Defense: Supply Operations at Military Depots (2018-15)
The Department of Defense could improve the efficiency and effectiveness of supply operations at Army and Marine Corps depots and Navy shipyards and save tens of millions of dollars.
Year Identified: 2018
Area Number: 15
Area Type: Cost Savings & Revenue Enhancement
2 Total Action(s)
The Assistant Secretary of Defense for Logistics and Materiel Readiness, in conjunction with the Director, Defense Logistics Agency (DLA), and the Secretaries of the Army and Navy and the Commandant of the Marine Corps should assess through a comprehensive business case analysis–drawing on lessons learned from previous efforts–the costs and benefits of DLA managing the retail supply, storage, and distribution functions at the Army and Marine Corps depots and Navy shipyards.
The Assistant Secretary of Defense for Logistics and Materiel Readiness, in conjunction with the Director, Defense Logistics Agency (DLA), and the Secretaries of the Army and Navy and the Commandant of the Marine Corps should assess through a comprehensive business case analysis–drawing on lessons learned from previous efforts–the costs and benefits of DLA managing the retail supply, storage, and distribution functions at the Army and Marine Corps depots and Navy shipyards.
DOD agreed with GAO's June 2016 recommendation; however, as of January 2022, a comprehensive business case analysis had not been completed for the Navy shipyards. In November 2017, DOD designated the transfer of these retail functions as an operating priority and identified it as a key reform effort within logistics in the department.
As of June 2018, the Marine Corps had conducted an analysis and decided to transition additional supply, storage, and distribution functions to DLA over a 4-year period, with all implementation activities scheduled to be completed by the end of fiscal year 2022. As of March 2019, the Army also had developed a comprehensive business case analysis that examined several different courses of action for transitioning supply, storage, and distribution functions to DLA. However, according to department officials in January 2022, the comprehensive business case analysis recommended that the Army not pursue the transfer of retail functions to DLA.
Lastly, the Navy and DLA in August 2018 signed a strategic memorandum of agreement that identifies the roles and responsibilities of different organizations with respect to supply, storage, and distribution in support of Navy shipyards. However, it remains unclear at this point the extent to which the Navy and DLA will assess through a comprehensive business case analysis the management of the supply, storage, and distribution functions at the Navy shipyards.
Without the Navy completing a business case analysis, decision-makers will not be positioned to make cost-effective decisions regarding supply operations at the Navy shipyards.
The Assistant Secretary of Defense for Logistics and Materiel Readiness, in conjunction with the Director, Defense Logistics Agency (DLA), and the Secretaries of the Army and Navy and the Commandant of the Marine Corps should use a comprehensive business cases analysis to make a decision on the degree to which DLA should manage these functions at the Army and Marine Corps depots and Navy shipyards.
The Assistant Secretary of Defense for Logistics and Materiel Readiness, in conjunction with the Director, Defense Logistics Agency (DLA), and the Secretaries of the Army and Navy and the Commandant of the Marine Corps should use a comprehensive business cases analysis to make a decision on the degree to which DLA should manage these functions at the Army and Marine Corps depots and Navy shipyards.
DOD agreed with GAO's June 2016 recommendation. However, as of January 2022, the Army is reviewing the comprehensive business case analysis recommendation not to pursue the transfer of retail functions at its depots to DLA, according to department officials. Also, the Army will be formalizing its position on the recommendation to DOD, according to department officials.
Additionally, the Navy had not completed a comprehensive business case analysis, preventing an informed decision on the transfer of supply, storage, and distribution functions to DLA. The Marine Corps conducted an analysis and decided to transition additional supply, storage, and distribution functions to DLA over a 4-year period, with all implementation activities scheduled to be completed by the end of fiscal year 2022.
Without the Army and Navy making decisions based on comprehensive business case analyses on the degree to which additional supply, storage, and distribution functions will transfer to DLA, DOD will not be assured that it is operating its supply operations at the Army depots and Navy shipyards in a cost-effective manner.
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