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

Letter

Background

DOD Supply Chain Management Challenges and Past Efforts to Address Them

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.

GAO’s High-Risk List and Criteria for Removal

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.

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

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.

DOD Has Taken Steps to Improve Its Asset Visibility, but Additional Actions Are Needed to Fully Address GAO’s High- Risk Criteria

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.

DOD Has Fully Demonstrated Leadership Commitment and Support

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.

DOD Has Begun to Identify Required Resources and Investments, but Cost Estimates Do Not Include Detailed Information

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.

DOD’s Strategy and Implementation Plans Serve as a Corrective Action Plan, but Initiatives Do Not Clearly Link with Goals and Objectives

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.

DOD Has Taken Steps to Monitor Its Initiatives, but Lacks a Way to Assess Progress toward Achievement of Its Goals and Objectives

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.

DOD Has Started to Demonstrate Progress in Addressing Its Asset Visibility Challenges, and Sustained Progress Is Warranted

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Scope and Methodology

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.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.

Related GAO Products

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.