Starting An Industry: From UID To RFID

2012-05-12 by Murielle Delaporte

An Interview with Michael Wynne, former Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) from 2003 till 2005 and Secretary of the Air Force from 2005 till 2008, with Mrs. LeAntha Sumpter and Rob Leibrandt.

Ms. Sumpter is the Deputy Director, Program Development and Implementation, Defense Procurement and Acquisition Policy in the Office of the Under Secretary of Defense (Acquisition, Technology & Logistics) responsible for functional e-business procurement requirements. This includes Unique Identification (UID) policy and Program Management for the DoD Purchase Card Joint Program.

Rob Leibrandt is the Deputy Program Manager for Unique Identification in the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics USD (AT&L).


UIDs have been revolutionizing U.S. logistics in the past decade both in the commercial and governmental sectors. Credit Image: Bigstock

This article explains the origins of the Unique Identification (UID) and Radio-Frequency Identification (RFID) process within the Department of Defense, via its initiator and architect, Secretary Wynne when he was AT&L, as well as two of its current implementers and developers of the effort.

UIDs have been revolutionizing U.S. logistics in the past decade both in the commercial and governmental sectors.

Nine years have past since the concept has first been introduced by Michael Wynne within DoD and in spite of multi-front resistance and obstacles, the process has now a life of its own and has passed what the latter refers to as the “tipping point”, i.e. the point of no return, as it turns out that the benefits go well beyond simple asset visibility…

As Michael Wynne stresses,

UID has become today a major underpinning on the removal and transfer of material to both the Iraqi and Afghani forces. Much like in this country, we now see Bar Codes on the side windows of automobiles for entry into garages as well as bar codes on Personal Data Assistants for payment or ticketing. This is a gratifying extension to the introduction of the same concepts in the logistics machinery of the US Government.

Getting Industry on Board

The rationale behind developing UIDs within the Pentagon was prompted by Congress’s requirement for an audit.

At the beginning, when I was at the head of DoD acquisition and as we had an audit, I was confronted with the problem of lists: in the old warehouse systems, lists were counted, but not pieces. I said “people do not deal with lists, but are confronted with problems related to pieces and inventory control”, and I decided we needed to buy things with an inventory mark and to create a unique ID for parts in order to replace the old inventory little by little. My vision was that you could push a button and have all the records needed. But, for that to happen, people had to act in a new fashion and we had to push the system down to the contractors for the better good. It turned out it was something very difficult to do because of the need to go towards a harmonization of standards for the companies.

My vision was that you could push a button and have all the records needed…

Indeed, the very first hurdle was to get the companies onboard.

As Rob Leibrandt noted, “Today most companies do some kind of internal identification, while the government does not.”

But in 2003 only very specific industries would rely on an internal tracking system.

“There was always a good tracking system in aviation, and even more so in the rocket business: it is more exhaustive than in aviation when sometimes aircraft investigation only finds a batch or a log number. Since in some industries, there existed some parts trackability that we were very clear about, I wondered about having the same standards and on behalf of the government I decided that we were going to cut costs by moving forward in that direction.”

After we lost a few rockets in the nineties”, pursues Michael Wynne, “quality specifications were re-issued and old standards needed to be ratified.”

There are basically three marking standards but because these three industries would not recognize each other, DoD set up an interoperable standard.

“What we did not know is that this business of standards is a cult !” recalls Secretary Wynne.

So when we gathered the three groups who had known each other for decades and when I declared that we needed lesser standards to allow international partners to join in, arguments broke out immediately. From my point of view, I wanted to make sure the international community could participate to the UID process. The idea was to start an industry, which was a big deal, because it would involve the Wal-Mart’s of this world. It became kind of a “cause célèbre”, because it would not affect just us, but many parts of the supply base…

The big issue as always, for WALMART, but also for all the suppliers, which Michael Wynne and his team decided to gather in the discussions, was “who is going to pay for this?”

The answer of the former head of AT&L was clear:

I said: actually you will have DoD pay for this, as you will embed these costs into acquisition costs. You cannot loose business, because of some charlatan not marking. Contracting officers were not too happy, as there was a risk of encouragement to raise prices and we did not have the money to pay for it. But, as the head buyer, I had a message to industries, especially the OEMs, such as Pratt and Whitney for instance: when I have a main battle tank’s wheel break on the field, which had been bought to small suppliers who substituted bad steel instead of respecting the specs, have I had the ability to marking, I could have gone to the mark and tell the Army you are going to have to enforce this. People understood how this could be a benefit for them and give them the ability to know via marking the sources of counterfeit. Most stopped complaining as they saw this could in addition actually open up some parts of the market for them.

The lack of visibility in records meant that DoD could not differentiate between supplier A and supplier B, while this whole new approach opened up all kinds of related questions, such as export issues since the supply chain includes a large foreign component as well.

As Michael Wynne recalled:

DoD was not in a position to be the discriminator, but one of the main challenges was indeed to convince each nation, which belonged to the ISO community to get on board. Fourteen nations out of twenty-one agreed.

According to Rob Leibrandt, the beauty of this system is that there is no need to pick anybody; you have to use aviation standards, industry standards, or use the commercial JS1: as the supplier, you pick it…”

To recognize each other’s standards and read the ISO or JS1 language, format codes were used allowing the three groups to work together if they agreed to do so. “The first group which got onboard was aviation”, says Rob Leibrandt. “We were able to establish a really good relationship with the Air Transport Association, which declared these standards as an acceptable alternative to the one they use.”

From there, smart readers capable of reading the marking and recognize the uniqueness of what it was reading became the market itself, explained Michael Wynne.

[DoD] and our supply line became a fairly large buyer of these smart readers, which were replacing single reads.

As it became possible to match up items with inventories through a scanning device and because of the volumes involved (whether bricks or wheels),  “people started to translate this into force management, which was not intended at first. The Defense Logistics Agency (DLA) in particular realized that, if done properly, the right combination of UIDs could make an RFID, allowing you to read up a full pallet load.”

“(…) People started to translate this into force management, which was not intended at first.”

DLA had agreed to be the aggregative manager for UID and was also in the process of improving it’s accounting, so the journey could be undertaken in a joint manner.

Prices are now down to about eighty dollars for active tags and fifty cents for passive tags. Credit Image: Bigstock

The RFID market erupted at the time and SAVI, which was later on bought by Lockheed Martin, was created just for that market of active tag. Almost a decade ago, an active tag cost three hundred dollars and a passive tag fifty.

Prices are now down to about eighty dollars for active tags and fifty cents for passive tags.

According to Wynne:

Because we pushed this market, the price eventually collapsed; but the companies have also been prospering, as the market as a result dramatically expanded, including in the commercial sector, which looked at these device to protect itself from theft in stores. This was a tremendous breakthrough, since at first nobody wanted to put a uniformed barcode.  I was able to stay firm, as I thought we needed to succeed the way WALMART had done it in applying a smart tracking system to items in bundle which would have UIDs. That generated an interest…

The next challenge was to reach out to the aviation engine community, which argued at first that marking a turbo blade could destroy the engine as it might displace the center mass of the turbo blade.

In the mid-2000’s though, as Ms. Sumpter noted:

There was a meeting in Paris gathering all engine manufacturers, which realized this could be a fruitful business. Rolls Royce in the United Kingdom was in 2005 the first company to impose UIDs to all its suppliers. Pratt and Whitney followed and now tracks everything through scanning all the way to the factory, but not General Electric. The difficulty is that, depending to whom they sell the engine, the manufacturers have to use different markings, such as the FAA standards for the aviation community, or ISO for the US government.

In spite of initial installation costs (e.g. ten million dollars for Pratt), the benefits for the companies are now proven to be real. “Rolls Royce does not talk about UID benefits per se, but recognizes that the company is saving 4% in direct labor costs via the automation of data caption. One million factory hours per year is being saved by getting rid of the manual process of writing down the ID of an item, transferring it to the computer, correcting erroneous data, and so on…”

Getting the Pentagon On Board

Roadblocks were also obvious within DoD itself and OSD’s task has been to try to get the various players on track with the RFID venture. Creating a ballet, which can include the services, DLA, the financial management, as well as the contracting officers and of course the users abroad is a challenge.

“What we emphasized at AT&L was that we were pushing something that was not appreciated by the rest of the services; many did not want to do it, while others were neutral, but neutrally negative, “recalls Michael Wynne.

The most enthusiastic supporters have been the Marine Corps and the Air Force, while the Army, and even more so, the Navy, were not so keen. Nine years later, the journey is not complete, as stresses Ms. Sumpter.

When there was a lot of opposition, Army Aviation stood up at the highest level: it has been kind of our foster child as it took a maintenance approach as opposed to a financial one and therefore believed there was value in it. The USAF also went on board.

Aviation is always concerned with safety, so it understands better the need and the room for improvement. To this day, there is still no traction from Navy Aviation though.

The arrival of new generations of equipment and the fact that ships are now ready to do maintenance in a different way because of new information technology should prompt change at some point.

The F35 is a case in point: Because the F35 is an Air Force, Navy, Marine Corps product, it would probably be marked. But the choice is to use it …”, says Michael Wynne.

Life-cycle management is indeed becoming an increasingly visible priority within the services and information technology has become the key to enable it:

The registry is in DLA. When we take the birth data of some equipment, we used to put the birth information in the registry, but we realized that we also needed other data for life-cycle purpose. We are now down to five: when it was born, when it was placed into use, if it had a “sex change”, a property change, and death. These five are enough “, explains Ms. Sumpter

Going ahead with the process has been a bit of a vicious circle as DLA wanted to wait until the services went fully on board.

But in the past three years the agency “took a deep dive in several areas such as intensified management items and life-cycle management”, according to Rob Leibrandt.

They also have begun to insert contract clauses for readers regarding their own equipment such as trucks, conveyor belts and so on. Today, the snowball effect is at play, as Michael Wynne describes the following recent developments:

The Defense Logistics Agency, which buys roughly 80 percent of all the material items purchased by the military, agreed to take on the daunting task of Unique Identification and the configuration control that was required.

The Richmond Material center for instance, which buys the DLA Aviation spare, has initiated RFID recognition equipment allowing small businesses to get paid on a crisper schedule, if they assisted by using RFID on their shipments into the facility.

DLA did a terrific job setting out the vision.

One of the results of their modernization was that DLA could absorb the almost doubling of their ‘Sales’ with greater throughput and steady reduction in their Applied Overhead rates to the satisfaction of the services.

During the Base Realignment and Closure Process, the services effectively transferred to DLA increasingly complex major systems spares.

This should really set in motion concepts that were the heart of the F-22 and F-35 programs, that is plug and play for spares and electronic diagnosis

In addition, DLA set up swat teams to assist services with both shipping of spares (Asset Tracking) and repair external to depot—but with Depot expertise.  This extension allowed the use of Depot workers in field locations.

Initially, what got in the way of such a transformation has been the estimated cost of the initial investment necessary to build the infrastructure to be able to register and mark items.

For DLA, the inventory encompassed sixty million items and the estimated cost ranged between two to seven billion dollars. That is a big number, but the other big number is the three to five billion dollars in savings, that occur predominantly in lifecycle management, by making better management decision about one’s inventory, as well as intensified management benefits”, Rob Leibrandt opined.

To overcome such a hurdle, the former head of AT&L declared the vision a “strategic imperative.”

We declared it a “strategic imperative” to comply with congressional direction in order to do a clean audit which you could not do otherwise. As AT&L, I wrote the business plan for the financial community as well as the strategic imperative for Congress, and the Deputy Secretary of defense tasked the services. I am convinced that was the only way to have a clean audit as it helped DLA tremendously: it grew into a 38 billion dollar enterprise, as the BRAC’s consolidation process worked in DLA’s favor and the IUD development.

The next problem AT&L ran into was the fact that they did not want “to take away the authority of the contracting officers who have to make a judgment call on how to get the prices in correlation with the strategies they are looking for,” and not all of them are proponent of UID….

There is indeed a split between the Navy and the other services, as the former will not clear any contract if there is a UID requirement included. The companies that only work for the Navy or for the other services know what to do; it is nevertheless a concern for the factories of those who work for both. The trend is however set.

Another issue has been unexpected developments the end-users experienced on the field in theater of operation.

According to Ms. Sumpter:

When they first started to tag boxes on the Iraqi theater, the Iraqis were destroying them, as they believed they were spy wear. So the Army started to put RFID tags on the jeeps instead of the boxes assuming the boxes would be tied to the jeep, because they kept loosing them. In a fixed environment where you are moving things around, a FEDEX system is well designed, but when you go in the “big wild world”, things start to happen to that investment. So you learn that you need a mark that is permanent throughout the life of the item and that you need to double it up if you go the RFID way.

Getting the International Community on Board

Other than the United States, several NATO countries and NATO itself have started to include IUD requirements into their procurement practice at different degrees.

The most committed nation is the Netherlands, which have pretty much adopted a similar policy to the one of the United States, as far as criteria are concerned (inventory specified; mission essential; etc.), except for the dollar amount.

According to Rob Leibrandt, “most nations are not using UIDs on items which value is below 5000 US dollars.”

Then come the Canadians who have a draft policy, which is similar to the Dutch one. The Belgians have not adopted a formal policy, but have modified their supply system to identify when Unique Identification of items is required: they have the broad structure to make it happen in the supply system, something the United States do not have yet. The French are seeking to engage in the discussion, as they modernize and harmonize their IT and tracking systems. The United Kingdom is coming back in a positive way. And, finally, Norway is interested in using data elements, which are common across the board. The Norwegians are less involved in the marking per se, but more in the exchange information side.

Within NATO, two documents deal so far with unique identification of items.

The first one is STANAG 2290 (standardization agreement), which was ratified in 2010.

The second one is referred to as UIDP 1 which is a “How to “ guide for NATO members willing to enter in the UID business.

Rob Leibrandt has underscored that “It is not a top-down mandate, which is very difficult to achieve; it is not mandatory, but there are many data and practical examples which are very useful. There are contract clauses from the Dutch, the Canadians and the Americans.”

There exists a NAMSA registry located in Luxemburg, which is rather advanced with approximately twenty percent of the parts the international coalition purchase marked, as they collect lots of codification data (size, shape, etc.).

Rob Leibrandt highlights the following concrete development:

There is a good cooperation between Norway’s armed forces and the US Marines on data exchange standards and Marines equipment stored in Norway, such as the MTVRs, is now being marked.

And Secretary Wynne added that

Data exchanges are indeed very useful for operational capabilities. When in the middle of a war you have to borrow equipment and then pay it back. NATO has something called “Coalition Logistics Interoperability” (CLI) which is similar to shared access registry, as well as what is referred to as ACSA, i.e. Acquisition and Cross-Servicing Agreement, which allows coalition partners to have a logistics credit card: if I need a tire for my Humvee, I can go with my ACSA credit card and access this common part depot. You need this allied cross agreement, so that Congress considers it as a legitimate sale agreement (FMS or offsets). As coalition partners, including Japan, take this on, the format and the registry will be completed and it will be very useful:  you will have a F for French of J for Japanese on these spare parts, as the XML language tagging on these parts is flexible and can be adjusted. We spent a lot of time within STANAG on defining formats, as it is what underlies this whole UID construct: it is all about data sharing and attribution. There is much yet to be exploited and explored. They have been in the vineyard in more than eight years and have made a lot of progress, but we are being asked to go drain the ocean and it is hard…

We have been asked to go drain the ocean and it is hard…

A Tipping Point?

As mentioned earlier, one of the initial difficulties has been to try to quantify how much making UID part of the regular acquisition process would cost.  But it clearly is a value proposition.

Once the process got started, benefits have rapidly shown up well beyond the asset visibility, which was pursued in the first place:

“The program heads would have to establish a procedure to do that. They took a pencil, but only the Marines made actual headway on this. They believe they have marked about 30% of their legacy equipment,” according to Rob Leibrandt.

Among the legacy items dealt with, the Marines have indeed marked 20.000 small arms and the Army about 50,000 as of late last year.

The advantages of doing so are multiple, as Ms. Sumpter describes:

We believe any community who has small arms should do this – ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives), local police, and so on.

The USMC has done a lot of work with armory, aiming at marking each arm assigned to each soldier and a thirty four hour check in and check out process for issuing and returning weapons at the unit level has been reduced down to two hours! This is huge.

Till then, you had to visually confirmed the serial number every single time a weapons was issued and returned: not only was it a very time consuming process, but it was probably rather inaccurate. Now they scan the barcode and give the weapon to the soldier who has an identification card associated to it.  They will issue the right weapon to the valid soldier, but not only that they will issue the right weapon – special caliber machine gun or else – to the valid soldier with the need for it. Indeed, attribute-based access is really the next step to this…

[After marking small arms], a thirty four hour check in and check out process for issuing and returning weapons at a [Marine Corps] unit level has been reduced down to two hours!

This process allows one to reduce inventory errors, as well as the potential for accidents (for instance when a soldier returning from the theater may have kept his weapon with him by habit instead of returning it once back on CONUS).

Enhanced Transparency and Enhanced Reliability

Another benefit is the ability to track government equipment being used in theaters by contractors.

Another benefit is the ability to track government equipment being used in theaters by contractors. Credit Image: Bigstock

This has been possible by the development of various systems “connecting the dots” between items and end-users.

Ms. Sumpter provides the following example.

Another thing we did at DoD was to try to connect all the dots together. One of the means to do so was the CAC card, i.e. the Common Access Card, which uniquely identify you as an individual. There is in addition a system called SPOT for “Synchronized Predeployment Operational Tracker”, which allows us to conduct a census on all contractors in the theater of operations. It was recently mandated that it would also track government vehicles and guns issued to contractors on theaters, in order to improve private contractor security issues.

We hold monthly meetings with the contractors to connect contracted data via these CAC cards, so we can track equipment and all the pieces come together. We are just on the verge of being able to do that. In December 2010, the matching number between what they had contracted and what we had in DoD was only 13% and our goal is 90 % … »

The Challenge of Building a “Trusted Supply Base”

Getting a grip over counterfeiting and ensuring quality control over off-the-shelf acquisitions are also part of the benefits currently actively pursued.

The next big sector being addressed is the whole area of counterfeiting,” according to Rob Leibrandt.

There exists a federal counterfeiting task force, which focus is on grey market-acquired electronic components. This is a beginning, but the key is to include this dimension in the procurement system itself: we need to identify and determine which items are critical to the system or are likely to be counterfeited; then, if we are able to do that, we can declare them as ”intensified management items”. This would change the way we procure these items, since that would require full visibility, chain custody, as well as a certificate of authenticity and once passed on to logistics, they would know at this point about the potentiality of counterfeits and look out for them. We are trying to build that capability at this time and we are working on three key aspects.

Standards: we need to identify the right standards applying to counterfeiting, such as the item level;

Procurement : what are the procurement rules that need to be in play and how do they apply if it is a commercial item or if it has its own design? If we own the design, we have of course more flexibility and are in a position to verify suppliers;

Traceability: the 3rd area is the issue of traceability, which goes back to how you do your UID in the first place. Information needs to be registered from the minute the item enters the production chain till it reaches DoD’s inventories.

According to Ms. Sumpter,

The Pentagon lost track of this issue when the trend to buy commercially-made products speeded up in the 90’s without any quality control. By not controlling the design and not imposing any provision to manage quality, we have been experiencing a free fall to this point: we have situations where we buy black boxes designed to be installed within the weapon systems, and inside these black boxes, you will have recycled components which are not new, or in some cases, they have switches coming alive six months after being purchased so that data goes to China.

NASA’s position is to buy exclusively from the OEMs, the Original Equipment Manufacturers and no one else, but the issue remains as far as the reliability of these electronic parts the United States does not manufacture. The question is therefore “how do we force industry to build a trusted supply base…”

The certification of sub-tiers of suppliers has been secondary to the OEMs and the further down the chain, the bigger risk to lower prices at the expense of security and the respect of required specificities.

Several recent examples illustrate the consequences of such a pattern (e.g. the wrong screw bolts on US Army helmets in the mid-2000).

But the Pentagon is trying in connection with some of the big firms like Oracle, Cisco and Honeywell to reestablish some quality control framework and define new Quality Assurance (QA) specifications for commercially designed items.

The priority focus is aviation.  The upcoming Next Gen air traffic control system should push the system further, as Michael Wynne pointed out, in the sense that the concern over the origins of manufactured products in that area incentivizes to go beyond prevention via the ability for law enforcers to have access to the “forensic track” of parts.

The Way Ahead

There are four major sectors where the trend is now set and progress clear.

“Aviation, weapons, wheeled vehicles and medical equipment are the major sectors that are doing this well,” according to Rob Leibrandt.

Regarding wheeled vehicles, the robots program, the Humvees and especially the MRAPs (Mine Resistant Army Personal carriers) have been good candidates for use of UIDs

For the MRAPs, the US Army was dealing with ten different contractors, who were changing the configuration so fast that each vehicle was almost its own system with its own upgrade. UIDs literally were a savior, as without them, it would have been very complicated to track each vehicle and have the right supplier fix it, highlighted Ms. Sumpter,

The problem remains in some areas of application, such as medical equipment and controlled substances in hospitals, the issue of standards compatibility as well as readers’ interoperability. In the medical field, one has indeed to deal in addition with FDA rules and the HIBCC (Health Industry Business Communication Council) standards.

Nine years after the system was introduced however, it has grown into a clean audit automated process drastically reducing the paper load, the way Michael Wynne had hoped for and envisioned it from the outset.

Providing better visibility across theaters, it has actually turned into an inventory delivery system and has been contributing to enhanced visibility and transparency in the contracting transactions, while easing the maintenance chain between the depots and the field.

Ms. Sumpter underscored the progress.

We have now created a system of information management for invoices and contractors: we now have a live feed to put everything in the pipeline; there have been huge gaps between orders and deliveries and the whole supply community is interested. The Marines have been prototyping the system in the past two years and they discovered is that they don’t have to enter the data anymore and that there is no mistake. The key is to connect the dots between the supply chain and the actual deliveries via electronic date exchanges with the industry, which is not being done. Another improvement, directly benefiting in this case the end-user, is that we are going to attach warranty instructions to each UIDed item, so that the warfighter on the field knows exactly where to send it back for repair. This should save a lot of money at the depots’ level.

Sumpter added that in terms of overall coverage statistics, procedures are still being worked out to go after unregistered legacy items: “we think we are chasing about sixty million legacy items, of which about twelve million are in the registry, but we are doing audits to see which items are bookmarked but not registered, (this is the case for instance for two third of special operations items).”

All together and on average, about one third of items are identified across services, ranging from 70% for the Marines and 5% for the Navy.

Secretary Wynne concluded:

You will always run into compliance issues just because of the nature of the rotation in command authorities both in the civilian and military lanes, but as automation continues to grow, you will get tranches of change and all will begin to flow.  And we will reach the tipping point will be reached when the system goes virally on its own merits.

I would say that we are very close to the tipping point, the same way McNamara’s PPBS has become second nature.

In fact, industry may already have reached the tipping point, before DoD, as it is embedded into its operational prospect. Indeed DLA has about 25% items IUDed without implementing it, precisely because industry has started the process on its own.

There is self-momentum, because we gave it a great start and a push down the hill: senior leadership is benefiting from it and there is an echo chamber to it in savings.

But there is much more to it in areas such as management savings alone.  We had to change it into a logistical-based system and back into a financial system that benefits logistics and back and forth it might go. But one thing is certain: it is functional and we are just starting to measure up all its implications. It is live history…

For an overview on the DOD approach to UID please see the following briefing:

IUID Policy

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