Logistics business operations include four major business activities—depot maintenance, distribution, materiel management, and transportation. Recently, DOD acknowledged that the deployment of standard information systems will not provide the dramatic improvements and cost reductions envisioned under the CIM initiative and is now emphasizing alternative ways for meeting these objectives. At the same time, however, it is continuing to deploy the information systems selected under the failed migration strategy. GAO Reviews of DOD’s Migration System Efforts

Our reviews of DOD migration system efforts for depot maintenance, materiel management, and transportation operations confirm that, to date, the strategy has failed to produce the dramatic gains in efficiency and effectiveness that DOD anticipated. Our review of Defense’s transportation migration efforts found that the current migration strategy in the transportation area will not ensure improvements are made that Defense recognizes are critical to the transportation function. DOD Is Emphasizing Alternative Ways to Improve Logistics Operations

Currently, for all business areas, DOD is trying alternative ways to achieve its CIM objectives of dramatic business improvement and cost reductions while, at the same time, continuing to deploy migration systems. First, Defense still has not completed the analyses required to determine that its logistics system deployment effort will yield a positive return on investment. Second, Defense has not yet sufficiently tied its improvement efforts to its overall business objectives through the use of strategic planning—a necessary step to ensure that the billions of dollars being invested in logistics improvement efforts will result in significant improvements in operations. Fundamental Cost-Benefit Analyses Necessary to Ensure Success of System Efforts

In continuing to deploy migration systems without addressing the fundamental problems associated with its selection and deployment of migration systems to date, DOD risks wasting a substantial amount of the additional $7.7 billion it plans to spend over the next few years. Through the Clinger-Cohen Act, the Government Performance and Results Act (GPRA), and the Paperwork Reduction Act(PRA), the Congress has underscored the importance of strategic planning for the efficient and effective use of information technology. These new improvements in turn increased productivity and the quality of customer service. Recommendations

To ensure that DOD optimizes its use of information technology to achieve its logistics CIM goals of dramatic business process improvement and operational cost reduction, we recommend that the Secretary of Defense:
Direct that immediate cost-benefit analyses of each logistics migration system be undertaken and halt deployment of those that (1) cannot be shown to have significant return-on-investment, (2) will not facilitate ongoing efforts to privatize logistics business functions, or (3) do not support efforts to achieve interoperability between and among business activities. Objectives, Scope, and Methodology

To determine whether DOD’s efforts to standardize its logistics migration systems will allow Defense to meet its business objectives of dramatically improving the efficiency and effectiveness of its logistics operations, we identified problems DOD has had implementing information systems selected under its migration strategy by analyzing prior GAO reports on DOD’s CIM efforts related to logistics business activities.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts over the last 4 years to improve its information systems in the depot maintenance, materiel management, and transportation business areas, focusing on whether selected standard information systems will allow DOD to meet its business objective to dramatically improve the efficiency and effectiveness of its logistics operations.

What GAO Found

GAO found that: (1) DOD's continued deployment of information systems using a migration strategy for the depot maintenance, materiel management, and transportation business areas will not likely produce the significant improvements originally envisioned; (2) for the most part, these efforts, which were intended to lay the groundwork for future dramatic change by first standardizing information systems and the related processes throughout DOD, are merely increasing the risk that the new systems that are deployed will not be significantly better or less costly to operate than the hundreds of logistics information systems already in place; (3) DOD itself has acknowledged that its migration systems strategy will not provide necessary dramatic improvements and cost reductions and is now emphasizing alternative ways of improving logistics business operations, such as turning to the private sector to carry out major logistics functions; (4) at the same time, however, it is continuing to deploy information systems selected under the migration strategy that are linked to the very same business functions it wishes to make more efficient and economical through outsourcing and/or privatization; (5) while GAO is encouraged that DOD is exploring alternative ways to improve its logistics operations, it is concerned that the current path needlessly risks wasting a substantial amount of the more than $7.7 billion DOD plans to invest in improving automated logistics systems; (6) DOD still has not taken the fundamental steps necessary to ensure that the automated systems it continues to deploy will yield a positive return on investment; (7) even as DOD embarks on its new improvement efforts, it has not yet sufficiently tied these new efforts to its overall business objectives through the use of a strategic investment strategy to ensure that the billions of dollars will be wisely spent; (8) such planning would be in keeping with best private- and government-sector practices as well as with new legislation which underscores the importance of strategic information planning for the efficient and effective use of information technology; and (9) without addressing these concerns, DOD's new improvement efforts, like the failed standard migration strategy, will proceed with little chance of achieving the objectives originally envisioned for substantial operational improvements and reduction in costs.