Defense Logistics:

More Efficient Use of Active RFID Tags Could Potentially Avoid Millions in Unnecessary Purchases

GAO-06-366R: Published: Mar 8, 2006. Publicly Released: Mar 8, 2006.

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For many years, the Department of Defense (DOD) has been attempting to improve visibility over its inventory and equipment. The lack of visibility over inventory and equipment shipments increases vulnerability to undetected loss or theft and substantially heightens the risk that millions of dollars will be spent unnecessarily. Additionally, needed supplies may not reach the warfighter when needed, which may impair readiness. In order to improve visibility, DOD began using a technology to enable it to track shipments. This technology is known as radio frequency identification (RFID). RFID technology consists of active or passive electronic tags that are attached to equipment and supplies that are shipped from one location to another. This technology is part of a family of automatic information technologies used to enable hands-off identification of cargo and inventory. This report focuses on active RFID tags, which cost around $100 each and are reusable. DOD has been using active RFID technology since the early 1990s to help with in-transit visibility of shipments, and, as of January 2005, it officially began to implement the use of passive RFID. During the course of our work on the use and implementation of passive RFID technology in DOD, we observed that active RFID tags were not being routinely returned for reuse. This report discusses DOD's efficiency in managing the reuse of active RFID tags, specifically the effectiveness of DOD's RFID policy and the extent of tag reuse and monitoring. DOD's final RFID policy was issued by the Under Secretary of Defense (Acquisition, Technology, and Logistics), the defense logistics executive for RFID implementation, on July 30, 2004.

DOD's use of active RFID tags can be more efficiently managed, potentially avoiding millions of dollars in unnecessary tag purchases. DOD's current RFID policy does not require active tags to be returned or reused even though these tags are designed for repeated reuse. DOD's July 30, 2004, RFID policy governing active RFID tag return and reuse only "encourages" components to return active RFID tags for reuse. The policy does not specifically direct that active tags be returned for reuse or require military services and other users to reuse tags. Estimates of tag reuse by DOD component officials and DOD tag reuse data as of May 2005 indicate that the majority of active RFID tags had not been returned or reused more than twice. For example, Army and DLA officials estimate that 10 percent of active tags were being returned for reuse before Operations Iraqi Freedom and Enduring Freedom and only 3 percent after. Moreover, during the period May 2002 through May 2005, DOD active tag use data for 614,681 tags show that 84 percent of the tags (514,455 tags) had been used only one or two times. Only 16 percent of the tags (100,226 tags) were reported as being reused more than twice. Furthermore, DOD does not routinely monitor or account for reuse of all active RFID tags because it has not developed procedures to do this. Officials from the Army and DLA--the largest purchasers of active RFID tags--informed us that they are unaware of the status or location of the majority of previously used tags. Nonetheless, DOD continues to spend millions of dollars purchasing active RFID tags without having procedures to determine whether the purchase of new tags is needed or whether the demand could be met through reuse of existing tags. If the 84 percent reuse rate is applied to DOD's total tag purchases since December 1997, around 1,101,816 tags, valued at over $110 million, have been used only one or two times and are in an unknown status, even though these tags could potentially be reused. Without greater efficiency in the reuse of active RFID tags, DOD could spend millions of dollars for unnecessary purchases.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of the Secretary of Defense published guidance on 5/22/06 to the Services, DLA and TRANSCOM to reemphasize reuse of active RFID tags. In addition, DoD 4140.1-R was rewritten to include policy for active RFID. Beginning in July 2007, the Office of the Secretary of Defense (OSD), Directorate for Acquisition, Technology, and Logistics (AT&L) has been coordinating with the Services, DLA, and TRANSCOM on the language for the revision to this regulation. After several iterations of revisions to the regulation OSD AT&L received final comments from the Services, DLA, and TRANSCOM. OSD AT&L is incorporating the final comments, and will issue the revised regulation as GAO recommended.

    Recommendation: The Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to modify the July 30, 2004, RFID policy and other operational guidance to require that active RFID tags be returned for reuse or be reused by the military services and other users.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Office of the Secretary of Defense (OSD), Directorate for Acquisition, Technology, and Logistics (AT&L) published guidance on 5/22/06 to the Services, DLA and TRANSCOM which required the development or adaptation of existing procedures for the use and reuse of active RFID tags. According to OSD AT&L, each of the Components has complied with the requirement. In addition, DOD's Office of the Production Manager for Joint and Automatic Identification Technology has investigated causes for tag reuse and made reports available to users. Since the beginning of combat operations in Iraq and Kuwait, the Department has seen a significant increase in the use and re-use of RFID tags. The Department stated that it continues to monitor the reuse of active RFID tags and has seen an average of 62% reuse of the tags. The vast majority of the tags are being reused in Kuwait and Iraq where they are most needed.

    Recommendation: The Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to direct the secretaries of each military service and administrators of other components to establish procedures to track and monitor the use of active RFID tags, to include (1) determining requirements for the number of tags needed, (2) compiling an accurate inventory of the number of tags currently owned, and (3) establishing procedures to monitor and track tags, including purchases, reuse, losses, repairs, and any other categories that would assist management's oversight of these tags.

    Agency Affected: Department of Defense

 

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