipment, satellite tracking of shipments, and timeframes for entering  shipment information into DTTS. In addition, we interviewed relevant  officials at the Office of the Secretary of Defense, the military services,  U.S. Transportation Command, and the Military Surface Deployment and  Distribution Command to gain an understanding of how visibility is  maintained in their automated information systems, how shipments of  SRC I ammunition are processed for shipping and entered into DTTS,  and how visibility is maintained while the shipment is in transit.
We obtained SRC I ammunition data from each of the military services’  automated information systems as of April 30, 2015, and analyzed this  data for timely, complete and accurate information to maintain full visibility  of SRC I ammunition in the continental United States. Specifically, we  compared this data, based on a number of elements including type of  SRC I ammunition, location in the continental United States, condition of  the SRC I ammunition, and military service ownership codes, against  information in the department’s National Level Ammunition Capability  (NLAC) system, a DOD-wide repository that provides visibility of SRC I  ammunition data, to identify inconsistencies across DOD and the military  services.
We also analyzed DOD requirements for satellite tracking from the  Defense Transportation Regulation and obtained and analyzed  information from DTTS provided by the Military Surface Deployment and  Distribution Command about satellite tracking of shipments of SRC I  ammunition in the continental United States from November 1, 2013,  through April 30, 2015, to gain an understanding of how visibility is  maintained. We analyzed data from November 1, 2013, to April 30, 2015,  to correspond to the time frame we used to select our non-generalizable  sample of shipments for review. To examine whether the military services  used satellite tracking for shipments included in our non-generalizable  sample of 104 shipments described above, we compared the  transportation control number for each shipment in our sample to  transportation control numbers associated with SRC I shipments in DTTS.  When we could not locate a shipment in DTTS by transportation control  number, we followed up with the Military Surface Deployment and  Distribution Command to obtain additional information about the  shipment, since in some cases the transportation control number was in  DTTS but not in the data provided to us since the data was provided  based on a bill-of-lading number. For the shipments that neither we nor  the Military Surface Deployment and Distribution Command could locate  in DTTS, we requested additional information about the shipment from  military service officials to attempt to locate the shipment in DTTS through  a means besides the transportation control number. For example, in  some cases, the shipper had not identified the shipment in DTTS by  transportation control number, and we were able to obtain and search on  the bill-of-lading number to confirm that the shipment had been tracked in  DTTS.
We also examined the extent to which the military services provided  timely data in DTTS, in accordance with the Defense Transportation  Regulation, to ensure visibility. We analyzed data and reports provided by  the Military Surface Deployment and Distribution Command from DTTS to  identify the number of SRC I shipments between November 1, 2013, and  April 30, 2015, for which information had not been entered into the  system at the time of shipment departure and the number of shipments  that were not confirmed within the calendar month of arrival. Further, we  examined the extent to which the military services provided accurate and  complete data in DTTS. We compared values for key data fields in DTTS,  such as the DOD Identification Code and transportation control number,  to shipping documents for selected shipments from our sample of 104  shipments. We also analyzed the number of missing values for selected  data fields in DTTS for the 1,008 SRC I shipments in the continental  United States between November 1, 2013, and April 30, 2015, reported to  us by the Military Surface Deployment and Distribution Command. While  we identified some issues related to the accuracy and completeness of  DTTS data that are described in this report and may affect the reliability of  the overall number of SRC I shipments during this time frame, we  determined that the data were sufficiently reliable for our purposes of  analyzing information about individual shipments in our sample and  general trends in the timeliness, accuracy, and completeness of data  entry in DTTS. To obtain additional information about the timeliness,  accuracy, and completeness issues we identified and steps that were  being taken to address these issues, we conducted interviews with U.S  Transportation Command and Military Surface Deployment and  Distribution Command officials, as well as representatives from each of  the military services who are assigned to coordinate with the Military  Surface Deployment and Distribution Command on transportation issues  and reviewed additional documentation provided by the Military Surface  Deployment and Distribution Command and the military services, such as  reporting provided by the Military Surface Deployment and Distribution  Command to the military services.
Table 4 lists the offices that we visited or contacted during our review.
We conducted this performance audit from September 2014 to February  2016 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: Selected Security Risk Category I Ammunition
section_title: Appendix III: Overview of Policy and Guidance of SRC I Ammunition in the Continental United States
paragraphs: Department of Defense Manual (DODM) 5100.76, Physical Security of  Sensitive Conventional Arms, Ammunition, and Explosives (AA&E) sets  forth DOD policy on the physical security of sensitive conventional AA&E.  According to DODM 5100.76, continuous program and policy oversight is  required to ensure protection of AA&E within DOD, and DOD components  are required to track and conduct physical inventories of SRC I  ammunition by serial number. DOD policy requires SRC I ammunition to  be treated as a higher risk than other conventional ammunition which  requires a higher level of protection and security. DOD and the military  services have policy and guidance on how to account for, safeguard,  conduct physical inventories, adjust if necessary, track, and ship SRC I  ammunition within and between services and to contractors for repair, as  shown in table 5 below.
section_title: Appendix IV: GAO’s Prior Work on SRC I Ammunition
subsections: section_title: Defense Transportation: DOD Needs to Take Actions to Improve the Transportation of Hazardous Material Shipments
paragraphs: In May 2014, we found that the department has experienced some  challenges in implementing hazardous materials (HAZMAT) regulations  and other guidance, which can adversely affect the safe, timely, and cost- effective transportation of HAZMAT. For example, we found that at least  44 times during fiscal years 2012 and 2013, DOD installations did not  provide commercial carriers with access to secure hold areas for arms,  ammunition, and explosives shipments or assist them in finding  alternatives, as required by DOD regulations. We made 3  recommendations and all 3 have been closed as implemented. Table 7  summarizes our recommendations and their implementation status.
section_title: Defense Logistics: Actions Needed to Improve Department-Wide Management of Conventional Ammunition Inventory
paragraphs: In March 2014, we found that the military services’ automated information  systems used to maintain accountability for ammunition inventory have  some limitations that affect their ability to facilitate efficient management  of conventional ammunition. For example, the systems cannot directly  exchange ammunition data because they use different exchange formats  that require extra time and resources to ensure data efficiency when  exchanging between systems. We also found that Army reports of  ammunition inventory data, used in the process for collecting and sharing  ammunition data among the military services do not include information  on certain missiles. We concluded that without incorporating these items  in the Army’s report, DOD may lack full transparency about all available  items and may miss opportunities to avoid procurement costs for certain  usable items that may already be available in the Army’s stockpile. We  made 7 recommendations, of which 2 have been implemented and 5  remain open. Table 8 summarizes our recommendations and their  implementation status.
section_title: DOD Inventory: Weaknesses in Controls Over Category I Rockets
paragraphs: In April 2000, we found internal controls weaknesses at an Army  ammunition depot that resulted in a loss of accountability and control over  SRC I rockets. For example, serial number control of SRC I rockets was  lost at the time of shipment from the contractor because serial numbers  listed on receiving reports that accompanied shipments did not  correspond to the actual items and quantities of the respective shipments.  We also noted that these control weaknesses indicate that the depot’s  inventory business processes for these sensitive items do not fully comply  with federal accounting and systems requirements. We made 10  recommendations, of which 9 have been implemented and 1 has not  been implemented. Table 9 summarizes our recommendations and their  implementation status.
section_title: Inventory Management: Vulnerability of Sensitive Defense Material to Theft
paragraphs: In September 1997, we found oversight weaknesses with SRC I rockets  and that the military services have different procedures and requirements  for maintaining oversight of the rockets. Further, we found that  discrepancies existed between records of the number of missiles and a  physical count we conducted. In addition, we identified that some facilities  were not fully complying with DOD physical security requirements. We  made 5 recommendations, of which all 5 have been closed as  implemented. Table 10 summarizes the recommendations and their  implementation status.
section_title: Inventory Management: Handheld Missiles Are Vulnerable to Theft and Undetected Losses
paragraphs: In September 1994, we found discrepancies in the quantities, locations,  and serial numbers of SRC I missiles inventories, which we concluded  indicated that the services’ oversight and recordkeeping for the missiles is  poor. We also noted, among other findings, that the services did not know  how many missiles they should have in their possession because they  lacked systems to track the missiles by serial number. We made 6  recommendations, all of which have been implemented. Table 11  summarizes the recommendations and their implementation status.
section_title: Appendix V: Comments from the Department of Defense
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Marilyn Wasleski (Assistant  Director), Laura Czohara, Martin de Alteriis, Amie Lesser, Felicia Lopez,  Sean Manzano, Anne McDonough-Hughes, Steve Pruitt, and Richard  Powelson made key contributions to this report.