Defense Logistics: DOD Has Begun to Improve Supply Distribution  
Operations, but Further Actions Are Needed to Sustain These	 
Efforts (11-AUG-05, GAO-05-775).				 
                                                                 
Problems in the supply distribution system dating back to the	 
Persian Gulf War have impeded the ability of the Department of	 
Defense (DOD) to provide effective and timely logistics support  
to the warfighter. DOD has taken actions to improve the 	 
distribution system by assigning new organizational		 
responsibilities, including designating U.S. Transportation	 
Command as the "Distribution Process Owner" (DPO); issuing a new 
logistics transformation strategy; and undertaking specific	 
improvement initiatives. GAO's objectives were to (1) assess	 
DOD's organizational structure and transformation strategy to	 
improve the distribution system and (2) determine the status of, 
and timelines for completing, specific DOD distribution 	 
initiatives. agreed with the latter two.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-775 					        
    ACCNO:   A32740						        
  TITLE:     Defense Logistics: DOD Has Begun to Improve Supply       
Distribution Operations, but Further Actions Are Needed to	 
Sustain These Efforts						 
     DATE:   08/11/2005 
  SUBJECT:   Accountability					 
	     Air Force supplies 				 
	     Army supplies					 
	     Combat readiness					 
	     Defense capabilities				 
	     Internal controls					 
	     Logistics						 
	     Military forces					 
	     Military operations				 
	     Naval supplies					 
	     Spare parts					 
	     Strategic planning 				 
	     Transportation					 

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GAO-05-775

United States Government Accountability Office

GAO Report to the Subcommittee on Readiness, Committee on Armed Services, House
                               of Representatives

August 2005

DEFENSE LOGISTICS

DOD Has Begun to Improve Supply Distribution Operations, but Further Actions Are
                        Needed to Sustain These Efforts

GAO-05-775

[IMG]

August 2005

DEFENSE LOGISTICS

DOD Has Begun to Improve Supply Distribution Operations, but Further Actions Are
Needed to Sustain These Efforts

  What GAO Found

Although DOD has made progress in addressing supply distribution problems,
the department's ability to make coordinated, systemic improvements that
cut across the multiple organizations involved in the distribution system
is stymied because of problems in defining who has accountability and
authority for making such improvements and because the current strategy to
transform logistics does not provide a clear vision to guide and
synchronize future distribution improvement efforts. The U.S.
Transportation Command developed a draft directive to define the DPO role,
but no directive has been approved or issued almost 2 years later because
of disagreement with the Office of the Secretary of Defense (OSD)
concerning the Secretary's intent in designating the DPO. Whereas the
Command asserted that the Secretary intended for the DPO to have broad
authority to direct changes to the distribution system, OSD took the
position that the Defense Logistics Executive-the Under Secretary of
Defense (Acquisition, Technology, and Logistics)-was the accountable
entity and that the DPO was to act as an advisor. As a result of this
disagreement, accountability and authority for improving the distribution
system remain unclear. In addition, the DPO's roles and responsibilities
may overlap with those of other organizations that are involved in
deployment and distribution. In recent testimony on DOD's business
transformation efforts, GAO has stated that DOD has not routinely assigned
accountability for performance to specific organizations or individuals
who have sufficient authority to accomplish goals. Furthermore, DOD's
current strategy to transform logistics lacks elements of an effective
strategic plan, including specific performance goals, programs,
milestones, and resources needed for achieving distribution objectives.
Because of the problems in DOD's organizational structure and current
strategy, DOD faces challenges in taking a coordinated and systemic
approach to improving the distribution system. Until these issues are
resolved, DOD has little assurance that warfighters in future conflicts
will have more effective and timely logistics support.

Two of DOD's five distribution initiatives GAO reviewed have been
successful enough to warrant application to future operations, but the
future of the other three is less certain because they lack funding or
other support. Two promising initiatives that have been implemented are,
first, the establishment of a deployment and distribution operations
center in Kuwait to coordinate the arrival of supplies and, second, the
consolidation of air shipments to Iraq that do not require sorting and
repacking when they arrive in theater. The other three initiatives GAO
reviewed are facing challenges to their implementation that raise concerns
about when they will be completed. For example, the Army has not fully
funded two new communications and tracking systems to better connect
logisticians on the battlefield, and thus has placed their fielding
schedules into question. The delay increases the risk that some future
deploying units will lack a capability to effectively submit and monitor
their supply requisitions.

United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Accountability and Authority for Improving the Distribution

System Remain Unclear Two Initiatives Have Shown Promise, but the Future
of Three

Other Initiatives Is Less Certain Conclusions Recommendations for
Executive Action Agency Comments and Our Evaluation Scope and Methodology

                                       1

                                      3 5

12

17 27 28 28 30

Appendix I Comments From the Department of Defense

Appendix II GAO Contact and Staff Acknowledgments

  Table

Table 1: Distribution Problems During Operation Desert Shield/Storm and
Operation Iraqi Freedom

  Figures

Figure 1: Very Small Aperture Terminal 21 Figure 2: Mobile Tracking System
23

This is a work of the U.S. government and is not subject to copyright
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separately.

United States Government Accountability Office Washington, DC 20548

August 11, 2005

The Honorable Joel Hefley
Chairman
Subcommittee on Readiness
Committee on Armed Services
House of Representatives

The Honorable Solomon P. Ortiz
Ranking Minority Member
Subcommittee on Readiness
Committee on Armed Services
House of Representatives

Long-standing problems in the supply distribution system have impeded
the ability of the Department of Defense (DOD) to provide effective and
timely logistics support to the warfighter. These problems have included
an insufficient capability to support combat forces during the early
stages
of a conflict, limited communications, a shortage of trucks and other
transportation equipment, difficulties in distributing supplies within the
theater of operations, limited visibility of assets within the
distribution
system, and problems with managing shipping priorities. Such problems
occurred during Operation Desert Shield/Desert Storm, and DOD after
action reports, as well as studies by our office and other organizations,
have documented similar supply distribution problems during Operation
Iraqi Freedom. Most recently, in April 2005, we reported that a lack of
asset visibility was a problem in Iraq that affected supply distribution
and
the readiness of forces.1 In addition, since 1990 we have identified
supply
chain and inventory management, including distribution, as one of DOD's
high-risk areas.

DOD has recently taken actions aimed at addressing supply distribution
problems. In September 2003, the Secretary of Defense designated new
organizational responsibilities in the logistics area, including
designating
U.S. Transportation Command as the "Distribution Process Owner" (DPO)
to improve the efficiency and interoperability of the distribution system.

1 GAO, Defense Logistics: Actions Needed to Improve the Availability of
Critical Items during Current and Future Operations, GAO-05-275
(Washington, D.C.: Apr. 8, 2005).

DOD also issued a new strategy in December 2004 for its logistics
transformation efforts. Meanwhile, DOD components have undertaken a number
of specific initiatives to address supply distribution problems.

In response to your request, we reviewed the progress DOD is making toward
achieving logistics improvement efforts for supply distribution.
Specifically, we (1) assessed DOD's organizational structure and
transformation strategy to improve the distribution system and (2)
determined the status of specific DOD distribution initiatives, including
timelines for completing them.

To assess DOD's organizational structure and transformation strategy, we
analyzed U.S. Transportation Command's progress in implementing its DPO
responsibilities, including efforts to define the role of the DPO in
response to the Secretary's 2003 memorandum. We also analyzed DOD's
logistics transformation strategy to determine the extent to which it
provides a framework for guiding and synchronizing distribution
improvement efforts. To determine the status of specific DOD initiatives,
we selected five initiatives that were highlighted as major ongoing
efforts by representatives of U.S. Transportation Command and the Army in
March 2004 testimony before the House Committee on Armed Services. We
focused on these two DOD components because of the key roles they have had
in supply distribution operations in Iraq. The two U.S. Transportation
Command initiatives we reviewed were (1) establishing a deployment and
distribution operations center to coordinate the arrival of supplies in
theater and (2) improving the interoperability of information technology
systems supporting the distribution system.2 The three Army initiatives we
reviewed were (1) consolidating air cargo pallets for shipment to a single
supply support activity-called "pure packing," (2) acquiring two
communications and tracking systems to better connect logisticians on the
battlefield, and (3) creating command and control units that are trained
and equipped to rapidly receive military forces into a theater of
operations and provide initial logistics support, which the Army refers to
as a "theater opening" capability. In addition to these five initiatives,
other distribution improvement programs are continuing within the
department. Several of these programs have been included in a plan DOD has
recently developed, in coordination with the Office of Management and
Budget, to address the DOD High-Risk Area of supply

2 The term "interoperability" refers to the ability of different systems
to communicate effectively, including sharing information.

chain management.3 For the five initiatives in our review, we obtained
information on their purpose and funding, as well as their fielding
schedule where appropriate. We discussed the specific initiatives and
issues concerning supply distribution with officials from U.S.
Transportation Command, the Army, the Office of the Deputy Under Secretary
of Defense (Logistics and Materiel Readiness), and the Joint Staff. We
visited the U.S. Central Command area of operations to obtain a first-hand
view of distribution problems in the theater and how solutions were being
implemented to correct them. Because some of the initiatives have been
implemented for only a short time, we obtained limited data on the
effectiveness of initiatives that have been implemented, and we did not
independently validate these data. We determined that the data used were
sufficiently reliable for our purposes. We performed our work from July
2004 through June 2005 in accordance with generally accepted government
auditing standards. The scope and methodology section contains more
detailed information on the work we performed.

                                Results in Brief

Although DOD has made progress in addressing supply distribution problems,
the department's ability to make coordinated, systemic improvements that
cut across the multiple organizations involved in the distribution system
is stymied because of problems in defining who has accountability and
authority for making such improvements and because the current logistics
transformation strategy does not provide a clear vision to guide and
synchronize future distribution improvement efforts. When the Secretary of
Defense designated U.S. Transportation Command as DPO, he directed the
Command to develop a directive within 30 days to define the DPO role.
Although the Command developed a draft directive, it has not been approved
or issued almost 2 years later because of disagreement with the Office of
the Secretary of Defense (OSD) concerning the Secretary's intent in
designating the DPO. Whereas the Command asserted that the Secretary
intended for the DPO to have broad authority to direct changes to the
distribution system, OSD took the position that the Defense Logistics
Executive-the Under Secretary of

3 The distribution-related programs in DOD's plan include Radio Frequency
Identification, Item Unique Identification, Joint Regional Inventory
Materiel Management, War Reserve Materiel Improvements, Joint Theater
Logistics, Deployment and Distribution Operations Center, Defense
Transportation Coordination Initiative, and Business Management
Modernization Program. We plan to issue a report soon on DOD's program to
track supplies by using radio frequency identification tags. We have also
undertaken a review of the Army's shortage of armored trucks during
Operation Iraqi Freedom and will report on this issue separately.

Defense (Acquisition, Technology, and Logistics)-was the accountable
entity and that the DPO's intended role was to act as an advisor. As a
result of this disagreement, accountability and authority for improving
the distribution system remain unclear. In addition, the DPO's roles and
responsibilities may overlap with those of other organizations that are
involved in deployment and distribution. In recent testimony on DOD's
business transformation efforts, we stated that DOD has not routinely
assigned accountability for performance to specific organizations or
individuals who have sufficient authority to accomplish goals.
Furthermore, DOD's current strategy to transform logistics stymies the
department's ability to improve distribution because it does not provide
clear direction to guide and synchronize improvement initiatives based on
a common vision of a future distribution system. For example, the strategy
lacks guidance on specific performance goals, programs, milestones, and
resources needed for achieving stated objectives. DOD officials have
acknowledged the shortcomings of the current strategy and are working to
develop a more detailed roadmap to guide improvement efforts. Because of
the problems in DOD's organizational structure and current strategy, DOD
faces challenges in taking a coordinated and systemic approach to
improving the distribution system. As a result, DOD has little assurance
that warfighters in future conflicts will have more effective and timely
logistics support.

Two of the five DOD distribution initiatives we reviewed have been
successful enough to warrant application to future operations, but the
future of the other three is less certain because they lack funding or
other support. Two promising initiatives that have been implemented are,
first, the establishment in January 2004 of a deployment and distribution
operations center in Kuwait to coordinate the arrival of supplies and,
second, the use of pure packing for air shipments to Iraq, an effort the
Army began in response to a January 2004 request from U.S. Central
Command. According to DOD, both these initiatives helped improve the flow
of supplies into and around the theater of operations for Operation Iraqi
Freedom. On the basis of the success of these initiatives, U.S.
Transportation Command is working with other regional combatant commands
to establish a deployment and distribution operations center within their
organizations, and the Army is incorporating its pure packing initiative
into its regulations for Army-wide application. The other three
initiatives we reviewed are facing challenges to their implementation that
raise concerns about when they will be completed. The Army has not fully
funded two new communications and tracking systems to better connect
logisticians on the battlefield, and thus has placed their fielding
schedules into question. The delay increases the risk that some future
deploying

units will lack a capability to effectively submit and monitor their
supply requisitions. In addition, the Army is making progress toward
developing a theater opening capability, but it is uncertain whether this
capability will be deployed at the same time as combat forces in future
conflicts. Finally, U.S. Transportation Command is facing challenges in
improving the interoperability of information technology supporting the
distribution system, an effort the Command has undertaken in its role as
DPO. The Command was delayed in receiving funding to begin this initiative
and will miss a deadline for developing a transition plan to guide future
information technology investments. Moreover, the Command has not been
able to gain agreement from other DOD components on which of their
existing information technology systems should be included in this effort
to improve interoperability.

This report contains four recommendations aimed at enhancing DOD's ability
to take a coordinated and systemic approach to improving the distribution
system, including clarifying the scope of responsibilities,
accountability, and authority between the DPO and the Defense Logistics
Executive. In commenting on a draft of this report, DOD did not concur
with our recommendations that the Secretary of Defense clarify the scope
of responsibilities, accountability, and authority between the DPO and the
Defense Logistics Executive; and that he issue a directive reflecting
these clarifications. DOD concurred with our recommendations to include
improvements to the Logistics Transformation Strategy in its Focused
Logistics Roadmap, and to determine whether sufficient funding priority
has been given to the acquisition of the Very Small Aperture Terminal and
the Mobile Tracking System. The department's written comments are
reprinted in appendix I, and our evaluation of them appears in the Agency
Comments and Our Evaluation section of this report.

Background 	Distribution is part of the process and activities for
managing the supply chain that include purchasing, producing, and
delivering products and services to the warfighter during contingency
operations consistent with the National Military Strategy. According to
joint doctrine, distribution is the process of synchronizing all elements
of the logistics system to deliver the "right things" to the "right place"
at the "right time" to support the combatant commander in an area of
operations.

The distribution system has two distinct segments: strategic-national and
theater. The strategic-national segment consists of moving supplies from
points outside a theater of military operations into the theater. The
military services and the Defense Logistics Agency manage supplies and

provide for asset visibility. U.S. Transportation Command provides
transportation support, primarily strategic airlift and sealift, as well
as intransit asset visibility. The theater segment consists of
distribution that occurs within a theater of military operations. Theater
distribution is the responsibility of the geographic combatant command,
such as U.S. Central Command. The combatant commander will generally
designate one military service to act as the theater lead service to
oversee logistics support to all of the service components and to the
theater. During Operation Iraqi Freedom, U.S. Central Command designated
the Army as the theater's lead service for logistics support.

Long-standing Problems in Long-standing problems in DOD's distribution
system have continued to

DOD's Distribution System 	impede its ability to provide effective and
timely logistics support to the warfighter during recent operations. Such
problems occurred during Operation Desert Shield/Desert Storm in 1991, and
DOD after action reports, as well as studies by our office and other
organizations, have documented similar supply distribution problems during
Operation Iraqi Freedom, as shown in table 1.

Table 1: Distribution Problems During Operation Desert Shield/Storm and
Operation Iraqi Freedom

Operation Desert Shield/Storm-1991 Operation Iraqi Freedom-2003

                           Logistics Force Reception

The deployment of combat forces to the theater of operations in advance of
support units created logistical support difficulties. The military's
decisions to "push" enormous amounts of equipment to the theater and to
deploy combat units before support units in the first 3 months of the
campaign contributed to the Army's and Marine Corps' problem of limited
capability to store and retrieve equipment and supplies during the initial
stages of Operation Desert Storm. A small cadre of logisticians was
established to receive incoming equipment, supplies, and personnel;
support the combat units that were deployed; and build a logistics
infrastructure in an austere environment.

DOD's priority was for combat forces to move into the theater first. A
study suggested that distribution assets were either deleted from the
deployment plan or shifted back in the deployment timeline. As a result,
logistics personnel could not effectively support the increasing numbers
of combat troops moving into theater. A shortage of support personnel in
theater prior to and during the arrival of combat forces was reported, and
those who arrived were often untrained or not skilled in the duties they
were asked to perform. The shortage resulted in delays in the processing
(receipt, sorting, and forwarding) of supplies, and backlogs. Contractors
performing distribution functions had become overwhelmed and a joint
contractor military organization quickly evolved. As two divisions entered
the theater, the need for a Theater Distribution Center became apparent
and an area in the desert was designated as a storage and cross-dock area.

                             Limited Communications

The distance of the supply routes created communications A number of
factors limited communications between the various problems within the
logistical system because Army officials had logistics systems, including
distances being too great for supply difficulty communicating using their
equipment, which was activities to effectively transmit data by radio, a
lack of bandwidth designed for much shorter ranges. Military doctrine
called for units in the theater to satisfy all systems users, systems that
were to be equipped to operate up to 90 miles from main supply bases.
incompatible with each other, and units lacking the necessary However, the
Army supported military and logistics bases over 600 equipment or being
delayed in connecting to the supply system. miles from its main supply
bases.

Operation Desert Shield/Storm-1991

Operation Iraqi Freedom-2003

                    Shortage of Ground Transportation Assets

Although the Army was the designated theater manager for surface
transportation, it could not fulfill that role because it lacked the
transportation assets to meet its own requirements. The Army experienced
shortages of surface transportation assets such as heavy-equipment
transports, tractor trailers, and material-handling equipment, which
limited the services' ability to transport equipment and supplies. When
parts requisitions were filled, transportation problems often slowed
efforts to get parts to combat units. Many of the available trucks were
inadequate and unreliable. More than half of the heavy transportation
assets were either contracted commercial trucks or trucks provided by
other nations. Despite the deployment of 72 percent of its truck companies
in support of 25 percent of its combat divisions, the Army still relied on
host nation support trucks to meet requirements.

The lack of adequate ground transportation, especially cargo trucks,
contributed significantly to distribution problems. The 377th Theater
Support Command, responsible for logistics support in Kuwait, needed 930
light/medium and medium trucks but had only 515 trucks on hand when combat
began, creating a strain on materiel movement. Available transportation
assets could not meet the Marine Corps' and the 3rd Infantry Division's
capacity requirements. High-priority items such as food did not always
move as intended. Contractors responsible for moving meals ready-to-eat
from ports to the Theater Distribution Center at times had only 50 of the
80 trucks needed. At one time 1.4 million meals ready-to-eat were stored
at a port in theater, awaiting transport to customers.

                      In Theater Distribution Difficulties

Units experienced a shortage of critical spare parts and had to strip
parts from inoperable equipment and trade for parts with other units. Army
units, for example, experienced difficulties in obtaining spare and repair
parts for their Bradley Fighting Vehicles and Abrams tanks. Parts were
generally available in Saudi Arabia at the theater level, but their
distribution to combat units was inadequate. Mechanics and logistics
personnel in combat units had to work around the formal parts distribution
system and "scrounge" for needed parts. Documentation on containers packed
at U.S. depots did not include adequate descriptions of container
contents. Transportation and supply personnel in Southwest Asia had to
open the containers to determine their contents and destination.
Containers began stacking up in the ports because the transportation
system could not move them out of the port areas quickly. Materiel
designated for specific units often never reached them because no
procedures were established to document the arrival of incoming supplies,
and the units, in most cases, were not notified when materiel they
requisitioned arrived. The rapid redeployment of units resulted in similar
container problems, with the majority of containers being opened at U.S.
ports to identify the contents and destination.

The lack of repair parts delivery resulted in a loss of trust and
confidence in logistics systems and processes, and units were forced to
improvise. At times there were shortages of some spares or repair parts
needed by deployed forces. Personnel noted shortages of items such as
tires, tank track, helicopter spare parts, and radio batteries. As a
result, units resorted to cannibalizing vehicles or circumventing normal
supply channels to keep equipment in ready condition. Early in the
operation, inefficient packaging and palletizing of air shipments created
supply backlogs in Kuwait. These backlogs delayed the delivery of supplies
shipped by air to units in Iraq, which included armored vehicle track
shoes, body armor, and tires. Once in theater, mixed shipments had to be
manually opened, sorted, and re-palletized at theater distribution points,
causing additional delays. Some mixed shipments were not marked with all
the intended destinations so the contents of the shipments had to be
examined. By the fall of 2003, 30 percent of the pallets arriving at the
Theater Distribution Center still had to be reconfigured in some way. DOD
could potentially pay millions of dollars for late fees on leased
containers or on the replacement of DOD-owned containers due to
distribution backlogs or losses.

Operation Desert Shield/Storm-1991

Operation Iraqi Freedom-2003

                            Limited Asset Visibility

The Army did not have visibility of repair parts at the unit level and The
lack of in-transit visibility over supplies impeded distribution. could
not readily redistribute parts among units. Army officials did Because of
incomplete radio frequency identification tags on not have visibility of
on-hand stocks at the unit and division levels, incoming shipments,
logistics personnel had to spend time and they were operating in a vacuum
deciding how much of an opening and sorting the shipments, significantly
increasing item to order. Army and Marine Corps officials at seaports
processing time. According to U.S. Central Command, about generally knew
when a ship was to arrive but had only a general 1,500 Small Arms
Protective Inserts plates for body armor were idea about the type of cargo
it was carrying. Incomplete manifests, lost and 17 containers of meals
ready-to-eat were left at a supply mislabeled containers, or generic cargo
descriptions were not base in Iraq for over a week because no one at the
base knew uncommon for ships. Officials at an airport usually did not know
the they were there. Marine Corps officials became frustrated with
contents of incoming shipments until the unloading was complete, their
inability to "see" supplies moving towards them and lost and air shipments
also suffered from inaccurate manifests and trust and confidence in the
logistics system and processes. mislabeled pallets. Army officials of a
support command did not Logistics systems used to order, track, and
account for supplies have an in-transit system for tracking cargo after it
was shipped, were not well integrated and could not provide the essential
and they had to keep personnel at the ports to determine the information
to effectively manage theater distribution. contents and destination of
incoming cargo.

                       Misuse of Shipment Prioritization

In the initial phase of Desert Shield, Defense Logistics Agency DOD's lack
of an effective process for prioritizing cargo for
officials were overwhelmed with high-priority requisitions for the
delivery precluded the effective use of scarce theater
items they managed, and until they received distribution guidance
transportation assets. The Joint Movement Center, which was
from theater managers, they issued items on a first-come first-responsible
for validating and prioritizing movements in the
serve basis. DOD officials in the theater confirmed the use of the
theater, did not have the required resources, processes, and
high-priority code for most requisitions made in country. tools to perform
this function and did not attempt to manage truck

                                   movements.

Source: GAO analysis of DOD lessons learned studies and prior GAO reports.

    DOD's Changes in Organizational Responsibilities and Transformation Strategy

The Secretary of Defense, in a memorandum dated September 16, 2003,
designated the Commander, U.S. Transportation Command, as DPO and directed
the Command to (1) improve the overall efficiency and interoperability of
distribution-related activities-deployment, sustainment, and redeployment
support-during peace and war; and (2) serve as the single entity to direct
and supervise execution of the strategic distribution system. The
Secretary's memorandum also designated the Under Secretary of Defense
(Acquisition, Technology, and Logistics) as the Defense Logistics
Executive. The memorandum states that the Defense Logistics Executive
shall have the authority to make changes necessary to integrate the global
supply chain and, in coordination with the Chairman of the Joint Chiefs of
Staff, prepare any directives, instructions, and decision memos; and
suggest legislative changes. After this memorandum was issued, U.S.
Transportation Command established a DPO management structure consisting
of an Executive Board, a Distribution Transformation Task Force, a
steering group, and working groups to oversee and manage the DPO's
improvement initiatives. This management structure includes
representatives from OSD, the Joint Staff, the combatant commands, the
military services, and the Defense Logistics Agency.

In December 2004, DOD issued its Logistics Transformation Strategy. The
strategy was developed at the direction of the department's fiscal year
2006 Strategic Planning Guidance. The guidance directed the Under
Secretary of Defense (Acquisition, Technology, and Logistics) to reconcile
three logistics concepts-force-centric logistics enterprise, sense and
respond logistics, and focused logistics-into a coherent transformation
strategy. Force-centric logistics enterprise is OSD's midterm concept
(2005-2010) for enhancing support to the warfighter, and it encompasses
six initiatives.4 Sense and respond logistics is a future logistics
concept developed by the department's Office of Force Transformation that
envisions a networked logistics system that would provide joint strategic
and tactical operations with predictive, precise, and agile support.
Focused logistics is a concept for force transformation developed by the
Joint Chiefs of Staff that identifies logistics challenges and
capabilities needed to meet the challenges. In December 2003, the Joint
Requirements Oversight Council approved the Focused Logistics Joint
Functional Concept, one in a "family" of joint operating, functional, and
integrating concepts that collectively depict how transformed forces will
operate in the future.5

Recent U.S. Transportation In March 2004 testimony before the Subcommittee
on Readiness, House Command and Army Armed Services Committee, senior
officials of U.S. Transportation Initiatives to Address Command and the
Army highlighted continuing initiatives aimed at

addressing supply distribution problems.6 One initiative highlighted
bySupply Distribution U.S. Transportation Command was the establishment of
a deployment andProblems distribution operations center to assist U.S.
Central Command with

distribution. During Operation Iraqi Freedom, commanders at the senior

4 These six initiatives are (1) depot maintenance partnership, (2)
condition-based maintenance plus, (3) total life cycle systems management,
(4) end-to-end distribution, (5) executive agents, and (6) enterprise
integration.

5 As approved by the Joint Requirements Oversight Council, the Focused
Logistics Joint Functional Concept defines seven capabilities needed to
effectively project and sustain military forces: (1) joint
deployment/rapid distribution, (2) agile sustainment, (3) operational
engineering, (4) multinational logistics, (5) force health protection, (6)
information fusion, and (7) joint theater logistics management.

6 Testimony of Major General Robert Dail, Director of Operations, U.S.
Transportation Command, and Lieutenant General Claude V. Christianson,
Deputy Chief of Staff for Logistics, United States Army, before the
Subcommittee on Readiness, House Armed Services Committee on March 30,
2004. Major General Dail was subsequently promoted to lieutenant general
and assigned to the position of Deputy Commander, U.S. Transportation
Command.

levels were not able to prioritize their needs and make decisions in the
early stages of the distribution process because they did not know what
was being shipped to them. The result was an overburdened and overtasked
transportation and distribution system. The operations center was
established at Camp Arifjan, Kuwait, in January 2004 and placed under the
tactical control of the Commander, U.S. Central Command. Its mission was
to help coordinate the movement of materiel and forces into the theater of
operations by confirming the combatant commander's deployment and
distribution priorities; validating and monitoring theater air and surface
transportation requirements; providing asset visibility; setting the
conditions for the return of materiel from the theater; and synchronizing
the forces, equipment, and supplies arriving in theater with critical
theater lift and theater infrastructure limitations. The operations center
acquired a workforce of approximately 60 personnel provided by U.S.
Transportation Command and other DOD components.

A second initiative highlighted by U.S. Transportation Command was
improving the interoperability of the information technology systems
supporting distribution. In his testimony, the senior U.S. Transportation
Command official noted that there were more than 200 information
technology systems supporting distribution and that the lack of
interoperability among these systems during Operation Iraqi Freedom had
contributed to problems such as poor asset visibility. Improved
interoperability, he stated, would provide the warfighter greater
reliability and predictability for sustainment supplies. In July 2004,
OSD's Deputy Under Secretary of Defense for Logistics and Materiel
Readiness and the Joint Staff's Director for Logistics designated U.S.
Transportation Command, as DPO, to be the office with primary
responsibility for overseeing departmentwide efforts to improve
information technology support for distribution, including sustainment and
force movement. The term used to describe this role is "portfolio
management." Specifically, the Command was assigned to (1) develop a
process for managing its portfolio of information technology systems by
August 2004; (2) identify potential returns, goals, outcomes, and draft
performance requirements by the end

of 2004; and (3) develop an information technology transition plan by the
end of 2005 to guide information technology investments.7

In the March 2004 testimony, the Army official identified four focus areas
for the service's initiatives to improve logistics support, including
supply distribution. The four focus areas were connecting Army
logisticians, improving force reception, modernizing theater distribution,
and integrating the supply chain. Following are the Army initiatives we
reviewed under three of these four focus areas.8

o  	To connect logisticians, the Army stated that it would acquire two
systems: the Very Small Aperture Terminal, a compact satellite to replace
line-of-sight communications to send and monitor requisitions for supplies
from the battlefield; and the Mobile Tracking System, a satellite-based,
two-way text messaging system installed in trucks to provide position
locations and allow truck drivers to communicate with a dispatcher.
According to the Army, these systems will improve logisticians' visibility
of the status of their supply requisitions. During Operation Iraqi
Freedom, logisticians lost confidence in the supply system because their
ability to monitor requisitions was impaired by a lack of reliable
communications.

7 As directed by section 332 of the Fiscal Year 2005 National Defense
Authorization Act, DOD is changing its approach to business system
modernization. The Secretary of Defense is required under the
authorization act to develop an enterprise architecture for defense
business systems not later than September 30, 2005. Beginning October 1,
2005, business systems modernization investments over $1 million are to be
certified as being in compliance with the enterprise architecture. The
Under Secretary of Defense (Acquisition, Technology, and Logistics) is the
certifying authority for the Weapon System Lifecycle Management and
Materiel Supply and Services business mission areas, including the
portfolio of distribution systems. The Defense Business Systems Management
Committee also must approve the certification.

8 Under its fourth focus area-integrating the supply chain-the Army stated
that it would develop integrated processes and an information systems
architecture through the integration of three capabilities-the Logistics
Modernization Program, the Global Combat Service Support-Army, and Product
Life Cycle Management Plus-into its Single Army Logistics Enterprise.
While the outcome of this enterprise initiative will have an impact on
distribution, its purpose within the context of this focus area is on
incorporating certain standardized business practices such as
performance-based agreements. Therefore, we have excluded this enterprise
initiative from our review. As part of our ongoing work on DOD business
systems modernization, we have reviewed aspects of this enterprise
initiative. See GAO, DOD Business Systems Modernization: Billions Continue
to Be Invested with Inadequate Management Oversight and Accountability,
GAO-04-615 (Washington, D.C.: May 27, 2004) and DOD Business Systems
Modernization: Limited Progress in Development of Business Enterprise
Architecture and Oversight of Information Technology Investments,
GAO-04-731R (Washington, D.C.: May 17, 2004).

o  	To improve force reception, the Army stated that it would develop a
"theater opening" capability-a headquarters deployed at the same time as
combat forces to provide a single command-and-control element focused on
joint force generation and sustainment-to rapidly receive military forces
into a theater of operations and accomplish such tasks as maintaining
real-time visibility of personnel and equipment en route to the theater;
execute joint reception, staging, and onward movement operations,
including the care and feeding of the forces and force protection; and
serve as a joint theater logistics headquarters when augmented with
additional capabilities. During the onset of Operation Iraqi Freedom, the
Army did not have a logistics organization designed, trained, and equipped
to receive forces in the theater. As a result, critical force reception
capabilities were often missing, and combat units were tasked to receive
forces, provide logistics support, and move elements into assembly areas.

o  To modernize theater distribution, the Army stated that it would
require

  Accountability and Authority for Improving the Distribution System Remain
  Unclear

pure packing (also called pure palleting), which is the consolidation of
air cargo pallets for shipment to a single supply support activity,
streamlining the theater distribution process. Pure pallets contain
materiel destined solely for a single organization and do not require
sorting and repackaging at interim distribution nodes. During the early
stages of Operation Iraqi Freedom, mixed pallets had to be unpacked,
sorted, and repacked in the theater of operations before they were shipped
forward, which lengthened the delivery time.

Although the Secretary of Defense's 2003 memorandum designated new
organizational responsibilities in the logistics area, accountability and
authority for improving the distribution system remain unclear. The
Secretary's intent in designating U.S. Transportation Command as DPO has
been a point of dispute between the Command and OSD, and almost 2 years
later no directive has been issued to define the DPO's role. In addition,
the DPO's roles and responsibilities may overlap with those of other
organizations that are involved in deployment and distribution. Moreover,
DOD's current strategy to transform logistics lacks elements of an
effective strategic plan and does not provide clear direction to guide and
synchronize distribution improvement initiatives based on a common vision
of an end-to-end distribution system for future military operations. With
no single entity accountable for optimizing the distribution system's
overall efficiency and interoperability and without an effective
transformation strategy to guide and synchronize improvement efforts
toward a common vision of a future distribution system, efforts by DOD
components to improve the distribution system will likely remain
fragmented and limited in scope rather than coordinated and systemic.

    Intent of the Secretary of Defense in Designating the DPO Is in Dispute

Although U.S. Transportation Command has initiated actions to implement
its DPO responsibilities and has made progress addressing supply
distribution problems, it has been unable to reach agreement with OSD on
the intent of the Secretary of Defense's DPO designation. As a result,
accountability and authority for improving the distribution system remain
unclear. The Secretary of Defense's memorandum, in designating U.S.
Transportation Command as DPO, directed the DPO to draft a directive to
define the DPO's authority, accountability, resources, and responsibility
to improve distribution, and to submit this draft directive within 30 days
of the date of the Secretary's memo. As directed by the Secretary, U.S.
Transportation Command drafted a directive. The draft directive states
that the DPO serves as the single entity to direct and supervise execution
of the global distribution system on behalf of the Secretary of Defense.
Subject to the direction and control of the Secretary and the Defense
Logistics Executive, such directive authority includes promulgating and
disseminating directives, regulations, instructions, and decision
memorandums and taking other actions, as appropriate, to carry out DPO
responsibilities, the draft directive states.

OSD officials in the Office of the Under Secretary of Defense
(Acquisition, Technology, and Logistics) and the Office of General Counsel
reviewed the draft directive and determined that it asked for DPO
authorities that conflicted with the services' statutory authorities to
supply and support their forces, and with the regional combatant
commanders' statutory authorities to direct theater distribution within
their areas of responsibility. During an interview, a representative from
the OSD General Counsel's office stated that the draft directive would
have required statutory changes and that the Secretary of Defense's
memorandum did not clearly call for such sweeping changes.

OSD then prepared its own version of the DPO directive, placing the DPO in
an advisory role to the Defense Logistics Executive, with responsibility
for studying the distribution system and making recommendations to the
Defense Logistics Executive on how to improve the efficiency of the
system. Under OSD's revised directive, the Defense Logistics Executive
rather than the DPO would be accountable for improving the distribution
system.

U.S. Transportation Command disagreed with the OSD-revised directive,
contending that it did not implement the Secretary of Defense's
designation of the DPO as the single entity to direct and supervise the
execution of the distribution system. In a July 2004 letter to the
Principal Deputy Under Secretary of Defense (Acquisition, Technology, and

Logistics), the Commander, U.S. Transportation Command, wrote that the
OSD-revised directive (1) diluted the authority originally vested by the
Secretary of Defense in the DPO; (2) did not vest the DPO with sufficient
authority to make enduring factory-to-foxhole distribution improvements;
and (3) could inhibit services, commands, and other distribution
stakeholders in fully cooperating with the DPO's efforts to drive
necessary changes. U.S. Transportation Command and OSD continued to work
collaboratively until the end of calendar year 2004 to get the draft
directive back on track but subsequently decided not to continue pursuing
a DPO directive. OSD issued guidance defining the role of the Defense
Logistics Executive. The instruction, which does not mention the DPO,
states that the Defense Logistics Executive shall monitor distribution
process improvements to ensure consistency with the requirements of the
defense logistics and global supply chain management system.

We have previously reported that key practices for successful
transformation include leadership that sets the direction of
transformation and assigns accountability for results, and the use of
crosscutting implementation teams, which can provide the day-to-day
management needed for success.9 In recent testimonies on DOD's business
transformation, we underscored the importance of these elements and stated
that DOD has not routinely assigned accountability for performance to
specific organizations or individuals who have sufficient authority to
accomplish goals.10 In March 2005, DOD characterized the DPO as the
department's single entity to revolutionize the distribution system,
working with services and combatant commanders in synchronizing the
distribution of personnel and equipment from factory to foxhole.

9 GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers
and Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2,
2003) and Military Transformation: Clear Leadership, Accountability, and
Management Tools Are Needed to Enhance DOD's Efforts to Transform Military
Capabilities, GAO-05-70 (Washington, D.C.: Dec. 17, 2004).

10 GAO, Department of Defense: Further Actions Needed to Establish and
Implement a Framework for Successful Financial and Business Management
Transformation, GAO-04-551T (Washington, D.C.: Mar. 23, 2004), DOD'S High
Risk Areas: Successful Business Transformation Requires Sound Strategic
Planning and Sustained Leadership, GAO-05-520T (Washington, D.C.: Apr. 13,
2005), and Defense Management: Key Elements Needed to Successfully
Transform DOD Business Operations, GAO-05-629T (Washington, D.C.: Apr. 28,
2005).

    DPO Roles and Responsibilities May Overlap With Those of Other Organizations
    in the Distribution System

Joint Deployment Process Owner

Executive Agent for Supply Classes

The many designations of logistics responsibility that DOD has executed in
the past few years, coupled with existing conflicts in joint doctrine
regarding who is responsible for synchronizing theater distribution, may
have created overlaps in roles and responsibility. Specifically, the DPO's
roles and responsibilities may overlap with those of U.S. Joint Forces
Command, which has been designated as the Joint Deployment Process Owner,
and with those of the Defense Logistics Agency, which is the Executive
Agent for the supply chain management of certain classes of supply. In a
prior report, we have noted existing conflicts in joint doctrine regarding
responsibility for theater distribution.

The Secretary of Defense, in a 1998 memorandum, designated the Joint
Forces Command as the Joint Deployment Process Owner. The principal role
and focus of the Joint Deployment Process Owner is to (1) maintain overall
effectiveness while improving the joint deployment and redeployment
processes so that all supported joint force commanders and supporting DOD
components can execute them more effectively and efficiently and (2)
resolve joint deployment and redeployment process problems that span
functional and organizational boundaries. The DPO, however, was explicitly
directed by the Secretary of Defense to improve the overall efficiency and
interoperability of deployment, sustainment, and redeployment support.

In 2004, the Defense Logistics Agency became Executive Agent for bulk
petroleum, subsistence (food and water), and medical items.11 By the end
of 2005, the Defense Logistics Agency is also expected to become the
Executive Agent for clothing and individual equipment as well as for
construction materials. Executive agent is a governance structure used
within DOD to ensure collaboration and cooperation among DOD components.
The Defense Logistics Agency's role as Executive Agent includes
distribution responsibilities that may overlap with those of the DPO. For
example, as Executive Agent for bulk petroleum, the Defense Logistics
Agency is responsible for end-to-end distribution, to include establishing
equipment standards and interoperability requirements in collaboration
with the military services and the combatant commands. As Executive Agent
for subsistence, it is responsible for, among other things, distributing
subsistence products throughout the supply chain and

11 DOD Directive 5101.8, DOD Executive Agent (DoD EA) for Bulk Petroleum,
August 11, 2004; DOD Directive 5101.9, DOD Executive Agent (DoD EA) for
Medical Materiel, August 23, 2004; DOD Directive 5101.10, DOD Executive
Agent (DoD EA) for Subsistence, September 27, 2004.

                          Conflicting Theater Doctrine

delivering items to locations as mutually agreed to with the military
services and the combatant commands. As Executive Agent for medical items,
it is responsible for managing the distribution of surge and sustainment
materiel from commercial sources to the theater of operations, and
establishing in-theater operational relationships to ensure distribution
of medical items to support tactical situations.

We have previously reported that conflicting doctrine impeded the
establishment of a distribution system capable of delivering supplies to
the warfighter smoothly and on time.12 Currently, joint doctrine
institutionalizes separate management of sections of the distribution
system by placing responsibility for logistics support outside the theater
with the individual services and the U.S. Transportation Command. However,
it also requires the theater commander to synchronize all aspects of
logistics necessary to support the mission. This conflicting doctrine is
contrary to DOD's principle of centralized management for theater
distribution. An SAIC study also reports that joint doctrine does not
contain any specific or prescriptive guidance on how the combatant
commander might ensure a seamless distribution process.13 We recommended
in our April 2005 report that the Secretary of Defense revise current
joint logistics doctrine to clearly state, consistent with policy, who has
responsibility and authority for synchronizing the distribution of
supplies from the United States to deployed units during operations. While
DOD agreed with the intent of this recommendation, it did not commit to
taking any specific actions.

    Logistics Transformation Strategy Is Lacking Key Elements to Guide and
    Synchronize Improvements to the Distribution System

Although DOD's current strategy to transform logistics provides a
crosswalk of the department's various logistics concepts and initiatives
back to the approved Focused Logistics Joint Functional Concept, the
strategy does not provide clear direction to guide and synchronize efforts
to improve the distribution system across the department. For example, it
lacks information on specific performance goals, programs, milestones, and
resources to achieve focused logistics capabilities. OSD and Joint Staff
officials agreed that the document does not provide elements essential for
an effective strategic plan. U.S. Transportation Command officials also
noted that the current strategy does not address joint

12 GAO-05-275, p. 39.

13 SAIC, Objective Assessment of Logistics in Iraq, Contract No.
GS-10F-009IL, Task Order 73510 (March 2004), Chapter 6.

  Two Initiatives Have Shown Promise, but the Future of Three Other Initiatives
  Is Less Certain

logistics governance, roles and responsibilities, and accountability to
guide the DPO's efforts to improve the overall efficiency and
interoperability of the distribution system.

According to OSD officials, shortcomings in the Logistics Transformation
Strategy will be addressed in a follow-on document called the Focused
Logistics Roadmap. However, according to OSD officials, the contractor
initially assigned the task of developing the roadmap did not perform
well, and there have been difficulties in obtaining performance metrics
and budget data from DOD components on their logistics initiatives. OSD
missed its February 2005 target date for issuing the roadmap. This effort
was restarted in March 2005. OSD hired a new contractor, and the Under
Secretary of Defense (Acquisition, Technology, and Logistics) issued new
guidance to the DOD components directing them to provide data needed to
complete the analysis. OSD officials estimated they would publish the
roadmap by August 2005.

Two of DOD's five initiatives we reviewed have been successful enough to
warrant application to future operations, but the future of the other
three are less certain because they lack funding or other support. Two
promising initiatives that have been implemented are the establishment of
a deployment and distribution operations center in Kuwait and the use of
pure packing for air shipments to Iraq. According to DOD, both these
initiatives helped improve the flow of supplies into and around the
theater of operations for Operation Iraqi Freedom. On the basis of the
success of these initiatives, U.S. Transportation Command is working with
other regional combatant commands to establish a deployment and
distribution operations center within their organizations, and the Army is
incorporating its pure packing initiative into its regulations for
application Army-wide. The other three initiatives we reviewed are facing
challenges to their implementation that raise concerns about when they
will be completed. The Army has not fully funded two new communications
and tracking systems to better connect logisticians on the battlefield,
placing their fielding schedules into question. The delay increases the
risk that some future deploying units will lack a capability to
effectively submit and monitor their supply requisitions. In addition, the
Army is making progress toward developing a theater opening capability,
but it is uncertain whether this capability will be deployed at the same
time as combat forces in future conflicts. Finally, U.S. Transportation
Command is facing challenges in improving the interoperability of
information technology supporting the distribution system.

    Deployment and Distribution Operations Center

On the basis of the success of the deployment and distribution operations
center in Kuwait, U.S. Transportation Command is leading an effort to
rewrite military doctrine to establish a similar organization within each
of the regional combatant commands. According to U.S. Transportation
Command, the operations center in Kuwait succeeded at

o  	shifting use of airlift to sealift to reduce costly airlift
requirements and to free up airlift capacity;

o  	moving units from point of origin to final destination rather than
through intermediate locations with time-consuming layovers (a concept
referred to as "single ticket");

o  testing satellite tracking of containers and trucks; and

o  	improving distribution management, including the use of pure pallets
and containers, developing a container management plan, and improving the
retrograde of Army materiel.

U.S. Transportation Command reported that the deployment and distribution
operations center in Kuwait produced cost avoidance of $360 million from
January 2004 through March 2005. We did not independently verify these
cost data. According to the Command's data, about $312 million, or 87
percent, of the cost avoidance was attributed to shifting the mode of
strategic transportation from airlift to sealift in conjunction with U.S.
Central Command's shipping priorities.

According to U.S. Transportation Command officials, the effectiveness of
the operations center in Kuwait and favorable reports following subsequent
tests of the concept in Korea and the U.S. Pacific Command have prompted
other regional combatant commanders to request the same capability. The
U.S. Transportation Command is working with the U.S. Joint Forces Command
to incorporate the deployment and distribution operations center into
joint doctrine as a regional combatant command organization.14 At the time
of our review, this effort was in the early stages. As the deployment and
distribution operations center is currently envisioned, the regional
combatant command would provide a core staff from its own workforce, and
this core staff would be augmented with personnel from other military
organizations as the intensity of military operations increased. The
number of core staff has not been determined, but it could range from 10
in U.S. Southern Command to perhaps 20 in U.S. European Command and U.S.
Pacific Command, according to U.S

14 U.S. Joint Forces Command is responsible for developing joint force
doctrine.

Transportation Command officials. The regional combatant command would be
responsible for acquiring a core workforce with the right skill mix and
for providing them with the equipment and the necessary training.

                                  Pure Packing

In January 2004, U.S. Central Command requested that all air shipments
entering its area of responsibility be pure packed. The Army and Defense
Logistics Agency worked to implement pure packing at Defense Distribution
Center Depots in the United States, and in April 2004, the Army issued a
message to establish pure packing as a servicewide policy. Army officials
said they plan to amend service regulations to reflect this policy change.
The switchover to pure packing increased the time required to build
pallets at the Defense Distribution Center Depots but reduced the workload
in the theater of operations and reduced the overall delivery time to the
warfighter. According to an Army official, pure packing contributed to a
decrease in requisition wait time for most shipments from over 40 days in
October 2003 to consistently below 25 days since February 2005.15 We did
not independently verify these requisition wait time data. Requisition
wait time is the amount of time spent from when a logistician in the
battlefield orders an item from the supply system until the item is
received. According to this official, the Army set a requisition wait-time
goal of 20 days or less for all Army cargo moving by air pallet to Iraq
during Operation Iraqi Freedom sustainment operations. To meet the more
complex and labor-intensive requirements associated with pure packing and,
concurrently, to address the surge of work at its distribution centers,
the Defense Logistics Agency hired an additional 800 employees, added
shifts, redistributed workloads, and authorized increased overtime. To
absorb these costs, the Defense Logistics Agency increased its overhead
and surcharges to the Army. Neither the Defense Logistics Agency nor the
Army could provide information on the total cost of implementing pure
packing.

Acquisition of Systems to Very Small Aperture Terminal: The Army has
identified a requirement

Connect the Logistician 	for 775 Very Small Aperture Terminals. (See fig.
1.) Although the systems will be fielded primarily to active brigades,
each National Guard and Reserve brigade will receive one system and then
receive additional

15 One exception to this continual decrease was the acceleration of
hostilities from May to August 2004 that resulted in an upward increase in
requisition wait time for most shipments to almost 40 days.

systems at Army training centers prior to deployment at the same level as
the active units. Upon returning from their deployment, Guard and Reserve
units will turn in the additional systems. Fielding began in July 2004 and
will continue through fiscal year 2007. Seven units have been fully
fielded with 106 systems and four units have been partially fielded with
64 systems as of June 2005. The unit cost is $75,000, and the total
funding requirement for the 775 systems is $256.6 million through fiscal
year 2011. However, funding data provided by the Very Small Aperture
Terminal program office show that the program is underfunded by a total of
$21.4 million for fiscal years 2005 and 2006, or 24 percent of the $90.3
million in total funding requirements for these 2 years, placing the
fielding schedule in question. Program officials said the current funding
level would delay fielding the systems. They noted that the unfunded
requirements have been prioritized and included in the Army's budgeting
for its modularity efforts. According to a program official, additional
funds from fiscal year 2005 supplemental appropriations may be provided to
reduce the shortfall. In addition, according to an Army official,
logisticians are concerned about the future of the system in light of the
Army's Warfighter Information Network-Tactical (WIN-T) system currently
under development. Win-T is the Army's future high-speed, high-capacity
communications network, which will link Army units with higher levels of
command and provide video, data, imagery, and voice services. The Army is
scheduled to have initial capability on the system in 2010. The Win-T
system would duplicate many of the functions of the Very Small Aperture
Terminal and could potentially result in reduced funding for this system,
this official said.

Figure 1: Very Small Aperture Terminal

Source: Very Small Aperture Terminal Program Office.

A soldier with the 3rd Infantry Division performs maintenance on a Very
Small Aperture Terminal at the National Training Center, Fort Irwin,
California.

Mobile Tracking System: Although the Army originally identified a total
requirement for 47,000 Mobile Tracking Systems, the Army now plans to
acquire 18,629 systems to meet basic needs, which the Army refers to as a
"good enough" fielding authorization. (See fig. 2.) According to a May
2004 memorandum signed by the Army's Deputy Chief of Staff for Operations,
fielding the Mobile Tracking System at the "good enough" level can be done
with an acceptable level of risk. The memo did not define "acceptable
level of risk," but it added that to mitigate risk, the Army would develop
a capability to move the systems between vehicles rather than permanently
mounting the systems. Requirements for active and reserve forces are the
same, with priority fielding to units deploying to Iraq. The fielding
schedule calls for all active and reserve components to be fielded in 3
years. The system would be installed on one of every two military police
vehicles; one of every five trucks; all ground ambulances; all movement
control/dispatchers; and all command and control elements

of a logistics unit. The Mobile Tracking System program has fielded 7,500
systems to 14 major units as of June 2005. Each unit costs an estimated
$17,000 for the original version and $21,000 for an enhanced version that
includes the capability to read radio frequency identification tags placed
on in-transit cargo, an enhanced Global Positioning System, and a panic
button. The total funding requirement at the "good enough" level is $455.2
million through fiscal year 2011. However, funding data provided by the
program office show the program is underfunded by a total of $39 million
for fiscal years 2005 and 2005, or 35 percent of the $110.3 million in
total requirements for these 2 years, placing the fielding schedule in
question. Program officials said some authorized units would not be
receiving systems at the current funding level. According to a program
official, additional funds from fiscal year 2005 supplemental
appropriations may be provided to reduce the shortfall.

Figure 2: Mobile Tracking System

Source: Top photo: Fort Lewis, Washington; bottom photo: Comtech Mobile
Datacom Corp.

Top photo: A soldier uses the Mobile Tracking System mounted in a vehicle.
Bottom photo: Components of the Mobile Tracking System, displayed left to
right on the hood of the vehicle, include a cover for the transceiver, a
global positioning system, a printer, a transceiver, a laptop, and a
transit case.

Theater Opening Although the Army is making progress developing a theater
opening

Capability 	capability, it is uncertain whether this capability, when
fully developed, will be deployed at the same time as combat forces in
future conflicts.

During the early stages of Operation Desert Shield/Desert Storm and
Operation Iraqi Freedom, DOD's priority was to deploy combat forces prior
to logistics support, resulting in theater distribution problems. In
addition, we noted that most of the units the Army is converting to
provide this capability are in the reserve component, raising questions
about whether these units could be mobilized quickly enough to be deployed
in the early deployment stages. Army plans call for converting seven
existing transportation units that would be trained and equipped to
provide a theater opening capability, with the first units to begin
conversion in September 2006. Of these seven units, four are in the Army
Reserve, one is in the National Guard, and two are active component units.

Interoperable Information Technology

The U.S. Transportation Command has met the time frames set by OSD and the
Joint Staff for (1) developing a process to manage the group of
information technology systems supporting distribution and (2) identifying
potential returns, goals, outcomes, and draft performance requirements. In
August 2004, the Command issued its Distribution Portfolio Management
Process setting out the roles, processes, and information needed to
determine and adjust the set of distribution and force movement systems to
support the Logistics Domain.16 It also provided an estimate of the
resources-24 government personnel and fiscal year 2005 funding of $11.93
million for contractor personnel, office space, travel, and consultants-it
needed to accomplish the portfolio management taskings and timelines
established by OSD and the Joint Staff. In December 2004, U.S.
Transportation Command identified the potential returns, goals, and
outcomes for portfolio management and drafted performance requirements for
the portfolio. In March 2005, U.S. Transportation Command published an
overview of the joint distribution architecture that provided a blueprint
for future distribution information technology systems that are
interoperable and enable an end-to-end distribution capability.

16 On May 12, 2005, the Under Secretary of Defense (Acquisition,
Technology, and Logistics) realigned his offices to better support
business transformation and in doing so he consolidated the Logistics
Domain and Acquisition Domain into a single directorate- Supply Chain
Systems Transformation Directorate. The new directorate is responsible for
aligning business capabilities to DOD goals, allocating resources, and
overseeing policy in support of two newly created business mission
areas-Weapon System Lifecycle Management and Materiel Supply and Service
Management. U.S. Transportation Command officials believe that the
portfolio of distribution systems previously within the Logistics Domain
now lies within both of the two new business mission areas.

Identifying Systems to Be Included in the Distribution Portfolio

Although U.S. Transportation Command has met the milestones for these two
tasks, it has been delayed in issuing a transition plan to guide DOD's
investment strategy for these systems. The transition plan was initially
due by the end of calendar year 2005, but the Command's latest estimate
for completion is June 2006. Command officials cited delays in receiving
fiscal year 2005 funding for this effort as a reason for slipping the
delivery date for the information technology transition plan. According to
U.S. Transportation Command officials, they requested funding from OSD for
DPO activities in August 2004, but did not receive funding approval until
February 2005. In addition, the Command's ability to execute an effective
information technology transition plan by June 2006 depends on (1) gaining
agreement from DOD components on which information technology systems
should be included in the distribution portfolio, (2) obtaining from DOD
components the technical information on the systems and data bases in the
distribution portfolio, and (3) completing an end-to-end supply chain
analysis, which requires input from the Defense Logistics Agency and Joint
Forces Command.

U.S. Transportation Command has been unable to gain agreement from DOD
components that own and fund information technology systems on which
systems should be in the distribution portfolio. The Command, in
conjunction with OSD, identified approximately 500 information technology
systems DOD-wide that they believe belong in the distribution portfolio.
According to Command officials, DOD components have agreed with the
selection of about 80 of the systems thus far, and discussions are
continuing regarding other systems. Of the approximately 500 systems
identified, 128 belonged to the Defense Logistics Agency. However, Defense
Logistics Agency officials told us that that they believe only 2 of these
128 systems belong in the distribution portfolio, and that the others are
(1) not information systems, (2) not within the scope of the distribution
portfolio, or (3) being absorbed into the agency's business system
modernization efforts, also referred to as enterprise resource planning.
According to U.S. Transportation Command officials, the Defense Logistics
Agency and the services do not agree that enterprise systems belong in the
DPO's distribution portfolio, but rather that they should remain
exclusively within their respective agency or service portfolios. Command
officials noted that the enterprise systems will eventually consolidate
numerous legacy logistics systems, many of which have distribution-related
activities.

We have previously reported that DOD lacks effective management oversight,
control, and accountability over its business system investments and that
the manner in which business system funding is controlled

Obtaining Technical Data on Systems and Data Bases

Completing an End-to-End Supply Chain Analysis

hampers the development and implementation of broad-based, integrated
business system solutions to address DOD-wide problems.17 Each military
service and defense agency receives its own funding and is largely
autonomous in deciding how to spend these funds, thereby enabling multiple
system approaches to common problems. To improve management oversight, we
have recommended that Congress consider appropriating funds to operate,
maintain, and modernize DOD's business systems to domain leaders rather
than the military services and defense agencies. DOD disagreed with this
recommendation, noting that the portfolio management process, including
investment review boards, would provide appropriate control and
accountability over business system investments. While the establishment
of investment review boards is consistent with our previous
recommendations, we continue to believe that appropriating funds for DOD
business systems to the domains will significantly improve accountability
over business system investments.

If U.S. Transportation Command can reach agreement with the DOD components
on which information technology system should belong in the distribution
portfolio, it will still have to collect and analyze a substantial amount
of technical data on the individual systems and the data bases they manage
in order to complete its information technology analysis and develop its
transition plan by June 2006. According to U.S. Transportation Command
officials, if they do not have the technical information on these systems
and data bases by September 2005, it will be difficult to complete the
information technology transition plan by June 2006 and execute its
responsibilities for portfolio management.

This end-to-end supply chain analysis is aimed at identifying gaps that
need to be bridged and areas where systems need to be made interoperable.
This analysis is being performed by U.S. Transportation Command, the
Defense Logistics Agency, and Joint Forces Command, with each organization
responsible for separate components of the analysis. According to U.S.
Transportation Command's timeline, the supply chain analysis must be
completed by September 2005 to allow it time to complete its overall
analysis by February 2006 and develop its investment technology transition
plan by the new June 2006 target date. Based on information provided by
the DPO, however, it is uncertain whether the supply chain analysis will
be completed by September 2005

17 GAO-04-615.

Conclusions

due to the multiple organizations involved and issues concerning
coordination and funding of the separate analysis efforts.

A lack of clear accountability and authority for improving the
distribution system presents a significant challenge to DOD in its efforts
to correct long-standing problems that date back at least to the Persian
Gulf War. The Secretary of Defense's decision in 2003 to designate U.S.
Transportation Command as the DPO appeared to signal that the department
would take a more coordinated and systemic approach to address supply
distribution problems. Moreover, as recently as March 2005, DOD
characterized the DPO as the department's single entity to revolutionize
the distribution system, working with services and combatant commanders in
synchronizing the distribution of personnel and equipment from factory to
foxhole. However, DOD's ability to make coordinated, systemic improvements
that cut across the multiple organizations involved in distribution is
stymied because of problems in clarifying who has accountability and
authority for improving the distribution system. U.S. Transportation
Command has asserted that the DPO is the single accountable entity,
whereas OSD has taken the position that the Defense Logistics Executive is
the accountable entity and the DPO has an advisory role. The issue of
accountability is further confused by OSD guidance that is silent on the
role of the DPO and states that the role of the Defense Logistics
Executive is to "monitor" improvements in the distribution system. In
addition, the Defense Logistics Agency is responsible for distribution
functions in its role as executive agent for specified supply classes, and
Joint Forces Command is responsible for resolving deployment and
redeployment process problems in its role as the Joint Deployment Process
Owner. In both cases, these roles and responsibilities may overlap with
those of the DPO. Another underlying problem that stymies DOD's ability to
improve distribution is the lack of an effective logistics transformation
strategy to guide and synchronize improvement efforts toward a common
vision of a future distribution system. Until DOD defines which single
entity has accountability and authority for improving the distribution
system and develops an effective transformation strategy, DOD will face
challenges in taking a coordinated and systemic approach to improving
distribution and may experience continued problems in providing timely and
effective logistics support to the warfighter.

Recognizing shortfalls in the distribution process, U.S. Transportation
Command and the Army have embarked upon some promising and potential
solutions to these issues. However, the Army has not fully funded

its requirements for communications and tracking systems. The delay
increases the risk that some future deploying units will lack a capability
to effectively submit and monitor their supply requisitions.

Recommendations for To enhance DOD's ability to take a more coordinated
and systemic approach to improving the supply distribution system, we
recommend thatExecutive Action the Secretary of Defense take the following
three actions:

o  	Clarify the scope of responsibilities, accountability, and authority
between the DPO and the Defense Logistics Executive as well as the roles
and responsibilities between the DPO, the Defense Logistics Agency, and
Joint Forces Command.

o  	Issue a directive instituting these decisions and make other related
changes, as appropriate, in policy and doctrine.

o  Improve the Logistics Transformation Strategy by directing the Under

  Agency Comments
  and Our Evaluation

Secretary of Defense (Acquisition, Technology, and Logistics) to include
specific performance goals, programs, milestones, and resources to achieve
focused logistics capabilities in the Focused Logistics Roadmap.

To address the current underfunding of the Very Small Aperture Terminal
and the Mobile Tracking System, we recommend that the Secretary of Defense
direct the Secretary of the Army to determine whether sufficient funding
priority has been be given to the acquisition of these systems and, if
not, to take appropriate corrective action.

In commenting on a draft of this report, the Acting Deputy Under Secretary
of Defense (Logistics and Materiel Readiness) did not concur with the
first two recommendations and concurred with the last two recommendations.
DOD's comments are reprinted in appendix I.

DOD did not concur with our recommendations that the Secretary of Defense
clarify the scope of responsibilities, accountability, and authority
between the DPO and the Defense Logistics Executive, as well as the roles
and responsibilities between the DPO, the Defense Logistics Agency, and
Joint Forces Command; and that he issue a directive instituting these
decisions and make other related changes, as appropriate, in policy and
doctrine. DOD stated that it is confident that the responsibilities,
accountability, and authority of the DPO exercised under the Defense
Logistics Executive's guidance are clear to the DPO, the Defense Logistics
Agency in its Executive Agent roles, and Joint Forces Command in its Joint
Deployment Process Owner role. The department stated that it did

not issue the U.S. Transportation Command's proposed DPO directive because
its Office of General Counsel found that the proposed directive's
definition of the DPO's responsibilities, accountability, and authority
was inconsistent with the statutory roles and responsibilities of the
secretaries of the military departments. The department also stated that
the DPO has not been "stymied" by the lack of a directive-rather, that the
DPO, working cooperatively with the Joint Logistics Community, has made
significant progress in its DPO role.

While the department has issued directives and instructions defining
responsibilities for the Defense Logistics Executive, the Defense
Logistics Agency in its Executive Agent role, and the Joint Forces Command
as the Joint Deployment Process Owner, it has not issued a directive on
the DPO-despite the Secretary of Defense's stated interest in defining the
DPO's authority, accountability, resources, and responsibility to improve
distribution-in part because such a directive would be inconsistent with
the statutory roles and responsibilities of the secretaries of the
military departments. Although we did not evaluate the potential need for
changes in statutory roles and responsibilities with respect to the
distribution system, such changes may be appropriate once DOD has defined
organizational responsibilities, accountability, and authority needed to
enhance the department's ability to take a more coordinated and systemic
approach to improving the supply distribution system. The department
stated that it is confident that the scope of responsibilities,
accountability, and authority of the DPO are clear, yet it did not address
the specific overlaps of distribution responsibilities in its policy and
doctrine that we identified. As pointed out in this report, we have
identified supply chain management as a high-risk area, in part because of
problems in the distribution process, and we have identified the lack of a
comprehensive, integrated approach to addressing those problems. The
department has characterized the DPO as its single entity in charge of
revolutionizing the distribution system by working with the services and
combatant commanders to synchronize the distribution of personnel and
equipment from factory to foxhole. However, we believe that unless the
department (1) clarifies the scope of responsibilities, accountability,
and authority between the DPO and the Defense Logistics Executive, as well
as the roles and responsibilities between the DPO, the Defense Logistics
Agency, and Joint Forces Command; and (2) implements our prior (April
2005) recommendation to clearly state, consistent with policy, who has
responsibility and authority for synchronizing the distribution of
supplies from the United States to deployed units during operations, its
wellintended efforts may not effectively address the department's
longstanding problems in distribution.

Regarding the department's statement that the DPO has not been stymied by
the lack of a directive, we agree that progress has been made by the DPO
and other DOD entities in addressing supply distribution problems, and our
report identifies promising initiatives. We have modified our report to
clarify that DOD is stymied in its ability to make coordinated, systemic
improvements cutting across the multiple organizations involved in the
distribution system. We also note that DOD initiatives such as the
deployment and distribution operations center were developed as improvised
solutions to logistics problems reported during Operation Iraqi Freedom.
As of the time of our review, these solutions have not been instituted
into policy or doctrine. Notwithstanding the progress made to date in
addressing supply distribution problems, we continue to believe that DOD
needs to take an institutional approach in order to avoid ambiguity about
the DPO's roles and responsibilities in the future and to address the
department's long-standing supply distribution problems in a coordinated
and systemic fashion. A directive, along with appropriate changes in
policy and doctrine, can provide the organizational and policy structure
necessary for an institutional approach.

With regard to our recommendation to improve the logistics transformation
strategy to include specific performance goals, programs, milestones, and
resources to achieve focused logistics capabilities in the Focused
Logistics Roadmap, DOD concurred that improvements are necessary in DOD's
Logistics Transformation Strategy and stated that it would include these
elements in the roadmap in order to achieve the focused logistics
capabilities.

Regarding our recommendation to the Secretary of Defense to direct the
Secretary of the Army to determine whether sufficient funding priority has
been given to the acquisition of the Very Small Aperture Terminal and the
Mobile Tracking System, and if not, to take corrective action, DOD
concurred and stated that the Under Secretary of Defense (Acquisition,
Technology, and Logistics) will direct the Secretary of the Army to
determine whether sufficient funding priority has been given to the
acquisition of these systems.

Scope and 	To assess DOD's organizational structure and transformation
strategy to improve the distribution system, we obtained information on
the progress

Methodology 	made by U.S. Transportation Command in implementing its role
as the DPO. We discussed the accountability, authority, role, and other
issues pertaining to the DPO with U.S. Transportation Command officials
and reviewed a draft directive and other documents related to the DPO. We

also discussed DPO implementation with officials from the Office of the
Under Secretary of Defense (Acquisition, Technology, and Logistics), with
the Joint Staff, and with the OSD Office of General Counsel. We met with
the U.S. Joint Forces Command on its role as the Joint Deployment Process
Owner and the Defense Logistics Agency on its role as the Executive Agent
for certain classes of supply. We examined DOD's overall efforts to
institute a long-term logistics strategy by reviewing DOD's December 2004
Logistics Transformation Strategy, monitoring the impending release of the
Focused Logistics Roadmap, and interviewing officials from the Office of
the Deputy Under Secretary of Defense (Logistics and Materiel Readiness)
to obtain their perspective on problems and solutions that were taking
place agencywide. We also met with officials from the OSD Office of Force
Transformation, Army Logistics Transformation Agency, the Navy, and Air
Force, and the Marine Corps.

To identify the status of initiatives that DOD is taking to address supply
distribution issues, we focused on five initiatives that were highlighted
in testimony by representatives from the U.S. Transportation Command and
the Army before the Subcommittee on Readiness, House Armed Services
Committee, in March 2004. Although other DOD components have important
roles in the distribution system, we decided to focus on the initiatives
of these two organizations because of the key roles these organizations
have had in the supply distribution system for Operation Iraqi Freedom. We
obtained information from the U.S. Transportation Command and the Army on
the status of the five initiatives, including their purpose, funding, and
fielding schedule where appropriate. Because some of the initiatives have
been implemented for only a short time, we obtained limited data on their
effectiveness, and we did not independently validate these data. We
conducted interviews with officials from U.S. Transportation Command and
from the Army's G-4 logistics directorate, the Army Materiel Command, the
3rd Infantry Division, the Combined Arms Support Command, and program
offices responsible for the Very Small Aperture Terminal and the Mobile
Tracking System. We also obtained pertinent information on supply
distribution issues and initiatives from the Office of the Under Secretary
of Defense (Acquisition, Technology and Logistics), including the Office
of the Deputy Under Secretary of Defense (Logistics and Materiel
Readiness); the Joint Staff logistics directorate; and the Defense
Logistics Agency. We visited the U.S. Central Command area of operations
to obtain a firsthand view of distribution problems in the theater and how
solutions were being implemented to correct them. We reviewed prior GAO
reports, DOD after action reports, and studies by other organizations
concerning supply

distribution issues that occurred during Operation Iraqi Freedom and past
military operations going back to Operation Desert Shield/Desert Storm.

We are sending copies of this report to the appropriate congressional
committees, and it will be available at no charge on GAO's Web site at
http://www.gao.gov. If you or your staff have any questions on the matters
discussed in this letter, please contact me at (202) 512-8365 or
[email protected]. Contact points for our Offices of Congressional Relations
and Public Affairs may be found on the last page of this report. GAO staff
who made major contributions to this report are listed in appendix II.

William M. Solis
Director, Defense Capabilities and Management

Page 33 GAO-05-775 Supply Distribution Operations

               Page 34 GAO-05-775 Supply Distribution Operations

               Page 35 GAO-05-775 Supply Distribution Operations

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact William Solis, (202) 512-8365

Acknowledgments 	In addition to the contact named above, Thomas Gosling,
Assistant Director; David Epstein; Larry Junek; Paulina Reaves; and Cheryl
Weissman made key contributions to this report.

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