Defense Logistics: Lack of Key Information May Impede DOD's Ability to Improve Supply Chain Management
Published: 2009-01-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Military operations in Iraq and Afghanistan have focused attention on the performance of the Department of Defense's (DOD) supply chain management. According to DOD, it spent approximately $178 billion on its supply chain in fiscal year 2007. As a result of weaknesses in DOD's management of its supply chain, this area has been on GAO's list of high-risk federal government programs since 1990. DOD released its Logistics Roadmap in July 2008 to guide, measure, and track logistics improvements. DOD has identified two technologies included in this roadmap, item unique identification (IUID) and passive radio frequency identification (RFID), as having promise to address weaknesses in asset visibility. GAO reviewed (1) the extent to which the roadmap serves as a comprehensive, integrated strategy to improve logistics; and (2) the progress DOD has made implementing IUID and passive RFID. GAO reviewed the roadmap based on DOD statements about its intended purposes and visited sites where IUID and passive RFID were implemented.
section_title: What GAO Found
paragraphs: The Logistics Roadmap falls short of meeting DOD's goal to provide a comprehensive and integrated strategy to address logistics problems department-wide. The roadmap documents numerous initiatives and programs that are under way and aligns these with goals and objectives. However, the roadmap lacks key information in three areas necessary for it to be a more useful tool that DOD's senior leaders can use to guide and track logistics improvement efforts toward achieving stated goals and objectives. First, the roadmap does not identify the scope of logistics problems or gaps in logistics capabilities, information that could allow the roadmap to serve as a basis for establishing priorities to improve logistics and address any gaps. Second, the roadmap lacks outcome-based performance measures that would enable DOD to assess and track progress toward meeting stated goals and objectives. Third, DOD has not clearly stated how it intends to integrate the roadmap into DOD's logistics decision-making processes or who within the department is responsible for this integration. DOD officials stated they plan to remedy some of these weaknesses in their follow-on efforts. For instance, DOD has begun to conduct gap assessments for individual objectives in the roadmap and hopes to complete these by July 2009. They stated that they recognized the need for these assessments; however, they had committed to Members of Congress to release the roadmap by the summer of 2008 and were unable to conduct the assessments prior to the release of the roadmap. A comprehensive, integrated strategy that includes these three elements is critical, in part, because of the diffuse organization of DOD logistics, which is spread across multiple DOD components with separate funding and management of logistics resources and systems. Until the roadmap provides a basis for determining priorities and identifying gaps, incorporates performance measures, and is integrated into decision-making processes, it is likely to be of limited use to senior DOD decision makers as they seek to improve supply chain management. DOD has taken initial steps to implement two technologies included in the Logistics Roadmap-IUID and passive RFID-that enable electronic identification and tracking of equipment and supplies; but has experienced difficulty fully demonstrating return on investment for these technologies to the military components that have primary responsibility for determining how and where these technologies are implemented. Although DOD has undertaken initial implementation efforts of these technologies at several locations, at present, it does not collect data on implementation costs or performance-based outcome measures that would enable the department to quantify the return on investment associated with these two technologies. Without this information, it may be difficult for DOD to gain the support needed from the military components to make significant commitments in funding and staff resources necessary to overcome challenges to widespread implementation of these technologies. As a result, full implementation of these technologies is impeded and the realization of potential benefits to asset visibility DOD expects may be delayed.

section_title: Letter
paragraphs: Military operations in Iraq and Afghanistan have focused attention on the  Military operations in Iraq and Afghanistan have focused attention on the  performance of the Department of Defense’s (DOD) supply chain  performance of the Department of Defense’s (DOD) supply chain  management in support of deployed U.S. troops. The availability of spare  management in support of deployed U.S. troops. The availability of spare  parts and other critical supply items affects the readiness and operational  parts and other critical supply items affects the readiness and operational  capabilities of U.S. military forces, and the supply chain can be a critical  capabilities of U.S. military forces, and the supply chain can be a critical  link in determining outcomes on the battlefield. Moreover, the investment  link in determining outcomes on the battlefield. Moreover, the investment  of resources in the supply chain is substantial, amounting to  of resources in the supply chain is substantial, amounting to  approximately $178 billion in fiscal year 2007, according to DOD. As a  approximately $178 billion in fiscal year 2007, according to DOD. As a  result of weaknesses in DOD’s management of supply inventories and  result of weaknesses in DOD’s management of supply inventories and  responsiveness to war fighter requirements, supply chain management has  responsiveness to war fighter requirements, supply chain management has  been on our list of high-risk federal government programs and operations  been on our list of high-risk federal government programs and operations  since 1990. We initially focused on inventory management and later  since 1990. We initially focused on inventory management and later  determined that problems extended to other parts of the supply chain, to  determined that problems extended to other parts of the supply chain, to  include requirements forecasting, asset visibility, and materiel  include requirements forecasting, asset visibility, and materiel  distribution.distribution.
In the summer of 2008,  across the department and measuring progress.
GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: Jan. 1, 2005) and  High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: Jan. 31, 2007).
GAO, DOD’s High-Risk Areas: High-Level Commitment and Oversight Needed for DOD  Supply Chain Plan to Succeed, GAO-06-113T (Washington, D.C.: Oct. 6, 2005) and 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).
DOD released its Logistics Roadmap with the intent to develop a more  coherent and authoritative framework for guiding, measuring, and  tracking DOD’s logistics improvement efforts. The roadmap subsumed the  Supply Chain Management Improvement Plan. We have previously  recommended that DOD improve its ability to guide logistics programs and  initiatives across the department and demonstrate the effectiveness,  efficiency, and impact of its efforts to resolve supply chain management  problems by completing the development of a comprehensive, integrated  strategy that is aligned with defense business transformation efforts. DOD  concurred with this recommendation.
Asset visibility is an area DOD has focused on in its plans to improve  logistics, including its Supply Chain Management Improvement Plan and  the recently released Logistics Roadmap. The roadmap describes visibility  as answering the questions, “Where is it?”, “How will it get here?”, and  “When will it get here?” Lack of asset visibility increases vulnerability to  undetected loss or theft and substantially heightens the risk that millions  of dollars will be spent unnecessarily. Furthermore, a lack of visibility  potentially compromises cargo security and the readiness of the military.  Two of the initiatives included in the Supply Chain Management  Improvement Plan and the Logistics Roadmap that focus on improving  asset visibility are item unique identification (IUID) and passive radio  frequency identification (passive RFID). IUID and passive RFID are  technologies for capturing data on individual items or shipments and are  sometimes referred to as automatic identification technology (AIT). IUID  provides for the marking of individual items with a set of globally unique  data elements to help DOD value and track items throughout their life  cycle. The passive RFID initiatives provide for the tagging of assets with  an electronic identification device consisting of a chip and an antenna,  usually embedded within a “smart” packaging label, in order to enable  electronic tracking of the assets, including the shipping date and the date  they are received. Passive RFID tags have no battery; they draw power  from the reader, which sends out electromagnetic waves that induce a  current in the tag’s antenna. DOD has stated that these two AIT initiatives  represent critical efforts in support of larger improvements to DOD supply  chain management, particularly for improving visibility.
This report addresses DOD’s Logistics Roadmap and the status of DOD’s  implementation of IUID and passive RFID. It was prepared under the  authority of the Comptroller General to conduct evaluations at his own  initiative and is being addressed to the committees of jurisdiction and to  others who have expressed interest in tracking DOD’s efforts to improve  supply chain management. Additionally, it is part of a body of work we  used in our evaluation of DOD supply chain management for our January  2009 high-risk series update. Specifically, this report discusses (1) the  extent to which DOD’s Logistics Roadmap serves as a comprehensive,  integrated strategy to improve DOD logistics and (2) the progress DOD has  made implementing IUID and passive RFID.
To assess the Logistics Roadmap, we reviewed guidance, plans, and other  documents related to its development. We also interviewed officials from  the Office of the Secretary of Defense, Joint Staff, U.S. Transportation  Command, U.S. Joint Forces Command, the Defense Logistics Agency  (DLA), and the four military services involved in the development of the  roadmap. We reviewed DOD statements about the intended purposes of  the roadmap that were made at congressional hearings, in discussions  with our office, and in the roadmap itself. We also assessed whether the  roadmap incorporated sound strategic planning and transformation  management principles based on our prior work. To assess DOD’s  progress implementing passive RFID and IUID, we reviewed pertinent  DOD and military components’ guidance, policy, implementation plans,  business case analyses, and other documentation related to these  technologies. We visited various sites, identified by DOD as locations  which have implemented passive RFID and IUID, to observe these  technologies in use and to more fully understand their implementation  challenges and potential benefits. Additionally, we interviewed officials  responsible for the coordination and management of these technologies  from the Office of the Secretary of Defense, the four military services,  DLA, and U.S. Transportation Command. We also reviewed OMB and DOD  guidance on benefit-cost analysis and economic analysis for decision  making and assessed the extent to which key principles embodied in this  guidance have been applied to DOD’s decision making for IUID and  passive RFID. Additional information on our scope and methodology is  provided in appendix I. We conducted this performance audit from  January 2008 to January 2009 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
paragraphs: DOD is one of the largest and most complex organizations in the world to  manage effectively. While DOD maintains military forces with unparalleled  capabilities, it continues to confront pervasive, decades-old management  problems related to its business operations—which include outdated  systems and processes—that support these forces. These management  weaknesses cut across all of DOD’s major business areas, such as human  capital management, including the department’s national security  personnel system initiative; the personnel security clearance program;  support infrastructure management; business systems modernization;  financial management; weapon systems acquisition; contract management;  and last, but not least, supply chain management. All of these areas are on  our high-risk list for DOD.
Supply chain management consists of processes and activities to purchase,  produce, and deliver materiel—including ammunition, spare parts, and  fuel—to military forces that are highly dispersed and mobile. DOD relies  on defense and service logistics agencies to purchase needed items from  suppliers using working capital funds. Military units then order items from  the logistics agencies and pay for them with annually-appropriated  operations and maintenance funds when the requested items—either from  inventory or manufacturers—are delivered to the units.
Since 1990, DOD supply chain management (previously, inventory  management) has been on our list of high-risk areas needing urgent  attention because of long-standing systemic weaknesses that we have  identified in our reports. Our high-risk series reports on federal  government programs and operations that we have identified, through  audits and investigations, as being at high risk due to their greater  vulnerabilities to fraud, waste, abuse, and mismanagement. In recent  years, we also have identified high-risk areas to focus on the need for  broad-based transformations to address major economy, efficiency, or  effectiveness challenges. The high-risk series serves to identify and help  resolve serious weaknesses in areas that involve substantial resources and  provide critical services to the public.
subsections: section_title: DOD Has Taken Actions to Improve Supply Chain Management
paragraphs: DOD has taken a number of steps to improve supply chain management in  the past several years, including preparing strategic planning documents  and experimenting with a new way to manage its logistics portfolio. In  2005, the Under Secretary of Defense (Acquisition, Technology, and  Logistics) released the Focused Logistics Roadmap, which presented an  “as-is” compendium of logistics programs and initiatives and provided a  baseline for future focused logistics capability analysis and investment  within DOD. With the release of the “as-is” roadmap, DOD also identified a  need for a future-oriented “to-be” roadmap. DOD released the “to-be”  roadmap, now known as the Logistics Roadmap, in July 2008.
In a separate effort, the Deputy Secretary of Defense began, in September  2006, testing a new approach for managing the development of joint  capabilities and included joint logistics as a test case. This concept,  capability portfolio management, is an effort to manage groups of similar  capabilities across the DOD enterprise to improve interoperability,  minimize capability redundancies and gaps, and maximize capability  effectiveness. In February 2008, the Deputy Secretary of Defense issued a  memo formalizing the first four test cases, including joint logistics, and  setting out plans for further experimentation with five additional test  cases. In that memo, the Under Secretary of Defense (Acquisition,  Technology, and Logistics) was designated the capability portfolio  management civilian lead for logistics, with U.S. Transportation Command  serving as the military lead. According to the memo, the capability  portfolio managers will make recommendations to the Deputy Secretary of  Defense and the Deputy’s Advisory Working Group on capability  development issues within their respective portfolio. In addition, the  memo states that the capability portfolio managers have no independent  decision-making authority and will not infringe on existing statutory  authorities. A DOD directive, issued in September 2008, established the  policy for using capability portfolio management to advise the Deputy  Secretary of Defense and the Heads of the DOD Components on how to  optimize capability investments across the defense enterprise.
section_title: DOD Expects IUID and Passive RFID Will Improve Asset Visibility
paragraphs: DOD has identified total asset visibility as a key focus area for improving  supply chain management. DOD has defined total asset visibility as the  ability to provide timely and accurate information on the location,  movement, status and identity of units, personnel, equipment and supplies;  and the capability to act on that information to improve the overall  performance of DOD logistics practices. We have previously reported on  issues associated with DOD’s lack of asset visibility. DOD’s latest  roadmap includes a number of initiatives and programs that involve the  implementation of IUID and RFID, two technologies that enable electronic  identification and tracking of equipment and supplies and that DOD  expects will improve its asset visibility.
DOD’s 2007 Enterprise Transition Plan lists IUID and RFID as enablers to  achieve the goal of end–to-end materiel visibility in the DOD supply  chain. Specifically, the plan states that IUID enables the accurate and  timely recording of information on the location, condition, status and  identity of appropriate tangible personal property to ensure efficient and  effective acquisition, repair, and deployment of items, and states that IUID  will contribute to improvements in the responsiveness and reliability of  the DOD supply chain. The plan also states that RFID will improve process  efficiencies in shipping, receiving, and inventory management, contribute  to reductions in cycle time, and increase confidence in the reliability of the  DOD supply chain through increased visibility of the location of an item or  shipment.
IUID includes the application of a data matrix through direct inscription or  placement of a permanent machine-readable label or data plate onto an  item. The data matrix contains a set of data elements that form a unique  item identifier. This data matrix identifies an individual item distinctly  from all other items that DOD buys and owns, similar to the vehicle  identification number on a car. Items can be marked either by the vendor  before entering into DOD’s inventory, or by a DOD component after DOD  takes possession of an item. In both cases, information about the item and  the mark are uploaded to the IUID Registry, which is located in Battle  Creek, Michigan, and managed by the Defense Logistics Agency. The  registry serves as the central repository for data about all of the items in  the DOD inventory that have been marked with a UID data matrix.  Although the registry is intended to contain information about all of the  marked items, DOD has issued policy indicating that the registry is not to  be used as a property accountability system or to maintain detailed  transaction data. As part of its IUID initiative, DOD plans to use this data  to more closely track items and more effectively manage its inventory.
In July 2003, DOD directed that all new solicitations and contracts issued  on or after January 1, 2004, require the use of IUID for items meeting  established criteria. Additionally, in December 2004, the IUID policy was  updated to require the application of UID to legacy items (that is, existing  personal property items in inventory and operational use). In this memo,  DOD requested all program and item managers plan to complete this  marking by the end of 2010.  The number of items this requirement covers  is unknown. DOD officials estimate it is probably around 100 million;  however, they stated the actual number of items could be much higher.
RFID is a data input system that consists of (1) a transponder, generally  referred to as a tag; (2) a tag reader, also known as an interrogator, that  reads the tag using a radio signal; (3) centralized data processing  equipment; and (4) a method of communication between the reader and  the computer. The reader sends a signal to the tag, which prompts the tag  to respond with information about the item to which it is attached. The  information is forwarded to central data processing equipment, which can  then be used to get detailed information about the container or item, such  as the shipping date or the date received. The information contained in the  central data processing equipment can provide visibility over inventory  items throughout the supply chain. DOD’s RFID policy, issued on July 30,  2004, finalizes business rules for implementing two types of RFID tags— active and passive. This report focuses on DOD’s implementation of  passive RFID, which is a newer technology than active RFID and less well- established in DOD’s supply chain. We previously examined DOD’s  implementation of passive RFID in September 2005.
A passive RFID tag is an electronic identification device consisting of a  chip and an antenna, usually embedded within a “smart” packaging label.  Passive RFID tags have no battery; they draw power from the reader,  which sends out electromagnetic waves that induce a current in the tag’s  antenna. Passive RFID readers transmit significant power to activate the  passive tags and are not currently approved for use on ammunition,  missiles, or other potentially explosive hazards.
Primary responsibility for determining how and where to implement IUID  and RFID, as well as funding the implementation and operations of these  technologies, resides with DOD components. These costs include the  purchase of necessary equipment, costs associated with marking and  tagging items, and changes to automated supply systems. In an effort to  coordinate the components’ efforts to implement various automatic  identification technologies, DOD designated U.S. Transportation  Command as the lead functional proponent for RFID and related AIT  implementation within the DOD supply chain in September 2006. U.S.
Transportation Command subsequently published an AIT concept of  operations in June 2007 and an implementation plan for this concept of  operations in March 2008. Additionally, the Unique Item Identification  Policy Office was established in 2002 in the Office of the Under Secretary  of Defense (Acquisition, Technology, and Logistics) to develop and  implement unified IUID policy across DOD.
section_title: DOD’s Logistics Roadmap Documents Numerous Initiatives and Programs, but Falls Short of Providing a Comprehensive, Integrated Strategy
paragraphs: Although DOD intended that its Logistics Roadmap would provide a  comprehensive and integrated strategy to address logistics problems  department-wide, we found that the roadmap falls short of this goal. The  roadmap documents numerous initiatives and programs that are under  way and organizes these around goals, joint capabilities, and objectives.  However, the roadmap lacks three elements necessary in a  comprehensive, integrated strategy which would make it a more useful  tool for DOD’s senior logistics leaders in guiding, measuring, and tracking  progress toward achieving DOD logistics goals and objectives—key stated  purposes of the roadmap. First, the roadmap does not identify the scope of  logistics problems or gaps in logistics capabilities, information that could  allow the roadmap to serve as a basis for establishing priorities to improve  logistics and address any gaps. Second, the roadmap lacks outcome-based  performance measures that would enable DOD to assess and track  progress toward meeting stated goals and objectives. Finally, DOD has not  clearly stated how it intends to integrate the roadmap into its decision- making processes and who will be responsible for this integration. Without  a strategy that provides a basis for determining priorities and identifying  gaps, that includes key strategic planning elements, and that is integrated  into decision-making processes, DOD will have difficulty guiding,  measuring, and tracking progress toward meeting its logistics goals and  objectives and providing the visibility needed to fully inform senior  decision makers of logistic needs and priorities across the department.
subsections: section_title: Logistics Roadmap Documents Existing Initiatives and Programs
paragraphs: DOD’s Logistics Roadmap, released in July 2008, documents numerous  initiatives and programs that are under way within the department. The  roadmap includes a total of 56 initiatives and 62 programs, based on  information submitted by DOD components. According to the data in the  roadmap, the total cost of implementing the initiatives and programs from  fiscal year 2008 to 2013 is estimated at more than $77 billion. Table 1  summarizes the initiatives and programs by DOD component.
DOD initially began to develop the Logistics Roadmap in response to  direction from the Under Secretary of Defense (Acquisition, Logistics, and  Technology) in 2005. In the memorandum accompanying the 2005 Focused  Logistics Roadmap, the Under Secretary directed the creation of a follow- on “to be” roadmap. While the Under Secretary recognized that the  Focused Logistics Roadmap provided a baseline of programs and  initiatives for future focused logistics capability analysis and investment  and documented significant resource investment in logistics programs and  initiatives, he also recognized that the roadmap indicated that key focused  logistics capabilities would not be achieved by 2015. As a result, he  expected the “to be” roadmap to present credible options for achieving  focused logistics capabilities for consideration by the Defense Logistics  Board. The “to be” roadmap eventually became the Logistics Roadmap,  released in July 2008 by the Deputy Under Secretary of Defense (Logistics  and Materiel Readiness). Officials in the Office of the Secretary of Defense  (OSD) characterized the “to be” roadmap as an effort to portray where the  department was headed in the logistics area, how it would get there, and  what progress was being made toward achieving its objectives. Further,  they said the roadmap would institutionalize a continuous assessment  process linking ongoing capability development, program reviews, and  budgeting. DOD officials also testified that the roadmap would include a  detailed depiction, over time, of existing, planned, and desired capabilities  to effectively project and sustain the joint force. Moreover, they said the  roadmap would establish a coherent framework for achieving the best and  most cost-effective joint logistics outcomes to support the warfighter. We  have emphasized the importance of DOD developing an overarching  logistics strategy that will guide the department’s logistics planning efforts  and have stated that without an overarching logistics strategy, the  department will be unable to most economically and efficiently support  the needs of the warfighter.
Although DOD originally intended for the roadmap to be issued in  February 2007, the department suspended its development while it tested  its new capability portfolio management concept. Joint logistics was one  of the capability areas included in this test. In November 2007, the Office  of Supply Chain Integration, under the direction of the Deputy Under  Secretary of Defense (Logistics and Materiel Readiness), began the formal  development of the roadmap by coordinating with the military services,  combatant commands, the Defense Logistics Agency, and other OSD  offices to gather information on their logistics initiatives and programs.  The initial data call from the Deputy Under Secretary requested that DOD  components identify logistics-related initiatives (e.g., RFID and the Single  Army Logistics Enterprise) and acquisition programs of record (e.g., C- 130J Hercules and Fuel System Supply Point) that are critical to  successfully meeting logistics capability needs. The Deputy Under  Secretary requested additional information about the initiatives and  programs, such as a description, expected benefits and impact,  implementation milestones, and resources.
subsections: section_title: Logistics Roadmap is Organized around Goals, Capabilities, and Objectives
paragraphs: OSD, in presenting information on the department’s logistics initiatives  and programs, structured the roadmap around three goals, three joint  capabilities, and 22 objectives. The objectives in the roadmap are aligned  to three logistics goals that were enumerated in DOD’s Guidance for  Development of the Force, a department-wide strategic planning  document that followed the 2006 Quadrennial Defense Review. The three  goals are as follows:    unity of effort – the synchronization and integration of joint,  multinational, interagency, and non-governmental logistics capabilities  focused on the joint force commander’s intent;    visibility – having assured access to information about logistics  processes, resources, and requirements in order to gain the knowledge  necessary to make effective decisions; and  rapid and precise response – the ability to meet the constantly  changing logistics needs of the joint force.
The objectives are aligned further with three joint capability areas that  DOD has identified for joint logistics. These joint capabilities are as  follows:    supply – the ability to identify and select supply sources, schedule  deliveries, receive, verify and transfer product, and authorize supplier  payments; the ability to see and manage inventory levels, capital assets,  business rules, supplier networks and agreements, as well as  assessment of supplier performance;    maintain – the ability to manufacture and retain or restore materiel in a    deployment and distribution – the ability to plan, coordinate,  synchronize, and execute force movement and sustainment tasks in  support of military operations, including the ability to strategically and  operationally move forces and sustainment to the point of need and  operate the Joint Deployment and Distribution Enterprise.
The 22 objectives were developed by OSD and each is generally aligned to  both a goal and a joint capability, although some objectives are aligned  with multiple joint capabilities. OSD provided guidance to the  participating DOD components on how to align their initiatives and  programs with the objectives.
Table 2 summarizes the organization of the roadmap, including the  number of initiatives and programs linked to each objective.
OSD intends for the Logistics Roadmap to serve as a starting point for  improvement efforts across the department. In the message from the  Deputy Under Secretary of Defense (Logistics and Materiel Readiness),  included at the beginning of the roadmap, the Deputy Under Secretary  explained that the roadmap initiates the process of defining the  department’s logistics capability portfolio in terms of initiatives and  programs, and documents specific actions under way to achieve logistics  goals and supporting objectives, examining them from the perspective of  experts who must advise senior leaders. In addition, he stated that the  roadmap begins an evolutionary process of linking logistics initiatives and  program performance assessments to identifiable and measurable  outcomes. Finally, he explained that the roadmap is intended to be part of  an ongoing process of assessment and feedback linked to the Quadrennial  Defense Review and to the department’s Planning, Programming,  Budgeting, and Execution cycles, and to be a tool for the DOD logistics  community to use in guiding, measuring, and tracking progress of the  ongoing transformation of logistics capabilities.
OSD also expects to update and improve the roadmap periodically. The  Office of Supply Chain Integration, under the Deputy Under Secretary of  Defense (Logistics and Materiel Readiness), stated that an updated  roadmap may be completed in the summer of 2009. According to the  Deputy Under Secretary’s message in the roadmap, future updates to the  roadmap will incorporate new initiatives and programs, as well as results  from capability-based assessments, joint experiments, and joint  technology demonstrations; report progress toward achieving logistics  capability performance targets; and help connect capability performance  targets to current and planned logistics investment for an overarching  view of DOD’s progress toward transforming logistics.
section_title: Roadmap Lacks Key Elements Needed by Decision Makers to Identify and Address Logistics Problems across DOD
paragraphs: In its current form, the Logistics Roadmap lacks three elements that are  needed in order for it to serve as a more useful tool for DOD’s senior  logistics leaders in guiding, measuring, and tracking progress toward  achieving DOD logistics goals and objectives—one of the key stated  purposes of the roadmap. Specifically, the roadmap does not identify the  scope of DOD logistics problems and capability gaps and lacks outcome- oriented performance measures. Additionally, DOD has not clearly stated  how the roadmap will be integrated into its decision-making processes and  who will be responsible for this integration. DOD officials stated that they  plan to remedy some of these weaknesses in their future efforts to update  and expand the roadmap.
subsections: section_title: Roadmap Does Not Identify Scope of Logistics Problems and Capability Gaps
paragraphs: The Logistics Roadmap does not identify the scope of DOD’s logistics  problems or gaps in logistics capabilities. In interviews prior to developing  the roadmap, DOD officials responsible for the roadmap said that it would  identify the scope of DOD’s logistics problems and gaps in logistics  capabilities. This information, if included, could allow the roadmap to  serve as a basis for logistics decision makers to establish priorities for  formulating, funding, and implementing corrective actions. However, the  current roadmap does not include a discussion about department-wide or  DOD component-specific logistics problems. For example, the roadmap  does not discuss logistics problems encountered during the ongoing  operations in Iraq and Afghanistan. Similarly, while the roadmap links  initiatives and programs to three joint capabilities, it does not indicate  where there are gaps in either current or desired capabilities. Without  addressing the scope of logistics problems and gaps in capabilities, the  roadmap’s utility is limited and it does not fully inform senior decision  makers of the warfighters’ logistics needs or provide them with a basis for  determining priorities to meet those needs by filling capability gaps.
Addressing logistics capabilities is a core function of the roadmap. For  example, according to the roadmap, it initiates the process of defining the  department’s logistics capability portfolio in terms of initiatives and  programs, and provides a foundation for future logistics capability  assessments and investment analyses. In addition, the roadmap states that  the Guidance for the Development of the Force, from which the roadmap’s  three goals are drawn, directs DOD to focus on better integrating its  logistics capabilities and processes to meet the demands of an emerging  operational environment. The roadmap also states that it will allow the  department’s senior leaders to more effectively advocate for the logistics  initiatives and programs most critical for providing globally responsive,  operationally precise, and cost-effective logistics support for the  warfighter. In addition, DOD officials stated that the roadmap should be of  use in helping decision makers as they determine whether current  programs and initiatives are sufficient to close any capability gaps that  may be identified.
DOD officials have begun a series of assessments for 3 of the 22 objectives  in the roadmap and directed DOD components to develop these  assessments to identify capability gaps, shortfalls, and redundancies and  to recommend solutions. DOD views such assessments as essential for  providing a strategic view of the department’s progress toward achieving  the goals and objectives of the roadmap. DOD officials said that the results  of all 22 of these assessments will be included in the next version of the  roadmap, tentatively scheduled for release in the summer of 2009. Until  the assessments for each of the 22 objectives are completed, the roadmap  will not begin to provide senior decision makers with a basis for  determining priorities for developing and maintaining logistics capabilities  to support the warfighter.
section_title: Roadmap Lacks Outcome- Based Performance Measures
paragraphs: The roadmap lacks outcome-based performance measures that would  enable DOD to assess and track progress toward meeting stated goals and  objectives. Prior to its development, OSD officials said the roadmap would  allow the department to monitor progress toward achieving its logistics  objectives, and include specific performance goals, programs, milestones,  resources, and metrics to guide improvements in supply chain  management and other areas of DOD logistics. Based on interviews with  OSD officials prior to the completion of the roadmap, we previously  reported that the roadmap would include performance measures and link  objective, quantifiable, and measurable performance targets to outcomes  and logistics capabilities. However, we found that the roadmap does not  include outcome-based performance measures of the objectives, which  would allow DOD to measure progress toward meeting these stated  objectives. While many of the individual initiatives include performance  goals or implementation milestones, the objectives lack such measures.  We also found that although the objectives were categorized by DOD-wide  logistics goals, they were not linked to those goals with performance or  cost metrics. The lack of outcome-based performance measures makes it  difficult to measure progress on how the objectives are meeting the stated  goals.
An official from the Office of Supply Chain Integration, responsible for  leading the development of the roadmap, stated that performance  measures or assessments of the objectives to measure progress were not  included in this version of the roadmap because of a tight schedule for its  completion and release. As noted previously, DOD decided to delay  development of the roadmap until the capability portfolio management  test cases had been completed; however, they had committed to Members  of Congress that the roadmap would be released by the summer of 2008.  Within this time frame, officials said they were unable to address  performance measures or assessments. They stated that future versions of  the roadmap will include these elements, and assessments to measure  progress toward achieving 3 of the 22 objectives were ongoing at the time  we conducted our audit work. In October 2008, we requested descriptions  of the assessment approach and methodology; however, the DOD official  coordinating the assessments indicated that the assessments were a work  in progress and the approach had not been finalized.
We have emphasized the importance of performance measures as  management tools for all levels of an agency, including the program or  project level, to track an agency’s progress toward achieving goals, and to  provide information on which to base organizational and management  decisions. In a previous review of the Supply Chain Management  Improvement plan, we found that many of the initiatives in the plan, as  well as the three focus areas these initiatives were to address, lacked  outcome-focused performance measures, limiting DOD’s ability to fully  demonstrate the results achieved through its plan. We also found that the  plan lacked cost metrics that might show efficiencies gained through these  supply chain improvement efforts, either at the initiative level or overall.  Without outcome-focused performance measures and cost metrics, DOD is  unable to fully track progress toward meeting its goals for improving  logistics from the component to the department level, limiting the  department’s ability to fully demonstrate results achieved through the  roadmap. Increasing DOD’s focus on measurable outcomes will enable the  department’s internal and external stakeholders, including OMB and  Congress, to track the interim and long-term success of its initiatives and  help DOD determine if it is meeting its goals of achieving more effective  and efficient supply chain management. Performance metrics are critical  for demonstrating progress toward achieving results and providing  information on which to base organizational and management decisions.
Inadequate information on performance may be an impediment to  improving program efficiency and effectiveness.
section_title: Roadmap Has Not Been Integrated into Decision- Making Processes
paragraphs: DOD has not clearly stated how it intends to integrate the roadmap into its  decision-making processes and who will be responsible for this  integration. For example, DOD has not shown how the roadmap could  shape logistics budgets developed by individual DOD components or  address joint logistics needs through the new capability portfolio  management process. According to the Deputy Under Secretary’s message  at the beginning of the roadmap, the document will be part of on ongoing  assessment and feedback process linked to the Quadrennial Defense  Review and the Planning, Programming, Budgeting, and Execution cycles  and will support senior leader decision making in a constrained resource  environment. However, on the basis of our review, we found that DOD has  not clearly stated the manner in which the roadmap will be formally or  informally used within these processes, how it will be used to inform  senior decision makers, and who will be responsible for its  implementation. In our prior work on DOD’s transformation efforts, we  have emphasized the importance of establishing clear leadership and  accountability for achieving transformation results, as well as having a  formal mechanism to coordinate and integrate transformation efforts. In  the absence of clear leadership, accountability, and a formal  implementation mechanism, DOD may have difficulty in resolving  differences among competing priorities, directing resources to the highest  priorities, and ensuring progress if changes in senior personnel occur.
DOD officials explained that procedures for how DOD officials use the  roadmap within these existing processes have not been formalized, but  provided various scenarios in which the assessments associated with the  roadmap’s objectives could possibly be used. They stated that upon  completion of the assessments for the individual objectives, the  assessments could be inserted into program and budget reviews, and  could be used to inform the development of future versions of the  Quadrennial Defense Review and the Guidance for the Development of the  Force. Additionally, an official with the Office of Supply Chain Integration  responsible for leading the development of the roadmap stated the  assessments could be incorporated into DOD’s budget process to  document the current status of initiatives and programs, and could aid in  identifying redundancies across DOD. DOD officials have stated various  ways in which the roadmap and its associated assessments could be useful  to senior decision makers, but they have not clearly defined how the  products will be used to inform the Quadrennial Defense Review,  Guidance for the Development of the Force, and the budget process.
Some DOD component officials who participated in the development of  the roadmap said it could be useful in the capability portfolio management  process. However, DOD officials stated that because capability portfolio  management was still new and had not been formalized at the time the  roadmap was under development, they were not sure how it would be  implemented and how or if the roadmap could be useful in this process. As  mentioned previously, the roadmap defines the logistics portfolio and in  light of the recent formalization of the joint logistics capability portfolio,  the roadmap could serve as the starting point to assist the capability  portfolio managers with their responsibilities. The capability portfolio  managers for joint logistics, the Under Secretary of Defense (Acquisition,  Technology and Logistics) and the Commander, U.S. Transportation  Command, are responsible for providing recommendations or advice to  appropriate DOD decision makers and forums regarding integration,  coordination, and synchronization of capability requirements for  capability investments, and for evaluating capability demand against  resource constraints, identifying and assessing risks, and suggesting  capability trade-offs within their portfolio to the heads of the DOD  components. Given that capability portfolio management has been  recently formalized, it remains to be seen how the capability portfolio  managers will implement the process and what types of information they  will need to fulfill their responsibilities.
A comprehensive integrated strategy to address logistics problems  department-wide is critical, in part, because of the diffuse organization of  DOD logistics. Responsibility for logistics within DOD is spread across  multiple components with separate funding and management of logistics  resources and systems. For example, the Under Secretary of Defense  (Acquisition, Technology and Logistics), as part of OSD, serves as the  principal staff element of the Secretary of Defense in the exercise of policy  development, planning, resource management, fiscal, and program  evaluation responsibilities. The Secretary of Defense designated the Under  Secretary of Defense as the department’s Defense Logistics Executive with  authority to address logistics and supply chain issues. However, each of  the military services is separately organized under its own secretary and  functions under the authority, direction, and control of the Secretary of  Defense. The secretaries of the military departments are responsible for  organizing, training, and equipping their forces under Title 10 of the United  States Code. DOD policy states that each of the secretaries is directed to  prepare and submit budgets for their respective departments, justifying  before the Congress budget requests, as approved by the President; and to  administer the funds made available for maintaining, equipping, and  training their forces. As we have previously reported, the diffuse  organization of DOD’s logistics operations complicates DOD’s ability to  adopt a coordinated and comprehensive approach to joint logistics. Until  the roadmap provides a basis for determining priorities and identifying  gaps, incorporates performance measures, and is integrated into decision- making processes, it is likely to be of limited use, beyond the current  processes and information available, to senior DOD decision makers as  they seek to improve supply chain management.
section_title: DOD May Face Challenges Achieving Widespread Implementation of IUID and Passive RFID
paragraphs: DOD has taken several steps toward implementing IUID and passive RFID  but may face challenges achieving widespread implementation because it  is unable to fully demonstrate the return on investment associated with  these efforts to the military components that have primary responsibility  for determining how and where these technologies are implemented. DOD  and its military components have made some progress adopting these two  technologies. These efforts include developing policy and guidance,  establishing working groups and integrated process teams to share  information and lessons learned both within and across the military  components, providing funding to support implementation, and  establishing pilot projects and initial implementation efforts at several  locations. Despite these signs of progress, full implementation of IUID and  passive RFID is still several years away under current time frames. At  present, DOD is not able to fully quantify the return on investment  associated with these technologies because it does not uniformly collect  complete information on both the costs and benefits associated with  implementing IUID and passive RFID. Additionally, effective integration of  these technologies with supply chain processes and information systems is  challenging and will require the military components to make significant  commitments of funding and staff resources. Without the ability to fully  demonstrate that the benefits of IUID and passive RFID justify the costs  and efforts involved, DOD is likely to face difficulty gaining the support  needed from the military components to overcome challenges associated  with implementation.
subsections: section_title: DOD Efforts to Implement IUID and Passive RFID Include Issuing Guidance, Sharing Information, Allocating Resources, and Conducting Pilot Projects
paragraphs: DOD and its military components have taken several steps to facilitate,  support, and undertake the implementation of IUID and passive RFID. Use  of IUID and passive RFID was required by memoranda issued by the Office  of the Under Secretary of Defense (Acquisition, Technology, and Logistics)  in July 2003 and July 2004, respectively, and DOD and its military  components have periodically issued policy and guidance to manage and  inform users regarding the implementation of both technologies. For  example, U.S. Transportation Command, the lead functional proponent for  the implementation of AIT, including IUID and passive RFID, released an  AIT Concept of Operations (CONOPS) in June 2007 and an AIT  Implementation Plan in March 2008. The CONOPS and Implementation  Plan provide information on DOD’s future vision for AIT use across the  supply chain and are intended to establish a baseline standard for AIT use  and implementation throughout DOD. Guidance on these technologies has  also been published by DOD. For example, DOD has provided guidance  concerning the use of IUID to support improved maintenance and materiel  management processes, as well as detailed information on the technology  and the mechanics of its implementation.
DOD has taken other actions to support and facilitate the implementation  of IUID and passive RFID. DOD established a UID Policy Office and  designated staff resources toward RFID implementation in the Office of  Supply Chain Integration. In addition to helping disseminate policy and  guidance, the two offices play a role in promoting the technologies and  educating the military components regarding implementation. For  example, the offices have established Web sites for suppliers, program  managers, and others involved in implementation efforts to access  information on the technologies, including specifications and  requirements, tutorials and trainings, guidance for implementation, and  updates to existing policy and guidance. Additionally, the UID Policy  Office holds biannual UID Forums to provide practical guidance to help  educate military program managers and DOD contractors regarding IUID  implementation, and the Supply Chain Integration Office holds annual  RFID summits to highlight best practices across the department and  provide a forum for discussion of RFID technologies and their potential  applications to supply chain management.
In addition to guidance developed at the department level, the military  components are developing service-specific implementation plans for IUID  and passive RFID. As of October 2008, the Army had issued a service-wide  strategy for IUID implementation, and the Marine Corps and Air Force had  both completed draft IUID implementation plans. While the Navy does not  have a formal service-wide IUID implementation plan, a Navy official  responsible for managing IUID implementation stated its draft serialized  item management implementation plan contains information pertaining  to DOD IUID guidance and requirements. For passive RFID, the Navy and  Air Force had completed plans for implementation of the technology, the  Army had completed a draft implementation plan, and the Marine Corps  was in the process of updating its existing RFID implementation plan to  incorporate information from the DOD AIT CONOPS.
Efforts to implement the technologies also include information sharing  across DOD and within its military components. DOD and its military  components have established integrated process teams and working  groups to define objectives and establish implementation timelines,  identify common implementation challenges and potential solutions, and  facilitate stakeholder communications. These teams focus on several areas  related to implementation and operate both within and across the military  components. For example, U.S. Transportation Command formed multiple  integrated process teams dedicated to different segments of supply and  distribution operations during the development of its AIT Implementation  Plan, which encompasses both IUID and passive RFID. Additionally, the  UID Policy Office has established and participated in a number of working  groups to support the development and implementation of IUID policy.
Integrated process teams and working groups also operate within the  military components. For example, in September 2007, the Navy formed an  IUID integrated process team whose four working groups meet monthly to  discuss metrics for measuring implementation progress, technical  solutions for implementation challenges, process mapping of  implementation efforts, and internal and external communications  regarding implementation. In December 2007, the Army also formed an  IUID integrated process team, which developed the Army-wide  implementation strategy for IUID and continues to meet to share lessons  learned and discuss challenges related to implementation.
The military components, DLA, and U.S. Transportation Command have  funded implementation of both IUID and passive RFID through various  mechanisms and to varying degrees. For instance, the Army funds AIT,  which includes both IUID and passive RFID, through its regular budget  process. Army officials estimated that, in fiscal years 2007 and 2008, the  Army has spent $22.5 million on the implementation of IUID and has  requested an additional $15 million per year for fiscal years 2009 through  2013. For passive RFID, Army officials estimated that the Army spent $2.2  million between the third quarters of fiscal year 2006 and 2008. Other  services, however, do not uniformly provide designated funding for  implementation. For example, Navy officials stated that implementation of  IUID within the Navy is an unfunded mandate and funding for  implementation must be taken out of operational budgets. Air Force  officials also stated that funding for implementation is taken out of  operational budgets by program managers. Additionally, DLA and U.S.  Transportation Command funded a project that spanned multiple military  components.
Pilot projects and initial implementation efforts for both IUID and passive  RFID are under way at multiple locations throughout the military  components. Table 3 lists examples of pilot projects and initial  implementations that DOD officials identified as important ongoing  efforts.
The implementation efforts listed in the table vary in scope, in terms of  both the number of components and installations involved and the amount  of resources required for full implementation. For example, the Alaska  RFID Implementation project, which aimed to test and evaluate passive  RFID within the DOD supply chain in order to streamline supply chain  operations, spanned multiple military components and cost more than $27  million to implement. As a part of this pilot, passive RFID infrastructure  was installed at DLA, Army, and Air Force locations in Alaska and  California. Other implementation efforts, however, have been smaller and  less resource intensive. For instance, the Robotic Systems Joint Project  Office, which works to procure, field, sustain, and support ground robotics  for the Army and the Marine Corps, implemented IUID at its Joint Robot  Repair Fielding division at a cost of approximately $400,000 during fiscal  years 2007 and 2008. The project office established a process for marking  new acquisitions to its inventory with item unique identifiers and, to  maximize the benefits of implementation, integrated IUID into its existing  supply chain management data system.
section_title: Full Implementation of IUID and Passive RFID Remains Several Years Away
paragraphs: Full implementation of IUID and passive RFID remains several years away  under current time frames. Although DOD initially projected that all items  currently in its inventory required to be marked under IUID guidance  would be marked with unique item identifiers by fiscal year 2010, officials  stated that this target will not be met. According to DOD officials, as of  October 2008 approximately 4 percent of the estimated 100 million items  currently in DOD inventory have been marked with item unique identifiers.  DOD officials stated that, at the current pace of implementation, full  marking of legacy items will take many additional years. For example, the  Air Force estimates that it will take until fiscal year 2021 to complete  marking parts already in inventory with item unique identifiers. Since  2005, Air Force officials estimated that the Air Force has marked 10,000  items in its inventory while the total number of Air Force items required to  be marked exceeds 12.5 million.
The DOD AIT Implementation Plan estimates that the implementation of  technologies, including passive RFID will be completed in 2015; however,  current time frames indicate that it may take longer to fully implement the  technology. Initial pilots of passive RFID called for in the DOD AIT  Implementation Plan are under way at selected locations in each military  service, but a DOD official responsible for coordinating passive RFID  implementation across the department stated that the services are still in  the process of gathering baseline information and the technology will not  be fully functional at these locations until the end of fiscal year 2009.  Additionally, according to the DOD AIT Implementation Plan, updated  automatic information systems needed to support passive RFID and IUID  may not be functional until after 2015. Updates to these systems are  necessary in order for the components to derive benefit from these  initiatives. Furthermore, while infrastructure for reading passive RFID tags  is in place in multiple locations throughout the military components,  additional work is required to reach full implementation. According to a  September 2008 report by the DOD Inspector General on DLA’s  implementation of passive RFID, 10 percent of supply contracts examined  did not contain the required RFID clause and suppliers for 43 percent of  contracts containing the required clause did not apply passive RFID tags  to shipments they sent to depots. The Inspector General also found that  installation-level understanding of the use and application of passive RFID  was limited and additional training was needed to increase awareness of  the technology and its application.
section_title: DOD Does Not Collect Information Needed to Fully Demonstrate Return on Investment for IUID and Passive RFID
paragraphs: Although implementation of IUID and passive RFID will require significant  funding commitments and staff resources from the military components,  DOD does not gather the cost and performance information needed to  fully demonstrate return on investment for the technologies to the military  components that have primary responsibility for determining how and  where these technologies are implemented. While DOD gathers  information on some of the costs associated with implementation, cost  estimates do not include all of the funding or staff resources provided by  the services to support implementation because funding for  implementation at the component level is frequently taken out of  operational accounts, rather than being directly allocated. The March 2008  DOD AIT Implementation Plan identified $744 million in programmed AIT- related funding for fiscal years 2008 through 2013, but does not include in  its estimate funding that the military components take from operational  accounts to support implementation efforts. A 2005 memo from the Under  Secretary of Defense (Acquisition, Technology, and Logistics) requires  acquisition programs to specifically identify funding for IUID in budget  submissions. However, several officials from the military services stated  that they divert resources from other efforts in order to facilitate  implementation of IUID and passive RFID. Navy officials stated that  implementation of IUID within the Navy is treated as an unfunded  mandate and program managers at the installation level must take funding  out of operational budgets in order to support implementation efforts.  Army officials have faced similar challenges. For example, program  managers involved in the Army’s implementation of IUID for small arms  have had to release staff from other tasks to assist in the marking of  weapons with item unique identifiers. Since funding and staff resources  are often provided in this indirect manner, the total resources expended  on the implementation of IUID and passive RFID may not be visible to  decision makers, both at the component level and across DOD.
Additionally, DOD does not require the military components to gather or  report on outcome-based performance measures to demonstrate the  extent to which benefits are being accrued through the implementation of  IUID and passive RFID. While DOD does gather some information to  assess implementation efforts across the military components, the  information collected focuses on measures of implementation progress  and does not include outcome-based performance measures. For example,  while OSD and the military components are required to provide updates to  DOD at quarterly IUID Scorecard Reviews, reporting requirements focus  on the execution of implementation plans rather than benefits accrued  from implementation. At the July 2008 scorecard review, military  components provided installation-level implementation plan status  updates and reported on implementation efforts, such as issuance of new  policies and outreach activities. Furthermore, while U.S. Transportation  Command’s AIT Implementation Plan identifies potential performance  measures for automatic identification technologies and establishes a  schedule to begin collecting some data in 2009, the military components  have not yet been required to collect or report information pertaining to  these metrics. Senior DOD officials involved in the implementation of  passive RFID stated that they plan to collect this information in the future.
During our site visits, officials at some locations were able to describe  qualitative benefits derived from the implementation of IUID or passive  RFID. However, the officials had not quantified the benefits they had  observed. For instance, Army officials cited a number of benefits from the  implementation of IUID by the Robotic Systems Joint Project Office.  These included reductions in inventory size, shipping and receiving time,  and data entry errors and increases in data quality, robustness, and  processing speed. However, officials stated that they had not attempted to  quantify these benefits. Other officials cited installation-level qualitative  benefits for implementing passive RFID. For example, officials from DLA’s  Defense Distribution Center in San Joaquin, California, said the  implementation of passive RFID reduced the amount of time needed to  prepare shipments. However, they lacked key data to quantify the extent  of the time savings. Additionally, only limited efforts have been made to  gather the baseline information needed to quantify change in performance  outcomes over time. For instance, DLA gathered baseline information on  shipping and receiving operations at the Defense Distribution Center in  San Joaquin in September 2008, despite beginning its implementation of  passive RFID in November 2004.
Without data on the costs and benefits associated with the technologies, it  is difficult for DOD to create a business case or other analysis that would  fully demonstrate return on investment from implementing IUID and  passive RFID to the military components. Both OMB and DOD have  established guidance for conducting such analyses. The stated goal of  OMB Circular A-94 is to promote efficient resource allocation through  well-informed decision making by the federal government, and the circular  provides general guidance on comparing the costs of alternative means of  achieving the same objective or stream of benefits. Additionally, according  to DOD Instruction 7041.3, economic analyses are an integral part of the  planning, programming and budgeting system of the department, and  economic analysis calculations should include information on the costs  and benefits associated with alternatives under consideration.
While OSD and the military components have conducted some studies to  assess the business case for the use of IUID and passive RFID, these  studies have had mixed results. For example, a June 2008 analysis of  alternatives for AIT in base-level Air Force supply and distribution  processes found that implementation of the RFID vision presented in the  DOD AIT CONOPS was not optimal, based on the costs and benefits  associated with implementation. Instead, the Air Force determined that its  current state of operations, with limited incorporation of passive RFID,  functioned both effectively and efficiently. Broader analyses of return on  investment, however, have arrived at different results. DOD released a  business case analysis of passive RFID in April 2005 that projected overall  cost savings from implementation of passive RFID would range from $70  million to $1.781 billion over a 6-year period and found that there is a  reasonable to good expectation that implementation of passive RFID  across DOD will provide an economic return on investment in the near  term and an excellent expectation of economic returns in the long term.  Additionally, a March 2005 cost benefit analysis of IUID performed by OSD  found that implementation of the technology would deliver benefits in  both the short and long terms. However, these department-wide business  case analyses for both technologies have been characterized by DOD  officials involved in the coordination and management of IUID and passive  RFID as overly broad and unconvincing because analyses have been  largely based on data from private industry implementation efforts. DOD  officials stated that the April 2005 DOD business case analysis for passive  RFID and the March 2005 DOD IUID business case analysis were both  high-level efforts that were discounted by the military components for  overstating potential benefits of the technologies, as well as the time frame  in which those benefits would be achieved.
In 2005, we identified unclear return on investment as an impediment to  the implementation of passive RFID. This impediment remains today.  Since return on investment for both IUID and passive RFID is not always  clear to the military components charged with their implementation, it is  difficult for DOD to convince program managers at the installation level to  invest time and resources toward overcoming challenges associated with  implementing the technologies at the expense of other competing  priorities. For example, officials from both the Army and the Navy who  have responsibility for coordinating and managing implementation of  these technologies in their respective components stated that  implementation of IUID is given low priority by program managers, who  do not see the benefits associated with implementation. DOD officials  agreed that program managers resist implementation of the technologies  when the value of implementation is unclear. In our previous work on  supply chain management, we have stated that it is important for the  Office of the Secretary of Defense to obtain the necessary resource  commitments from the military services, DLA, and other organizations,  such as U.S. Transportation Command, to ensure that initiatives are  properly supported. At present, DOD’s inability to fully quantify return on  investment has impeded implementation progress, as the military  components charged with carrying out implementation are unable to  clearly discern the benefits of the technologies and are reluctant to devote  time and resources for implementation, rather than for competing  priorities.
Effective integration of these technologies with supply chain processes  and information systems is challenging and requires the military  components to make significant commitments of funding and staff  resources, often without promise of short-term benefit. As noted  previously, DOD identified $744 million in programmed funding that will  be necessary in fiscal years 2008 through 2013 to achieve the vision laid  out in the AIT Implementation Plan. Military service officials stated that  tasks required to achieve full implementation include installation of  infrastructure and training of personnel to understand and use the  technologies. Additionally, costly and complex business process changes  are necessary for the military components to enable interoperability  between automatic information systems used to gather data from IUID  marks and passive RFID tags and service-specific supply data systems.
Without these changes, data gathered through IUID and passive RFID  cannot be accessed to derive benefit from the technologies. In some cases,  data are not being gathered at all. Officials at three out of four locations  participating in the implementation of the Alaska RFID Implementation  Project stated they derive no benefit yet from passive RFID as a result of  the lack of integration between RFID data collection platforms and supply  chain information systems. Deriving benefit from IUID implementation has  also been difficult. Officials from multiple military components stated that  while IUID marking efforts are time consuming and resource intensive,  lack of data system integration prevents implementation benefits from  being realized.
Without a clear return on investment, achieving the integration necessary  to derive benefit from the technologies may be resource intensive to a  degree that discourages the military components from investing in  technology solutions. For instance, faced with a lack of information  system interoperability, the Army decided against investing in  technologies that would allow its legacy supply systems to use IUID and  passive RFID data. Instead, the Army decided to delay obtaining benefit  from the technologies for multiple years until Army-wide information  systems that can directly communicate with one another are operational.  Army officials stated that the costs associated with implementing an  interim solution were prohibitive, given the uncertain return on  investment for the technologies in the near term.
section_title: Conclusions
paragraphs: The importance of supply chain management to the operational capability  of U.S. forces, as well as the considerable resources being spent in this  area, highlight the importance of addressing long-standing problems that  have resulted in our designation of this DOD function as a high-risk area.  Given the diffuse organization of DOD’s logistics operations, senior DOD  decision makers need a comprehensive, integrated strategy to guide the  department’s efforts to make significant improvements. Although DOD’s  Logistics Roadmap represents the latest attempt to establish such a  strategy for the department, the lack of key elements we identified in our  review calls into question the utility of this roadmap in addressing supply  chain problems. Further, without the inclusion of these key elements, it  will be difficult for DOD to demonstrate progress in addressing these  problems and provide Congress with assurance that the DOD supply chain  achieves DOD’s goal of providing cost-effective joint logistics support for  the war fighter. Therefore, it will be important that DOD officials follow  through on their intent to remedy weaknesses in the roadmap.
Although incorporating IUID and passive RFID into the DOD supply chain  offers the promise of technologies that may be able to help address long- standing problems of inadequate asset visibility, the department is unable  to fully quantify the return on investment associated with the technologies  to those in the military components responsible for implementation. Cost  and benefit information collected from actual implementation efforts  could form the basis for quantifying return on investment and help to  encourage the military components to allocate resources that will be  needed for widespread implementation of these technologies. Until the  military components place higher priority on integration of IUID and  passive RFID into their business processes, DOD will not realize the  benefits it expects to achieve from these initiatives.
section_title: Recommendations for Executive Action
paragraphs: To improve DOD’s ability to guide logistics initiatives and programs across  the department and to demonstrate the effectiveness, efficiency, and  impact of its efforts to resolve supply chain management problems, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense (Acquisition, Technology, and Logistics) take the following three  actions necessary to have a comprehensive, integrated strategy for  improving logistics:  Identify the scope of logistics problems and capability gaps to be  addressed through the Logistics Roadmap and associated efforts.    Develop, implement, and monitor outcome-focused performance  measures to assess progress toward achieving the roadmap’s objectives  and goals.
Document specifically how the roadmap will be used within the  department’s decision-making processes used to govern and fund  logistics and who will be responsible for its implementation.
To improve the likelihood DOD will achieve the potential benefits it  expects from the implementation of IUID and passive RFID, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense (Acquisition, Technology, and Logistics), in conjunction with the  military components, take the following two actions:    Collect detailed information on the costs, including costs currently  being funded from operational accounts, and performance outcomes  for ongoing and future implementation of these two technologies.
On the basis of these data, develop an analysis or analyses of the return  on investment to justify expanded investment of resources in the  implementation of the technologies.
We also recommend that the Secretary of Defense direct the Secretaries of  the Army, the Navy, and the Air Force; the Commandant of the Marine  Corps; and the Director of the Defense Logistics Agency to determine, on  the basis of the above analysis or analyses, whether sufficient funding  priority has been given to the integration of these technologies into their  respective business processes and, if not, to take appropriate corrective  action.
section_title: Agency Comments and Our Evaluation
paragraphs: In its written comments on a draft of this report, DOD concurred with our  recommendations and identified a number of corrective actions it has  taken or plans to take. While we believe DOD’s actions, for the most part,  respond to the issues raised in this report, several questions remain,  including both the methodology and time frame for DOD’s assessments of  the objectives in the roadmap. On the basis of DOD’s comments, we have  modified our fourth recommendation to specify that DOD collect  information on all costs, including costs currently being funded from  operational accounts, associated with implementing these two  technologies. The department’s written comments are reprinted in  appendix II.
DOD concurred with our three recommendations focused on improving its  Logistics Roadmap and cited actions to address the recommendations.  DOD stated that the roadmap is a living document and the department  continues progressing toward developing a more coherent and  authoritative framework for guiding its logistics improvement efforts.  Specifically, DOD stated that it has completed an initial review of three of  the roadmap’s objectives as the framework for finalizing an assessment  methodology. This initial review is intended to identify gaps, shortfalls,  timing issues, and challenges throughout DOD’s supply chain. DOD also  stated that, in addition to monitoring existing performance metrics, such  as customer wait time, the department will determine which specific  outcome-based performance measures can be linked to each of the  objectives and goals within the roadmap. Finally, DOD stated that it has  established an executive advisory committee to ensure that the roadmap is  a useful tool in decision making. Our report describes the ongoing  assessment effort that DOD cites in its comments. Although DOD did not  provide a time frame for completing these assessments, DOD officials  have previously stated that they tentatively expect to have all 22  assessments completed for the next iteration of the roadmap in July 2009.  Because DOD was not able to provide information on its assessment  methodology, we could not determine whether these assessments are  likely to address the information gaps we identified in the current  roadmap regarding the scope of DOD’s logistics problems and capability  gaps; nor could we determine the extent that these assessments might  result in outcome-oriented performance measures that would enable DOD  to assess progress toward achieving the roadmap’s goals and objectives.  DOD’s decision to form an executive advisory committee appears to be a  positive step. However, it remains unclear at this time how the roadmap  will be integrated within the department’s existing decision-making  processes used to govern and fund logistics; therefore, DOD will need to  take additional steps to clarify how it intends to use the roadmap.
DOD also concurred with our three recommendations aimed at improving  the likelihood that the department will achieve the potential benefits it  expects from implementing IUID and passive RFID. DOD cited a number  of efforts to identify and collect performance metrics for IUID and passive  RFID and to analyze this information to justify the expanded investment of  resources in their implementation. DOD further stated it will review the  services’ Program Objective Memorandum inputs to ensure that, based on  the department’s AIT investment plan, sufficient funding priority is given  to integrating these technologies into their respective business processes.  Our review indicated that much work remains for DOD to collect complete  and useful performance data. Additionally, DOD did not indicate plans to  gather additional cost information pertaining to the implementation of  IUID and passive RFID. We continue to believe that cost information  associated with the implementation of these technologies is important to  any analysis of return on investment. As we noted in the report, some  funding for the implementation of IUID and passive RFID is being taken  out of operational accounts. Current POM information may not provide a  complete picture of the costs associated with the implementation of IUID  and passive RFID. Therefore, DOD should gather detailed information on  the full costs associated with the implementation of both IUID and passive  RFID, including those funded from operational accounts. We have  modified our recommendation accordingly.
We are sending copies of this report to interested congressional  committees; the Secretary of Defense; the Secretaries of the Army, the  Navy, and the Air Force; the Commandant of the U.S. Marine Corps; the  Commander of U.S. Transportation Command; the Director of the Defense  Logistics Agency; and the Director, Office of Management and Budget.  This report will also be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staffs have questions concerning this report, please contact  me at (202) 512-8365 or solisw@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which the Department of Defense’s (DOD) July  2008 Logistics Roadmap serves as a comprehensive, integrated strategy to  improve DOD logistics, we reviewed its content and organization, as well  as documents relating to its development, including DOD guidance to the  components regarding submitting information and reviewing draft copies  of the roadmap. We also reviewed memoranda directing components to  conduct assessments for specific objectives included in the roadmap. We  reviewed prior DOD logistics strategies and plans, including the 2005  Focused Logistics Roadmap and the DOD Plan for Improvement in the  GAO High Risk Area of Supply Chain Management with a Focus on  Inventory Management and Distribution, as well as other DOD strategic  plans such as the Enterprise Transition Plan and the Quadrennial Defense  Review. We reviewed DOD statements about the intended purposes of the  roadmap that were made in congressional hearings, in discussions with  our office conducted during prior GAO work in this area, and in the  roadmap itself. We identified sound management principles based on prior  work evaluating strategic planning efforts and performance assessments.  We obtained information on DOD’s logistics capabilities portfolio  management test case by reviewing DOD guidance and interviewing  officials within the Office of the Joint Chiefs of Staff, who were  responsible for managing the test case for joint logistics. We interviewed  officials from DOD components submitting information for the roadmap,  including the Army, Navy, Air Force, Marine Corps, the Defense Logistics  Agency, the U.S. Transportation Command, the U.S. Joint Forces  Command, and the Offices of the Assistant Deputy Under Secretaries of  Defense for Supply Chain Integration, Transportation Policy, and  Maintenance Policy and Programs. Over the course of these interviews, we  obtained pertinent information and perspectives on the roadmap, efforts  to compile and review the information included in the roadmap, and  potential uses of the roadmap for logistics decision making.
To obtain information on the progress DOD has made implementing item  unique identification (IUID) and passive radio frequency identification  (RFID), we reviewed DOD’s overall concept of operations and  implementation plan for automatic identification technology, which  includes IUID and passive RFID. We obtained briefing documents  describing the status of IUID and passive RFID implementation. We  obtained and reviewed various service-level implementation plans for  IUID and RFID; however, because the majority of these plans were only  recently released or in draft form, we did not evaluate the adequacy of  these service-level plans. We also reviewed Office of Management and  Budget (OMB) and DOD guidance on benefit-cost analysis and economic  analysis for decision making. We visited and conducted interviews with  officials involved in the coordination and management of these  technologies within the Office of the Secretary of Defense (OSD), Defense  Logistics Agency (DLA), the U.S. Transportation Command, and the  military services. Additionally, we visited and observed the use of passive  RFID technology at DLA’s Defense Distribution Center in San Joaquin,  California; Travis Air Force Base, California; and the Naval Base Kitsap in  Bangor, Washington. We also visited and observed the use of IUID at the  Robotic Systems Joint Project Office and the Army Aviation and Missile  Command, Alabama. We also interviewed officials at the following  locations involved in implementing either IUID or passive RFID: Anniston  Army Depot, Alabama; Army Project Manager Soldier Weapons, New  Jersey; Navy Extremely High Frequency Satellite Communications Branch,  California; Naval Air Systems Command, Maryland; Elmendorf Air Force  Base, Alaska; Fort Richardson, Alaska; and Air Mobility Command, Illinois.  We also interviewed officials responsible for managing the IUID registry in  Battle Creek, Michigan. We also interviewed officials in the DOD Inspector  General’s Office to review concurrent work that office is conducting on  passive RFID.
We conducted this performance audit from January 2008 through January  2009 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, Tom Gosling (Assistant Director),  Grace Coleman, Nicole Harms, Brooke Leary, Andrew McGuire, Paulina  Reaves, and Ben Thompson made significant contributions to this report.