This report discusses the (1) high-risk areas of financial management, information technology, weapon systems acquisition, contract management, infrastructure, and inventory management; (2) underlying causes of these high-risk areas; and (3) overall strategy we believe is needed to eliminate them.

The Dept. of Defense (DoD) spends billions of dollars to sustain key business operations intended to support the warfighter. DoD is at high risk because of vulnerabilities to fraud, waste, abuse, and mismanagement and also should have a broad-based transformation needed to achieve greater efficiency, effectiveness, and sustainability. The author provide his views on: (1) actions needed to achieve measurable outcomes in DoD's high-risk areas; and (2) DoD's progress in strengthening its mgmt. approach for business transformation, including establishing the Chief Mgmt. Officer position. Includes info. regarding the high-risk area related to contract mgmt. at the Dept. of Energy's National Nuclear Security Admin. Illustrations.

DoD¿s management of its supply chain network is critical to supporting military forces in Iraq, Afghanistan, and elsewhere and also represents a substantial investment of resources. As a result of weaknesses in DoD's management of supply inventories and responsiveness to warfighter requirements, supply chain management is a high-risk fed. gov¿t. program. In July 2010, DoD issued a new Logistics Strategic Plan that represents the dept's. current vision and direction for supply chain management and other logistics areas. This testimony: (1) describes DoD's prior strategic planning efforts in the area of logistics; (2) highlights key elements in the new Logistics Strategic Plan; and (3) discusses opportunities for improvement in future iterations of this plan. Ill.