Space Exploration: Improved Planning and Communication Needed for Plutonium-238 and Radioisotope Power Systems Production

This testimony summarizes the information contained in GAO's September 2017 report, entitled Space Exploration: DOE Could Improve Planning and Communication Related to Plutonium-238 and Radioisotope Power Systems Production Challenges ( GAO-17-673 ).

The National Aeronautics and Space Administration (NASA) selects radioisotope power systems (RPS) for missions primarily based on the agency's scientific objectives and mission destinations. Prior to the establishment of the Department of Energy's (DOE) Supply Project in fiscal year 2011 to produce new plutonium-238 (Pu-238), NASA officials said that Pu-238 supply was a limiting factor in selecting RPS-powered missions. After the initiation of the Supply Project, however, NASA officials GAO interviewed said that missions are selected independently of decisions on how to power them. Once a mission is selected, NASA considers power sources early in its mission review process. Multiple factors could affect NASA's demand for RPS and Pu-238. For example, high costs associated with RPS and missions can affect the demand for RPS because, according to officials, NASA's budget can only support one RPS mission about every 4 years. Expected technological advances in RPS efficiency could reduce NASA's demand for RPS and Pu-238.

DOE has made progress in reestablishing Pu-238 production to meet NASA's future demand to fuel RPS and has identified challenges to meeting its production goals. Specifically, since the start of the Supply Project, DOE has produced 100 grams of Pu-238 and expects to finalize production processes and produce interim quantities by 2019. However, DOE has also identified several challenges to meeting the Supply Project goal of producing 1.5 kilograms (kg) of new Pu-238 per year by 2026. DOE officials GAO interviewed said that DOE has not perfected the chemical processing required to extract new Pu-238 from irradiated targets to meet production goals. These officials also said that achieving the Pu-238 production goal is contingent on the use of two reactors, but only one reactor is currently qualified for Pu-238 production while the second reactor awaits scheduled maintenance. Moreover, while DOE has adopted a new approach for managing the Supply Project and RPS production—based on a constant production approach—the agency has not developed an implementation plan that identifies milestones and interim steps that can be used to demonstrate progress in meeting production goals and addressing previously identified challenges. GAO's prior work shows that plans that include milestones and interim steps help an agency to set priorities, use resources efficiently, and monitor progress in achieving agency goals. By developing a plan with milestones and interim steps for DOE's approach to managing Pu-238 and RPS production, DOE can show progress in implementing its approach and make adjustments when necessary. Lastly, DOE's new approach to managing the Supply Project does not improve its ability to assess the potential long-term effects of challenges DOE identified, such as chemical processing and reactor availability, or to communicate these effects to NASA. For example, DOE officials did not explain how the new approach would help assess the long-term effects of challenges, such as those related to chemical processing. Under Standards for Internal Control in the Federal Government , agencies should use quality information to achieve objectives and to communicate externally, so that external parties can help achieve agency objectives. Without the ability to assess the long-term effects of known challenges and communicate those effects to NASA, DOE may be jeopardizing NASA's ability to use RPS as a power source for future missions.

I am pleased to be here today to discuss our recent work on radioisotope  power systems. The National Aeronautics and Space Administration  (NASA) has long used radioisotope power systems (RPS) to generate  reliable electrical power and heat energy for long-duration space  missions. RPS can operate where solar panels or batteries would be  ineffective or impossible to use, such as in deep space or in shadowed  craters, by converting heat from the natural radioactive decay of  plutonium-238 (Pu-238) into electricity. The Department of Energy (DOE)  and its predecessor agencies have been providing Pu-238 and fabricating  RPS for NASA and other federal agencies for more than 5 decades.

In 2011, with funding provided by NASA, DOE initiated the Pu-238 Supply  Project (Supply Project) to reestablish the capability to domestically  produce Pu-238. According to DOE documents and agency officials,  DOE currently maintains about 35 kilograms (kg) of Pu-238 isotope  designated for NASA missions, about half of which currently meets the  power specifications for spaceflight. However, given NASA’s current  plans for solar system exploration, this supply could be exhausted within  the next decade. Specifically, NASA plans to use about 3.5 kg of Pu-238  isotope for one RPS to power the Mars 2020 mission. NASA may also  use an additional 10.5 kg of Pu-238 isotope for its New Frontiers #4  mission if three RPS are used. If DOE’s existing Pu-238 supply is used  for these two missions, NASA would be forced to eliminate or delay future  missions requiring RPS until DOE produces or acquires more Pu-238.

My remarks today are based on our recent report on NASA’s use of  radioisotope power systems that are powered by plutonium 238, which  we are releasing today. Our report examined (1) how NASA selects RPS  for missions and what factors affect NASA’s demand for RPS and Pu- 238; and (2) DOE’s progress in meeting NASA’s RPS and Pu-238  demand, and what, if any, challenges DOE faces in meeting the demand.  Today, I will discuss the key findings and recommendations from that  report.

For our report, we reviewed documentation on how NASA considered  mission requirements during the agency’s planning for recent missions  that considered or used RPS as a power source. We also interviewed  officials from the Planetary Science Division (PSD) of NASA’s Science  Mission Directorate and from the Human Exploration and Operations  Mission Directorate. In addition, we reviewed documentation related to  DOE’s efforts to develop the Supply Project and DOE’s RPS production  process. We also interviewed officials from DOE’s Office of Nuclear  Energy as well as officials involved in RPS work at three DOE national  laboratories—Idaho National Laboratory (INL), Los Alamos National  Laboratory (LANL), and Oak Ridge National Laboratory (ORNL)—and  conducted site visits to ORNL and INL. More detailed information on the  objectives, scope, and methodology of our work can be found in the  September report. The work upon which this statement is based was  conducted in accordance with generally accepted government auditing  standards.

In summary, we found that NASA selects RPS for missions based  primarily on scientific objectives and that several factors may affect  NASA’s demand for RPS and Pu-238. For example, RPS have been  typically used on NASA’s most expensive and highest priority missions.  Based on expected funding levels, NASA can only support two or three of  these missions per decade. We also found that DOE has made progress  meeting NASA’s demand for RPS and Pu-238, but the agency faces  some challenges in reaching full production goals. For example, DOE  does not maintain a comprehensive system for tracking RPS production  risks. In addition, DOE’s management approach does not allow for the  agency to adequately communicate long-term production challenges to  NASA. We made several recommendations to DOE to address these  issues. DOE agreed with our recommendations and outlined actions it  planned to take to address them.

RPS are long-lived sources of spacecraft electrical power and heating  that are rugged, compact, highly reliable, and relatively insensitive to  radiation and other effects of the space environment, according to NASA  documentation. Such systems can provide spacecraft power for more  than a decade and can do so billions of miles from the sun. Twenty-seven  U.S. missions have used RPS over the past 5 decades. The current RPS  design, the Multi-Mission Radioisotope Thermoelectric Generator  (MMRTG), converts heat given off by Pu-238 into about 120 watts of  electrical power at the beginning of its life—a 6 percent power conversion  efficiency. One MMRTG contains 32 general purpose heat source  (GPHS) fuel clads in the form of pressed Pu-238 pellets encapsulated in  iridium.

NASA’s PSD science portfolio includes a wide array of missions that seek  to address a variety of scientific objectives and answer many questions  about the solar system, from how life began to how the solar system is  evolving. Scientific and mission objectives influence the types of  equipment needed for the mission, including the mission’s power source.  According to NASA officials we interviewed, missions in NASA’s PSD  portfolio are generally classified in three ways:

Flagship. Flagship missions are the largest and most expensive class  of NASA’s missions, costing $2 billion or more, and are given the  highest priority for resources, including funding, infrastructure, and  launch support. Past Flagship missions that have used RPS include  the Galileo, Cassini, and Curiosity missions. NASA’s Mars 2020  mission is a planned Flagship mission using RPS.

New Frontiers. New Frontiers missions focus on enhancing our  understanding of the solar system and have a development cost cap  of $850 million. To date, there has been one New Frontiers mission  using RPS (New Horizons).

Discovery. Missions in the Discovery program have a development  cost cap of $450 million to $500 million and have shorter development  time frames, according to NASA officials and documentation. No  Discovery mission has been powered by RPS.

DOE oversees the design, development, fabrication, testing, and delivery  of RPS to meet NASA’s overall systems requirements, specifications, and  schedules. DOE’s goal under its Supply Project is to reach a full Pu-238  production rate of 1.5 kg per year by 2023, at the earliest, with a late  completion date of 2026. DOE also established an interim production rate  of 300 to 500 grams per year by 2019, to ensure an adequate supply of  Pu-238 for NASA’s near-term missions, before the full production rate  goal is achieved. The Supply Project involves a number of steps across  several DOE national laboratories, including the use of two DOE research  reactors—the High Flux Isotope Reactor at ORNL, and the Advanced  Test Reactor at INL.

NASA began fully funding DOE’s Supply Project in 2011, and since 2014,  has been responsible for funding all aspects of RPS production  operations, according to NASA documents. NASA funds DOE’s efforts to  build, test, and fuel RPS, as well as to update equipment and sustain  staffing levels associated with RPS production between missions. Since  2014 NASA has provided, on average, approximately $50 million per year  to support DOE’s ongoing operations and maintenance of RPS  production equipment. Since its inception until early 2017, DOE has used  a short-term and incremental segmented management approach to  manage the Supply Project.

NASA Selects RPS for Missions Based Primarily on Scientific Objectives, and Several Factors May Affect NASA’s Demand for RPS and Pu-238

NASA selects RPS to power its missions primarily based on scientific  objectives and mission destinations. According to NASA officials we  interviewed, the need for RPS is usually apparent based on the mission’s  scientific objectives and destination. For instance, an RPS is more likely  to be needed for a mission to a distant planet, where minimal sunlight  reduces the effectiveness of solar power. NASA officials we interviewed  stated that, consistent with the National Space Policy, the agency uses  RPS when they enable or significantly enhance a mission, or when  alternative power sources, such as solar power, might significantly  compromise mission objectives. NASA prioritizes mission selection  based on missions identified in the National Academy of Sciences’  decadal survey report, which represents the highest priorities of the  scientific community and includes many missions that require the use of  RPS.

Prior to the establishment of DOE’s Supply Project in fiscal year 2011,  NASA officials we interviewed stated that mission selections were  influenced by the limited amount of available Pu-238. These same  officials told us that missions are now selected independently from  decisions about how they will be powered. However, projected availability  of Pu-238 is factored into whether an RPS is available for a specific  mission opportunity.

In addition to the scientific objectives of planned and potential space  exploration missions, several other factors may affect NASA’s demand for  RPS and Pu-238:

Costs associated with missions that typically require RPS.

According to NASA officials, RPS have typically been used on  Flagship missions that cost $2 billion or more. NASA can support no  more than one mission using RPS about every 4 years—or two to  three missions per decade—based on expected agency funding  levels.

Cost of RPS relative to mission costs. According to NASA officials,  New Frontiers missions may be good candidates to use RPS;  however, given the cost cap for this mission class, one RPS would  account for about 9 percent of the mission’s budget, while three RPS  would account for almost 14 percent. For Discovery missions, for  which the cost of using RPS would represent a large portion of a  Discovery mission budget, a single RPS would represent more than  17 percent of a mission’s development cap.

DOE’s production capability. According to DOE officials we  interviewed, it can take up to 6 years to acquire, fuel, test, and deliver  a new RPS for a NASA mission. According to DOE and NASA officials  we interviewed, given the current floor space dedicated to RPS  development at INL and limits on staff exposure to radiation at LANL,  DOE only has the capacity to produce three to four RPS at one time.  To accommodate DOE’s current RPS production capability, NASA  officials we interviewed said they will not select two consecutive  missions requiring RPS.

Technological advances may reduce the demand for Pu-238 and thus  RPS. For example, according to NASA officials, advances in solar power  technology have realistically expanded the ability to use solar power for  missions for which it would not have been considered before, and these  advances could help address low levels of light intensity for deep space  missions. NASA also is developing new RPS technologies that may  reduce its demand for Pu-238 and thus RPS. For example, NASA officials  told us that they plan to invest in dynamic RPS technology that could  increase RPS efficiency and require less RPS to achieve mission power.  NASA research indicates that dynamic RPS designs could be more than  four times as efficient as the current MMRTG design.

The Supply Project goal of producing 1.5 kg of Pu-238 per year was  established to support two to three PSD missions using RPS each  decade, and NASA does not anticipate other potential users to affect  demand for RPS or Pu-238, according to NASA and DOE officials and  documentation we reviewed. DOE planning documents and NASA  officials we interviewed stated that current RPS and Pu-238 production  levels expected from the Supply Project are intended to only meet PSD’s  demand. NASA officials said that they did not account for potential  demand from other potential users within NASA, the national security  community, or commercial sectors when establishing current Pu-238  production goals.

DOE Has Made Progress Meeting NASA’s RPS and Pu- 238 Demand, but Faces Challenges Reaching Full Production Goals

DOE has made progress meeting NASA’s future demand for Pu-238 to  fuel RPS. A chronology of key DOE planned RPS and Pu-238 production  activities, and NASA’s mission-related activities, are shown in figure 1.

DOE demonstrated a proof of concept for new Pu-238 production, and  has made approximately 100 grams of new Pu-238 isotope under its  Supply Project, since the project’s inception in 2011. However, given  DOE’s Supply Project and RPS production schedule, and NASA’s current  space exploration plans to use up to four RPS for its Mars 2020 and New  Frontiers #4 missions, DOE’s existing Pu-238 supply will be exhausted by  2025.

Moreover, DOE officials we interviewed from INL, LANL, and ORNL  identified several challenges, including perfecting and scaling up chemical  processing and the availability of reactors, that need to be overcome for  DOE to meet its projected Supply Project goal of producing 1.5 kg per  year of Pu-238 by 2026, at the latest. If these challenges are not  overcome, DOE could experience delays in producing Pu-238 to fuel RPS  for future NASA missions.

DOE’s ability to meet its production goal and support future NASA  missions is at risk if certain steps for chemical processing necessary for  the production of Pu-238 are not improved and scaled up. According to  DOE officials we interviewed, DOE is still in the experimental stage and  has not perfected certain chemical processing measures required to  extract new Pu-238 isotope from irradiated targets, creating a bottleneck  in the Supply Project and putting production goals at risk.

In addition, reactor availability will be necessary for DOE to achieve its  Pu-238 production goals. Officials we interviewed at INL and ORNL said  that achieving 1.5 kg of Pu-238 per year is contingent on the availability of  positions within both the High Flux Isotope Reactor (HFIR) and the  Advanced Test Reactor (ATR) to irradiate neptunium targets for  conversion to Pu-238 isotope. DOE officials said HFIR can produce  approximately 600 grams of Pu-238 isotope and they plan to use  positions within ATR to achieve full production goals; however, ATR has  not been qualified for Supply Project work. In addition, DOE officials said  that ATR’s availability for the Supply Project may be limited due to  competition from other users. DOE officials said that they will be unable to  meet full Pu-238 production goals if positions in ATR, which are already  over-utilized, are not available for Pu-238 isotope production and that  they do not have a plan to address this challenge.

These and other challenges identified in our September 2017 report may  place DOE’s RPS and Pu-238 production goals at risk, in part, because of  the short-term and incremental segmented management approach DOE  had used to manage the Supply Project since its inception in 2011  through early 2017. In March 2017, DOE officials we interviewed said that  the agency anticipated moving to a constant GPHS production rate  approach to help provide funding flexibility and stabilize RPS production  staffing levels between NASA missions. In June 2017, DOE officials we  interviewed said that implementing a constant GPHS production rate  approach would also address other previously identified challenges  associated with RPS production and the Supply Project and therefore  decided to discontinue its short-term and incremental segmented  management approach.

However, DOE officials we interviewed did not describe how the new  constant GPHS production rate approach would help them address some  of the longer-term challenges previously identified by the agency, such as  scaling up and perfecting chemical processing. We found that DOE has  yet to develop an implementation plan for the new approach, with defined  tasks and milestones, that can be used to show progress toward  assessing challenges, demonstrate how risks are being addressed, or  assist in making adjustments to its efforts when necessary. Our previous  work has shown that without defined tasks and milestones, it is difficult for  agencies to set priorities, use resources efficiently, and monitor progress  toward achieving program objectives.

In our September 2017 report, we recommended that DOE develop a  plan that outlined interim steps and milestones that would allow the  agency to monitor and assess the implementation of its new approach for  managing Pu-238 and RPS production. DOE agreed with our  recommendation and noted it was in the process of implementing an  approach for the RPS supply chain that was more responsive to NASA’s  needs, among other things. DOE also noted that it was developing an  integrated program plan to implement and document the agency’s new  approach and expected this to be completed in September 2018. We  believe that the development of an integrated program plan is an  important step and that any such plan should include defined tasks and  milestones, so that DOE can demonstrate progress toward achieving its  RPS supply chain goals.

In addition, in our September 2017 report we identified another factor that  could undermine DOE’s ability to inform NASA about previously identified  challenges to reach its full Pu-238 production goal. We found that DOE  does not maintain a comprehensive system for tracking RPS production  risks and, instead, relies on individual laboratories to track and manage  risks specific to their laboratories. Standards for Internal Control in the  Federal Government call for agency management to identify, analyze,  and respond to risks related to achieving defined objectives. We  recommended that DOE develop a more comprehensive system to track  systemic risks, beyond the specific technical risks identified by individual  laboratories. Doing so would better position DOE to assess the long-term  effects of the challenges associated with its Pu-238 and RPS production  objectives. DOE agreed with our recommendation and stated that the  agency would include steps to ensure that its risk assessment system  would include comprehensive programmatic risks.

Finally, in our September 2017 report we found that DOE’s new approach  to managing RPS and Pu-238 production does not allow for DOE to  adequately communicate long-term challenges to NASA. It is also unclear  how DOE will use its new management approach to communicate to  NASA challenges related to Pu-238 production. As a result, NASA may  not have adequate information to plan for future missions using RPS.  Standards for Internal Control in the Federal Government call for agency  management to use quality information to achieve agency objectives and  communicate quality information externally through reporting lines so that  external parties can help achieve agency objectives and address related  risks. In our September 2017 report, we recommended that DOE assess  the long-term effects that known challenges may have on Pu-238  production quantities, time frames, and required funding, and  communicate these potential effects to NASA. DOE stated that it agreed  with our recommendation and would work with NASA to identify, assess,  and develop plans to address known challenges. DOE also stated that  the agency expected to complete this effort in September 2019.

Chairman Babin, Ranking Member Bera, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.

If you or your staff have any questions about this statement, please  contact Shelby Oakley at (202) 512-3841 or OakleyS@gao.gov. In  addition, contact points for our Offices of Congressional Relations and  Public Affairs may be found on the last page of this statement. Individuals  who made key contributions to the report on which this testimony is based  are Jonathan Gill (Assistant Director); Samuel Blake, Kevin Bray, John  Delicath, Jennifer Echard, Cindy Gilbert, Timothy Guinane, John Hocker,  Michael Kaeser, Jason Lee, Tim Persons, Danny Royer, Aaron Shiffrin,  Kiki Theodoropoulos, Kristin VanWychen, and John Warren.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Radioisotope power systems enable NASA to conduct space exploration missions where solar or other power sources are not feasible (such as in deep space). These systems convert heat generated by the plutonium 238 (Pu-238), a scarce resource, into electricity.

In 2015, the Department of Energy produced new Pu-238 for the first time since 1988. However, this process is highly technical and the department faces challenges meeting NASA's expected need for Pu-238.

In the report on which this testimony is based, we recommended that the department improve its planning and communication about the challenges it faces in producing Pu-238.


Document Services: DOD Should Take Actions to Achieve Further Efficiencies

DOD has reported printing costs that totaled about $608 million, on average, during fiscal years 2010 through 2015. DLA Document Services has key DOD-wide responsibilities for (1) printing and reproduction, (2) print device procurement, and (3) electronic content management (e.g., digital document repositories). Other DOD components, including the military services, also maintain some document services capabilities at various locations.

House Report 115-200 accompanying a bill for the National Defense Authorization Act for fiscal year 2018 included a provision for GAO to examine DOD's document services. This report evaluates (1) the progress DOD has made in achieving efficiencies in its document services and opportunities, if any, to achieve further efficiencies, and (2) the extent to which DOD reports accurate financial information about its document services to key stakeholders. GAO reviewed documents and interviewed officials regarding DOD's efficiency initiatives, including DLA Document Services' transformation plan; reviewed print device procurement contracts and pricing information; and analyzed DOD budget data for fiscal years 2012 through 2016.

The Department of Defense (DOD) has taken steps to achieve efficiencies in its document services, including implementing a transformation plan to consolidate existing Defense Logistics Agency (DLA) Document Services facilities. However, GAO identified four areas where further gains may be possible:

Managing fragmentation in printing and reproduction services. DOD has designated DLA Document Services as the single manager for printing and reproduction services, but DOD customers, citing concerns with DLA's services, have also obtained these services directly from the Government Publishing Office and via in-house print facilities (see fig.). DOD has not assessed DLA's performance in this role or whether additional efficiencies may be possible in light of DLA's transformation plan.

Reducing overlap in procuring print devices. GAO found that DOD components used at least four different contract sources to acquire print devices. DOD has not assessed which acquisition approach represents the best value; doing so might better position DOD to further reduce its costs.

Meeting goals to reduce the number of print devices. DOD and the military services have not demonstrated that they achieved established goals for reducing the number of print devices. Additional controls and assignment of oversight responsibilities to monitor progress could better enable DOD to achieve its cost savings goals, estimated to be millions of dollars annually.

Consolidating DLA facilities. DLA is closing or consolidating 74 of its 112 facilities in the United States. However, GAO found that for four of seven types of specialty services, DLA plans to retain facilities that are responsible for less than 5 percent of the total revenue for each of those specialties, which suggests that further consolidations are possible.

DOD includes the cost of non-printing activities, such as the purchase of advertising time for recruiting, within its budget materials for printing and reproduction. It does not include costs to acquire print devices and for electronic content management. As a result, DOD and the Congress lack the oversight into total document services costs needed to make informed decisions.

GAO is making six recommendations, including that DOD evaluate options to achieve additional cost savings and other efficiencies in its document services and report more accurate budget data. DOD generally agreed with the recommendations.

The Department of Defense (DOD) reported spending an annual average  of $608 million on document services, such as printing, copying, and  related activities, during fiscal years 2010 through 2015. In recent years,  congressional committees have expressed concerns about these costs.  For example, in 2015, the Senate Committee on Appropriations reported  concerns over wasteful printing practices and the lack of clear printing  policies within DOD and recommended that DOD reduce its printing and  reproduction costs by 34 percent.

The Defense Logistics Agency’s (DLA) Document Services organization  has key department-wide responsibilities for document services. It is  designated as DOD’s “single manager” for printing and high-speed, high- volume duplication and “preferred provider” for document conversion and  automation services. DOD document services generally encompass  three broad categories: (1) printing and reproduction (e.g., copying), (2)  print device procurement, and (3) electronic content management (e.g.,  digital document repositories and records management). In addition, DOD  components, which include the military services, maintain some  document service capabilities at various locations.

Due in part to congressional concerns, DOD has implemented initiatives  to reduce the number of print devices and increase the use of electronic  content management practices. DLA Document Services has also taken  steps to implement a transformation plan to better accomplish its mission.  The objective of this plan is to transition DOD to online services by  transforming the way customers, the workforce, and in-house facilities  operate. DLA Document Services plans to consolidate existing brick and  mortar facilities, leverage existing partnerships with the Government  Publishing Office (GPO), and shift to digital services. An internal analysis  of the transformation plan estimated that, once the plan is fully  implemented in fiscal year 2019, DLA Document Services can expect  annual savings of 20 percent of its fiscal year 2017 operating costs.

House Report 115-200 accompanying a bill for the National Defense  Authorization Act for Fiscal Year 2018 included a provision for us to  examine DOD’s document services and assess opportunities to achieve  greater efficiencies and cost savings. This report evaluates (1) the  progress DOD has made in achieving efficiencies in its document  services and opportunities, if any, to achieve further efficiencies and (2)  the extent to which DOD reports accurate financial information about its  document services to key stakeholders.

For our first objective, we reviewed DOD documents and interviewed  DOD officials to understand how each military service obtains document  services and identify department-wide and military service-specific  efficiency initiatives for document services. We focused our review on  DLA and the military services, which accounted for an average of about  92 percent of DOD’s total document service costs reported by DLA  Document Services in fiscal years 2010 through 2015. We also reviewed  DLA’s and the military services’ document services activities and  compared them with a DOD statutory periodic review, DOD Instructions,  and other guidance; OMB guidance; internal control standards; and  best practices for efficiency initiatives—such as consolidations—and  strategic sourcing to identify any potentially inefficient duplication,  overlap, or fragmentation; and any opportunities for greater efficiencies.  For specific efficiency initiatives identified by DOD officials or in DOD  documents, we interviewed DOD officials regarding their progress in  implementing and meeting the goals of these initiatives.

We also compared the cost of print devices offered by DLA Document  Services, the Army, and the Air Force. Specifically, we gathered and  analyzed data on (1) the monthly price of multifunction devices offered by  DLA Document Services, (2) the estimated average monthly cost for the  Army, based on quotes provided by vendors through the Army’s  mandatory source for print devices, and (3) the estimated average monthly cost, based on the standard pricing included in the Air Force’s  2018 catalog for print devices. We compared costs for similar devices  based on device specifications, including print speeds, monthly volumes,  and paper capacities. This analysis did not account for other differences  in device specifications, approaches to obtaining devices, or the types of  associated maintenance services and supplies that were included. As a  result, this analysis does not allow us to conclude which sources provide  the greatest value, but it illustrates differences in the cost of print devices  across sources.

For our second objective, we analyzed DOD’s operation and maintenance  (O&M) budget justification materials and DLA data for fiscal years 2012  through 2016, which provided us with 5 fiscal years of data to determine  any trends in document services obligations. We interviewed officials  from the services to determine how they reported their costs for document  services. We assessed the information against federal accounting  standards on how information should be recorded and communicated to  management and others.

To determine the reliability of the data provided to us by DOD, we  collected information through interviews with and questionnaires to  relevant officials on how the data were collected, managed, and used. We  determined that the data presented in our findings were sufficiently  reliable for the purposes of this report. Appendix I provides further details  on our scope and methodology.

We conducted this performance audit from August 2017 to October 2018  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Document services at DOD are generally encompassed by three broad  categories, shown in figure 1.

Printing and reproduction includes the high-speed, high-volume  reproduction of printed documents, as well as the distribution of those  products. Documents are printed internally by DOD components, which  include the military services, or printing is procured through an  organization such as DLA Document Services, the Government  Publishing Office (GPO), or a commercial vendor. Device procurement  covers the acquisition of all office-level and production-level equipment.  Office-level equipment includes printers; copiers; multi-function devices  (MFDs), which perform multiple functions—printing, copying, scanning,  and faxing—in one device; and all other devices that produce documents  on-site and in low volume. Production-level equipment can include offset  printers, digital presses, and other devices that are capable of high- speed, high-volume production of documents. Electronic content  management is the digitization of printed documents and the creation and  management of electronic content management systems, such as  databases and automation services.

Roles and Responsibilities for Document Services

The Under Secretary of Defense for Acquisition and Sustainment is the  principal staff assistant and advisor to the Secretary of Defense on  document services policies and programs and provides policy guidance  regarding the operation and management of document services. DOD’s  Instruction on document services also designates DLA Document  Services as DOD’s single manager for printing and high-speed, high- volume duplication. This includes both the operation of DOD’s in-house  print facilities and the procurement of such services from outside DOD. It  also establishes DLA Document Services as the preferred provider of  document conversion and automation services within DOD. DOD is in the  process of revising its instruction on document services and is  considering changes to DLA’s single manager role. DLA Document  Services customer service network is comprised of a headquarters  located in New Cumberland, Pennsylvania and 132 production facilities  worldwide.

Each military service also provides internally some document services of  the type assigned to DLA. Service-level implementing guidance governs  how each military service will provide document service-related activities  to its components, commands, and organizations, such as through the  Army Publishing Directorate, the Navy’s Chief Information Officer, and the  Marine Corps Publishing and Logistics Systems Management Section.  The Air Force’s major commands operate their own printing operations,  according to a service official.

DLA funds document services through the Defense-wide Working Capital  Fund, which covers DLA’s costs for purchasing various commodities and  providing services. DOD components and other customers, such as other  federal agencies, reimburse the Defense-wide Working Capital Fund  through the purchase of these commodities and services. In obtaining  document services from DLA, DOD components—including the military  services—use annual appropriations and their own working capital funds  to reimburse the Defense-wide Working Capital Fund. DLA Document  Services’ primary customers, by sales, are shown in table 1. DOD  components can also fund document services outside of DLA Document  Services with annual appropriations.

Efforts to Increase Efficiencies in Providing Document Services

Beginning in 2011, Congress, the federal government, and DOD initiated  efforts to increase efficiencies in various areas involving document  services. For example, Executive Order 13589 directed agencies to  pursue steps to reduce administrative costs across the federal  government by setting reduction goals for certain areas, such as printing  and employee use of IT devices. According to DOD, it set—and  achieved—a goal of a 20 percent reduction in fiscal year 2013 spending  in these areas. Following this effort, in 2015, the Senate Committee on  Appropriations recommended that DOD work with the Office of  Management and Budget to reduce costs for printing and reproduction by 34 percent. DOD issued a report in December 2016 that identified the  reductions it would make to achieve this goal. The plan focused on two  main areas: emphasizing electronic content management over a reliance  on printed materials and reducing the number of print devices. Starting in  fiscal year 2015, DLA Document Services undertook a separate but  complementary effort to further increase efficiencies and better  accomplish its mission of providing document services to DOD and the  military services. Figure 2 provides a time line of efficiency initiatives  related to DOD’s document services. We discuss the status of these  efforts later in this report.

DOD Has Made Progress toward Achieving Efficiencies in its Document Services, but Opportunities May Exist for Further Gains

DOD has taken steps toward achieving efficiencies in its document  services, including implementing a transformation plan for DLA Document  Services, taking steps to reduce the cost and number of office print  devices, and increasing its use of electronic content management.

However, we identified four areas where further gains may be possible:  better managing fragmentation in printing and reproduction services,  reducing overlap in procuring print devices, meeting goals to reduce the  number of print devices, and consolidating locations that provide mission  specialty printing.

DOD Has Taken Steps toward Achieving Efficiencies

Implementing DLA Document Services’ Transformation Plan

In fiscal year 2015, DLA Document Services developed and, starting in  fiscal year 2017, began implementing a transformation plan to further  increase efficiencies and better accomplish its mission of providing  document services to DOD and the military services. The objective of this  transformation plan is to transition DOD from on-site printing to digital,  online services by transforming the way customers, the workforce, and in- house facilities operate. Based on the plan, DLA Document Services is  closing or consolidating 74 of its 112 brick and mortar facilities in the  continental United States over the course of fiscal years 2018 and 2019,  bringing its footprint to 38 facilities. An internal analysis of the  transformation plan, conducted by DLA, estimates annual savings of 20  percent compared to DLA Document Services’ fiscal year 2017 operating  costs once the plan is fully implemented in fiscal year 2019. Figure 3  shows DLA Document Services’ facility footprint prior to the  implementation of its transformation plan and the locations it intends to  retain following completion of the plan in fiscal year 2019.

The transformation plan also calls for DLA Document Services to adjust  the size and composition of its workforce by the plan’s completion in fiscal  year 2019. For example, DLA Document Services intends to reduce its  total number of full-time equivalent positions from about 600 to about 400,  mainly through Voluntary Early Retirement Agreements and Voluntary  Separation Incentive Payments. According to officials, DLA Document  Services is also in the process of converting existing positions and hiring  staff as customer relations specialists at each of the consolidated  facilities. These officials noted that these positions are intended to help  customers learn about and access the full range of services offered by  DLA Document Services, including printing and reproduction services,  office print devices, and electronic content management services. The  goal of establishing these positions, officials stated, is to help facilitate the  increased use of technology to meet customers’ needs, because DLA  Document Services intends to transition customers to using an online  portal to fulfill their printing needs. According to DLA, it is hiring many of  the customer relations specialists from current DLA Document Services  locations, and the planned reduction in its total full-time equivalent  positions is a net reduction that accounts for the hiring of, and conversion  of existing positions to, these customer relations specialists.

DLA Document Services also plans to use and expand its existing public  and private sector partnerships to support an increased emphasis on  online services as it implements its transformation plan. For example,  DLA Document Services currently works in partnership with GPO’s  GPOExpress, an online portal for fulfilling printing and reproduction  services in cooperation with FedEx Office. For those customer orders that  DLA Document Services is unable to fulfill in-house, whether due to  workload or lack of capability, GPO and GPOExpress meet these needs.  According to a GPO official, GPOExpress will also serve customers  located in areas where DLA Document Services has closed or  consolidated 74 of its 112 U.S. facilities.

We found that DLA Document Services’ transformation plan generally  reflects leading practices for initiatives to consolidate physical  infrastructure or management functions. For example, DLA Document  Services identified goals for its transformation plan, ensured top  leadership engagement, dedicated an implementation team, and  established metrics that it is using to track progress toward the plan’s  goals. As of June 2018, DLA Document Services is ahead in its goals for  overall personnel reductions and for hiring customer service  representatives and is behind on its goal for closing facilities, as shown in  table 2.

According to DLA Document Services officials, delays in reducing  facilities have been due to a variety of factors, including earlier delays in  hiring customer service representatives, equipment removal, and  administrative delays at installations. There have also been delays as  DLA Document Services has sought to minimize the effect of the  consolidations on affected employees by offering buyout packages or  transfers. DLA Document Services officials told us they anticipate that  their efforts to consolidate facilities and reduce the overall number of  employees will begin to achieve savings by fiscal year 2020.

Reducing the Cost and Number of Print Devices

DOD, including the military services, has also taken steps to reduce the  cost and number of office-level print devices, including identifying goals  for reducing the number of print devices and plans for each military  service to establish a mandatory source (e.g., one particular contract or  organization) for obtaining print devices. The Army and Air Force have  each established their own service-wide contracts for obtaining print  devices and have mandated their use, while the Department of the Navy  has mandated that the Navy and Marine Corps use DLA Document  Services to obtain these devices. Military service officials told us that  consolidating purchases with a single service-wide source reduces the  cost of these devices by taking advantage of economies of scale,  because vendors can offer better pricing for larger numbers of customer  orders. Our previous work on strategic sourcing—a process that moves  agencies away from numerous individual purchases to an aggregate  approach—shows that such practices can allow agencies to better  manage acquisitions and reduce costs.

In addition, DOD and the military services have identified reducing the  number of print devices as an opportunity for significant savings and have  established guidance on reducing the number of these devices. DOD’s  Chief Information Officer (CIO) issued a memorandum in 2012 on, among  other things, reducing the number of print devices to one per office space  of 12 or fewer users and assessing the ratio of printers to employees in  larger spaces. In response to this memorandum and to Army Audit  Agency findings of excessive user-to-printer ratios, the Secretary of the  Army issued guidance in fiscal year 2013, requiring all Army commands,  organizations, and activities to assess print capacity and plan for  reductions, if necessary, based on the results of those assessments,  which the Army last completed in fiscal year 2014. The Department of  the Navy, in adopting DLA Document Services as the exclusive source for  acquiring and sustaining print devices for the Navy and Marine Corps,  also directed Department of the Navy officials to work with DLA  Document Services to conduct assessments and develop a phased  execution plan regarding the number and type of print devices Navy and  Marine Corps organizations require. DLA began conducting these  assessments for the Navy and Marine Corps in fiscal year 2014. In  conducting these assessments, DLA Document Services reviews the  inventory, cost, and use of output devices within an organization and then  conducts an analysis that results in recommendations. According to DLA  Document Services, its recommendations are designed to optimize an  organization’s equipment to meet the organization’s needs, while  reducing cost by shifting from single-function, or standalone devices, to  shared, multifunction devices.

Increasing the Use of Electronic Content Management

Led by DLA Document Services, DOD has also made greater use of  electronic content management, with the objective of reducing the volume  and cost of printed materials. DLA Document Services is using a number  of electronic content management systems, including its Document  Automation and Content Services, and has deployed those systems for a  number of DOD customers, such as DLA Distribution and U.S.  Transportation Command. According to DLA Document Services  officials, because Document Automation and Content Services functions  as one large system with separate libraries for individual customers, and  costs for the system are shared, increasing adoption of the system will  reduce costs for each organization using the system.

Opportunities May Exist to Achieve Further Efficiency Gains

DOD’s document services initiatives have gained efficiencies, but we  identified four areas where further gains may be possible, including (1)  managing fragmentation in printing and reproduction services, (2)  reducing overlap in procuring print devices, (3) meeting goals to reduce  the number of print devices, and (4) consolidating locations that provide  mission specialty printing.

Managing Fragmentation in Printing and Reproduction Services

Our review found that DOD components, including the military services,  use multiple approaches to obtain printing and reproduction services.  These approaches include (1) using DLA Document Services to obtain  printing and reproduction services, which, in turn, can outsource the work  to GPO; (2) obtaining these services directly from GPO and its network of  private sector vendors without first involving DLA Document Services;  and (3) providing these services at in-house print locations, as shown in  figure 4.

For example, according to DLA Document Service officials, the Army  Publishing Directorate, which is responsible for obtaining print services for  the Department of the Army and local commands in the Washington, D.C.  region, has been given authority by DLA Document Services to obtain  printing and reproduction services directly from GPO under a contract that  DLA Document Services established for that purpose. In contrast, the  Army Marketing and Research Group (AMRG), which is responsible for  developing and distributing printed materials for recruitment, obtains  services directly from GPO without the involvement of DLA Document  Services. Finally, some DOD components, such as the Navy, Marine  Corps, and National Guard Bureau, also operate their own in-house print  facilities.

In our interviews with military service officials, they stated that they  obtained services outside of DLA Document Services because of  concerns regarding the cost, quality, and timeliness of its work, including  inefficiencies that can result from using DLA Document Services to obtain  printing services that are ultimately outsourced to GPO. For example, an  analysis by the Army Publishing Directorate found that ordering directly  through GPO results in savings of 35 percent, compared to fulfilling the  same orders in house through DLA Document Services. In addition,  headquarters officials with the Army and Navy stated that there have  been significant delays in obtaining services through DLA Document  Services, including cases where GPO ultimately fulfilled the orders. Navy  officials also said that there were issues with the quality of DLA Document  Services’ work, including orders they had to return repeatedly because of  quality issues. Further, Army officials—as well as DLA Document  Services—acknowledged that certain print jobs, including some bulk  printing or magazine- and advertising-quality printing, are beyond DLA  Document Services’ capabilities to provide in house.

According to DLA Document Services officials, DLA Document Services  offers value as a single manager for printing and reproduction services,  including when GPO fulfills printing and reproduction orders. For  example, DLA Document Services may be able to identify different  options that allow customers to reduce costs, such as different contract  options that GPO may not identify. Officials also said that DLA provides  administrative support, such as centralized billing and record keeping,  that the military services would have to replicate in their absence. These  officials also stated that they were unaware of any persistent problems  with the quality or timeliness of DLA Document Services’ work, and that  they work with customers to resolve such issues when they arise.

As noted above, DOD is in the process of revising DOD Instruction  5330.03, and a draft of the revision continues to assign DLA as the single  manager for printing and reproduction services within DOD. However,  despite the concerns expressed by some military service officials, DOD  has not assessed the extent to which DLA Document Services is fulfilling  its duties in accordance with DOD Instruction 5330.03 when considering  any revisions to the instruction. Specifically, DOD has not assessed  whether the products and services DLA Document Services provides are  based on “best value,” as determined by quality, price, and delivery time,  in accordance with the instruction.

According to both DLA Document Services officials and the official at the  office of the Under Secretary of Defense for Acquisition and Sustainment  who is responsible for document services policy, the office of Acquisition  and Sustainment has had minimal involvement in ensuring that DLA  Document Services is fulfilling its duties in accordance with the  instruction. For example, DOD’s last formal report on defense agencies  and DOD field activities, including DLA Document Services, was  completed in 2013, before DLA Document Services began implementing  its transformation plan. Because it has not assessed DLA Document  Services’ provision of document services since 2013, DOD has not  ensured that DLA Document Services is providing the best value in an  efficient and effective way.

In light of changes such as DLA Document Services’ transformation plan,  DOD has also not determined whether DLA’s single manager role as it is  currently constituted is the most effective and efficient model for providing  printing and reproduction services, or whether additional efficiencies may  be possible. For instance, as a part of its transformation plan, DLA  Document Services is increasing its use of GPO to fulfill customer orders,  in lieu of using its in-house print facilities. As previously discussed, DLA  Document Services can provide certain arrangements—such as  establishing term contracts with GPO for certain customers while still  providing administrative support for those customers—which may allow  for greater efficiencies in printing and reproduction services. However, the  draft revision to DOD Instruction 5330.03 does not address how DLA  Document Services might use or expand these more flexible  arrangements in light of its transformation plan. DOD Instruction 5025.01  requires that, when revising DOD issuances—such as DOD  Instructions—the relevant Office of the Secretary of Defense component  head will ensure that each assignment of authority or responsibility is  verified to be a current requirement and is appropriately assigned.  Without assessing whether DLA’s single manager role as it is currently  constituted is the most effective and efficient model for providing printing and reproduction services in light of the current transformation plan, DOD  may miss opportunities to gain additional efficiencies and better manage  fragmentation when obtaining these services.

Reducing Overlap in Procuring Print Devices

Our review found that DOD has not implemented a department-wide  approach for acquiring print devices, and DOD components use at least  four different sources to acquire them, with costs that vary widely for  similar devices. For example, as one of its services, DLA Document  Services provides print devices, as well as associated maintenance and  supplies, to DOD components. The Department of the Navy has adopted  DLA Document Services as the exclusive source for acquiring and  sustaining print devices for the Navy and Marine Corps. In addition, both  the Army and Air Force have established their own contracts for print  devices. Further, the Defense Information Systems Agency’s Joint  Service Provider delivers print devices to organizations in the Pentagon  and the national capital region, including the headquarters organizations  of some of the military services, and officials noted that they use a  government-wide contract managed by the National Aeronautics and  Space Administration.

Based on DLA Document Services’ assessments of customers’ print  device requirements, its print device procurement service resulted in  savings of between 33 and 45 percent compared to the customers’ prior  costs for devices, primarily because of reductions in unnecessary devices  and efficiencies that are gained through the economies of scale of a  single organization procuring these devices. More specifically, DLA  Document Services, as a part of its print device procurement service,  assesses customers’ device requirements, which officials told us  generally results in reducing the number of devices and the associated  costs. In addition, DLA Document Services is pursuing, with the support  of the General Services Administration, a “best-in-class” designation for  its print device procurement service as a part of an effort to reduce costs  by using multi-agency and government-wide acquisition vehicles.

Army and Air Force officials told us that they had established their own  print device procurement sources primarily because they believed that  these sources are less expensive than using DLA Document Services.  This is primarily because DLA Document Services charges administrative  and overhead costs to support its operations, such as facility and  maintenance costs, whereas the services’ own contracts do not require  any additional fees, according to these officials. However, service officials  were unable to provide any analyses or other documentation to support  these determinations, and some service officials have been reassessing  their approach to obtaining devices. For example, Air Force officials told  us they recognize that print procurement services like those provided by  DLA Document Services can result in savings, and these officials plan to  issue guidance instructing commands to use either DLA Document  Services or a similar service offered through the General Services  Administration. Conversely, the Marine Corps official responsible for  implementing the Department of the Navy’s policy on print devices told us  that two installations had reported that the mandated use of DLA  Document Services for print device procurement had not yielded savings.  That official told us that the office plans to survey additional Marine Corps  installations and may make recommendations on the current policy as a  result.

Our analysis found differences in cost among the contracts for similar  devices and associated services (see fig. 5). However, we were unable to  determine which sources provided the greatest value, because of  differences in device specifications (such as handling different paper  sizes or the capability to be used on classified networks), approaches to  obtaining devices, and whether associated maintenance services and  supplies were included. We analyzed DLA Document Services’ standard  pricing for customers, contractor quotes for the Army’s mandatory source,  and standard pricing for the Air Force’s mandatory source for devices with  similar capabilities offered by two or more of the sources, and we found  that prices varied widely. For example, we found that DLA Document  Services offered customers high capacity color multifunction devices for  between $280 and $315 a month, including maintenance and supplies.  Vendor quotes we reviewed for similar devices through the Army’s  mandatory source were for between $185 and $479 a month, not  including maintenance and supplies, while the cost under the Air Force’s  mandatory source was between $92 and $145, including maintenance but  excluding supplies.

Our prior work on strategic sourcing—an approach to procurement that  moves away from numerous individual procurements to a broader  aggregate approach—has found that this approach can result in  considerable savings. OMB has also promoted category management— an approach that includes strategic sourcing as well as improving data  analysis and more frequently using private sector (as well as government)  best practices. OMB also encourages the use of multi-agency and  government-wide approaches to acquiring goods and services. Our work  has further found that collecting and using transactional data—information  generated when the government purchases goods or services from a  vendor, including specific details such as descriptions, part numbers,  quantities, and prices paid for the items purchased—can help ensure that  the benefits of strategic sourcing are maintained.

The proposed revisions to DOD Instruction 5330.03 would designate the  DLA Director as DOD’s single manager for procuring print devices. The  current version of the Instruction designates DLA Document Services as  the preferred provider for document conversion and automation services,  which includes print device procurement services. Further consolidation  of print device procurement, such as under DLA Document Services,  might reduce costs. However, it is unclear what approach represents the  best value to the government. This is because DOD has not conducted  an analysis to establish which approach—or approaches—to obtaining  print devices would be most cost effective, according to officials from  DOD, DLA, and the military services. By assessing which approach to  acquiring print devices represents the best value to the department, DOD  would be better positioned, as it revises DOD Instruction 5330.03, to  establish a policy that consolidates print device procurements and further  reduces its costs.

Meeting Goals to Reduce the Number of Print Devices

Beginning in fiscal year 2012, the DOD CIO and some of the military  services established goals for reducing the number of print devices,  which—according to internal DOD analyses—would save millions of  dollars annually. DOD’s Chief Information Officer (CIO) issued a  memorandum in 2012, which instructed DOD components, including the  military services, to issue guidance to, among other things, reduce the  number of print devices to one per office space of 12 or fewer users and  assess the ratio of printers to employees in larger spaces. However, the  services have not demonstrated that they have achieved their goals for  print device reductions. Specifically, we found the following:

Army: The Secretary of the Army issued guidance in 2013, requiring  all Army commands, organizations, and activities to assess print  device capacity and plan for reductions if necessary based on the  results of those assessments. The guidance noted that those  reductions could save millions of dollars annually. The guidance also  included a requirement for biannual reporting by all Army commands,  organizations, and activities on their print device inventory, number of  printing devices required, and annual costs for printing device  acquisitions. In June 2014, Army commands reported an average of 5  users for each single function printer, compared to an industry  standard of 7 users per device and a DOD goal of one print device per  office space of 12 or fewer users and assessing the ratio of printers to  employees in larger spaces. According to Headquarters, Department  of the Army officials, however, Army commands objected to the  workload associated with this reporting requirement and discontinued  issuing the reports. As a result, the Army did not follow through with  enforcing the reporting, which limited the ability of Army officials to  ensure that Army commands achieved the planned reductions.

Navy and Marine Corps: The Department of the Navy established  guidance in 2013, directing Department of the Navy officials to work  with DLA Document Services to conduct assessments and develop a  phased execution plan for the number and type of print devices Navy  and Marine Corps organizations require. The guidance also directed  Department of the Navy officials to develop policy requiring that the  acquisition of new devices be exclusively through DLA Document  Services. DLA subsequently conducted these assessments and found  that the Navy and Marine Corps had an average of one device for  every seven users. DLA Document Services recommended further  reductions in the number of print devices across the Navy and Marine  Corps, which it estimated could save over $63 million annually.  However, Department of the Navy officials were unable to provide us  with data on the total number of Navy and Marine Corps print devices  that would indicate whether these device reductions and savings had  occurred.

Air Force: The Air Force did not issue any guidance based on the  CIO memorandum. In response to our review, the Air Force  developed draft guidance on print device management, which  includes a goal of increasing the ratio of users to devices from 4 users  per device to 12 users per device. The draft guidance also includes  requirements for quarterly reporting by the Air Force Information  Technology Business Analytics Office on the number of devices and  related metrics to monitor progress. According to an Air Force  analysis, doing so would achieve savings of over $67 million as it  replaces or retires devices. As of July 2018, the Air Force had not fully  implemented this guidance.

Efforts by the military services to demonstrate that they have achieved  print device reduction goals have been limited because they have not  monitored the actions they have taken to reduce the number of print  devices. Military service officials we interviewed said they were unaware  of any efforts by the DOD CIO to ensure that device reductions occurred  and that DOD components achieved their planned savings, such as  providing information to the CIO on the status of their efforts to implement  the guidance in the memorandum or data on reductions in the number of  devices. Standards for internal control state that management should  implement control activities through policies that use quality information to  achieve an entity’s objectives, monitor the internal control system, and  evaluate the results of the system.

Efforts to implement the memorandum to achieve print device reduction  goals have also been limited because responsibility for implementation  was not clearly assigned. According to a DOD CIO official, the  responsibility for the memorandum is not clearly assigned to a member of  the CIO staff. This official also stated that because of the consolidation of  information technology services in the Pentagon and the national capital  region, the Defense Information Systems Agency’s Joint Service Provider  assumed responsibility for implementing the memorandum. According to  Joint Service Provider officials, however, they were only responsible for  implementing the memorandum for the customers they serve in the  Pentagon and the national capital region, and not for other DOD  components outside those areas, such as military services. Standards for  internal control state that management should ensure that key roles in  operating the internal control system are clearly assigned. In the  absence of these controls, such as reporting procedures to monitor  actions to reduce the number of print devices and establishing clear  responsibility for implementing the CIO memorandum, DOD has been  unable to ensure that it is achieving any estimated savings, which could  represent tens of millions of dollars annually.

Consolidating Locations That Provide Mission Specialty Printing

DLA Document Services may be able to realize additional savings from  further consolidating facilities beyond those already identified, but it does  not currently plan to do so, and it does not have the complete data it  would need to make those determinations. As a part of its transformation  plan, DLA Document Services identified 38 of its 112 facilities in the  continental United States that it would retain. DLA Document Services  officials stated that they considered a number of factors in determining  whether to consolidate or retain facilities, including the number of staff  and customers and the facilities’ workloads, but that they generally  consolidated or retained facilities based on whether the facility provided  “mission specialty” services. These mission specialties are services that  DLA Document Services officials believe cannot be easily outsourced,  such as printing and reproduction of classified and sensitive documents  and on-demand printing and distribution of certain technical materials.

However, our analysis of DLA Document Services data found that some  facilities retained for certain mission specialties were responsible for a  relatively small share of business for those specialties in fiscal year 2016  (the last full year for which data were provided), which suggests that  further consolidations are possible. For example, for each of the four  mission specialties for which DLA Document Services provided us with  revenue data, the bottom quartile (25 percent) of the facilities retained for  each specialty were responsible for less than 5 percent of the total  revenue for that specialty, as shown in figure 6. We also found some  cases in which DLA Document Services retained facilities that reported  less revenue for a given specialty than facilities that it did not retain.  According to officials, DLA Document Services took a number of factors  into consideration in deciding on consolidations, including the complexity  of the work at a facility and whether nearby sites could fulfill the orders.  According to these officials, this allowed them to consolidate some  facilities even if those facilities had greater revenue from a given mission  specialty than other facilities.

DOD Instruction 5330.03 requires DLA Document Services to provide  effective and efficient document services support to DOD components.  Our key practices for efficiency initiatives also note the importance of  targeting both short-term and long-term efficiency initiatives. DLA  Document Services officials stated that they would consider additional  consolidations of facilities, but they have not conducted any analysis or  planning to gain further efficiencies and do not currently have plans to do  so. These officials stated they are committed to implementing the current  transformation plan as announced. Officials also stated that they want to  have a better sense of the results from the current transformation,  including how workloads may change among facilities as consolidations  occur, before considering additional consolidations. DLA Document  Services’ current transformation plan includes the possible consolidation  of facilities outside the continental United States following the  implementation of its current plan (which only addressed facilities inside  the continental United States); it does not have any plans for further  consolidations within the continental United States.

We also found that DLA Document Services did not have revenue data  on all of its mission specialties to inform any future decisions on facility  consolidations. Standards for internal control state that entities’  management should use quality information to achieve the entities’  objectives. However, DLA Document Services could not provide  revenue data on three specific mission specialties—sensitive, classified,  and Naval Nuclear Propulsion Information—for which it retained 30 of its  facilities, including some that it retained exclusively for those specialties.  According to DLA Document Services officials, they did not collect  revenue data for these mission specialties because the facilities  responsible for processing this type of information were generally  retained, regardless of the revenue they produced, due to the sensitive  nature of this work. As noted above, our analysis of available mission  specialty data found that some facilities that DLA retained for certain  mission specialties did a relatively small share of business for those  specialties, indicating that there may be opportunities for additional facility  consolidations. DLA Document Services officials told us that they had  consulted with managers at the facilities about the amount of sensitive  and classified they conducted. Because of these consultations, DLA  Document Services is closing some facilities that handled sensitive and  classified information. However, DLA Document Services does not  routinely collect these data as it does for other mission specialties. By  collecting and analyzing more complete revenue data on its mission  specialties and using those data to evaluate opportunities for further  consolidations, DLA Document Services would be better positioned to  determine if opportunities exist to achieve additional cost savings.

DOD Does Not Report Accurate Financial Information about Its Document Services

DOD reports some financial information regarding its document services,  but this information does not accurately capture the scope of its document  services mission. We reviewed the O&M obligations for printing and  reproduction in fiscal years 2012 through 2016 that were reported to  Congress by the military services. The total obligations ranged from about  $534 million to about $736 million annually for the 5-year period (see fig.  7).

Our analysis found that DOD’s O&M budget materials for printing and  reproduction are inaccurate in two ways. First, the budget materials  include obligations that are primarily for non-printing activities, such as  the purchase of advertising and radio and television time. DOD and  military service financial management officials prepare budget justification  materials for their O&M funding requests on an annual basis. DOD and  the services report printing and reproduction costs in the Summary of  Price and Program Changes budget exhibit (the “OP-32”). It contains  information by line item, detailing, among other items, printing and  reproduction and related operations performed by the military services,  DLA, or GPO. It also contains elements of expenses for purchases  related to document services that are provided by DLA. The OP-32  exhibits are provided to Congress with the budget justification materials  accompanying the President’s annual budget request.

Officials from AMRG told us that, in accordance with Army guidance,  printing and reproduction obligations are coupled with other obligations,  including the purchase of advertising space and radio and television time  for recruiting activities. Data provided by these officials show that in fiscal  year 2016, AMRG’s obligations for printing and reproduction accounted  for only about $2 million, or 2 percent, of the Army’s total fiscal year 2016  obligations included in the printing and reproduction line of the OP-32.  Obligations for the publication of notices, advertising, and radio and  television time accounted for about $78 million, or 63 percent, of the  obligations reported for printing and reproduction. According to officials,  the Navy, Air Force, and Marine Corps also follow their respective  guidance on reporting printing and reproduction obligations together with  these other obligations.

Second, the budget justification information does not represent the full  scope of the military services’ document services mission. Specifically,  we found that the military services’ annual budget requests do not provide  distinct information on two areas of their document services mission— print device procurement and electronic content management. Data we  reviewed indicate that the military services obligate a considerable  amount of resources in these areas. For example, according to DLA  Document Services, sales to DOD and the military services for its print  device services are comparable to sales for its printing and reproduction  services. According to DLA data, in fiscal year 2017, it received in  revenue about $108 million for print device and about $105 million for  printing and reproduction services. Officials from the military services told  us that obligations for these activities are included within the budget  requests for various IT procurement categories. For example, Army  Budget Office officials noted that the budget request for IT procurement  and office supplies would include estimates associated with the purchase  and sustainment of devices, but those line items would include other,  non-printing obligations as well. According to these officials, the Army has  made efforts to standardize the procurement of information technology,  including collecting better data on spending for these types of devices.  They told us that these efforts will result in shifts in how those obligations  are reported in budget justification materials.

The accuracy and completeness of DOD’s financial information about its  document services can affect the allocation of budgetary resources, and  inaccurate or incomplete information can hamper initiatives to gain further  efficiencies. The Handbook of Federal Accounting Standards states that  its managerial cost accounting concepts and standards are aimed at  agencies providing reliable and timely information on the full costs of their  federal programs that congressional and executive decision makers can  use in making decisions about allocating federal resources and program  managers can use in making decisions to improve operating economy  and efficiency. DOD’s Financial Management Regulation lays out the  structure of the budget exhibits that the military services develop during  the department’s budget process. According to a DOD Comptroller  official, DOD has historically reported its budget requests following the  format prescribed by the Financial Management Regulation, and it follows  this format in its reporting of printing and reproduction costs that are  coupled with non-printing costs.

Although the department has followed this format, the House Armed  Services Committee has expressed concern about the military services’  printing budgets, noting that they were excessive and that portions of the  budgets should be realigned to address unfunded readiness priorities.  Further, as we discussed earlier in this report, DOD has outlined specific  steps it intends to take to achieve a recommended goal of 34 percent  reduction in spending on its printing and related activities. Without quality  information on the scope of its document services mission, DOD will lack  the information it needs to assess whether it is achieving this goal. To  assess its progress toward achieving this goal, it will be critical for  decision makers to have accurate financial information. According to a  DOD Comptroller official, the Financial Management Regulation provides  flexibility in how obligations are categorized and reported internally and to  Congress, but DOD has not evaluated options to report more accurate  funding information on its document services. Unless DOD evaluates  options to report more accurate funding information and takes steps to  improve the accuracy of its budgetary and financial information reporting,  DOD and Congress will not have the full visibility over these costs that  they need to make informed decisions.

DOD is taking important steps to address congressional concerns about  its spending on document service activities. Most notably, DOD is  implementing its plan to transform its DLA Document Services mission  and has taken certain steps to reduce the number and cost of print  devices. These efforts have begun to produce results, but DOD can do  more to build on these gains. By better managing fragmentation in  printing and reproduction services, DOD could ensure that DLA  Document Services is providing the best value in obtaining document  services. DOD could further reduce overlap in print device procurement  by assessing the various approaches employed by DLA and the military  services to determine what constitutes the most cost-effective approach  for the department.

DOD has set goals intended to reduce the number of print devices and  realize tens of millions of dollars in savings each year, but it has not  demonstrated that it has achieved these savings, because of limitations in  internal controls. Additional efforts aimed at collecting and analyzing  information to examine areas for further consolidation of DLA Document  Services’ mission specialty locations might provide DOD with additional  cost savings. DOD’s O&M budget materials for printing and reproduction  activities include information on non-printing activities that make up a  much larger portion of its reported spending than printing does. In  addition, these O&M budget materials omit information that would capture  the full scope of DOD’s document services mission, such as device  procurement and electronic content management, which are included with  information technology budget materials. By providing more accurate  costs for its document services activities, DOD would ensure that  Congress and departmental leaders have the insight needed to make  informed decisions.

We are making a total of six recommendations to DOD.

The Secretary of Defense should ensure that the Under Secretary of  Defense for Acquisition and Sustainment assesses whether DLA  Document Services’ single manager role for printing and reproduction  provides the best value to the government—as determined by quality,  price, and delivery time and in light of DLA Document Services’  transformation plan—and whether any additional efficiencies are possible,  and use the results of that assessment to inform the revision of DOD  Instruction 5330.03. (Recommendation 1)

The Secretary of Defense should ensure that the Under Secretary of  Defense for Acquisition and Sustainment assesses whether DOD’s  current approach to obtaining print devices represents the best value to  the government or whether other approaches, such as further  consolidations under DLA Document Services as a proposed single  manager for print device procurement, would be more cost effective.  (Recommendation 2)

The Secretary of Defense should ensure that the DOD CIO implements  controls, such as reporting procedures, to routinely monitor actions to  reduce the number of print devices, consistent with department-wide  goals for reducing the number of print devices that are included in the  CIO’s 2012 memorandum. (Recommendation 3)

The Secretary of Defense should ensure that the DOD CIO assigns  responsibility for implementing the CIO’s 2012 memorandum on  optimizing the use of employee information technology devices.  (Recommendation 4)

The Secretary of Defense should ensure that the Director, DLA, in  coordination with the Director, DLA Document Services and following  implementation of the current transformation plan, gathers data on  workload revenue at retained facilities and all mission specialties and  evaluate whether additional opportunities for consolidation exist based on  those data. (Recommendation 5)

The Secretary of Defense should ensure that the Under Secretary of  Defense (Comptroller), in consultation with the military services and DLA,  evaluates options to report more accurate funding information and takes  steps to improve the accuracy of its budgetary and financial information  reporting on document services internally and to Congress, including  making distinctions between printing and non-printing-related costs and  information on device procurement and electronic content management.  This information could be provided as part of DOD’s annual O&M budget  justification materials. (Recommendation 6)

We provided a draft of this report to DOD for review and comment. In its  written comments, DOD concurred with five recommendations and  identified specific actions and time frames for addressing them, and it  partially concurred with the remaining recommendation. DOD’s written  comments are reprinted in their entirety in appendix II. DOD also provided  technical comments, which we incorporated into the report, where  appropriate.

DOD partially concurred with our recommendation that the Under  Secretary of Defense (Comptroller), in consultation with the military  services and DLA, evaluate options to report more accurate funding  information and take steps to improve the accuracy of budgetary and  financial information reporting on document services internally and to  Congress, including making distinctions between printing and non- printing-related costs and information on device procurement and  electronic content management. Our recommendation noted that this  information could be provided as part of DOD’s annual O&M budget  justification materials. DOD stated that the budget materials it submits to  Congress are in compliance with OMB Circular A-11’s definitions of  printing and reproduction and equipment. It further noted that Working  Capital Fund exhibits provided with each annual budget include a  breakout, by service, of the appropriated and Working Capital Fund  activities and a detailed accounting of unit cost and pricing for all sub- activities of DLA Document Services.

As we noted in our report, a DOD Comptroller official told us that the  Financial Management Regulation provides DOD with flexibility in  categorizing and reporting obligations internally and to Congress.  However, we found that, based on this flexibility, DOD’s O&M budget  materials reported obligations for printing and reproduction that were  primarily for non-printing activities, such as the purchase of advertising  and radio and television time. This budget information did not represent  the full scope of DOD’s document services mission, since it omitted  obligations for print device procurement and electronic content  management. We also reported that DOD had not evaluated options to  report more accurate funding information on its document services.  DOD’s comments did not include plans to address this recommendation.  We continue to believe that by providing more accurate costs for its  document services activities, DOD would ensure that Congress and  departmental leaders have the insight needed to make more informed  decisions.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the DOD Chief Information Officer,  the Under Secretary of Defense (Comptroller), the Under Secretary of  Defense for Acquisition and Sustainment, the Director, Defense Logistics  Agency, the Secretaries of the Army, Navy, and Air Force, and the  Commandant of the Marine Corps. In addition, the report is available at  no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2775 or fielde1@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to evaluate (1) the progress the Department of  Defense (DOD) has made in achieving efficiencies in its document  services and opportunities, if any, for further efficiencies, and (2) the  extent to which DOD reports accurate financial information about its  document services to key stakeholders.

For our first objective, we reviewed DOD documents and interviewed  DOD officials in order to understand how each military service obtains  document services and identify department-wide and military service  efficiency initiatives for these services. We also reviewed the Defense  Logistics Agency’s (DLA) and the military services’ document services  activities and compared them with a DOD statutory periodic review; DOD  Instructions and other guidance; Office of Management and Budget  (OMB) guidance; internal control standards; and best practices for  consolidation initiatives, efficiency initiatives, and strategic sourcing to  identify any potentially unnecessary duplication, overlap, or fragmentation  and any opportunities for greater efficiencies. For specific efficiency  initiatives identified by DOD officials or in DOD documents, we  interviewed DOD officials regarding their progress in implementing and  meeting the goals of these initiatives.

To evaluate DLA Document Services’ transformation plan, we interviewed  DLA Document Services officials, reviewed DLA Document Services  documents regarding the plan, and assessed that plan based on leading  practices for consolidation and efficiency initiatives. To assess the plan  against these practices, one analyst reviewed the testimony and  documents provided and compared it to our key questions to consider  when evaluating proposals to consolidate physical infrastructure and  management functions. A second analyst reviewed and concurred with  the first analyst’s assessments. In any cases where there was a  disagreement, the analysts discussed any discrepancies. If they were not  resolved, a third analyst reviewed the assessments.

To assess the extent to which there may be additional opportunities for  facility consolidations, we obtained DLA Document Services data on  revenue reported by each facility, which DOD Document Services officials  told us they used in determining which facilities to consolidate as a part of  their transformation plan. We analyzed the share of mission specialty  revenue reported by facilities that (1) were retained by DLA Document  Services for a given mission specialty, (2) were retained but not for a  given specialty, and (3) were not retained. We further divided those  facilities retained for a given specialty into quartiles to better understand  the concentration of revenue in those facilities. To assess the reliability of  these data, we interviewed DLA Documents Services officials regarding  how the data were gathered, analyzed, reported, and used. We found that  these data were reliable for the purpose of analyzing the shares of  mission specialty revenue represented by each facility or group of  facilities.

To compare the cost of print devices offered by DLA Document Services,  the Army, and the Air Force, we gathered and analyzed data on the  monthly cost of multifunction devices with comparable specifications. We  compared costs for similar devices based on device specifications  including print speeds, monthly volumes, and paper capacities. Because  Army and Air Force costs are estimated and there might be other  differences in device specifications, approaches to obtaining devices, and  which associated services were included, this analysis does not allow us  to conclude which sources provide the greatest value. However, it  illustrates differences in the cost of print devices across sources.

For DLA Document Services, we used DLA Document Services’  standard monthly pricing for 2018 for various categories of  multifunction devices.

For the Army, Army officials were unable to provide data on the cost  of multifunction devices purchased by Army customers. Instead, they  provided us with documentation of vendor responses to requests for  quotes from the Army’s mandatory source for print devices from April  2017 through January 2018. We reviewed those documents and  assigned each device to a DLA Document Services category, based  on the device’s specifications as identified in the documentation. We  then estimated the monthly cost for each device. For leased devices,  we used the monthly cost of the lease. For purchased devices, we  used the total cost of the device divided by an estimated service life  for the device. We estimated this service life using some indication  available in the documentation, such as the length of time a  maintenance agreement or extended warranty was provided for the  device. Army officials provided 183 quotes for devices. Of those, we  were able to include 24 in our analysis. We excluded the other 159  because either we could not determine the cost for individual devices  in a quote, there was not enough information on a device’s  specifications, there was no DLA Document Services equivalent for  the device, or we were unable to estimate a service life based on the  information provided. Because the information included all vendor  quotes provided and not just those that were selected by a customer,  the costs may not represent the actual costs of devices to the  customer.

For the Air Force, we used an estimated average monthly cost based  the standard pricing included in the Air Force’s 2018 catalog for print  devices. We reviewed the catalog and assigned each multifunction  device offered to a DLA Document Services category, based on the  devices’ specifications. The Air Force’s catalog contained 32 devices;  we were able to determine the equivalent DLA Document Services  category for 13 of those devices. All devices in the Air Force’s catalog  are available for purchase and include a 4-year maintenance  agreement; therefore, we estimated the average monthly cost as the  purchase price divided by 48.

To evaluate the extent to which DOD reports accurate and complete  financial information to key stakeholders to manage its document  services, we analyzed DOD’s operation and maintenance (O&M) budget  justification materials for fiscal years 2012 through 2016 and Defense  Logistics Agency data on its document services mission. We focused our  review on O&M obligations reported by DLA and the military services,  which accounted for an average of about 92 percent of DOD’s total  document service costs reported by DLA Document Services in fiscal  years 2012 through 2016. We interviewed officials, including officials  from the Office of the Under Secretary of Defense (Comptroller), DLA  Document Services, and the military services to determine how they  reported costs for document services. We assessed the information we  collected against federal accounting standards on how information should  be recorded and communicated to management and others. To  determine the reliability of the O&M budget justification data provided to  us by DOD, we obtained information on how the data were collected,  managed, and used through interviews with relevant officials. We  determined that the data were sufficiently reliable to represent the military  services’ total O&M obligations for document services for fiscal years  2012 through 2016.

We interviewed officials and, where appropriate, obtained documentation,  from the following organizations:

Office of the Under Secretary of Defense for Acquisition, Technology

Office of the Under Secretary of Defense (Comptroller)

Department of Defense Chief Information Officer

Defense Logistics Agency – Chief Information Officer

Defense Logistics Agency – Document Services

Defense Information Systems Agency – Joint Service Provider

Headquarters Air Force – Chief Information Officer

Department of the Navy – Chief Information Officer

Headquarters Marine Corps Command, Control, Communications,

Headquarters Marine Corps Publishing and Logistics

Headquarters Marine Corps Budget and Execution

Marine Corps Reprographic Equipment Management Program  We conducted this performance audit from August 2017 to October 2018  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Matthew Ullengren (Assistant  Director), Adam Hatton (Analyst in Charge), Adam Brooks, Joanne  Landesman, Amie Lesser, Daniel Ramsey, Carter Stevens, and Walter  Vance made key contributions to this report.