GAO-11-240R, DOD's 2010 Comprehensive Inventory Management Improvement Plan Addressed Statutory Requirements, But Faces Implementation Challenges


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GAO-11-240R: 

United States Government Accountability Office: 
Washington, DC 20548: 

January 7, 2011: 

Congressional Committees: 

Subject: DOD's 2010 Comprehensive Inventory Management Improvement 
Plan Addressed Statutory Requirements, But Faces Implementation 
Challenges: 

The Department of Defense (DOD) spends billions of dollars to 
purchase, manage, store, track, and deliver spare parts and other 
supplies needed to keep military equipment ready and operating. Given 
the need to support ongoing U.S. military operations, DOD reported 
that it currently manages more than 4 million secondary inventory 
items valued at more than $91 billion as of September 2009.[Footnote 
1] However, DOD reported that $10.3 billion (11 percent) of its 
secondary inventory has been designated as excess and categorized for 
potential reuse or disposal. According to DOD, another $15.2 billion 
(17 percent) of its secondary inventory exceeds the approved 
acquisition objective and is being retained because it was determined 
to be more economical to retain than to dispose of it or it might be 
needed in the future.[Footnote 2] 

Since 1990, we have identified DOD supply chain management as a high- 
risk area due in part to ineffective and inefficient inventory 
management practices and procedures, weaknesses in accurately 
forecasting demand for spare parts, and challenges in achieving 
widespread implementation of key technologies aimed at improving asset 
visibility. These factors have contributed to the accumulation of 
billions of dollars in spare parts that are excess to current 
requirements.[Footnote 3] Moreover, we have recently reported on the 
inventory management practices of the military departments and the 
Defense Logistics Agency (DLA) and recommended DOD take steps to 
improve demand forecasting, modify policies to provide incentives to 
reduce on-order inventory that is not needed to support requirements 
(i.e., on-order excess), ensure proper, documented reviews are 
conducted to validate methodologies for making retention decisions, 
and establish metrics and goals for tracking and assessing the cost 
efficiency of inventory management.[Footnote 4] To provide high-level 
strategic direction, DOD issued its Logistics Strategic Plan in July 
2010, which, among other things, established a goal to improve supply 
chain processes, including inventory management practices. 

Section 328 of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2010 required the Secretary of Defense to submit to 
congressional defense committees a comprehensive plan for improving 
the inventory management systems of the military departments and DLA 
with the objective of reducing the acquisition and storage of 
secondary inventory that is excess to requirements.[Footnote 5] For 
purposes of section 328, the NDAA defines inventory that is excess to 
requirements as inventory that is excess to the approved acquisition 
objective and not needed for the purposes of economic or contingency 
retention.[Footnote 6] Section 328 identifies eight specific elements, 
listed in table 1, that are required to be in the plan. Further, 
section 328 states that the plan was to be submitted not later than 
270 days after the enactment of the act.[Footnote 7] The department 
submitted its Comprehensive Inventory Management Improvement Plan 
(Plan) on November 8, 2010. 

Section 328 also requires us to submit to the congressional defense 
committees an assessment of the extent to which the Plan meets the 
specified requirements no later than 60 days after the Plan's 
submission. Our objectives were to (1) determine the extent to which 
DOD's Plan addresses the reporting elements required by section 328 of 
the NDAA and (2) assess the extent to which the Plan addresses six key 
characteristics that help establish a comprehensive, results-oriented 
management framework to guide implementation. These characteristics 
were not required to be included by section 328, but our prior work 
examining national strategies and logistic issues has shown that these 
characteristics help establish a results-oriented management framework 
for effective implementation.[Footnote 8] These characteristics are a 
mission statement; problem definition, scope, and methodology; goals, 
objectives, activities, milestones, and performance measures; 
resources and investments; organizational roles, responsibilities, and 
coordination; and key external factors that could affect the 
achievement of goals. 

This letter and enclosure I provide our assessment of the degree to 
which the Plan addressed the eight specific elements required by 
section 328 and the extent to which the Plan addressed six key 
characteristics of a comprehensive, results-oriented management 
framework. Additionally, section 328 requires us to submit another 
report to the congressional defense committees not later than 18 
months after the Plan is submitted. The second report is to document 
our assessment of the extent to which the Plan has been effectively 
implemented by each military department and by DLA. Additionally, we 
will report on DOD's progress in implementing recommendations from our 
prior work examining inventory management practices. 

Scope and Methodology: 

For our assessment of the extent to which the Plan addressed the eight 
required elements of section 328 of the NDAA for Fiscal Year 2010, we 
reviewed the Plan provided to the congressional defense committees to 
determine the extent to which each element was addressed. 
Specifically, two team members concurrently conducted independent 
assessments of the Plan to determine whether the eight required 
elements were addressed, partially addressed, or not addressed. Then, 
the two analysts compared the two sets of observations and discussed 
and reconciled any differences. The final assessment reflected our 
consensus. We considered the element addressed when the Plan 
explicitly addressed all parts of the element. We considered the 
element partially addressed when the Plan addressed at least one or 
more parts of the required element, but not all parts of the element 
were explicitly addressed. We considered the element not addressed 
when the Plan did not explicitly address any part of the required 
element. We also interviewed Office of the Secretary of Defense (OSD), 
service, and DLA officials involved in the development of the Plan to 
discuss their interpretation of the legislative requirements, their 
perspectives on the Plan, and potential implementation challenges. 
Lastly, our assessment reflected our review of relevant DOD documents 
and issues raised in our recent reports that specifically relate to 
the required elements of the Plan. 

For our assessment of the extent to which the Plan contained desirable 
characteristics of a comprehensive, results-oriented management 
framework, we identified six key characteristics from our prior work 
that examined national strategies and logistic issues and developed a 
data collection instrument to assess the Plan.[Footnote 9] We used the 
same methodology as above for our assessment of the extent to which 
the Plan addressed six key characteristics that help establish a 
comprehensive, results-oriented management framework. We reviewed the 
Plan to determine whether each characteristic was addressed, partially 
addressed, or not addressed. In addition, we interviewed OSD, service, 
and DLA officials involved in the development of the Plan to discuss 
the extent to which the Plan incorporated six key characteristics. We 
conducted this performance audit from October 2010 to January 2011, 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. Additional 
information regarding our scope and methodology appears in enclosure 
II. 

DOD's Plan Addressed All Eight Required Elements of the NDAA for 
Fiscal Year 2010: 

Table 1: Extent to Which the Plan Addressed the Eight Required 
Elements: 

Required element: (1) A plan for a comprehensive review of demand-
forecasting procedures to identify and correct any systematic 
weaknesses in such procedures, including the development of metrics to 
identify bias toward over-forecasting and adjust forecasting methods 
accordingly; 
Our assessment: Addressed. 

Required element: (2) A plan to accelerate DOD’s efforts to achieve 
total asset visibility, including efforts to link wholesale and retail 
inventory levels through multi-echelon modeling; 
Our assessment: Addressed. 

Required element: (3) A plan to reduce the average level of on-order 
secondary inventory that is excess to requirements, including a 
requirement for the systemic review of such inventory for possible 
contract termination; 
Our assessment: Addressed. 

Required element: (4) A plan for the review and validation of methods 
used by the military departments and DLA to establish economic 
retention requirements; 
Our assessment: Addressed. 

Required element: (5) A plan for an independent review of methods used 
by the military departments and the DLA to establish contingency 
retention requirements; 
Our assessment: Addressed. 

Required element: (6) A plan to identify items stored in secondary 
inventory that require substantial amounts of storage space and shift 
such items, where practicable, to direct vendor delivery; 
Our assessment: Addressed. 

Required element: (7) A plan for a comprehensive assessment of 
inventory items that have no recurring demands, including the 
development of (a) metrics to track years of no demand for items in 
stock; and (b) procedures for ensuring the systemic review of such 
items for potential reutilization or disposal; 
Our assessment: Addressed. 

Required element: (8) A plan to more aggressively pursue disposal 
reviews and actions on stocks identified for potential reutilization 
or disposal; 
Our assessment: Addressed. 

Source: GAO analysis of the Plan. 

[End of table] 

The Plan addressed the eight required elements, but DOD faces a number 
of implementation challenges, including: 

* Aggressive timelines and benchmarks. Service and DLA officials 
stated that the Plan is executable, but expressed concern that some of 
its timelines and benchmarks are aggressive. In order to achieve the 
overall goals, OSD, the services, and DLA will need to complete 30 
actions identified in the nine sub-plans. Some of these actions are 
interrelated and sequential, and delays in one area could affect the 
ability to meet subsequent milestones. 

* Identification of resources. Implementing the Plan’s actions will 
require considerable personnel resources through fiscal year 2016, 
according to service and DLA officials. DOD established three working 
groups to assist in implementing the Plan, but it did not include an 
estimate of the extent to which additional resources, if any, would be 
required. 

* Implementation of enterprise resource planning (ERP) systems. The 
services are either in the process of developing or implementing a 
number of automated business systems for managing inventory, commonly 
referred to as ERPs. DOD officials stated that while implementing the 
Plan does not depend on implementing ERPs, these systems facilitate 
improvements to areas such as demand forecasting and multi-echelon 
modeling.[Footnote 11] For example, according to the Plan, multi-
echelon modeling programs are often add-on applications to ERPs that 
can further complicate their implementation. Delays in the 
implementation of ERPs and shortfalls in their expected performance 
could affect the services’ ability to meet timelines in the Plan. In 
addition, our prior work has shown that ERPs have experienced delays 
in implementation, cost overruns, data quality issues, and an 
inability to perform as expected.[Footnote 12] For example, we 
reported in 2010 that full deployment of the Army’s ERP for inventory 
management, the Logistics Modernization Program, has been delayed by 6 
years to fiscal year 2011 and has experienced data quality issues 
which could impede its functionality.[Footnote 13] 

* Standardization of definitions, processes, procedures, and metrics. 
In a number of areas, the Plan requires the services and DLA to 
standardize definitions, processes, procedures, and metrics. The Plan 
provides a process to develop this standardization, but reaching 
agreement among the services and DLA will be challenging, according to 
OSD, service, and DLA officials. For example, an action in the Plan 
requires the services and DLA to agree to a standard set of reasons 
for holding contingency retention stock. Currently, each of the 
services has various, often different rationales for retaining items 
for contingency. Additionally, OSD, the services, and DLA will need to 
develop common metrics to assess inventory management. For example, 
while the services and DLA currently differ in their approach to 
measuring demand forecast accuracy, the Plan requires the development 
of a standard accuracy metric and associated targets. 

* Coordination and collaboration among multiple stakeholders. Many of 
the actions in the Plan require coordination and collaboration among 
OSD, the services, DLA, and commercial suppliers. For example, 
improving demand forecasting accuracy, a leading cause of inventory 
excesses and shortages, will require collaboration among the services, 
DLA, and commercial vendors to better identify requirements, reduce 
lead times for parts, and estimate future demand. 

DOD's Plan Generally Addressed Six Key Characteristics of a 
Comprehensive, Results-Oriented Management Framework: 

Our analysis showed that DOD's Plan addressed three characteristics 
and partially addressed the three remaining characteristics of a 
comprehensive, results-oriented management framework to guide 
implementation. The Plan addressed the characteristics of mission 
statement; goals, objectives, activities, milestones, and performance 
measures; and organizational roles, responsibilities, and 
coordination. For example, the Plan identifies a performance 
management structure that is intended to provide oversight and ensure 
actions are progressing as planned while monitoring for adverse 
effects on operational readiness. The Plan partially addressed the 
characteristics of problem definition, scope, and methodology; 
resources and investments; and key external factors that could affect 
goals. In particular, the Plan did not present the methodology used to 
develop the Plan; fully identify resources and investments needed to 
carry out the actions in the Plan; assign responsibility for 
monitoring external factors; or discuss how external factors, such as 
challenges in implementing the ERPs, could affect the ability to 
achieve the desired goals. Table 2 below identifies the six 
characteristics and our assessment of the degree to which the Plan 
addressed each of the characteristics. Enclosure I includes a detailed 
assessment of the extent to which the Plan addressed these six key 
characteristics. 

Table 2: Extent to Which the Plan Addressed Six Key Characteristics: 

Key characteristic: (1) Mission statement—A comprehensive statement 
that summarizes the main purposes of the plan; 
Our assessment: Addressed. 

Key characteristic: (2) Problem definition, scope, and methodology-—
Presents the issues to be addressed by the plan, the scope of its 
coverage, the process by which it was developed, and key 
considerations and assumptions used in the development of the plan; 
Our assessment: Partially addressed. 

Key characteristic: (3) Goals, objectives, activities, milestones, and 
performance measures—The identification of goals and objectives to be 
achieved by the plan, activities or actions to achieve those results, 
as well as milestones and performance measures; 
Our assessment: Addressed. 

Key characteristic: (4) Resources and investments—-The identification 
of costs to execute the plan and the sources and types of resources 
and investments, including skills and technology and the human, 
capital, information, and other resources required to meet the goals 
and objectives; 
Our assessment: Partially addressed. 

Key characteristic: (5) Organizational roles, responsibilities, and 
coordination—The development of roles and responsibilities in managing 
and overseeing the implementation of the plan and the establishment of 
mechanisms for multiple stakeholders to coordinate their efforts 
throughout implementation and make necessary adjustments to the plan 
based on performance; 
Our assessment: Addressed. 

Key characteristic: (6) Key external factors that could affect the 
achievement of goals—-The identification of key factors external to 
the organization and beyond its control that could significantly 
affect the achievement of the long-term goals contained in the plan. 
These external factors can include economic, demographic, social, 
technological, or environmental factors, as well as conditions that 
would affect the ability of the agency to achieve the results desired; 
Our assessment: Partially addressed. 

Source: GAO analysis of the Plan. 

[End of table] 

Agency Comments and Our Evaluation: 

We provided a draft of this product to DOD for review and comment. In 
providing oral comments, the Deputy Assistant Secretary of Defense for 
Supply Chain Integration agreed with our assessment of the Plan and 
recognized that the Plan's implementation will have challenges. In 
addition, the Deputy Assistant Secretary stated that DOD is fully 
engaged in executing the plan to improve inventory management 
practices. DOD also provided technical comments which we incorporated 
as appropriate. 

We are sending copies of this report to the congressional defense 
committees. We are also sending copies to the Secretary of Defense; 
the Deputy Secretary of Defense; the Under Secretary of Defense 
(Comptroller); the Under Secretary of Defense (Acquisition, Technology 
and Logistics); the Secretaries of the Army, Navy, and Air Force; and 
the Commandant of the Marine Corps. This report will also be available 
at no charge on our Web site at [hyperlink, http://www.gao.gov]. 

Should you or your staffs have any questions concerning this report, 
please contact me at (202) 512-8246 or edwardsj@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. Key contributors to this 
report were Suzanne Wren, Assistant Director; John Bumgarner; Grace 
Coleman, Terry Richardson, Adam Smith, and Michael Willems. 

Signed by: 

Jack E. Edwards: 
Director, Defense Capabilities and Management: 

Enclosures: 2: 

List of Committees: 

The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate: 

The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate: 

The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Committee on Appropriations:
House of Representatives: 

The Honorable Howard McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives: 

[End of section] 

Enclosure I: Detailed Assessments of Required Elements and
Characteristics of a Comprehensive Results-Oriented Framework: 

Overview of Department of Defense's (DOD's) Comprehensive Inventory 
Management Plan: 

Plan Requirement: 

Section 328 of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2010 required the Secretary of Defense to submit to the 
congressional defense committees a comprehensive plan for improving 
the inventory management systems of the military departments and 
Defense Logistics Agency (DLA) with the objective of reducing the
acquisition and storage of secondary inventory that is excess to 
requirements. The plan was to include: (1) a plan for a comprehensive 
review of demand-forecasting procedures; (2) a plan to accelerate the 
efforts of DOD to achieve total asset visibility, including efforts to 
link levels of inventory through multi-echelon modeling; (3) a plan to 
reduce the average level of on-order secondary inventory that is 
excess to requirements; (4) a plan for the review and validation of 
methods used to establish economic retention requirements; (5) a plan 
for an independent review of methods used to establish contingency 
retention requirements; (6) a plan to identify items stored in 
secondary inventory that require substantial amounts of storage space 
and shift such items, where practicable, to direct vendor delivery; 
(7) a plan for a comprehensive assessment of inventory items on hand 
that have no recurring demand, including the development of metrics to 
track years of no demand for items in stock and procedures for 
ensuring the systemic review of such items; and (8) a plan to more 
aggressively pursue disposal reviews and actions on stocks identified 
for potential reutilization or disposal. 

Two Overall Goals of the Plan: 

The Plan seeks to reduce the acquisition and storage of secondary 
inventory that is excess to requirements through achieving two overall 
goals: (1) reduce total on-order excess inventory from 8.5 percent of 
obligated on-order dollars in fiscal year 2009 to 4 percent by the end 
of fiscal year 2016, and (2) reduce the on-hand excess inventory from 
11.3 percent of the total value of inventory in fiscal year 2009 to 10 
percent by the end of fiscal year 2012. 

Structure of the Plan: 

To achieve these goals, DOD developed nine sub-plans. Each sub-plan 
provides background on the respective issue, general descriptions of 
current and planned initiatives and efforts by the services and DLA, 
an objective and supporting actions with milestones for DOD-wide 
improvement, and existing and to-be-developed performance measures to 
track results Eight of the sub-plans directly address the eight 
required elements of the NDAA. A ninth sub-plan, which was not 
required by section 328 of the NDAA, focuses on accomplishing several 
cross-functional improvements, such as the development of DOD-wide 
efficiency metrics. 

Performance Management Structure of the Plan: 

The Plan outlines the roles and responsibilities of key stakeholders, 
including those of the Assistant Secretary of Defense (Logistics and 
Materiel Readiness), the Deputy Assistant Secretary of Defense (Supply 
Chain Integration), the Supply Chain Executive Steering Committee, the 
services, and DLA. The Plan establishes three working groups—inventory 
and stock retention, forecasting and demand planning, and supply chain 
metrics—responsible for the execution of the actions in the Plan. 
These working groups are to meet and report monthly to the Deputy 
Assistant Secretary of Defense (Supply Chain Integration) and every 
two months to the Supply Chain Executive Steering Committee. This 
performance management structure is intended to ensure actions are 
progressing as planned while monitoring for adverse effects on 
operational readiness. 

Process Used to Develop the Plan: 

The Plan does not discuss the methodology that guided its development, 
but officials from Office of the Deputy Assistant Secretary of Defense 
(Supply Chain Integration), the services, and DLA characterized the 
process as collaborative and transformational in nature. The 
development of the Plan began in March 2010, and included high-level 
stakeholders from the Office of the Secretary of Defense (OSD), the 
services, and DLA setting the vision for the Plan. Additionally, 
working groups met over several months to design and develop the Plan. 
Officials we met with from the services and DLA supported the goals, 
objectives, and actions laid out in the Plan. 

[End of section] 

Required Element 1: A Plan for a Comprehensive Review of Demand-
Forecasting Procedures: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan for a comprehensive review of 
demand-forecasting procedures to identify and correct any systematic 
weaknesses in such procedures, including the development of metrics to 
identify bias toward over-forecasting and adjust forecasting methods 
accordingly. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on demand 
forecasting addressed the requirements of section 328 of the NDAA for 
Fiscal Year 2010. 

Key Terms: 

Demand forecasting: Predicting future customer demands so inventory 
managers can develop inventory requirements to satisfy demands when 
they occur. Inaccurate forecasts lead to either excess inventory or 
shortfalls. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan on demand forecasting met the requirements 
of section 328 because it includes a planned review of demand 
forecasting across DOD and identifies steps and targets for 
establishing metrics to measure demand accuracy. The objective of the 
sub-plan is to improve the prediction of future demand so that 
inventory requirements more accurately reflect actual needs. To 
achieve this objective, DOD identified five actions: (1) identify 
improved methods and techniques for demand forecasting that consider 
an item's life cycle (i.e., new item introduction, sustainment, and 
end-of-life), (2) implement standard metrics to assess forecasting 
accuracy and bias, (3) expand and refine a DOD-wide structure for 
collaborative forecasting, (4) implement approaches for improving the 
setting of inventory levels for low-demand items, and (5) examine how 
investment risk for new consumable items initially entering the 
inventory can be reduced among the services, DLA, and suppliers. As 
part of the sub-plan, DOD plans to develop and implement a consistent 
set of metrics to assess forecasting accuracy and bias that considers 
the items' life cycles. DOD plans to develop these metrics by the 
fourth quarter of fiscal year 2012 and track these metrics thereafter. 

DOD faces a number of challenges in implementing the actions outlined 
in the sub-plan to achieve improved demand forecasting accuracy 
because demand patterns for many items are highly variable and 
intermittent. In addition, the ability to forecast demand for weapon 
systems varies based on where a weapon system is in its lifecycle. 
Together, these factors make it difficult to forecast demand 
accurately. For example, in a current effort to improve demand 
forecasting, the Air Force was able to improve its demand forecast 
accuracy from 29 percent in 2008 to 40 percent in 2009. The Air Force 
established a stretch goal of 70 percent demand forecast accuracy for 
2011, but officials told us that this will be difficult to achieve. 

Related GAO Findings: Inaccurate Demand Forecasting Is the Leading 
Reason for the Accumulation of Excess Inventory: 

Our recent work identified demand forecasting as the leading reason 
why the services and DLA accumulate excess inventory.[Footnote 14] A 
number of other factors also contribute to inaccurate forecasts, 
including variations in demand; incomplete, inaccurate, and untimely 
data; and a lack of timely communication among the services, DLA, and 
suppliers. The services are also implementing enterprise resource 
planning (ERP) systems that are intended to, among other things, 
improve demand forecasting. However, these systems have experienced 
delays, cost overruns, and have not performed as expected.[Footnote 
15] Additionally, our prior work found that inaccurate forecasts by 
the Army and DLA contributed to shortages of parts that caused work 
stoppages at Army depots in 2006 and 2007.[Footnote 16] DLA stated 
that a major difficulty it faces as a supplier is forecasting the 
amount of repair parts needed when the depots' types and numbers of 
repairs continue to change. 

[End of section] 

Required Element 2: A Plan to Accelerate Total Asset Visibility: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan to accelerate the efforts of the 
DOD to achieve total asset visibility, including efforts to link 
wholesale and retail inventory levels through multi-echelon modeling. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on total asset 
visibility addressed the requirements of section 328 of the NDAA for 
Fiscal Year 2010. 

Key Terms: 

Total asset visibility: The capability to provide all users with (1) 
timely and accurate information about the location, movement, status, 
and identity of supplies and (2) the capability to act on this
information. 

Multi-echelon modeling: Mathematical models capable of computing the 
optimal number and type of parts needed at the wholesale and retail 
levels to achieve readiness and cost goals. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it has steps and targets for achieving total asset visibility, 
including the increased use of multi-echelon modeling. The objective 
of the sub-plan is to minimize the size of purchases by considering 
all accessible inventories. To achieve this objective, DOD identified 
three actions: (1) expand total asset visibility capabilities to 
improve access to targeted inventories,[Footnote 17] (2) accelerate 
existing and emerging multi-echelon improvement efforts, and (3) 
expand automated capabilities to fill customer demands and offset 
inventory purchases across DOD. The sub-plan seeks to develop two 
metrics: percentage of inventory that is visible and automatically 
accessible and the dollar value of backorders filled and procurements 
offset by assets designated for disposal. DOD will use these two 
metrics and an existing metric—-the percentage of inventory covered by 
multi-echelon models—-to track performance. The sub-plan establishes 
two performance targets over the next 5 years: (1) access 90 percent 
of targeted inventory, and (2) use multi-echelon modeling for setting 
inventory levels on 90 percent of targeted inventories, up from 34 
percent in fiscal year 2009. 

DOD faces challenges in implementing the actions in the sub-plan. The 
primary challenges include developing business rules and financial 
processes that allow for the visibility and redistribution of assets 
among the services and DLA in order to avoid or minimize future 
purchases. Our prior work shows that DOD does not have total asset 
visibility, which includes visibility over assets in transit to and 
from a theater of operations.[Footnote 18] Also, some of the data 
required for the successful operation of multi-echelon modeling 
programs, such as configuration data that identifies the relationships 
among items, are not available and need to be developed for multi-
echelon modeling systems to fully function. 

Related GAO Findings: ERPs Have Implementation Issues: 

One component to achieving total asset visibility is the DOD-wide 
implementation of multi-echelon modeling, which is needed to set 
inventory requirement levels at the retail and wholesale levels. Multi-
echelon modeling programs are often add-on applications that 
complicate implementation of the ERPs for managing inventory. However, 
ERPs have experienced delays and cost overruns, and have not performed 
as expected.[Footnote 19] For example, we reported that as of November 
2010, the implementation of one the Army's ERPs—-Logistics 
Modernization Program—-may not fully achieve the intended 
functionality due to longstanding data inaccuracies and software and 
system shortcomings.[Footnote 20] As a result, DOD may face challenges 
in achieving the sub-plan's goals of increasing asset visibility and 
using multi-echelon modeling for setting inventory levels on 90 
percent of targeted inventories within 5 years. 

[End of section] 

Required Element 3: A Plan for Reducing On-Order Excess Inventory: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan to reduce the average level of 
on-order secondary inventory that is excess to requirements, including 
a requirement for the systemic review of such inventory for possible 
contract termination. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on reducing on-
order excess inventory addressed the requirements of section 328 of 
the NDAA for Fiscal Year 2010. 

Key Terms: 

On-order excess inventory: Items for which a contract has been awarded 
or funds have been obligated, but that are not needed to meet 
requirements. 

Approved acquisition objective: Consists of inventory necessary to 
meet the requirements objective and materiel needed to meet 2 years of 
estimated future demand. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it includes steps and targets for reducing on-order excess inventory 
and ensuring appropriate review of contracts for possible termination. 
As of September 2009, DOD had $1.2 billion of on-order excess. The 
objective of the sub-plan is to reduce or terminate purchases that 
result in inventory excesses due to a decrease in requirements. To 
achieve this objective, the sub-plan identified two actions: (1) 
establish an economically optimal point to terminate an order 
considering the different stages of a weapon system's life cycle 
(i.e., introduction, sustainment, and end-of-life) and (2) strengthen 
the approval and reporting procedures for on-order excess. DOD will 
track the percentage of on-order dollars that are above the approved 
acquisition objective, with the goal of reducing on-order excess from 
8.5 percent of total on-order inventory in fiscal year 2009 to 6 
percent by fiscal year 2014 and to 4 percent by fiscal year 2016. 

DOD faces a number of challenges in implementing the actions outlined 
in the sub-plan to reduce on-order excess and ensure review of 
contracts for possible termination. DOD's Plan notes that several 
factors can cause on-order excess, such as inaccurate demand 
forecasts, vendor minimum order quantities, and the need to purchase a 
lifetime supply of an item that will no longer be produced. 
Additionally, service and DLA officials must carefully consider 
altering or terminating a contract because of associated costs and the 
possibility that requirements will change in the future, resulting in 
the need to reorder the item. While the services and DLA can limit the 
accumulation of excess inventory during the procurement request stage, 
altering or terminating established contracts is sometimes not 
economical (i.e., when the cost of holding an item in inventory is 
less than the cost of terminating the order). Given these challenges, 
the establishment of an economically optimal point to terminate a 
purchase request or order will be difficult and require the services 
and DLA to change business rules. 

Related GAO Findings: Difficulties in Canceling Contracts Lead to 
Excess Inventory: 

Our prior work identified on-order excess inventory as an area of 
potential financial savings for Navy, Air Force, and DLA.[Footnote 21] 
Specifically, we found that existing business rules hampered efforts 
to cancel on-order excess inventory. For example, the Navy's 
management practices for on-order items limited its ability to modify 
purchase decisions when demand changes. We also found that Air Force 
policies did not provide incentives to reduce the amount of inventory 
on-order that was not needed to support requirements. Further, DLA did 
not identify and review potential over-procurements because they did 
not meet or exceed DLA-established minimum thresholds, which limited 
the number of items being reviewed for on-order excess. DLA also had 
business rules that exempted certain programs from reviews. Those 
rules contributed to one item accruing more than 20 years of supply 
based on the current demand. Finally, DLA's lengthy review processes 
made it difficult to execute a timely cancellation. 

[End of section] 

Required Element 4: A Plan to Review Economic Retention Stock: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan for the review and validation of 
methods used by the military departments and DLA to establish economic 
retention requirements. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on economic 
retention addressed the requirements of section 328 of the NDAA for 
Fiscal Year 2010. 

Key Terms: 

Economic retention stock: Items that have been determined to be more 
economical to keep than to dispose of because the items are likely to 
be needed in the future. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it includes a review of economic retention stock, including steps to 
ensure the validation of the services' and DLA's methods for 
establishing economic retention stock. For September 2009, the Plan 
reported that DOD held $8 billion dollars (8.8 percent) of its 
secondary inventory as economic retention stock. The objective of the 
sub-plan is to ensure economic retention decisions are based on 
current cost factors and economic principles. To achieve this 
objective, the sub-plan identified three actions: (1) review and 
validate current economic retention methods, (2) review and evaluate 
enhancements to these methods, and (3) ensure annual reviews of 
service and DLA economic retention procedures. DOD will validate 
economic retention methods in accordance with DOD policy. The target 
is to conduct annual reviews of 100 percent of items held as economic 
retention stock to ensure that retention decisions are based on 
approved economic methods. Economic retention methods will be 
revalidated on a 3-year cycle. Additionally, DOD plans to develop a 
metric that will quantify the expected savings from holding economic 
retention stock. 

DOD faces a number of challenges in implementing the actions outlined 
in the sub-plan. Economic retention methods depend not only on 
economic analysis, but also the probability of an item's future use, 
which varies based on operational tempo and the stage of a weapon 
system's life cycle (i.e., introduction, sustainment, and end-of-
life). While DOD incurs a cost for storing retained items, DOD reports 
that storage cost is generally less than the cost of re-ordering an 
item. In addition, while economic analysis can help minimize the risk 
of unnecessarily retaining an item, some items are used so rarely or 
intermittently that it can be difficult to use economic retention 
methods in determining whether to keep or dispose of items. Lastly, 
the sub-plan emphasizes that economic retention stock is comprised of 
items that were originally purchased as operating stocks but are no 
longer needed due to downturns in demand, changes in programs, or 
other reasons. Improved demand forecasting would generally reduce such 
purchases, according to DOD officials. 

Related GAO Findings: Economic Retention Decisions Lack Sound 
Analytical Support and Proper Review: 

We found in 2001[Footnote 22] and again in 2006[Footnote 23] that the 
services and DLA did not have sound analytical support for determining 
which items should be kept as economic retention stock, and that they 
were not conducting required annual reviews of the methodologies used 
to determine which items in the inventory to retain for economic 
reasons. Similarly, in 2008 we found that the Navy could not document 
that it had conducted required annual reviews of its economic 
retention method.[Footnote 24] In 2009, the Navy instituted a 
requirement for the annual documentation of its retention methodology, 
but we have not verified that this documentation has occurred. 

[End of section] 

Required Element 5: A Plan to Review Contingency Retention Stock: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan for an independent review of 
methods used by the military departments and the DLA to establish 
contingency retention requirements. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on contingency 
retention stock addressed the requirements of section 328 of the NDAA 
for Fiscal Year 2010. 

Key Terms: 

Contingency retention stock: Items that exceed the approved 
acquisition objective and economic retention inventory (items that are 
more economical to keep than to dispose of) but are retained to 
support specific contingencies, such as to support foreign military 
sales, future military operations, minimum stock levels, and disaster 
relief or humanitarian aid, or to mitigate risk associated with 
diminished manufacturing sources or non-procurable stock. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements section 328 because it 
includes steps to complete an independent review of methods for 
retaining contingency stock. In September 2009, DOD held $7.2 billion 
dollars (almost 8 percent) of its secondary inventory as contingency 
retention stock. The objective of the sub-plan is to ensure the 
services and DLA justify the retention of contingency stock. To 
achieve this objective, the sub-plan identified four actions: (1) 
complete an independent review that examines the services' and DLA's 
processes and develop a more effective way to categorize contingency 
retention stock, (2) ensure annual reviews of the services' and DLA's 
contingency retention stock, (3) employ a consistent approach for 
approving decisions to retain inventory for contingencies, and (4) 
establish a DOD-wide metric to monitor sales of contingency retention 
stock. DOD will use two metrics—-the percentage of contingency stock 
in dollars and the dollar value of contingency retention that the 
services and DLA use to fill demand-—as a way of tracking the amount 
of contingency retention stock. The target for the sub-plan is to 
ensure annual reviews are based on approved criteria. The sub-plan 
also notes that DOD will establish a quantitative contingency 
retention stock target pending the results of the independent review 
mandated by section 328. 

DOD faces a number of challenges in implementing the actions in the 
sub-plan. The amount of contingency stock and the reasons for 
retaining it varies widely. In addition, the services and DLA use 
different management processes for determining which stock should be 
retained. Standardization will require cooperation among stakeholders 
and changes in the services' and DLA's business rules. 

Related GAO Findings: The Services and DLA Do Not Always Follow 
Policies and Procedures and Lack DOD Oversight: 

Our prior work found that the services and DLA have not followed their 
own and DOD-wide policies and procedures to ensure they are retaining 
the appropriate amount of contingency retention stock.[Footnote 25] We 
found examples of organizations not properly assigning codes that 
describe the reasons for holding items as contingency retention stock, 
retaining items for which there had been little or no recent demand, 
and not conducting required annual reviews to verify reasons for 
retaining contingency retention stock. In addition, we found that DOD 
did not provide sufficient oversight to ensure that the services and 
DLA are conducting required annual reviews of their contingency 
retention stock. We also found that the services sometimes did not 
provide input to DLA on which items were no longer needed, which DLA 
officials stated limited their ability to reduce unneeded contingency 
retention stock.[Footnote 26] As a result, DOD cannot be certain that 
the services and DLA are retaining the right amount of contingency 
retention stock to meet potential future needs in the most effective 
and efficient manner. 

[End of section] 

Required Element 6: A Plan to Reduce Storage Space for Secondary 
Inventory through Direct Vendor Delivery Arrangements: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan to identify items stored in 
secondary inventory that require substantial amounts of storage space 
and shift such items, where practicable, to direct vendor delivery. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on storage space 
and direct vendor delivery, addressed the requirements of section 328 
of the NDAA for Fiscal Year 2010. 

Key Terms: 

Direct vendor delivery: A materiel acquisition and distribution method 
that requires supplier delivery directly to the customer. This 
arrangement can reduce the storage of items by the services and DLA. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it includes actions to identify items requiring large amounts of 
storage space and shift these items, where practicable, to direct 
vendor delivery to save storage costs. DOD reported that it has 
reduced its storage footprint from about 100 million cubic feet in 
September 2004, to 80 million in September 2009. Additionally, DOD 
estimated that in fiscal year 2009, storage costs were $252 million, 
approximately 0.3 percent of the total value of inventory across DOD. 
The objective of the sub-plan is to use commercial vendors to store 
items when use of those vendors represents the best value to the 
government. To achieve this objective, the sub-plan identified four 
actions: (1) examine items with high storage requirements for 
potential management as direct vendor delivery, (2) track reduction of 
depot storage space that can be attributed to alternative sourcing 
strategies, (3) identify the method and criteria for including depot 
storage space as a cost factor in the business case analyses for 
alternative sourcing strategies, and (4) review DOD-wide policies and 
procedures for shifting items to direct vendor delivery arrangements 
to ensure they do not cause the acquisition of excess inventories. To 
monitor the success of the sub-plan, DOD plans to collect three 
metrics, two of which exist—the total storage footprint in 
distribution depots for secondary item inventory and total costs of 
distribution depots' storage for these items—and one that must be 
developed—the reduction in storage that results from items shifting to 
direct vendor delivery arrangements. DOD has reported it reduced 
storage space by 11.1 million gross square feet since 2005, with a 
target of a 15.4 million gross square feet reduction by the end of 
fiscal year 2011, as part of DOD's response to one of the 
recommendations from the 2005 Base Realignment and Closure round. DOD 
also plans to track storage reduction metrics in subsequent years, but 
has not identified formal targets for later years. 

DOD reports that the opportunity to save on the cost of storage space 
through use of direct vendor delivery arrangements may be limited. For 
example, DOD reports in the Plan that 39 percent of DOD's storage 
space is occupied by a relatively small number of bulk items. Also, a 
business case analysis is required to support decisions to use direct 
vendor delivery. Although storage cost is one factor in that analysis, 
DOD also considers the ability to provide customers what they need, 
when they need it, and at the least cost. The services and DLA 
determine the right mix of vendor and stock support on a case-by-case 
basis during the acquisition planning process. This requires the 
services and DLA to conduct an analysis that balances cost and 
reliability factors. According to DOD, the cost of storage is a small 
fraction of materiel cost and thus space reduction may not be a 
determining factor in awarding direct vendor delivery arrangements. An 
exception would be bulk items, such as tires or lumber, where the 
volume of the assets are an obvious factor in storage costs. In 
addition, direct vendor delivery arrangements are often elements of 
broader agreements for maintenance and logistical support, which 
involve not only the provision of supply parts, but also the actual 
maintenance conducted on an end-item. 

[End of section] 

Required Element 7: A Plan to Assess Items with No Recurring Demand: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan for a comprehensive assessment 
of inventory items that have no recurring demands, including the 
development of metrics to track years of no demand for items in stock; 
and procedures for ensuring the systemic review of such items for 
potential reutilization or disposal. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on inventory items 
that have no recurring demands addressed the requirements of section 
328 of the NDAA for Fiscal Year 2010. 

Key Terms: 

Items with no recurring demand: Secondary inventory that has not been 
needed over a specified period of time. Although service and DLA time 
periods vary, the Plan intends to implement a DOD-wide standard of 
greater than 5 years. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it includes a plan for assessing inventory items with no recurring 
demand, including metrics to track and procedures to help ensure 
reutilization or disposal reviews. For September 2009, DOD reported 
holding $7.9 billion (9 percent of the total value of inventory) of 
items that had 5 or more years of no demand. The objective of the sub-
plan is to eliminate items with a history of no recurring demand and a 
low probability of future demand, unless there is sufficient 
justification for further retention. To achieve this objective, DOD 
identified two actions: examine the services' and DLA's definitions, 
methods, and rationales for retaining or disposing items with no 
recurring demand to determine the potential for applying a life cycle 
approach; and develop an annual review and reporting process for items 
with no recurring demand based on dollar thresholds. The sub-plan 
states that its annual reviews should ensure that items retained are 
essential to the operation of weapon systems at a level that guards 
against their catastrophic failure. To measure success, DOD plans to 
monitor three metrics currently being developed: (1) percentage of 
total inventory dollars with no recurring demand, (2) an inventory 
segmentation based on years of no demand, and (3) the amount of stock 
with no recurring demand that is both retained and disposed. Lastly, 
the sub-plan targets completing the first annual review by the 
beginning of fiscal year 2012 and disposing of 100 percent of non-
justified inventory with no recurring demand for 5 or more years by 
the third quarter of fiscal year 2012. 

DOD faces a number of challenges in implementing these actions. Items 
with no recurring demand are potentially found across various 
inventory segmentation categories, including economic and contingency 
retention stock. Executing the actions in the sub-plan will require 
inventory managers to examine demand for all items. In addition, 
retention decisions must be based on an evaluation of the likelihood 
of future need and the amount of stock needed. The Plan identifies 
examples of items that had 5 or more years of no demand, but were 
later needed by the services and would have required repurchase had 
they been disposed. 

Related GAO and Other Audit Findings: DOD Has Large Investments in 
Items with No Recurring Demand: 

We previously reported that DLA estimated that as of September 2008, 
it held $1 billion of items for which there had been no demand for at 
least 8 years, and incurred about $2.5 million in associated storage 
costs.[Footnote 27] In addition, in 2007 we reported that the Air 
Force had not performed a comprehensive assessment of its on-hand 
inventory items that were not needed to support requirements and that 
had no recurring demand. Similarly, the Air Force had not revalidated 
the need to continue to retain these items.[Footnote 28] Finally, the 
Army Audit Agency reported that in fiscal year 2008, the Army had $717 
million of inventory without demand in over 5 years and that item 
managers were not performing required reviews.[Footnote 29] 

[End of section] 

Required Element 8: A Plan to Pursue Disposal Reviews and Actions More 
Aggressively: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 required a comprehensive 
plan for improving the inventory management systems of the military 
departments and DLA to include a plan to more aggressively pursue 
disposal reviews and actions on stocks identified for potential 
reutilization or disposal. 

Our Assessment: Addressed: 

Based on our assessment, we found that the sub-plan on disposal 
reviews and actions addressed the requirements of section 328 of the 
NDAA for Fiscal Year 2010. 

Key Terms: 

Potential reutilization stock: Materiel that exceeds the approved 
acquisition objective, as well as economic and contingency retention 
stock, and has been identified for possible disposal but with 
potential for reutilization. 

Detailed Assessment of This Sub-Plan: 

We found that the sub-plan met the requirements of section 328 because 
it includes actions and targets to more aggressively pursue disposal 
reviews and actions. For September 2009, DOD reported that it held 
$10.3 billion dollars (11.3 percent) of its secondary inventory as 
potential reutilization stock. The objective of the sub-plan is to 
ensure timely disposition of these stocks. The sub-plan identified 
three actions: (1) review the methods, frequency, and timeliness of 
reviews of potential reutilization stock and the execution of disposal 
releases, (2) establish a process to pre-screen retail materiel 
returns for disposal before returns are shipped to a distribution 
depot, and (3) develop new reporting requirements on inventory being 
reviewed and disposed of to evaluate the process. OSD, the services, 
and DLA plan to develop timeliness and effectiveness metrics for 
disposal as well as track the total dollar value of disposals for 
reparable and consumable items, the portion of disposal dollars that 
are associated with condemned or unserviceable assets, and the 
percentage of dollars and items reviewed and released to disposal. 
Within the next 2 years, DOD plans to reduce the time needed to review 
potential reutilization stock for disposal from 12 months to 3 months 
and the time for directing a disposal action from 6 months to 1 month. 

OSD, the services, and DLA face a number of challenges in implementing 
the actions outlined in the sub-plan. First, the services and DLA 
report workload constraints at their facilities that hamper the review 
and disposal of excess inventory. Second, DOD lacks the necessary 
technical procedures for the demilitarization of some items, which 
prevents disposal. Third, the services' and DLA's reviews of potential 
reutilization stock occur on varying timeframes (e.g., monthly, 
quarterly, and semiannually); and standardization of these time frames 
and procedures will require agreement among DOD, the services, and DLA. 

Related GAO and Other Audit Findings: Excess Determination Process 
Lacks Coordination and Is Wasteful: 

Our prior work found that DLA lacked input from the services to make 
disposal decisions.[Footnote 30] DLA made progress toward rebalancing 
its inventory between items held as part of the approved acquisition 
objective and items retained for retention purposes in fiscal years 
2008 and 2009 by disposing of unneeded parts. However, DLA continued 
to hold large amounts of contingency retention stock that could be 
declared excess, but the services had not provided input that DLA 
needed to make this determination. Also, we found that the services, 
and DLA did not have management controls in place to ensure that 
excess inventory is reutilized to the maximum extent possible. 
[Footnote 31] At the same time, DOD organizations continued to buy 
many of these same items that had been disposed. In addition, the Army 
Audit Agency found that U.S. Army Aviation and Missile Life Cycle 
Management Command sometimes did not perform complete or thorough 
reviews of dormant stock.[Footnote 32] 

[End of section] 

A Plan to Address Cross-Functional Improvements for Inventory 
Management: 

Plan Requirement: 

Section 328 of the NDAA for Fiscal Year 2010 did not require DOD to 
address cross-functional improvements, such as developing efficiency 
metrics and reducing procurement lead times. However, DOD believes 
that these cross-functional issues are important to improving 
inventory management practices. 

Key Terms: 

Cost efficiency metric: A measurement to monitor the efficient use of 
resources for inventory management that would provide a means for 
assessing costs versus benefits. 

Lead time: DOD's estimate of when an item will be received from a 
supplier. Management of inventory acquisition lead times is important 
in maintaining cost-effective inventories, budgeting, and having 
material available when needed. 

Detailed Assessment of This Sub-Plan: 

The objective of the sub-plan is to accomplish several cross-
functional improvements needed to ensure that DOD's investment in 
inventory supports the warfighter at the lowest cost. To achieve this 
objective, DOD identified four actions: (1) define and establish a new 
segmentation of DOD inventory that will better capture the rationale 
behind inventory decisions and improve inventory reporting, (2) 
establish DOD-wide procedures for seeking reduced procurement lead 
times, (3) provide for improved data accuracy and a better system for 
improving inventory management practices, and (4) establish DOD-wide 
metrics to monitor the efficiency of inventory operations. The Plan 
noted that these actions will contribute to reducing on-hand excess 
inventory from 11.3 percent of the total value of inventory in fiscal 
year 2009 to 10 percent in fiscal year 2012, which is one of the 
overall goals of the Plan. 

DOD faces a number of challenges in implementing the actions outlined 
in the sub-plan. First, DOD officials stated that current inventory 
segmentation is outdated and does not reflect changes in inventory 
management, such as multi-echelon modeling and direct vendor delivery 
strategies. However, reaching agreement among the services and DLA on 
a new method for segmenting the inventory could be difficult. Second, 
automated capabilities for revised processes, such as demand 
forecasting, requirements determination, and asset visibility are 
essential to improvements targeted by this Plan. Implementation of the 
ERPs is critical to institutionalizing needed processes and business 
practice upgrades, but the services and DLA are at varying stages of 
implementation. As noted earlier, our work has shown that there have 
been implementation delays, cost overruns, data quality issues, and an 
inability to perform to expected capabilities.[Footnote 33] 

Related GAO Findings: DOD Needs to Track Cost Efficiency and Improve 
Management of Lead Times for Spare Parts: 

Our prior work found that the Army, Navy, and DLA need to develop cost 
efficiency metrics for its inventory management operations.[Footnote 
34] Currently, there is no DOD-wide set of metrics to track the cost 
efficiency of its inventory management. The Navy, in response to one 
of our recommendations, developed a metric that tracks materiel 
replacement within its inventory. We found that in fiscal year 2005 
the Army underestimated lead times, DLA overestimated lead times, and 
the Air Force and Navy both overestimated and underestimated lead 
times.[Footnote 35] Underestimates resulted in almost $12 billion in 
spare parts arriving more than 90 days later than anticipated, which 
could have negatively affected unit readiness. The effect of 
overestimated lead times resulted in obligating $2 billion more than 
90 days earlier than necessary. We also found that until steps are 
taken by DOD to renew management focus on reducing lead times, the 
services and DLA may continue to experience spare parts shortages and 
increased inventory levels to ensure inventory availability. 

[End of section] 

Assessment of Six Key Characteristics of a Comprehensive, Results-
Oriented Framework: 

Key Characteristics: 

Our prior work identified six key characteristics that help establish 
a results-oriented plan. Section 328 of the NDAA for Fiscal Year 2010 
did not require these to be included, but our prior work has shown 
that they can facilitate implementation. They are: 

(1) Mission statement-—A comprehensive statement that summarizes the 
plan's purpose. 

(2) Problem definition, scope, and methodology-—Presents the issues to 
be addressed by the plan, the scope of its coverage, the process by 
which it was developed, and key considerations and assumptions. 

(3) Goals, objectives, activities, milestones, and performance 
measures-—The identification of goals and objectives to be achieved by 
the plan, activities or actions to achieve those results, as well as 
milestones and metrics. 

(4) Resources and investments—-The identification of costs to execute 
the plan and the sources and types of resources and investments, 
including skills and technology and the human, capital, information, 
and other resources required. 

(5) Organizational roles, responsibilities, and coordination-—The 
development of roles and responsibilities in managing and overseeing 
the implementation of the plan and the establishment of mechanisms for 
multiple stakeholders to coordinate their efforts and make adjustments 
as necessary. 

(6) Key external factors that could affect the achievement of goals—-
The identification of key factors external to the organization and 
beyond its control that could significantly affect the achievement of 
the long-term goals contained in the plan. 

Table: 

Key characteristic:(1) Mission statement; 
Comments: The Plan states that it was developed to guide and direct 
DOD's collective efforts to improve inventory management and support 
to the warfighter. It seeks to do this through a "prudent" reduction 
in current inventory excesses as well as a reduction in the potential 
for future excesses without degrading materiel support to the customer; 
Assessment: Addressed. 

Key characteristic:(2) Problem definition, scope, and methodology; 
Comments: The Plan identifies the key problems, the scope, and 
considerations and assumptions. However, the Plan does not discuss the 
methodology used to develop it. OSD, service, and DLA officials said 
the development process was collaborative and supported the goals, 
objectives, and actions in the Plan; 
Assessment: Partially addressed. 

Key characteristic:(3) Goals, objectives, activities, milestones, and 
performance measures; 
Comments: The Plan outlines two overall goals focused on the reduction 
of on-order and on-hand excess inventory. The nine sub-plans are 
intended to support achieving the two overall goals. The Plan 
identifies an objective for each of these sub-plans as well as 
activities, milestones, and existing or to-be-developed performance 
measures; 
Assessment: Addressed. 

Key characteristic:(4) Resources and investments; 
Comments: The Plan notes that two working groups responsible for 
implementing the Plan's actions must also ensure the availability of 
in-house and contractual resources to execute the plan by elevating 
resourcing issues to the Deputy Assistant Secretary of Defense (Supply 
Chain Integration). The Plan does not identify the costs necessary to 
execute it or the sources of funding for particular actions. DOD is 
contracting two actions in the Plan: the review of contingency 
retention and demand forecasting; 
Assessment: Partially addressed. 

Key characteristic:(5) Organizational roles, responsibilities, and 
coordination; 
Comments: The Plan outlines the roles and responsibilities of key 
stakeholders. The Plan also establishes three working groups—inventory 
and retention, forecasting and demand planning, and supply chain 
metrics—responsible for the execution of the actions in the Plan. The 
Plan identifies a performance management structure. This structure 
allows for adjustments to the Plan; 
Assessment: Addressed. 

Key characteristic:(6) Key external factors that could affect the 
achievement of goals; 
Comments: The Plan highlights that acquisition and materiel retention 
decisions rely on incomplete information due to unpredictable demand 
patterns, lack of data during the introduction of new weapons systems, 
and various other factors. However, the Plan does not completely 
address how these or other external factors could affect actions to 
achieve the Plan's two main goals. The performance management 
framework does not explicitly assign responsibility for monitoring 
external factors. Additionally, the services are in the process of 
developing or implementing ERPs. Our work identified challenges in the 
implementation of ERPs, such as implementation delays, cost overruns, 
data quality issues, and potential inability to perform to expected 
capabilities.[A] DOD officials stated that the Plan's implementation 
does not depend on ERPs, which facilitate improvements to areas such 
as demand forecasting and total asset visibility. However, delays in 
the implementation of ERPs and their inability to perform as expected 
could affect the ability to meet the Plan's timelines; 
Assessment: Partially addressed. 

[A] GA0-11-139, GAO-11-53, GA0-10-461, and GAO-07-860. 

[End of table] 

[End of Enclosure I] 

Enclosure II: Scope and Methodology: 

To assess the extent to which the Department of Defense (DOD) 
addressed the requirements of section 328 of the National Defense 
Authorization Act (NDAA) for Fiscal Year 2010, we evaluated DOD’s Plan 
provided to the congressional defense committees on November 8, 2010. 
We determined that the extent to which DOD addressed each element 
required by the law would be rated as either “addressed,” “partially 
addressed,” or “not addressed.” These categories were defined as 
follows: 

* Addressed: All parts of a required element are explicitly addressed. 

* Partially addressed: One or more parts of the required element, but 
not all parts of the element are explicitly addressed. 

* Not addressed: No part of the required element is explicitly 
addressed. 

To conduct this analysis, we developed a data collection instrument 
that incorporated the required elements established by section 328. 
Two GAO analysts independently assessed whether each element was 
addressed, partially addressed, or not addressed, and recorded their 
assessment and the basis for the assessment on the data collection 
instrument. The final assessment reflected the analysts’ consensus. In 
addition, we reviewed documentation related to the Plan’s development 
and interviewed DOD officials involved in developing the Plan to 
discuss DOD’s strategy for improving inventory management, their 
interpretation of the legislative requirements, current inventory 
management improvement initiatives, and implementation challenges 
faced by DOD inventory managers in each sub-plan area. To provide 
context, our assessment also reflected our review of relevant DOD 
documents and issues raised in recent GAO reports that specifically 
relate to some of the required elements of the Plan. A list of our 
related products is included at the end of this report. 

Our second objective was to assess the extent to which the Plan and 
its supporting sub-plans contain the desirable characteristics of a 
comprehensive, results-oriented management framework. To answer this 
question, we developed a data collection instrument that contained 
desirable characteristics and elements that help establish a 
comprehensive, results-oriented management framework using information 
from prior GAO work examining national strategies and logistics 
issues.[Footnote 36] The data collection instrument included the 
following six desirable characteristics: 

1. Mission statement: A comprehensive statement that summarizes the 
main purposes of the plan. 

2. Problem definition, scope, and methodology: Presents the issues to 
be addressed by the plan, the scope of its coverage, the process by 
which it was developed, and key considerations and assumptions used in 
the development of the plan. 

3. Goals, objectives, activities, milestones, and performance 
measures: The identification of goals and objectives to be achieved by 
the plan, activities or actions to achieve those results, as well as 
milestones and performance measures. 

4. Resources and investments: The identification of costs to execute 
the plan and the sources and types of resources and investments, 
including skills and technology and the human, capital, information, 
and other resources required to meet the goals and objectives. 

5. Organizational roles, responsibilities, and coordination: The 
development of roles and responsibilities in managing and overseeing 
the implementation of the plan and the establishment of mechanisms for 
multiple stakeholders to coordinate their efforts throughout 
implementation and make necessary adjustments to the plan based on 
performance. 

6. Key external factors that could affect the achievement of goals: 
The identification of key factors external to the organization and 
beyond its control that could significantly affect the achievement of 
the long-term goals contained in the plan. These external factors can 
include economic, demographic, social, technological, or environmental 
factors, as well as conditions that would affect the ability of the 
agency to achieve the results desired. 

For our assessment of the extent to which the Plan addressed these six 
key characteristics, we used the data-collection instrument to 
determine whether each characteristic was addressed, partially 
addressed, or not addressed. We used the same assessment methodology 
and rating scheme to assess whether the Plan incorporated six key 
characteristics as we did in assessing whether the Plan addressed the 
required elements of section 328 of the NDAA for Fiscal Year 2010. In 
addition, we interviewed Office of the Secretary of Defense, service, 
and DLA officials involved in the development of the Plan to discuss 
the incorporation of the six key characteristics. 

To address our objectives, we reviewed documentation and interviewed 
officials from: 

* Office of the Deputy Assistant Secretary of Defense for Supply Chain 
Integration; 

* Office of the Joint Chiefs of Staff, Supply Division; 

* Defense Logistics Agency Headquarters; 

* Headquarters Army, Office of the Deputy Chief of Staff of the Army, 
Logistics; 

* Headquarters Navy, Deputy Assistant Secretary of the Navy, 
Acquisition & Logistics Management; 

* Navy Supply Systems Command Headquarters; 

* Headquarters Air Force, Deputy Chief of Staff for Logistics, 
Installations, and Mission Support, Directorate of Logistics Policy 
Division; 

* Air Force Materiel Command Headquarters; 

* Marine Corps Headquarters, Installations and Logistics Department; 

* Marine Corps Logistics Command Headquarters. 

We conducted this performance audit from October 2010 to January 2011, 
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. 

[End of Enclosure II] 

Related GAO Products: 

Defense Logistics: Additional Oversight and Reporting for the Army 
Logistics Modernization Program Are Needed. [hyperlink, 
http://www.gao.gov/products/GAO-11-139]. Washington, D.C.: November 
18, 2010. 

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. 

Warfighter Support: Preliminary Observations on DOD’s Progress and 
Challenges in Distributing Supplies and Equipment to Afghanistan. 
[hyperlink, http://www.gao.gov/products/GAO-10-842T]. Washington, 
D.C.: June 25, 2010. 

Defense Inventory: Defense Logistics Agency Needs to Expand on Efforts 
to More Effectively Manage Spare Parts. [hyperlink, 
http://www.gao.gov/products/GAO-10-469]. Washington, D.C.: May 11, 
2010. 

Defense Logistics: Actions Needed to Improve Implementation of the 
Army Logistics Modernization Program. [hyperlink, 
http://www.gao.gov/products/GAO-10-461]. Washington, D.C.: April 30, 
2010. 

Military Base Realignments and Closures: DOD Needs to Update Savings 
Estimates and Continue to Address Challenges in Consolidating Supply-
Related Functions at Depot Maintenance Locations. [hyperlink, 
http://www.gao.gov/products/GAO-09-703]. Washington, D.C.: July 9, 
2009. 

High-Risk Series: An Update. GAO-09-271. Washington, D.C.: January 2009.
Defense Inventory: Army Needs to Evaluate Impact of Recent Actions to 
Improve Demand Forecasts for Spare Parts.[hyperlink, 
http://www.gao.gov/products/GAO-09-199]. Washington, D.C.: January 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. 

Defense Logistics: Improved Analysis and Cost Data Needed to Evaluate 
the Cost-effectiveness of Performance Based Logistics. [hyperlink, 
http://www.gao.gov/products/GAO-09-41]. Washington, D.C.: December 19, 
2008. 

Defense Inventory: Management Actions Needed to Improve the Cost 
Efficiency of the Navy’s Spare Parts Inventory. [hyperlink, 
http://www.gao.gov/products/GAO-09-103]. Washington, D.C.: December 
12, 2008. 

DOD Business Transformation: Air Force’s Current Approach Increases 
Risk That Asset Visibility Goals and Transformation Priorities Will 
Not Be Achieved. [hyperlink, http://www.gao.gov/products/GAO-08-866]. 
Washington, D.C.: August 8, 2008. 

Army Working Capital Fund: Actions Needed to Reduce Carryover at Army 
Depots. [hyperlink, http://www.gao.gov/products/GAO-08-714]. 
Washington, D.C.: July 8, 2008. 

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. 

DOD Business Transformation: Lack of an Integrated Strategy Puts the 
Army’s Asset Visibility System Investments at Risk. [hyperlink, 
http://www.gao.gov/products/GAO-07-860]. Washington, D.C.: July 27, 
2007. 

High-Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-07-310]. Washington, D.C.: January 
2007. 

Defense Inventory: Opportunities Exist to Improve the Management of 
DOD’s Acquisition Lead Times for Spare Parts. [hyperlink, 
http://www.gao.gov/products/GAO-07-281]. Washington, D.C.: March 2, 
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. 

Defense Inventory: Opportunities Exist to Save Billions by Reducing 
Air Force’s Unneeded Spare Parts Inventory. [hyperlink, 
http://www.gao.gov/products/GAO-07-232]. Washington, D.C.: April 27, 
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. 

Defense Inventory: Actions Needed to Improve Inventory Retention 
Management. [hyperlink, http://www.gao.gov/products/GAO-06-512]. 
Washington, D.C.: May 25, 2006. 

Defense Logistics: More Efficient Use of Active RFID Tags Could 
Potentially Avoid Millions in Unnecessary Purchases. [hyperlink, 
http://www.gao.gov/products/GAO-06-366R]. Washington, D.C.: March 8, 
2006. 

Defense Logistics: Better Strategic Planning Can Help Ensure DOD’s 
Successful Implementation of Passive Radio Frequency Identification. 
[hyperlink, http://www.gao.gov/products/GAO-05-345]. Washington, D.C.: 
September 12, 2005. 

DOD Excess Property: Management Control Breakdowns Result in 
Substantial Waste and Inefficiency. [hyperlink, 
http://www.gao.gov/products/GAO-05-277]. Washington, D.C.: May 13, 
2005. 

High-Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-05-207]. Washington, D.C.: January 
2005. 

Defense Inventory: Improvements Needed in DOD’s Implementation of Its 
Long-Term Strategy for Total Asset Visibility of Its Inventory. 
[hyperlink, http://www.gao.gov/products/GAO-05-15]. Washington, D.C.: 
December 6, 2004. 

Defense Inventory: Approach for Deciding Whether to Retain or Dispose 
of Items Needs Improvements. [hyperlink, 
http://www.gao.gov/products/GAO-01-475]. Washington, D.C.: May 25, 
2001. 

[End of section] 

Footnotes: 

[1] DOD defines secondary inventory items to include reparable 
components, subsystems, and assemblies other than major end items 
(e.g., ships, aircraft, and helicopters), consumable repair parts, 
bulk items and materiel, subsistence, and expendable end items (e.g., 
clothing and other personal gear). 

[2] The approved acquisition objective incorporates both materiel 
needed to meet the requirements objective and materiel needed to meet 
2 years of estimated future demand. The requirements objective is (for 
wholesale inventory replenishment) the maximum authorized quantity of 
stock for an item. It consists of the sum of stock represented by the 
economic order quantity, the safety level, the repair-cycle level, and 
the authorized additive levels. While inventory held for economical 
reasons or future use is not part of the approved acquisition 
objective, DOD states that retention of this inventory is necessary 
for the military mission. 

[3] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009); High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-07-310] (Washington, D.C.: January 
2007); and High Risk-Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-05-207] (Washington, D.C.: January 
2005). 

[4] See GAO, Defense Inventory: Defense Logistics Agency Needs to 
Expand on Efforts to More Effectively Manage Spare Parts, [hyperlink, 
http://www.gao.gov/products/GAO-10-469] (Washington, D.C.: May 11, 
2010); Defense Inventory: Army Needs to Evaluate Impact of Recent 
Actions to Improve Demand Forecasts for Spare Parts, [hyperlink, 
http://www.gao.gov/products/GAO-09-199] (Washington, D.C.: Jan. 12, 
2009); Defense Inventory: Management Actions Needed to Improve the 
Cost Efficiency of Navy's Spare Parts Inventory, [hyperlink, 
http://www.gao.gov/products/GAO-09-103] (Washington, D.C.: Dec. 12, 
2008); and Defense Inventory: Opportunities Exist to Save Billions by 
Reducing Air Force's Unneeded Spare Parts Inventory, [hyperlink, 
http://www.gao.gov/products/GAO-07-232] (Washington, D.C.: Apr. 27, 
2007). 

[5] Pub. L. No. 111-84 § 328 (2009). 

[6] Economic retention stock is materiel that has been deemed more 
economical to keep than to discard because it is likely to be needed 
in the future. Contingency retention stock is materiel retained for 
specific contingencies. 

[7] The NDAA for Fiscal Year 2010 was enacted October 28, 2009. 

[8] GAO, Combating Terrorism: Evaluation of Selected Characteristics 
in National Strategies Related to Terrorism, [hyperlink, 
http://www.gao.gov/products/GAO-04-408T] (Washington, D.C.: Feb. 3, 
2004); Depot Maintenance: Improved Strategic Planning Needed to Ensure 
that Air Force Depots Can Meet Future Maintenance Requirements, 
[hyperlink, http://www.gao.gov/products/GAO-10-526] (Washington, D.C.: 
May 14, 2010); and Depot Maintenance: Improved Strategic Planning 
Needed to Ensure that Navy Depots Can Meet Future Maintenance 
Requirements, [hyperlink, http://www.gao.gov/products/GAO-10-585] 
(Washington, D.C.: June 11, 2010). 

[9] [hyperlink, http://www.gao.gov/products/GAO-04-408T], [hyperlink, 
http://www.gao.gov/products/GAO-10-526], and [hyperlink, 
http://www.gao.gov/products/GAO-10-585]. 

[10] Inventory that is not in DOD's possession but for which a 
contract has been awarded or funds have been obligated is considered 
to be on-order. Inventory that is in DOD's possession is considered to 
be on-hand. 

[11] Multi-echelon modeling is the automated computation of the 
optimal number and type of parts needed at the wholesale and retail 
levels to achieve readiness and cost goals. 

[12] See GAO, Defense Logistics: Additional Oversight and Reporting 
for the Army Logistics Modernization Program Are Needed, [hyperlink, 
http://www.gao.gov/products/GAO-11-139] (Washington, D.C.: Nov. 18, 
2010); 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); Defense Logistics: Actions Needed to Improve Implementation of 
the Army Logistics Modernization Program, [hyperlink, 
http://www.gao.gov/products/GAO-10-461] (Washington, D.C.: Apr. 30, 
2010); and DOD Business Transformation: Lack of an Integrated Strategy 
Puts the Army’s Asset Visibility System Investment at Risk, 
[hyperlink, http://www.gao.gov/products/GAO-07-860] (Washington, D.C.: 
July 27, 2007). Also see Insufficient Governance over Logistics 
Modernization Program System Development, Inspector General, United 
States Department of Defense, Audit Report No. D-2011-015, Nov. 2, 
2010. 

[13] [hyperlink, http://www.gao.gov/products/GAO-11-139] and 
[hyperlink, http://www.gao.gov/products/GAO-11-53]. 

[14] [hyperlink, http://www.gao.gov/products/GA0-10-469], [hyperlink, 
http://www.gao.gov/products/GAO-09-199], [hyperlink, 
http://www.gao.gov/products/GAO-09-103], and [hyperlink, 
http://www.gao.gov/products/GAO-07-232]. 

[15] [hyperlink, http://www.gao.gov/products/GAO-11-139] and 
[hyperlink, http://www.gao.gov/products/GAO-11-53]. 

[16] [hyperlink, http://www.gao.gov/products/GAO-08-714]. 

[17] Items in the targeted inventories will be available for 
redistribution to meet critical needs. Targeted inventories will not 
include those already identified to meet critical needs (i.e., 
inventories aboard ship or positioned in theaters of operation). 
Specific targeted inventories have not been selected. 

[18] [hyperlink, http://www.gao.gov/products/GAO-10-842T], [hyperlink, 
http://www.gao.gov/products/GAO-09-150], [hyperlink, 
http://www.gao.gov/products/GAO-06-366R], [hyperlink, 
http://www.gao.gov/products/GAO-05-345], and [hyperlink, 
http://www.gao.gov/products/GAO-05-15]. 

[19] [hyperlink, http://www.gao.gov/products/GA0-11-139] and 
[hyperlink, http://www.gao.gov/products/GAO-11-53]. 

[20] [hyperlink, http://www.gao.gov/products/GA0-11-139]. 

[21] [hyperlink, http://www.gao.gov/products/GAO-10-469], [hyperlink, 
http://www.gao.gov/products/GAO-09-103], and [hyperlink, 
http://www.gao.gov/products/GAO-07-232]. 

[22] [hyperlink, http://www.gao.gov/products/GA0-01-475]. 

[23] [hyperlink, http://www.gao.gov/products/GA0-06-512]. 

[24] [hyperlink, http://www.gao.gov/products/GA0-09-103]. 

[25] [hyperlink, http://www.gao.gov/products/GA0-06-512]. 

[26] [hyperlink, http://www.gao.gov/products/GA0-10-469]. 

[27] [hyperlink, http://www.gao.gov/products/GA0-10-469]. 

[28] [hyperlink, http://www.gao.gov/products/GA0-07-232]. 

[29] Dormant Stock, U.S. Army Audit Agency, Audit Report No. A-2010-
0183-ALR, September 1, 2010. 

[30] [hyperlink, http://www.gao.gov/products/GA0-10-469]. 

[31] [hyperlink, http://www.gao.gov/products/GA0-05-277]. 

[32] Dormant Stock, U.S. Army Audit Agency, Audit Report No. A-2010-
0183-ALR, September 1, 2010. 

[33] [hyperlink, http://www.gao.gov/products/GAO-11-139], [hyperlink, 
http://www.gao.gov/products/GAO-11-53], [hyperlink, 
http://www.gao.gov/products/GA0-10-461], and [hyperlink, 
http://www.gao.gov/products/GAO-07-860]. 

[34] [hyperlink, http://www.gao.gov/products/GA0-10-469], [hyperlink, 
http://www.gao.gov/products/GAO-09-199], and [hyperlink, 
http://www.gao.gov/products/GAO-09-103]. 

[35] [hyperlink, http://www.gao.gov/products/GA0-07-281]. 

[36] GAO, Combating Terrorism: Evaluation of Selected Characteristics 
in National Strategies Related to Terrorism, [hyperlink, 
http://www.gao.gov/products/GAO-04-408T] (Washington, D.C.: Feb. 3, 
2004); Depot Maintenance: Improved Strategic Planning Needed to Ensure 
that Navy Depots Can Meet Future Maintenance Requirements, GAO-10-585 
(Washington, D.C.: June 11, 2010); and Depot Maintenance: Improved 
Strategic Planning Needed to Ensure that Air Force Depots Can Meet 
Future Maintenance Requirements, [hyperlink, 
http://www.gao.gov/products/GAO-10-526] (Washington, D.C.: May 14, 
2010). 

[End of section] 

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