Defense Logistics: Improvements Needed to Enhance DOD's Management Approach and Implementation of Item Unique Identification Technology
Highlights
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.
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.
Recommendations
GAO is making nine recommendations for enhancing DODs implementation of IUID. They include actions to improve DODs 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.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | 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, the Secretary of Defense should 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 partially concurred with this recommendation and stated they would continue to identify costs of implementing IUID as IUID is implemented across the department. When we conducted audit work on DOD's IUID effort in 2011, the scope and intent of the effort were different than the scope and intent of the program now, as reflected in DOD's September 2017 report to Congress on IUID. In November 2018, DOD officials stated that, and the 2017 report confirms, this recommendation no longer applies to the IUID program and we have closed the recommendation as not implemented.
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| Department of Defense | 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, the Secretary of Defense should direct 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. |
By September 2016, the DOD components had taken action in response to our recommendation. First, DOD has established quantitatively-defined goals for the number of legacy items to be marked, as reflected in the department's IUID Integrated Schedule, Item Marking. Second, according to an official in the OSD office with oversight responsibility for DOD's IUID implementation, DOD estimates that if 75 percent or 80 percent of legacy items are marked, this is sufficient for the department to realize some benefits of IUID implementation. Thus, DOD has also quantitatively-defined a "majority" of legacy items which meets the intent of our recommendation.
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| Department of Defense | 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, the Secretary of Defense should direct 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. |
By September 2016, the DOD components had taken action in response to our recommendation. Specifically, DOD had established quantifiable interim milestones for marking legacy items, as reflected in the department's IUID Integrated Schedule, Item Marking which meets the intent of our recommendation.
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| Department of Defense | 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, the Secretary of Defense should direct 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. |
By July 2014, the DOD components had taken action in response to our recommendation. Specifically, DOD has started using a consistent set of criteria for marking legacy items, as reflected in the department's DOD Cumulative Item Marking Totals (July 2014) which meets the intent of our recommendation.
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| Department of Defense | 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, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to 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 matrices. |
In response to our recommendation, DCMA issued an August 2012 Quality Technical Information Paper intended to serve as a reminder for its Quality Assurance personnel of relevant IUID requirements, such as risk assessment of the supplier's performance and risk-based surveillance of IUID. DCMA's reminder to its inspectors of existing policies and procedures does not represent "development" of new policies and procedures. However, it does represent a DOD action aimed at systematic assessment of the sufficiency of contractor-marked items, data matrices. Thus, it meets the intent of our recommendation. Then, in October 2014, DOD reported that it planned to take two additional actions to improve vendor (i.e., contractor) compliance. First, the department planned to implement a change in the Wide Area Work Flow system to prevent submission of receiving reports if IUID data is not provided by the submitting contractor. This change meant that, for contracts beginning in fiscal year 2015, new procurement end items (i.e., new items) must be submitted via a WAWF Receiving Report. This 2015 change to DOD's policy and procedure for how contractors are supposed to submit IUID data through WAWF is specifically aimed at contractors' provision of the IUID data contained in matrices. Through this change, DOD is attempting to correct the challenge of deficient matrices. Second, DOD planned to require Services and Agencies (i.e., components) to report metrics on their validation of IUID data matrices. In summary, from August 2012 to October 2015, the components and DCMA took, or planned to take, three actions in response to our recommendation, meeting the intent of our recommendation. If current marking trends continue, the ratio of new items to legacy items will continue to increase, with newly-acquired items (and government-furnished property) continuing 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. Further, DOD's implementation of our recommendation better positions the department to verify the sufficiency of data matrices. Thus, DOD's implementation of our recommendation should better enable to achieve success in the department's future IUID implementation efforts.
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| Department of Defense | 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, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to 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. |
Starting in September 2014, DOD began taking action in response to our recommendation. First, the office of the USD AT&L issued a September 2014 memo requiring the components to report to DPAP on the inclusion of required government-furnished property DFARS clauses in contracts. According to DPAP, one of the DFARS clauses required in contracts for government-furnished property is 252.211-7007. Thus, USD AT&L's requirement for the components to report to DPAP on their compliance with DFARS regulations regarding DFARS clauses in contracts for government-furnished property implements the portion of the recommendation concerning the government-furnished property clause. Second, the office of the USD AT&L issued a January 2015 memo requiring the components to report to DPAP on the inclusion of the acquired-items clause in contracts. Thus, USD AT&L's requirement for the components to report to DPAP on their compliance with DFARS regulations, regarding DFARS clauses in contracts for acquired items, implements the portion of the recommendation concerning the acquired items clause. In summary, these DOD actions meet the intent of our recommendation. By implementing this recommendation, DOD may be better positioned to ensure that contractors are marking all newly-acquired items and pieces of government-furnished property that require IUID labels.
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| Department of Defense | To enable DOD to successfully share UII data enterprisewide and integrate IUID functionality with its Enterprise Resource Planning systems, the Secretary of Defense should 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 UII data across DOD and within the components' Enterprise Resource Planning systems. |
DOD concurred with this recommendation. When we conducted audit work on DOD's IUID effort in 2011, the scope and intent of the effort were different than the scope and intent of the program now, as reflected in DOD's September 2017 report to Congress on IUID. In November 2018, DOD officials stated that, and the 2017 report confirms, this recommendation no longer applies to the IUID program and we have closed the recommendation as not implemented.
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| Department of Defense | To enable DOD to successfully share UII data enterprisewide and integrate IUID functionality with its Enterprise Resource Planning systems, the Secretary of Defense should 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 with the components' individual Enterprise Resource Planning systems-and between these systems-across DOD. These schedules should fully integrate distinct IUID activities. |
DOD concurred with this recommendation. When we conducted audit work on DOD's IUID effort in 2011, the scope and intent of the effort were different than the scope and intent of the program now, as reflected in DOD's September 2017 report to Congress on IUID. In November 2018, DOD officials stated that, and the 2017 report confirms, this recommendation no longer applies to the IUID program and we have closed the recommendation as not implemented.
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| Department of Defense | The Secretary of Defense should direct the Secretary of the Navy to develop a plan to share UII data enterprisewide. |
DOD concurred with this recommendation. In January 2019, according to DOD officials, the Navy was still revising its policies and guidance documents to include information on sharing UII data enterprise wide. They expected a revised Secretary of the Navy instruction to undergo review in Fiscal Year 2019 and an OPNAV supporting instruction to follow, once the Secretary of the Navy instruction is released. However, as of March 2021, the Navy was unable to provide an update as to the status of the revised instruction and whether it contained a plan to share UII data. As of June 2021, due to a lack of action by the Navy on this recommendation, we are closing it as not implemented.
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