Defense Logistics:

Opportunities to Improve the Army's and Navy's Decision-making Process for Weapons Systems Support

GAO-02-306: Published: Feb 28, 2002. Publicly Released: Feb 28, 2002.

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The armed services have significantly reduced their procurement of new weapons systems and are keeping their existing systems longer than originally anticipated. The Department of Defense (DOD) estimates that it is spending $59 billion a year on logistics support to operate and sustain weapons systems, but DOD believes that better logistics support practices could reduce these costs by as much as 20 percent. To cut costs and improve efficiency, the military services have begun implementing logistics support strategies that rely on the private sector. DOD Regulation 5000.2-R expresses a preference for using long-term contractor logistics support but requires that an analysis be done first to determine how logistics support work is to be allocated to public or private entities. It is impossible to determine whether initial cost-effectiveness estimates for proposed contractor-logistics-support approaches are being achieved because the Army and Navy lack the required data. Consequently, the services may be adopting support approaches without knowing whether expected readiness improvements and cost-reduction goals are being met, where adjustments are needed, or the conditions under which the various support approaches are likely to achieve the most cost-effective results. Comparisons of the same or similar work done by military and private facilities are not possible or were inconclusive in determining which is more cost-effective. No comparisons were possible for the Army because, as a matter of policy, it does not divide its depot-level maintenance work for the same items between Army and contractor facilities. Only four comparisons of aircraft systems were possible in the Navy, and these showed mixed results. Although contractors have provided some logistics support needs, major Army and Navy commands have concerns about widespread contractor logistics support. However, the DOD's and the services' actions so far do not fully address these concerns, or the issues have not been fully resolved.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that the department is expanding its DOD 5000 regulation series to include requiring logistics support decisions based on the total life cycle of weapons systems. In 2002, subsequent to the DOD response to GAO's recommendations, the department restructured its DOD 5000 regulation series and has issued a new 5000 Directive and Instruction, but did not include a specific requirement for program managers to perform a business case analysis before selecting a logistics provider. Instead, the department issued a policy letter in January 2004, promulgating business case analysis principles and directing the services to revise their performance based logistics guidance to incorporate OSD's new business case analysis principles. The guidelines require a sufficiently detailed quantification of the expected life-cycle costs of logistics support strategies before making logistics support decisions for a weapon system. Consequently, DOD's business case analysis requirements are responsive in implementing the intent of GAO's recommendation.

    Recommendation: To enhance accountability over life-cycle cost and effectiveness decisions regarding logistics support, the Secretary of Defense should take action to strengthen Department of Defense (DOD) Regulation 5000.2-R to require that a detailed quantification of the expected life-cycle costs of alternative support approaches be made before making logistics support decisions for a weapon system.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD partially concurred with this recommendation, stating that rather than directing a specific service to develop requirements for retaining logistics support decision-making criteria, the Department will include requirements in its next update of DOD 5000 policy series requiring periodic assessments to measure factors such as the readiness, availability, reliability, and cost of new programs. DOD also stated that these reviews will assess the extent to which logistics support decisions achieve their stated purpose and identify the actions needed to alter support strategies. In May 2003, the Department revised its 5000 regulation series to require that the services conduct continuing reviews of sustainment strategies, comparing expectations against actual performance and, where necessary, revise, correct, and improve sustainment strategies to meet performance requirements. The revised policy's requirement to compare actual performance against expectations and adjust sustainment approaches were needed to achieve the most cost-effective results.

    Recommendation: The Secretary of Defense should develop a requirement to ensure that weapons systems acquisition program offices retain the documentation of analyses used to support the initial life-cycle logistics support decisions and, using the data from these analyses, conduct periodic reviews to (1) assess the cost-effectiveness of logistics support, (2) develop budgetary implications of life-cycle cost changes, (3) assess existing and newly emerging support strategies to determine where adjustments may be needed, and (4) identify the conditions under which the various support approaches are likely to achieve the most cost-effective results.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. DOD stated that the Joint Logistics Board's work group for total life-cycle systems management will include the issues of personnel requirements, contractors on the battle field, and command spending flexibility as items to be addressed in formulating DOD sustainment policy guidance. DOD further stated that strategies, actions, and critical elements to address these concerns, including appropriate consultation with operational commanders, would be performed on a DOD-wide basis. In May 2003 the Department revised its DOD 5000 regulation series to pursue "performance-based" logistics strategies for all weapon systems. As part of this approach, DOD requires that program managers enter into service agreements with the warfighter to address any warfighter or major command concerns, prior to adopting weapon system logistics support strategies.

    Recommendation: To enhance the services' ability to make sound logistics management and policy decisions, the secretary of defense should require the Departments of the Army and Navy to assess and report to him on any actions needed to address the concerns raised by operating commands regarding the (1) requirements for logistics military personnel in each logistics specialty required to support operational plans, (2) planning for the use of contractors to support operational and contingency plans, and (3) impact of increasing contractor-logistics-support arrangements on command spending flexibility.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that it planned to strengthen requirements to provide access to needed technical data through its DOD 5000 series update. In later followup, DOD stated that it planned to take steps to address this issue in the next iteration of its 5000 acquisition regulation policy. The new policy would require the program manager to establish a data management strategy that requires access to the minimum data necessary to sustain the fielded system, recompete or reconstitute sustainment if necessary, promote real time access and delivery of the data, and provide for the availability of quality data at the point of need for the intended user. While the department has not specifically revised the 5000 series regulation, it has changed related acquisition guidance. In November 2004, DOD did update other guidance that supports the acquisition process--the Performance Based Logistics Product Support Guide and the Defense Acquisition Guidebook. Both of these documents now contain a discussion of the minimum level of data which program managers must have access to in order to implement alternative sustainment options. GAO is closing out this recommendation based on the Department's implementation of this related acquisition guidance, which provides improved guidance over that available before. It is possible the department could still revise the 5000 series regulation. GAO will continue to track this issue through followup on our more recent report on performance-based logistics (DEFENSE MANAGEMENT: Opportunities to Enhance the Implementation of Performance-Based Logistics--GAO-04-715), which included a similar recommendation.

    Recommendation: To help reduce the risk of increased life-cycle support costs and foster a competitive logistics support environment, the secretary of defense should take actions to enforce the requirement in DOD Regulation 5000.2-R, related to the acquisition of technical data rights to foster source of support competition throughout the life of the system, by (1) placing greater emphasis on the importance of addressing the availability of technical data during the acquisition oversight process and (2) requiring program offices to assess the merits of including a priced option for the purchase of technical data when proposals for new weapons systems or modifications to existing systems are being considered.

    Agency Affected: Department of Defense


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