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TESTIMONY OF
VICE ADMIRAL KEITH W. LIPPERT
DIRECTOR OF THE DEFENSE LOGISTICS AGENCY

BEFORE THE
HOUSE ARMED SERVICES COMMITTEE
SUBCOMMITTEE ON READINESS
UNITED STATES HOUSE OF REPRESENTATIVES

REGARDING LOGISTICS

 March 30, 2004 

Good afternoon, Mr. Chairman, Mr. Ortiz, and distinguished members of the Subcommittee.  Today, it is my privilege to represent the men and women of the Defense Logistics Agency (DLA).  We are committed to fighting the war on terror, and providing logistic support to the brave young Americans deployed in Iraq, Afghanistan, and in other places around the world.  DLA is focused on the warfighter.  We are a critical combat enabler, improving warfighter support to the combatant commands.

For more than forty years, our Agency's hallmark has been our demonstrated ability to provide around-the-clock, around-the-world logistic support to America's armed forces in peace and in war.  I am here today to discuss DLA's collaborative efforts with OSD and the Services in preparing for Operation Iraqi Freedom (OIF).  In particular, I will discuss how we (1) currently support the operation in Theater; (2) respond to the many logistic challenges; and, (3) plan for future improvements.  We are improving our business processes based on lessons learned to ensure we do an even better job supporting the warfighter in the future.

I appreciate this opportunity to testify on DLA's logistic efforts during OIF and address the specific issues identified in the GAO's report "Defense Logistics:  Preliminary Observations on the Effectiveness of Logistics Activities during Operation Iraqi Freedom", which was released on December 18, 2003. 

As DoD's logistic combat support agency, we acquire a large variety of consumable items. We are the source for nearly every consumable item, whether for combat readiness, emergency preparedness or day-to-day operations for the Department of Defense.

The Army, Navy, Marines, Air Force, and Coast Guard rely on DLA to provide food, fuel, medical supplies, clothing, construction and barrier materiel, and more than ninety percent of their weapons systems repair parts both in times of peace and war.  We receive, store, and issue DLA and Military Service assets at our distribution depots located in the continental United States and at key sites overseas. Our Defense Reutilization and Marketing Service oversees the re-use or disposal of excess property.  

In fiscal year 2003, DLA provided nearly twenty five billion dollars in goods and services - primarily to America's military services.  We process an average of 45,000 requisitions and 8,200 contracts daily.  We have a presence in 48 states and 28 countries.  We manage the second largest warehousing operation in North America.

If DLA were a publicly traded company, we would be listed number sixty-five among Fortune 500 companies - just above New York Life.  And, like a business, we use financial and performance metrics to ensure we're being effective and efficient.  We use these indicators to ensure we are ready to provide logistic support for any future major combat support scenario.  We know how important it is to have our basic support posture in the best possible condition, so we've focused on reducing backorders or unfilled customer orders and improving supply availability. This approach helps us to ensure that DLA has an extremely responsive and efficient supply system.

In July 2002, the Deputy Under Secretary of Defense for Logistics, Manpower and Readiness discussed with me the requirement to prepare for a possible conflict in Iraq.  As a result, we developed our budget requirements and provided them to the Office of Secretary of Defense within thirty days. During that process, we requested that OSD identify the force structure that would be utilized for this operation. The size and duration of the force structure are key components to planning, especially for the items we manage - food, clothing, fuel, and spare parts. Within three days OSD provided us with a tentative force structure.  It was not exactly what we deployed with for Operation Iraqi Freedom, but it allowed DLA to begin deliberate planning for possible action in Iraq.

Based on that OSD guidance, experienced DLA planners began working with the Services' planners to identify quantities and timing of what would be needed to support a potential near-term conflict.  As a direct result of their efforts, DLA procured the planned items to meet the increased operational tempo that would occur during the operation.  The OSD Comptroller provided five hundred million dollars in obligation authority to DLA, which was obligated during September 2002. An additional four hundred and twenty-four million dollars was then obligated between October 2002 and January 2003 as it became more apparent that combat was likely. 

These funds were used for items such as spare and repair parts for critical aviation, land and maritime weapon systems, clothing, subsistence, medical supplies and fuel.  For spare parts, we identified items we believed would have the greatest demands and bought ahead of actual demands, which ensured availability of needed parts when demand for these items surged dramatically.  We also bought desert camouflage uniforms based on Army planning requirements.  For medical applications we bought thirty million dollars of general vaccine types.  We completed a major effort to get the USNS Comfort underway - which was the one thousand bed hospital ship that deployed.  With very short notice, we had eighty percent of the planned items ordered by the Comfort on board within 3.5 business days, with the balance delivered enroute and in-theater.  We effectively integrated Prime Vendor support and disposal operations in our planning efforts.

High on our list were Meals, Ready to Eat (MREs).  Since this would be the primary food source during combat operations and until a revised feeding plan was implemented, we had to ensure that we had adequate MREs to support our troops.  At the height of the combat operation, the MRE requirement was 350,000 MREs per day.  We have three contractors producing MREs and all three increased their production in accordance with pre-established contracts with surge provisions.  This surge capability allowed us to meet a peak production of 1.4 million cases of MREs during April 2003, more than seven times the normal monthly production.

Another important item was the Joint Service Lightweight Integrated Suit Technology (JSLIST) chemical protective ensemble.  Since the inception of the program we have provided more than three million JSLIST suits to the Services, including approximately two thousand custom-made suits since the beginning of Operation Iraqi Freedom for service members outside the normal size-range.

The decision to acquire the items before executing Operation Iraqi Freedom proved to be very effective   As a result of changes in the entire logistic and supply chain process, Defense Logistics Agency does not manage huge stocks of inventory, especially if the items and quantities are readily available in the commercial marketplace.  We still manage inventories of critical long lead time and high-demand items.  Overall, a significant portion of the warfighter's supplies are shipped directly from manufacturers, distributors, and strategic suppliers with whom we have prearranged contracts with surge provisions.  This is an entirely different approach than was used in both Vietnam and Desert Storm.

As we prepared, we built on lessons learned from previous conflicts.  Our preparations were good in some areas, but needed to improve in others.  I've discussed our joint planning with the Services in advance of the operation.  In some cases, actual demands for items exceeded projections.  For example, for the Small Arms Protective Inserts - the SAPI plates you've all heard about - the estimated FY 03 requirements were seventeen million dollars.  For a very good reason - the protection of our American warfighter - the Army increased their requirement for Interceptor Body Armor.  Today, ALL troops in Iraq are equipped with Interceptor Body Armor.  To meet the increased requirement, funded requisitions began coming to us in January 2003.  By November 2003, we actually bought three hundred seventy million dollars of the SAPI plates - using exigency contracts, awarded within thirty days, with an average delivery beginning within eighty-three days.  The Army Audit Agency conducted a special inspection of body armor and found that we were timely in making awards and that quality products were delivered on time.  However, SAPI production right now is constrained by the availability of raw materials, mainly the ceramic tiles contained in the plates.  At present, known worldwide production of qualified ballistic packages is limited to twenty-five thousand SAPI sets (or fifty thousand plates) per month.

Another challenge we did not fully anticipate was the size and duration of the surge impact on our distribution centers.  OIF has been unlike previous actions in that our workload increase has continued well beyond the end of the major conflict.  It took us time to ramp up:  we added overtime and additional shifts, augmented several sites with Reserve forces, redistributed workload among our distribution centers (especially to San Joaquin and Norfolk), hired an additional eight hundred employees, and reconfigured workload patterns at our Susquehanna, Pennsylvania distribution operation to balance customer needs (Susquehanna is our strategic distribution platform not only for Southwest Asia, but includes Europe, North Africa, Central and South America and the eastern half of the United States).  High priority requisitions grew from forty percent of our workload to sixty percent.  At the height of the surge in Fall 2003, it took us 3.5 days to process an urgent shipment.  Now, our average time to get that item out the door is 2.6 days, and it is continuing to decrease.

Some lessons previously learned we applied with great results:  we forward-positioned barrier and construction material into Bahrain -- items like sand bags and concertina wire - for force protection and construction.  You have seen photos from the GAO that show our prepositioned material in Bahrain - a real success story in terms of planning and materiel  prepositioning using surface transportation. Of the three thousand five hundred containers of construction materiel we prepositioned, we have consumed nearly ninety-four percent as of February 24, 2004.  This prepositioning helped us reduce customer wait time by over half and allowed air transportation capacity to be used for other critical items being requisitioned by war fighters in theater.

Another improvement over Desert Storm was our deployment of a DLA Contingency Support Team (DCST) to help expedite cargo shipments and critical items and provide solutions to warfighter inquiries. DLA was instrumental in reducing theater handling of materiel.  One of the initiatives included the concept of building "Pure 463-L Pallets".  These pallets contain only freight for a specific customer and do not need to move in a circuitous route or be packed and repacked for the delivery of goods for another customer.  This results in a more efficient transportation system to speed cargo through transshipment points and reduces breakout/repackaging of cargo, with quicker arrivals at the end user's location. Right now, we are shipping eighty percent pure pallets to Central Command out of the DLA Distribution Centers.

To improve in-transit visibility, DLA put radio frequency identification (RFID) tags on all Central Command shipments loaded on containers and air pallets as well as similar shipments to all customers in Europe and the Pacific.  RFID tags are the foundation for the in-transit visibility capability being developed by DOD.  As their use is expanded, they will enable the capture of in-transit status information to support end to end visibility of each container, case, or pallet of materiel as it moves through the distribution process to, and then within, the operational theater.  In the theater itself, and throughout the process, RFID utility depends upon sufficient amounts of equipment, specific procedures, and trained personnel. Collectively, we need to ensure that all parts of the system are working properly to achieve the full capability of this technology, and DLA is collaborating with OSD, TRANSCOM, and the military Services to make this happen.

To further improve our logistic processes, DLA is partnering with the Transportation Command, the Joint Munitions Command, and the military Services to staff the Central Command's  Deployment Distribution Operations Center (CDDOC) pilot.  The CDDOC, one of the Transportation Command's top Distribution Process Owner initiatives, is a cross-command, cross-Service team deployed to the Central Command theater to integrate movement of sustainment cargo, deploying forces, and theater stocks.  The team arrived in Kuwait on January 17, 2004. DLA is leading the Requirements and Synchronization Cell and providing nine of the twenty-eight personnel.

To improve theater distribution capability, the CDDOC worked with CENTCOM to lift container throughput restrictions that will eliminate container backlogs at nodes and transshipment points.  The CDDOC synchronized onward movement of six hundred seventy-two air pallets destined for Iraq that were flown into Kuwait when military airlift was consumed by force rotation operations.

To overcome issues with asset visibility, the CDDOC reached back to national logistic partners to locate and redirect in-transit materiel for the 101st Air Assault Division, the 82d Airborne Division, the 173d Airborne Brigade and the 3d Armored Cavalry Division.

To improve container management, the CDDOC is overseeing management of containers and air pallets, working with port operators and units to document turn-in processes and record status of empty sea van containers.

As we talk about the challenges we faced during this period, we need to remember that DLA was also sustaining concurrent operations in Guantanamo Bay, Afghanistan, Horn of Africa, and Bosnia-Kosovo with food, fuel, clothing, medical, and repair parts as well as disaster relief efforts in Iran and here at home.

Tomorrow's battlefield will look far different from those we have encountered in the past.  One of the challenges we continue to face is 'the last tactical mile':  ensuring that the right item is delivered to the warfighter when needed - anywhere that war fighter may be located.  We are continuing to build upon lessons learned to develop strategies for the future.  The CDDOC is just one of the ways we partner with other Department of Defense elements.and its success gives you an idea of the immediate fixes we can put into place when Office of the Secretary of Defense, the Combatant Commanders, Services and Defense Agencies work together.  But resolving the immediate problems is not enough.we must look to the future.  We must be able to rapidly and effectively respond to future threats and opportunities.  Comprehensive logistic solutions are being demanded..OIF/OEF places increased pressure on agile logistics to support operations.   DLA has developed a transformation strategy that will build and sustain a logistic system with the capability and agility to ensure war fighter readiness and materiel availability in an environment where battle space tactics and logistic support needs are continually evolving.  To improve the end-to-end distribution process, we are modernizing our technology infrastructure, we are modernizing our business practices to streamline and fully integrate the supply chain, and we are giving our workforce the skills they will need to ensure DLA's success.  We will partner with OSD, the Combatant Commanders, the Services and Industry to resolve the issues of 'the last tactical mile'.

DLA worked proactively to be ready for this conflict.  When conflict came, we partnered with OSD, the Combatant Commanders, the Services, and Defense Agencies to meet requirements, resolve immediate issues, and deliver the goods.

Finally, Mr. Chairman, DLA remains committed to ensuring that America's fighting forces are the best equipped in the world.  We pledge to use American's resources wisely and, with your continued support, we will prevail in the war on terrorism.  Our nation and our freedom depend on it.

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