United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office National Security and International Affairs Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1997-12-08 monographic deposited born digital 32 p. GA 1.13:NSIAD-98-48 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-98-48 P0b002ee180397f98 f:ns98048 DGPO 2010-08-12 2011-03-24 GAOREPORTS-NSIAD-98-48 machine generated eng fdlp REPORT GAOREPORTS-NSIAD-98-48 NSIAD-98-48 Defense cost control Military downsizing Future budget projections Privatization Cost effectiveness analysis Defense procurement Military inventories Reductions in force Logistics Program evaluation DOD Quadrennial Defense Review DOD Prime Vendor Program Letter Report NSIAD

Pursuant to a congressional request, GAO reviewed the basis for the Defense Science Board's (DSB) estimate that the Department of Defense (DOD) could potentially save $6 billion annually by reducing its logistics infrastructure costs within the continental United States, focusing on: (1) the opportunities for logistics infrastructure savings; and (2) DOD's and GAO's analyses of the DSB's projected logistics infrastructure savings.<p/>GAO noted that: (1) GAO agrees with the DSB that DOD can reduce the costs of its logistics activities through outsourcing and other initiatives; (2) DOD has already achieved over $700 million in savings from the use of a prime vendor program and other inventory-related reduction efforts for defense medical supplies; (3) according to studies by the Center for Naval Analyses, competition for work, including competition between the public sector and the private sector--regardless of which one wins--can result in cost savings; (4) many private sector firms have successfully used outsourcing to reduce their costs of operations; (5) the DOD Program Analysis and Evaluation (PA&E) directorate's analysis shows, however, that the DSB's estimated annual savings of $6 billion is overstated by about $4 billion because of errors in estimates, overly optimistic savings assumptions, and legal and cultural impediments; (6) according to PA&E's analysis, this $4 billion includes: (a) $1 billion in overstated contract administration and oversight savings and one-time inventory savings; and (b) $3 billion in savings that would be unlikely or would be difficult to achieve within the Board's 6-year time frame, given certain legislative requirements and DOD's resistance to outsourcing all logistics functions; (7) GAO's analysis confirmed PA&E's conclusion that the Board's estimated savings were overstated; (8) GAO's analysis also raised questions about the Board's projected savings, but GAO does not know by how much or whether these questions would change the $2 billion in savings that PA&E concluded were achievable; (9) GAO questioned whether DOD would achieve a 25-percent savings from outsourcing, as the Board assumed, because the savings were based primarily on studies of public-private competitions in highly competitive private sector markets; (10) however, competitive markets may not exist in some areas; (11) notwithstanding GAO's concerns about the magnitude of savings, DOD can make significant reductions in logistics costs; (12) the Secretary of Defense recently issued a strategic plan for achieving such reductions; (13) this report is a step in the right direction; and (14) DOD now needs an implementation plan based on a realistic assessment of the savings potential of various cost-reduction alternatives and the time frames for accomplishing various activities required to identify and implement the most cost-effective solutions. https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-98-48/html/GAOREPORTS-NSIAD-98-48.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-98-48/pdf/GAOREPORTS-NSIAD-98-48.pdf GAO/NSIAD-98-48 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-98-48 Letter Report GAO/NSIAD-98-48; Outsourcing DOD Logistics: Savings Achievable But Defense Science Board's Projections Are Overstated; Defense cost control Military downsizing Future budget projections Privatization Cost effectiveness analysis Defense procurement Military inventories Reductions in force Logistics Program evaluation DOD Quadrennial Defense Review DOD Prime Vendor Program Title 10 Section 2305 Title 10 Section 2460 Title 10 Section 2461 Title 10 Section 2464 Title 10 Section 2465 Title 10 Section 2466 Title 10 Section 4532 10 U.S.C. 2305 10 U.S.C. 2460 10 U.S.C. 2461 10 U.S.C. 2464 10 U.S.C. 2465 10 U.S.C. 2466 10 U.S.C. 4532 Public Law 99-661