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GAO-12-883R 1 (2012-08-03)

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           GAO
       ~~JjccoutabIIty * Integrity * Reliability
United States Government Accountability Office
Washington, DC 20548




    August 3, 2012

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

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

    Subject: Defense Logistics: DOD Has Taken Actions to Improve Some Segments of the Materiel
    Distribution System

    The Department of Defense (DOD) operates a complex, multibillion-dollar distribution system for
    delivering needed supplies and equipment to U.S. forces across the world. DOD's goal in
    operating its global distribution system is to deliver the right item to the right place at the right
    time, and also at the right cost. The materiel distribution system covers multiple legs, from the
    movement of supplies in the continental United States to tactical movement on the battlefield,
    and must be capable of reaching its military customers whether they are located on large, well-
    established bases or at small, remote outposts. As we have reported, the federal government is
    facing serious long-term fiscal challenges, and DOD may confront increased competition over
    the next decade for federal discretionary funds.1 Given the fiscal environment DOD must
    operate in now and into the future, the distribution of supplies and equipment to the warfighter
    must be performed as effectively and efficiently as possible to ensure the best use of limited
    resources. Strategic guidance issued by the Secretary of Defense in January 2012 emphasized
    that DOD must continue to reduce the cost of doing business, in particular finding further
    efficiencies in overhead, business practices, and support activities.2

    Since 1990, GAO has identified DOD supply chain management as a high-risk area, with
    materiel distribution as one focus area for improvement.3 Our prior work, for example, has

    1GAO, The Federal Government's Long-Term Fiscal Outlook: January 2010 Update, GAO-1 0-468SP (Washington,
    D.C.: March 2010); and 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-
    325SP (Washington, D.C.: February 2005).
    2Department of Defense, Sustaining U.S. Global Leadership: Priorities for 21st Century Defense (Jan. 5, 2012).

    3This high-risk area was originally identified in 1990 as DOD inventory management. In 2005, it was expanded to
    DOD's management of its entire supply chain, which includes three focus areas for improvement: requirements


GAO-12-883R Defense Logistics


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