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entitled 'Defense Logistics: Improvements Needed to Enhance DOD's 
Management Approach and Implementation of Item Unique Identification 
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United States Government Accountability Office: 
GAO: 

Report to the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

May 2012: 

Defense Logistics: 

Improvements Needed to Enhance DOD's Management Approach and 
Implementation of Item Unique Identification Technology: 

GAO-12-482: 

GAO Highlights: 

Highlights of GAO-12-482, a report to the Subcommittee on Readiness, 
Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

IUID technology allows DOD to assign a unique number to an item and 
use that number to manage that item in a variety of logistics 
processes. In 2003, DOD began implementation of IUID and has estimated 
that it could improve the accountability and maintenance of its 
property and equipment and save from $3 billion to $5 billion per 
year. Also, integrating and sharing UII data across DOD’s enterprise 
information systems could enable DOD to track equipment as it moves 
between its components. GAO evaluated the extent to which DOD has (1) 
incorporated key elements of best management practices into its 
framework for IUID implementation, (2) marked items with IUID labels, 
and (3) developed the capability to share UII data across DOD in its 
enterprise information systems. GAO reviewed documents, interviewed 
cognizant officials, and reviewed DOD and GAO key practices for its 
analysis. 

What GAO Found: 

The Department of Defense (DOD) has taken some steps to improve its 
approach to managing and implementing Item Unique Identification 
(IUID) technology, but has yet to incorporate some key elements of 
best management practices into its evolving framework for management 
of IUID implementation. These include internal controls and analysis 
of return on investment. DOD has included certain internal controls, 
such as defining key areas of authority for IUID implementation, and 
it is revising policy to incorporate IUID. However, DOD does not have 
performance measures, such as reliable schedules for predicting when 
its enterprise information systems will be able to manage items using 
IUID data, or a full estimate of IUID’s cost and benefits. Without a 
management framework that includes such key practices, DOD has faced 
challenges in implementing IUID technology and may not be well 
positioned to achieve potential financial and nonfinancial benefits. 

DOD’s data on the number of items already in its inventory—-legacy 
items-—marked with IUID labels to date is incomplete and DOD lacks 
assurance that contractors are sufficiently marking newly-acquired 
items and government-furnished property. The military services mark 
legacy items and have reported marking more than 2 million items. 
However, DOD does not have complete information on the total number of 
legacy items its components have marked and must mark in the future; 
does not have a full set of quantifiable goals or interim milestones 
corresponding to its IUID marking criteria—-such as certain items that 
cost $5,000 or more—-and does not use consistent criteria among its 
components to track progress. Without the components reporting 
complete and comparable data, DOD’s ability to assess progress in 
marking legacy items will remain limited. Also, DOD does not have 
assurance that contractors are sufficiently marking newly-acquired 
items and government-furnished property. DOD reported that as of 
January 2012, over 2,500 contractors had marked or registered over 11 
million items. However, DOD does not require the components to examine 
and report on all types of contracts that should include IUID marking 
clauses, nor does it have policies and procedures that provide for 
systematic assessment of the sufficiency of data contained in these 
items’ labels. Hence, DOD cannot know the full extent to which 
contractors are supplying IUID labels with the data needed to track 
items. 

DOD’s ability to track and share unique item identifier (UII) data 
across components is hampered by the lack of full integration of data 
into components’ enterprise information systems. DOD has made some 
progress but faces challenges as it proceeds with its integration 
plans. DOD is revising its supply chain management policy and guidance 
to include IUID use, but has not fully defined requirements for using 
UII data, nor developed complete, integrated master schedules for 
integrating IUID, DOD-wide and within components’ systems. Such 
schedules enable agencies to predict the cost and timelines of their 
systems’ development. Without such requirements and schedules, DOD 
cannot adequately predict when the systems will be able to use UII 
data, or whether DOD will meet its fiscal year 2015 goal for using UII 
data to manage items throughout their life cycle. 

What GAO Recommends: 

GAO is making nine recommendations for enhancing DOD’s implementation 
of IUID. They include actions to improve DOD’s management of IUID 
implementation through best practices; enable the components to report 
complete data for marking items with IUID labels; and enable the 
components to share UII data across DOD enterprise information 
systems. DOD concurred with eight recommendations and partially 
concurred with one related to updating estimated financial costs and 
benefits of IUID implementation. DOD stated it will continue to 
identify such costs, but GAO continues to believe that updating 
benefits is also important, as discussed more fully in the report. 

View [hyperlink, http://www.gao.gov/products/GAO-12-482]. For more 
information, contact Zina Merritt at (202) 512-5257 or 
merrittz@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DOD Has Taken Some Steps toward Developing a Framework for Management 
of IUID Implementation, but Has Not Yet Incorporated Several Key 
Elements of a Comprehensive Management Approach: 

DOD and Contractors Have Made Some Progress Marking Items with IUID, 
but DOD Faces Challenges in Assessing Progress toward Goals and 
Ensuring That Items Are Sufficiently Marked: 

DOD Has Made Some Progress in Preparing to Share UII Data 
Enterprisewide, but Faces Challenges: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Key IUID Policy Issuances and Implementation Events, 
Fiscal Year 2003 to Fiscal Year 2011: 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Components' Reported Spending on IUID Implementation in 
Fiscal Years 2004 through 2011: 

Table 2: Number of Legacy Items in Components' Inventories That Meet 
DOD's IUID Marking Criteria and That the Components Have Marked, as Of 
October 2011: 

Table 3: DOD's Methods of Assessing Progress in Legacy Item Marking 
Using Categories Defined by Its IUID Marking Criteria, as of October 
2011: 

Figures: 

Figure 1: Data Plate with IUID Data Matrix: 

Figure 2: Electronic Scanner Being Used to Read a Data Plate with an 
IUID Data Matrix: 

Abbreviations: 

DASD(SCI): Deputy Assistant Secretary of Defense for Supply Chain 
Integration: 

DFARS: Defense Federal Acquisition Regulation Supplement: 

DOD: Department of Defense: 

IT: information technology: 

IUID: item unique identification: 

ODASD(SCI): Office of the Deputy Assistant Secretary of Defense for 
Supply Chain Integration: 

OUSD(AT&L): Office of the Under Secretary of Defense for Acquisition, 
Technology and Logistics: 

UII: unique item identifier: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

May 3, 2012: 

The Honorable Randy Forbes: 
Chairman: 
The Honorable Madeleine Bordallo: 
Ranking Member: 
Subcommittee on Readiness: 
Committee on Armed Services: 
House of Representatives: 

The Department of Defense’s (DOD) inventory contains tens of millions 
of items, and it is a DOD priority to provide effective accountability 
over equipment and inventory items.[Footnote 1] One aspect of 
accountability is asset visibility, a key component of DOD’s 
management of its supply chain. DOD describes asset visibility as the 
ability to provide timely and accurate information on the location, 
quantity, condition, movement, and status of items in its inventory. 
[Footnote 2] Limitations in asset visibility-—such as a lack of 
interoperability among information technology (IT) systems, or 
challenges in instituting new technologies for tracking assets 
[Footnote 3]-—make it difficult to obtain this information in a timely 
and accurate fashion. One of the tools that DOD plans to use to 
improve asset visibility is a technology called item unique 
identification (IUID). This technology allows DOD to assign a unique 
number to an individual item and then use that unique number to manage 
that item in a variety of logistics processes. For example, according 
to DOD, tracking assets with IUID technology could enhance logistical 
efficiency and improve DOD’s visibility of these assets. We have long 
reported that DOD supply chain management is a high-risk area, due in 
part to ineffective and inefficient inventory management practices and 
procedures, and challenges in achieving widespread implementation of 
key technologies aimed at improving asset visibility.[Footnote 4] We 
have also previously reported on challenges DOD has faced in 
instituting new technologies for improving asset visibility,[Footnote 
5] and with current technology and processes DOD continues to have 
difficulties in systematically identifying and managing individual 
items throughout their life cycles. 

In 2003, the Office of the Under Secretary of Defense for Acquisition, 
Technology and Logistics issued DOD’s first policy on IUID technology, 
directing DOD components-—the Army, Navy, Marine Corps, Air Force, and 
Defense Logistics Agency[Footnote 6]—-to include IUID marking 
requirements in contracts for certain types of items. In 2004, this 
office established the requirement for DOD components to mark items 
already in their inventories—-known as legacy items[Footnote 7]-—with 
IUID labels.[Footnote 8] Contractors and components mark items with 
IUID by placing a label on the item.[Footnote 9] IUID labels contain 
information printed on them, and also encoded in a two-dimensional bar 
code image, referred to as a data matrix. These data matrices contain 
various pieces of information that—-when combined—-make up a globally 
unique string of numbers referred to as the item’s unique item 
identifier (UII). DOD has established criteria for the types of items 
that are required to be marked with IUID labels.[Footnote 10] 
According to DOD, it has tens of millions of items in its inventory 
that meet these criteria. It is DOD’s goal for its components to share 
UII data departmentwide, and the components are to use these data for 
tracking these items. 

DOD has reported that the use of IUID could improve the accountability 
and maintenance of its components’ property and equipment. For 
example, by sharing UII data across the components’ IT systems, DOD 
could follow equipment as it moves between components. In addition, a 
component could use these data in its IT systems to more quickly 
identify items that require higher amounts of maintenance. By 
replacing such items with others that require normal amounts of 
maintenance, DOD could potentially save money. In addition, according 
to DOD’s IUID Task Force (task force),[Footnote 11] managing 
individual items by their unique identification numbers could save DOD 
an estimated $3 billion to $5 billion per year. In 2009, we noted that 
DOD had marked only a fraction of the millions of legacy items in its 
inventory that required IUID labels; had experienced delays in 
integrating IUID with its IT systems; and could not adequately track 
the money it had spent on IUID.[Footnote 12] In response to your 
request, we are reporting on the current status of DOD’s IUID 
implementation efforts. For this report, we are evaluating the extent 
to which DOD has (1) a comprehensive management approach for its 
implementation of IUID; (2) marked legacy items with IUID and taken 
steps to ensure that newly-acquired items and government-furnished 
property are sufficiently marked by contractors with IUID; and (3) 
developed the capability to share UII data across DOD in its 
enterprise information systems. 

To determine the extent to which DOD has a comprehensive management 
approach for its implementation of IUID, we reviewed previously 
published DOD and GAO work to identify best management and cost-
estimation practices.[Footnote 13] One of the best cost-estimation 
practices is that historical data are important for creating credible 
cost estimates. Because the task force used historical cost data in 
development of IUID cost estimates, we collected and reviewed the 
components’ estimates of historical IUID spending. In addition, we 
collected and reviewed the components’ fiscal year 2012 budget 
requests for IUID implementation, and the task force’s analysis of the 
potential costs and benefits of IUID implementation. To determine the 
extent to which the DOD components have marked legacy items with IUID 
and taken steps to ensure that newly-acquired items and government-
furnished property are sufficiently marked by contractors with IUID, 
we reviewed DOD’s criteria for IUID marking and its plans for marking 
items. We also gathered data on the number of legacy items in 
components' inventories, and how many had been marked as of October 
2011. In addition, we reviewed the Defense Federal Acquisition 
Regulation Supplement clauses that require contractors to mark or 
register newly-acquired items and government-furnished property, and 
we gathered data from DOD on contractor-marked items. To determine the 
extent to which DOD has developed the capability to share UII data 
across DOD in its enterprise information systems, we reviewed our 
previously published work on best practices for developing schedules 
for these systems;[Footnote 14] reviewed existing schedules for these 
systems; and reviewed other system planning documents. We reviewed a 
variety of DOD’s IUID implementation efforts and visited selected 
sites (based on a non-generalizable, judgmental sample) to observe key 
IUID activities; these sites represent each DOD component and were 
selected in part based on the type of IUID activity performed at each. 
For all our objectives, we interviewed officials knowledgeable about DOD
’s IUID implementation efforts. We assessed the reliability of data 
provided by DOD by reviewing existing information about the data and 
the systems that produced the data and by interviewing agency 
officials knowledgeable about the data to determine the steps taken to 
ensure the accuracy and completeness of the data. We have determined 
that the data are sufficiently reliable for the purposes of reporting 
the findings in this study. 

We conducted this performance audit between May 2011 and May 2012 in 
accordance with generally accepted government auditing standards. 
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. More detailed 
information on our scope and methodology is provided in appendix I. 

Background: 

Criteria and Process for Using IUID Technology: 

DOD has established criteria for the types of items that are required 
to be marked with IUID labels.[Footnote 15] 

For principal end items and contractor-marked secondary items, the 
criteria are as follows:[Footnote 16] 

1. all items for which the government's unit acquisition cost is 
$5,000 or more; 

2. items for which the government's unit acquisition cost is less than 
$5,000, when identified by the requiring activity as DOD serially 
managed, mission-essential or controlled-inventory;[Footnote 17] 

3. when the government's unit acquisition cost is less than $5,000 and 
the requiring activity determines that permanent identification is 
required; and: 

4. regardless of value, (a) any DOD serially managed subassembly, 
component, or part embedded within an item and (b) the parent item 
that contains the embedded subassembly, component, or part. 

For secondary items in use or in inventory, the criteria are as 
follows: 

1. all DOD serially managed items including, but not limited to: 
sensitive, critical safety, or pilferable items that have a unique 
item-level traceability requirement at any point in their life cycle; 
and all depot-level reparable items;[Footnote 18] and: 

2. any other item that the requiring activity decides requires unique 
item-level traceability at any point in their life cycle. 

In order to use IUID technology, four processes must be completed. 
First, each item that qualifies for IUID marking--according to DOD's 
criteria--is labeled. IUID labels often contain some human-readable 
information, printed as text on the label. The amount and type of 
human-readable information varies,[Footnote 19] but it often contains 
key details about the item, such as its National Stock Number, 
[Footnote 20] part number, or serial number. These are categories that 
DOD components use to identify items in their inventories. In certain 
cases, items do not have labels attached to them, and instead are 
labeled through a process known as direct part marking, in which the 
human-and machine-readable information are applied directly to the 
item. In addition, each individual label contains information about 
the item, encoded in a machine-readable, two-dimensional image printed 
on the label. Known as a data matrix, this image contains various 
pieces of information encoded in a two-dimensional bar code. Figure 1 
shows a data plate with an IUID data matrix in the lower right-hand 
corner. 

Figure 1: Data Plate with IUID Data Matrix: 

[Refer to PDF for image: photograph] 

Depicted on photo: 

MODEL#: MLT5060MIT: 
S/N: 081268: 
INSN#: 6230-01-530-8890: 
MFR DATE: 03-17-2008: 
CAGE: OSUA9:
IORGPART#: MLT5060MIT/CT: 
SERIAL#: 081268: 

Source: GAO. 

[End of figure] 

When combined, the pieces of information encoded in the data matrix 
make up a globally unique string of numbers referred to as the item's 
UII number. To ensure that all items marked with IUID labels are 
globally unique, DOD requires that UII numbers be formatted according 
to international standards for syntax format. Further, UII numbers 
must be entered into DOD's IUID Registry. The registry is a database 
intended to ensure that each UII number is unique. An item's UII 
number may be entered into the registry in one of two ways: the item 
is marked with an IUID label and the UII number associated with that 
label is registered, or DOD or contractors can establish a "virtual" 
UII number. According to DOD guidance, these virtual UII numbers are 
assigned to an item that has not yet been marked with an IUID label. 
The guidance states that a virtual UII number may be used due to 
economic or logistical considerations. For example, a DOD component 
may virtually mark one item that is embedded in another item, so that 
DOD does not have to remove the embedded item solely to mark the 
embedded item. For legacy items already in a component's inventory, 
marking and registration are the responsibility of the component. For 
items that are not yet in DOD's inventory and are being delivered to a 
component--or for property furnished by the government to a 
contractor--it is the responsibility of the contractor to mark or 
register items. If the UII number in a data matrix is improperly 
formatted, it cannot be used to properly identify the item, and the 
data matrix must be replaced. 

Second, personnel must electronically read the label's data matrix, 
the two-dimensional bar code in which the item's UII number is 
encoded. There are several types of tools than can be used for this 
process, including hand-held scanners and web-based software that can 
read an image of a data matrix. Because data matrices cannot be read 
visually, electronically reading the matrices is the only way to 
access the UII data they contain. Figure 2 shows an electronic scanner 
being used to read a data plate with an IUID data matrix. 

Figure 2: Electronic Scanner Being Used to Read a Data Plate with an 
IUID Data Matrix: 

[Refer to PDF for image: photograph] 

Source: GAO. 

[End of figure] 

Third, UII data from a data matrix is passed to an IT system. 
According to DOD officials, there are a variety of IT systems that 
have a requirement to use UII data,[Footnote 21] and some of these 
systems currently have the capability to store UII data. Examples 
include the Army's Property Book Unit Supply Enhanced, the Navy's 
Configuration Data Managers Database-Open Architecture, the Marine 
Corps' Joint Asset Maintenance Integrated Support System, and the Air 
Force's Automated Inventory Management Tool. DOD officials have 
explained that some of these systems operate in "pockets" within the 
components, and do not share UII data across the components or DOD-
wide. For instance, the Air Force's Automated Inventory Management 
Tool contains UII data that is specific to an Air Force installation, 
and does not have the capability to share these data with other 
installations. DOD's goal is for the components to share UII data 
across each of their individual IT systems, and DOD-wide, between 
components. Within DOD, this type of data sharing is characterized as 
"enterprisewide." In order to accomplish enterprisewide data sharing 
of UII data, the components intend to use certain IT systems referred 
to as Enterprise Resource Planning systems. These automated systems 
consist of multiple, integrated functional modules that perform a 
variety of business-related tasks, such as general-ledger accounting, 
payroll, and supply chain management. DOD officials have explained 
that certain Enterprise Resource Planning systems will provide the 
capability to share UII data enterprisewide, and in this report we are 
focusing on DOD efforts to integrate IUID with these systems.[Footnote 
22] Once UII data is uploaded into an IT system, such as an Enterprise 
Resource Planning system, DOD intends to store UII data and share 
these data within and across DOD organizations. In addition, IT 
systems can use software to analyze these data to improve logistics 
processes, such as property accountability and maintenance,[Footnote 
23] in DOD's supply chain. 

Fourth, to achieve IUID technology's potential benefits in many 
logistics processes, DOD personnel will have to periodically repeat 
the previous steps, including scanning the matrix on an item's label; 
uploading the UII data into an IT system; and then storing, sharing, 
and analyzing the data as required by the specific logistics process. 
For example, in a property-accountability process that we observed, 
each time a weapon was checked in or out of an armory, personnel 
scanned the label's data matrix; the matrix's UII number was uploaded 
into an electronic property book; and software then matched the 
weapon's UII number with data that identified the weapon's owner. For 
many of the logistics processes in which IUID could be used, these 
steps would be repeated throughout an item's life cycle. 

Key Organizations Involved in IUID Implementation: 

It is DOD's goal for its components to share UII data departmentwide, 
and the components are to use these data for unique item tracking. The 
Office of the Deputy Under Secretary of Defense for Logistics and 
Materiel Readiness--under the Office of the Under Secretary of Defense 
for Acquisition, Technology, and Logistics--is the focal point for 
implementing IUID capabilities for DOD's supply chain materiel. As of 
July 2011,[Footnote 24] that office delegated the responsibility for 
programmatic lead of DOD-wide IUID implementation to the Office of the 
Deputy Assistant Secretary of Defense for Supply Chain Integration 
(ODASD[SCI]). According to component officials, each component has 
multiple organizations carrying out IUID implementation tasks, such as 
creating policy and defining requirements; planning and budgeting for 
implementation of policy; and executing requirements. In addition, 
according to component officials, each component has an office that 
maintains the lead in IUID implementation policy. These respective 
offices are: 

* Army--the Office of Life Cycle Logistics Policy, in the Office of 
the Assistant Secretary of the Army for Acquisition, Logistics and 
Technology; 

* Navy--the Office of the Assistant Secretary of the Navy for 
Research, Development, and Acquisition; 

* Marine Corps--the Office of the Director, Logistics Plans, Policies, 
and Strategic Mobility, in the office of the Deputy Commandant of the 
Marine Corps for Installations and Logistics; 

* Air Force--the Directorate of Transformation, Deputy Chief of Staff 
for Logistics, Installations and Mission Support; and: 

* Defense Logistics Agency--the Office of Logistics Management 
Standards. 

Also, to facilitate intercomponent communication and collaboration, 
the components have established a number of working groups and other 
bodies to facilitate coordination on IUID implementation. 

DOD's IUID Task Force: 

The Joint Logistics Board determined that there were ambiguities 
concerning DOD's IUID policy, requirements, and proposed value across 
DOD, as well as wide variation in the components' implementation 
strategies, execution, and funding of IUID implementation. As a 
result, in 2009 the board chartered the task force, led by the 
Assistant Deputy Under Secretary of Defense for Maintenance Policy and 
Programs, and including representatives from the components and the 
Office of the Secretary of Defense. The task force had several goals, 
to include assessing the value of IUID within DOD's supply chain, and 
recommending changes to policy and guidance to adequately align IUID 
implementation with the task force's evaluation of IUID's value. The 
task force issued a report with recommendations in June 2010 that 
estimated financial costs of IUID implementation, as well as financial 
and nonfinancial benefits. Specifically, the report stated that DOD 
could begin to achieve net financial benefits of IUID implementation 
in fiscal year 2017. In addition, the task force recommended modifying 
some of DOD's IUID-marking criteria.[Footnote 25] Subsequently, the 
Office of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics modified DOD's IUID marking criteria to implement some 
of the task force's recommended changes, issuing the modification in 
December 2010.[Footnote 26] In addition, the task force issued a 
revision to its initial estimates, lowering its cost estimate. The 
revision was issued in March 2011.[Footnote 27] DOD's key IUID policy 
issuances and implementation events from fiscal year 2003 to fiscal 
year 2011 are summarized in appendix II. 

DOD Has Taken Some Steps toward Developing a Framework for Management 
of IUID Implementation, but Has Not Yet Incorporated Several Key 
Elements of a Comprehensive Management Approach: 

DOD has taken some steps to improve its approach to managing and 
implementing IUID technology, but has yet to incorporate some key 
elements of best management practices into its evolving framework for 
management of IUID implementation. These include internal controls and 
analysis of return on investment. According to GAO's previously 
published work, internal controls are important in helping agencies 
improve operational processes and implement new technological 
developments.[Footnote 28] Internal controls include an organizational 
structure that clearly defines key areas of authority; policies that 
enforce management directives; goals; and performance measures. 
[Footnote 29] In addition, GAO and DOD have identified best practices 
for analyzing a program's return on investment. The practices 
identified by GAO include providing estimates of all potential costs 
and the timing of costs.[Footnote 30] DOD has identified best 
practices that include analyzing benefits, and making recommendations, 
based on relevant evaluation criteria.[Footnote 31] DOD has defined 
key areas of authority and responsibility for IUID implementation, and 
is updating policy to incorporate changes required by the 
implementation of IUID. However, DOD has not incorporated other key 
elements of best management practices into its evolving framework for 
management of IUID implementation. For example, DOD lacks such key 
information as quantitatively defined goals for marking legacy items; 
performance measures, such as reliable schedules for predicting when 
its Enterprise Resource Planning systems will have the capability to 
manage items using UII data; and a full estimate of IUID's cost and 
benefits. Without a management framework that includes quantitatively 
defined goals, performance measures, and a more complete estimate of 
all associated costs and benefits, DOD has faced challenges in 
implementing IUID technology and runs the risk of not fully realizing 
its potential benefits, including financial benefits by fiscal year 
2017. 

DOD Has Taken Several Steps That Could Improve Its Management of IUID 
Implementation: 

ODASD(SCI) and the components have taken some steps that could improve 
DOD's management approach for IUID implementation. According to the 
DASD(SCI), his office is in the process of developing a framework for 
managing and implementing IUID, which we reviewed. As of March 2012, 
this framework consisted of two elements. The first element is a set 
of July 2011 briefing slides titled "IUID Game Plan and Actions 
Underway." The slides include a summary of actions that DOD needs to 
take in key areas of IUID implementation such as the marking of items, 
the use of IUID in business processes, and modifying IT systems to 
incorporate IUID. These slides also indicate that ODASD(SCI) is 
following some best practices of a comprehensive management framework. 
In the slides, DOD clearly defines the Office of the Assistant 
Secretary of Defense for Logistics and Materiel Readiness as the DOD 
organization responsible for leading IUID implementation activities. 
As previously discussed, that office delegated the responsibility to 
ODASD(SCI). In addition, the slides discuss DOD policies that enforce 
management directives concerning IUID implementation and that are 
being updated to incorporate IUID. The second element of DOD's 
framework for managing and implementing IUID is a January 2012 
timeline listing several planned implementation actions from fiscal 
years 2012 through 2017. 

The components have also taken some steps toward improving their 
management of IUID implementation. The Army and Marine Corps are using 
some quantifiable goals--and certain IUID marking criteria--to track 
the progress of their legacy marking efforts. In addition, officials 
from some components told us that they had inspected some newly-
acquired items to determine whether these items were sufficiently 
marked with IUID labels. For the items they reviewed, those 
inspections helped to detect problems in contractors' marking of 
items. Further, the Marine Corps and Air Force are planning to 
integrate IUID elements into implementation schedules for their 
Enterprise Resource Planning systems. 

DOD Has Not Fully Incorporated Certain Internal Controls into Its 
Framework for Management of IUID Implementation: 

DOD has not fully incorporated internal controls, such as quantifiable 
goals or metrics to assess progress, into its framework for management 
of IUID implementation. An agency's establishment of internal controls 
is key in helping an agency meet its goals, and we have previously 
reported that in the absence of quantifiable targets, it is difficult 
for officials to assess whether goals were achieved, because 
comparisons cannot be made between projected performance and actual 
results.[Footnote 32] DOD has identified tens of millions of legacy 
items that meet its IUID marking criteria, but has not developed a 
full set of quantifiable goals or metrics to assess its progress in 
marking these items. The task force has stated that DOD will not 
achieve IUID's potential benefits unless DOD marks a "significant" 
number of these legacy items, and an ODASD(SCI) official stated that 
DOD needs to mark a "majority" of these legacy items by fiscal year 
2015. However, the task force and ODASD(SCI) have not quantitatively 
defined the terms "significant" or "majority," respectively. Further, 
according to the task force report, the number of legacy items DOD 
will mark is an important factor in determining when DOD may begin to 
realize IUID's projected financial benefits. Therefore, without 
metrics to quantify its progress in marking legacy items, it is 
unclear whether DOD will begin to realize these benefits by fiscal 
year 2017, the year in which the task force report projects these 
benefits may begin. 

Another key internal control is the use of performance measures, and 
we have previously reported that such metrics for a program's main 
efforts--including interim milestones and schedules--give decision 
makers the information needed to assess progress and estimate 
realistic completion dates.[Footnote 33] In its framework for managing 
and implementing IUID, ODASD(SCI) has an IUID timeline that contains 
targets for several types of IUID implementation efforts, including 
requirements and business rules; legacy-item marking; and Enterprise 
Resource Planning system updates. In addition, the DASD(SCI) stated 
that he has asked components to provide his office with IUID 
implementation plans that contain interim milestones for the marking 
of legacy items. However, ODASD(SCI) and the components have not fully 
developed interim milestones, schedules, or metrics to assess DOD's 
progress in IUID implementation. For example, neither ODASD(SCI) nor 
the components have adequate schedules for the integration of IUID 
with their Enterprise Resource Planning systems. 

We have previously reported that an important element of measuring 
performance is the collection of data that are complete and consistent 
enough to document performance and support decision making.[Footnote 
34] As previously discussed, DOD has established IUID marking criteria 
for different categories of inventory. We found that some components 
used these criteria to track their progress in marking legacy items; 
however, others did not. The DASD(SCI) stated that he has asked the 
components to periodically report on their progress in marking legacy 
items to his office. However, he stated that he has not asked the 
components to use DOD's IUID marking criteria in their reporting. 

DOD Has Not Completed a Full Analysis of IUID's Return on Investment: 

We have previously reported that another key element of best 
management practices is analysis of return on investment. A complete 
analysis on the return on investment consists of several best 
practices identified in previously published GAO and DOD work. The 
practices identified by GAO include providing estimates on all 
potential costs and the timing of costs.[Footnote 35] DOD has 
identified best practices for analyzing benefits, and making 
recommendations, on the basis of relevant evaluation criteria as a 
best practice.[Footnote 36] In addition, GAO has reported that 
performing a sensitivity analysis of these estimates demonstrates the 
effects on the cost and schedule of an assumption that may no longer 
be valid.[Footnote 37] DOD began implementation of IUID in fiscal year 
2003, and in fiscal year 2009 the task force estimated some costs and 
benefits of implementation. The task force report discusses how IUID 
could improve DOD's logistical efficiency and effectiveness. In 
addition, the report provides a "rough order of magnitude" assessment 
of certain costs and financial benefits of implementation;[Footnote 
38] and projects when DOD may begin to realize financial benefits. 
However, the components, ODASD(SCI), and the task force did not fully 
follow certain best practices for the estimation of costs and 
financial benefits. As a result, DOD does not have a full analysis of 
IUID's potential return on investment. 

DOD Has Not Fully Estimated Costs of IUID Implementation: 

DOD's components could not provide complete historical and planned 
spending data for IUID implementation, and ODASD(SCI) has not tracked 
the components' spending or budget requests for IUID. According to GAO 
best practices for cost estimation, historical data on the cost of a 
system is important for projecting a credible estimate of future 
costs.[Footnote 39] Although the Marine Corps and Air Force provided 
us with complete estimates of the amount of money they have spent in 
their IUID budgets, the Army and Navy provided incomplete estimates of 
their IUID spending, and the Defense Logistics Agency did not provide 
an estimate. These components were not able to provide complete 
estimates because they do not track IUID spending as a distinct budget 
category. In addition, ODASD(SCI) does not track the five components' 
historical spending on IUID. 

Although the components were not able to provide complete historical 
spending information, according to the information they provided, the 
components spent at least $219 million on IUID implementation from 
fiscal year 2004 through fiscal year 2011. Officials explained that 
they spent this money on a variety of IUID implementation efforts, 
including the acquisition of marking equipment, such as IUID label 
printers and scanners; the marking of legacy items; and the 
development of software to support marking processes. Table 1 
summarizes the five components' reported historical spending on IUID 
over 8 fiscal years. 

Table 1: Components' Reported Spending on IUID Implementation in 
Fiscal Years 2004 through 2011: 

Current dollars in millions: 

Fiscal year: 2004; 
Army: $0.2 million; 
Navy: Did not report; 
Marine Corps: 0.0; 
Air Force: 0.0; 
Defense Logistics Agency: Did not report; 
Total: $0.2 million. 

Fiscal year: 2005; 
Army: $0.2 million; 
Navy: Did not report; 
Marine Corps: 0.0; 
Air Force: 0.0; 
Defense Logistics Agency: Did not report; 
Total: $0.2 million. 

Fiscal year: 2006; 
Army: $0.8 million; 
Navy: Did not report; 
Marine Corps: 0.0; 
Air Force: $12.3 million; 
Defense Logistics Agency: Did not report; 
Total: $13.1 million. 

Fiscal year: 2007; 
Army: $0.6 million; 
Navy: $3.6 million; 
Marine Corps: 0.0; 
Air Force: $14.1 million; 
Defense Logistics Agency: Did not report; 
Total: $18.3 million. 

Fiscal year: 2008; 
Army: $0.6 million; 
Navy: $8.5 million; 
Marine Corps: $7.0 million; 
Air Force: $23.1 million; 
Defense Logistics Agency: Did not report; 
Total: $39.2 million. 

Fiscal year: 2009; 
Army: $2.2 million; 
Navy: $3.0 million; 
Marine Corps: $27.0 million; 
Air Force: $24.4 million; 
Defense Logistics Agency: Did not report; 
Total: $56.6 million. 

Fiscal year: 2010; 
Army: $1.9 million; 
Navy: Did not report; 
Marine Corps: $23.2 million; 
Air Force: $33.4 million; 
Defense Logistics Agency: Did not report; 
Total: $58.5 million. 

Fiscal year: 2011; 
Army: $2.5 million; 
Navy: Did not report; 
Marine Corps: $21.1 million; 
Air Force: $9.3 million; 
Defense Logistics Agency: Did not report; 
Total: $32.9 million. 

Fiscal year: Total; 
Army: $9.0 million; 
Navy: $15.1 million; 
Marine Corps: $78.3 million; 
Air Force: $116.6 million; 
Defense Logistics Agency: NA; 
Total: $219 million[A]. 

Source: GAO analysis of DOD data. 

[A] The components' total reported spending in fiscal year 2011 
dollars is $226.1 million. 

[End of table] 

The Army provided an estimate of the money spent on IUID 
implementation in its depots over this period but, as an official 
explained, could not provide an estimate of IUID spending outside of 
its depots because it does not track IUID funding as a distinct budget 
category. The Navy was also able to report on a portion of its IUID 
spending that was executed by one office within the Navy, but Navy 
officials stated that because the Navy has not funded IUID 
implementation in a centralized fashion, the Navy cannot track how 
much other Navy offices have spent in implementing IUID. An official 
from the Defense Logistics Agency explained that while the agency does 
spend money on IUID implementation, it does not have a distinct budget 
for IUID implementation, and so cannot specifically track its IUID 
costs. 

With regard to future spending, the Marine Corps and the Air Force 
reported that they requested a total of $19.2 million (Marine Corps: 
$10.8 million; Air Force: $8.4 million) for IUID implementation in 
fiscal year 2012. However, the Army and Navy were unable to provide 
their budget requests for fiscal year 2012 because they do not budget 
for IUID spending as a distinct budget category. According to 
officials from the Defense Logistics Agency, an office within the 
agency submitted a request for IUID implementation spending, but this 
request was not included in the agency's final fiscal year 2012 budget 
request. 

In addition to the components not fully tracking their spending on 
IUID implementation, ODASD(SCI) does not track the components' 
spending on IUID implementation. ODASD(SCI) explained that the office 
uses a set of "scorecards" to track the components' IUID 
implementation efforts. In 2011, ODASD(SCI) received two sets of 
scorecards, the first in January and the second in November. In our 
review of these scorecards, we found that the components do not report 
information on either the amount of money they have spent on IUID 
implementation, or the amount of money that they plan to request for 
IUID implementation. 

In its report, the task force estimates that DOD would need to invest 
$3.2 billion to realize the benefits of IUID implementation.[Footnote 
40] This estimate includes several types of costs, such as the cost of 
marking legacy items and the labor required to perform various 
implementation tasks. However, the estimate does not include the 
following four costs: 

* The task force could not completely estimate the costs associated 
with how individual logistics processes would need to change to 
incorporate the use of IUID technology, because it did not have 
sufficient information about these changes. As a relatively new 
technology, IUID is not widely used in existing DOD logistics 
processes. That means that the components will have to modify existing 
processes to use IUID. DOD has made some progress in defining the type 
of logistics processes that would need to change to incorporate IUID. 
For example, according to ODASD(SCI), DOD intends to modify 10 
different categories of logistics processes, such as receipt and 
distribution of items. DOD has made some progress in planning for such 
modifications. For example, the Army Materiel Command has determined 
that 11 of its logistics processes will incorporate IUID functionality 
through one of the Army's Enterprise Resource Planning systems. 
However, according to Army officials, the Army has not yet defined the 
distinct steps at which personnel will use IUID, within its logistics 
processes. Further, according to DOD officials, the components have 
not determined the full number or type of business processes within 
these categories that need to be modified. In addition, in their 2011 
scorecard updates, the Army, Marine Corps, and Air Force reported 
challenges or concerns with progress in defining how their business 
processes will require modification because of IUID. Without 
information on the number of logistics processes that will require 
modification and the specific steps that will need to change to 
accommodate the incorporation of IUID, the task force could not have 
completely estimated costs. Several DOD officials we spoke with agreed 
with this assessment, explaining that without this information, the 
task force was not able to completely estimate IUID implementation 
costs. 

* The task force report states that the task force did not include the 
cost of modifying Enterprise Resource Planning systems to share and 
use UII data because the functionality to use UII data is inherent in 
these systems. However, if DOD is to achieve benefits from IUID, 
Enterprise Resource Planning systems must have the ability to share 
and analyze UII data, and according to DOD officials the ability to 
perform these two functions is not always inherent in these systems. 
For example, the core software package for one of the Army's 
Enterprise Resource Planning systems has the capability to accept UII 
data, but in its current version this capability is not activated. For 
the system to accept UII data, the capability must be activated in a 
future update. According to DOD officials, such modifications to 
Enterprise Resource Planning systems can incur costs. Navy officials 
explained that the task force report does not include the additional 
cost that would be required to modify the Navy's systems to 
communicate with other components' systems, or to analyze UII data to 
improve logistics processes. By not including certain costs to modify 
the relevant Enterprise Resource Planning systems, the task force may 
have left out a substantial set of costs. 

* The report did not include the full cost of marking newly-acquired 
items with IUID. Because the Defense Federal Acquisition Regulation 
Supplement contract clauses provide that contractors are responsible 
for marking or registering items, contractors are likely to build the 
cost of marking items into their contract pricing. Therefore, while 
contractor personnel are marking the items in question, this cost is 
borne by DOD to the extent that the contractor has built the cost of 
marking qualifying items into the costs of the goods or services 
provided. According to component officials, the components do not know 
how much of a newly-acquired item's cost is attributable to 
contractors' marking of that item. However, according to estimates in 
the task force report and provided by the Air Force, contractors' 
average cost to mark a newly-acquired item is about $30 to $50. On the 
basis of GAO analysis of information from the DOD registry on the 
number and rate of contractors' registration of newly-acquired items 
in January 2012, IUID marking by contractors could result in 
approximately $27 million to $45 million in marking costs to the 
components per year. This cost is not included in the task force's 
estimate. 

* As previously discussed, an IUID label on an item may contain human-
readable information, such as the item's National Stock Number. In 
addition, the label has a data matrix that contains information about 
the labeled item. For example, the matrix contains various pieces of 
information that make up the globally unique string of numbers 
referred to as the item's UII number. Contractors have delivered items 
to DOD that have labels with deficient data matrices. If a label has a 
deficient data matrix, DOD cannot use the label's data matrix to track 
or manage items. The task force did not include the cost to the 
components of fixing these deficient IUID data matrices on contractor-
marked items. Although component officials were not able to estimate 
the financial cost of fixing these data matrices, officials explained 
that there is productivity loss associated with fixing them. For 
example, according to Army and Marine Corps officials, their 
verification of a deficient matrix's missing or incorrect data 
requires an average of 10 to 15 minutes, and sometimes requires 
significantly more time, when additional research into the item is 
needed. This investment of time, multiplied by many thousands of 
deficient data matrices, may result in a substantial amount of lost 
productivity for DOD components' personnel. 

DOD May Not Have Appropriately Estimated Financial Benefits: 

The task force report assessed the potential benefits of IUID 
implementation by examining three categories of logistics processes: 
intensive item management, property accountability, and product life 
cycle management. According to the task force's analysis, DOD's 
implementation of IUID is unlikely to result in substantial financial 
benefit in the categories of intensive item management or property 
accountability. However, the report did discuss potential nonfinancial 
benefits of IUID implementation in these two categories. The report 
states that the use of IUID in intensive item management could enable 
strict accountability and control of DOD's most critical assets--such 
as nuclear weapon-related material--across parts of DOD's supply 
chain, enhancing the security and safety of such assets. Moreover, 
according to the report, implementing IUID into property-
accountability processes on the enterprise level could enable DOD to 
track equipment assets throughout their life cycle. The report 
explains that one benefit of tracking on the enterprise level is that 
DOD may be able to more quickly address equipment losses. Further, 
according to an official from the Office of Defense Procurement and 
Acquisition Policy, the use of IUID in DOD's logistics processes could 
lead to improved data quality that may result from automatically 
entering data into IT systems, as opposed to manually entering data. 

While the report does not estimate substantial savings through the 
integration of IUID with intensive item management or property-
accountability processes, the report estimates that IUID 
implementation could result in annual savings of $3 billion to $5 
billion through the implementation of IUID in a collection of 
maintenance processes referred to as product life cycle 
management.[Footnote 41] According to our review of the report and a 
task force official, the key to achieving savings through product life 
cycle management is to track and manage individual items by a unique 
identifier. That approach is called serialized item management. 
According to DOD officials and the task force report, DOD can achieve 
serialized item management by using any type of unique identifier, 
including a traditional serial number; a UII number; or a unique 
identifier provided by a different type of technology, such as a radio 
frequency identification device or a contact memory button. 

The task force estimated achieving substantial financial benefits from 
product life cycle management, but it used a methodology for 
estimating these benefits that may not be appropriate to the scale and 
complexity of DOD's IUID implementation efforts. The IUID task force 
report states that projected savings will gradually increase as 
implementation of IUID spreads throughout DOD and, by fiscal years 
2016 to 2017, DOD may reach a break-even point at which its annual 
financial savings would equal its annual spending for implementation 
of IUID. After fiscal year 2017, the report projects that DOD may pass 
the break-even point, and could begin to realize the annual savings of 
$3 billion to $5 billion. 

To develop its estimate of cost savings through the use of serialized 
item management in product life cycle management, the task force used 
the following methodology: 

* Reviewed case studies of five DOD maintenance programs that use 
serialized item management. The task force observed that by using 
serialized item management,[Footnote 42] the maintenance programs 
reduced costs by an average of 4 to 6 percent in labor and materiel 
costs for maintenance, and in the cost to transport items to 
maintenance locations. 

* Next, the task force estimated maintenance costs by adding DOD's 
fiscal year 2008 budget for depot-and field-level maintenance to DOD's 
fiscal year 2009 budget for maintenance transportation, which together 
total about $83.2 billion. 

* Finally, by applying the 4 to 6 percent reduction to $83.2 billion 
in annual maintenance costs, the task force estimated that an annual 
savings of $3 billion to $5 billion could result from the use of 
serialized item management in product life cycle management 
maintenance processes. 

However, three aspects of this methodology call into question whether 
it is reasonable to assume that DOD-wide use of IUID technology in 
maintenance processes would lead to the savings estimated by the task 
force. 

* The task force estimated DOD-wide savings on the basis of a limited 
number of case studies, and conclusions developed from these studies 
may not be applicable to the substantial complexity and size of the 
DOD-wide maintenance enterprise. According to the Office of the Deputy 
Assistant Secretary of Defense for Maintenance Policy and Programs, 
DOD's maintenance operations support a wide range of weapon systems 
including about 280 ships, 14,000 aircraft and helicopters, 900 
strategic missiles, and 30,000 combat vehicles. Our review of the Task 
Force report indicates the five case studies address--in total--five 
individual weapon systems, whereas DOD performs maintenance on 
hundreds of different systems. Moreover, four of the five case studies 
address either Air Force or Navy programs; only one addressed Army 
programs. Because of the limited scope of the case studies used by the 
task force, conclusions based on these case studies may not apply to 
the DOD-wide maintenance budgets that the task force used in its 
estimation of savings. 

* The case studies did not address programs that use IUID as the 
technology that provides a unique identifier to track items through 
serialized item management. Rather, the case studies addressed 
programs that use other means of uniquely tracking items, such as 
contact memory buttons. Thus, the case studies do not consider costs 
that may be specific to IUID technology, such as the cost to purchase 
scanners or software to read data matrices, or the cost to replace 
deficient IUID data matrices. Because of this, it may be inaccurate to 
assume that maintenance programs using IUID technology will achieve 
the same type or amount of savings claimed by the case studies of 
programs using other technologies. 

* Even when a logistics program experiences cost savings after 
introducing a new technology or process, it can be difficult to link 
the savings directly to a specific cause or technology. For example, 
we visited an installation that is using a combination of IUID, 
passive radio frequency identification, new database software, and a 
reorganization of warehouse space to reduce the cost of managing its 
supply chain. However, an installation official explained that it was 
not possible to determine the extent to which the cost savings were 
attributable to a specific change, such as the introduction of IUID. 
For this reason, it may have been incorrect for the task force to 
assume a link between estimated cost savings and the use of a specific 
technology such as IUID. 

The Task Force Report Did Not Include a Sensitivity Analysis: 

We have previously reported that every estimate is uncertain because 
of the assumptions that must be made about future projections, and 
because of this, cost estimators should always perform a sensitivity 
analysis that demonstrates the effects on the cost and schedule of an 
assumption that may no longer be valid.[Footnote 43] The task force 
report estimates that DOD could begin to realize financial savings 
from IUID implementation after fiscal year 2017, and explains that its 
cost and benefit estimates are conditional, depending on a number of 
assumptions. However, the task force report does not contain a 
sensitivity analysis for either its cost or its benefit estimates. As 
a result, the task force's report does not portray the potential 
effects of changing key assumptions on the report's estimates of cost, 
financial benefits, or the time frames in which the report estimates 
DOD may realize financial benefits. 

There is a substantial amount of uncertainty associated with key 
assumptions on which the task force report's estimates are based. For 
example, the task force report states that the cost to mark legacy 
items is one of the primary drivers of IUID implementation costs. 
However, as discussed in more detail later, DOD may face challenges in 
determining the total number of legacy items it must mark. The task 
force's cost estimate does not reflect the range of costs associated 
with marking a population of legacy items that--according to DOD 
estimates--may range between about 60 million and 122 million items. 
In addition, the task force's estimate of financial benefits assumes 
that the components' IT systems, including their Enterprise Resource 
Planning systems, will have the capability to use UII data for product 
life cycle management in 2015. However, as discussed later in the 
report, the components cannot reliably predict when their Enterprise 
Resource Planning systems will be able to use UII data for product 
life cycle management. The task force's estimate of when DOD will 
begin to realize these benefits does not reflect the possibility that 
the components' Enterprise Resource Planning systems will not have 
this capability in fiscal year 2015. 

Also, the task force's estimates of financial benefits assume IUID 
implementation across each of DOD's components. However, as discussed 
in more detail later, the Navy, Air Force, and Defense Logistics 
Agency are currently not carrying out key IUID implementation efforts. 
For example, the Navy is not systematically marking legacy items and 
the potential integration of IUID with its Enterprise Resource 
Planning system for Supply is unfunded. In addition, the Air Force is 
not actively integrating IUID into its Enterprise Resource Planning 
system. Also, the Defense Logistics Agency is not marking legacy 
items. The task force's estimate of financial benefits does not 
consider that some benefits may not be achieved as a result of DOD's 
partial implementation of IUID. Without a sensitivity analysis of its 
cost and benefit estimates, the task force report does not provide DOD 
leaders with information about how well the estimates may hold up 
under reasonable changes to the assumptions on which the estimates are 
based. 

DOD and Contractors Have Made Some Progress Marking Items with IUID, 
but DOD Faces Challenges in Assessing Progress toward Goals and 
Ensuring That Items Are Sufficiently Marked: 

DOD components and contractors have been marking items with IUID, but 
due to several challenges, it is difficult for DOD to assess its 
progress in marking items or ensuring that contractors are 
sufficiently marking items. DOD components have reported marking more 
than 2 million legacy items,[Footnote 44] and DOD has identified tens 
of millions of legacy items that meet its IUID marking criteria. But, 
DOD does not have complete information on the total number of legacy 
items that its components have marked and must mark in the future. 
Moreover, DOD has not developed a full set of quantifiable goals to 
assess its progress in marking these items. Further, DOD has not set 
interim milestones to determine the components' progress in marking 
items, and DOD's components do not use consistent criteria to track 
progress in legacy item marking. With respect to newly-acquired items 
and pieces of government-furnished property, DOD reports that as of 
January 2012, more than 2,500 contractors had delivered newly-acquired 
items to DOD and had registered over 11.5 million such items and 
pieces of government-furnished property in DOD's IUID Registry. 
However, DOD cannot ensure that contractors are sufficiently marking 
all of the items that require IUID labels, for two reasons: DOD 
reporting requirements do not provide assurance that appropriate 
marking clauses are included in all contracts, and DOD components do 
not have systematic processes to assess the sufficiency of IUID data 
matrices. As a result, DOD may be unable to ensure that contractors 
are marking all newly-acquired items and pieces of government-
furnished property that require IUID labels, and DOD cannot know the 
extent to which contractors are supplying IUID data matrices that the 
components need to track items with IUID technology. 

DOD Components Have Made Some Progress in Marking Legacy Items, but 
Several Challenges Make Progress toward Marking Goals Difficult to 
Assess: 

DOD has made some progress in marking legacy items. In late 2004, the 
Office of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics established the requirement for DOD components to mark 
legacy items with IUID labels and for the military services to develop 
plans to accomplish such marking. An Army depot began marking legacy 
items in 2005, and according to information from DOD's IUID Registry, 
DOD components began registering legacy items in 2006. As of October 
2011, the components reported marking more than 2 million legacy 
items. However, DOD does not have complete information on the total 
number of items to be marked and that have been marked; DOD has not 
quantifiably defined its marking goals according to DOD's IUID marking 
criteria; DOD has not set interim milestones to determine the 
components' progress in marking items; and DOD's components do not use 
consistent criteria to track progress in legacy item marking. 

Total Number of Items to Be Marked and That Have Been Marked Is 
Uncertain: 

The components provided us with estimates of the total number of items 
that must be marked in the future, according to DOD's IUID marking 
criteria. According to the components, the total number of items in 
their inventories that meet DOD's IUID marking criteria is about 122 
million. In addition, the components provided us with estimates of the 
total number of legacy items they have marked, if estimates were 
available. As of October 2011,[Footnote 45] the Army, Marine Corps, 
and Air Force reported that they had marked a total of about 2.7 
million legacy items. The Navy and Defense Logistics Agency did not 
report the marking of legacy items. 

* The Army reported that its inventory contains about 15 million items 
that meet DOD's IUID marking criteria, and that it had marked about 
1.2 million legacy items. 

* The Marine Corps reported that its inventory contains about 3.1 
million items that meet DOD's IUID marking criteria, and that it had 
marked about 0.3 million legacy items. 

* The Air Force reported that its inventory contains about 13.3 
million items that meet DOD's IUID marking criteria, and that it had 
marked about 1.2 million legacy items. 

* The Navy reported that its inventory contains about 60.6 million 
items that meet DOD's IUID marking criteria. However, the Navy could 
not provide an estimate of the number of legacy items it had marked. 
According to a Navy official, there are "pockets of compliance" within 
the Navy, in which certain organizations had marked legacy items with 
IUID labels. But the Navy does not have a Navy-wide, systematic plan 
or approach to legacy marking; it does not track the number of legacy 
items being marked within these pockets; and it characterized its 
progress in legacy marking as "minimal." 

* The Defense Logistics Agency reported that its inventory contains 
about 30.0 million items that meet DOD's IUID marking criteria. 
However, according to the agency, it is not currently marking legacy 
items; does not have the capability or required technical information 
to mark the legacy items in its inventory; and does not plan to mark 
legacy items in the future. For example, the agency does not have 
marking equipment. In addition, agency officials explained that the 
agency lacks information on how to appropriately mark legacy items 
with IUID labels.[Footnote 46] According to the officials, the other 
components must provide this information to the agency, because the 
components manage the items that the agency stores in its inventory. 

With regard to the total number of items to be marked in the future, 
some component officials stated that their estimates are incomplete. 
For example, Army officials explained that their estimate does not 
include certain classified items because the system they used to 
estimate the Army's legacy item inventory does not interface with 
systems that track those classified items. Navy officials stated that 
their estimate does not include items that are embedded in other items-
-such as a circuit board inside of an aircraft--because of system 
limitations and the time it would have taken to include these items in 
the Navy's estimate. Further, Defense Logistics Agency officials 
explained that their estimate does not include items that are 
classified by the components as serially managed. Moreover, the 
components' estimates of legacy items to be marked in the future do 
not match the estimate of the total number of legacy items to be 
marked according to the task force's report. According to the report, 
DOD has a total of about 60 million legacy items to be marked. 
However, the components report that they must mark a total of about 
122 million legacy items, and the Navy alone estimates it has 60.6 
million legacy items to mark in the future. Because the task force's 
estimate is 49 percent smaller than the components' estimates, DOD may 
not have complete information on the total number of legacy items in 
its inventory that meet IUID marking criteria, and that it must mark 
in the future. 

As stated above, the components reported to us that they had marked 
about 2.7 million legacy items. However, information from the DOD IUID 
Registry indicates that about 4.9 million legacy items were registered 
as of October 2011.[Footnote 47] As previously discussed, an item's 
UII may be entered into the registry in one of two ways. First, the 
item can be marked with an IUID label, and the UII associated with 
that label is registered. Second, DOD or contractors can establish a 
virtual UII, registering an item before it is eventually marked with a 
label. Because the registry's estimate of legacy items registered is 
45 percent larger than the components' estimate, it is unclear how 
many legacy items that DOD has marked. Table 2 summarizes the 
components' estimates of the total number of legacy items in their 
inventories that meet DOD's IUID marking criteria; the task force's 
estimate of the total number of legacy items in the components' 
inventories that meet DOD's IUID marking criteria; the components' 
estimates of the total number of legacy items they have marked; and 
the total number of legacy items recorded in the DOD IUID Registry. 

Table 2: Number of Legacy Items in Components' Inventories That Meet 
DOD's IUID Marking Criteria and That the Components Have Marked, as Of 
October 2011: 

DOD component: Army; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 15.0; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: [Empty]; 
Components' estimates of number of legacy items marked: 1.2; 
DOD registry information on number of legacy items registered[C]: 
[Empty]. 

DOD component: Navy; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 60.6; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: [Empty]; 
Components' estimates of number of legacy items marked: Did not 
provide; 
DOD registry information on number of legacy items registered[C]: 
[Empty]. 

DOD component: Marine Corps; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 3.1; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: [Empty]; 
Components' estimates of number of legacy items marked: 0.3; 
DOD registry information on number of legacy items registered[C]: 
[Empty]. 

DOD component: Air Force; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 13.3; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: [Empty]; 
Components' estimates of number of legacy items marked: 1.2; 
DOD registry information on number of legacy items registered[C]: 
[Empty]. 

DOD component: Defense Logistics Agency; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 30.0; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: [Empty]; 
Components' estimates of number of legacy items marked: 0.0; 
DOD registry information on number of legacy items registered[C]: 
[Empty]. 

DOD component: Total; 
Components' estimates of number of legacy items that meet DOD's IUID 
marking criteria[A]: 122.0; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: 60.0; 
Components' estimates of number of legacy items marked: 2.7; 
DOD registry information on number of legacy items registered[C]: 
4.9[D]. 

DOD component: Size difference between totals; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: 62.0; 
DOD registry information on number of legacy items registered[C]: 2.2. 

DOD component: Percent difference between totals; 
Task force estimate of number of legacy items that meet DOD's IUID 
marking criteria[B]: 51.0%; 
DOD registry information on number of legacy items registered[C]: 
45.0%. 

Source: GAO analysis of DOD data. 

[A] The Navy estimate was completed in December 2009. According to 
Navy officials, the Navy developed its estimate on the basis of the 
task force's recommended revisions of DOD's IUID marking criteria, 
which were adopted by DOD in December 2010. The Army, Air Force, and 
Defense Logistics Agency estimates are as of October 2011; the Marine 
Corps' estimate is as of January 2012. 

[B] The task force first reported its estimate in June 2010 and 
reported the same estimate in March 2011. 

[C] The DOD IUID Registry contains information on legacy items marked 
by DOD organizations other than the five components addressed in this 
report. However, according to an official from the Office of Defense 
Procurement and Acquisition Policy, the five DOD components addressed 
in this report are conducting the vast majority of legacy item 
marking, and thus it is valid to assume that only a very small 
fraction of the legacy items recorded in the registry were recorded by 
DOD organizations other than these five components. 

[D] According to ODASD(SCI), the DOD IUID Registry contained 1.6 
million virtual UIIs as of October 2011. Officials stated that these 
virtual UIIs may account for a portion of the difference between the 
components' reported total of 2.7 million items marked and the DOD 
IUID Registry's total of 4.9 million items registered. 

[End of table] 

Not All of the Goals Established by DOD for Measuring Progress in 
Marking Legacy Items Are Quantifiable: 

An agency's establishment of goals is a key internal control, and we 
have previously reported that in the absence of quantifiable targets, 
it is difficult for officials to assess whether goals were achieved, 
because comparisons cannot be made between projected performance and 
actual results.[Footnote 48] In 2010, the task force recommended that 
DOD focus its legacy marking efforts on those items from which DOD 
could derive the greatest benefit. According to an ODASD(SCI) 
official, it is DOD's goal to complete the marking of the "majority" 
of these legacy items by the end of fiscal year 2015. In addition, 
according to the task force's report, DOD's marking of a "significant" 
number of legacy items is one of the keys to realizing the potential 
financial benefits of IUID implementation. We have previously reported 
that, where appropriate, to more easily assess agency progress, 
performance goals should have quantifiable, numerical 
targets.[Footnote 49] However, neither ODASD(SCI) nor the task force 
has quantified DOD's goals of marking a "majority" of legacy items, or 
a "significant" number of legacy items, respectively. Further, while 
some DOD components have quantifiable goals for marking certain legacy 
items, others do not. As previously discussed, DOD has established 
IUID marking criteria for different categories of inventory, such as 
certain items with a unit acquisition cost of $5,000 or greater; 
certain items that are serially managed; certain items that are 
controlled (sensitive or classified); and certain depot-level 
reparable items. We found that some components had set quantifiable 
goals using these criteria. For instance, the Marine Corps has 
quantifiable goals for each of the categories defined by DOD's IUID 
marking criteria. The Army has quantifiable goals for each of these 
categories except for items that are controlled (sensitive or 
classified). Neither the Navy nor the Air Force have established 
quantifiable goals defined by DOD's IUID marking criteria. 

DOD Has Not Established a Full Set of Quantifiable Interim Milestones 
for Measuring Progress in Marking Legacy Items: 

Once quantifiable goals have been established, we have previously 
reported that metrics for a program's main efforts--such as interim 
milestones and schedules--give decision makers the information needed 
to assess progress and estimate realistic completion dates.[Footnote 
50] As previously discussed, we have noted that quantifiable target--
such as interim milestones--can assist organizations in tracking 
progress toward their goals. For example, quantifiable interim 
milestones could assist DOD in evaluating whether the components are 
marking legacy items at a rate that will allow DOD to meet its fiscal 
year 2015 goal of marking a "majority" or "significant" number of 
legacy items in its inventory. 

As of January 2012, ODASD(SCI), the task force, and the components had 
not fully developed quantifiable interim milestones to track progress 
toward DOD's goals for marking legacy items. Neither ODASD(SCI) nor 
the task force had set interim milestones for the number of items that 
should be marked in fiscal year 2015, DOD's target date for marking a 
"majority" of legacy items and a "significant" number of legacy items. 
Further, while some components have set interim milestones for 
tracking their progress in marking certain legacy items, others have 
not. For instance, the Air Force has established interim milestones 
for the marking of some legacy items, such as class VII 
equipment,[Footnote 51] but it is still working on developing interim 
milestones for others, such as class II items. The Marine Corps has 
established a goal of completing the marking of about 34 percent of 
its legacy items by December 2012. However, it has established no 
interim milestones. Similarly, neither the Navy nor the Defense 
Logistics Agency has developed interim milestones. 

In January 2012, ODASD(SCI) provided us with an IUID timeline 
containing targets that are not quantified. The IUID timeline 
indicates that ODASD(SCI) expects the components to be marking legacy 
items at least through fiscal year 2017. In addition, ODASD(SCI)'s 
IUID timeline lays out fiscal year 2012 targets for the components to 
determine the number of items they need to mark, and fiscal year 2013 
targets for the components to report on their legacy marking progress 
to ODASD(SCI). According to ODASD(SCI) officials, the office intends 
for the components to use the Federal Logistics Information System to 
eventually provide quantifiable reports on their legacy marking 
efforts.[Footnote 52] In addition, the DASD(SCI) stated that he has 
asked the components to develop quantifiable interim milestones for 
legacy marking. The components' use of the system may provide them 
with a means to report progress in regard to these milestones. 
However, ODASD(SCI) officials stated that the system does not yet have 
this capability and they do not yet have an estimate for when the 
components could begin their reporting. Until ODASD(SCI) and the 
components begin to use such milestones to assess DOD's progress in 
marking legacy items, it is difficult to know whether DOD's current 
number of marked legacy items represents what DOD intended to achieve, 
almost 7 years after DOD established the requirement to mark legacy 
items. 

DOD Components Use Inconsistent Criteria for Tracking Progress: 

We have previously reported that an important element of measuring 
performance is the collection of data that are complete and consistent 
enough to document performance and support decision making.[Footnote 
53] However, we found that the various DOD components track their 
progress in the marking of legacy items by using different criteria. 
As previously discussed, DOD has established IUID marking criteria for 
different categories of inventory. We found that some components used 
these criteria to track their progress, while others did not. For 
instance, the Army and the Marine Corps currently use DOD's IUID 
marking criteria to track their progress in marking legacy items. The 
Air Force defines its progress in marking legacy items according to 
military classes of supply, which is not one of the categories of 
inventory in DOD's IUID marking criteria. ODASD(SCI)'s January 2012 
IUID timeline does not indicate whether either ODASD(SCI) or the 
components intend to track and report legacy marking progress using 
consistent criteria. Without the components reporting complete and 
comparable data, DOD's assessment of its progress in marking legacy 
items will remain limited. ODASD(SCI) and the components' use of 
numerical goals, interim milestones, and the tracking of progress with 
categories defined by DOD's IUID marking criteria is summarized in 
table 3. 

Table 3: DOD's Methods of Assessing Progress in Legacy Item Marking 
Using Categories Defined by Its IUID Marking Criteria, as of October 
2011: 

Organization: ODASD(SCI); 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: No; 
Interim milestones: No; 
Tracking progress: No. 

Organization: Army; 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: Yes, for 4 categories; 
Interim milestones: No; 
Tracking progress: 4 categories of DOD's IUID marking criteria. 

Organization: Navy; 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: No; 
Interim milestones: No; 
Tracking progress: No. 

Organization: Marine Corps; 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: Yes, for 5 categories; 
Interim milestones: No; 
Tracking progress: All categories of DOD's IUID marking criteria. 

Organization: Air Force; 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: No; 
Interim milestones: No; 
Tracking progress: Military class of supply, which is not a category 
of DOD's IUID marking criteria. 

Organization: Defense Logistics Agency; 
Is organization using categories defined by DOD's IUID marking 
criteria[A]: 
Numerical goals: Yes, for 4 categories; 
Interim milestones: No; 
Tracking progress: No. 

Source: GAO analysis of DOD data. 

[A] As previously discussed, DOD has established criteria for the 
types of items required to be marked with IUID labels. These criteria 
vary for different categories of inventory: there are currently four 
criteria for marking principal end items and new secondary items, and 
two criteria for marking secondary items in use or in inventory. The 
criteria include certain items for which the government's unit 
acquisition cost is $5,000 or more, as well as certain types of items 
that cost less than $5,000, to include those that are serially 
managed; certain items that are depot-level reparable; and those 
deemed by a DOD component to require unique item-level traceability at 
any point in their life cycle. 

[End of table] 

DOD Has Taken Some Steps to Ensure That Contractors Are Sufficiently 
Marking Newly-acquired Items and Government-Furnished Property 
Requiring IUID, but Faces Challenges: 

While legacy items are marked by DOD, newly-acquired items and 
government-furnished property must be marked by DOD's contractors. DOD 
has made some progress in ensuring that these types of items are 
marked by contractors. According to the DOD IUID Registry, more than 
2,500 contractors had registered over 11.5 million newly-acquired 
items in the registry as of January 2012. DOD plans to eventually 
finish marking its legacy items, but contractors will continue to mark 
items that are acquired by DOD, or provided by DOD to contractors, and 
meet its IUID marking criteria.[Footnote 54] According to January 2012 
data from the DOD IUID Registry, the number of newly-acquired items 
and government-furnished property already exceeds the number of legacy 
items. If current marking trends continue, the ratio of these items to 
legacy items will continue to increase, and newly-acquired items and 
government-furnished property will continue to make up the majority of 
DOD's inventory of IUID-labeled items. For this reason, the future 
success of DOD's IUID implementation efforts depends on having 
contractors sufficiently mark newly-acquired items and government-
furnished property with IUID labels. While DOD has made some progress, 
it cannot currently ensure that contractors are sufficiently marking 
all of the items that require IUID labels, for two reasons: reporting 
requirements do not provide assurance that appropriate IUID-marking 
contract clauses are included, and DOD's inspection efforts are not 
systematic. Without adequate reporting requirements regarding the 
components' insertion of IUID clauses into applicable contracts, DOD 
cannot know the extent to which it is requiring contractors to mark 
all items that should have IUID labels. And, without sufficient 
inspection of IUID data matrices, DOD cannot know the extent to which 
contractors are supplying deficient data matrices. 

Process for Marking, and Verifying the Marking, of Qualified Items: 

In order for DOD to use IUID technology to track contractor-marked 
items that qualify for IUID marking, DOD and its contractors must take 
certain steps to help ensure that qualified items are marked, and that 
the IUID marks are usable. These steps are as follows: 

* in contracts for qualified items, the components must ensure that 
the contracts contain appropriate contract clauses and that those 
clauses are correctly completed. These clauses require the contractor 
to mark or register qualified items; 

* the contractor must then mark items with an IUID label with a data 
matrix that can be read electronically or establish a virtual UII in 
some cases; and: 

* the data matrix must contain the necessary information, organized 
with the proper data elements and syntax, which must be registered in 
DOD's IUID Registry.[Footnote 55] 

DOD components have processes in place to ensure the sufficiency of 
data matrices in IUID labels the components use to mark legacy items. 
Upon labeling an item, the component personnel electronically read the 
label's data matrix. If the matrix is not usable, personnel replace it 
with a new label that has a functioning matrix. To ensure that 
contractors are sufficiently marking newly-acquired items and 
government-furnished property with IUID labels, DOD has taken two key 
steps. The Defense Federal Acquisition Regulation Supplement requires 
DOD components to insert specific clauses into contracts that involve 
newly-acquired items and government-furnished property that meet DOD's 
IUID marking criteria. One clause requires contractors to mark and 
register specified types of items that DOD is acquiring from the 
contractor (the acquired-items clause),[Footnote 56] and the other 
clause requires contractors to establish a unique identifier for--and 
register--specified pieces of government-furnished property (the 
government-property clause).[Footnote 57] These clauses require 
contractors to mark with IUID labels or register all items meeting 
specified criteria, or otherwise listed in the contract clause; and to 
format the labels' data matrices according to DOD-wide standards. In 
addition, according to DOD officials, it is a good practice for the 
components or the Defense Contract Management Agency to inspect items 
acquired from contractors to determine whether qualified items are 
marked with an IUID label and whether that label's data matrix is 
formatted according to DOD-wide standards. Officials from several 
components told us that they had inspected some newly-acquired items 
to determine whether these items were sufficiently marked with IUID 
labels. For the items they reviewed, those inspections helped to 
detect problems in contractors' marking of items. Also, since 2009, 
the Defense Contract Management Agency has had a surveillance program 
in place to inspect newly-acquired items and assess contractors' 
compliance with the acquired-items clause. 

Reporting Requirements Do Not Provide Assurance That Appropriate 
Contract Clauses Are Included: 

A DOD memorandum requires that the components report to the Office of 
Defense Procurement and Acquisition Policy on only a portion of 
contracts that should include the clauses related to IUID.[Footnote 
58] According to the memorandum, components are required to report on, 
among other things, whether the acquired-items clause is present in 
contracts for newly-acquired items. However, they are not required to 
report on whether the government-furnished property clause is present 
in contracts involving government-furnished property. Several 
components are thus reporting only on whether they are including the 
acquired-items clause in contracts. While the Air Force reports on 
whether it is including both the acquired-items clause and the 
government-property clause in contracts, the Army, Navy, Marine Corps, 
and Defense Logistics Agency report only on whether they are including 
the acquired-items clause. While certain components are reviewing 
contracts for items that cost more than $5,000 or are serially 
managed, none of the components are reviewing contracts for items that 
meet other DOD IUID marking criteria, such as those for controlled 
(sensitive or classified) items. Consequently, DOD does not know the 
full extent to which the components are complying with the 
requirements to include IUID-related clauses in contracts. Without 
this information, DOD may be unable to ensure that contractors are 
marking all newly-acquired items and pieces of government-furnished 
property that require IUID labels. 

DOD's Inspection Efforts Are Not Systematic: 

According to DOD officials, it is a good practice for either a DOD 
component or the Defense Contract Management Agency to inspect items 
to ensure that contractors have marked items with IUID labels, and 
that the labels' data matrices are not deficient. Inspection of newly-
acquired items is important because contractors have been delivering 
IUID labels with deficient data matrices that cannot be used by DOD. 
However, neither the components nor the Defense Contract Management 
Agency have been systematically inspecting the data matrices in IUID 
labels applied to items by contractors. According to both the Marine 
Corps and the Air Force, more than 10 percent of the newly-acquired 
items' data matrices they examined after receipt of the items from the 
contractor have been deficient. For example, one Marine Corps 
installation reported that from January 2010 through October 2011, 
there were 8 months in which more than 10 percent of newly-acquired 
items provided by contractors were marked with deficient data 
matrices. Problems include having matrices in which the syntax of the 
UII data was incorrect or missing key elements; matrices that could 
not be electronically read; and matrices that contained a UII number 
that had not been registered in DOD's IUID Registry. 

Although the Marine Corps and Air Force have assessed a portion of the 
data matrices on newly-acquired items in their inventories, these 
components are not systematically assessing whether contractors are 
sufficiently marking these items. For example, the Marine Corps 
estimates that it has assessed the sufficiency of contractors' marking 
for about 79 percent of all newly-acquired items' data matrices in its 
inventory. Officials from both the Marine Corps and Air Force 
explained, however, that neither has developed a systematic approach 
for inspecting these items' data matrices. According to Army 
officials, the Army also lacks a systematic approach to inspecting 
these items' data matrices. For example, the two depots identified by 
the Army as furthest along in IUID implementation have not established 
a policy or set procedures for assessing the sufficiency of the data 
matrices of newly-acquired items in their inventories. Defense 
Logistics Agency officials explained that although its personnel do 
perform various types of inspection and acceptance procedures on items 
delivered to its sites, personnel are not inspecting items' data 
matrices. In addition, the Navy does not have a policy or plans in 
place to systematically assess newly-acquired items' data matrices. 

According to the Defense Contract Management Agency's information 
memorandum that describes procedures for inspecting contractors' data 
matrices, the agency's inspectors are to verify the readability of 
these matrices if a scanner for reading matrices is available at the 
inspection site. However, as previously discussed, the only way to 
assess the functionality of a data matrix is to use a tool that can 
electronically read the matrix. Because its memorandum does not 
require inspectors to electronically read data matrices in all cases, 
the Defense Contract Management Agency cannot ensure that the items it 
inspects have an IUID label with a data matrix that can be properly 
read; that the data matrix contains the necessary UII data, organized 
with the proper syntax; and that the item's UII number is registered 
in DOD's IUID Registry. Furthermore, officials from the Defense 
Contract Management Agency said their inspectors rely on contractors 
to provide the technology to electronically read data matrices. If 
contractors do not provide this technology, inspectors at those 
manufacturing sites cannot electronically read and verify the 
sufficiency of data matrices. 

The Office of Defense Procurement and Acquisition Policy and the 
components have taken steps to address some of these challenges. For 
example, in February 2011, the office issued a DOD standard operating 
procedure for assessing the sufficiency of data matrices.[Footnote 59] 
Also, through the Product Quality Deficiency Report process,[Footnote 
60] Marine Corps item managers are beginning to work with contractors 
to address the contractors' delivery of deficient data matrices. In 
addition, in the first quarter of fiscal year 2012, the Air Force 
began to track the number of deficient data matrices it is discovering 
as it assesses the sufficiency of newly-acquired items' data matrices. 
However, unless all of the components and the Defense Contract 
Management Agency are systematically assessing whether contractors are 
sufficiently marking newly-acquired items, DOD cannot know the full 
extent to which contractors are supplying deficient data matrices. 

DOD Has Made Some Progress in Preparing to Share UII Data 
Enterprisewide, but Faces Challenges: 

DOD has made some progress in developing a capability to share UII 
data enterprisewide and integrating IUID functionality with its 
Enterprise Resource Planning systems.[Footnote 61] For example, DOD is 
in the process of revising key guidance on using IUID technology and 
UII data across DOD, and three components are temporarily storing UII 
data until they are ready to use these data in their Enterprise 
Resource Planning systems. However, DOD faces several challenges in 
sharing UII data enterprisewide, and it is unlikely that it will meet 
a fiscal year 2015 goal to use UII data for the management of items in 
enterprise information systems. Further, DOD cannot reliably predict 
when it will meet this goal, because ODASD(SCI) and the components 
have not fully scheduled for integrating IUID functionality with the 
IT systems through which the components plan to achieve this 
capability, their Enterprise Resource Planning systems. 

To Achieve Key Benefits, DOD Plans to Use IUID Technology in 
Enterprisewide Logistics Processes by the End of Fiscal Year 2015: 

It is DOD's goal for its components to share UII data departmentwide, 
and the components are to use these data for unique item tracking. 
According to a DOD instruction,[Footnote 62] the Director for Defense 
Procurement and Acquisition Policy is to ensure unique IUID 
identifiers are established to enable items to be tracked and traced 
throughout their life cycle in acquisition and logistics business 
processes and systems, in an integrated approach across DOD. Further, 
a 2011 IUID implementation schedule from ODASD(SCI) states that 
certain DOD item management processes are to be using UII data to 
manage items by the end of fiscal year 2015. Specifically, according 
to the schedule, by fiscal year 2015, two categories of logistics 
processes--intensive item management and product life cycle 
management--are to use IUID technology. 

As previously discussed, the task force report assessed the potential 
benefits of using IUID technology in these logistics processes. In 
both cases, the report explains that sharing UII data across DOD is 
key to realizing the full benefits of these processes. Regarding 
intensive item management, the report states it is clear that DOD 
requires an enterprisewide approach to managing critical items and the 
largest benefits of managing items intensively would be achieved by 
using UII data across the enterprise. 

With regard to product life cycle management, the task force report 
estimates that DOD could achieve substantial financial benefits 
through the use of UII data in this process. In our previous 
discussion, we explained that the task force report's methodology for 
estimating these financial benefits may not be appropriate. However, 
if DOD is to achieve potential benefits of product life cycle 
management, the report explains that benefits would come primarily 
through analysis of UII data, and that DOD should expect to see the 
full benefit of this analysis as its Enterprise Resource Planning 
systems begin sharing and using these data. As previously mentioned, 
the report states that DOD could begin to achieve the net financial 
benefits of IUID implementation in fiscal year 2017. However, in order 
to do so, the report assumes that DOD will have the capability to 
share and use UII data, enterprisewide, by fiscal year 2015. 

DOD and Its Components Have Made Some Progress in Integrating IUID 
with Their Enterprise Resource Planning Systems: 

Since DOD began its IUID technology implementation efforts in fiscal 
year 2004, it has made some progress in preparing to share UII data 
enterprisewide through its Enterprise Resource Planning systems, in 
two main areas. First, DOD is in the process of modifying its supply 
chain management policy and guidance to incorporate use of IUID 
technology and UII data across DOD. Second, three of the components 
have developed IT systems to temporarily store data from IUID-labeled 
items until these data can be uploaded into Enterprise Resource 
Planning systems. 

Revisions to Policy and Guidance Are Underway: 

In January 2012, ODASD(SCI) provided us with sections from a draft 
revision to the regulation that establishes DOD's supply chain 
management processes and procedures, including sections pertaining to 
IUID.[Footnote 63] The draft sections we reviewed define standards and 
procedures for using IUID in DOD Enterprise Resource Planning systems. 
If implemented, the revisions would likely help DOD move forward in 
its integration of IUID technology and UII data with its IT systems--
including its Enterprise Resource Planning systems--in two ways. 
First, the draft revisions would establish standards for acceptable 
electronic scanners, which should help ensure interoperability across 
DOD organizations that are scanning and uploading UII data from IUID 
labels' data matrices. Second, the draft revisions would require DOD 
organizations to update their UII data-sharing capabilities by 
adopting a system to share UII data, such as the Defense Logistics 
Management Standards; according to DOD officials, this system is 
replacing an older one that is unable to share UII data.[Footnote 64] 
Adoption of the Defense Logistics Management Standards is for that 
reason essential to IUID implementation. 

UII Data Are Being Temporarily Stored: 

Because their Enterprise Resource Planning systems are not currently 
capable of accepting or storing UII data at a componentwide level, the 
Army, Marine Corps, and Air Force have developed IT systems to 
temporarily store UII data generated by the labeling of both legacy 
and newly-acquired items.[Footnote 65] However, these systems have 
limited capabilities to manage or use UII data. For example, these 
temporary systems are not capable of sharing UII data within or 
between components. As of January 2012, the Air Force's temporary 
system was limited to use on individual computer workstations, and 
could not send or receive UII data from other Air Force or DOD 
computers. In addition, the Marine Corps used its temporary system to 
provide us with information on its inventory of IUID-labeled legacy 
items, but the system was not designed to perform more complex tasks 
such as analyzing UII data in support of product life cycle management 
processes. 

DOD Faces Several Challenges in Integrating IUID and Is Unlikely to 
Meet Its Fiscal Year 2015 Goal: 

DOD faces three challenges in sharing UII data enterprisewide and 
integrating IUID functionality with its Enterprise Resource Planning 
systems. First, ODASD(SCI) and the components have not fully defined 
the requirements for using UII data across DOD, or within the 
components' Enterprise Resource Planning systems. Second, as of April 
2012, the Air Force and the Navy were not actively integrating IUID 
with their Enterprise Resource Planning systems. And third, ODASD(SCI) 
and the components have not fully scheduled for integration of IUID 
functionality with their Enterprise Resource Planning systems. As a 
result, DOD is unlikely to meet its fiscal year 2015 goal to use UII 
data in intensive item management and product life cycle management. 

Requirements Are Not Fully Defined: 

Officials from the Army, Marine Corps, Air Force, and Defense 
Logistics Agency said that their components had not yet fully defined 
the component-specific UII requirements for their respective 
Enterprise Resource Planning systems. A Marine Corps official stated 
that, as of January 2012, requirements for how the Marine Corps system 
will interface with scanners were in draft form. Officials from the 
Defense Logistics Agency explained that because the agency manages 
items on the basis of the requirements of the other components, it 
could not finalize the business rules for using UII data in its system 
until the other components had determined their requirements. 
According to DOD officials, it is unclear when the requirements or 
related business rules will be fully defined and, until they are 
defined, the components cannot complete their integration of IUID 
technology with their IT systems, including their Enterprise Resource 
Planning systems. 

Air Force and Navy Were Not Actively Integrating IUID with Enterprise 
Resource Planning Systems: 

As of April 2012, the Air Force and the Navy were not actively 
integrating IUID with their Enterprise Resource Planning systems. 
According to Air Force officials, because of cost overruns and delays 
in the development of its Enterprise Resource Planning system, the 
Office of the Secretary of Defense and the Air Force are planning to 
evaluate alternatives to the system. Because this system is central to 
the Air Force's IUID implementation efforts and the Air Force does not 
know when a decision will be made, officials stated that they cannot 
estimate when--or whether--the system will be ready to share and use 
UII data. According to Air Force officials, the Air Force has a data 
network that provides the capability to share UII data within the Air 
Force, between certain IT systems. However, they stated that this data 
network does not currently have the capability to share UII data with 
other components, across DOD. Further, the officials stated that the 
Air Force's plan is to eventually share UII data enterprisewide 
through its Enterprise Resource Planning system. In October 2011, 
senior Navy officials stated that the Navy had no plans to integrate 
IUID with its Enterprise Resource Planning system for Supply, and will 
not be ready to share or use UII across its systems--or with other 
components' systems--by the end of fiscal year 2015. Further, they 
explained that the Navy was not actively integrating IUID with its 
Enterprise Resource Planning system for Supply because strict budget 
conditions compelled Navy leadership to allocate funds to programs the 
Navy considered to be of higher priority than IUID implementation. As 
of April 2012, the Navy stated that proposed integration efforts 
remained unfunded. 

ODASD(SCI) and the Components Do Not Have Complete Integrated Master 
Schedules for Integration of IUID Functionality with Their Enterprise 
Resource Planning Systems: 

Because neither ODASD(SCI) nor the components have complete integrated 
master schedules for the integration of IUID functionality with their 
Enterprise Resource Planning systems, DOD cannot reliably predict when 
it will be able to use these systems to meet its fiscal year 2015 goal 
to use UII data in intensive item management and product life cycle 
management. A key internal control is the use of performance measures, 
and we have previously reported that such metrics for a program's main 
efforts--including interim milestones and schedules--give decision 
makers the information needed to assess progress and estimate 
realistic completion dates.[Footnote 66] In addition, we have reported 
that a reliable schedule--such as an integrated master schedule--is 
crucial to estimating the overall timeline and cost of IT programs, 
including Enterprise Resource Planning systems. An integrated master 
schedule is the time-phased schedule DOD and other agencies use for 
assessing technical performance. It contains the detailed tasks or 
work packages necessary to ensure program execution. Further, we have 
reported that without fully integrating the distinct activities that 
make up an IT program with such a schedule, an organization will not 
be able to measure its progress toward completion and cannot be held 
accountable for results.[Footnote 67] 

Although the Army has integrated master schedules for its two 
Enterprise Resource Planning systems, these schedules lack key 
elements, such as distinct activities for IUID integration and 
detailed processes for transmission of UII data across the systems. 
The Air Force has an integrated master schedule for its Enterprise 
Resource Planning system, and this schedule has distinct activities 
for IUID integration. However, as previously discussed, the Office of 
the Secretary of Defense and the Air Force are in the process of 
evaluating whether to modify, or cancel and replace, the Air Force's 
Enterprise Resource Planning system. According to Air Force officials, 
the system's current schedule will need to be revised once the future 
of the system has been determined. The Marine Corps has an integrated 
master schedule for its Enterprise Resource Planning system, and 
Marine Corps officials have stated that they plan to amend the 
schedule to include distinct IUID activities. However, as of January 
2012, it did not contain them. As discussed previously, the Navy is 
not actively integrating IUID with its Enterprise Resource Planning 
system for Supply and does not have an integrated master schedule for 
integrating IUID with its Enterprise Resource Planning system. 
ODASD(SCI) has produced an IUID timeline that contains general targets 
for the fielding of IUID-capable Enterprise Resource Planning systems. 
However, an ODASD(SCI) official stated that it does not have an 
integrated master schedule to coordinate or track the progress of the 
components' efforts to integrate IUID with their Enterprise Resource 
Planning systems. Officials from ODASD(SCI) and several components 
have reported that they are unsure of when the components' Enterprise 
Resource Planning systems will be able to share UII data within their 
networks, a key capability for both intensive item management and 
product life cycle management. 

Given the challenges ODASD(SCI) and the components face in sharing UII 
data enterprisewide and integrating IUID with their Enterprise 
Resource Planning systems, DOD likely will face difficulties in 
meeting its IUID integration goals. Without fully defined 
requirements; resolving the challenges posed by the Air Force and the 
Navy not actively integrating IUID with their Enterprise Resource 
Planning systems; and an integrated master schedule that includes IUID 
integration at the component level and at the DOD-wide level, DOD 
cannot reliably predict whether it will meet its goal to use these 
systems to manage items through intensive item management and product 
life cycle management by the end of fiscal year 2015, or predict when 
these systems will have this capability. 

Conclusions: 

Using UII data could enable DOD to improve accountability and 
management of equipment and materiel, and increase efficiencies in 
maintenance, which could potentially result in cost savings in some 
cases. DOD is in the process of developing a framework for managing 
and implementing IUID technology, but could benefit from fully 
implementing best management practices that would enable the 
department to better determine the costs and benefits of IUID 
implementation, and progress toward goals. DOD components have 
reported marking more than 2 million legacy items, and DOD has made 
some progress in ensuring that its contractors are marking newly-
acquired items with IUID. As of January 2012, though, DOD's 
implementation of IUID technology faces several substantial 
challenges. For example, while the components report marking more than 
2 million items, DOD does not have quantifiable goals or interim 
milestones that it can use to assess progress in achieving its fiscal 
year 2015 goal of marking a "majority" of legacy items, or the task 
force's goal of marking a "significant" number of legacy items. With 
regard to items that must be marked by contractors, in the absence of 
policies and procedures that establish a systematic process for 
assessing the sufficiency of contractor-supplied data matrices, DOD is 
unable to determine the extent to which contractors are sufficiently 
marking items. This limits DOD's ability to ensure that it can track 
those items. Also, DOD has not fully developed the schedules needed to 
integrate IUID with existing IT systems, so that DOD can share UII 
data enterprisewide. This impedes its successful integration of IUID 
technology with these systems by the end of fiscal year 2015, its 
stated goal, and prevents the department from determining when it 
might achieve this integration. At a time when the nation faces fiscal 
challenges, and defense budgets are becoming tighter, DOD leaders' 
lack of key information on IUID implementation could hinder sound 
program management and decision making. 

Recommendations for Executive Action: 

We recommend that the Secretary of Defense direct the Under Secretary 
of Defense for Acquisition, Technology, and Logistics to complete its 
implementation and management framework for IUID by incorporating key 
elements of a comprehensive management approach, such as a complete 
analysis of the return on investment, quantitatively-defined goals, 
and metrics for measuring progress. To do so, we recommend that the 
Secretary of Defense direct the following organizations to take six 
actions: 

* The Under Secretary of Defense for Acquisition, Technology, and 
Logistics to update the IUID task force report's estimates of costs 
and benefits by incorporating key elements of a sound investment 
analysis including a more complete estimate of all associated costs, 
an appropriate methodology for estimating benefits, and a sensitivity 
analysis of these estimates. 

* The Under Secretary of Defense for Acquisition, Technology, and 
Logistics, in coordination with the components, develop quantitatively-
defined goals for the number of legacy items that may allow DOD to 
achieve the Task Force's estimate of IUID's potential benefits, by 
marking a "significant" number of these legacy items, or meet 
ODASD(SCI)'s goal that DOD needs to mark a "majority" of these legacy 
items by fiscal year 2015. 

* The Under Secretary of Defense for Acquisition, Technology, and 
Logistics, in coordination with the components, establish quantifiable 
interim milestones for marking legacy items that allow DOD to track 
progress toward its goals. 

* The Under Secretary of Defense for Acquisition, Technology, and 
Logistics, in coordination with the components, track progress using a 
consistent set of criteria, such as DOD's IUID marking criteria. 

* The components and the Defense Contract Management Agency develop 
policies and procedures that provide for systematic assessment of the 
sufficiency of contractor-marked items' data matrices. 

* The Under Secretary of Defense for Acquisition, Technology, and 
Logistics require the components to examine and report to the Office 
of Defense Procurement and Acquisition Policy on all types of 
contracts that should include the acquired-items and government-
property clauses. 

In addition, to enable DOD to successfully share UII data 
enterprisewide and integrate IUID functionality with its Enterprise 
Resource Planning systems, we recommend that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology, and 
Logistics to coordinate with the military services and the Defense 
Logistics Agency to take the following two actions: 

* Define the requirements for using UII data across DOD and within the 
components' Enterprise Resource Planning systems. 

* Develop or revise integrated master schedules for the integration of 
IUID technology with the components' individual Enterprise Resource 
Planning systems--and between these systems--across DOD. These 
schedules should fully integrate distinct IUID activities. 

We also recommend that the Secretary of Defense direct the Secretary 
of the Navy to develop a plan to share UII data enterprisewide. 

Agency Comments and Our Evaluation: 

In commenting on a draft of this report, DOD concurred with eight 
recommendations and partially concurred with one recommendation. DOD's 
comments are reprinted in appendix III. DOD also provided technical 
comments, which we considered and incorporated where appropriate. 

DOD concurred with our recommendation to develop quantitatively-
defined goals for the number of legacy items that may allow DOD to 
achieve the task force's estimate of IUID's potential benefits. DOD 
stated that an IUID working group will identify the target population 
of items that qualify for IUID marking in a list of the items' 
National Stock Numbers and DOD will track progress in its marking of 
individual items on this list according to component IUID 
implementation plans that are due to be submitted to the Assistant 
Secretary of Defense for Logistics and Materiel Readiness by September 
2012. 

DOD concurred with our recommendation to establish quantifiable 
interim milestones for marking legacy items that allow DOD to track 
progress toward its goals. DOD stated that its IUID working group will 
establish interim milestones to track the progress of marking legacy 
assets as part of the development of component IUID implementation 
plans to be submitted to the Assistant Secretary of Defense for 
Logistics and Materiel Readiness by September 2012. 

DOD concurred with our recommendation to track progress using a 
consistent set of criteria. DOD stated that progress will be tracked 
using a consistent set of criteria, once developed by the IUID working 
group. 

DOD concurred with our recommendation to develop policies and 
procedures that provide for systematic assessment of the sufficiency 
of contractor-marked items' data matrices. DOD stated that the Defense 
Contract Management Agency has risk-based assessment policies and 
procedures in place. According to DOD, these include a review of 
contracts to determine whether they contain an IUID requirement; 
surveillance of a contractor's IUID marking; and an IUID checklist 
that requires agency personnel to examine an item's data matrix. DOD 
explained that agency personnel assess the sufficiency of a data 
matrix by electronically reading it with a scanner supplied by a 
contractor or through a statement of quality from contractors that the 
agency has determined have adequate quality control. We believe that 
DOD's concurrence with our recommendation may lead to the components 
improving their capability to systematically assess these matrices, 
and that the agency's policies and procedures may assist its 
inspectors in doing the same. However, our review of the policies and 
procedures provided by the agency indicate that it does not require 
inspectors to assess the sufficiency of data matrices in all cases. 
For example, if a contractor does not provide evidence that it has 
marked items with sufficient data matrices, and no IUID scanner is 
available on site, neither the agency's 2009 information memorandum 
describing procedures for inspecting contractors' data matrices, nor 
its IUID checklist, provide an alternative method for inspectors to 
assess the sufficiency of items' matrices. Because of this, we 
continue to believe that the agency cannot ensure that the items it 
inspects have IUID labels with sufficient data matrices, and that it 
should continue to develop policies and procedures that provide for 
systematic assessment of the sufficiency of contractor-marked items' 
data matrices. 

DOD concurred with our recommendation for the components to examine 
and report to the Office of Defense Procurement and Acquisition Policy 
on all types of contracts that should include the acquired-items and 
government-property clauses. DOD stated that the components will 
provide contract evaluation reports--for items meeting any of DOD's 
IUID criteria, as well as pieces of government-furnished property that 
meet these criteria--and report on compliance with the requirements to 
include the appropriate Defense Federal Acquisition Regulation 
Supplement IUID clauses in contracts. 

DOD concurred with our recommendation to define the requirements for 
using UII data across DOD and within the components' Enterprise 
Resource Planning systems. DOD stated that the IUID working group will 
define DOD-wide IUID functional requirements. 

DOD concurred with our recommendation to develop or revise integrated 
master schedules for the integration of IUID technology with the 
components' individual Enterprise Resource Planning systems--and 
between these systems--across the department. DOD stated that the 
components have been tasked to submit revised IUID implementation 
plans to the Assistant Secretary of Defense for Logistics and Materiel 
Readiness by September 2012. We believe that such plans could assist 
DOD in improving its management approach for the implementation of 
IUID. However, as previously discussed, an integrated master schedule 
has specific characteristics that make it distinct from an 
implementation plan. Specifically, an integrated master schedule is a 
time-phased schedule that DOD and other agencies use for assessing 
technical performance. It contains the detailed tasks or work packages 
necessary to ensure program execution. Further, we have reported that 
without fully integrating the distinct activities that make up an IT 
program with such a schedule, an organization will not be able to 
measure its progress toward completion and cannot be held accountable 
for results. Because of this, we continue to believe that integrated 
master schedules should be developed or revised for the integration of 
IUID technology with the components' Enterprise Resource Planning 
Systems. 

DOD concurred with our recommendation that the Secretary of the Navy 
develop a plan to share UII data enterprisewide. DOD stated that the 
Navy--participating in the IUID working group--will develop IUID 
requirements as part of the working group's definition of DOD-wide 
IUID functional requirements. Regarding the specific requirement for 
IUID functionality in the Navy's Enterprise Resource Planning system--
Navy Enterprise Resource Planning system for Supply--DOD stated that 
the Assistant Secretary of Defense for Logistics and Materiel 
Readiness will continue to work with the Chief of Naval Operations 
(Deputy Chief of Naval Operations [Fleet Readiness and Logistics]) to 
develop a plan to include IUID requirements in this system. 

DOD partially concurred with our recommendation to update the IUID 
task force report's estimates of costs and benefits by incorporating 
key elements of a sound investment analysis, including a more complete 
estimate of all associated costs, an appropriate methodology for 
estimating benefits, and a sensitivity analysis of these estimates. 
DOD stated that the benefits to DOD of implementing IUID marking are 
to improve asset accountability, tracking, and the life cycle 
management of targeted items. Further, DOD stated that it will 
continue to identify costs of implementing IUID as IUID is implemented 
across DOD. As previously discussed, a best practice for analyzing a 
program's return on investment is the estimation of all potential 
costs, and DOD efforts to continue to identify costs of IUID 
implementation may be a positive step in this direction. According to 
DOD, another best practice for analyzing a program's return on 
investment is analyzing benefits, and making recommendations, based on 
relevant evaluation criteria. DOD has estimated that IUID 
implementation could cost $3.2 billion, and the components report that 
they have already spent at least $219 million on implementation 
efforts. Moreover, DOD has estimated that implementing IUID technology 
could save $3 billion to $5 billion per year. As previously discussed, 
DOD may have used a methodology for estimating these benefits that may 
not be appropriate to the scale and complexity of DOD's IUID 
implementation efforts. For example, the task force estimated DOD-wide 
savings on the basis of a limited number of case studies, these case 
studies did not address programs that use IUID as the technology that 
provides a unique identifier to track items through serialized item 
management, and even when a logistics program experiences cost savings 
after introducing a new technology or process, it can be difficult to 
link the savings directly to a specific cause or technology such as 
IUID. Given IUID's potential costs and that DOD's methodology for 
estimating IUID's potential financial benefits may not be appropriate, 
we continue to believe that an estimate of both IUID's costs and 
benefits, based on an appropriate methodology, and a sensitivity 
analysis of these estimates, would provide DOD leaders with key 
information to better enable sound program management and determine 
whether continued spending on IUID is likely to result in a 
significant return on investment. 

We are sending copies of this report to the Secretaries of Defense, 
the Army, the Navy, and the Air Force; the Commandant of the Marine 
Corps; and the Directors of the Defense Logistics Agency and the 
Defense Contract Management Agency. In addition, the report is 
available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-5257 or merrittz@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix IV. 

Signed by: 

Zina D. Merritt: 
Director: 
Defense Capabilities and Management: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine the extent to which the Department of Defense (DOD) has a 
comprehensive management approach for its implementation of item 
unique identification (IUID), we reviewed previously published DOD and 
GAO work to identify best practices;[Footnote 68] the IUID 
implementation framework documentation provided by the Office of the 
Deputy Assistant Secretary of Defense for Supply Chain Integration 
(ODASD[SCI]); the DOD IUID task force's analysis of the potential 
costs and benefits of IUID implementation; and the components' 
estimates of historical spending and fiscal year 2012 budget requests 
for IUID implementation. 

To determine the extent to which DOD components have marked legacy 
items with IUID, we reviewed DOD criteria for the types of items to be 
marked with IUID labels; reviewed DOD's plans for marking legacy 
items; and gathered data on the number and type of legacy items in 
components' inventories, and how many had been marked as of October 
2011. To determine the extent to which DOD has taken steps to ensure 
that items are sufficiently marked by contractors with IUID, we 
reviewed the Defense Federal Acquisition Regulation Supplement clauses 
that require contractors to mark items with labels--or establish 
virtual unique item identifiers (UII)--and register the items, and we 
gathered data from the components on the quality of contractors' IUID 
data matrices. 

To determine the extent to which DOD has integrated IUID with its 
enterprise information systems, we reviewed our previously published 
work on best practices for the planning of large-scale information-
technology efforts;[Footnote 69] reviewed DOD-wide and component-level 
policy on the use of UII data in its information technology systems, 
which include DOD Enterprise Resource Planning systems; reviewed DOD-
wide and component-level integrated master schedules for the 
integration of IUID technology with these systems, if available; and 
reviewed other types of existing schedules and system planning 
documents. 

In addition, we visited selected sites to observe key IUID activities. 
To select the sites we used a nongeneralizable, judgmental sample 
based on a number of criteria, including DOD component and the type of 
IUID activity performed at the site. For all our objectives, we 
interviewed officials knowledgeable about DOD's IUID implementation 
efforts, including officials from ODASD(SCI), as well as other 
officials from the Office of the Secretary of Defense, the components, 
and the Defense Contract Management Agency. 

We assessed the reliability of all computer-generated data provided by 
DOD for each of our objectives by reviewing existing information about 
the data and the systems that produced the data and by interviewing 
agency officials knowledgeable about the data to determine the steps 
taken to ensure the accuracy and completeness of the data. In the 
course of our assessment, we reviewed estimates provided by the 
components on the number of legacy items marked and to be marked; 
deficient data matrices; and historical and requested IUID spending. 

* Each of the components provided estimates on either the number of 
legacy items marked, or to be marked; several of the components 
provided estimates of both. On the basis of our review of the sources 
and methodology used by the Army, Marine Corps, and Air Force to 
produce estimates of the number of legacy items they have marked, we 
determined that these data are sufficiently reliable for the purposes 
of reporting the components' best estimates of the size of this 
population of items. The Navy was not able to estimate the number of 
legacy items it has marked; the Defense Logistics Agency reported that 
it has not marked legacy items. Based on our review of the sources and 
methodology used by the Marine Corps and Air Force to produce 
estimates of the number of legacy items they must mark in the future, 
we determined that these data are sufficiently reliable for the 
purposes of reporting on the components' best estimates of the size of 
this population of items. As previously discussed, the Army, Navy, and 
Defense Logistics Agency explained that their estimates on the number 
of legacy items that must be marked in the future are not complete. 
Although not complete, we determined that the data on legacy items 
represent the components' best estimates, and are sufficiently 
reliable for the purposes of reporting on the general size of the 
population of legacy items they must mark in the future. 

* The Army, Navy, and Defense Logistics Agency did not provide data on 
deficient data matrices; the Marine Corps and Air Force did provide 
these data. We reviewed the data sources and methodology used by the 
Marine Corps and Air Force to produce data on the number of deficient 
data matrices they have discovered through their review of a portion 
of data matrices on newly-acquired items in their inventories. We 
determined that these data are sufficiently reliable for the purposes 
of reporting on the percentage of data matrices that these components 
classified as deficient, out of the portion of data matrices in their 
inventories that they have assessed for sufficiency. 

* The Defense Logistics Agency did not provide estimates on either 
historical or requested IUID spending; the Army and Navy provided 
estimates on historical IUID spending; and the Marine Corps and Air 
Force provided estimates of both historical and requested IUID 
spending. We discussed with component officials the sources and 
methodology they used to produce the data on their historical IUID 
spending and fiscal year 2012 budget requests for IUID spending. The 
Marine Corps and Air Force provided data on both their historical and 
future spending. On the basis of our review of their sources and 
methodology for producing these data, we determined that the spending 
data provided by the Marine Corps and Air Force are sufficiently 
reliable for the purposes of reporting on these components' historical 
spending and fiscal year 2012 IUID budget requests. As previously 
discussed, Army and Navy officials explained that their estimates on 
historical IUID spending are not complete. Although not complete, we 
determined that these data represent the best estimates of the Army 
and Navy on their historical IUID spending, and are sufficiently 
reliable for the purposes of reporting on the historical spending data 
that are available. 

[End of section] 

Appendix II: Key IUID Policy Issuances and Implementation Events, 
Fiscal Year 2003 to Fiscal Year 2011: 

[REfer to PDF for image: list] 

2003: 
* OUSD(AT&L) issues first policy on IUID, directing components to
collect unique item identification (UII) data. 

2004: 
* DOD requires inclusion of DFARS clause 252.211-7003 in
contracts for contractor-marked acquired items; 
* OUSD(AT&L) issues IUID policy for marking legacy items. 

2005: 
* OUSD(AT&L) updates policy on contractor-marked government-
furnished property. 

2006: 
* DOD components begin marking legacy items with IUID. 

2007: 
* OUSD(AT&L) issues DOD Directive 8320.03 establishing
requirement to have IUID capabilities in certain information-
technology systems; 
* DOD issues DFARS clause 252.211-7007 in contracts for contractor-
marked government-furnished property. 

2008: 
* OUSD(AT&L) issues DOD Instruction 8320.04, which establishes IUID 
marking standards. 

2009: 
* The DOD Joint Logistics Board forms the Logistics Item Unique
Identification Task Force with the mission to assess IUID 
implementation in DOD. 

2010: 
* DOD IUID Task Force publishes report, and OUSD(AT&L)
modifies IUID marking criteria for secondary items, on the basis of 
recommendations from the Joint Logistics Board. 

2011: 
* Office of the Deputy Assistant Secretary of Defense for Supply
Chain Integration (ODASD[SCI]) assumes programmatic lead for DOD-wide 
implementation of IUID; 
* Office of Defense Procurement and Acquisition Policy issues DOD 
standard operating procedure for assessing the sufficiency of data 
matrices; 
* DOD IUID Task Force issues revision of estimate of costs and 
benefits of IUID implementation. 

OUSD(AT&L): Office of the Under Secretary of Defense for Acquisition, 
Technology, and Logistics. 

IUID: Item unique identification DOD: Department of Defense. 

DFARS: Defense Federal Acquisition Regulation Supplement. 

Source: GAO analysis of DOD information. 

[End of figure] 

Appendix III: Comments from the Department of Defense: 

Assistant Secretary of Defense: 
Logistics and Materiel Readiness: 
3500 Defense Pentagon: 
Washington, DC 20301-3500: 

April 24, 2012: 

Ms. Zina D. Merritt: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. Merritt: 

This is the Department of Defense (DoD) response to the U.S. Government
Accountability Office (GAO) draft report, GAO-12-482, "Defense 
Logistics: Improvements Needed to Enhance DoD's Management Approach 
and Implementation of Item Unique Identification Technology," dated 
April 4, 2012 (GAO Code 351612). The Department generally concurs with 
the report; detailed responses to the nine recommendations in the 
report are enclosed. 

The Department concurs with eight of the nine recommendations, to 
include defining and tracking the target population of items, 
establishing and monitoring interim milestones for item unique 
identification (IUID) implementation, ensuring applicable Defense 
Federal Acquisition Regulation clauses are included in contracts and 
applied as required, and developing requirements to be included in the 
DoD Components' enterprise resource planning systems. 

The Department partially concurs with the recommendation that DoD 
update the IUID Task Force reports' estimates of costs and benefits. 
The benefits to the Department of implementing IUID marking are to 
improve asset accountability, tracking, and the lifecycle management 
of targeted parts. DoD will continue to identify costs of implementing 
IUID as IUID is implemented across the Department. 

We appreciate the opportunity to respond to this report. 

Sincerely, 

Signed by: 

Alan F. Estevez: 

Enclosure: As stated. 

[End of letter] 

GAO Draft Report Dated April 4, 2012: 
GAO-12-482 (GAO Code 351612): 

"Defense Logistics: Improvements Needed To Enhance DOD's Management 
Approach And Implementation Of Item Unique Identification Technology" 

Department Of Defense (Dod) Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology and 
Logistics, in coordination with the components, to develop 
quantitatively-defined goals for the number of legacy items that DoD 
must mark to achieve its fiscal year 2015 goal of making a "majority" 
of legacy items, and the Task Force's goal of marking a "significant" 
number of legacy items. 

DoD Response: Concur. The item unique identification (IUID) working 
group, comprised of representatives of Office of the Secretary of 
Defense, Military Services, and the Defense Logistics Agency (DLA), 
will identify the target population of National Stock Numbers (NSNs), 
which qualifies for IUID marking. Once finalized, that NSN list will 
form the basis to track progress of marking individual assets. Legacy 
items that are included in the targeted population of items will 
generally be marked through the maintenance process. Progress against 
the asset population will be tracked against implementation plans to 
be submitted to the Office of Logistics and Materiel Readiness (L&MR) 
by September 2012. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology and 
Logistics, in coordination with the components, to establish 
quantifiable interim milestones for marking legacy items that allow
DoD to track progress toward its goals. 

DoD Response: Concur. Interim milestones, to track the progress of 
marking legacy assets, will be established by the IUID working group 
as part of the development of the implementation plans to be submitted 
to L&MR by September 2012. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology, and 
Logistics, in coordination with the components, to track progress 
using a consistent set of criteria, such as DOD's item unique 
identification (IUID) marking criteria. 

DoD Response: Concur. Progress will be tracked against these criteria 
once finalized by the working group. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology and 
Logistics to update the IUID Task Force report's estimates of costs 
and benefits by incorporating key elements of a sound investment 
analysis including a more complete estimate of all associated costs, 
an appropriate methodology for estimating benefits, and a sensitivity 
analysis of these estimates. 

DoD RESPONSE: Partial concur. Benefits to the Department of 
implementing IUID marking are to improve asset accountability, 
tracking, and the lifecycle management of targeted parts. DoD will 
continue to identify costs of implementing IUID as IUID is implemented 
across the Department. 

Recommendation 5: The GAO recommends that the Secretary of Defense 
direct the components and the Defense Contract Management Agency 
develop policies and procedures that provide for systematic assessment 
of the sufficiency of contractor-marked items' data matrixes. 

DoD Response: Concur. Policies and procedures exist and have been 
implemented. Since 2010, DCMA has established and implemented a 
documented, systematic risk-based process for assessing the 
application of IUID marking by the contractors. The IUID process 
begins with the Contract Technical Review — Quality Assurance (QA) 
instruction requiring DCMA QA personnel to review contracts to 
identify whether IUID is required by contract. Then, based on the Risk 
Assessment — QA process, if the contractor has not demonstrated 
satisfactory performance in correctly identifying and complying with 
IUID marking requirements, surveillance of the contractor's IUID 
process would be performed. An IUID checklist is available with the 
Process Review — QA instruction for use by DCMA QA personnel, which 
also includes a requirement to perform an examination of the 2D 
matrix. DCMA verifies the readability of the IUID marking either by 
using an IUID scanner, if available, at the contractor's plant (DCMA 
QA personnel do not possess IUID scanners), or by reviewing the IUID 
contractor's statement of quality supplied with the shipment when 
confidence in the contractor's controls have been determined. 
Contractor IUID-marked supplies are accepted based on positive results 
of either inspection technique. However, a Quality Technical 
Information Paper will be issued advising the field of the results of 
the GAO review and to emphasize the importance of Government Contract 
Quality Assurance in the implementation of IUID Technology by DoD. 

Recommendation 6: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology, and 
Logistics require the components to examine and report to the Office 
of Defense Procurement and Acquisition Policy on all types of 
contracts that should include the acquired items and government 
property clauses. 

DoD Response: Concur. The Military Services and DLA will report 
contract evaluation reports for items meeting any of the defined IUID 
criteria as well as Government Property requiring IUID. Confirmation 
of Defense Federal Acquisition Regulation Supplement (DFARS) clause 
compliance will also be reported. 

Recommendation 7: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology and 
Logistics to coordinate with the military services and the Defense 
Logistics Agency to define the requirements for using unique item 
identifier data across DOD and within the components' Enterprise 
Resource Planning systems. 

DoD Response: Concur. The IUID working group will define Department-
wide IUID functional requirements, beginning with the establishment of 
an IUID indicator in the Federal Logistics Information System (FLIS). 
This new FLIS data element will serve as the trigger to include Unique 
Item Identification data in logistics materiel management systems and 
for the use of applicable DFARS clauses related to IUID. 

Recommendation 8: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology, and 
Logistics to coordinate with the military services and the Defense 
Logistics Agency to develop or revise integrated master schedules for 
the integration of IUID technology for the components' Enterprise 
Resource Planning systems — and between these systems — across DOD. 
These schedules should fully integrate distinct IUID activities. 

DoD Response: Concur. The Services and DLA have been tasked to submit 
revised IUID implementation plans to L&MR by September 2012. 

Recommendation 9: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Navy to develop a plan to share unique 
item identifier data enterprise-wide. 

DoD Response: Concur. The Navy, participating in the IUID working 
group, will develop IUID requirements. (Reference response to 
Recommendation 7). Regarding the Navy-specific Enterprise Resource 
Planning (ERP) requirement for IUID functionality, Assistant Secretary 
of Defense (L&MR) will continue to work with the Chief of Naval 
Operations (Deputy Chief of Naval Operations (Fleet Readiness and 
Logistics)) to develop a plan to include IUID requirements in Navy ERP. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Zina D. Merritt, (202) 512-5257 or merrittz@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Kimberly Seay, Assistant 
Director; Emily Biskup; Cindy Brown Barnes; Cynthia Grant; Neelaxi 
Lakhmani; Jason Lee; Alberto Leff; John Martin; Charles Perdue; Carol 
Petersen; Karen Richey; Darby Smith; Chris Turner; Cheryl Weissman; 
and Michael Willems made key contributions to this report. 

[End of section] 

Related GAO Products: 

Defense Logistics: DOD Needs to Take Additional Actions to Address 
Challenges in Supply Chain Management. [hyperlink, 
http://www.gao.gov/products/GAO-11-569]. Washington, D.C.: July 28, 
2011. 

High-Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-11-278]. Washington, D.C.: February 
16, 2011. 

DOD's 2010 Comprehensive Inventory Management Improvement Plan 
Addressed Statutory Requirements, but Faces Implementation Challenges. 
[hyperlink, http://www.gao.gov/products/GAO-11-240R]. Washington, 
D.C.: January 7, 2011. 

DOD Business Transformation: Improved Management Oversight of Business 
System Modernization Efforts Needed. [hyperlink, 
http://www.gao.gov/products/GAO-11-53]. Washington, D.C.: October 7, 
2010. 

DOD's High-Risk Areas: Observations on DOD's Progress and Challenges 
in Strategic Planning for Supply Chain Management. [hyperlink, 
http://www.gao.gov/products/GAO-10-929T]. Washington, D.C.: July 27, 
2010. 

Department of Defense: Additional Actions Needed to Improve Financial 
Management of Military Equipment. [hyperlink, 
http://www.gao.gov/products/GAO-10-695]. Washington, D.C.: July 26, 
2010. 

DOD's High-Risk Areas: Actions Needed to Reduce Vulnerabilities and 
Improve Business Outcomes. [hyperlink, 
http://www.gao.gov/products/GAO-09-460T]. Washington, D.C.: March 12, 
2009. 

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.: January 12, 
2009. 

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. 

Defense Logistics: Efforts to Improve Distribution and Supply Support 
for Joint Military Operations Could Benefit from a Coordinated 
Management Approach. [hyperlink, 
http://www.gao.gov/products/GAO-07-807]. Washington, D.C.: June 29, 
2007. 

DOD's High-Risk Areas: Progress Made Implementing Supply Chain 
Management Recommendations, but Full Extent of Improvement Unknown. 
[hyperlink, http://www.gao.gov/products/GAO-07-234]. Washington, D.C.: 
January 17, 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. 

[End of section] 

Footnotes: 

[1] Office of the Under Secretary of Defense (Comptroller) and Chief 
Financial Officer, Financial Improvement and Audit Readiness Guidance 
(Washington, D.C.: Dec. 2011). 

[2] GAO, Defense Logistics: DOD Needs to Take Additional Actions to 
Address Challenges in Supply Chain Management, [hyperlink, 
http://www.gao.gov/products/GAO-11-569] (Washington, D.C.: July 28, 
2011). 

[3] [hyperlink, http://www.gao.gov/products/GAO-11-569]. 

[4] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: Feb. 16, 
2011). The title of this high-risk area was initially "DOD inventory 
management." Subsequently, our work demonstrated that the problems 
adversely affecting support to the warfighter extended beyond DOD's 
inventory management system to involve the entire supply chain. As a 
result, we subsequently modified the title to "DOD supply chain 
management." 

[5] GAO, Defense Logistics: Efforts to Improve Distribution and Supply 
Support for Joint Military Operations Could Benefit from a Coordinated 
Management Approach, [hyperlink, 
http://www.gao.gov/products/GAO-07-807] (Washington, D.C.: June 29, 
2007). 

[6] In this report, we are addressing IUID implementation efforts 
carried out by the Army, Navy, Marine Corps, Air Force, and Defense 
Logistics Agency. According to DOD, these five components manage the 
majority of the items it plans to mark with IUID labels. 

[7] For the purposes of this report, we have separated qualifying 
items into two categories: legacy items and contractor-marked items. 
Items are marked with IUID labels either by DOD components or by 
contractors. If an item qualifies for IUID marking, the DOD components 
are responsible for marking the item if it is currently in their 
inventory (legacy items), while contractors are responsible for 
marking the item if they are delivering it to DOD, or are using 
property furnished to them by the government (contractor-marked items). 

[8] Principal Deputy Under Secretary of Defense for Acquisition, 
Technology, and Logistics memorandum, Policy for Unique Identification 
(UID) of Tangible Personal Property Legacy Items in Inventory and 
Operational Use, Including Government Furnished Property (GFP) (Dec. 
23, 2004). 

[9] For the purposes of this report, "IUID label" is used to refer to 
the following labeling processes: embedding information directly to 
the item's surface, affixing through a data plate directly to the 
item, or printing on a label that is attached to the item. These 
labels vary in size and material, depending on the item to which they 
are attached and the durability they require to withstand the 
environmental conditions to which the item will be exposed. 

[10] DOD Instruction 8320.04, Item Unique Identification (IUID) 
Standards for Tangible Personal Property (June 16, 2008). In 2010, the 
Principal Deputy Under Secretary of Defense for Acquisition, 
Technology and Logistics revised certain aspects of the criteria in a 
memorandum entitled Item Unique Identification (IUID) of Tangible 
Personal Property--Policy Refinement for Secondary Items in Use or in 
Inventory (Dec. 30, 2010). 

[11] The task force was formed at the direction of the Joint Logistics 
Board on July 7, 2009, and was tasked to assess IUID implementation 
across DOD. The Joint Logistics Board provides advice and 
recommendations regarding joint logistics concerns and issues at the 
level of the Office of the Secretary of Defense. 

[12] 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). 

[13] DOD, Product Support Business Case Analysis Guidebook 
(Washington, D.C.: April 2011); GAO, Drug Control: DOD Needs to 
Improve Its Performance Measurement System to Better Manage and 
Oversee Its Counternarcotics Activities, [hyperlink, 
http://www.gao.gov/products/GAO-10-835] (Washington, D.C.: July 21, 
2010); GAO, Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: Mar. 2, 
2009); GAO, Afghanistan Security: U.S. Efforts to Develop Capable 
Afghan Police Forces Face Challenges and Need a Coordinated, Detailed 
Plan to Help Ensure Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-08-883T] (Washington, D.C.: June 18, 
2008); GAO, 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); GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1999); GAO, Executive Guide: Effectively 
Implementing the Government Performance and Results Act, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June 
1996). 

[14] GAO, DOD Business Transformation: Improved Management Oversight 
of Business System Modernization Efforts Needed, [hyperlink, 
http://www.gao.gov/products/GAO-11-53] (Washington, D.C.: Oct. 7, 
2010). 

[15] DOD Instruction 8320.04, Item Unique Identification (IUID) 
Standards for Tangible Personal Property (June 16, 2008). In 2010, the 
Principal Deputy Under Secretary of Defense for Acquisition, 
Technology and Logistics revised certain aspects of the criteria in a 
memorandum entitled Item Unique Identification (IUID) of Tangible 
Personal Property--Policy Refinement for Secondary Items in Use or in 
Inventory (Dec. 30, 2010). 

[16] These criteria vary for different categories of inventory: there 
are currently four criteria for marking principal end items and new 
secondary items, and two criteria for marking secondary items in use 
or in inventory. According to DOD, end items are a final combination 
of end products, component parts, and/or materials that are ready for 
their intended use, such as a ship, tank, mobile machine shop, or 
aircraft, while secondary items include reparable components, 
subsystems, and assemblies other than major end items, consumable 
repair parts, bulk items and materiel, subsistence, and expendable end 
items (E.g., clothing and other personal gear). 

[17] According to DOD, serially managed items are tangible items used 
by DOD that are designated by a DOD or Military Service Item Manager 
to be uniquely tracked, controlled, or managed in maintenance, repair, 
and/or supply by means of their serial number; mission-essential items 
are items that are designated as mission-essential on the basis of the 
composite effect of that item on the overall military mission on the 
basis of the most-critical significant application of the item; and 
controlled-inventory items are those items that are designated as 
having characteristics that require that they be identified, accounted 
for, segregated, or handled in a special manner to ensure their 
safeguard and integrity. 

[18] According to DOD, sensitive items are items that require a high 
degree of protection and control due to statutory requirements or 
regulations, such as narcotics and drug-abuse items; precious metals; 
items that are of a high value, highly technical, or a hazardous 
nature; and small arms, ammunition, explosives, and demolition 
material. Critical safety items are parts, assemblies, installations, 
or production systems with one or more critical or critical safety 
characteristics that, if missing or not conforming to the design data, 
quality requirements, or overhaul and maintenance documentation, would 
result in an unsafe condition that could cause loss or serious damage 
to the end item or major components, loss of control, uncommanded 
engine shutdown, or serious injury or death to personnel. Pilferable 
items are items that have a ready resale value or application to 
personal possession and that are, therefore, especially subject to 
theft. Depot-level reparable items are a reparable item of supply that 
is designated for repair at depot level or that is designated for 
repair below the depot level, but if repair cannot be accomplished at 
that level, shall have its unserviceable carcass either forwarded to 
the depot for repair or condemnation or reported to a materiel 
management activity for disposition. 

[19] According to DOD, the item's acquiring activity has the prime 
responsibility for determining the most effective use of human-
readable and machine-readable information on an item. See DOD MIL-STD-
130N, Standard Practice for the Identification Marking of U.S. 
Military Property (Dec. 17, 2007). 

[20] According to DOD, a National Stock Number is a13-digit number 
that consists of a 4-digit code--identifying an item in the federal 
supply classification system--and a 9-digit national item 
identification number. 

[21] The DOD Investment Review Board has established IUID conditions 
on certain types of IT systems that must be satisfied before these 
systems can be funded. 

[22] DOD operates a number of Enterprise Resource Planning systems. 
According to DOD, its components plan to use the following Enterprise 
Resource Planning systems to share UII data enterprisewide: The Army 
plans to use its Logistics Modernization Planning System and Global 
Combat Support System. The Marine Corps plans to use its Global Combat 
Support System. The Air Force plans to use its Expeditionary Combat 
Support System; however, according to Air Force officials, the system 
is currently being reevaluated by the Air Force and the Office of the 
Secretary of Defense. The Navy was planning to use its Navy Enterprise 
Resource Planning System for Supply. However, in October 2011, senior 
Navy officials stated that the Navy did not have plans to integrate 
IUID with the system. As of April 2012, the Navy stated that it had 
not integrated IUID with the system, and while the latest version of 
the system's software had some IUID capabilities, the Navy had not 
upgraded to that version, assessed whether these capabilities match 
DOD IUID requirements, or funded such upgrades. The Defense Logistics 
Agency plans to use its Distribution Standard System. 

[23] According to DODI 5000.64, property accountability should be 
enabled by IUID for identification, tracking, and management, in 
accordance with DOD Directive 8320.03, Unique Identification (UID) 
Standards for a Net-Centric Department of Defense (Mar. 23, 2007), 
which, among other things, establishes policy and criteria related to 
use of unique item identification in DOD's IT systems. 

[24] According to DOD officials, before the Deputy Assistant Secretary 
of Defense for Supply Chain Integration (DASD[SCI]) assumed the 
programmatic lead for DOD-wide implementation of IUID, the Office of 
Defense Procurement and Acquisition Policy--within the Office of the 
Under Secretary of Defense for Acquisition, Technology and Logistics--
coordinated IUID implementation efforts within the Office of the 
Secretary of Defense. 

[25] DOD, Logistics Item Unique Identification Task Force, 
Implementation of Item Unique Identification in DOD Logistics 
Processes (Washington, D.C.: June 8, 2010). 

[26] Principal Deputy Under Secretary of Defense for Acquisition, 
Technology, and Logistics Memorandum, Item Unique Identification 
(IUID) of Tangible Personal Property--Policy Refinement for Secondary 
Items in Use or In Inventory (Dec. 30, 2010). 

[27] DOD, Logistics Item Unique Identification Task Force, 
Implementation of Item Unique Identification in DOD Logistics 
Processes--an Update (Washington, D.C.: Mar. 11, 2011). 

[28] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[29] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[30] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[31] DOD, Product Support Business Case Analysis Guidebook (Apr. 2011). 

[32] [hyperlink, http://www.gao.gov/products/GAO-10-835]. 

[33] [hyperlink, http://www.gao.gov/products/GAO-11-53] and 
[hyperlink, http://www.gao.gov/products/GAO-08-883T]. 

[34] [hyperlink, http://www.gao.gov/products/GAO/GGD-96-118]. 

[35] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[36] DOD, Product Support Business Case Analysis Guidebook (Apr. 2011). 

[37] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[38] According to GAO's previously published work on cost estimation, 
a rough order of magnitude can be developed when a quick estimate is 
needed and few details are available. Because it is developed from 
limited data and in a short time, a rough order of magnitude analysis 
should never be considered a budget-quality cost estimate. See 
[hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[39] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[40] According to officials from the Office of the Under Secretary of 
Defense for Acquisition, Technology, and Logistics; the task force; 
and components, the estimates of the costs and benefits of IUID 
implementation that have been produced by the task force are the only 
estimates of their kind within DOD. 

[41] According to the task force report, product life cycle management 
is a collection of processes that include reliability-centered 
maintenance, total-ownership cost management, and precision 
maintenance. 

[42] We did not validate the cost-savings estimates of the case 
studies reviewed by the task force. 

[43] [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[44] As previously discussed, we have separated qualifying items into 
two categories: legacy items and contractor-marked items. Items are 
marked with IUID labels either by DOD components or by contractors. If 
an item qualifies for IUID marking, the DOD components are responsible 
for marking the item if it is currently in their inventory (legacy 
items), while contractors are responsible for marking the item if they 
are delivering it to DOD, or are using property furnished to them by 
the government (contractor-marked items). Contractors either mark 
items that DOD is purchasing (newly-acquired items), or items that DOD 
has provided to contractors (government-furnished property). 

[45] Each of the five DOD components provided data in October 2011. To 
generate its October 2011 data, the Marine Corps used a method that 
was not consistent with the method used by the Army and Air Force to 
generate their data. To make its data consistent with the other two 
components, the Marine Corps adjusted its method, and in January 2012 
provided us with data that are consistent with the data provided by 
the Army and Air Force. The Air Force reported additional information 
in November 2011. We included this additional information in the Air 
Force's estimate of the total number of legacy items in its inventory 
that meet DOD's IUID marking criteria. 

[46] The components carry out the engineering support activity that 
determines where the label should be placed on the item. Where the 
IUID mark is placed on the item influences the mark's durability and 
usefulness. 

[47] The DOD IUID Registry contains information on legacy items marked 
by DOD organizations other than the five components addressed in this 
report. However, according to an official from the Office of Defense 
Procurement and Acquisition Policy, the five DOD components addressed 
in this report are conducting the vast majority of legacy item 
marking, and thus it is valid to assume that only a very small 
fraction of the legacy items recorded in the registry were recorded by 
DOD organizations other than these five components. 

[48] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] and 
[hyperlink, http://www.gao.gov/products/GAO-10-835]. 

[49] [hyperlink, http://www.gao.gov/products/GAO-03-143]. 

[50] [hyperlink, http://www.gao.gov/products/GAO-08-883T]. 

[51] DOD organizes its materiel using a number of different 
categories. One such category is classes of supply, in which DOD has 
defined 10 classes. Among these are class VII, which contains items 
such as aircraft engines; and class II, which contains items such as 
electronics and weapons. 

[52] According to DOD, the Federal Logistic Information System is the 
primary computer system through which users are able to access, 
maintain, store, and retrieve necessary information related to items 
of supply in the Federal Catalog Program, which provides a uniform 
system of item identification; precludes/eliminates different 
identifications of like items; reveals interchangeability among items; 
aids in parts standardization; facilitates intra-and interdepartmental 
logistics support; and improves materiel management and military 
effectiveness by promoting efficiency and economy in logistics 
operations. 

[53] [hyperlink, http://www.gao.gov/products/GAO/GGD-96-118]. 

[54] There is no set number of newly-acquired items or pieces of 
government-furnished property required to be marked with IUID labels. 
The number of such items marked depends on the number of items 
acquired by DOD or provided to contractors in a given year that meet 
DOD's IUID marking criteria. Whatever the number of such items, DOD 
policy holds that all these items meeting the DOD IUID marking 
criteria should be marked with IUID labels by contractors. 

[55] In this report, we use the term "sufficiently" to describe 
marking efforts that correspond to these steps, and "deficient" to 
describe data matrices that are not usable because they lack necessary 
attributes identified in these steps. For example, a data matrix that 
cannot be read electronically is considered deficient. 

[56] Defense Federal Acquisition Regulation Supplement section 252.211-
7003. 

[57] Defense Federal Acquisition Regulation Supplement section 252.211-
7007. The clause requires contractors to either mark the item with a 
DOD-recognized UII or establish a virtual identifier for the item in 
the DOD IUID Registry. 

[58] Director of Defense Procurement and Acquisition Policy 
Memorandum, IUID DFARS Rule Compliance Reporting (Dec. 4, 2007). 

[59] Office of the Director, Defense Procurement and Acquisition 
Policy, DOD Standard Operating Procedure, Acquisition/Procurement 
Guide for Unique Item Traceability Data Integrity (Washington, D.C.: 
Feb. 25, 2011). 

[60] A product quality deficiency is a defective or nonconforming 
condition that limits or prohibits the item from fulfilling its 
intended purpose. These include deficiencies in design, specification, 
materiel, manufacturing, and workmanship. A noncompliant UII mark 
would be reportable. A "Product Quality Deficiency Report" enables the 
component to report contractor noncompliance. The purpose of reporting 
noncompliance is to determine the cause of supply discrepancies and 
product quality deficiencies, effect corrective action, prevent 
recurrence, and provide a measure for contractor past performance. 
Discrepancies in packaging and deficiencies in marking and 
registration should be reported. 

[61] As previously discussed, there are a variety of IT systems that 
have a requirement to use UII data, and some of these systems 
currently have the capability to store UII data. DOD officials 
explained that some of these systems operate in "pockets" within the 
components, and do not share UII data across the components or DOD-
wide. DOD's goal is for the components to share UII data across many 
of their individual IT systems, and DOD-wide, between components. In 
order to accomplish enterprisewide data sharing of UII data, DOD 
officials stated that the components intended to use certain IT 
systems referred to as Enterprise Resource Planning systems. According 
to officials, certain Enterprise Resource Planning systems will 
provide the capability to share UII data enterprisewide, and in this 
report, we are focusing on DOD efforts to integrate IUID with these 
systems. 

[62] DODI 8320.04 (June 16, 2008). 

[63] This draft guidance would update DOD 4140.1-R, Supply Chain 
Materiel Management Regulation, (May 23, 2003). As of January 2012, 
DOD had not issued the revised version of DOD 4140.1-R, but ODASD(SCI) 
officials stated that they expect DOD will release the new version in 
fiscal year 2012. 

[64] According to DOD officials, the Defense Logistics Management 
Standards are a set of data-exchange protocols through which DOD 
organizations share logistics data. The system's predecessor--the 
Military Logistics System--is unable to transmit UII data. DOD 
organizations are in the process of transitioning from the older 
Military Logistics System to the newer Defense Logistics Management 
Standards. 

[65] These are the Army's IUID Data Warehouse; the Marine Corps' 
Temporary Data Storage; and the Air Force's Automated Inventory 
Management Tool. 

[66] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] and 
[hyperlink, http://www.gao.gov/products/GAO-08-883T]. 

[67] [hyperlink, http://www.gao.gov/products/GAO-11-53]. 

[68] DOD, Product Support Business Case Analysis Guidebook 
(Washington, D.C.: April 2011); GAO, Drug Control: DOD Needs to 
Improve Its Performance Measurement System to Better Manage and 
Oversee Its Counternarcotics Activities, [hyperlink, 
http://www.gao.gov/products/GAO-10-835] (Washington, D.C.: July 21, 
2010).GAO, Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: Mar. 2, 
2009); GAO, Afghanistan Security: U.S. Efforts to Develop Capable 
Afghan Police Forces Face Challenges and Need a Coordinated, Detailed 
Plan to Help Ensure Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-08-883T] (Washington, D.C.: June 18, 
2008); GAO, 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); GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1999); GAO, Executive Guide: Effectively 
Implementing the Government Performance and Results Act, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June, 
1996). 

[69] GAO, DOD Business Transformation: Improved Management Oversight 
of Business System Modernization Efforts Needed, [hyperlink, 
http://www.gao.gov/products/GAO-11-53] (Washington, D.C.: Oct. 7, 
2010). 

[End of section] 

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