-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-106		

TITLE:     Defense Logistics: Strategic Planning Weaknesses 
Leave Economy, Efficiency, and Effectiveness of Future Support 
Systems at Risk

DATE:   10/11/2001 
				                                                                         
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GAO-02-106

   Report to Congressional Committees

   United States General Accounting Office

   GAO

   October 2001 DEFENSE LOGISTICS Strategic Planning Weaknesses Leave
   Economy, Efficiency, and Effectiveness of Future Support Systems at Risk

   GAO- 02- 106

   Page i GAO- 02- 106 Strategic Planning for Logistics Transformation Letter
   1

   Results in Brief 2 Background 4 Conclusions 15 Recommendations for
   Executive Action 15 Agency Comments and Our Evaluation 16

   Appendix I Analysis of Military Components* Logistics Transformation and
   Implementation Plans 18

   Appendix II Scope and Methodology 24

   Appendix III Comments From the Department of Defense 26

   Related GAO Products 29

   Tables

   Table 1: Defense- wide Objectives and Performance Measures and a Summary
   of Weaknesses in the Components* Implementation Plans 3 Table 2: Objective
   One* Optimize Support to the Warfighter 9 Table 3: Objective Two* Improve
   Strategic Mobility to Meet

   Warfighter Requirements 10 Table 4: Objective Three* Implement Customer
   Wait Time as the

   Department- wide Logistics Metric 11 Table 5: Objective Four* Fully
   Implement Total Asset Visibility

   Across the Department of Defense 12 Table 6: Objective Five* Reengineer
   and Modernize Applicable

   Logistics Processes and Systems 13 Table 7: Objective Six* Minimize
   Logistics Costs While Meeting

   Warfighter Requirements 14 Contents

   Page 1 GAO- 02- 106 Strategic Planning for Logistics Transformation

   October 11, 2001 The Honorable Carl Levin Chairman The Honorable John
   Warner Ranking Minority Member Committee on Armed Services United States
   Senate

   The Honorable Bob Stump Chairman The Honorable Ike Skelton Ranking
   Minority Member Committee on Armed Services House of Representatives

   Since the end of the Cold War, the Department of Defense has dramatically
   reduced its fighting forces and logistics infrastructure. The Department
   estimates it is spending about $59 billion a year on logistics support 1
   programs to operate and sustain weapon systems, 2 but it reports that
   significant reductions can be achieved by adopting a variety of different
   logistics support practices. We reported in January 2001 that serious
   weaknesses persist throughout the Department*s logistics activities and
   that it is unclear to what extent ongoing reengineering management
   improvement initiatives will overcome them. 3 The Department has taken a
   number of significant steps in recent years directed at improving its
   outdated and inefficient logistics processes. Specifically, the Office of
   the Secretary of Defense and each of the military services and appropriate
   Defense commands have established a number of significant logistics
   reengineering efforts. In addition, the Office of the Secretary of Defense
   developed the Fiscal Year 2000 Logistics Strategic Plan in August 1999,
   which outlines six overall objectives, a basic

   1 The Department of Defense defines *logistics support* as planning and
   carrying out the movement and maintenance of forces. 2 The Department does
   not routinely capture these costs in its accounting and estimating
   systems. However, beginning in 1999, the Undersecretary of Defense for
   Acquisition, Technology, and Logistics used a contractor to estimate the
   amount of funds DOD spends annually on logistics support.

   3 Major Management Challenges and Program Risks: Department of Defense

   (GAO- 01- 244, Jan. 2001).

   United States General Accounting Office Washington, DC 20548

   Page 2 GAO- 02- 106 Strategic Planning for Logistics Transformation

   framework for a Department- wide logistics concept, and a general time
   frame for implementation. The plan required that the military services,
   the Defense Logistics Agency, and the U. S. Transportation Command develop
   supporting implementation plans that reflect the vision, objectives, and
   metrics outlined in the Department- wide plan.

   The House Committee on Armed Services report on the Floyd D. Spence
   National Defense Authorization Act for Fiscal Year 2001 (Report 106- 616)
   requires that we assess the Department of Defense*s long- range logistics
   strategic planning process. As agreed with your offices, we focused our
   review on the Department- wide Logistics Strategic Plan and the Defense
   components* supporting implementation plans. Specifically, this report
   addresses whether (1) the Department*s Logistics Strategic Plan provides
   an adequate overarching logistics strategy to guide the reengineering
   initiatives of the military services, the Defense Logistics Agency, and
   the U. S. Transportation Command and (2) the related implementation plans
   prepared by those components are likely to result in overall improvements
   to the economy and efficiency of logistics activities. Our scope and
   methodology are discussed in appendix II. The Department of Defense is
   currently engaged in a strategic review of its warfighting goals,
   objectives, and capabilities that, when completed, could influence the way
   it approaches logistics support and strategic planning.

   The Department of Defense*s Logistics Strategic Plan is not sufficiently
   comprehensive and does not provide an adequate overarching logistics
   strategy to effectively guide the Defense components* logistics plans. The
   plan, which is organized around six broad objectives and associated
   generic performance measures, is very general and does not provide a
   cohesive planning strategy for developing future logistics systems. Also,
   the objectives and actions outlined in the plan are almost exclusively
   related to supply and inventory management issues and do not fully address
   several other critical logistics functions, such as maintenance and
   transportation. Specifically, the plan does not adequately address (1) all
   aspects of the logistics life- cycle process, (2) how the Department
   should be organized in the future to fulfill evolving logistics
   requirements, or (3) the facilities and personnel the Department
   anticipates it will need to fulfill its future logistics requirements.
   Furthermore, the Department*s long- range initiative to design a logistics
   architecture for the years 2010 and beyond is progressing slowly, and it
   is not clear how this initiative will fit into the Department*s overall
   future logistics strategy set forth in the strategic plan. Results in
   Brief

   Page 3 GAO- 02- 106 Strategic Planning for Logistics Transformation

   While the military services, the Defense Logistics Agency, and the U. S.
   Transportation Command each developed separate logistics transformation
   plans and other implementation plans to support the Department- wide
   Logistics Strategic Plan, these plans also have a number of fundamental
   weaknesses and are, therefore, not likely to result in overall
   improvements to the economy, efficiency, and effectiveness of logistics
   activities. Specifically, these plans (1) are not always consistent with
   the actions in the Defense- wide plan; (2) are not directly related to the
   Defense- wide plan or to each other; and (3) do not contain some key
   management elements needed to develop an effective management framework
   for measuring progress, such as performance measures and specific
   milestones. Table 1 identifies the six strategic objectives set forth in
   the Department- wide strategic plan, along with stated performance
   measures and a summary of our analyses regarding the weaknesses in the
   components* implementation actions.

   Table 1: Defense- wide Objectives and Performance Measures and a Summary
   of Weaknesses in the Components* Implementation Plans

   Objective/ action Performance measure Weakness in components* plans

   1. Optimize support to the warfighter.

    Military components will determine existing mission capable rates within
   the specified time frame.

   Mission capable rates The definitions and metrics regarding mission
   capable rates are not consistent. In many cases, the plans lack specific
   performance measures. 2. Improve strategic mobility to meet

   warfighter requirements.

    Increase cargo airlift capacity and sealift surge and afloat preposition
   capacity to meet current Department guidance. a

    Develop a measurement approach and appropriate targets for mobility
   infrastructure and mobility process improvements.

   Airlift, sealift, and afloat preposition capacity and mobility
   infrastructure and process improvements

   The plans do not define a consistent strategy that recognizes the
   interrelationship of the various initiatives and do not include the
   necessary metrics to measure progress.

   3. Implement customer wait time b as the Department- wide logistics
   metric.

    Refine the definition of *customer wait time,* develop appropriate
   measures, and implement them.

   Customer wait time The definitions and metrics regarding customer wait
   time are not consistent.

   4. Fully implement total asset visibility across the Department of
   Defense.

    View information on the identity and status of Defense material and
   assets.

    In some cases, complete a business transaction using that information.

   Total asset visibility The components are relying on asset visibility
   systems that have not been fully developed. Consequently, performance
   targets and measures have not been defined.

   5. Reengineer and modernize applicable logistics processes and systems.

    Develop logistics processes/ systems modernization plans by the end of
   FY 2001.

   Components* logistics system modernization plans The components*
   initiatives are

   generally not directly linked to the Department- wide Logistics Strategic
   Plan or to each other. Additionally, the plans generally lack adequate

   Page 4 GAO- 02- 106 Strategic Planning for Logistics Transformation

   Objective/ action Performance measure Weakness in components* plans

    Increase the proportion of modernized logistics business systems
   according to those plans by the end of fiscal year 2006.

   performance measures. 6. Minimize logistics costs while meeting

   warfighter requirements.

    Reduce the overall costs of logistics support for selected weapon
   systems by fiscal year 2006.

   Weapon system support cost reductions The plans do not identify which
   weapon systems the components are focusing on to reduce logistics costs
   and do not include adequate performance measures. a Current guidance is
   Mobility Requirements Study (MRS- 05). b Customer wait time is the total
   elapsed time between issuance of a customer order and satisfaction

   of that order.

   We are recommending that the Department revise the August 1999 Department-
   wide Logistics Strategic Plan to include a more detailed framework for
   organizing logistics support throughout the Department and for guiding the
   components* logistics planning and implementation efforts. We are also
   recommending that the Office of the Secretary of Defense establish a
   mechanism for ensuring that the components* implementation plans include
   key management elements for measuring progress, such as performance
   measures and detailed milestones. In its written comments on a draft of
   this report, the Department agreed with our recommendations and stated
   that it will initiate corrective actions.

   The Department of Defense understands that a comprehensive transformation
   of its logistics structures, processes, and supporting information systems
   is necessary to improve its customer services and reduce the cost of
   support. To lead this transformation, the Department established the
   Logistics Reform Senior Steering Group* comprised of senior officials from
   the Joint Staff, the military services, the Defense Logistics Agency, and
   the U. S. Transportation Command* to develop its Fiscal Year 2000
   Logistics Strategic Plan. This plan was designed during a series of
   workshops that focused the collective attention and resources that the
   Department believed were necessary for achieving its key objectives. This
   top- leadership effort concentrated on developing a common mission,
   vision, and associated performance goals. To meet the Department of
   Defense goal to have a successful logistics transformation, the Logistics
   Reform Senior Steering Group prescribed the following specific *success
   criteria.*

    Optimize cycle times* acquisition, supply, maintenance, transportation,
   and distribution. Background

   Page 5 GAO- 02- 106 Strategic Planning for Logistics Transformation

    Manage the total life- cycle through integration of acquisition and
   logistics processes.

    Meet deployment and sustainment requirements across the full spectrum of
   military operations.

    Guarantee joint total asset visibility through fully integrated, secure
   information systems, with asset visibility being the capability for users
   to view information on the identity and status of Defense material assets
   and, in some cases, complete a business transaction using that
   information.

    Meet or exceed the Department of Defense logistics metrics and
   costreduction goals.

   To address the above criteria, the Logistics Strategic Plan includes six
   broad objectives developed by the Logistics Reform Senior Steering Group
   to assist logistics managers in planning and executing the Department*s
   priority initiatives for transforming logistics. The objectives are as
   follows:

    Optimize support to the warfighter.

    Improve strategic mobility to meet warfighter requirements.

    Implement customer wait time as the Department- wide logistics metric.

    Fully implement total asset visibility across the Department of Defense.

    Reengineer and modernize applicable logistics processes and systems.

    Minimize logistics costs while meeting warfighter requirements. The
   Department*s Fiscal Year 2000 Logistics Strategic Plan directed the
   services and Defense commands to develop implementing plans that reflect
   the vision, objectives, and metrics of the Department- wide plan. The plan
   also specified that the implementing strategies and related plans are
   governed in content and format by the provisions of the Government
   Performance and Results Act of 1993 (P. L. 103- 62), commonly referred to
   as the Results Act. As such, these plans should include detailed actions,
   performance measures, completion dates, and resource requirements. To
   support the implementation of the Logistics Strategic Plan, the Deputy
   Secretary of Defense directed the military services, the Defense Logistics
   Agency, and the U. S. Transportation Command in a March 23, 2000,
   directive entitled the Department of Defense Reform Initiative #54, to
   establish logistics transformation plans for submission to the Office of
   the Secretary of Defense. This directive also provided guidance for the
   preparation of these plans, which were intended to serve as vehicles for
   aligning the military component initiatives, documenting their approach
   for achieving the objectives in the Department*s Logistics Strategic Plan,
   and obtaining resources. Appendix I provides an overview of the logistics
   reengineering initiatives that each of the components is individually
   pursuing as part of its transformation plan.

   Page 6 GAO- 02- 106 Strategic Planning for Logistics Transformation

   We reported in December 1996 4 that the Department*s 1994 version of its
   Logistics Strategic Plan contained similar weaknesses to those outlined in
   this report. Specifically, we reported that the 1994 version of the plan
   did not adequately (1) link the action plans to resource requirements, (2)
   link the services* and the Defense Logistics Agency*s plans to the
   strategic plan, or (3) identify interim approaches that could be developed
   and implemented when milestones of a priority strategy had been extended.
   Other related GAO reports and testimonies are listed on the last page of
   this report.

   While the Department- wide Logistics Strategic Plan outlines six key
   objectives and a general time frame for implementation, it is not
   sufficiently comprehensive and does not provide an adequate framework for
   guiding the military services*, the Defense Logistics Agency*s, and the U.
   S. Transportation Command*s logistics reengineering initiatives. 5
   Specifically, the plan does not address the logistics lifecycle process
   from acquisition through support and system disposal.

   In addition, the Department*s plan does not specify how the Department
   will be organized in the future to fulfill the logistics requirements that
   will be needed to support the National Military Strategy or how the
   Department will eventually attain a new logistics structure. The
   Department*s plan identifies that the logistics vision is that, by fiscal
   year 2006, the joint logistics process will be a highly efficient,
   integrated system that ensures required support to the warfighter. This
   vision, however, does not identify the logistics requirements the
   Department will have to fulfill, how it will be organized to fulfill these
   requirements, or who will be responsible for providing specific types of
   logistics support. Furthermore, while the Department will likely face
   further changes in size and structure in the near future, its strategic
   plan has not identified the logistics facilities or personnel it will need
   to support future logistics requirements and has not specified a process
   for determining what resources it will need. Without addressing all
   logistics functions, as well as these facilities and personnel
   requirements through its strategic planning process, the

   4 Logistics Planning: Opportunities for Enhancing DOD*s Logistics
   Strategic Plan (GAO/ NSIAD- 97- 28, Dec. 18, 1996).

   5 We previously reported in our Performance and Accountability Series in
   January 2001 that the Department*s plan is very general and does not
   provide a cohesive planning strategy for developing future logistics
   systems (GAO- 01- 244, Jan. 2001). The Department- wide

   Logistics Strategic Plan Does Not Provide an Adequate Overarching
   Logistics Strategy

   Page 7 GAO- 02- 106 Strategic Planning for Logistics Transformation

   Department will be unable to identify the resources (i. e., maintenance
   facilities, storage capacity, transportation assets, and depot personnel)
   it will need to support the Department*s future logistics concepts.

   In assessing the Logistics Strategic Plan, we also reviewed the
   relationship between the Department*s logistics architecture initiative
   and the strategic plan. The architecture initiative is intended to provide
   a strategic framework to synchronize logistics improvements for the years
   2010 and beyond and to define a Department- wide logistics organization.
   In a previous report 6 on the Department of Defense*s reengineering
   initiatives, we identified that in October 1999, the Department
   established the Office of the Assistant Deputy Under Secretary of Defense
   for Logistics Architecture to oversee defense logistics reengineering
   efforts. This office was given responsibility for designing a logistics
   system for business processes, physical infrastructure, and information
   technologies, as well as for defining the services* responsibilities
   within the new logistics architecture. With the assistance of a
   contractor, the Office began work on an integrated logistics architecture
   that was intended to facilitate the implementation of reengineered
   logistics support processes and procedures. To some extent, this logistics
   concept was intended to address the logistics facilities and personnel
   requirements.

   This project has progressed slowly and it is not clear how it will fit
   into the Department*s Logistics Strategic Plan. A planned report on the
   contractor study has not yet been completed. Further, according to defense
   officials, this planning effort may be refocused to incorporate the vision
   of the Department*s new leadership regarding how future logistics planning
   should proceed. The title of the office overseeing this effort has been
   changed to the Assistant Deputy Undersecretary of Defense for Logistics
   Plans and Programs and its stated mission has been expanded to cover the
   entire future logistics environment. The Office is pursuing an approved
   long- term logistics planning strategy and plans to identify specific
   operational efforts to undertake to move the Department along toward
   achieving that strategy. Nonetheless, service planning officials expressed
   concerns regarding the realism of this study effort and the extent to
   which the proposed concept would work in wartime. They also questioned how
   this effort fits in with other planning initiatives, such as the Logistics
   Strategic Plan. Therefore, it is too early for us to determine whether
   this

   6 Defense Logistics: Actions Needed to Enhance Success of Reengineering
   Initiatives

   (GAO/ NSIAD- 00- 89, June 23, 2000).

   Page 8 GAO- 02- 106 Strategic Planning for Logistics Transformation

   new concept for logistics support planning is an effective one, whether it
   will be accepted throughout the Department, and whether it will be
   feasible for future implementation.

   While each of the military services, the Defense Logistics Agency, and the
   U. S. Transportation Command prepared implementation plans 7 in the form
   of transformation plans and other documents to support the Logistics
   Strategic Plan, these plans will not likely result in overall improvements
   to the economy and efficiency of logistics activities. We found that these
   plans (1) are not always consistent with the actions in the Defense- wide
   plan, (2) are not directly related to the Defense- wide plan or to each
   other, and (3) do not contain some key management elements as outlined in
   the Results Act, 8 such as performance measures and specific milestones.
   According to officials in the Office of the Secretary of Defense, the
   components* plans were generally a summation of ongoing initiatives
   reformatted to support the Department- wide generic objectives and did not
   include any new initiatives. According to Air Force officials, one
   contributing factor to this lack of any new initiatives was that the
   approximately 3 months the components were given to prepare their
   implementation plans was insufficient given the scope of the task.

   The military services, the Defense Logistics Agency, and the U. S.
   Transportation Command have initiated implementation actions to address
   the Department*s six objectives set forth in the Department- wide
   strategic plan. Tables 2 through 7 outline the six strategic objectives
   and the stated performance measures and provide a summary of the
   weaknesses we identified in the corresponding parts of the components*
   implementation plans. A more detailed discussion of our findings related
   to each objective follows the individual tables.

   7 Unlike the other military components, the U. S. Transportation Command*s
   plan focused primarily on objective 2* improve strategic mobility to meet
   warfighter requirements* and, to a lesser extent, objective 4* fully
   implement joint total asset visibility.

   8 The Results Act provides the primary guiding principles that agencies
   should use to develop a successful management framework. Its key elements
   require each agency to (1) define its mission and goals, (2) develop
   quantifiable performance measures that will indicate how well goals are
   being achieved, and (3) include a description of required resources (i.
   e., staff operational roles, skills, schedules, and other costs).
   Additionally, the Results Act requires agencies to report actual
   performance against performance goals, the reasons certain goals were not
   met, and future actions they plan to take to meet these goals. The
   Components* Plans

   Lack Necessary Elements for Improving Logistics Management

   Implementation Plan Weaknesses

   Page 9 GAO- 02- 106 Strategic Planning for Logistics Transformation

   Table 2: Objective One* Optimize Support to the Warfighter Objective/
   action Performance measures Weakness in components* plans

   Optimize support to the warfighter.

    Military components will determine existing mission capable rates within
   the specified timeframe.

   Mission capable rates The definitions and metrics regarding mission
   capable rates are not consistent. In many cases, the plans lack specific
   performance measures.

   While we found that each component, with the exception of the U. S.
   Transportation Command, addressed this objective, mission capable rates
   are not defined and/ or measured the same among the components. For
   example, to measure mission capable rates, the Army plans to use the
   percent of equipment that is fully mission capable and the revised
   readiness report for tracking mission capable rates. These readiness
   reports are embedded in the development of the Army*s Global Combat
   Support System. However, this system has not been fielded Army- wide. The
   Air Force, on the other hand, uses historical and forecasted aggregate
   aircraft mission capable rates to measure readiness and has implemented
   four initiatives to improve logistical support to the warfighter* aircraft
   spare parts availability, informational advancements, reengineered
   logistical support concepts, and supply chain management. Many of the
   Marine Corps initiatives to support this objective are still under
   development. The Navy included a sample of 12 ongoing initiatives to
   support this objective. These initiatives, however, are not directly
   linked to defining or measuring mission capable rates. For example, the
   Navy*s OneTouch Support initiative allows a customer to use the Internet
   to access the supply system, identify the location and status of stock,
   and input requisitions. The Navy has predicted that the upgraded version
   will be an electronic single point of entry that will link Navy users via
   the Internet to over 20,000 suppliers and manufacturers.

   The military components have not fully defined specific performance
   measures that can be used to monitor the implementation of actions that
   will meet the Department*s objective. The measures are generally not
   specified or are under development. For example, the Army plans to utilize
   its revised readiness reports when available. However, these reports will
   be developed at a later date based on an ongoing Army War College study
   being conducted at the request of the Army*s Deputy Chief of Staff for
   Logistics. The Air Force states that its current best measure is logistics
   response- time days. However, the Department is transitioning from the
   logistics response- time measurement to customer wait time. The Marine
   Corps developed draft metrics during a working group session that was

   Page 10 GAO- 02- 106 Strategic Planning for Logistics Transformation

   completed in May 2000. The operational performance of the Navy*s One Touch
   Support initiative is measured by the number of *logins* by the customer
   and the number of *hits* experienced by the program.

   Table 3: Objective Two* Improve Strategic Mobility to Meet Warfighter
   Requirements Objective/ action Performance measure Weakness in components*
   plans

   Improve strategic mobility to meet warfighter requirements.

    Increase cargo airlift capacity and sealift surge and afloat preposition
   capacity to meet current Department guidance.

    Develop a measurement approach and appropriate targets for mobility
   infrastructure and mobility process improvements.

   Airlift, sealift, and afloat preposition capacity and mobility
   infrastructure and process improvements

   The plans do not define a consistent strategy that recognizes the
   interrelationship of the various initiatives and do not include the
   necessary metrics to measure progress.

   The military components have not established the necessary metrics to
   measure progress toward a successful implementation of this objective or
   defined a strategy that recognizes the interrelationship of the
   components* initiatives. With regard to the components* initiatives, the
   Army and Air Force, for example, are relying on the future outcome of the
   Mobility Requirements Study. The Department believes this study is the
   absolute key to determining its strategic mobility requirements. However,
   the expected completion date is not until fiscal year 2005. The Army is
   also relying on the future deployment of its Transportation Coordinator
   Automated Information for Movement System II. This system is intended to
   provide automation support to warfighters during deployment, sustainment,
   and redeployment operations and to provide source data to strategic
   command and control systems to increase the visibility of intransit
   personnel and items during those operations. However, the Army has
   encountered delays in the development of this system and fielding will not
   be completed until September 2007. We reported in February 2000 9 that a
   critical $22.7- million software requirement was unfunded and could
   further delay the project*s completion. The Army*s Transformation Plan
   indicates that some of these requirements are still unfunded.

   The Defense Logistics Agency states in its transformation plan that
   objective two does not apply to them. We agree with their position since

   9 Defense Inventory: Plan to Improve Management of Shipped Inventory
   Should Be Strengthened (GAO/ NSIAD- 00- 39, Feb. 22, 2000).

   Page 11 GAO- 02- 106 Strategic Planning for Logistics Transformation

   this agency*s mission does not directly involve mobility issues. While the
   U. S. Transportation Command has initiated many actions, the successful
   implementation of these actions has been hindered by inadequacies in the
   Department*s transportation systems. For example, in order for the U. S.
   Transportation Command to execute its global mission in support of a
   National Military Strategy, a healthy and robust Defense transportation
   system infrastructure, including all mobility assets and critical nodes
   (i. e. installations, depots, rail/ highway networks, air bases including
   en route bases, and seaports) is required worldwide. The continued decline
   of the U. S. flag merchant marine fleet and the maritime industry may
   affect the Command*s ability to meet peacetime and wartime Defense
   requirements. Therefore, the success of the Command*s initiatives depends
   largely on the services* actions.

   We found that in most cases the military services, the Defense Logistics
   Agency, and the U. S. Transportation Command have not identified
   performance measures to indicate a successful implementation of objective
   two. The proposed measures that were outlined simply define a goal and do
   not include baseline data or interim steps for implementing the
   initiatives necessary to meet this objective.

   Table 4: Objective Three* Implement Customer Wait Time as the Department-
   wide Logistics Metric Objective/ action Performance measure Weakness in
   components* plans

   Implement customer wait time as the Department- wide logistics metric.

    Refine the definition of *customer wait time,* develop appropriate
   measures, and implement them.

   Customer wait time The definitions and metrics regarding customer wait
   time are not consistent.

   The Department considers customer wait time, in general, to be the total
   elapsed time between issuance of a customer order and satisfaction of that
   order. However, the capability to capture and to report customer wait time
   is still under development; and the Department is relying on the
   individual components to develop a more specific definition of, and a
   process for measuring, customer wait time. Further, the Department has not
   identified how it plans to integrate the military components* efforts. The
   Logistics Strategic Plan does not define how customer wait time will be
   calculated or provide information on expected outcomes, such as to what
   extent customer wait time will be reduced. The capability to capture and
   report customer wait time is still under development. The Marine Corps,
   for example, uses retail and wholesale order ship time for all classes of
   supply. According to the Marine Corps, its order ship time measurement is

   Page 12 GAO- 02- 106 Strategic Planning for Logistics Transformation

   identical to the Department*s logistics metric of customer wait time. The
   Marine Corps believes that implementing customer wait time will not
   require significant changes in its business process or the way response
   time is measured. According to the Army, its Single Stock Fund initiative
   will provide the Army with its initial capability to collect customer wait
   time data. Initiatives included in the plans submitted by the Defense
   Logistics Agency and the U. S. Transportation Command did not relate to
   establishing customer wait time. In addition, the performance measures
   specified in the other component*s plans are primarily stated objectives
   and are too broad to measure whether a successful implementation will
   occur.

   Table 5: Objective Four* Fully Implement Total Asset Visibility Across the
   Department of Defense Objective/ action Performance measure Weakness in
   components* plans

   Fully implement total asset visibility across the Department of Defense.

    View information on the identity and status of Defense material and
   assets.

    In some cases, complete a business transaction using that information.

   Total asset visibility The components are relying on asset visibility
   systems that have not been fully developed. Consequently, performance
   targets and measures have not been defined.

   The military components are focusing on achieving 100- percent asset
   visibility by fiscal year 2006 through the use of automatic identification
   technology and automated information systems. However, some of the systems
   that the Department is relying on to achieve that 100- percent visibility
   may not be fully developed in time to support that schedule. For example,
   the Army*s Global Combat Support System is expected to substantially
   improve asset visibility for the warfighter and the logistics support
   community. This system is being developed in three tiers concurrently*
   retail, wholesale, and joint integration* but the expected completion date
   is also fiscal year 2006. The Air Force has tasked the Air Force Audit
   Agency to perform a series of reviews to determine the continued need for
   Air Force manual accounts that are targeted for total asset visibility by
   fiscal year 2004. We noted in our November 2000 report 10 that the Air
   Force plans to complete these reviews by December 2001. Air Force audit
   officials stated that the scope of this work has recently

   10 Defense Inventory: Implementation Plans to Enhance Controls Over
   Shipped Items Can Be Improved (GAO- 01- 30, Nov. 15, 2000).

   Page 13 GAO- 02- 106 Strategic Planning for Logistics Transformation

   changed and that they will likely not complete the work by December 2001.

   In many cases, the performance measures will be based on the progress made
   in achieving the components* individual initiatives to have 100percent
   visibility by fiscal year 2006. For example, the Army has outlined several
   initiatives to meet this goal; but in many cases, no stated performance
   measures were given. The Defense Logistics Agency states that its sample
   inventory accuracy for all products in each fiscal year will be greater
   than or equal to 95 percent and that the depot location accuracy for all
   products will be greater than or equal to 99 percent. The U. S.
   Transportation Command did not define a performance measure.

   Table 6: Objective Five* Reengineer and Modernize Applicable Logistics
   Processes and Systems Objective/ action Performance measure Weakness in
   components* plans

   Reengineer and modernize applicable logistics processes and systems.

    Develop logistics processes/ systems modernization plans by the end of
   FY 2001.

    Increase the proportion of modernized logistics business systems
   according to those plans by the end of fiscal year 2006.

   Components* logistics system modernization plans The components*
   initiatives are

   generally not directly linked to the Department- wide Logistics Strategic
   Plan or to each other. Additionally, the plans generally lack adequate
   performance measures.

   With the exception of the U. S. Transportation Command, we found that the
   components have ongoing initiatives to address objective five. However,
   the components* individual initiatives are generally not directly linked
   to the Department*s Logistics Strategic Plan or to each other. It appears
   that the components* initiatives will have limited, if any, interface. For
   example, the Navy*s Transformation Plan outlined 16 objectives to
   represent a sample of the initiatives that are ongoing throughout the
   Navy, but it did not indicate how these systems will interface with the
   other military components. The Air Force has established a Logistics
   Transformation Team specifically chartered to reengineer overarching Air
   Force logistics system processes and identify opportunities to increase
   performance and optimize costs. This team will also develop plans and
   schedules that will outline the approach for identifying process
   enhancements for the logistics system and describe the key activities
   required. However, the plan does not state how the different Air Force
   systems will be linked with similar systems in the rest of the Department.
   The Marine Corps has initiated a program called Integrated Logistics
   Capability to reengineer and modernize its logistics processes and system.
   The Army*s stated solution to logistics software modernization includes

   Page 14 GAO- 02- 106 Strategic Planning for Logistics Transformation

   both its Global Combat Support System, which is scheduled to be completed
   in fiscal year 2006, and its web- based logistics system. The webbased
   logistics system will transform existing serial, sequenced, batch
   processing into a real- time set of logistics management systems that will
   connect enterprises with customers, suppliers, and transportation
   providers worldwide. The Defense Logistics Agency plans to implement
   commercial business- based systems and practices.

   For objective five, we also found that the military components have not
   defined adequate performance measures. In most cases, the performance
   measures will be determined once the initiatives have matured. The Marine
   Corps states that its detailed schedule for key activities and milestones
   will identify performance measures and will be finalized by September
   2001. For the Navy*s 16 initiatives, either no firm decision has been
   reached for the performance measures; or it will be based on future
   progress in achieving completion of the Navy*s stated objectives.

   Table 7: Objective Six* Minimize Logistics Costs While Meeting Warfighter
   Requirements Objective/ action Performance measure Weakness in components*
   plans

   Minimize logistics costs while meeting warfighter requirements.

    Reduce the overall costs of logistics support for selected weapon
   systems by fiscal year 2006.

   Weapon system support cost reductions The plans do not identify which
   weapon systems the components are focusing on to reduce logistics costs
   and do not include adequate performance measures.

   Under objective six, the Department is relying on the individual
   components to reduce the overall costs of logistics support for selected
   weapon systems. With the exception of the U. S. Transportation Command,
   which did not address this objective, the components have each outlined
   initiatives to meet this objective. However, the components did not
   identify which weapon systems they are focusing on to reduce logistics
   costs. For example, the Marine Corps has established a Total Ownership
   Cost Integrated Product Team to identify its total ownership cost
   methodology and to obtain the necessary data to compute the costs and
   minimize the logistics costs. The Air Force has a cost savings
   modernization initiative to identify and highlight cost reduction
   opportunities and to ensure that the opportunities receive due
   consideration for funding. The Army initiatives are ongoing, and it plans
   to reduce the total ownership costs for its weapons.

   Page 15 GAO- 02- 106 Strategic Planning for Logistics Transformation

   In most cases, the components* performance measures were not defined or
   were under development. The goal is to reduce costs by fiscal year 2006.

   While the Department of Defense has taken a number of steps toward
   improving the economy and efficiency of its logistics support systems, its
   Logistics Strategic plan lacks a realistic and practicable overarching
   logistics framework to effectively guide the Defense components* logistics
   planning and implementation efforts. In the absence of a clearly defined,
   Department- wide logistics strategy, the Department is unable to develop a
   Defense- wide logistics structure that is both economical and efficient
   and supports the needs of the warfighter. Furthermore, because the
   Department*s plan and the components* implementation plans lack a
   comprehensive strategy that addresses the logistics life- cycle process
   from acquisition through disposal, the Department cannot evaluate and
   prioritize the initiatives on a Department- wide basis. The Department
   also faces an increased risk that the Defense components will continue to
   develop individual initiatives that may not be compatible with each other
   or may have differing objectives. Furthermore, without detailed
   performance measures and milestones, the Department will be unable to
   monitor the progress of its logistics initiatives or ensure that the
   components* individual initiatives are contributing to meeting the
   Department*s overall objectives.

   To provide the military services, the Defense Logistics Agency, and the U.
   S. Transportation Command with a framework for developing a Department-
   wide approach to logistics reengineering, we recommend that the Secretary
   of Defense direct the Under Secretary of Defense for Acquisition,
   Technology, and Logistics to revise the Department- wide Logistics
   Strategic Plan to provide for an overarching logistics strategy that will
   guide the components* logistics planning efforts. Among other things, this
   logistics strategy should

    specify a comprehensive approach that addresses the logistics life-
   cycle process from acquisition through support and system disposal,
   including the manner in which logistics is to be considered in the system
   and equipment acquisition process and how key support activities such as
   procurement, transportation, storage, maintenance and disposal will be
   accomplished; Conclusions

   Recommendations for Executive Action

   Page 16 GAO- 02- 106 Strategic Planning for Logistics Transformation

    identify the logistics requirements the Department will have to fulfill,
   how it will be organized to fulfill these requirements, and who will be
   responsible for providing specific types of logistics support; and

    identify the numbers and types of logistics facilities and personnel the
   Department will need to support future logistics requirements.

   We also recommend that the Under Secretary of Defense for Acquisition,
   Technology and Logistics establish a mechanism for monitoring the extent
   to which the components are implementing the Department*s Logistics
   Strategic Plan. Specifically, the Under Secretary of Defense for
   Acquisition, Technology, and Logistics should monitor the extent to which
   the components* implementation plans are (1) consistent with the
   Department- wide plan, (2) directly related to the Department- wide plan
   and to each other, and (3) contain appropriate key management elements,
   such as performance measures and specific milestones.

   We received written comments from the Department of Defense, which are
   reprinted in appendix III. The Department generally agreed with the report
   and our recommendations.

   The Department agreed with our recommendation that the Under Secretary of
   Defense for Acquisition, Technology, and Logistics should revise the
   Department- wide Logistics Strategic Plan to provide for an overarching
   logistics strategy that will guide the components* logistics planning
   efforts. The Department specifically stated in its comments that the
   Deputy Under Secretary of Defense (Logistics and Materiel Readiness) will
   lead the Department in developing a comprehensive Logistics Strategic Plan
   that incorporates our recommendation, the results of the recent
   Quadrennial Defense Review, and the logistics requirements of the new
   National Defense Strategy.

   The Department also agreed with our recommendation that the Under
   Secretary of Defense for Acquisition, Technology, and Logistics should
   establish a mechanism for monitoring the extent to which the components
   are implementing the Department*s Logistics Strategic Plan. Specifically,
   the Department stated in its comments that it will establish metrics to
   Agency Comments

   and Our Evaluation

   Page 17 GAO- 02- 106 Strategic Planning for Logistics Transformation

   measure performance of the components* implementation of the Logistics
   Strategic Plan, within the context of the normal program and budget review
   cycles.

   We are sending copies of this report to the appropriate congressional
   committees; the Secretary of Defense; the Secretaries of the Army, the
   Navy, and the Air Force and the Commandant of the Marine Corps; the
   Director of the Defense Logistics Agency; the Commander- in- Chief of the
   U. S. Transportation Command; and the Director of the Office of Management
   and Budget. We will also make it available at www. gao. gov and to others.

   If you or your staff have any questions regarding this report, please
   contact me at (202) 512- 8412. Key contributors to this report were Julia
   Denman, David Schmitt, Patricia Albritton, and Marjorie J. Hunt.

   David R. Warren, Director Defense Capabilities and Management

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 18 GAO- 02- 106 Strategic Planning for Logistics Transformation

   This appendix provides our analysis of the logistics transformation plans
   and other implementation plans prepared by the military services, the
   Defense Logistics Agency, and the U. S. Transportation Command as they
   relate to the Department of Defense*s Logistics Fiscal Year 2000 Strategic
   Plan. The overall objective of the Department- wide plan was to focus the
   collective attention and resources necessary for achieving the key
   objectives required to improve the Department*s logistics support to the
   warfighter. The Logistics Strategic Plan includes the following six basic
   objectives: (1) optimize support to the warfighter, (2) improve strategic
   mobility to meet warfighter requirements, (3) implement customer wait time
   as the Department- wide logistics metric, (4) fully implement total asset
   visibility across the Department of Defense, (5) reengineer and modernize
   applicable logistics processes and systems, and (6) minimize logistics
   costs while meeting warfighter requirements.

   To support the implementation of the Department*s Logistics Strategic
   Plan, the Department of Defense Reform Initiative 54, dated March 23,
   2000, requires the military services, the Defense Logistics Agency, and
   the U. S. Transportation Command to develop logistics transformation plans
   to relate the 400 different service- sponsored logistics reengineering
   initiatives to the Department- wide Logistics Strategic Plan. These plans
   serve as the primary vehicles for aligning the military component
   initiatives, obtaining resources, and documenting the approach for
   achieving the Logistics Strategic Plan goals and objectives. With the
   exception of the U. S. Transportation Command, each component prepared a
   transformation plan based on high- level guidance provided by the
   Department to address the six strategic objectives. The U. S.
   Transportation Command*s plan primarily focused on objective 2* improve
   strategic mobility to meet warfighter requirements* and, to a lesser
   extent, objective 4* fully implement joint total asset visibility. The
   Defense Logistics Agency submitted an annotated agency performance
   contract that specifically addressed its implementation plan for the
   Department*s six objectives.

   The following is both a brief overview of the logistics reengineering
   initiatives that each of the military services, the U. S. Transportation
   Command, and the Defense Logistics Agency are individually pursuing and
   our analyses of how these initiatives related to the Office of the
   Secretary of Defense*s Fiscal Year 2000 Logistics Strategic Plan. The
   components* implementation plans are embodied in their transformation
   plans and other related documents. Appendix I: Analysis of Military
   Components*

   Logistics Transformation and Implementation Plans

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 19 GAO- 02- 106 Strategic Planning for Logistics Transformation

   The Navy*s focus on High Yield Logistics began several years ago and
   includes 46 ongoing initiatives in its logistics transformation plan.
   According to Navy officials, the Navy*s vision of logistics transformation
   is captured in its High Yield Logistics Strategy. However, the Navy is
   using its logistics transformation plan as the tool to meet the challenge
   and address all aspects of logistics transformation required under the
   Department of Defense*s Reform Initiative #54. These initiatives, however,
   do not directly link with the other components* initiatives. For example,
   the Navy*s four ongoing initiatives to support how it plans to implement
   customer wait time, objective three, do not relate to the other
   components* initiatives regarding customer wait time. While the Navy was
   scheduled to begin collecting data to define customer wait time after the
   Logistics Reform Senior Steering Group met in June 2000, this initiative
   is still in process. Additionally, the Navy has implemented a *Response to
   Failure* 1 metric, which the Navy is synonymous with customer wait time.
   The Response to Failure metric has been prototyped and developed for use
   by cognizant fleet and Headquarters staff. However, the specific goals for
   Response to Failure man- hours by fiscal year are under development. The
   Navy also plans to utilize the Logistics E- Business Concept of operations
   to integrate e- business interfaces, applications and data environments.
   The Navy has not developed, however, any performance measures to monitor
   the success of implementing these initiatives.

   The Navy outlined six ongoing initiatives in its transformation plan as a
   sample of the efforts that it has underway to support fully implementing
   objective four, total asset visibility across the Department. These
   initiatives include, among others, (1) the Navy*s Total Asset Visibility
   Strategic Plan, (2) fielding the Transportation Coordinator Automated
   Information for Movement System II system throughout the Navy shore
   commands, (3) developing a serial number tracking capability for Naval
   Aviation, and (4) establishing a Military Sealift Command Total Asset
   Visibility System. However, the Navy*s success in implementing some of
   these ongoing initiatives will be governed by other military components.
   For example, the Navy plans to field the Transportation Coordinator
   Automated Information for Movement System II throughout the Navy by

   1 The Navy defines *Response to Failure* as the total time that
   maintenance personnel wait for material. The Military Services

   Navy

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 20 GAO- 02- 106 Strategic Planning for Logistics Transformation

   fiscal year 2002. However, we reported in November 20002 that the Army has
   encountered delays in developing this system and does not expect to
   complete fielding it until September 2007, which may be further delayed
   due to a reported critical $22.7- million unfunded software development
   requirement. The Army*s Transformation Plan indicates that some of these
   requirements are still unfunded. The Transportation Coordinator Automated
   Information for Movement System II system will also have a direct link to
   the Global Transportation Network that will be relying on more than 20
   Defense automated logistics systems to provide data that our prior reports
   and Department of Defense audit reports have found inaccurate.

   With regard to reengineering and modernizing applicable logistics
   processes/ systems, the Navy outlined 16 objectives to represent a sample
   of ongoing initiatives, such as Enterprise Resource Planning, Technical
   Publications Lifecycle processes, and update and revise Military Sealift
   Command Logistics Systems Procedures. However, it is not clear how these
   initiatives will correlate with the initiatives of other components.

   The Marines Corps* current logistics effort began several years ago when
   it grouped enhancements in its logistics community under the title

   *Precision Logistics.* Marine Corps officials stated that the Precision
   Logistics concept embodies its logistics evolution effort because its
   principal priorities are to improve equipment readiness, enhance
   distribution and joint warfighting capabilities, and develop a robust
   command and control capability. The Marine Corps has also developed the
   Marine Corps Logistics Campaign Plan that is considered a *living

   document* designed to evolve the Marine Corps* current and future external
   logistics requirements and opportunities. This plan is supposed to provide
   the necessary overarching framework, guidance, strategies, specific goals,
   objectives, and tasks to successfully evolve Marine Corps logistics. The
   Marine Corps also included some of its current and emerging capabilities
   in its Transformation Plan to address the objectives in the Department of
   Defense*s Plan. However, the Marine Corps did not specify in its
   Transformation Plan how it would coordinate its efforts with the other
   components. For example, to implement objective three* customer wait time*
   the Marine Corps is using retail and wholesale order ship time instead for
   all classes of supply. The Marine Corps believes, however, that

   2 GAO- 01- 30, Nov. 15, 2000.

   Marine Corps

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 21 GAO- 02- 106 Strategic Planning for Logistics Transformation

   its retail and wholesale order ship time measurement is identical to the
   Department- wide customer wait time logistics metric and will not require
   significant changes in its process or the way response time is measured.
   However, it will require new tools to capture customer wait time rather
   than order ship time data. The Navy is establishing baseline data based on
   its current performance.

   To fully implement objective four, total asset visibility, the Marine
   Corps plans to develop and field total asset visibility/ in- transit
   visibility systems along with the automatic identification technology to
   support the identification and processing of materiel within the supply
   and distribution pipeline. During 1998, the Marine corps initiated a
   program* Integrated Logistics Capability* to reengineer and modernize its
   logistics processes and systems.

   The Army plans to synchronize its logistics transformation with the
   overall Army Force transformation, which is expected to be completed by
   about 2010. The Army Force transformation is a three- phased approach to
   develop a consistent, Army- wide force structure. According to Army
   officials, while there are many Army- wide supporting plans, the plans
   most critical to the success of logistics transformation are its Strategic
   Logistics Plan and Combat Support/ Combat Service Support Transformation
   Campaign Plan. The Army*s Strategic Plan includes initiatives from all
   elements of the Army*s logistics community. In order to define customer
   wait time, the Army is relying on an ongoing effort* the Single Stock Fund
   initiative* that is intended to provide the Army with the initial
   capability to collect customer wait time data. According to the Army, the
   Global Combat Support System will be the platform for the customer wait
   time data collection and dissemination. However, this system is being
   developed in three tiers and the expected completion date for fielding
   this system is not until fiscal year 2006. To fully implement Total Asset
   Visibility, the Army plans to achieve this objective through the use of
   its automatic identification technology/ automated information systems and
   transformed business practices. The Army is also relying on the Global
   Combat Support System that is being used to define customer wait time as
   the solution to the Army*s logistics software modernization but as
   mentioned earlier, the fielding of this system is not scheduled for
   completion until fiscal year 2006.

   The Air Force integrated several of its ongoing initiatives into its
   Transformation Plan to meet the Department of Defense*s objectives. Army

   Air Force

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 22 GAO- 02- 106 Strategic Planning for Logistics Transformation

   However, it is uncertain as to how the actions the Air Force has taken
   will achieve a successful overarching framework. For example, the Air
   Force plans to measure customer wait time starting with the logistics
   pipeline documentation of a requisition by a customer to receipt of the
   asset by the customer to include retail transactions. However, it does not
   indicate how this action will link with the other components or how this
   objective will be assessed, since the metrics have not been defined. To
   implement the Joint Total Asset Visibility concept, the Air Force plans to
   rely on a series of ongoing studies being conducted by the Air Force Audit
   Agency, in response to section 349 of the National Defense Authorization
   Act for Fiscal Year 1999, to assess its policies, procedures, and business
   practices regarding controls over assets. Additionally, the Air Force has
   established a Logistics Transformation Team specifically designed to
   create an overarching logistics system process and identify opportunities
   to increase performance and optimize costs. The Air Force is relying on
   this team to develop a set of plans and schedules that will outline the
   approach for identifying logistics system process enhancements. However,
   none of the Air Force actions indicates a successful coordination with the
   other components.

   To meet the Department of Defense*s goals, the Defense Logistics Agency
   annotated its Fiscal Years 2001 through 2005 Performance Contract sorted
   by the objectives outlined in Department*s Logistics Strategic Plan.
   According to officials, the agency*s basic mission, operations, authority,
   or reporting chain was not altered in any way. However, according to these
   officials, only two of the six objectives were in line with the Defense
   Logistics Agency*s operations and easy to address. These were objective
   three* implementing customer wait time* and objective four* total asset
   visibility. Officials stated that these two objectives were easy to
   support due to the way the Defense Logistics Agency does its business.
   Additionally, the Defense Logistics Agency plans to develop a *balanced

   scorecard* approach to measure its strategic performance. According to
   officials, this approach will allow the agency to more closely align its
   performance indicators used to measure its strategic goals and objectives
   that support logistics transformation. However, the agency*s actions
   defined do not show a correlation to the Department*s overall objective.
   For example, to implement customer wait time, the Defense Logistics Agency
   states that it will consistently provide responsive, best- value supplies
   and services to its customers. Specifically, the logistics response time
   reliability for *supply* non- energy materials* will improve over the
   program period to reflect greater percentages of requisitions processed
   within shorter timeframes. To fully implement objective four, total asset
   Defense Logistics

   Agency

   Appendix I: Analysis of Military Components* Logistics Transformation and
   Implementation Plans

   Page 23 GAO- 02- 106 Strategic Planning for Logistics Transformation

   visibility, the Defense Logistics Agency plans to sample inventory
   accuracy for all products, as determined by a statistical sampling in each
   fiscal year. The sampling accuracy is expected to be greater than or equal
   to 95 percent. The agency plans to shift to commercial practices for its
   hardware, energy, and troop support items as a way to reengineer/
   modernize its applicable logistics processes/ systems.

   The U. S. Transportation Command used its 1999 Strategic Plan to implement
   the Department of Defense*s Logistics Strategic Plan and develop its
   Logistics Transformation Plan. The Command*s plan consists of two parts:
   (1) the Strategic Guidance, which identifies the Command*s mission, vision
   and long- term goals for executing each of its five core processes, and
   the Strategic Objectives, which must be accomplished to ensure the vision
   is met, and (2) the Corporate Resource Plan, which is intended to link the
   long- term goals and objectives, strategies and various resources needed
   to accomplish the goals and objectives, and an avenue to evaluate,
   establish, and revise strategic goals and objectives. The Command
   incorporated a table in its transformation plan to depict the Command*s
   strategic objectives and how they support the Department of Defense*s
   Logistics Strategic Plan objectives. Of the six objectives, the Command
   primarily focused on two* objective two* improving strategic mobility to
   meet warfighter requirements* and to a lesser extent, how it plans to
   fully implement objective four* total asset visibility. However, the
   Command has not identified in its plan how the actions it plans to
   implement will be coordinated with those of the other components. U. S.
   Transportation

   Command

   Appendix II: Scope and Methodology Page 24 GAO- 02- 106 Strategic Planning
   for Logistics Transformation

   To assess the Department of Defense*s logistics strategic planning
   process, we reviewed the Department*s August 1999 Logistics Strategic Plan
   and the various logistics transformation plans prepared by the military
   services, the Defense Logistics Agency, and the U. S. Transportation
   Command. We met with officials in the Office of the Secretary of Defense,
   each of the military services, the Defense Logistics Agency, and the U. S.
   Transportation Command to discuss these various planning documents and the
   Department*s planning approach. We also relied on our prior work regarding
   logistics planning and reengineering.

   Our review of the logistics strategic planning process focused on the
   Department*s Logistics Strategic Plan because the purpose of this plan was
   to provide an overall Defense- wide corporate direction for accomplishing
   the Department*s logistics mission. To determine whether this plan
   provides an adequate overarching logistics strategy to guide logistics
   reengineering initiatives, we analyzed the contents of the plan and the
   extent to which it contained the elements we believe are necessary for
   focusing current and future initiatives. Specifically, we assessed whether
   the plan included an appropriate definition of (1) the future role of
   logistics in supporting the operational forces; (2) how the Department
   should be organized and staffed to fulfill its logistics mission; and (3)
   the types of capabilities, facilities, and systems that will likely be
   needed to meet future logistics requirements. We also reviewed the status
   of the Department*s long- range logistics architecture initiative because
   the intent of this initiative is to identify the framework for logistics
   support for the years 2010 and beyond. Specifically, we met with officials
   in the Office of the Deputy Under Secretary of Defense for Logistics
   Architecture and of the Science Applications International Corporation to
   discuss the objectives, status, and future plans for this project. These
   officials provided us with the basic principles and long- range vision of
   the logistics architecture initiative and discussed with us the current
   status and proposed milestones for this project.

   To determine whether the components* related implementation plans are
   likely to result in overall improvements to the economy and efficiency of
   logistics activities, we reviewed the plans, comparing the objectives and
   planned actions outlined in each of the various transformation plans and
   other logistics reengineering initiatives. Our review concentrated on
   determining whether there was a direct linkage among the various plans and
   initiatives and whether the objectives and actions outlined in these
   documents represented a coordinated approach to logistics reengineering on
   a department- wide basis. Specifically, we reviewed the components*
   implementation plans to determine the extent to which these plans are (1)
   Appendix II: Scope and Methodology

   Appendix II: Scope and Methodology Page 25 GAO- 02- 106 Strategic Planning
   for Logistics Transformation

   consistent with the Defense- wide plan, (2) directly related to the
   Defensewide plan and to each other, and (3) contain appropriate key
   management elements. We also reviewed the various plans to determine
   whether they contained an appropriate management framework for
   implementation. For these analyses, we used the requirements of the
   Government Performance and Results Act, commonly referred to as the
   Results Act, as a model for the types of information the plans should
   contain. We compared the contents of the plans and the requirements of the
   Results Act. Additionally, we reviewed the plans in terms of outcome-
   oriented Results Act principles and identified areas in which they could
   be improved to achieve successful implementation. Congressional reports
   and administrative guidance regarding the Results Act indicate that
   activities such as strategic planning should be subject to the outcome-
   oriented principles of the Results Act. We did not assess the merits of
   the Department*s proposed actions or the likelihood of success for these
   actions.

   We conducted our review from January to May 2001 in accordance with
   generally accepted government auditing standards.

   Appendix III: Comments From the Department of Defense Page 26 GAO- 02- 106
   Strategic Planning for Logistics Transformation

   Appendix III: Comments From the Department of Defense

   Appendix III: Comments From the Department of Defense Page 27 GAO- 02- 106
   Strategic Planning for Logistics Transformation

   Appendix III: Comments From the Department of Defense Page 28 GAO- 02- 106
   Strategic Planning for Logistics Transformation

   Actions Needed to Overcome Capability Gaps in the Public Depot System

   (GAO- 01- 612, Oct. 2001).

   Defense Maintenance: Sustaining Readiness Support Capabilities Requires a
   Comprehensive Plan (GAO- 01- 533T, Mar. 23, 2001).

   Major Management Challenges and Program Risks: Department of Defense (GAO-
   01- 244, Jan. 2001).

   Defense Inventory: Implementation Plans to Enhance Controls Over Shipped
   Items Can Be Improved (GAO- 01- 30, Nov. 15, 2000).

   Defense Logistics: Actions Needed to Enhance Success of Reengineering
   Initiatives (GAO/ NSIAD- 00- 89, June 23, 2000).

   Defense Inventory: Plan to Improve Management of Shipped Inventory Should
   Be Strengthened (GAO/ NSIAD- 00- 39, Feb. 22, 2000).

   Defense Inventory: DOD Could Improve Total Asset Visibility Initiative
   With Results Act Framework (GAO/ NSIAD- 99- 40, Apr. 12, 1999).

   Performance and Accountability Series: Major Management Challenges and
   Program Risks * Department of Defense (GAO/ OCG- 99- 4, Jan. 1999).

   High- Risk Series: An Update (GAO/ HR- 99- 1, Jan. 1999).

   Defense Inventory Management: Problems, Progress, and Additional Actions
   Needed (GAO/ T- NSIAD- 97- 109, Mar. 20, 1997).

   High- Risk Series: Defense Inventory Management (GAO/ HR- 97- 5, Feb.

   1997).

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   Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm, E- mail:
   fraudnet@ gao. gov, or 1- 800- 424- 5454 (automated answering system).

   Jeff Nelligan, Managing Director, NelliganJ@ gao. gov (202) 512- 4800 U.
   S. General Accounting Office, 441 G. Street NW, Room 7149, Washington, D.
   C. 20548 GAO*s Mission

   Obtaining Copies of GAO Reports and Testimony

   Order by Mail or Phone Visit GAO*s Document Distribution Center

   To Report Fraud, Waste, and Abuse in Federal Programs

   Public Affairs
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