The staff projections, however, are based on assumptions about what a standardized cataloging process might look like rather than on actual plans for reengineered processes. Until DOD completes its planning on a design for the new cataloging process and develops a cost estimate for the new standardized system, it has no firm basis for projecting staff requirements and savings from centralizing and consolidating cataloging operations. Its projection that 753 full-time equivalent employees will be needed for a centralized and consolidated operation is an estimate based on the assumption that the new standardized process will not differ markedly from some of the best practices currently in use and that these best practices can be adopted by the other services and agencies. These studies will document how (1) each of the services’ and agencies’ existing processes work and (2) cataloging processes would be separated from other materiel management processes. With the demise of PCTSS, DOD will need a new development effort for a standardized cataloging system. DOD Faces Significant Challenges in Centralizing and Consolidating Operations

Although DOD has not yet developed a standardized cataloging process or determined how it will meet its needs for a standardized cataloging system, it has decided to relocate catalogers to Battle Creek, and reduce the number of catalogers to be relocated to a level envisioned after the processes and systems are standardized. According to the business case analysis, centralizing catalogers under one command will increase the likelihood of catalogers adopting to the new processes and procedures. Questions Exist About Separating Cataloging From Other Functions

Senior officials at the two DLA and two military service cataloging sites we visited expressed concerns about consolidating cataloging operations without a clearly defined business process to guide the consolidation. A DOD official stated that, in the short term, centralizing cataloging personnel before reengineering cataloging processes could result in inefficiencies and added costs. Until a standardized process for cataloging is developed, however, it is not possible to determine the reasonableness of either DOD’s or the employee groups’ staffing projections. Conclusions

Many uncertainties exist regarding what personnel reductions and savings will occur from DOD’s planned centralization and consolidation of its cataloging operations. DOD partially concurred with our recommendation that a clearly defined plan for standardizing the cataloging processes should be developed before cataloging personnel are moved to Battle Creek and did not concur with our recommendation that it should develop a full assessment of the costs and savings of consolidation. Most importantly, system development cost data needs to be assessed. Our information on the proposals made by two employee groups that state that DOD could achieve even greater personnel reductions and savings by consolidating cataloging operations in other locations (instead of Battle Creek, Michigan) was obtained from employees at the Navy Inventory Control Point, Philadelphia, Pennsylvania; the Defense Industrial Supply Center, Philadelphia, Pennsylvania; the Defense Personnel Support Center, Philadelphia, Pennsylvania; and the Defense Supply Center, Columbus, Ohio. Copies will be made available to others upon request. 3. 5. Comments From the Department of Defense

	GAO Comments

1. Our draft report included statements by Defense Logistics Agency (DLA) officials that they have begun developing plans that address these risks. 2. DOD’s plans are those discussed in comment 1. DOD does not currently intend to complete this plan until after catalogers are centralized, but not consolidated, in Battle Creek. 3. 4.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) decision to centralize and consolidate DOD cataloging operations in Battle Creek, Michigan, focusing on: (1) the likelihood that DOD's decision will result in the estimated personnel reductions and savings; (2) challenges DOD may face when implementing the consolidation effort; and (3) proposals made by two employee groups that state that DOD could achieve even greater personnel reductions and savings by centralizing and consolidating cataloging operations in other locations.

What GAO Found

GAO noted that: (1) it is uncertain that the estimated personnel reductions and savings will occur; (2) DOD's estimates are based on several assumptions that either will not necessarily occur or have changed since DOD made the estimates; (3) DOD based the estimates, for example, on an assumption of what a standardized cataloging process may look like but has not settled on an actual design of the centralized and consolidated system; (4) detailed studies to document existing cataloging processes are still ongoing and will be important for determining how cataloging processes can be separated from other materiel management functions; (5) DOD also assumed that an ongoing system development project to develop a standardized cataloging system would be successful and thus did not consider any system development costs in estimating savings; (6) however, DOD has since halted work on that system, and costs to develop a new one are uncertain; (7) DOD faces significant challenges in implementing the consolidation; (8) prior DOD cataloging consolidation efforts incurred problems that will need to be taken into consideration in developing detailed implementation plans for consolidation; (9) separating cataloging from other service provisioning and materiel management functions may be difficult and could negatively affect cataloging operations during the transition; (10) DOD may lose much of its cataloging experience because of the reluctance of experienced catalogers to relocate; (11) a Defense Logistics Agency (DLA) official stated that DLA has begun developing plans that address these risks and that no cataloging functions will be transferred to Battle Creek until these plans are complete; (12) planning for the new standardized cataloging process and the necessary standardized cataloging system will not be completed until after catalogers are moved to Battle Creek; (13) DOD also plans, in conjunction with the move, to reduce the number of catalogers to levels envisioned only after process reengineering and consolidation of cataloging have occurred; (14) DOD officials believe the move will increase the likelihood of catalogers adapting to the as yet unplanned new processes and systems; (15) however, senior officials responsible for service cataloging operations have expressed concerns about the risks inherent in proceeding without detailed plans to guide the consolidation; and (16) until a standardized cataloging process is developed, it is not possible to determine the reasonableness of the employee groups' proposals concerning further staff reductions.