Defense IRM:

Critical Risks Facing New Materiel Management Strategy

AIMD-96-109: Published: Sep 6, 1996. Publicly Released: Sep 6, 1996.

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Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) Joint Logistics Systems Center's (JLSC) development and deployment of standard materiel management systems.

GAO found that: (1) DOD development of nine integrated materiel management systems will cost more than the $5.3 billion originally estimated; (2) DOD plans to deploy each system individually at a selected site; (3) DOD is embarking on a new materiel management strategy to ensure that the additional funds spent on the systems are well invested; (4) DOD has not conducted economic or risk assessments of the new systems, or incorporated efforts to improve, consolidate, and privatize logistics operations; (5) DOD has failed to define the objectives, costs, and risks of its new materiel management strategy, thus denying DOD decisionmakers the opportunity to review the systems before deployment; (6) DOD is proceeding with its scheduled deployments without allocating necessary time for systems testing; (7) this action will increase the likelihood of DOD experiencing problems during systems testing; and (8) DOD will incur significant costs in operating and maintaining the legacy system due to existing deficiencies within the system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The services and the Defense Logistics Agency (DLA), in conjunction with the Deputy Undersecretary of Defense for Logistics (DUSD(L)) and JLSC are implementing a new materiel management systems strategy (MMSS) following the failure of the MMSS initiative to meet the requirements of having a standard suite of systems at the inventory control points. This new strategy is basically returning to the previous strategy of having the services and DLA modernize their individual inventory control points whichever way they want. Some will implement pieces of the MMSS suite of systems and some will modernize by integrating some new commercial-off-the-shelf packages with their legacy systems. The goals of standard processes and systems to meet interoperability needs appears to have been abandoned in favor of an electronic data interchange-based transaction interface for the MILS transactions.

    Recommendation: The Secretary of Defense should stop the materiel management system development and deployment until the Deputy Under Secretary of Defense for Logistics completes an economic analysis and a comprehensive implementation plan, including actions to be taken, schedules, milestones, and performance measures, and a technical risk plan.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: Based on action taken as a result of GAO's report recommendations, significant cuts have been made in the MMSS program. The services and DLA are now responsible for modernizing their inventory control point environment and the original DUSD(L) plan for a standard suite of systems has been abandoned in favor of a combination of commercial-off-the-shelf-based systems and modernized legacy systems. This approach, however, has not been justified by a new economic analysis. The DUSD(L) position is that this is now the responsibility of each service and DLA, and thus, a Major Automated Information System Review Committee is not required.

    Recommendation: The Secretary of Defense should stop the materiel management system development and deployment until the full Major Automated Information System Review Council reviews and approves these plans.

    Agency Affected: Department of Defense

 

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