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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: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 2:30 p.m. EDT: 

Tuesday, July 27, 2010: 

DOD's High-Risk Areas: 

Observations on DOD's Progress and Challenges in Strategic Planning 
for Supply Chain Management: 

Statement of Jack E. Edwards, Director: 
Defense Capabilities and Management: 

Statement of William M. Solis, Director: 
Defense Capabilities and Management: 

GAO-10-929T: 

GAO Highlights: 

Highlights of GAO-10-929T, a 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: 

The Department of Defenseís (DOD) management of its supply chain 
network is critical to supporting military forces in Iraq, 
Afghanistan, and elsewhere and also represents a substantial 
investment of resources. As a result of weaknesses in DODís management 
of supply inventories and responsiveness to warfighter requirements, 
supply chain management is on GAOís list of high-risk federal 
government programs and operations. In July 2010, DOD issued a new 
Logistics Strategic Plan that represents the departmentís current 
vision and direction for supply chain management and other logistics 
areas. 

Todayís testimony draws from GAOís prior related work and observations 
from an ongoing review of DOD supply chain management, and, as 
requested, will (1) describe DODís prior strategic planning efforts in 
the area of logistics, (2) highlight key elements in the new Logistics 
Strategic Plan, and (3) discuss opportunities for improvement in 
future iterations of this plan. In conducting its ongoing audit work, 
GAO reviewed the Logistics Strategic Plan, compared elements in the 
plan with effective strategic planning practices, and met with 
cognizant officials from DOD, the military services, and other DOD 
components as appropriate. 

What GAO Found: 

Prior to the publication of its new Logistics Strategic Plan, DOD 
issued a series of strategic planning documents for logistics over a 
period of several years. In 2008, DOD released its Logistics Roadmap 
to provide a more coherent and authoritative framework for logistics 
improvement efforts, including supply chain management. While the 
roadmap discussed numerous ongoing initiatives and programs that were 
organized around goals and joint capabilities, it fell short of 
providing a comprehensive, integrated strategy for logistics. GAO 
found, for example, that the roadmap did not identify gaps in 
logistics capabilities and that DOD had not clearly stated how the 
roadmap was integrated into DODís logistics decision-making processes. 
GAOís prior work has shown that strategic planning is the foundation 
for defining what an agency seeks to accomplish, identifying the 
strategies it will use to achieve desired results, and then 
determining how well it succeeds in reaching results-oriented goals 
and achieving objectives. DOD said that it would remedy some of the 
weaknesses GAO identified in the roadmap. 

The July 2010 Logistics Strategic Plan, which updates the roadmap, is 
DODís most recent effort to provide high-level strategic direction for 
future logistics improvement efforts, including those in the area of 
supply chain management. The plan provides unifying themes for 
improvement efforts, for example, by including a logistics mission 
statement and vision for the department, and it presents four goals 
for improvement efforts with supporting success indicators, key 
initiatives, and general performance measures. One goal focuses 
specifically on supply chain processes. The plan is aligned to and 
reiterates high-level departmentwide goals drawn from both the 2010 
Quadrennial Defense Review and the 2009 Strategic Management Plan for 
business operations. Key initiatives in the plan appear to focus on 
issues that GAO has identified as needing management attention. 

While the Logistics Strategic Plan contains some of the elements 
necessary for strategic planning, it lacks some detailed information 
that would benefit decision makers and guide DODís logistics and 
supply chain improvement efforts. The plan lacks specific and clear 
performance measurement information (such as baseline or trend data 
for past performance, measurable target-level information, or time 
frames for the achievement of goals or completion of initiatives), 
definition of key concepts, identification of problems and capability 
gaps, and discussion of resources needed to achieve goals. Further, 
linkages to other plans and some key related activities under way 
within logistics are unclear, and it is similarly unclear how the plan 
will be used within the existing governance framework for logistics. 
Without more specific information in the Logistics Strategic Plan, it 
will be difficult for DOD to demonstrate progress in addressing supply 
chain management problems and provide Congress with assurance that the 
DOD supply chain is fulfilling the departmentís goal of providing cost-
effective joint logistics support for the warfighter. 

View [hyperlink, http://www.gao.gov/products/GAO-10-929T] or key 
components. For more information, contact Jack E. Edwards at (202) 512-
8246 or edwardsj@gao.gov or William M. Solis at (202) 512-8365 or 
solisw@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss the Department of Defense's 
(DOD) progress and challenges in developing a strategic plan to 
resolve long-standing problems with supply chain management. DOD 
manages a vast and complex supply chain network--providing everything 
from spare parts and base support items to food and fuel--that is 
vital to supporting operations and maintaining readiness. As you are 
aware, supply chain management is critical to supporting military 
forces in Iraq, Afghanistan, and elsewhere, and it also represents a 
substantial investment of resources. While there are many aspects to 
supply chain management, at its essence it is the operation of a 
continuous and comprehensive logistics process, from the initial 
customer order of materials or services to the ultimate satisfaction 
of the customer's requirements. DOD's goal is to provide effective and 
efficient supply chain management and to deliver the right items to 
the right place at the right time. 

As a result of weaknesses in DOD's management of supply inventories 
and responsiveness to warfighter requirements, supply chain management 
has been on our list of high-risk federal government programs and 
operations since 1990. We initially focused on inventory management 
and later determined that concerns extended to other aspects of the 
supply chain, including requirements forecasting, asset visibility, 
and materiel distribution.[Footnote 1] For many years, DOD has 
recognized a need to improve logistics support and supply chain 
management, and has issued a series of planning documents, including 
strategies, vision statements, and roadmaps. Earlier this month, the 
Office of the Secretary of Defense (OSD) issued DOD's new Logistics 
Strategic Plan that represents the department's current vision and 
direction for supply chain management and other logistics areas. 
[Footnote 2] DOD intends to update this plan annually. 

In our statement today, we will (1) describe DOD's prior logistics- 
related strategic planning efforts, (2) highlight key elements in 
DOD's new Logistics Strategic Plan, and (3) discuss opportunities for 
improvement in future iterations of this plan. Our statement is based 
both on previous GAO work and observations from our ongoing review of 
DOD's efforts to improve supply chain management. In our ongoing 
review, which is being performed under the authority of the 
Comptroller General to conduct evaluations on his own initiative, we 
interviewed DOD and component officials to discuss the development of 
the Logistics Strategic Plan and reviewed relevant documents, such as 
current DOD-wide and service-level plans and strategies. We also 
compared elements in the plan to practices found in effective 
strategic planning that we have identified in previous work. This work 
is being performed in accordance with generally accepted government 
auditing standards.[Footnote 3] 

Background: 

Before addressing these issues in detail, we would like to review two 
primary reasons why effective and efficient supply chain management is 
important for DOD. First, supply support to the warfighter affects 
readiness and military operations. In fact, the supply chain is a 
critical link in determining outcomes on the battlefield and can 
affect the military's ability to meet national security goals. We 
previously reported on problems with supply distribution support in 
Iraq, including shortages of critical supply items and weaknesses in 
requirements forecasting, asset visibility, and distribution. DOD took 
steps to address such issues, for example, by establishing a joint 
deployment and distribution operations center to coordinate the flow 
of materiel into the theater. Second, given the high demand for goods 
and services to support ongoing U.S. military operations, the 
investment of resources in the supply chain is substantial. DOD spends 
billions of dollars to purchase, manage, store, track, and deliver 
supplies. It is particularly important that these substantial 
resources are effectively and efficiently invested in light of the 
nation's current fiscal environment. In fact, the Secretary of Defense 
has recently stated that given the nation's difficult economic 
circumstances and fiscal condition, DOD will need to reduce overhead 
costs and transfer those savings to force structure and modernization 
priorities.[Footnote 4] 

Congressional interest has likewise focused attention on areas within 
DOD's logistics portfolio that are in need of improvement. One such 
area is inventory management. The Fiscal Year 2010 National Defense 
Authorization Act requires DOD to prepare a comprehensive plan for 
improving the inventory management systems of the military departments 
and the Defense Logistics Agency (DLA), with the objective of reducing 
the acquisition and storage of secondary inventory that is excess to 
requirements. We understand that DOD is finalizing the development of 
its comprehensive plan and expects to release that plan later this 
year. 

As noted earlier, DOD supply chain management has been designated by 
GAO as a high-risk area. GAO's high-risk designation is intended to 
place special focus on programs and functions that need sustained 
management attention in order to resolve identified problems. We have 
reported that in order to successfully resolve supply chain management 
problems, DOD needs to sustain top leadership commitment and long-term 
institutional support for its strategic planning efforts for supply 
chain management, obtain necessary commitments for its initiatives 
from the military services and other DOD components, make substantial 
progress in implementing improvement initiatives and programs across 
the department, and demonstrate progress in achieving the objectives 
identified in supply chain management-related strategic planning 
documents. We have also encouraged DOD to develop an integrated, 
comprehensive plan for improving logistics. While we have previously 
noted progress DOD has made toward improving some aspects of supply 
chain management, demonstrating sustained improvement has been a 
continuing challenge due in part to a lack of outcome-oriented 
performance measures that are consistent across the department and 
that are linked to focus areas, such as requirements forecasting, 
asset visibility, and materiel distribution, and related initiatives. 
[Footnote 5] 

In addition, successful resolution of weaknesses in supply chain 
management depends on improvements in some of DOD's other high-risk 
areas. For example, modernized business systems and the related 
investments in needed information technology are essential to the 
department's effort to achieve total asset visibility, an important 
supply chain management issue. Regarding financial management, we have 
repeatedly reported that weaknesses in business management systems, 
processes, and internal controls not only adversely affect the 
reliability of reported financial data but also the management of DOD 
operations. Such weaknesses have adversely affected the ability of DOD 
to control costs, ensure basic accountability, anticipate future costs 
and claims on the budget, measure performance, maintain funds control, 
and prevent fraud. 

DOD's new Logistics Strategic Plan is intended to support other recent 
strategic planning efforts in the department, including the completion 
of the 2010 Quadrennial Defense Review and the publication of the 2009 
Strategic Management Plan.[Footnote 6] The Quadrennial Defense Review 
is a congressionally mandated report that provides a comprehensive 
examination of the national defense strategy, force structure, force 
modernization plans, infrastructure, budget plan, and other elements 
of defense programs and policies. The review is to occur every 4 
years, with a view toward determining and expressing the nation's 
defense strategy and establishing a defense program for the next 20 
years. Also in response to legislative requirements, DOD issued the 
Strategic Management Plan in 2008 and updated it in 2009. The 
Strategic Management Plan serves as DOD's strategy for improving its 
business operations, and describes the steps DOD will take to better 
integrate business with the department's strategic planning and 
decision processes in order to manage performance. 

Prior DOD Logistics Planning Efforts Identified Goals and Initiatives 
but Fell Short of Providing a Comprehensive, Integrated Strategy: 

Sound Strategic Planning Is Critical to an Agency's Results-Oriented 
Management: 

A key starting point in developing and implementing an effective 
results-oriented management framework is an agency's strategic 
planning effort. Our prior work has shown that strategic planning is 
the foundation for defining what the agency seeks to accomplish, 
identifying the strategies it will use to achieve desired results, and 
then determining how well it succeeds in reaching results-oriented 
goals and achieving objectives. Developing a strategic plan can help 
clarify organizational priorities and unify the agency's staff in the 
pursuit of shared goals. If done well, strategic planning is 
continuous, provides the foundation for the most important things the 
organization does each day, and fosters informed communication between 
the organization and its stakeholders. Combined with effective 
leadership, strategic planning provides decision makers with a 
framework to guide program efforts and the means to determine if these 
efforts are achieving the desired results. 

The Government Performance and Results Act (GPRA) and associated 
guidance from the Office of Management and Budget (OMB)[Footnote 7] 
require, among other things, that government agencies periodically 
develop agencywide strategic plans that contain certain necessary 
elements to be used by the agency and external stakeholders in 
decision making. Furthermore, recent OMB guidance concerning GPRA-
related strategic plans stated that such a strategic plan should also 
provide sufficient context to explain why specific goals and 
strategies were chosen.[Footnote 8] The strategic planning 
requirements of GPRA and its implementation guidance generally only 
apply to agencywide strategic plans.[Footnote 9] 

While GPRA does not apply to DOD's Logistics Strategic Plan, our prior 
work has identified many of GPRA's requirements as the foundation for 
effective strategic planning. Our prior work has shown that 
organizations conducting strategic planning need to develop a 
comprehensive, results-oriented management framework to provide an 
approach whereby program effectiveness is measured in terms of 
outcomes or impact, rather than outputs, such as activities or 
processes. Such a framework includes critical elements such as a 
comprehensive mission statement, long-term goals, strategies to 
achieve the goals, use of measures to gauge progress, identification 
of key external factors that could affect the achievement of goals, a 
description of how program evaluations will be used, and stakeholder 
involvement in developing the plan. DOD internally has recognized the 
importance of these critical elements. For example, the Office of the 
Assistant Secretary of Defense for Logistics and Materiel Readiness 
directed each of the services to conduct strategic planning for depot 
maintenance and to submit plans that focus on achieving DOD's 
strategy. The services were directed to include in their depot 
maintenance plans many of the same strategic planning elements just 
mentioned.[Footnote 10] In addition, we have reported that a strategic 
planning process should align lower-level goals and measures with 
departmentwide goals and measures, assign accountability for achieving 
results, be able to demonstrate results and provide a comprehensive 
view of performance, and link resource needs to performance. Further, 
such a strategic planning process and the resulting plan should set 
strategic direction, prioritize initiatives and resources, establish 
investment priorities and guide key resource decisions, and monitor 
progress through the establishment of performance goals and measures. 
Finally, we found in previous work that DOD's prior strategic planning 
efforts for logistics lacked information necessary to be more useful 
tools for senior leaders, such as the inclusion of identified 
logistics problems, performance measures, and a method for integrating 
plans into existing decision-making processes. 

DOD Has Issued Prior Strategic Plans on Logistics and Supply Chain 
Management: 

Over a number of years prior to the publication of its Logistics 
Strategic Plan, DOD issued a series of strategic planning documents 
for logistics and the management of its supply chain. These plans have 
differed in scope and focus, although they have typically included a 
number of high-level goals and related initiatives. For example, for a 
period of several years beginning in the mid-1990s, DOD issued a 
series of strategic plans for logistics. Later, the 2004 DOD Logistics 
Transformation Strategy attempted to reconcile several of DOD's 
ongoing logistics approaches, namely focused logistics, force-centric 
logistics enterprise, and sense and respond logistics.[Footnote 11] In 
2005, DOD issued the first iteration of its Supply Chain Management 
Improvement Plan to address some of the systemic weaknesses that were 
highlighted in our reports. That same year, DOD produced its Focused 
Logistics Roadmap, which catalogued current ("as is") efforts and 
initiatives. 

Building on the "as is" Focused Logistics Roadmap, DOD recognized the 
need for a comprehensive, integrated strategy for transforming 
logistics and released its Logistics Roadmap in July 2008 to provide a 
more coherent and authoritative framework for logistics improvement 
efforts, including supply chain management.[Footnote 12] DOD indicated 
that the roadmap would be a "living" document and that future updates 
would incorporate new initiatives and programs, report progress toward 
achieving logistics capability performance targets, and help connect 
capability performance targets to current and planned logistics 
investment for an overarching view of DOD's progress toward 
transforming logistics. 

The roadmap documented numerous initiatives and programs that were 
then under way and organized these around goals, joint capabilities, 
and objectives. However, we found that the roadmap was missing 
information that would make it more useful for DOD's senior leaders. 
[Footnote 13] First, it did not identify the scope of DOD's logistics 
problems or gaps in logistics capabilities. Second, it lacked outcome-
based performance measures that would enable DOD to assess and track 
progress toward meeting stated goals and objectives. Third, DOD had 
not clearly stated how it intended to integrate the roadmap into DOD's 
logistics decision-making processes or who within the department was 
responsible for this integration. A comprehensive, integrated strategy 
that includes these three elements is critical, in part, because of 
the diffuse organization of DOD logistics, which is spread across 
multiple DOD components with separate funding and management of 
logistics resources and systems. Moreover, we stated that without 
these elements, the roadmap would likely be of limited use to senior 
DOD decision makers as they sought to improve supply chain management 
and that DOD would have difficulty fully tracking progress toward 
meeting its goals. 

To address these weaknesses, we recommended that DOD include in future 
updates of its Logistics Roadmap the elements necessary to have a 
comprehensive, integrated strategy for improving logistics and to 
clearly state how this strategy would be used within existing decision-
making processes. Specifically we recommended that DOD: 

* identify the scope of logistics problems and capability gaps to be 
addressed through the roadmap and associated efforts; 

* develop, implement, and monitor outcome-focused performance measures 
to assess progress toward achieving the roadmap's objectives and 
goals; and: 

* document specifically how the roadmap will be used within the 
department's decision-making processes used to govern and fund 
logistics and who will be responsible for its implementation. 

DOD officials concurred with our recommendations and stated that they 
planned to remedy some of these weaknesses in their follow-on efforts 
to the roadmap. DOD officials subsequently stated that they had begun 
a series of assessments of the objectives included in the roadmap in 
order to identify capability gaps, shortfalls, and redundancies and to 
recommend solutions. As part of this assessment process, DOD officials 
stated that supply, maintenance, deployment, and distribution managers 
had been tasked with determining which specific outcome-oriented 
performance metrics could be linked to each of the objectives and 
goals within the roadmap in order to assess progress toward achieving 
desired results. DOD officials said that the results of these 
assessments would be included in the next version of the roadmap, 
which was scheduled for release in 2009. DOD further stated that a 
joint Executive Advisory Committee made up of senior leaders 
responsible for implementing logistics programs and initiatives had 
been established to guide the roadmap process to ensure that it is a 
useful tool in decision making. 

DOD's 2010 Logistics Strategic Plan Provides High-Level Strategic 
Direction: 

The 2010 Logistics Strategic Plan is DOD's most recent effort to 
provide high-level strategic direction for future logistics 
improvement efforts, including those in the area of supply chain 
management. According to DOD officials, the plan serves as an update 
to the 2008 Logistics Roadmap. They further explained that the plan is 
an effort to identify the enduring and ongoing logistics efforts 
within the department and provide a good balance between the need for 
specificity and generality, without the level of detail included in 
the prior roadmap and with a broader scope than that provided in the 
Supply Chain Management Improvement Plan. 

The Logistics Strategic Plan articulates the department's logistics 
mission and vision.[Footnote 14] The plan further states that to 
continue improving logistics support to the warfighter, it is 
essential that all elements of DOD's logistics community take steps to 
better integrate logistics with strategic planning and decision 
processes and to manage logistics performance. To drive the 
department's logistics enterprise toward that end, the plan includes 
goals, key initiatives, and some information on how DOD plans to track 
progress, including general performance measures. Through the 
inclusion of these elements, the plan provides unifying themes for 
improvement efforts. 

The Logistics Strategic Plan reiterates high-level department goals 
drawn from both the Quadrennial Defense Review and the Strategic 
Management Plan. For example, the Logistics Strategic Plan 
incorporates two of the Strategic Management Plan's business 
priorities: support contingency business operations to enhance support 
to the deployed warfighter and reform the department's acquisition and 
support processes. In addition, the Logistics Strategic Plan contains 
four logistics goals: 

Goal 1: Provide logistics support in accordance with warfighter 
requirements. 

Goal 2: Institutionalize operational contract support. 

Goal 3: Ensure supportability, maintainability, and costs are 
considered throughout the acquisition cycle. 

Goal 4: Improve supply chain processes, synchronizing from end-to-end 
and adopting challenging but achievable standards for each element of 
the supply chain. 

The plan lists 30 key initiatives related to the four logistics goals. 
According to a senior DOD official, the initiatives were selected 
based on the determination of officials within the Office of Assistant 
Secretary of Defense for Logistics and Materiel Readiness and were 
subsequently provided to the military services for review. In our 
review of the plan, we noted that key initiatives appear to focus on 
issues that we have identified as needing management attention. For 
example, our prior work on warfighter and logistics support in Iraq 
and Afghanistan has identified issues that directly relate to 
initiatives that support Goal 1--provide logistics support in 
accordance with warfighter requirements. We recently testified that 
DOD has taken steps to improve distribution of materiel to deployed 
forces in Afghanistan; however, we found several challenges that 
included difficulties with transporting cargo through neighboring 
countries and around Afghanistan, limited airfield infrastructure, and 
lack of full visibility over cargo movements.[Footnote 15] The 
Logistics Strategic Plan contains an initiative to facilitate 
logistics support for Afghanistan, including interagency coordination 
and development of transportation and distribution alternatives, as 
needed. In addition, our work has also raised concerns about the lack 
of risk assessments conducted for DOD's Civil Reserve Air Fleet 
program, and DOD's management of the program has not provided air 
carrier participants with a clear understanding of some critical areas 
of the program. DOD's Logistics Strategic Plan includes a related 
initiative.[Footnote 16] 

With regard to Goal 2--institutionalize operational contract support-- 
we have issued reports over a period of many years on progress and 
problems with contract support during contingency operations. We 
testified in March 2010 that DOD had taken steps to institutionalize 
operational contract support by appointing a focal point to lead 
efforts, issuing guidance, and beginning to determine its reliance on 
contractors; but we also identified ongoing challenges associated with 
contractor support. These challenges include inadequate oversight and 
management of contractors, providing training on how to work 
effectively with contractors during operations, ensuring proper 
screening of local and third-country nationals, compiling reliable 
data on the number of contractors supporting U.S. forces in 
contingencies, and identifying contractor requirements.[Footnote 17] 

Our prior work related to Goal 3--ensure supportability, 
maintainability, and costs are considered throughout the acquisition 
cycle--includes reviews of weapon system life cycle management, depot 
maintenance, and sustainment costs. For example, while we have noted 
that DOD has placed increased emphasis on life cycle management, we 
reported recently that DOD lacks key information on weapon system 
operating and support costs and therefore may not be well-equipped to 
analyze, manage, and ultimately reduce these costs.[Footnote 18] 

Although all four goals of the Logistics Strategic Plan have aspects 
relating to supply chain management, Goal 4 explicitly addresses the 
need to improve supply chain processes. DOD identifies four success 
indicators and three performance measures for this goal. The success 
indicators address both the efficiency and effectiveness of DOD's 
supply chain management. For example, one success indicator states 
that enterprisewide solutions for the management of inventories and 
services will optimize total supply chain costs, and another states 
that effective demand planning will increase forecast accuracy and 
reduce costs. The performance measures, which are listed separately 
from the success indicators, include the percent of negotiated time 
definite delivery standards met globally (by combatant command), the 
percent of actual demand compared to forecasted demand,[Footnote 19] 
and number of days of customer wait time (time from submission of 
order to receipt of order) by lift area. The Logistics Strategic Plan 
lists 12 key initiatives that support Goal 4. The key initiatives 
focus on, among others issues, life cycle forecasting, the 
distribution process, automatic identification technology, and the 
department's human capital strategy for logistics personnel. We have 
reported on some of these issues. For example, we reported in 2009 
that DOD has taken steps to implement automatic identification 
technologies, such as item unique identification and passive radio 
frequency identification, to identify and track equipment and 
supplies, but has experienced difficulty in fully demonstrating return 
on investment to the military services responsible for implementation. 
[Footnote 20] 

The Logistics Strategic Plan also includes some information on how DOD 
plans to track progress. The plan lists success indicators and 
performance measures under each goal, and it states that the plan will 
be implemented by following the performance management framework found 
in the Strategic Management Plan. This framework contains six steps: 
plan, set targets, cascade measures, align processes, assess and 
report, and correct. By modeling the performance management framework 
of the Logistics Strategic Plan after that of the broader Strategic 
Management Plan, DOD officials expect that this alignment will 
naturally have a complementary, behavior-shaping influence on 
organizations subject to both plans. 

Logistics Strategic Plan Lacks Specificity Regarding Strategies and 
Time Frames: 

Plan Lacks Detailed Information in Several Areas: 

Although the Logistics Strategic Plan contains some key elements of an 
effective strategic plan and provides unifying themes for improvement 
efforts, it lacks detailed information regarding strategies and time 
frames that would help to specify how and when goals will be achieved. 
In our review of Goal 4, which focuses on supply chain processes, we 
found that detailed information was lacking in several areas, which 
may limit the plan's usefulness as a tool for decision makers, 
including: 

* Performance measurement information. While the plan presents three 
performance measures associated with Goal 4, it lacks baseline or 
trend data for past performance, measurable target-level information, 
or time frames for the achievement of goals or completion of 
initiatives. These are among the characteristics of successful 
performance measures that we have identified in our prior work. 
[Footnote 21] Such elements are needed to monitor the progress of 
implementation efforts and to determine how far DOD and its components 
must go to achieve success. In addition, there is not a clear linkage 
between the three measures and the success indicators or key 
initiatives under Goal 4. A senior DOD official stated that the 
performance measures in Goal 4 were included to present information 
about the overall functioning of the supply chain rather than specific 
improvement efforts. 

* Key concepts. Some concepts in the plan express broad, positive 
ideas but are not fully defined. For example, Goal 4 states that 
processes should be "synchronized end-to-end," and a success indicator 
states that supply chain costs should be "optimized." The plan, 
however, does not define what aspects of the supply chain need further 
synchronization, how costs should be further optimized, or how DOD 
will gauge progress in these efforts. 

* Problems and capability gaps. The plan does not include a discussion 
about overall departmentwide or DOD component-specific logistics 
problems or challenges, nor does it indicate the extent or severity of 
any identified capability gaps. Such information is necessary to 
establish a clear and common understanding of what problems and gaps 
the plan is trying to address. For example, the plan does not discuss 
logistics problems encountered during operations in Iraq and 
Afghanistan. We raised a similar concern about the 2008 Logistics 
Roadmap. 

* Resource needs. The plan does not discuss resources needed to 
implement improvement efforts. As noted, an effective strategic 
planning process should be able to link resource needs to performance, 
prioritize initiatives and resources, establish investment priorities, 
and guide key resource decisions. 

In the absence of more detailed information in these areas, the 
usefulness of the Logistics Strategic Plan for decision making may be 
limited. Measuring performance, for example, allows for tracking 
progress toward goals and gives managers crucial information on which 
to base their decisions. In addition, if the plan included information 
on problems, capability gaps, and resource needs, managers could use 
the plan as a basis for establishing priorities for formulating, 
funding, and implementing corrective actions. DOD has recognized the 
need to include some of this information, and the plan states DOD's 
intent to establish baseline performance and then measure that 
performance against interim targets through an annual assessment 
process. 

Plan Does Not Show Explicit Links with Related Supply Chain Management 
Plans and Activities: 

Although the Logistics Strategic Plan is linked to some broader 
strategic plans, it does not show explicit links with other strategic 
plans of supply chain or logistics defense components, and the link 
between that plan and some major logistics activities is not clear. 
These plans and activities could have a major role in shaping future 
logistics capabilities and functions. Some DOD components have issued 
their own strategic plans, but the linkages between the logistics- 
related issues in those plans and the Logistics Strategic Plan are not 
transparent. DOD states in the Logistics Strategic Plan that the 
combatant commands, military departments, and defense agencies should 
review and revise their respective strategic plans and associated 
goals, objectives, measures, and targets to reflect the Logistics 
Strategic Plan's broader priorities. Moreover, DOD indicates that 
logistics leaders at the component level may find it necessary to 
realign operations and organizational structures to better integrate 
functional activities with larger end-to-end processes. However, the 
mechanism for ensuring that needed changes are made is not specified. 

Further, the plan does not reflect some activities and information 
that could affect supply chain management. For example, the military 
services have ongoing supply chain management improvement efforts 
under way; however, there is no explicit mention of these service-
level efforts or goals, initiatives, or measures, even though the 
services have important responsibilities for carrying out logistics 
and supply chain functions. In addition, officials from various 
components stated that the Joint Supply Joint Integrating Concept, co-
led by the Joint Staff and DLA, is a major ongoing effort. However, 
this concept is not discussed in the Logistics Strategic Plan. The 
purpose of this concept is to guide development and employment of 
future joint supply capabilities. 

It is not clear how the Logistics Strategic Plan will be used within 
the existing logistics governance framework to assist decision makers 
and influence resource decisions and priorities. For example, the plan 
states that the Joint Logistics Board and executive-level functional 
logistics governance bodies play critical roles in providing oversight 
and guidance to implementation of the Logistics Strategic Plan. While 
the Joint Logistics Board and other bodies may play critical roles in 
DOD's supply chain management improvement efforts, their roles are not 
defined in the plan. In addition, the organizations responsible for 
key initiatives included in the plan are not identified. 

Similarly, the plan does not clearly define how oversight of plan 
implementation will occur. The plan briefly mentions the development 
of a Logistics Strategic Management Report that, along with a 
management dashboard of measures maintained by the Under Secretary of 
Defense for Acquisition, Technology and Logistics, will be used to 
report progress. However, the specific process or responsibilities for 
ensuring that corrective actions are taken in response to 
underperformance are not detailed in the plan. DOD officials stated 
that corrective actions are the responsibility of process or activity 
owners, while the responsibilities defined in the Logistics Strategic 
Plan include "implement corrective actions" as a responsibility of the 
Assistant Secretary of Defense for Logistics and Materiel Readiness. 
In its description of performance management, the plan states that 
accountable individuals will identify and implement corrections. 
Lastly, budget development is an important aspect of the existing 
governance framework, yet DOD has not shown how the plan will be used 
to help shape logistics budgets developed departmentwide or by 
individual components. 

In conclusion, strategic plans need to remain at a high enough level 
to provide a clear vision and direction for improvement, but without 
more specific information in the Logistics Strategic Plan, it will be 
difficult for DOD to demonstrate progress in addressing supply chain 
management problems and provide Congress with assurance that the DOD 
supply chain is fulfilling the department's goal of providing cost- 
effective joint logistics support for the warfighter. 

Mr. Chairman, this concludes our prepared remarks. We would be happy 
to answer any questions you or other Members of the Subcommittee may 
have at this time. 

Contacts and Acknowledgments: 

For further information regarding this testimony, please contact Jack 
E. Edwards at (202) 512-8246 or edwardsj@gao.gov or William M. Solis 
at (202) 512-8365 or solisw@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this statement. Individuals making contributions to this 
testimony include Tom Gosling, Assistant Director; Jeffrey Heit; 
Suzanne Perkins; Pauline Reaves; and William Varettoni. 

[End of section] 

Footnotes: 

[1] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009); High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-07-310] (Washington, D.C.: January 
2007); and High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-05-207] (Washington, D.C.: January 
2005). 

[2] Department of Defense, Office of the Secretary of Defense, 
Principal Deputy Assistant Secretary of Defense for Logistics and 
Materiel Readiness, Department of Defense Logistics Strategic Plan, 
July 2010. 

[3] Those standards require that we plan and perform the audit to 
obtain sufficient, appropriate evidence to provide a reasonable basis 
for our findings and conclusions based on our audit objectives. We 
believe that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[4] Remarks delivered by Secretary of Defense Robert M. Gates in 
Abilene, Kansas (May 8, 2010). 

[5] For our prior statements on supply chain management, see GAO, 
DOD's High-Risk Areas: Efforts to Improve Supply Chain Can Be Enhanced 
by Linkage to Outcomes, Progress in Transforming Business Operations, 
and Reexamination of Logistics Governance and Strategy, [hyperlink, 
http://www.gao.gov/products/GAO-07-1064T] (Washington, D.C.: July 10, 
2007); DOD's High-Risk Areas: Challenges Remain to Achieving and 
Demonstrating Progress in Supply Chain Management, [hyperlink, 
http://www.gao.gov/products/GAO-06-983T] (Washington, D.C.: July 25, 
2006); and DOD's High-Risk Areas: High-Level Commitment and Oversight 
Needed for DOD Supply Chain Plan to Succeed, [hyperlink, 
http://www.gao.gov/products/GAO-06-113T] (Washington, D.C.: Oct. 6, 
2005). 

[6] Office of the Secretary of Defense, Quadrennial Defense Review 
Report (February 2010), and Office of the Deputy Chief Management 
Officer, Strategic Management Plan (July 31, 2009). 

[7] Government Performance and Results Act of 1993, Pub. L. No 103-62 
(1993), and OMB Circular No. A-11, Preparation, Submission and 
Execution of the Budget (Aug. 7, 2009). 

[8] OMB Memorandum M-10-24, Performance Improvement Guidance: 
Management Responsibilities and Government Performance and Results Act 
Documents (June 25, 2010). 

[9] DOD views the Quadrennial Defense Review as fulfilling the 
requirement for an agency strategic plan. 

[10] See, for example, GAO, Depot Maintenance: Improved Strategic 
Planning Needed to Ensure That Air Force Depots Can Meet Future 
Maintenance Requirements, [hyperlink, 
http://www.gao.gov/products/GAO-10-526] (Washington, D.C.: May 14, 
2010). 

[11] Focused logistics was a concept for force transformation 
developed by the Joint Chiefs of Staff that identified logistics 
challenges and capabilities needed to meet the challenges. Force-
centric logistics enterprise was an OSD concept for enhancing support 
to the warfighter that encompassed six initiatives. Sense and respond 
logistics was a future logistics concept developed by the department's 
Office of Force Transformation that envisioned a networked logistics 
system that would provide joint strategic and tactical operations with 
predictive, precise, and agile support. 

[12] Office of the Secretary of Defense, Deputy Under Secretary of 
Defense for Logistics and Materiel Readiness, Department of Defense 
Logistics Roadmap, July 2008. 

[13] GAO, Defense Logistics: Lack of Key Information May Impede DOD's 
Ability to Improve Supply Chain Management, [hyperlink, 
http://www.gao.gov/products/GAO-09-150] (Washington, D.C.: Jan. 12, 
2009). 

[14] According to the plan, DOD's logistics mission is to provide 
globally responsive, operationally precise, and cost-effective joint 
logistics support for the projection and sustainment of America's 
warfighters. The logistics vision is to have a logistics enterprise 
ready to support any combination of combat, security, engagement, and 
relief and reconstruction operations. 

[15] GAO, Warfighter Support: Preliminary Observations on DOD's 
Progress and Challenges in Distributing Supplies and Equipment to 
Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-10-842T] 
(Washington, D.C.: June 25, 2010). 

[16] GAO, Military Airlift: DOD Should Take Steps to Strengthen 
Management of the Civil Reserve Air Fleet Program, [hyperlink, 
http://www.gao.gov/products/GAO-09-625] (Washington, D.C.: Sept. 30, 
2009). 

[17] GAO, Warfighter Support: Continued Actions Needed by DOD to 
Improve and Institutionalize Contractor Support in Contingency 
Operations, [hyperlink, http://www.gao.gov/products/GAO-10-551T] 
(Washington, D.C.: Mar. 17, 2010). 

[18] GAO, Defense Management: DOD Needs Better Information and 
Guidance to More Effectively Manage and Reduce Operating and Support 
Costs of Major Weapon Systems, [hyperlink, 
http://www.gao.gov/products/GAO-10-717] (Washington, D.C.: July 20, 
2010). 

[19] Although not noted as such in the Logistics Strategic Plan, the 
performance measure for the percent of actual demand compared to 
forecasted demand is described as under development in the Strategic 
Management Plan. 

[20] [hyperlink, http://www.gao.gov/products/GAO-09-150]. 

[21] GAO, Agency Performance Plans: Examples of Practices That Can 
Improve Usefulness to Decisionmakers, [hyperlink, 
http://www.gao.gov/products/GAO/GGD/AIMD-99-69] (Washington, D.C.: 
Feb. 26, 1999), and Tax Administration: IRS Needs to Further Refine 
Its Tax Filing Season Performance Measures, [hyperlink, 
http://www.gao.gov/products/GAO-03-143] (Washington, D.C.: Nov. 22, 
2002). 

[End of section] 

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