Defense Logistics Air Force Lacks Data To Assess Contractor Logistics Support Approaches Report To Congressional Committees

In 2001, the Department of Defense (DOD) identified performance based logistics (PBL) as the preferred weapon system support strategy. Within DOD, PBL is the purchase of performance outcomes, such as system availability, rather than the purchase of individual elements of logistics support -- such as parts, repairs, and engineering support. Although PBL initially arose from efforts to reduce support costs, questions have arisen about whether PBL has reduced support costs as originally intended. GAO was asked to evaluate the extent to which DOD has used business case analyses to guide decisions related to PBL arrangements and the impact PBL arrangements have had on weapon system support costs. In conducting the review, GAO analyzed the implementation of PBL arrangements for 29 weapon system programs. GAO also looked at the use and characteristics of performance-based contracting in the United Kingdom's Ministry of Defence. GAO makes five recommendations, including that DOD require the development of business case analyses, clearly define specific criteria for their development, and require that the services improve their internal controls to ensure that the analyses are performed. GAO also recommends that DOD require program offices to collect and report detailed support cost data for their PBL arrangements. DOD generally concurred with these recommendations.

Military operations in Iraq and Afghanistan have focused attention on the performance of the Department of Defense's (DOD) supply chain management. According to DOD, it spent approximately $178 billion on its supply chain in fiscal year 2007. As a result of weaknesses in DOD's management of its supply chain, this area has been on GAO's list of high-risk federal government programs since 1990. DOD released its Logistics Roadmap in July 2008 to guide, measure, and track logistics improvements. DOD has identified two technologies included in this roadmap, item unique identification (IUID) and passive radio frequency identification (RFID), as having promise to address weaknesses in asset visibility. GAO reviewed (1) the extent to which the roadmap serves as a comprehensive, integrated strategy to improve logistics; and (2) the progress DOD has made implementing IUID and passive RFID. GAO reviewed the roadmap based on DOD statements about its intended purposes and visited sites where IUID and passive RFID were implemented. GAO recommends that DOD (1) include in its roadmap additional information and elements needed for a comprehensive strategy and (2) collect data associated with the implementation of IUID and passive RFID, analyze their return on investment, and determine if sufficient funding priority has been provided.

Logistics Modernization Program is an Army enterprise resource planning system that supports industrial operations conducted by Army Materiel Command at its life cycle management commands and its maintenance, manufacturing, and storage sites. Increment 1 of LMP was fully deployed in October 2010, and the Army has spent approximately $1.4 billion on LMP through fiscal year 2012. In order to expand the system's capabilities, the Army plans to deploy a second increment of LMP. The life cycle cost for LMP Increment 1 and Increment 2, from fiscal year 2000 through 2026, is estimated to be over $4 billion. GAO was asked to evaluate AMC's use of LMP. This report assesses the extent to which (1) LMP supports AMC's industrial operations and (2) the Army has realized the expected benefits from deploying LMP. GAO reviewed Army documents regarding LMP usage and interviewed officials from AMC headquarters, the LMP product office, and 14 AMC sites that use LMP to conduct their operations.