DOD's High-Risk Areas: High-Level Commitment and Oversight Needed for DOD Supply Chain Plan to Succeed Page: 2 of 15

SGAO
Accountabiity Integrity-Reliability
Highlights
Highlights of GAO-06-113T, testimony
before the Subcommittee on Oversight of
Government Management, the Federal
Workforce, and the District of Columbia,
Committee on Homeland Security and
Governmental Affairs, U.S. Senate
Why GAO Did This Study
Since 1990 the Department of
Defense's (DOD) supply chain
management processes have been
on GAO's list of high-risk areas
needing urgent attention and
fundamental transformation to
ensure that they function in the
most economical, efficient, and
effective manner possible.
Recently in collaboration with the
Office of Management and Budget
(OMB), DOD developed a plan to
address some of the systemic
weaknesses as a first step toward
removing supply chain
management from the list. DOD's
plan focuses on three areas for
improvement: accuracy of supply
requirements forecasts,
distribution of material, and asset
visibility.
GAO was asked to provide its
views on (1) the importance of
supply chain management in DOD,
(2) why GAO listed it as a high-risk
area, (3) GAO's assessment of
DOD's plan to improve supply
chain processes, and (4) GAO's
plans to follow up on DOD's
efforts.
This testimony contains GAO's
views on what remains to be done
to improve DOD's supply chain
management and bring about
lasting solutions. Continued efforts
to complete and implement DOD's
plan as well as continued oversight
by Congress are essential.

www.gao.gov/cgi-bin/getrpt?GAO-06-113T.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact William Solis at
202 512-8365 or solisw@gao.gov.

DOD'S HIGH-RISK AREAS
High-Level Commitment and Oversight
Needed for DOD Supply Chain Plan to
Succeed
What GAO Found
It is important for DOD to have effective supply chain management because
of (1) its impact on military readiness and operations and (2) the substantial
investment in inventory. While DOD maintains military forces with
unparalleled capabilities, timely supply support is critical to sustaining them.
For example, to support Operation Iraqi Freedom, DOD moved more than 2
million tons of cargo, but shortages of items such as vehicle track shoes and
tires hampered operations. In addition, DOD spends billions on supplies.
For example, its supply inventory levels have grown in recent years from
$62.3 billion in fiscal year 2001 to $77.4 billion in fiscal year 2004. DOD
expects to spend approximately $50 billion in fiscal year 2005 for such items
and associated operations.
In 1990, we identified DOD's inventory management processes as "high risk"
because of long-standing problems such as excess inventory levels,
inadequate controls, and cost overruns. Since then, GAO's work has shown
that the problems adversely affecting supply support to the warfighter
involved the entire supply chain. As a first step toward removing supply
chain management from GAO's high-risk list, DOD in cooperation with OMB
prepared a plan to address weaknesses in three key areas: accuracy of
supply requirements forecasts, distribution of material, and asset visibility.
DOD's plan to improve supply chain management provides a good start and
framework for addressing long-term systemic weaknesses and in focusing
the multiyear effort to improve supply support to the warfighter. However,
successful resolution of DOD's supply chain management problems will
require continued efforts to complete and successfully implement the plan.
Based on GAO's criteria for removing programs from the high-risk
designation, it is important for DOD to sustain top leadership commitment
and long-term institutional support for the plan; obtain necessary resource
commitments from the military services, the Defense Logistics Agency, and
other organizations; implement proposed improvement initiatives across the
department to address root causes; identify performance metrics and valid
data to use in monitoring the initiatives; and demonstrate progress toward
meeting performance targets.
As part of GAO's periodic reassessment of high-risk areas across the federal
government, GAO will be assessing DOD's progress in resolving supply chain
management and its other high-risk areas. GAO plans to follow up on DOD's
actions to improve supply chain management in three ways. First, GAO will
assess DOD's progress in implementing recommendations made in prior
GAO reports. Second, GAO anticipates evaluating several of DOD's supply
management activities as part of our planned engagements over the next 2
years. Third, GAO expects to work with other audit agencies,, as well as
DOD and OMB, to coordinate audit coverage of the initiatives, metrics, and
data system validity.

United States Government Accountability Office

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United States. Government Accountability Office. DOD's High-Risk Areas: High-Level Commitment and Oversight Needed for DOD Supply Chain Plan to Succeed, text, October 6, 2005; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc293883/m1/2/ocr/: accessed December 16, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.

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