DOD’s goal is for the components to share UII  data across each of their individual IT systems, and DOD-wide, between  components. The task  force issued a report with recommendations in June 2010 that estimated  financial costs of IUID implementation, as well as financial and  nonfinancial benefits. DOD Has Taken Some Steps toward Developing a Framework for Management of IUID Implementation, but Has Not Yet Incorporated Several Key Elements of a Comprehensive Management Approach

DOD has taken some steps to improve its approach to managing and  implementing IUID technology, but has yet to incorporate some key  elements of best management practices into its evolving framework for  management of IUID implementation. These include internal controls and  analysis of return on investment. For example, DOD lacks such key information as  quantitatively defined goals for marking legacy items; performance  measures, such as reliable schedules for predicting when its Enterprise  Resource Planning systems will have the capability to manage items  using UII data; and a full estimate of IUID’s cost and benefits. Moreover, according to the report, implementing  IUID into property-accountability processes on the enterprise level could  enable DOD to track equipment assets throughout their life cycle. DOD and Contractors Have Made Some Progress Marking Items with IUID, but DOD Faces Challenges in Assessing Progress toward Goals and Ensuring That Items Are Sufficiently Marked

DOD components and contractors have been marking items with IUID,  but due to several challenges, it is difficult for DOD to assess its progress  in marking items or ensuring that contractors are sufficiently marking  items. But, DOD does not have complete  information on the total number of legacy items that its components have  marked and must mark in the future. With  respect to newly-acquired items and pieces of government-furnished  property, DOD reports that as of January 2012, more than 2,500  contractors had delivered newly-acquired items to DOD and had  registered over 11.5 million such items and pieces of government- furnished property in DOD’s IUID Registry. As a result, DOD may be unable to  ensure that contractors are marking all newly-acquired items and pieces  of government-furnished property that require IUID labels, and DOD  cannot know the extent to which contractors are supplying IUID data  matrices that the components need to track items with IUID technology. As of October  2011, the components reported marking more than 2 million legacy items. However, DOD does not have complete information on the total number  of items to be marked and that have been marked; DOD has not  quantifiably defined its marking goals according to DOD’s IUID marking  criteria; DOD has not set interim milestones to determine the  components’ progress in marking items; and DOD’s components do not  use consistent criteria to track progress in legacy item marking. To Achieve Key Benefits, DOD Plans to Use IUID Technology in Enterprisewide Logistics Processes by the End of Fiscal Year 2015

It is DOD’s goal for its components to share UII data departmentwide, and  the components are to use these data for unique item tracking. First, DOD is in the process of modifying its supply chain  management policy and guidance to incorporate use of IUID technology  and UII data across DOD. However, these systems have limited capabilities  to manage or use UII data. Without fully defined requirements; resolving the  challenges posed by the Air Force and the Navy not actively integrating  IUID with their Enterprise Resource Planning systems; and an integrated  master schedule that includes IUID integration at the component level  and at the DOD-wide level, DOD cannot reliably predict whether it will  meet its goal to use these systems to manage items through intensive  item management and product life cycle management by the end of fiscal  year 2015, or predict when these systems will have this capability. Also, DOD has not fully developed  the schedules needed to integrate IUID with existing IT systems, so that  DOD can share UII data enterprisewide. Because of this, we continue to believe that the agency cannot  ensure that the items it inspects have IUID labels with sufficient data  matrices, and that it should continue to develop policies and procedures  that provide for systematic assessment of the sufficiency of contractor- marked items’ data matrices. DOD concurred with our recommendation for the components to examine  and report to the Office of Defense Procurement and Acquisition Policy  on all types of contracts that should include the acquired-items and  government-property clauses. DOD concurred with our recommendation to define the requirements for  using UII data across DOD and within the components’ Enterprise  Resource Planning systems. Moreover, DOD has estimated that implementing  IUID technology could save $3 billion to $5 billion per year. Appendix I: Scope and Methodology

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

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

What GAO Found

The Department of Defense (DOD) has taken some steps to improve its approach to managing and implementing Item Unique Identification (IUID) technology, but has yet to incorporate some key elements of best management practices into its evolving framework for management of IUID implementation. These include internal controls and analysis of return on investment. DOD has included certain internal controls, such as defining key areas of authority for IUID implementation, and it is revising policy to incorporate IUID. However, DOD does not have performance measures, such as reliable schedules for predicting when its enterprise information systems will be able to manage items using IUID data, or a full estimate of IUIDs cost and benefits. Without a management framework that includes such key practices, DOD has faced challenges in implementing IUID technology and may not be well positioned to achieve potential financial and nonfinancial benefits.
DODs data on the number of items already in its inventorylegacy itemsmarked with IUID labels to date is incomplete and DOD lacks assurance that contractors are sufficiently marking newly-acquired items and government-furnished property. The military services mark legacy items and have reported marking more than 2 million items. However, DOD does not have complete information on the total number of legacy items its components have marked and must mark in the future; does not have a full set of quantifiable goals or interim milestones corresponding to its IUID marking criteriasuch as certain items that cost $5,000 or moreand does not use consistent criteria among its components to track progress. Without the components reporting complete and comparable data, DODs ability to assess progress in marking legacy items will remain limited. Also, DOD does not have assurance that contractors are sufficiently marking newly-acquired items and government-furnished property. DOD reported that as of January 2012, over 2,500 contractors had marked or registered over 11 million items. However, DOD does not require the components to examine and report on all types of contracts that should include IUID marking clauses, nor does it have policies and procedures that provide for systematic assessment of the sufficiency of data contained in these items labels. Hence, DOD cannot know the full extent to which contractors are supplying IUID labels with the data needed to track items.
DODs ability to track and share unique item identifier (UII) data across components is hampered by the lack of full integration of data into components enterprise information systems. DOD has made some progress but faces challenges as it proceeds with its integration plans. DOD is revising its supply chain management policy and guidance to include IUID use, but has not fully defined requirements for using UII data, nor developed complete, integrated master schedules for integrating IUID, DOD-wide and within components systems. Such schedules enable agencies to predict the cost and timelines of their systems development. Without such requirements and schedules, DOD cannot adequately predict when the systems will be able to use UII data, or whether DOD will meet its fiscal year 2015 goal for using UII data to manage items throughout their life cycle.

What GAO Recommends

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