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Hearing Of The House Committee On Armed Services - Chairman Rob Andrew's Opening Statement On DOD Supply Chain Management

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Date:
Location: Washington, D.C.

"Today's hearing is the latest in a series of hearings that this panel is holding where we look at specific areas of acquisition where the Department of Defense may have experienced a serious loss of value for one reason or another that has harmed the taxpayer and short-changed the warfighter. Each of these hearings has examined a hypothesis about why the Department may have received less value than it paid for on a particular procurement or set of procurements, and we've tested these hypotheses with our witnesses.

"Today's witnesses will discuss how the Department procures parts, supplies, and commodities. Although it is not the most glamorous part of defense acquisition, it has generated several of the classic procurement scandals of our times, such as the gold-plated toilet seats and thousand dollar hammers of the 1980's or the $19,000 refrigerator uncovered by this committee four years ago.

"On the whole it would appear that much has improved since those earlier scandals. DOD no longer maintains the massive warehouses and stockpiles of yesteryear and it has substantially reduced the byzantine military specifications for items large and small which drove us to pay outrageous prices for simple things. However, there remains substantial progress to be made.

"Perhaps the best model for understanding this part of defense acquisition is probably the concept of supply chain management: the process of identifying, acquiring, transporting and distributing the parts, supplies, and commodities that the warfighter needs. Although some of the issues here are unique to DOD, others are common to many large organizations. I believe that we will find that here, as on other matters we've examined, the Department's process for determining its true requirements is a serious problem.

"In addition, as DOD evolves towards relying on contractors to perform a larger share of managing the supply chain, as it has in the prime vendor program and in the tire privatization initiative, we need to safeguard much more carefully against potential contractor conflicts of interest, and we need to ensure that we have a workforce capable of providing real oversight for these large and complex contractual arrangements.

"Let's start, then, with the hypothesis that in managing the supply chain for parts, supplies, and commodities, DOD continues to lose some value through poorly defined requirements and through gaps between the skills of its acquisition workforce and the increasing complexity of their workload.

"To test this hypothesis, we have with us several excellent witnesses, including: Major General Gary T. McCoy, United States Air Force, Commander, Air Force Global Logistics Support Center (AFGLSC); Ms Nancy Heimbaugh, Senior Procurement Executive and Director of Acquisition Management, Defense Logistics Agency, Mr. William M. Solis, Director, Defense Capabilities and Management Team, U.S. Government Accountability Office."


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