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DOD Needs to Enforce Its Own RFID Mandate, Says Inspector General

Many suppliers and contracting officers are failing to comply with the U.S. Defense Department's directive for applying passive RFID tags to certain shipments, according to a recent investigation by the DOD's inspector general.
By Mary Catherine O'Connor
Oct 07, 2008If it wants to reap a return from its $12.2 million investment in passive RFID technology for improved supply chain visibility, the U.S. Department of Defense's Defense Logistics Agency (DLA) needs to get its contracting officers and suppliers to improve compliance with the department's RFID mandate, according to a recent report issued by the DOD's Office of Inspector General.

In 2003, the DOD first announced plans to have its suppliers RFID-tag their goods (see U.S. Military Clarifies RFID Mandate). The department then formally adopted rules by early 2007 (see DOD Finalizes RFID Regulations), requiring contractors to affix passive EPC RFID tags to cases and pallets of materiel they ship to DLA-operated distribution depots.

The report is based on an audit conducted by personnel from the Office of the Inspector General at four RFID-enabled DLA distribution depots, between December 2007 and January 2008. The depots were located in Susquehanna, Pa.; San Joaquin and San Diego, Calif.; and Corpus Christi, Texas. According to the report, the Susquehanna and San Joaquin depots were selected because they receive the largest amount of supplies, and because they were the first depots required to use passive RFID. The San Diego and Corpus Christi sites were chosen because they are collocated with a Navy and an Army depot, respectively.

During the audit, a total of 327 shipments, sent by suppliers to the four depots, were inspected. Of these, 220 were sent through supply contracts that, pursuant to the DOD mandate, should have included a clause requiring the suppliers to apply RFID tags to the shipments and furnish their destination depots with advance shipment notices listing the tags' encoded ID numbers. But 23 (10 percent) of these 220 supply contracts did not include the RFID clause. This means the contracting officers who issued the contracts failed to add it.

From this group, the report also breaks down the number of Air Force, Army, Navy and DLA contracting officers who did not include the RFID clause in new contracts, as required. Nearly 80 percent of the Army and nearly 20 percent of the Navy contracts failed to contain the requisite clause, while compliance among DLA contract officers was better, with only 10 percent of contracts lacking the clause. (The auditors reviewed only one Air Force contract, which did not require it.)

When auditors examined the shipments of the 197 suppliers whose contracts did contain the RFID clause, they found that 84 of those suppliers (43 percent) failed to apply passive RFID tags to their shipments, as stipulated in their contracts. Of the 327 shipments sampled by the inspector general's staff, 144 (35 percent) were sent without an advance shipment notice, forcing depot personnel to manually acknowledge and accept a supply item in the DLA's shipping system, thereby eliminating the efficiency of the passive RFID technology in the DOD supply chain.

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