October 21, 2016, Tony Bertuca

In an aim to find efficiencies in the Pentagon’s $150 billion logistics enterprise, the Defense Business Board is calling for another round of base closures; an end-to-end assessment of supply chain vulnerabilities; and the creation of a new management structure for the Defense Logistics Agency.

The board unanimously approved a set of logistics reform recommendations at its quarterly meeting Thursday, including calling for another round of base closures and realignments, known as BRAC.

Arnold Punaro, the board member who chaired the task group that made the recommendations, noted that this BRAC round would need to be “more politically palatable,” especially in light of concerns that the most recent round in 2005 was too expensive.

“Legislation authorizing a BRAC process should: stipulate the focus is closure, with minimal realignments necessary for closure, efficiency and immediate or near term savings,” according to the task group’s presentation (attached), which also called for this proposed BRAC round to “target supply chain and excess depot warehouse and capacity.”

The task group also noted that the Pentagon “needs a fuller understanding of end-to-end supply chain vulnerability to identify at-risk foreign and domestic companies,” according to the presentation, which calls for establishing “cybersecurity standards across all tiers of the supply chain.” The presentation dubs cybersecurity of the industrial base and supply chain as an “Achilles’ heel” for the department.

The task group found that the Pentagon’s logistics enterprise — which includes 18 maintenance depots, 25 distribution depots, and more than 49,500 customer sites — does not reflect best practices of private industry. Punaro noted that world-class business practices rely on flat, flexible management structures, while the Pentagon does not. In addition, the Pentagon lacks a powerful chief information officer focused on promoting information and knowledge sharing, he said.

“DOD should bring in accomplished civilians to lead its large logistics enterprises (e.g., DLA),” according to the report. This realignment of DLA structures would include “a civilian head with a 3-star military deputy tied to operations,” according to the report, which notes the civilian DLA chief “should not be a political appointee.”

Deputy Defense Secretary Bob Work called for this study in an Aug. 18, 2015, terms of reference.

“The Department of Defense’s logistics enterprise exists to support the ‘tip-of-the-spear’ and gives the U.S. a qualitative advantage over our adversaries; as such it is necessary that DOD optimize the use of resources and maximize the dollars available to support missions,” Work wrote. “While the enterprise has made significant progress the last several years reducing inventory and streamlining processes, additional opportunities exist.”