<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:29514.wais]
S. Hrg. 109-938
SUPPORTING THE WARFIGHTER: ASSESSING THE DEPARTMENT OF DEFENSE SUPPLY
CHAIN MANAGEMENT PLAN
=======================================================================
HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
THE FEDERAL WORKFORCE AND THE DISTRICT
OF COLUMBIA SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JULY 25, 2006
__________
Available via http://www.access.gpo.gov/congress/senate
Printed for the use of the Committee on Homeland Security
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______
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Michael L. Alexander, Minority Staff Director
Trina Driessnack Tyrer, Chief Clerk
OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE
DISTRICT OF COLUMBIA SUBCOMMITTEE
GEORGE V. VOINOVICH, Ohio, Chairman
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
NORM COLEMAN, Minnesota CARL LEVIN, Michigan
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Andrew Richardson, Staff Director
Richard J. Kessler, Minority Staff Director
Nanci E. Langley, Minority Deputy Staff Director
Emily Marthaler, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Voinovich............................................ 1
Senator Akaka................................................ 3
WITNESSES
Tuesday, July 25, 2006
WITNESSES
Alan F. Estevez, Assistant Deputy Under Secretary of Defense,
Supply Chain Integration, U.S. Department of Defense........... 5
William M. Solis, Director, Defense Capabilities Management, U.S.
Government Accountability Office............................... 6
Alphabetical List of Witnesses
Estevez, Alan F.:
Testimony.................................................... 5
Prepared statement........................................... 23
Solis, William M.:
Testimony.................................................... 6
Prepared statement........................................... 35
APPENDIX
Questions and responses for the Record from Mr. Estevez.......... 55
SUPPORTING THE WARFIGHTER: ASSESSING THE DEPARTMENT OF DEFENSE SUPPLY
CHAIN MANAGEMENT PLAN
----------
TUESDAY, JULY 25, 2006
U.S. Senate,
Subcommittee on Oversight of Government
Management, the Federal Workforce,
and the District of Columbia,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:05 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. George V.
Voinovich, Chairman of the Subcommittee, presiding.
Present: Senators Voinovich and Akaka.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. The hearing will come to order. Today's
hearing entitled ``Supporting the Warfighter: Assessing the DOD
Supply Chain Management Plan,'' is the second hearing that
Senator Akaka and I have held on the Department of Defense's
Supply Chain Management Improvement Plan and the third hearing
we have held on DOD business practices.
The hearing will focus on the progress that DOD has made in
developing and implementing the Supply Chain Management
Improvement Plan since the Subcommittee's last hearing on
October 6, 2005. I am interested to learn if DOD has identified
and implemented valid performance metrics and data to use in
measuring progress over the long term. Finally, the hearing
will examine the extent to which the Supply Chain Management
Improvement Plan is integrated with other DOD logistic
strategies, concepts, and plans.
I would reiterate that our interest in investigating and
improving the Department's supply chain management is guided by
two principles:
First, with a budget of well over $400 billion and a supply
inventory of $77 billion, the Department must be a good steward
of the taxpayers' money. I would note that Secretary of Defense
Rumsfeld once estimated that the Department wastes 5 percent of
its budget, over $20 billion a year at current budget levels,
on redundant or outdated business practices.
Second, inefficiant, ineffective, and redundant steps
within the supply chain can have a direct and negative impact
on our soldiers on the battlefield. The current system impedes
the Department's ability to deliver the right items at the
right time to the right place for the warfighter. According to
GAO, the demand for certain items in the war reserve exceeded
availability during Operation Iraqi Freedom. I know things have
improved since then, but as a result of the war reserves, they
did not have enough vehicle generators, tracks for tanks, body
armor, lithium batteries, ready-to-eat meals, tires, up-
armored, high-mobility, multi-purpose wheeled vehicles, and
kits to meet the demand in the field. We all are familiar with
that. We must do all we can to ensure that the men and women of
the armed services have the supplies that they need.
At the first Subcommittee hearing in October 2005, Under
Secretary of Defense Ken Krieg provided an overview of the
current logistics structure at DOD and summarized the
Department's ongoing efforts to improve and enhance the
efficiency and accountability of the supply chain. In addition,
Secretary Krieg outlined the next steps for the Department,
which was to develop metrics and benchmarks to measure DOD's
supply chain management progress.
I commend the Department for developing the Supply Chain
Management Improvement Plan in an open and collaborative manner
with the Office of Budget and Management and the Government
Accountability Office. I am pleased that the plan includes
baseline data and several metrics that can track short-term
progress in the supply chain process. I also appreciate the
fact that you have spent time with my staff and Senator Akaka's
staff, and I want you to know that they are going to be
spending more time with you.
However, it has now been a year since the plan was
developed, and these short-term metrics were intended to be
phased out and replaced by long-term metrics. Mr. Estevez, I am
interested to learn if the Department has begun to implement
those long-term metrics to ensure that this plan is driving
change in the supply chain.
In addition, there are at least five DOD strategic plans
that address logistics and business operations, including
Quadrennial Defense Review, the Logistics Transformation
Strategy, the Focused Logistics Road Map, and the Enterprise
Transition Plan. Some of those plans address supply chain
management while others do not. Mr. Solis, I would like to
learn from you where the Department has made clear links
between these various plans. Without clear links between these
plans, DOD runs the risk of duplicative and inefficient
operations.
I would like our witnesses to know that we are committed to
working with them to ensure that necessary improvements are
made in this area. Supply chain management has been on the GAO
high-risk list since 1990. Sixteen years is far too long for a
process of this magnitude and importance to be mismanaged. With
the continued collaboration of GAO, OMB, and DOD, as well as
continued congressional oversight, I am confident that supply
chain management can be removed from the high-risk list. I am
going to bring a bottle of champagne when we announce that.
I would like to thank both of our witnesses for coming
today. Alan Estevez is the Assistant Deputy Under Secretary of
Defense for Supply Chain Integration. Thank you for coming.
Bill Solis is the Director of Defense Capabilities Management
at the Government Accountability Office, Mr. Solis, it is good
to see you again.
I would now like to yield to my good friend and colleague,
Senator Akaka, for his opening statement. Senator Akaka.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman. I join
you in welcoming our witnesses, and I want all of you to know
that it is a pleasure to work with the Chairman on these and
other issues in our Subcommittee. And I am glad to have Mr.
Estevez, who leads DOD's Supply Chain Integration Initiative,
and, of course, to see Mr. Solis again, who has long guided
GAO's oversight of this critical DOD program. And so we have
been working together and trying to improve the general
government management of our country.
The Chairman and I intend to move DOD's supply chain
management off of the GAO high-risk list, as he has mentioned.
It has been on there since 1990. Now, we are making solid
progress, and I thank our witnesses for the important roles
they are playing in this effort.
I am especially pleased that Mr. Estevez is with us today
for a couple of reasons. First, as the head of Supply Chain
Integration, you are central in identifying the capabilities
and gaps in supply chain management, which is so important in
trying to improve what we are doing. And, second, I would like
to point out that you were last year's recipient of the Service
to America Award for National Security. And I tell you that
because I was honored to be at the ceremony as the presenter of
the 2005 Federal Employee of the Year Award, and I am so happy
that there are such awards. Again, congratulations.
Today's discussion will help us better understand where DOD
is going on supply chain management. Inefficiencies in DOD
business operations impact our men and our women in uniform. I
know from reviewing today's written testimony that progress has
been made. However, having worked on DOD business modernization
as the ranking member of the Armed Services Readiness
Subcommittee, I also know the road ahead is rough and that the
short-term goal of meeting certain milestones by 2008 may not
be achieved.
Supply chain management is not a regional issue. Moving
material forward and expediting replacements without building
unnecessary stockpiles impacts overseas and domestic operations
equally. Until DOD builds on its strengths while addressing
deficiencies within logistics system, our Armed Forces are at
risk.
DOD logistics programs and operations account for close to
one-third of DOD's budget, and the Chairman mentioned $400
billion as the budget. Logistics and supply chain management,
which includes the purchase of equipment and spare parts, as
well as their maintenance and transport, are part of the
Operations and Maintenance account that supports critical
portions of DOD's readiness and quality-of-life programs.
O&M funding also covers a wide range of activities, such as
depot maintenance, environmental restoration, base operations,
and the training of U.S. forces. Therefore, we must ensure that
O&M funds are spent wisely or else the ability of our military
to meet present and future challenges will be impaired. And
being the Ranking Member on Readiness, I am being very careful
about that.
That is why it is so important that we have initiatives
with credible and achievable short- and long-term metrics that
are linked together. Developing programs, setting objectives,
and establishing benchmarks are only part of the solution to
improving supply chain management and moving it off the high-
risk list.
One new program developed as a result of the Supply Chain
Management Improvement Plan is the Joint Regional Inventory
Materiel Management Initiative (JRIMM). I am very proud that
the U.S. Pacific Command, PACOM, was chosen to lead this new
program. So JRIMM, once fully implemented, will provide
distribution services to all military commands on Oahu. The
principles of JRIMM focus on a single joint logistics system to
eliminate duplicative activities and inventory, leverage
distribution platforms, and improve shipment loads and routes.
And all of these need to be examined.
I support DOD on this effort, and I am confident PACOM's
experience will increase requirements forecasting, asset
visibility, and material distribution--three key areas of
improvement identified by GAO as central to supply chain
management processes.
Having spent time with combatant commanders, I know that
they will not accept a comprehensive logistics system unless
they are confident that the men and women under their commands
will have what is needed to carry out their missions. To
paraphrase you, Mr. Estevez, without the right equipment in the
right place and at the right time, our Armed Services cannot do
their jobs. And I thank you for that.
DOD's management and integration challenges demand long-
term attention and sustained leadership. One critical benchmark
will be how successfully DOD aligns its logistic supply
management initiatives to the Department's fiscal year 2008
budget submission. I am sure Clay Johnson at OMB will let us
know how DOD is doing in that regard.
So, Mr. Chairman, I want to thank you for holding this
hearing. This is really key for our country and government
management, and I look forward to working with you and with our
witnesses on this continued partnership.
Thank you very much, Mr. Chairman.
Senator Voinovich. Thank you, Senator Akaka. I think we are
very fortunate to not only have you as the Ranking Member of
the Subcommittee, but your extensive background on the Armed
Services Committee gives you an even broader perspective on
what we are dealing with today. I suspect, that you have been
dealing with this a lot longer than I have.
I would like the witnesses to limit their statements to 5
minutes or less. You all know that your statements will be
included in the record.
It is the custom of our Subcommittee to swear in our
witnesses. If you will please stand, I will swear you in. Do
you swear that the testimony you are about to give this
Subcommittee is the truth, the whole truth, and nothing but the
truth, so help you, God?
Mr. Estevez. I do.
Mr. Solis. I do.
Senator Voinovich. Thank you.
Mr. Estevez, thank you again for being here today, and we
look forward to your testimony.
TESTIMONY OF ALAN F. ESTEVEZ,\1\ ASSISTANT DEPUTY UNDER
SECRETARY OF DEFENSE, SUPPLY CHAIN INTEGRATION, U.S. DEPARTMENT
OF DEFENSE
Mr. Estevez. Thank you, sir. Chairman Voinovich, Senator
Akaka, thank you for the opportunity to appear before you and
discuss the current status of the Department of Defense's
efforts to address areas of risk in the Department's supply
chain processes. I welcome the opportunity to do so as we are
implementing a comprehensive Supply Chain Management High-Risk
Improvement Plan to improve the level of logistics support we
are providing to our warfighters and to increase the return on
investment for that support to the American taxpayer.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Estevez appears in the Appendix
on page 23.
---------------------------------------------------------------------------
Today, I will highlight recent actions the Department has
undertaken to improve our supply chain management. Before I do
that, first I would like to thank Senator Akaka for the
compliment, and also you, Senator Voinovich, I know also a
compliment to be in the hearing with Mr. Krieg last October for
winning that award, which, as I said, when I received that
award, really belongs to the men and women of our services that
are actually implementing and driving those programs.
I would like to compliment the respective staffs and the
staffs of the Government Accountability Office and Office of
Management and Budget who have worked with the Department in
addressing the supply chain management high-risk area.
DOD logistics is a $151 billion a year operation supporting
our forces around the world, keeping 15,000 aircraft, 300
ships, 30,000 combat vehicles, fulfilling their mission. Unlike
our commercial counterparts, DOD logisticians are called upon
to support operations on short notice, for an indefinite
period, in parts of the world such as the mountains of
Afghanistan or the desert of Al Ambar Province, in which we
have little or no existing presence or capabilities. We have
also supported unplanned disaster relief efforts, including
along our own Gulf Coast. Under such circumstances, there will
always be areas of risk.
Even as we continue to support multiple operations around
the world, we have made tremendous progress in transforming DOD
logistics. I will provide an update on our accomplishments.
A primary measure of performance of a logistics system is
customer wait time, that is, how long it takes from the time a
warfighter orders an item until they receive that item. I am
pleased to report that we have seen a 33-percent decrease in
customer wait time from fiscal year 2004 through April 2006,
from an average of 24 days to 16 days.
The designation of the U.S. Transportation Command as the
distribution process owner has already led to significant
benefits in aligning the Department's distribution process. For
example, average customer wait time to Iraq and Kuwait has
decreased from 22 days in March 2005 to 12\1/2\ days in June
2006.
DOD is a leader in the implementation of radiofrequency
identification technology, and the DOD Radio Frequency
Identification (RFID) network is providing the warfighter with
unprecedented visibility of incoming shipments. We continue to
drive our implementation of this leading-edge technology.
We have seen excellent results in applying continuous
process improvement to our maintenance depots, and lean
techniques used in our distribution depots have improved
processing times for air pallet builds from over 85 hours to an
average of 35 hours.
The recommendations of the Base Realignment and Closure
Commission reinforced the key programs highlight in our High-
Risk Improvement Plan. Initiatives such as our Joint Regional
Inventory Materiel Management program and our Strategic
Commodity program will help us to achieve real benefits under
our BRAC transformation.
We continue to develop an overarching logistics strategy.
To that end, we are conducting a job logistics capabilities
portfolio test to better integrate the warfighter's
requirements and refine the focus of our logistics strategy.
The results of that test, along with the operational support
lessons learned and initiatives contained in our high-risk
improvement plan, will be incorporated into the comprehensive
logistics strategic plan.
Change management begins at the top, and our senior leaders
are deeply involved. As you know, Ken Krieg, the Under
Secretary of Defense Acquisition, Technology, and Logistics,
and Jack Bell, the Deputy Under Secretary of Defense for
Logistics and Materiel Readiness, receive regular updates on
our progress.
Ultimately, the proof of this process will be in the
translation of these initiatives into improved performance and
better risk management. We are committed to measurably
improving logistics support to our military forces.
Thank you, and I would be happy to answer any questions you
may have.
Senator Voinovich. Thank you, Mr. Estevez. Mr. Solis.
TESTIMONY OF WILLIAM M. SOLIS,\1\ DIRECTOR, DEFENSE
CAPABILITIES MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Solis. Chairman Voinovich, Ranking Member Akaka, thank
you for the opportunity to discuss our views on DOD's progress
in addressing issues related to improvement in supply chain
management. At the onset, I would again like to thank the
Subcommittee for its oversight of this important issue, which,
as the Chairman mentioned, affects military readiness, the
safety and well-being of our military members, and the
investment of billions of dollars. The active involvement of
this Subcommittee is essential to ultimately ensuring DOD's
progress in addressing and resolving its high-risk areas, while
enhancing public confidence in DOD's stewardship of hundreds of
billions of dollars of taxpayer funds it receives each year. I
would also like to mention that OMB's and DOD's continued
commitment and involvement remain essential in resolving the
DOD supply chain issues we will discuss today.
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\1\ The prepared statement of Mr. Solis appears in the Appendix on
page 35.
---------------------------------------------------------------------------
As requested, my comments will focus on three issues:
First, DOD's progress in implementing the Supply Chain
Management Improvement Plan; second, its progress in
incorporating performance measures for tracking and
demonstrating improvement; and, third, the extent to which the
DOD Supply Chain Management Improvement Plan is aligned with
other logistics plans across the Department that address
aspects of the supply chain.
Regarding progress and its Supply Chain High-Risk Plan,
since October 2005, DOD has continued to make progress
implementing the 10 initiatives in its Supply Chain Management
Improvement Plan, but it will take several years to fully
implement all of these initiatives. DOD's stated goal for
implementing this plan is to demonstrate significant
improvement in supply chain management within 2 years of the
plan's inception in 2005, but the time frames for substantially
implementing some of the initiatives are currently 2008 or
later.
While DOD has generally stayed on track, it has reported
some slippage in the implementation of certain initiatives.
Factors such as the long-standing nature of the problems, the
complexities of the initiatives, and the involvement of
multiple organizations within DOD could cause the
implementation dates of some initiatives to slip further.
Regarding progress on supply chain metrics, DOD has
incorporated several broad performance measures in its Supply
Chain Management Improvement Plan, but it continues to lack
outcome-focused performance measures for many of the
initiatives. Therefore, it is difficult to track and
demonstrate progress toward improving the three focus areas of
requirements forecasting, asset visibility, and materiel
distribution. Although DOD's plan includes four high-level
performance measures that are being tracked across the
Department, these measures do not necessarily reflect the
performance of the initiatives and do not relate explicitly to
the three focus areas. Further, DOD's plan does not include
cost metrics that might show efficiencies gained through supply
chain management improvement efforts.
In their effort to develop performance measures for use
across the Department, DOD officials have encountered
challenges such as a lack of standardized, reliable data.
Nevertheless, DOD could show near-term progress by adding what
we call intermediate measures. These measures could include
outcome-focused measures for each of the initiatives or for the
three focus areas.
Last, regarding the alignment of the DOD high-risk plan
with other logistics plans, DOD has multiple plans aimed at
improving aspects of logistics, including supply chain
management, but it is unclear how these plans are aligned with
one another. The plans were developed at different points in
time for different purposes, and in different formats, so it is
difficult to determine how all the ongoing efforts link
together to sufficiently cover requirements forecasting, asset
visibility, and materiel distribution, and whether they will
result in significant progress towards resolving this high-risk
area.
Also, DOD's Supply Chain Management Improvement Plan by
design does not account for initiatives outside of the direct
oversight of the Office of the Secretary of Defense, and DOD
lacks a comprehensive strategy to guide logistics programs and
initiatives. DOD is in the process of developing a new plan,
referred to as a ``To Be'' roadmap, for future logistics
programs and initiatives. This roadmap is intended to portray
where the Department is headed in the logistics area, how it
will get there, and what progress is being made toward
achieving its objectives, as well as to link ongoing capability
development, program reviews, and budgeting. However, until the
roadmap is completed, GAO will not be able to assess how it
addresses the challenges and risks DOD faces in its supply
chain improvement efforts.
In closing, the plan alone will not resolve the problems we
identified in the DOD supply chain. While we recognize the
difficulties and long-term nature of dealing with this issue,
measurable and sustained progress will be needed not only to
remove the high-risk designation, but provide Congress and DOD
stakeholders at all levels with the confidence in DOD's supply
chain.
Mr. Chairman, Senator Akaka, that concludes my statement. I
will be happy to answer any questions.
Senator Voinovich. Thank you very much.
Mr. Estevez, I understand that you created a Supply Chain
Logistics Working Group to assess the cost and performance
outcomes of DOD logistics. This group has developed short-term
metrics as well as long-term benchmarks and metrics based on
industry standards that will allow you to measure your
effectiveness.
Has the Department been able to measure success based on
those short-term metrics? And has the Department begun to
implement the long-term metrics?
Mr. Estevez. Senator, let me address that in two ways.
We have obviously shown some results, customer wait time
being a primary metric of the logistics system. It is analogous
to a commercial metric called order fulfillment lead time,
which a commercial company would use to measure whether you are
delivering the material they need in an industrial capability
or you are delivering the material you need to sell in the case
of a Wal-Mart. We are showing measurable improvement in that.
Now, the initiatives that we are implementing are still in
microcosm. They are still too small to have direct effect. But
things that TRANSCOM is doing as the distribution process
owner, things that our depots are doing are helping to drive
that wait time down, plus the fact that we have a more robust
capability of delivering material to places like Iraq and
Afghanistan as the capacity of the network has increased.
That metric is going to be both a short-term and a long-
term metric. That is probably the key metric of how the
logistics system performs. The ultimate outcome of that is
operational availability. In other words, are the platforms,
the weapons systems that you are giving us the dollars to buy
and sustain up to the operational capacity so they can perform
their mission?
There are lots of other facets that feed into operational
availability, whether I have a trained mechanic to fix that
platform, as well as the logistics system that is feeding the
parts into that. So that is where we get into an issue of
whether you can track an initiative right back to that
operational availability or which of these initiatives are
affecting the driving down of that customer wait time.
I think that is our real challenge versus do we have the
right metrics. I would argue that we have, in fact, identified
the right metrics to measure the logistics performance.
Senator Voinovich. The challenge that the Department has is
it has to distribute supplies all over the world.
Mr. Estevez. That is correct, sir.
Senator Voinovich. I would suspect that this exacerbates
the problem of trying to develop an efficient supply chain
process. You are so busy just getting the stuff out there that
you do not have the chance to sit back and look at the process.
On the other hand, because it is happening every day, you
really get a chance to see whether or not something is being
accomplished.
The question I have is this, and I asked this of Mr. Krieg.
Do you have the people you need to improve the supply chain
process? Have you brought on new people to do this? Or have you
pulled people away from other things that they were doing in
order to work with you? Could you identify for me the
management team that you have in place to get the job done?
Mr. Estevez. I personally have a staff member dedicated to
focusing on this effort. She is also working some other issues
as well that feed into this effort, some of the initiatives
that are embedded in this. Likewise across the military
services, we are working with the people who are actually
implementing these programs and also managing the logistics
processes across the military services.
So, my counterparts across the military services, the one-
and two-star generals or SES members that oversee the supply
management portions of their service, are focused on directing
these efforts. They recognize the value from driving this
change, but simultaneously, as you just mentioned, they are
managing the ongoing support. So we are doing this change while
we are sustaining our current efforts.
Senator Voinovich. Do you think that is adequate to get the
job done? I am interested in Mr. Solis' observation. Mr. Solis.
Mr. Solis. I know there are other folks in the Department
that are also working on this. We have not really looked in
terms of the capacity for the Department to do this. We have
looked at what they have provided us, but we have not looked at
the capacity behind it to do the plans that they have put out.
Senator Voinovich. I want to make sure that you have people
dedicated to this. Who are staying on top of this issue.
What is your reaction to that?
Mr. Estevez. Senator, each of these initiatives is a major
program in and of itself, with folks dedicated across my staff
and the military service staffs that are focused on
implementing these initiatives. The fact that those are
knowledgeable people that are executing responsibilities across
the supply chain, I frankly think, is beneficial to our ability
to drive these initiatives because they understand both the
flaws in our process and what needs to be done to fix that
process.
So they are dedicated and focused on driving these
implementations because they understand truly the benefits that
they will derive from an end goal implementation.
Senator Voinovich. I would like to have a list of who is
working on it, what their capacity is, and I would also like to
know particularly if they are political appointees or whether
they are civil service individuals.
Mr. Estevez. I would be happy to do that, obviously for the
record, sir, to give you a definitive list.
Senator Voinovich. Mr. Estevez, I am very concerned about
the whole issue of moving forward with change and the time it
is going to take to get some of these things done. What
concerns me a great deal is that I know that transformational
change is not going to get done in 2 years. I am worried that
after this Administration is gone, how are we going to continue
to make sure that this gets done? If this has been on the GAO
high-risk list for 16 years, there has to be some reason why it
has not been done. I would be interested to know how often the
Department has taken on improving the supply chain management
over the last 16 years.
Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman, Mr.
Estevez, and Mr. Solis. I want to thank our witnesses again for
working with us on moving supply chain management off the high-
risk list, and this is what we are trying to do here. This is
not an easy undertaking, no question about that, and it will
not happen overnight.
I also know it is hard for the public to appreciate fully
how efficiencies in DOD's supply chain could impact them in the
future. For example, Mr. Estevez, you explained that, in
addition to supporting the armed services at home and abroad,
the Department is engaged in disaster relief efforts throughout
the world. Mr. Estevez, while I know DOD is unable to determine
in advance the location or the type of disaster relief that may
be needed, can you explain how DOD addresses the challenging
and complexities of balancing logistical support to the troops
on the one hand and on the other hand while being on call for
disasters?
Mr. Estevez. A couple of facets to that. Obviously, in
disaster, one of the things that we tap to provide support is
our lift capability, C-17s, C-5s, our military lift capability.
They are obviously being used to support our forces. We are
able to swing our airplanes around to support disaster relief,
plus to charter commercial aircraft on a reimbursable basis to
provide that.
Much of the supply that is used for disaster relief is
either commercial supply, for instance, medical equipment that
we buy under contracts, that we buy direct from vendors, we do
not stock that in the warehouse, so there are surge clauses in
those contracts, and we are able to draw on that capability.
MREs, we stock meals-ready-to-eat, we stock a certain amount of
those. We are able to draw those down while replenishing those,
making sure we do not hit a bottom point where we feel like we
are putting our own forces in danger. Other types of meals, we
are able, again, to buy off the commercial market under
existing contracts and just surge those capabilities.
In point of fact, for this hurricane season we are actually
engaged with the Federal Emergency Management Agency (FEMA) to
provide that kind of support to them on an as-needed basis. But
we do have the capacity to do that kind of dual operation.
Senator Akaka. Mr. Estevez, would you provide us with a
more complete description of what the joint logistics
capabilities portfolio test entails, as well as its time for
completion? And would you also explain how it will affect the
supply chain plan and what we call the ``To Be'' roadmap?
Mr. Estevez. The joint capabilities portfolio test is top-
down-driven, driven by Secretary England through Mr. Krieg. We
are doing tests, similar tests, in a number of other areas
aside from logistics. It is an outgrowth of the Quadrennial
Review, and really the intent is to get a better management
assessment structure so that we can determine what programs to
focus on in the joint environment. As you know, the military
services support programs that support their particular
service, but when you come to the trade-off in resources to
implement joint programs, those decisions in the current
environment tend to peak at the top.
So this is to put that governance structure in place, trade
off the capabilities for the combatant commanders, feed in the
different initiatives that we are doing, the initiatives that
are under the Supply Chain Management Plan, the initiatives
that TRANSCOM may be implementing under their distribution
process owner capability, distribution process ownership, look
to determine whether we need other process owners in additional
logistics areas to drive that kind of focus that we are getting
out of TRANSCOM today, and really, as you assess that whole
governance process, determine the trade-offs, put a structure
in place to weigh capabilities against each other. The outcome
of that will be the strategic plan with the initiatives in the
high-risk plan as a component of that overarching strategic
plan.
Hopefully I have answered your question.
Senator Akaka. Yes. Mr. Estevez, regarding the ``To Be''
roadmap, when will it be completed? And do you foresee any
significant delays?
Mr. Estevez. We expect to be getting initial results of the
joint capabilities test in late winter or early spring next
year, the February time frame. And at that point we will be
able to start congealing the roadmap by--I hesitate to give you
an end date for completing that. I would expect sometime next
year.
Senator Akaka. OK. Thank you.
Mr. Solis. If I could add, I think originally, the ``To
Be'' roadmap was originally supposed to coincide with the
President's 2008 budget submission, and I think that was going
to be very helpful in terms of tying programs to resources. And
if it is going to be delayed beyond that, I think that becomes
somewhat problematic because then you get beyond the budget
submission period, and then you have to wait maybe another year
to see whether these programs can really be funded and how are
they going to be funded, because I think that is really key.
But I think that any delay beyond the budget year or the budget
submission period, you probably would then have to wait another
year to really see if DOD could execute some of these programs.
Senator Akaka. Thank you for that explanation.
Thank you, Mr. Chairman. My time has expired.
Senator Voinovich. To follow up on this discussion. I am
sure the Administration is already working on the 2008 budget.
Mr. Estevez, are the initiatives you are implementing in
the 2007 budget?
Mr. Estevez. Some of the initiatives are covered in the
2007 budget. Some of them are not. It depends on the start
date.
Senator Voinovich. Can you let me know which intiatives are
covered and which are not?
Mr. Estevez. Absolutely. Again, if I could take that for
the record and give you the detail of that.
Senator Voinovich. Yes.
Mr. Estevez. Some of them, Senator, if I might add, are not
really resource-intensive type programs. They are basic
blocking, tackling, process-focused programs.
Commodity management or JRIMM, for example, are changing
the process that don't entail putting dollars in the budget. In
point of fact, they should relieve focus from the budget.
Senator Voinovich. As I mentioned earlier, I am concerned
that the people involved are so busy making sure that the
process is supplying the warfigher that they do not have time
to effectively manage the process.
Do you understand what I am saying? You have people that
are helping you, and it is good that they have the experience
and they understand what the motivation is. But I want to know
how many of them have been around a while. I will never forget,
I had a chief of staff when I became governor. I recognized
right away that he was so busy putting out fires that we needed
to move him out of the management of the operation. We put
together cabinet clusters, and then I had individuals that I
put in charge of those cabinet clusters. So every day I knew
that somebody got up early in the morning and stayed late at
night to make sure that the management changes and the
transformation were accomplished.
I find it hard to believe that you are going to be able to
get this done and have these people doing both jobs.
Mr. Estevez. Well, again, there is a mix. Let me use the
example of radiofrequency identification. Each of the services
has folks that are dedicated--I am trying to figure out how to
roll that out and implement that across their departments. DLA
has a program manager through headquarters, program managers at
their distribution depots that are going around figuring where
to put readers and how best to change the business process to
take advantage of this technology that is going to help us
downstream.
Now, some of those people are also involved in operating
the depot because they are the people who would know how to fix
that business process.
Senator Voinovich. This is an automated inventory system so
you know that you are not selling stuff that you are buying.
Right?
Mr. Estevez. That is correct, sir.
Senator Voinovich. So everybody agrees that this is the
best technology? Where did you get that technology?
Mr. Estevez. That technology is a standard enterprise
resource planning tool that most commercial companies have
already----
Senator Voinovich. So a Wal-Mart would have a similar
system?
Mr. Estevez. Yes, actually, Wal-Mart built their own, but a
good segment of the top 50 Fortune companies would be using
that kind of software.
Senator Voinovich. The software has already been tested?
Mr. Estevez. Absolutely, sir. Same with our RFID
implementation. We are using the same technology that Wal-Mart
is implementing today.
Senator Voinovich. Are you getting any help from the
private sector? Do you have a private sector task force that
you bounce ideas off of and that can give you some insight into
things?
Mr. Estevez. Again, it varies by program. RFID, I am
working very closely with the Procter & Gambles, Gillettes,
Wal-Marts of the world who are implementing these programs.
Many of them are in your State, as a matter of fact, of the
leading-edge companies. And some of that has paid off in that--
--
Senator Voinovich. Are they doing this for pay or are they
doing this pro bono?
Mr. Estevez. They are doing it pro bono.
Senator Voinovich. Great. I would suggest that the
Department continue to use these outside exports, as well as
people within the Department who are knowledgable about the
supply chain process to bounce ideas off of. I think that this
would help to DOD implement the plan faster.
Mr. Estevez. I could not agree more, and we are going out
and benchmarking amongst leaders in supply chain management in
the commercial sector and have great relationships out there to
draw on.
Senator Voinovich. Mr. Solis, have you had a chance to
observe what they are doing in this area? You mentioned you
were not familiar with the personnel issues.
Mr. Solis. Right.
Senator Voinovich. You have just been looking at whether or
not the short-term metrics have been achieved.
Mr. Solis. Right. I guess another perspective that I would
offer related to that, as we mentioned, there are a lot of
different plans that are out there, and from what we see, there
is not a clear linkage of how all those plans interrelate,
particularly with the supply chain plan. And I would only offer
that until you get some overarching plan that says this is the
direction we are going to go, which may be the ``To Be''
roadmap you are going to have a lot of folks that may or may
not be working toward a common direction. It is not clear in
terms of how all these plans link together.
So the question comes up: How do you better utilize all
these resources that may be working on all these other
different plans that are out there? And maybe there is a better
way to do that once you have your ``To Be'' roadmap or your
joint portfolio test completed.
Senator Voinovich. I would like to followup on what you are
saying. You mentioned these various plans that the Department
has. Has anybody really sat down and dissected those plans to
see just how they all interrelate with each other and that
there is not duplication?
Mr. Estevez. In point of fact, there is some overlap
between differing plans. Let me give you an example: the
Enterprise Transition Plan, which is broader than the logistics
area.
For the logistics area, it overlaps with some of the
initiatives that are in the High-Risk Management Plan, but the
milestones that are in there are, in fact, the milestones that
we have given them because visibility is a key component of the
Enterprise Transition Plan----
We work closely together in the coordination of the area of
logistics, not just me but the other SESes that are my
counterparts in logistics. So the items that are related to
supply chain that are in the Enterprise Transition Plan are, in
fact, programs that we are driving----
Senator Voinovich. So the enterprise transition group is
looking at the overall transformation of the Department. You
are a piece of that?
Mr. Estevez. That is correct, sir.
Senator Voinovich. OK. Senator Akaka.
Senator Akaka. Thank you, Mr. Chairman.
Mr. Estevez, the initiatives in the Supply Chain Management
Improvement Plan require buy-in from the services and
investment of funding resources. In some cases, this will
require investments of both procurement and O&M funds from the
services.
How do you plan to obtain the necessary funding commitments
needed from the services?
Mr. Estevez. For those programs that require funding--and,
again, not everything requires resources--I am working with the
services, my counterparts in the services, to ensure that they
are putting in sufficient funds to move those programs along. I
am also working with the Comptroller and PA&E to ensure that
there is sufficient funds should the services have issues as
they move through their own funding process.
Senator Akaka. I am asking this because I know the services
care about their own funding, and I was interested in how you
plan to work that out.
Mr. Estevez, I understand that the U.S. Transportation
Command is completing a contract that it will use private
logistic providers for both internal U.S. as well as overseas
supply shipments. Do you know if other commands are taking this
particular approach?
Mr. Estevez. The contract that I believe you are talking
about is called the Defense Transportation Coordinators
Initiative, and it is not moving overseas at this point It is
just for domestic shipments. TRANSCOM is the coordinator of
transportation for the Department, so this would be a first
step. Other combatant commands control the transportation
within their regions, if it is not coming from the United
States and managed by TRANSCOM.
Now, after we do this initiative in the United States,
there are opportunities overseas. TRANSCOM will certainly work
with the other commands.
Now, in the case of Oahu, under the JRIMM initiative, we
are looking at how to synchronize the capability of
transportation on the island in support of the forces that we
have out there as part of the JRIMM.
Senator Akaka. Now that you mention that, Mr. Estevez, I am
delighted that PACOM was chosen to take the lead by having the
first JRIMM program. Our staff had an opportunity to meet with
Navy Commander Bob Boudreau of PACOM and Deputy Commander Mike
O'Brien at the Defense Distribution Center at Pearl Harbor,
when Senator Voinovich and I held our NSPS field hearings at
Fort DeRussy in April of this year. Their briefing and tour
provided firsthand knowledge of how JRIMM is providing physical
distribution services for all the combatant commanders on the
island of Oahu.
You mentioned that the pilot program of the Navy in San
Diego yielded a 40 percent reduction in what you termed
``touches.'' What are your expectations and projections for
JRIMM over the next 2 years?
Mr. Estevez. I think we will have at least the same results
that we had in San Diego. In fact, going back to Senator
Voinovich's earlier question, we had a commercial group vet
what we were doing in that to give us advice that, yes, this is
standard commercial practice, this is the way you should go
about it, you are doing the right things.
So we should continue, just as we did in San Diego, to see
a decrease in what we call customer wait time, the time it
takes to provide an ordered piece of equipment to the user of
that equipment. With the decrease in the amount of inventory
that you need to carry because you are carrying buffer today,
just because the customer wait time is not assured, and that is
exactly what JRIMM will provide. So we expect to achieve at
least the same results that we are achieving in San Diego.
Mr. Solis. Senator, if I could add?
Senator Akaka. Mr. Solis.
Mr. Solis. I think those are things that we would like to
see, and we would like to actually see those defined a little
bit better in the actual initiative itself in terms of
specifics. I think those are all things that, again, when we
talk about measurable pieces, recognizing the challenge of
trying to put that together, Mr. Estevez or the Department
could come back and say here are things that we have actually
done in terms of reducing cost or inventory, or whatever the
case may be. I think that would be helpful.
Senator Akaka. In particular, Mr. Solis, what are your
expectations on JRIMM, and do you believe that significant
gains in better logistic response times and reduced inventory
can be achieved through this initiative?
Mr. Solis. Conceptually, from what I have seen and what I
have heard, intuitively, it tells me it is something that is
good. But, again, what I would ask is that at some point in
time, we be able to see the metrics or the measures by which we
can look at and say that there is actual progress being made.
Again, intuitively, conceptually, and some of the things
that we have seen and heard, yes, it would lend me to believe
that it is a good initiative. But I think the proof in the
pudding would be that you would want to see some specific
measures that go behind those things.
Senator Akaka. Thank you, Mr. Chairman.
Senator Voinovich. Getting back to the issue of calculating
cost savings, what is your capability?
Mr. Estevez. We are, by initiative, capable of doing that
over time. Some of them we have a more robust ability to make
that projection than in others. And, of course, not every one
of those initiatives is geared at cost savings. Some of those
are geared at better operational capability for the force,
which is, of course, our main goal.
Again, RFID--since I happen to have my fingers on that one
pretty closely. I think we are preliminary to be able to do a
projection. We did, in fact, do a business case analysis on
RFID that projected a cost savings across the Department of
best case $1.7 billion, worst case $70 million, depending on
how it is achieved. I do not want to call it an ``academic
exercise,'' but it was based on projections.
Now that we are implementing and we are gathering metrics
as we are implementing, as we are able to do that, we will be
able to get a better cost savings assessment. The same thing
with something like JRIMM. As we can identify what inventory we
can push back to the national level, how we can flow that
inventory, we will better be able to make those cost trade-offs
in identifying the cost savings.
Senator Voinovich. I suspect that your private sector
people have been able to calculate savings that they have made
as a result of the work that they have done.
Mr. Estevez. Some yes and some no, Senator, amazingly
enough. Now, their businesses are slightly different than ours.
In the case of a Wal-Mart, they are interested in item on shelf
to sell to a consumer. I am interested in that as well, but I
am more interested in making sure the platform flies at the end
of the day, so I may carry slightly more inventory than they
would carry. And the cost of stock-out is just greater for us
than it would be for them.
Senator Voinovich. What have you done in the area of
forecasting?
Mr. Estevez. We have a great program called readiness-based
sparing, and what readiness-based sparing does, again, it uses
those commercial software tools that we were talking about
earlier with some additional tools that some of the venture
capital folks have developed that are more robust. We need the
data from an SAP type, an ERP tool that we are using. But what
that does is it can take--should we be carrying the engine as a
spare or should we be carrying the part of the engine as a
spare? And should we be carrying that at the tactical level or
should we be holding that at the national level? It helps
balance that forecastability.
Navy is moving out very strongly in that, but each of the
services has a pilot program to implement that because, again,
they see the benefit to themselves of that operational
availability at the end of the day.
Senator Voinovich. During my time in Congress, I have seen
so often that we override the Department in regards to
decisionmaking. So often money and importance of a job is
judged by the jobs that are being generated in our respective
States. You get this tremendous pressure to continue to do
things that may not be the best thing for the Department in
terms of money. I have an up-armor operation in Ohio.
Information has come back about these Humvees are a little
dangerous, that they roll.
Are you able to analyze the initiatives and make
adjustments if necessary?
Mr. Estevez. Let me address that from a logistics
perspective. The logistics system receives information on
demand as it is occurring. Our ability to analyze all that
demand varies. So, an army item manager looking at requirements
for up-armor would see the requirement for that. Then it is a
matter of turning--so that is almost immediate. And that is a
matter of what is the surge capability of the industry in order
to support that.
If it is a particular part that starts breaking, you might
not identify that component needs to be made more reliable
because you are replacing that constantly, longer than you
would like. But, again, it depends on the component and the
system. An aircraft component, the folks that manage those
parts at Wright-Patt, or in Philadelphia for the Navy, are
pretty good at identifying when they are hitting demand outside
the bounds.
The other thing we are doing in that regard is, of course,
we are going to something called performance-based logistics
programs where the manufacturer is required to sustain those
platforms, so it behooves them because the cost burden now goes
to them to replace parts that they did not expect to replace to
increase the reliability of those components. And we have been
very successful in doing that.
Senator Voinovich. I remember one instance a couple of
years ago in one of our closed sessions, I asked Secretary
Rumsfeld a question regarding the demand for up-armored
Humvees. He said it was X, and I said: That is not true, it is
Y. I just wondered if somebody had better information that we
could have known what the capacity really was at the time.
Mr. Estevez. In the case of an up-armor, the folks at Tank
Automotive Command, a subcomponent of Army Materiel Command up
in Detroit, follow that pretty closely. So they should have
been able to answer that question. Those are their contracts.
Senator Voinovich. So do you think the problem in this
particular case was that he just did not have the information
but somebody did?
Mr. Estevez. I really do not want to answer that, sir.
Mr. Solis. Senator, if I could offer some perspective also
on this, we did some work, actually visited the facility that
you are talking about, which I believe is in Fairfield, Ohio.
Senator Voinovich. Right.
Mr. Solis. We talked to the folks there, and part of it,
the requirements are coming out of theater, and some of these
are what are called ``urgent requirements'' that come out of
theater, and then it goes to the Department. And then once the
requirement is validated, then the funding has to be provided
everything else has to be set aside.
I think in the case of the facility up there, I think part
of the issue was what was your current capacity, as opposed to
what is your max capacity. I think there was some of that that
was going back and forth, and I think that is part of the
problem the industrial base faces, is trying to understand what
the requirements that are coming down are. And I think TACOM
was trying to work with them, but I think, again, the funding
and everything else that needs to come with that was not always
there.
Senator Voinovich. I think the Department needs to do a
better job at forecasting and understanding demand.
It seems to me that the Department should be able to
provide Congress with information on exactly what they need to
purchase. This would make it harder for Congress to spend on
items not needed.
The other question I have is regarding the war on
terrorism. How have we changed the way we allocate our
resources to better protect the U.S. and the world from
terrorism. For example, is more money going to public
diplomacy?
Mr. Estevez. Sir, I can really only answer----
Senator Voinovich. Or is that above your pay grade?
[Laughter.]
Mr. Estevez. Again, I can only answer that from a logistics
perspective because it is above my pay grade. Of course, we are
looking at what our needs are and trying to plan out our needs
accordingly. I will say the Department only wants to buy what
we believe we need.
Senator Voinovich. Senator Akaka.
Senator Akaka. Thank you, Mr. Chairman. And in a sense,
following up on this line, and also in the private sector, Mr.
Estevez, both you and Mr. Solis discussed the need to
incorporate best practices from the private sector. I know from
my experiences as Chairman of the Postal Service Subcommittee
that the U.S. Postal Service and the United Parcel Service, for
example, are leaders in logistics.
What is the status of DOD's efforts to incorporate
commercial benchmarks for supply chain performance? And how is
DOD working with the private sector on that?
Mr. Estevez. We are letting a contract to go out and do
some benchmarks against the commercial sector based on our
benchmarks against our metrics. Again, going back to my earlier
statement, you really cannot benchmark against Wal-Mart because
they are in a different business line. That is not to say we
cannot learn lessons from some of the good things that Wal-Mart
does, but when it comes to the benchmarking, it really comes
down to what is an industrial activity doing, and there is
really no one to benchmark against when it comes to deploying
and sustaining a force in the field. So it is how do you
segment those benchmarks. But we are letting a contract to do
that.
Concurrently, as I said, I certainly am working closely
with the commercial sector, including folks like United Parcel
Service, on how they do their business, and they are more than
willing to open up and show us things that we can learn and
have, in fact, implemented in the past and will continue to do
so.
Senator Akaka. Mr. Solis, do you believe that DOD is on the
right track in this regard? And what more could be done to
further the incorporation of the private sector best practices
into the supply chain management process?
Mr. Solis. Well, again, I think in terms of adopting or
trying to look at commercial benchmarks, I think that is a
worthwhile endeavor to do. We talked about this the last time
we were here in testimony, and there was some thought that
maybe we would be further along. And I think that is part of
the issue that I keep coming back to, is that where we stand
today versus where we were a few months ago or last year or
where we hope to be in the future. And I think that is where,
again, with regard to any of the metrics, whether it is for the
initiatives or commercial benchmarks, I think we would like to
see progress so that we can measure where they are in relation
to the high-risk issues that we are talking about.
Senator Akaka. Mr. Estevez, large retailers have
significantly reduced inventory because of gains in inventory
management. One step in this process is to require suppliers to
provide advanced shipping notifications with strict delivery
times. To facilitate this time-sensitive coordination, there
has been an increase in businesses specializing in promoting
efficiencies between suppliers and their customers.
I would add that this is being done in Hawaii by the Matson
Lines, for example. Warehouse space has been reduced
significantly because the timing is so good. Matson comes in
with containers, and by 7:30 in the morning merchandise is
delivered to the stores. They do not need the warehouse space;
they put it right on the shelves.
Mr. Estevez, I know that JRIMM is intended to inject
efficiencies into the supply chain process, but what other
steps is DOD taking to manage its huge inventory of items?
Mr. Estevez. We have a number of programs, Prime Vendor
being the one that jumps out at me, that essentially is
delivery from the commercial sector direct to the user at DOD,
without storing that material. It has to be commercially
available material, and we tend to use the same networks that
the private sector company would use to distribute to a Wal-
Mart or a Target or a CVS. So those are excellent programs for
us.
Let me recognize retailers have more regular demand on
items than the Department may have. You have to look at
industrial activities to really get a better analogy, except
for those consumable items that I just discussed. So Prime
Vendor would be one.
Under our BRAC transformation, we are moving--the Defense
Logistics Agency is changing its depot structure so that we are
going to ensure that our network works better to support our
industrial depot maintenance activities where we are rebuilding
material. We have looked at programs. We have something called
Industrial Prime Vendor where material, again, is delivered
directly to the shop floor without going through a warehouse.
We are privatizing things like tires so that we are not
storing tires which previously were held in warehouses--they
take up a lot of warehouse space. This gives you better
circulation, the newest technology.
So we do have a number of programs that do exactly what you
asked, and, of course, we work with companies like Matson as
well in doing those types of things.
Senator Akaka. Yes. Let me follow up, Mr. Estevez. Wouldn't
better inventory management lead to less outsourcing of
logistics and supply chain activities?
Mr. Estevez. I think you have to have a mix. I think most
commercial companies have a mix between their own internal
processes and what they outsource. I do not expect us to be
outsourcing our key supply depots, and obviously we will not be
outsourcing some of our maintenance capability. But the flow in
for that material--and you have to assess what material you are
talking about, and where the commodity is commercially
available and the surge capability is there, we do not want to
store it. We want to receive it direct.
Senator Akaka. Well, I thank you both for your responses.
No question we are moving in the right direction.
Mr. Chairman, thank you very much. My time has expired.
Senator Voinovich. Thank you, Senator Akaka. I really
appreciate your being here.
As you know, Mr. Estevez, Senator Akaka and I are concerned
about how we continue this transformation. Maybe it is being
pretty selfish, but I am around here at least until the end of
2010, and depending on who is in the majority, either Senator
Akaka or I are going to be Chairman of this Subcommittee. We
plan to continue to work on this issue. One thing that I do not
want to see happen is that once the Administration changes, we
lose any progress that has been made. Frankly, the private
sector has had some of these initiatives in place for a number
of years. Why are we so far behind the private sector in
utilizing some of the resources that are out there? Why haven't
we been on our toes?
What is being put in place to guarantee that this
transformation that we are working on is going to continue.
Because I do not expect that this is going to get off the list
in 2009, and hopefully we will be closer to it in 2010. I am
real concerned and that is why I want to know who is working on
this and how long they have been with the Department. I am even
interested in knowing when they are eligible to retire.
Mr. Estevez. I am eligible in, I believe, 2012, Senator. I
enjoy my job and want to be cracking that bottle of champagne
with you at the removal of this from the list.
Senator Voinovich. Well, can I ask you one other question?
How long have you been with the Department?
Mr. Estevez. Twenty-five years, sir.
Senator Voinovich. OK. How come we did not do this 5 years
ago, 10 years ago?
Mr. Estevez. There are a variety of facets that we have
done that have laid the foundation for what we are doing today
that were done in the past. So it is not that we were sitting
idle in different areas. And some things we tried. The time was
not right. It failed in part sometimes because our systems were
not up to par in order to enable us to do that. That still
remains an issue. Defense Logistics Agency has had a successful
implementation of their ERP. The other military services are in
various stages of implementing theirs. And they really do
enable the ability to do some of the things that we are doing.
Again, some of it is just basic blocking and tackling. I
can only answer for my time in my chair, and I really hesitate
to second-guess what went on prior. But I do want to emphasize
that people were not sitting on their hands. We were doing some
of the foundational work that has enabled us to start driving
this change.
Senator Voinovich. Well, it appears that you have been
empowered to do it. Is part of the problem maybe that you were
not empowered to do it before?
Mr. Estevez. Again, I will go back to that you do need the
leadership commitment to do this. I believe we have that. I
cannot say that we did not have that in the prior
Administration, however, but I know we have it right now.
Senator Voinovich. Are your people excited?
Mr. Estevez. Yes, they are.
Senator Voinovich. Good.
Mr. Estevez. Absolutely.
Senator Voinovich. Senator Akaka, anything else?
Senator Akaka. Mr. Chairman, let me follow up here.
Senator Voinovich makes a good point in wanting to know
what kind of team is working on supply chain management. When I
heard him mention that, I was thinking of other parts of
government where committees or commissions deal with issues,
like this area.
So given the move toward joint logistics, could you give
more detail as to how this high-risk area is integrated into
the DOD Business Modernization Plan?
Mr. Estevez. Well, the supply chain management piece of the
Enterprise Transition Plan, the Business Modernization Plan, is
driven by our requirements. So while Mr. Brinkley would be
driving the governance over what systems get implemented and
the architecture of those systems, they are designing to our
requirements and putting systems in place to meet the
requirements laid out by the functional logistics community for
our piece of that plan.
The Enterprise Transition Plan addresses other areas, like
procurement, financial management, that the logistics system is
a user of versus the driver of those requirements. For the
requirements related to logistics, we are the functional
drivers of those, and they relate to our milestones and our
needs.
Senator Akaka. And I am assuming from what you are saying
that this is integrated into that plan.
Mr. Estevez. Absolutely. I am very comfortable working with
those folks on what they are doing.
Senator Akaka. Thank you. Thank you very much, Mr.
Chairman.
Senator Voinovich. Thank you. This has been a good hearing,
and we really appreciate your being here. And, Mr. Estevez, we
want you to know that we want to help you in any way that we
can, and if there are some things that we should be doing that
you think will help, we want to hear from you.
Mr. Estevez. Thank you, sir.
Senator Voinovich. The hearing is adjourned.
[Whereupon, at 11:27 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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