Defense Logistics: DOD Has a Strategy and Has Taken Steps to Improve Its Asset Visibility, but Further Actions Are Needed
Published: 2015-01-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GAO designated DOD's supply chain management as a high-risk area and in July 2011 found that limitations in asset visibility make it difficult to obtain timely and accurate information on assets that are present in a theater of operations. In 2013, GAO found that DOD had made moderate progress in addressing weaknesses in its supply chain management and identified several actions that DOD should take to strengthen asset visibility, including completing and implementing its strategy for coordinating efforts to improve asset visibility across the department.
This report examined the extent to which DOD has (1) a comprehensive strategy and implementation plans for improving asset visibility; and (2) made improvements in asset visibility that meet GAO's criteria for removal from the High-Risk List. GAO reviewed DOD's 2014 Strategy and initiatives for improving asset visibility and evaluated DOD's actions to improve asset visibility against GAO's criteria for determining and removing high risk designations.
section_title: What GAO Found
paragraphs: In January 2014, the Department of Defense (DOD) issued its Strategy for Improving DOD Asset Visibility ( Strategy ) and supporting execution plans (SEP), which included five of the seven key elements of a comprehensive strategic plan and partially included the other two elements. For example, the Strategy fully includes a comprehensive mission statement; a problem definition, scope, and methodology; goals and objectives; activities, milestones, and performance measures; and organizational roles, responsibilities, and coordination. However, 4 of the 22 SEPs, which outline initiatives intended to improve asset visibility, did not address resources and investments and key external factors. DOD officials told GAO that this information would be added during regular updates to the Strategy . Since the Strategy was issued, DOD components have begun updating the SEPs to include informationsuch as costs and key external factorsthat had been missing from the SEPs included in the Strategy .
DOD has taken steps to improve its asset visibility, and GAO's assessment is that the department has fully met one of the five criteria for removal from the High-Risk List—leadership commitment—and partially met the other four, as shown below.
section_title: What GAO Recommends
paragraphs: GAO recommends four actions to improve DOD's management of asset visibility. The actions include, among other things, that DOD include information in its S trategy and SEPs on elements used to develop cost estimates; clearly link performance measures for the initiatives and the Strategy's goals and objectives; and demonstrate that the initiatives are resulting in measurable outcomes and progress toward meeting the goals and objectives in the Strategy . DOD agreed with all the recommendations.

section_title: Letter
paragraphs: One of the Department of Defense’s (DOD) goals in supporting the  warfighter is to deliver the right items in the right quantities to the right  place at the right timeand at the right cost. One of the most complex  and vital tasks facing DOD is managing its supply chain to effectively and  efficiently provide spare parts, food, fuel, and other critical supplies in  support of U.S. military forces. Supply chain management encompasses  the processes and systems for accomplishing this goal. Because of long- standing weaknesses in DOD’s supply chain management, we have  designated it as a high-risk area. We have found that limitations in asset  visibility—including the visibility of assets in transit—make it difficult to  obtain timely and accurate information about the assets that are present  in the theater of operations. DOD defines asset visibility as the ability to  provide timely and accurate information on the location, quantity,  condition, movement, and status of items in its inventory—including  assets in transit. To achieve a seamless and effective supply chain, it is  important for DOD to have end-to-end visibility of its assetsfrom  acquisition to disposal and all points in between. Further, it is critical to  maintain visibility of these assets in order to ensure that DOD meets its  stated goals and provides needed support to the warfighter.
In our February 2013 high-risk update, we found that DOD had made  moderate progress in addressing weaknesses in its supply chain  management, but that several long-standing problems had not yet been  resolved. We found that DOD had met two of our five criteria for removal  from the High-Risk List in the supply chain management area.  Specifically, we found that DOD demonstrated top leadership support for  improving supply chain management, and the department had the  capacity (i.e., people and resources) to resolve risks in this area.  However, DOD had not yet fully met the remaining three criteria, which  include developing a corrective action plan for materiel distribution and  asset visibility, monitoring and independently validating the effectiveness  and sustainability of corrective measures, and demonstrating sustained  progress in implementing corrective measures. We also found that  although DOD had not established integrated, comprehensive  approaches for overseeing and addressing problems across the  department and implementing associated initiatives, it had begun  developing a strategy to coordinate efforts to improve asset visibility,  including in-transit visibility. We identified several actions that DOD  should take to improve asset visibility, including completing and  implementing its strategy for coordinating efforts to improve asset visibility  across the department. DOD concurred with our findings and  recommendations and issued a Strategy for Improving DOD Asset  Visibility (the Strategy) in January 2014, as discussed later in this report.
We performed our work and prepared this report under the authority of  the Comptroller General to assist Congress with its oversight  responsibilities. This report discusses the extent to which DOD has (1) a  comprehensive strategy and implementation plans for improving asset  visibility, including in-transit visibility; and (2) made improvements in asset  visibility that meet our criteria for removal from the High-Risk List.
To determine the extent to which DOD has a comprehensive strategy and  implementation plans for improving asset visibility, including in-transit  visibility, we reviewed DOD’s Strategy—which incorporates  implementation plans that DOD calls “supporting execution plans”  (SEP)—and assessed whether they fully included, partially included, or  did not include the elements of a comprehensive strategic plan. We  determined that the Strategy and plans “fully included” an element when  the plan described the entire element, and “partially included” an element  when the plan described some, but not all, parts of that element. When a  plan did not explicitly cite any of the parts of an element, we determined  that the element was “not included” in the Strategy. Additionally, we  discussed with officials from the Office of the Deputy Assistant Secretary  of Defense for Supply Chain Integration, Joint Staff, Defense Logistics  Agency (DLA), U.S. Transportation Command (TRANSCOM), and each  of the military services their roles in the development of the Strategy and  our preliminary analysis of the Strategy.
To evaluate the extent to which DOD has made improvements in meeting  the high-risk criteria for the asset visibility area, we reviewed DOD’s  Strategy and the SEPs, and discussed with the components the initiatives  they had implemented or were implementing to improve asset visibility.  We also reviewed updates to those initiatives that the components had  provided to the Asset Visibility Working Group. We assessed these  actions against GAO’s criteria for assessing agencies’ actions and  determining whether performance and accountability challenges merit our  high-risk designation. Additionally, we reviewed our prior high-risk  reports to obtain information on the progress agencies have made to  address issues identified on our High-Risk List. Further, we evaluated  DOD’s actions to improve asset visibility against each of our five high-risk  criteria for removal from the high-risk list (referred to as the “high-risk  criteria”). We also shared with officials our preliminary assessment of  asset visibility relative to each of the criteria and discussed actions that  DOD had taken, is taking to, or plans to take to fully address the criteria in  each of those areas.
We conducted this performance audit from August 2014 to January 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. We provide additional  information about our scope and methodology in appendix I.
subsections: section_title: Background
subsections: section_title: DOD Supply Chain Management Challenges and Past Efforts to Address Them
paragraphs: DOD’s supply chain is a global network that provides materiel, services,  and equipment to the joint force. Ineffective and inefficient inventory- management practices and procedures, and weaknesses in accurately  forecasting the demand for spare parts, contributed to our designating  DOD’s inventory management as a high-risk area in 1990. We initially  focused this high-risk area on inventory management including  requirements (or demand) forecasting. We subsequently determined, on  the basis of work we conducted related to U.S. operations in Iraq and  later Afghanistan, that weaknesses extended to other aspects of the  supply chain supporting the warfighter, including asset visibility and  materiel distribution. Additionally, based in part on our input and input  from the Office of Management and Budget in 2005, DOD identified  requirements forecasting, asset visibility, and materiel distribution as its  focus areas for improving supply chain management. Since that time,  DOD has made moderate progress in addressing weaknesses in its  supply chain management. For example, in our February 2013 High Risk  report we found that DOD had begun developing a strategy to coordinate  efforts to improve asset tracking and in-transit visibility. Although DOD  has made progress in these efforts, we also found that more work  remains to fully address the issues identified for this high-risk area.
In February 2013, we reviewed DOD’s draft strategy for in-transit visibility  and found that it included some, but not all, of the elements of a  comprehensive strategic plan. We found that the draft strategy fully  included one of the seven elements of a comprehensive strategic plan,  partially included four elements, and did not include two elements.  Specifically, the draft strategy fully included goals and objectives that  addressed the results desired from implementation of the strategy. The  draft strategy partially included (1) a mission statement that summarizes  the purpose of the strategy; (2) a problem definition, scope, and  methodology that summarizes the issues to be addressed and the scope  of the strategy; (3) activities, milestones, and performance measures  identifying steps required to achieve results, and timelines and metrics to  gauge results; and (4) organizational roles, responsibilities, and  coordination for overseeing and managing implementation of the strategy.  Lastly, we found that the draft strategy did not include (1) information on  resources and investments—including skills and technology and the  human capital, information, and other resources required to achieve the  goals and objectives—or (2) information on the key external factors that  could affect achievement of the goals and objectives. We recommended  that DOD finalize its strategy and ensure that the strategy contained all  the key elements of a comprehensive strategic plan, including the  elements that were not included in the draft strategyresources and  investments and key external factors. DOD concurred with our  recommendation and, as discussed later in our report, developed its  January 2014 Strategy in response to that recommendation.
section_title: GAO’s High-Risk List and Criteria for Removal
paragraphs: In 1990, we began a program to report on government operations that we  identified as “high risk.” Since then, generally coinciding with the start of  each new Congress, we have reported on the status of progress to  address high-risk areas and have also updated the high-risk list. Our  high-risk program has served to identify and help resolve serious  weaknesses in areas that involve substantial resources and provide  critical services to the public. Our experience with the high-risk series  over the past 23 years has shown that the key elements needed to make  progress in high-risk areas are congressional action, high-level  administrative initiatives, and agencies’ efforts grounded in the five criteria  we established for removal of an area from the high-risk list. These  criteria call for agencies to demonstrate the following:  1.  Leadership Commitment—a strong commitment and top leadership  2.  Capacity—the capacity (i.e., the people and other resources) to  resolve the risk(s);  3.  Corrective Action Plan—a plan that defines the root causes and  solutions and provides for substantially completing corrective  measures, including steps necessary to implement the solutions we  recommended;  4.  Monitoring—a program instituted to monitor and independently  validate the effectiveness and sustainability of corrective measures;  and  5.  Demonstrated Progress—the ability to demonstrate progress in  having implemented corrective measures and resolving the High-Risk  area.
section_title: DOD’s Asset Visibility Strategy and Implementation Plans Contain Most, but Not All, of the Key Elements of a Comprehensive Strategic Plan, and DOD Is Taking Steps to Address the Missing Information
paragraphs: In January 2014, DOD issued its Strategy and implementation plans for  improving asset visibility, which included five of the seven key elements of  a comprehensive strategic plan and partially included the other two  elements—resources and investments and key external factors.  According to the Strategy, it creates a framework within which the  components can work collaboratively to identify improvement  opportunities and capability gaps and to leverage technologies that will  improve asset visibility. The Strategy includes 22 SEPs developed by the  components that outline initiatives intended to improve asset visibility.  The SEPs describe the components’ approaches for addressing specific  processes, data and technical improvements, and logistics-related  opportunities that are intended to improve the visibility of asset data.
In February 2013, we recommended that DOD finalize its draft strategy  for in-transit visibility and that the strategy contain seven key elements of  a comprehensive strategic plan, including resources and investments and  key external factors. DOD addressed our recommendation by including,  or requiring the components to include, in the Strategy or SEPs, all seven  of the elements of a comprehensive strategic plan. We reviewed the  Strategy and SEPs and assessed whether they included, partially  included, or did not include the elements of a comprehensive strategic  plan. Table 1 describes these elements and shows whether they were  included in the Strategy and SEPs.
We determined that the Strategy fully includes a discussion of the first five  elements and partially includes the last two elements. Specifically, we  determined that the Strategy fully includes a comprehensive mission  statement; a problem definition, scope, and methodology; goals and  objectives; activities, milestones, and performance measures; and  organizational roles, responsibilities, and coordination. For example, we  determined that the Strategy fully includes a comprehensive mission  statement because it included a comprehensive statement that  summarizes the main purpose of the Strategy. More precisely, as stated  in the Strategy, it was developed to guide and integrate department-wide  efforts to improve asset visibility, reduce supply chain risk, and improve  logistics decision making. Additionally, we determined that the Strategy  fully includes a problem definition, scope, and methodology because it  presents the issues to be addressed by the strategy, the scope the  strategy covers, and the process by which it was developed. Further, we  determined that the Strategy fully includes goals and objectives because  it lists each of the department’s goals for improving asset visibility and  also lists the objectives that support achievement of those goals.  Specifically, the Strategy includes goals such as enhance visibility of  assets in-transit, in-storage, in-process, and in-theater, and increase  inventory existence and completeness in support of audit readiness. In  support of achieving these goals, the Strategy also establishes objectives  intended to be a foundation for identifying opportunities for improvement  across the supply chain, such as increase efficiencies to include delivery  accuracy or cycle times, and to provide better customer service by  changing or adjusting supply chain or asset movement processes. We  also determined that the Strategy fully includes activities, milestones, and  performance measures because the SEPs, which were issued along with  the Strategy, detail the initiatives (activities) intended to improve asset  visibility and include both milestones and performance measures for  monitoring their implementation. Lastly, we determined that the Strategy  fully includes organizational roles, responsibilities, and coordination due  to the inclusion of a responsibilities and oversight discussion in the  Strategy that details the key players and their roles in implementing the  Strategy.
However, not all of these elements were completely addressed in the  SEPs, as required by the Strategy, at the time the Strategy was issued. In  the Strategy, components were called to address resources and  investments and key external factors in their SEPs, which were  published as part of the Strategy. However, 4 of the 22 SEPs either did  not include resources and investments and key external factors or  indicated that the information is “to be determined.” Specifically, 4 of the  SEPs did not include information on key external factors, 1 of those 4  SEPs showed “to be determined” for resources and investments and key  external factors, while another of those SEPs did not include resources  and investments at all. For example, the SEP for the Navy’s Afloat/Ashore  Implementation of Navy Ordnance Information System (OIS) Automated  Information Technology (AIT) Capability shows “to be determined” for  resources and investments, and the SEP for the DOD Item Unique  Identification (IUID) Implementation Plan does not address resources and  investments at all. The SEPs for DOD IUID Implementation Plans, the  Army’s Mortuary Affairs Reporting and Tracking System, and the Joint  Staff Development of In-transit Visibility Capabilities within the Global  Combat Support System–Joint do not address key external factors that  could affect achievement of the goals and objectives.
We discussed with officials from the Office of the Deputy Assistant  Secretary of Defense for Supply Chain Integration why elements such as  costs and key external factors were either not addressed or noted as “to  be determined” in the SEPs. According to these officials, the Strategy was  issued before some of the SEPs had been finalized. The SEPs in which  information on resources and investments and key external factors was  not available were incorporated into the Strategy without that information.  These officials further noted it was DOD’s intent to capture and publish  costs and external factors during regular updates to the Strategy. Since  the Strategy was published, we have observed that components have  been working on updates to help ensure that the SEPs are current and  complete. Specifically, we reviewed updates to the 4 SEPs that were  missing informationsuch as costs (although they do not distinguish the  resources and investments that are included in those costs, as discussed  later in our report) and key external factorswhen the Strategy was  issued and determined that the missing information had been added in a  subsequent update to one of the SEPs. For example, as previously  stated, the SEP for the Navy Afloat/Ashore implementation of the Navy  OIS AIT showed costs “to be determined.” The update to this SEP shows  that the estimated cost to implement the OIS is $6.7 million (over fiscal  years 2011 through 2014) and that, starting in fiscal year 2015, an  additional $1.1 million will be required annually to sustain equipment and  software capabilities. Officials from the Office of the Deputy Assistant  Secretary of Defense for Supply Chain Integration stated that the  components will continue to make quarterly updates to the SEPs.
section_title: DOD Has Taken Steps to Improve Its Asset Visibility, but Additional Actions Are Needed to Fully Address GAO’s High- Risk Criteria
paragraphs: DOD has taken steps to improve its asset visibility, and we found that the  department has fully met one of the five criteria for removal from the High- Risk List—leadership commitment—and partially met the other four, as  shown in table 2. A discussion of the criteria as well as our assessment of  DOD’s progress in meeting each of the criteria is discussed below.
subsections: section_title: DOD Has Fully Demonstrated Leadership Commitment and Support
paragraphs: Our high-risk criterion for leadership commitment calls for leadership  oversight and involvement. DOD has taken positive steps to address  asset visibility challenges, and we found, as we did in our February 2013  high-risk assessment, that DOD has fully met our high-risk criterion for  leadership commitment. Senior leaders at the department have continued  to demonstrate commitment to addressing the department’s asset  visibility challenges. For example, this commitment is evidenced by  DOD’s issuance of its January 2014 Strategy and senior leadership  involvement in asset visibility improvement efforts through groups such as  the Supply Chain Executive Steering Committee. The Office of the  Deputy Assistant Secretary of Defense for Supply Chain Integration  provides department-wide oversight for development, coordination,  approval, and implementation of the Strategy, and reviews the  implementation of the initiatives. DOD has also established a governance  structure for overseeing and coordinating efforts to improve asset  visibility, which includes the following groups:
Supply Chain Executive Steering Committee: includes senior-level  officials responsible for overseeing asset visibility improvement  efforts;
Asset Visibility Working Group: includes representatives from the  components and other government agencies, as needed; identifies  opportunities for improvement; and monitors the implementation of  SEPs; and Item Unique Identification Working Group: includes representatives  from the components and other government agencies, as needed,  and identifies and monitors the implementation of item unique  identification initiatives, such as those related to asset marking and  automated identification system updates.
section_title: DOD Has Begun to Identify Required Resources and Investments, but Cost Estimates Do Not Include Detailed Information
paragraphs: Our high-risk criterion for capacity calls for agencies to demonstrate that  they have the people and other resources needed to resolve risks. In  February 2013, we found that DOD had limited awareness of in-transit  visibility efforts being taken across the department because it lacked a  formal, central mechanism to monitor the status of improvements or fully  track the resources allocated to them. Key elements of a comprehensive  strategic plan include a discussion of resources and investments  including the costs to execute the plan and the sources and types of  resources and investments—including skills and technology and the  human capital, information, and other resources required to meet the  goals and objectives. Further, these elements should be complete,  accurate, and consistent. Further, according to GAO’s Cost Estimating  and Assessment Guide, a reliable cost estimate is critical to the success  of any program. Such an estimate provides the basis for informed  investment decision making, realistic budget formulation and program  resourcing, meaningful progress measurement, proactive course  correction when warranted, and accountability for results.
DOD has begun to identify the resources and investments that would be  required to achieve the goals and objectives outlined in its January 2014  Strategy. For example, as previously discussed, DOD components have  included resource and investment information in 18 of the 22 SEPs, and  components are starting to include missing information in the remaining  SEPs. The Strategy calls for the components to include estimates of  costs to implement the initiatives in the SEPs. However, the Strategy  does not specify that the specific elements included in those cost  estimates, such as human capital, information, and other resources  required to meet the goals and objectives, be included. That is, the  components provide cost estimates in the SEPs, but generally at an  aggregate level without details of the elements included. In our review of  the SEPs, we asked component officials which elements—such as  human capital, information, and contracts—were used when computing  the cost estimates. The elements considered varied from estimate to  estimate because the components employ different cost estimating  models. Officials agreed that a greater transparency to the elements  included in these cost estimates would be helpful. Without including  information on the specific elements included in cost estimates, DOD  lacks reasonable assurance that the department will have the level of  detailed cost information it needs to make well-informed decisions about  asset visibility, including setting budget priorities.
section_title: DOD’s Strategy and Implementation Plans Serve as a Corrective Action Plan, but Initiatives Do Not Clearly Link with Goals and Objectives
paragraphs: Our high-risk criterion for a corrective action plan calls for agencies to  define the root causes and solutions and provide for substantially  completing corrective measures, including steps necessary to implement  the solutions. As we concluded in February 2013, DOD’s draft strategy for  in-transit visibility was incomplete because the components had not yet  submitted their SEPs, which provide key information about the  components’ in-transit visibility efforts and describe any gaps or  challenges within the supply chain, as well as the components’ corrective  actions to address them. DOD has since taken steps to implement our  February 2013 recommendation, and it issued its Strategy in January  2014. DOD’s 2014 Strategy represents its corrective action plan and  provides goals and objectives as well as SEPs detailing specific initiatives  for improving asset visibility. Aligning agency-wide goals and objectives  with strategies to achieve those goals and objectives is a key practice that  could improve the effectiveness of DOD’s efforts to improve asset  visibility. Further, leading practices to promote successful data-driven  performance reviews include ensuring alignment between agency goals,  program activities, and resources.
Realization of the goals and objectives outlined in the Strategy relies  heavily on efforts by the Joint Staff, DLA, TRANSCOM, and the services  to continue to identify initiatives and to collaborate and capitalize on those  initiatives that offer benefits across the department. The SEPs included in  the Strategy include asset visibility improvement efforts recently  completed or expected to be completed in the near future. Additionally, as  indicated in the Strategy, the components are expected to continue to  identify opportunities for improving asset visibility. These will be included  in future versions of the Strategy, which will be updated annually. As of  October 2014, 6 of the 22 SEPs that were included in the Strategy have  been fully implemented. For example, a TRANSCOM initiative intended to  create an integrated data environment for asset visibility information  included in transportation and supply data systems has been fully  implemented and is now being used to enhance asset visibility. The  implementation of 3 SEPs were halted either because funding was  unavailable or the initiatives were not succeeding in reaching their  intended purpose, and the remaining 13 SEPs were in the process of  being implemented.
As previously described, the Strategy includes goals and objectives for  improving asset visibility, as well as SEPs detailing specific initiatives.  The 22 SEPs identified in the Strategy are categorized by the major  categories of effort, or objectives, they address. However, the Strategy  does not specifically link the initiatives to the goals and objectives. For  example:
TRANSCOM identified in the Strategy an initiative that is intended to  create a more competitive environment for procuring Active Radio  Frequency Identification (RFID) technology. However, the Strategy  does not specify which of the goals and objectives this initiative  supports. According to TRANSCOM officials, this technology supports  many of the goals and objectives in the Strategy. Specifically, they  expect that the Active RFID Migration SEP will increase vendor  competition, lower product cost, and ensure an unlimited supply of  unique identification tags. Although the department is using these  outcomes to assess implementation of this initiative, the Strategy  does not clearly link how this initiative is related to or contributes  towards achieving the Strategy’s goals and objectives.
Additionally, the Strategy states that the Army’s enhanced parachute  tracking system initiative is intended to provide a web-based  automated system to manage parachutes—from delivery to  disposal—using standard, DOD-approved interoperable technologies,  and will enable these assets to be incorporated into the central Army  logistics and DOD visibility systems when in distribution or storage.  Specifically, this initiative is expected to increase supply chain  performance and improve logistics decision making. However, the  Strategy does not provide information about how these initiatives and  expected outcomes for the enhanced parachute tracking system will  contribute to the achievement of the Strategy’s goals and objectives.
We discussed with officials why this linkage was not clearly established in  the Strategy, and they indicated that the components that developed the  initiatives understood that linkage. However, they agreed the linkage was  not explicitly stated in the Strategy and agreed such linkage would be  useful to create a shared understanding of which of the goals and  objectives each of the initiatives were supporting. Without creating a clear  link between the goals and objectives in the Strategy and the initiatives  intended to implement the Strategy, DOD may be unable to assess  progress toward realizing its goals and objectives.
section_title: DOD Has Taken Steps to Monitor Its Initiatives, but Lacks a Way to Assess Progress toward Achievement of Its Goals and Objectives
paragraphs: Our monitoring high-risk criterion calls for agencies to institute a program  to monitor and independently validate the effectiveness and sustainability  of corrective measures, such as through performance measures and data  collection and analysis. We found in February 2013 that, while DOD’s  draft in-transit visibility strategy included overarching goals and objectives  that address the overall results desired from implementation of the  strategy, it only partially addressed, among other factors, performance  measures that are necessary to enable monitoring progress. We also  found that DOD lacked a formal, central mechanism to monitor the status  of improvements of its asset visibility efforts or fully track the resources  allocated to them. Similarly, in May 2012, we found that DOD had taken  steps to improve its approach to implementing a key asset visibility  enabling technology—item unique identification—but had not employed  best management practices, such as performance measures and  milestones, necessary to manage and determine benefits associated with  implementation of this technology. As we concluded in May 2012, in the  absence of quantifiable metrics to measure progress, it is difficult for  officials to assess whether goals were achieved. We recommended that  DOD complete its implementation and management framework for item  unique identification by incorporating key elements such as goals and  metrics for measuring progress. DOD concurred with our  recommendation.
DOD’s Strategy calls for organizations to identify at least one outcome or  key performance indicator for assessing the implementation of each SEP.  These performance indicators or outcomes are unique to the initiatives,  and any relation they may have to the Strategy’s goals and objectives is  not apparent. According to officials from the Office of the Deputy  Assistant Secretary of Defense for Supply Chain Integration, these key  performance indicators are used by the components and oversight bodies  such as the Asset Visibility Working Group to, among other things,  periodically assess whether the initiatives are meeting implementation  goals and achieving performance expectations. For example, one of the  expected outcomes for the TRANSCOM Active Radio Frequency  Identification (RFID) SEP is to realize a continual reduction in the cost of  Active RFID technology products. Specifically, the cost of RFID tags prior  to February 2009 was $75 each. Since the latest contract to procure RFID  tags was awarded in April 2014, the cost of RFID tags has decreased to  $37 each. As a result, according to DOD officials, the department has  realized an estimated cost reduction of $5 million to $7 million annually.
DOD has established a structure for overseeing and coordinating efforts  to improve asset visibility. This structure includes the Asset Visibility  Working Group, which is responsible for monitoring the implementation of  the initiatives identified by the components. The Asset Visibility Working  Group is to meet on a monthly basis to discuss the status of each SEP.  The components are to report quarterly to the Asset Visibility Working  Group on the status of their initiatives—including progress made on  implementation milestones, return on investment, and resources and  funding. Additionally, in March 2014, DOD established an online  database, or electronic repository, that includes the Strategy and SEPs.  According to information provided by the Office of the Deputy Assistant  Secretary of Defense for Supply Chain Integration, the online database is  used to track the status of the SEPs; document the final disposition of the  SEP upon completion or cancellation; and include outcomes and results  as well as lessons learned from the SEPs. In written comments provided  on a draft of this report, DOD stated that subsequent to the issuance of its  2014 Strategy, DOD implemented a Life-cycle of a SEP process that  requires the Asset Visibility Working Group to, among other things, review  and concur that a SEP has met its performance objectives and document  an after action report to include outcomes, lessons learned, and  performance measures.
DOD officials told us that the components are responsible for assessing  whether their initiatives that are being implemented are meeting  implementation goals and achieving performance expectations. However,  the performance indicators DOD currently uses to assess progress in  implementing the initiatives are specific to the individual initiatives, and  any relationship these indicators may have to the overarching goals and  objectives in the Strategy is not apparent. For example, one of the metrics  TRANSCOM uses to monitor its Active Radio Frequency Identification  (RFID) technology initiative is the cost to procure an RFID tag. While this  is a useful metric as it tells TRANSCOM if the organization is reducing the  item cost for RFID tags, it is unclear whether this is also a useful metric  for determining how the department is progressing towards achieving any  related goals and objectives for improving asset visibility. DOD officials  agree that there needs to be a process for assessing progress towards  meeting the overarching goals and objectives in the Strategy. Assessing,  and refining, the existing performance measures as needed to help  ensure their alignment with the goals in the Strategy, would better  position DOD to develop the most relevant performance metrics and to  analyze and monitor performance data. Until DOD implements a process  to monitor performance and progress towards achieving goals in the  asset visibility area, it may lack the tools necessary to effectively assess  the results of the initiatives.
section_title: DOD Has Started to Demonstrate Progress in Addressing Its Asset Visibility Challenges, and Sustained Progress Is Warranted
paragraphs: Our high-risk criterion for demonstrated progress calls for agencies to  demonstrate progress in implementing corrective measures and resolving  the high-risk area. When assessing agencies’ corrective actions,  consistent with GAO’s criteria for determining high risk, we assessed the  effectiveness of DOD’s corrective actions to address existing materiel  weaknesses. In this regard, we considered factors such as whether the  proposed remaining corrective action plans are appropriate and whether  effective solutions will be substantially completed in the near term, which  is generally considered to be within the 2-year period covered by the term  of the Congress to which a high-risk update report is addressed.
In December 2004, we found that DOD’s efforts to achieve total asset  visibility, which hinged largely on individual initiatives, were unlikely to  succeed without a long-term strategy that established outcome-oriented  goals, timelines, and performance measures. Therefore, we  recommended that the department develop a strategy for total asset  visibility that included, among other things, goals and performance  measures to gauge improvement. DOD’s January 2014 Strategy  represents a positive step, and the preliminary efforts to develop and  implement initiatives to improve asset visibility look promising. Further, as  indicated in the Strategy, it will be updated annually and include new  SEPs outlining initiatives that have been developed by the components.  The Asset Visibility Working Group encourages components to continue  to develop new initiatives. Several initiatives are being developed and  may be included in the next annual update to the Strategy. For example,  the Air Force is developing a new initiative that will track the location and  status of aircraft, vehicles, ground support equipment, and aircraft parts in  real time. Also, the Marine Corps is developing an initiative to leverage  passive RFID and Global Positioning System advances to provide,  among other things, improved equipment accountability and enterprise  data sharing. While the components are implementing initiatives intended  to improve asset visibility and are working to identify new ones, it is too  early to tell whether the implementation of these initiatives will result in  measurable outcomes and progress toward meeting the goals and  objectives in the Strategy. Further, DOD has a process for continuing to  identify new initiatives. However, it is too early to tell whether these  combined efforts will result in measurable outcomes and progress in  realizing DOD’s goals and objectives for improving asset visibility.  Further, the combined efforts may not be substantially completed in the  near term or within the 2-year period to demonstrate sustained progress  in resolving the high-risk area. Until DOD demonstrates that  implementation of these initiatives will result in measurable outcomes and  progress towards achieving the goals and objectives in the Strategy, it  may be limited in its ability to demonstrate sustained progress in  implementing corrective actions and resolving the high-risk area.
section_title: Conclusions
paragraphs: Moving forward, the removal of DOD’s asset visibility from our High-Risk  List will require that DOD meet all five of our high-risk criteria and achieve  related actions and outcomes. DOD’s leadership commitment with the  Strategy and implementation plans for improving asset visibility represent  positive steps toward meeting our high-risk criteria. However, without  transparency on what resources and investments are required to  implement its asset visibility improvement initiatives, DOD cannot be sure  that the department will have the information it needs to make well- informed decisions about asset visibility, including setting budget  priorities. Additionally, establishing clear linkage between these  improvement initiatives and the goals and objectives in the Strategy as  well as a process to monitor performance and assess progress towards  achieving the goals and objectives in its Strategy will be an important step  to determining what, if any, effect these initiatives are having on  achievement of those goals and objectives. Until DOD demonstrates that  implementation of the initiatives will result in measurable outcomes and  progress towards achieving the goals and objectives in the Strategy, it  may be limited in its ability to demonstrate sustained progress in  implementing corrective actions and resolving the high-risk area.
section_title: Recommendations for Executive Action
paragraphs: We are making four recommendations to help improve DOD’s asset  visibility.
To demonstrate the capacity to implement the initiatives intended to  improve asset visibility, we recommend that the Secretary of Defense  direct the Under Secretary of Defense for Acquisition, Technology and  Logistics, in collaboration with the components, to include information in  subsequent updates to the Strategy and accompanying SEPs about  which elements—such as human capital, information technology, and  contracts—were used in developing cost estimates for resources and  investments.
To implement a corrective action plan that defines the root causes,  identifies effective solutions, and provides for substantially completing  corrective actions, we recommend that the Secretary of Defense direct  the Under Secretary of Defense for Acquisition, Technology and Logistics  to clearly specify the linkage between the goals and objectives in the  Strategy and the initiatives intended to implement the Strategy.
To develop and implement a process to monitor performance and  independently validate the effectiveness and sustainability of corrective  actions, we recommend that the Secretary of Defense direct the Under  Secretary of Defense for Acquisition, Technology and Logistics to assess,  and refine as appropriate, existing performance measures to ensure the  measures assess the implementation of individual initiatives as well as  progress towards achievement of the overarching goals and objectives in  the Strategy.
To demonstrate sustained progress in having implemented corrective  measures, we recommend that the Secretary of Defense direct the Under  Secretary of Defense for Acquisition, Technology and Logistics, in  collaboration with the military services, to continue the implementation of  identified initiatives, refining them over time as appropriate, and  demonstrate that implementation of initiatives results in measurable  outcomes and progress toward achieving improvements in asset visibility.
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, reproduced in appendix II, DOD concurred with all four  of the recommendations. DOD also provided technical comments on the  draft report, which we incorporated as appropriate.
DOD concurred with our first recommendation to include information in  subsequent updates to its Strategy and accompanying SEPs about which  elements—such as human capital, information technology, and  contracts—were used in developing cost estimates for resources and  investments. DOD stated that the update to its Strategy to Improve DOD  Asset Visibility, which is under development and expected to be issued in  the third quarter of fiscal year 2015, will include a requirement to  delineate costs associated with implementing SEPs and specific elements  considered in developing the cost estimates will be included. DOD also  stated in its letter that SEPs contained in the current 2014 edition of the  Strategy will be updated in accordance with the new cost requirement.
In response to the second recommendation, DOD agreed to clearly  specify the linkage between the goals and objectives in the Strategy and  the initiatives intended to implement the Strategy. Specifically, DOD  stated that a matrix diagramming the relationship between the goals,  objectives, and SEPs will be included in its 2015 update to the Strategy  and will be used for monitoring progress in implementing the SEPs and  improving asset visibility.
DOD concurred with our third recommendation to assess, and refine as  appropriate, existing performance measures to ensure the measures  assess the implementation of individual initiatives as well as progress  towards achievement of the overarching goals and objectives in the  Strategy. DOD stated that subsequent to the publishing of the 2014  Strategy, the Department implemented the "Life-cycle of a SEP" process.  This process requires the Asset Visibility Working Group to, among other  things, review and concur that a SEP has met its performance objectives  and document an "after action report" for each SEP to include outcomes,  lessons learned, and performance measures. DOD stated in its letter that  the 2015 Strategy will expand on this and include a process as well as  metrics which will allow the Department to assess and demonstrate how  these individual efforts are supporting progress toward achievement of its  asset visibility goals and objectives.
In response to our fourth recommendation, DOD agreed to continue the  implementation of its identified initiatives, refining them over time as  appropriate, and demonstrate that implementation of these initiatives  results in measurable outcomes and progress towards achieving  improvements in asset visibility. DOD stated that its 2015 Strategy will  document the "Life-cycle of a SEP" process that not only enables  monitoring continued implementation of individual efforts but also includes  a mechanism and measures to ensure each SEP supports the  achievement of the overarching goals and objectives in the Strategy.
We are sending copies of this report to the appropriate congressional  committees and the Secretary of Defense. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-5257 or merrittz@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. Key contributors 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 a  comprehensive strategy and implementation plans for improving asset  visibility, including in-transit visibility, we reviewed DOD’s Strategy for  Improving DOD Asset Visibility (the Strategy) and its implementation  plans. Specifically, we reviewed the Strategy and plans and assessed  whether they included, partially included, or did not include the elements  of a comprehensive strategic plan, as outlined in our prior work. We  determined that the Strategy and plans “fully included” an element when  the plan described the entire element, and “partially included” an element  when the plan described some, but not all, parts of that element. When a  plan did not explicitly cite any of the parts of an element, we determined  that the element was “not included” in the Strategy. We then discussed  our assessment with officials from the Office of the Deputy Assistant  Secretary of Defense for Supply Chain Integration to confirm our  understanding of the documents and gain more insight, including whether  any elements were addressed in other departmental documents and  whether there were any plans or actions under way to update the  Strategy or address any of the missing elements. Additionally, we  discussed with officials from the Joint Staff, Defense Logistics Agency  (DLA), U.S. Transportation Command (TRANSCOM), and each of the  military services their roles in the development of DOD’s Strategy and our  preliminary analysis of the Strategy.
To evaluate any improvements made to asset visibility that would meet  criteria for removal from the High-Risk List (referred to as high-risk  criteria), we reviewed DOD’s Strategy and the supporting execution plans  (SEP), and we discussed with the components the initiatives they had  implemented or were in the process of implementing to improve asset  visibility. We also reviewed updates to those initiatives that the  components provided to the Asset Visibility Working Group. We  assessed these actions against GAO’s criteria for assessing agencies’  actions and determining whether performance and accountability  challenges merit our high-risk designation. Further, we evaluated DOD’s  actions to improve asset visibility against each of our five high-risk criteria  for removal from the high-risk list (referred to as the “high-risk criteria”).  We also shared with officials our preliminary assessment of asset visibility  relative to each of the criteria and discussed actions that DOD had taken,  is taking, or plans to take to fully address the criteria in each of those  areas. To help ensure that our evaluation of improvements made relative  to the high-risk criteria were consistent with our prior evaluations of  Supply Chain Management and other issue areas, we reviewed our prior  high-risk reports to gain insight on what actions agencies had taken to  address the issues identified on GAO’s past high-risk lists. We also  shared with officials our preliminary assessment of asset visibility relative  to each of the high-risk criteria and discussed actions DOD is taking to  address any shortcomings in each of those areas.
We conducted this performance audit from August 2014 to January 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, Carleen C. Bennett, Assistant  Director; Richard Burkard; Elizabeth Curda; Nicole Harris; Joanne  Landesman; Amie Lesser; Carol Petersen; Greg Pugnetti; Mike Silver;  Sabrina Streagle; Susan Tindall; and Jose Watkins made key  contributions to this report.
section_title: Related GAO Products
paragraphs: Defense Logistics: A Completed Comprehensive Strategy is Needed to  Guide DOD’s In-Transit Visibility Efforts. GAO-13-201. Washington, D.C.:  February 28, 2013.
High-Risk Series: An Update: GAO-13-283. Washington, D.C.: February  14, 2013.
Defense Logistics: Improvements Needed to Enhance DOD’s  Management Approach and Implementation Item Unique Identification  Technology. GAO-12-482. Washington, D.C.: May 3, 2012.
Defense Logistics: DOD Needs to Take Additional Actions to Address  Challenges in Supply Chain Management. GAO-11-569. Washington,  D.C.: July 28, 2011.
High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February  16, 2011.
DOD’s 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.
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.
High-Risk Series: An Update. GAO-09-271. Washington, D.C.: January  2009.
DOD’s High-Risk Areas: Progress Made Implementing Supply Chain  Management Recommendations, but Full Extent of Improvement  Unknown. GAO-07-234. Washington, D.C.: January 17, 2007.
High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January  2007.
DOD’s High-Risk Areas: Challenges Remain to Achieving and  Demonstrating Progress in Supply Chain Management. GAO-06-983T.  Washington, D.C.: July 25, 2006.
High-Risk Series: An Update. GAO-05-350T. Washington, D.C.: February  17, 2005.
High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January  2003.
High-Risk Series: An Update. GAO-01-263. Washington, D.C.: January  2001.