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TECHNOLOGY • INTELLIGENCE PROGRAMS • LOGISTICS • ORGANIZATIONS AND HUMAN CAPITAL • ECOLOGY • GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING • DEPOT • HUMAN CAPITAL MANAGEMENT • OPERATIONS PREPOSITIONED ASSETS • SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE • OPERATIONS INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS IMPROVED VETERANʼS HEALTH CARE • INCREASED EFFICIENCY • ENERGY• CHANGE MANAGEMENT • CONTINUITY OF OPERATIONS • STAFFING • PUBLIC MANAGEMENT NETWORKS • ORGANIZATIONAL ANALYSIS • COMPETENCY MODELING LEADERSHIP DEVELOPMENT • EXECUTIVE COACHING • PERFORMANCE MANAGEMENT • ECOLOGY • ACQUISITION ENVIRONMENT • GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING • LOGISTICS • HUMAN CAPITAL MANAGEMENT • OPERATIONS • PREPOSITIONED ASSETS • SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE • INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS • IMPROVED VETERANʼS HEALTH CARE • INCREASED EFFICIENCY • ENERGY• CHANGE MANAGEMENT CONTINUITY OF OPERATIONS • STAFFING • PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING • STAFFING • LEADERSHIP DEVELOPMENT • EXECUTIVE COACHING • PREPOSITIONED ASSETS ECOLOGY • ACQUISITION • ENVIRONMENT • GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING LOGISTICS • HUMAN CAPITAL MANAGEMENT • OPERATIONS • SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE • INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS • IMPROVED VETERANʼS HEALTH CARE • INCREASED EFFICIENCY • ENERGY• CHANGE MANAGEMENT CONTINUITY OF OPERATIONS • STAFFING • PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING • LEADERSHIP DEVELOPMENT • EXECUTIVE COACHING • PERFORMANCE MANAGEMENT ECOLOGY • ACQUISITION • ENVIRONMENT • GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING LOGISTICS • HUMAN CAPITAL MANAGEMENT • OPERATIONS • PREPOSITIONED ASSETS • SUPPLY CHAIN INNOVATION MODERNIZATION • DEPOT MAINTENANCE • INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS • IMPROVED VETERANʼS HEALTH CARE • INCREASED EFFICIENCY • ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT • ECOLOGY • ACQUISITION • ENVIRONMENT • GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING • LOGISTICS • HUMAN CAPITAL MANAGEMENT • OPERATIONS • PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE • INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRON• HEALTH RECORDS • IMPROVED VETERANʼS HEALTH CARE INCREASED EFFICIENCY • ENERGY• CHANGE MANAGEMENT • CONTINUITY OF OPERATIONS • STAFFING • PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS • COMPETENCY MODELING • LEADERSHIP DEVELOPMENT EXECUTIVE COACHING • PERFORMANCE MANAGEMENT • ECOLOGY • ACQUISITION • ENVIRONMENT • GREEN BUILDINGS ISO 9001 • BUSINESS PROCESS REENGINEERING • LOGISTICS • HUMAN CAPITAL MANAGEMENT • OPERATIONS PREPOSITIONED ASSETS • SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE • INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS • IMPROVED VETERANʼS HEALTH CARE • INCREASED EFFICIENCY • ENERGY• CHANGE MANAGEMENT • CONTINUITY OF OPERATIONS STAFFING • PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING • LEADERSHIP DEVELOPMENT • EXECUTIVE COACHING • PERFORMANCE MANAGEMENT • ECOLOGY • ACQUISITION • ENVIRONMENT GREEN BUILDINGS • ISO 9001 • BUSINESS PROCESS REENGINEERING • LOGISTICS • HUMAN CAPITAL MANAGEMENT OPERATIONS • PREPOSITIONED ASSETS •SUPPLY CHAIN INNOVATION • MODERNIZATION • DEPOT MAINTENANCE INFORMATION SYSTEMS • INTELLIGENCE PROGRAMS • INFORMATION ASSURANCE • ELECTRONIC HEALTH RECORDS 2008 ANNUAL REPORT IN A TIME OF CHANGE INNOVATION

LMI 2008 Annual Report

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In 2008, LMI continued helping government leaders and managers improve the management of their agencies. The environment was challenging, but even in the face of the complex and ongoing military efforts in Iraq and Afghanistan, global economic turmoil, federal election campaigns, sharp fluctuations in energy prices, and concern over global climate change, LMI found new ways to help.

Text of LMI 2008 Annual Report

  • TECHNOLOGY INTELLIGENCE PROGRAMS LOGISTICS ORGANIZATIONS AND HUMAN CAPITAL ECOLOGY GREENBUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING DEPOT HUMAN CAPITAL MANAGEMENT OPERATIONSPREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE OPERATIONSINFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTHRECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENTCONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSISCOMPETENCY MODELING STAFFING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PREPOSITIONED ASSETSECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERINGLOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTHRECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENTCONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSISCOMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENTECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERINGLOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATIONMODERNIZATION DEPOT MAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATIONASSURANCE ELECTRONIC HEALTH RECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGYCHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ANDORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHINGPERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESSPROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETSSUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE INFORMATION SYSTEMS INTELLIGENCEPROGRAMS INFORMATION ASSURANCE ELECTRON HEALTH RECORDS IMPROVED VETERANS HEALTH CAREINCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLICMANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENTEXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGSISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONSPREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE INFORMATIONSYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDS IMPROVEDVETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONSSTAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIPDEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENTGREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENTOPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCEINFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDS

    2008 ANNUAL REPORT

    IN A TIME OF CHANGEINNOVATION

  • Contents1 Letter from the Chairman4 Energy and Climate Change16 Client Studies31 Board of Trustees32 Officers33 Program Directors36 Financial Review

    ACQUISITION FACILITIES, ENVIRONMENT AND ASSET MANAGEMENT FINANCIAL MANAGEMENT INFORMATION ANDTECHNOLOGY INTELLIGENCE PROGRAMS LOGISTICS ORGANIZATIONS AND HUMAN CAPITAL ECOLOGY GREENBUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING DEPOT HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE OPERATIONS INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTHRECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING STAFFING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PREPOSITIONED ASSETS ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTHRECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATIONASSURANCE ELECTRONIC HEALTH RECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGYCHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ANDORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESSPROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE INFORMATION SYSTEMS INTELLIGENCEPROGRAMS INFORMATION ASSURANCE ELECTRON HEALTH RECORDS IMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLICMANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE INFORMATIONSYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDS IMPROVEDVETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OF OPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS AND ORGANIZATIONAL ANALYSIS COMPETENCY MODELING LEADERSHIPDEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITION ENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL MANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE

    PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT MAINTENANCE OPERATIONSINFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOT

  • Letter from the ChairmanIn 2008, LMI continued helping government leaders

    and managers improve the management of their agencies.

    The environment was challenging, but even in the face of

    the complex and ongoing military efforts in Iraq and

    Afghanistan, global economic turmoil, federal election

    campaigns, sharp fluctuations in energy prices, and concern

    over global climate change, LMI found new ways to help.

    As an independent, not-for-profit consulting firm, LMIs

    focus is on helping government leaders and managers make

    decisions that make a difference.Through the extraordinary

    depth of our experienced staff and use of state-of-the-art

    tools, LMI is able to develop unique and meaningful solu-

    tions to the significant challenges facing government. Our

    broad capabilities enable us to support nearly every federal

    agency, including the defense, homeland security, intelli-

    gence, and civil sectors of the government.

    In 2008, LMI expanded its capabilities for serving the

    community of government intelligence agencies with the

    acquisition of Jasmah Consulting, a highly regarded con-

    sulting firm within the mission side of the intelligence

    community. Jasmah Consultings expertise in advanced ana-

    lytical techniques and strategic consulting services comple-

    ments our expertise in assisting intelligence agencies with

    facilities, logistics, human capital management, and other

    issues.

    LMIs work covers a broad range of issues, and many of

    our findings have potentially significant impacts. One

    example of such an impact is our work for the Secretary of

    1LMI 2008 ANNUAL REPORT

    William S. NormanChairman of the Board

    INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH

  • Energy that resulted in developing an alternative strategy for

    the Plutonium Preparation Project.When implemented, that

    strategy will save taxpayers more than $500 million over the

    original plan.

    LMI also helped the Department of Defense prepare the

    DoD Logistics Roadmap, which serves as the Departments logis-

    tics strategic plan and provides a foundation for future logistics

    capability assessments and investment analyses. Equally illustra-

    tive of our strong logistics capabilities was our assistance to the

    U.S. Navy in broadening the scope of expertise and intellectu-

    al resources in the new Fleet Readiness Centers. In addition,

    our information technology capabilities were brought to bear

    on the Department of Labors requirements for an enterprise-

    wide modernization effort involving the replacement of a 15-

    year-old system with a more robust, cost-effective solution.

    LMI was grateful to receive special commendations for its

    service to federal agencies throughout the year, including from

    the Department of the Navy, National Oceanographic and

    Atmospheric Administration, and National Aeronautics and

    Space Administration.

    The LMI Research Institute continued to build its reputation

    for innovative thinking, inventive work, and thought leadership

    throughout the year. Some of these efforts are highlighted in

    this annual report, where our special focus is on energy and

    climate change.This report summarizes some of the key find-

    ings in our recently released book, A Federal Leaders Guide to

    Climate Change; identifies critical issues facing the federal gov-

    ernment in these areas; and suggests some solutions to these

    daunting challenges.As part of our effort, we developed a pro-

    tocol for assessing the impact that federal agencies have on

    greenhouse gas emissions, and this protocol is now being

    adopted as a national standard by the World Resources

    2 LMI 2008 ANNUAL REPORT

    INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH

  • 3LMI 2008 ANNUAL REPORT

    Institute.We believe this work will have an enduring, benefi-

    cial effect upon the governments ability to reduce its environ-

    mental footprint.

    This was also a year of transition for LMIs leadership. Early

    in 2008, LMI was greatly saddened by the death of its distin-

    guished President and CEO,Admiral Donald L. Pilling (USN

    Ret.). Admiral Pillings strong commitment to excellence and

    LMIs mission will be difficult to replace, and we extend our

    condolences to his friends and family. At the end of 2008,

    LMI bid farewell to two outstanding members of its Board of

    Trustees: General William G.T.Tuttle Jr. (USA Ret.), and

    Philip A. Odeen. General Tuttle served as LMIs President and

    CEO (19932002), and Mr. Odeen served as Chair of LMIs

    Governance and Nominating Committee. Each brought broad

    experience and clear insight to the Board during a time of

    great change in the company.

    Our new leaders will continue building LMIs reputation

    for innovative solutions to government management problems.

    In January 2009, the Honorable Nelson M. Ford, former

    Under Secretary of the Army, began serving as LMIs eleventh

    President and CEO.Also, the Honorable Kenneth J. Krieg

    (former Under Secretary of Defense for Acquisition,Tech-

    nology and Logistics) and LTG Robert T. Dail (USA Ret.),

    former Director, Defense Logistics Agency, have been elected

    to LMIs Board of Trustees.

    For 47 years, LMI has contributed to the federal govern-

    ments effort to preserve national security, secure the blessings

    of our country, and improve the welfare of its citizens.This

    annual report highlights some of those activities in 2008 with

    the commitment to continue meeting those challenges in the

    years ahead.

    INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITALMANAGEMENT OPERATIONS PREPOSITIONED ASSETS SUPPLY CHAIN INNOVATION MODERNIZATION DEPOTMAINTENANCE INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH

  • THE TROUBLED ECONOMY is grabbing the headlines, but the most

    complex, large-scale, and long-term problems facing the new adminis-

    tration involve energy and climate change.Talk on these topics has

    moved from the halls of science to the dinner table. Most acknowledge

    the need to confront these problems, but deciding how and when to

    do so is frequently debated, and those decisions will have far-reaching

    financial, national security, and environmental consequences. Energy

    and climate change issues are complex and intertwined; decisions

    concerning one will surely affect the other.

    LMI performs research and analysis to inform our clients and advance

    the dialogue on these issues.As we search for practical solutions, we

    develop and hone our skills to better help federal leaders anticipate

    emerging and future energy and climate change challenges.

    4 LMI 2008 ANNUAL REPORT

    Energy and Climate Change

    INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL

  • Helping DoD Set a Course

    In an environment of uncertainty about the

    price and availability of traditional energy, DoD

    faces increasing energy demand and support

    requirements it must meet to achieve its broader

    strategic goals, particularly the establishment of a

    more mobile and agile force. However, recent

    advances in energy efficiency and alternative

    energy technologies offer a unique opportunity

    for DoD to reconcile its strategic goals with its

    energy requirements through reduced consump-

    tion of fuelespecially foreign fuel.

    To capitalize on this opportunity, DoD needs to

    implement an energy strategy that encompasses

    the development of innovative new concepts and

    capabilities to reduce energy dependence while

    maintaining or increasing overall warfighting

    effectiveness. Recognizing that DoD must

    change how it views, values, and uses energya

    transformation that will challenge some of the

    departments most deeply held assumptions,

    interests, and processesthe Office of Force

    Transformation and Resources, Under Secretary

    of Defense for Policy, asked LMI to help estab-

    lish a DoD energy strategy.

    We found four areas where DoDs current

    energy consumption practices are disconnected

    from the capability requirements of its goals:

    (1) strategic, shaping the future security environ-

    ment; (2) operational, effecting greater mobility,

    5LMI 2008 ANNUAL REPORT

    persistence, and agility for our forces; (3) fiscal,

    reducing the operating costs of the current force;

    and (4) environmental, addressing the carbon foot-

    print and global climate change.

    From our research, we concluded that DoD has

    the opportunity to address the four disconnects

    by transforming its approach to obtaining and

    using energy. Many actions are needed to make

    this transformation, but the highest-level require-

    ments are straightforward: incorporate energy

    considerations (energy use and logistics support

    requirements) in the departments key corporate

    processes, establish a corporate governance struc-

    ture with policy and resource oversight to focus

    the departments energy efforts, and apply a struc-

    tured framework to address energy efficiency.

    We offered options for energy actions related

    to DoDs corporate processes, and several have

    been or are being executed.To coordinate

    component efforts, provide strategic direction,

    focus research and development initiatives, and

    monitor compliance with energy-efficiency

    guidelines, DoD needs an effective energy

    governance structure.We recommended that

    DoD establish a coordinating body with policy

    and resource oversight authority. Considering

    the need for collaboration among the military

    services and DoD, we found that an empowered

    committee would be more effective than a sin-

    gle leader.

    ENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURAL

    We found four areas where DoDs current energy

    consumption practices are disconnected from

    the capability requirements

    of its goals.

  • FIGURE 1. Average DESC Standard Price of JP-8

    Source: DESC Standard Prices (current and previous years),www.desc.dla.mil.

    From our survey of emerging energy technologies, we

    found that DoD has a wide range of options for address-

    ing energy efficiency and alternate sources of energy.

    Under proper governance, DoD could begin a structured

    analysis of how to apply organizational, process, and tech-

    nology changes to execute a strategy to reduce energy

    dependence.Although assessing the strategic, operational,

    fiscal, and environmental impacts of such a change would

    provide a mechanism to value potential choices, the

    impacts may not provide sufficient insight to be determi-

    native. To promote the changes that could have the great-

    est utility in addressing the disconnects, we recommended

    that DoD begin by focusing on three areas: greatest fuel

    use (aviation forces), greatest logistics difficulty (forward

    land forces and mobile electric power), and greatest war-

    rior impact (individual warfighter burden).

    For the energy transformation to be successful, DoDs

    senior leaders would need to articulate a clear vision for

    the change and ensurethrough their sustained commit-

    ment and active participationthat it becomes engrained

    in the departments ethos. In view of the long period

    required to develop and populate the force with new

    concepts and capabilities, DoD should begin now to

    shape the force for an uncertain energy future.

    Contributing to Defense Energy Economics

    The cost of energy to the federal government has been

    rising rapidly in recent years, and DoD is the major

    government consumer.The Defense Energy Support

    Centers (DESCs) standard price for fuel, which

    reflects costs in the marketplace, has increased steadily

    over the past several years. Figure 1 shows that its average

    price for JP-8, a jet fuel, has risen rapidly in the last

    5 years.

    The increased cost of fuel has affected the DoD budget.

    Figure 2 shows that DESCs energy purchase costs almost

    doubled from FY03 to FY07, from $6.7 billion to $12.9 bil-

    lion. (Although precise figures are not yet available, the

    standard price certainly increased in FY08.)

    6 LMI 2008 ANNUAL REPORT

  • These figures tell only a part of the story. LMI

    researchers have been aware for some time that energy

    economics for DoD differ from those of most other gov-

    ernment agencies. Our analysis has shown that the cost

    of supplying energy to forces in the field is far higher

    than the purchase cost of the fuel because defense assets

    deliver fuel to the front lines and protect its transport

    from enemy interdiction. Further, the assets necessary to

    deliver fuel to and within a theater must be maintained

    in peace as well as war, so this portion of the cost of fuel

    does not disappear when the nation is at peace.

    Estimates of the fully burdened cost of fuel (FBCF),

    which include these transport and protection costs, vary

    by operational scenario.The estimates in Figure 3 are for

    an FY07 ground scenario and include peacetime as well

    as three wartime scenarios, each more intense than the

    preceding (and hence requiring more protective assets).

    As can be seen, although the purchase cost of fuel was

    $2.30 per gallon in FY07, estimates of the fully burdened

    cost in that year ranged from $5.61 per gallon in peace-

    time to as much as $19.00 per gallon in a high-intensity

    conflict.

    Recognition that the true cost of fuel to DoD is much

    higher than the purchase price has dramatic implications

    for weapon systems acquisition choices and operational

    practices. Even small efficiencies in energy use can great-

    ly influence operational effectiveness because they reduce

    the need for fuel transport through dangerous terrain and

    the use of helicopters and ground vehicles for protective

    purposes.

    LMI has been intimately involved in the development

    of the FBCF concept and its application to specific

    defense problems.We participated in a 2008 Defense

    Science Board study on DoD energy strategy, More

    FightLess Fuel, which emphasized the potential for

    DoD to achieve large gains from fuel efficiency. In that

    study, we contributed an entire chapter on energy-effi-

    cient weapons platform technologies.We also participat-

    ed in DoD efforts to institutionalize the FBCF concept

    FIGURE 2. Annual DESC Energy Purchases

    FIGURE 3. Estimated Fully BurdenedCost of Fuel

    High-IntensityConflict

    Medium-IntensityConflict

    Low-IntensityConflict

    PeacetimePurchaseCost

    Source: DESC Fact Book (various issues), www.desc.dla.mil.

    Source: Fully Burdened Cost of FuelGround Systems,Summary Notes on IDA Modeling, January 5, 2007.

    $Billion

    $per

    gallon

    7LMI 2008 ANNUAL REPORT

  • in its weapon systems acquisition process.That

    process will take many years to complete.

    In addition, we have applied many of these

    concepts in studies for DoD agencies. For exam-

    ple, we used FBCF in an analysis of the cost-

    effectiveness of a centralized power supply to

    tactical operating centers, finding that the extra

    investment needed for such central power was

    more than justified by the returns in fuel savings

    after considering the burdened cost of fuel.

    We also employed estimates of FBCF in a cost-

    effectiveness analysis for the Defense Advanced

    Research Projects Agency.That analysis, which

    involved technologies for transforming military

    waste into fuel on the battlefield, showed that

    such transformation would be cost-effective in

    battlefield situations with a high FBCF.

    Helping Reduce Federal Petroleum Use

    As the nations dependence on foreign petrole-

    ummuch from unstable parts of the world

    grows, the federal government is focusing on

    opportunities to open, integrate, and diversify

    energy markets to ensure energy security. One

    key component of this strategy is promoting the

    use of alternative fuels, such as ethanol and

    biodiesel, as substitutes for conventional

    petroleum-based fuels. LMI is in the thick of this

    effort, working with DoD and the Department

    of Energy (DOE) to formulate and execute

    strategies to reduce federal use of petroleum and

    increase use of alternative fuels.

    DOE Petroleum Reduction Strategies

    Working with the National Renewable Energy

    Laboratory (NREL) and DOE, we are helping

    federal agencies navigate through the complex,

    piecemeal, and often contradictory legislation

    promoting petroleum reduction and alternative

    fuel use in federal fleets. None of the four key

    federal fleet regulationsEnergy Policy Acts of

    1992 and 2005, Executive Order 13423, or

    Energy Independence and Security Act of

    2007mandates a comprehensive petroleum

    reduction strategy. Instead, each addresses only

    one or two components of a fleets approach:

    acquisition of alternative fuel vehicles, petroleum

    reduction targets, alternative fuel use goals, and

    alternative fuels infrastructure development.

    As a result, federal fleets are failing to meet

    petroleum reduction mandates.Although the

    Energy Policy Acts created an inventory of more

    than 137,000 alternative fuel vehicles in FY08

    (23 percent of the federal fleet), alternative fuel

    constitutes only 3.1 percent of total fuel use.At

    the heart of the problem is the low use of

    ethanol (E85) in E85 flex-fuel vehicles: more

    than 90 percent of the fuel used in these vehicles

    was gasoline.The clear culprit is the lack of E85

    fueling stations, commercial and on federal facili-

    ties. However, our analysis revealed that another

    component of the problem was the fleets limited

    use of nearby E85 stations.

    In recognizing these difficulties, DOE and

    NREL asked LMI to formulate a comprehensive

    fleet petroleum reduction strategy for DOE,

    implementing the Secretarys Transformational

    Energy Action Management initiative to establish

    DOE as a leader in exceeding the goals of all

    applicable fleet requirements. Our strategy con-

    sisted of four core elements, which we evaluated

    and implemented at each fleet location:

    Alternative fuel vehicle acquisition and alternativefuel use. Install or convert to a new alterna-

    tive fuel infrastructure at high-use sites,

    replace light-duty gasoline vehicles with

    alternative fuel vehicles, and increase alterna-

    tive fuel use.

    8 LMI 2008 ANNUAL REPORT

  • Use of biodiesel blends. Install or convert to a new B20(20 percent biodiesel) infrastructure at high-use sites,

    replace medium- and heavy-duty gasoline vehicles

    with diesel vehicles, and increase B20 use in diesel

    vehicles.

    Acquisition of high-efficiency, advanced technology vehicles.Acquire hybrid electric vehicles at sites where no

    E85 infrastructure is present or planned.

    Fleet efficiency improvements. Reduce fuel use byimplementing fleet efficiencies, such as reducing

    vehicle miles traveled, increasing fleet fuel economy,

    teleconferencing, ride-sharing, and acquiring neigh-

    borhood electric vehicles.

    Considering data from the 20 largest DOE facilities, we

    found that implementation of this strategy would reduce

    DOEs petroleum use by 39 percent and increase alterna-

    tive fuel use by more than 250 percent from FY07 levels.

    We have already visited some of these sites and drafted

    site-specific executable plans.Those visits and plans have

    helped uncover many additional opportunities for reduc-

    ing petroleum use. For example, after visiting DOEs

    largest fleet locationIdaho National Laboratorywe

    discovered the potential to displace almost 450,000 gaso-

    line gallon equivalents of diesel use per year by accelerat-

    ing replacement of older diesel buses with those that run

    on compressed natural gas.We project that implementa-

    tion of our recommendations at just this one national

    laboratory would reduce DOEs overall petroleum use by

    11 percent.

    DoD Congressional Biofuels Study

    In FY07, DESC asked LMI to perform a congressionally

    required study of DoD use of biodiesel, ethanol, and

    other biofuels and to recommend ways to increase their

    usage through FY12. Congress saw DoD as a prime

    candidate for increasing alternative fuel use because it

    consumed roughly 136 million barrels of petroleum in

    FY06, or 1.8 percent of the national total.

    9LMI 2008 ANNUAL REPORT

  • From the start, we saw that DoDs potential future use

    of biofuels was likely to have only a minimal direct

    impact on reducing the nations petroleum usage. DoDs

    use of biofuels is limited to nontactical vehicles, which in

    FY06 constituted only 1.4 percent of its petroleum

    usage. Currently, biofuels are not capable of replacing the

    two largest components of DoDs petroleum consump-

    tion, jet fuel and marine diesel, and are prohibited from

    use in military tactical vehicles due to operational and

    mission-readiness concerns.

    Nonetheless, we concluded that DoD was capable of

    greatly increasing its use of biofuels over the next 5 fiscal

    years. By FY12, DoD could increase its use of E85 by an

    estimated 19.6 million gasoline gallon equivalents and its

    use of B20 by 6.4 million gasoline gallon equivalents by

    fully implementing the reports five recommendations,

    almost a fourfold increase over FY06 levels.

    This study further showed that one of the best oppor-

    tunities to increase biofuel use was to focus on the cur-

    rent fleet rather than on expanding the composition of

    biofuel-capable nontactical vehicles.We also found that

    the measures for increasing DoD biofuel use concern

    two primary underlying issues: (1) fleet operators do not

    know that their vehicles can use biofuels or where com-

    mercial biofuel stations are located, and (2) commercial

    fueling stations, DoD exchanges, and DoD installation

    fueling sites lack a biofuel infrastructure.

    Three of the studys recommendations centered on the

    use of commercial biofuel stations, which is the most cost-

    effective means for DoD to increase its use of biofuels:

    Direct operators of nontactical vehicles to use the biofuelpump at biofuel stations. Using individual DoD non-

    tactical vehicle fuel transaction data for FY06 at

    commercial stations, we found that fleet operators

    use the conventional fuel pump more than the bio-

    fuel pump when filling up their E85 flex-fuel and

    diesel vehicles at commercial biofuel stations.

    10 LMI 2008 ANNUAL REPORT

  • Divert fueling of biofuel-capable nontactical vehi-cles from conventional stations to biofuel stations

    when nearby. A geographic information sys-

    tem analysis of DoD fuel transaction data

    suggested that when near E85 stations, oper-

    ators of flex-fuel vehicles used gas stations

    more than 90 percent of the time.

    Deploy E85 flex-fuel vehicles near E85 stations.

    These actions would enable DoD to increase its

    use of E85 by almost seven times FY06 levels

    and B20 use by 16 percent.

    Commercial biofuel infrastructure, however, is

    limited: the nation has only a little more than

    1,000 publicly accessible E85 stations and 600

    publicly accessible B20 stations. Most of these

    stations are located far from DoD locations (pri-

    marily in the Midwest), so most DoD sites

    would need a new biofuel refueling infrastruc-

    ture to increase biofuel use.

    DESC and LMI identified candidate DoD fuel-

    ing sites for new biofuel infrastructure, including

    79 potential DoD exchanges and 107 military

    fueling sites with new E85 pumps, as well as 11

    DoD exchanges and 60 military fueling sites

    with new B20 pumps.We are currently helping

    DESC complete detailed site-specific evaluations

    to confirm the identified potential increase in

    biofuel use; determine whether DoD policy can

    be met; decide whether conversion or installa-

    tion of infrastructure is appropriate; and evaluate

    the cost, feasibility, and advisability of the new

    biofuel infrastructure.

    Even small changes in biofuel refueling behav-

    ior and limited installation of biofuel infrastruc-

    ture could drastically increase DoDs use of bio-

    fuels. Those efforts would also support expansion

    of the biofuel industry and move the nation for-

    ward in promoting energy security.

    Leading the Dialogue on Energyand Climate Change

    Any approach to analyzing either energy usage

    or climate change must consider the other: they

    are clearly intertwined.

    LMI is committed to helping the government

    understand and mitigate climate change.Through

    our climate change program, we are demonstrat-

    ing thought leadership at the federal level.

    Two internally funded projects are leading this

    effort. First, LMI recently published A Federal

    Leaders Guide to Climate Change, a major new book

    on this topic being distributed to leaders in the

    new administration as they take office. Members

    of our Energy and Environment group prepared

    this book, which addresses all aspects of the

    climate change issue from the perspective of the

    federal leader.

    In a related project, we partnered with the

    World Resources Institute to develop a Public-

    Sector Protocol for Greenhouse Gas Accounting,

    which is based on the institutes corporate stan-

    dard, recognized worldwide as the best approach

    to greenhouse gas accounting.Through stake-

    holder meetings, we engaged representatives

    from each federal agency active in greenhouse

    gas accounting to identify issues unique to the

    federal government.That protocol soon will be

    available to guide federal agencies to consistent

    results as they implement their own efforts.

    Moving beyond this protocol, we anticipate

    that the new president will expect all agencies to

    report their greenhouse gas emissions as a first

    step to reduction.To prepare for the expected

    executive order and related regulations, we host-

    ed an executive forum on Federal Greenhouse

    Gas Accounting in mid-October 2008; the

    11LMI 2008 ANNUAL REPORT

  • forum was attended by members of the Senior

    Executive Service who will play a major role in

    crafting any executive order. Such preparations

    leverage our experience creating the protocol

    and should help ensure that any executive order

    is soundly conceived and effective.

    In 2008, we also advised DESC on the imple-

    mentation of the Energy Independence and

    Security Act elements related to greenhouse gas

    emissions from fuel supplies.The primary con-

    cern we explored was the current and anticipated

    increase in the use of Canadian tar sandsderived

    crude oil and further introduction of Fischer-

    Tropschderived fuels in the DoD fuel supply

    chain.We estimated the current amount of the tar

    sands crude oil making its way to the U.S. market

    and the distribution within the current list of

    DESC suppliers. From current and planned fac-

    tors, we forecast the potential for increased use of

    the tar sands oil and the potential consequences

    for DESC and DoD.

    We are now working with the office of the

    Architect of the Capitol to help it meet a goal

    mandated by Congress to reduce energy use (and

    greenhouse gas emissions). Our work also extends

    to nonfederal entities: we recently began working

    with the office of the Mayor of NewYork City,

    advising on energy use and greenhouse gas emis-

    sions from city-operated buildings.

    The challenge of climate change is daunting,

    and a solution is not near.A changing climate

    will impact all government operations, and

    efforts to reduce greenhouse gas emissions or

    adapt to climate change will challenge agencies

    for the foreseeable future.We will continue to

    offer thought leadership and a range of tools that

    all branches of government will be able to use to

    address the challenge.

    Managing Energy in the Supply Chain

    Energy management is a critical issue that organ-

    izations, both public and private, need to address

    to secure long-term growth. Energy use is close-

    ly linked to greenhouse gas emissions, which are

    a primary cause of climate change.Although

    managing energy and greenhouse gas emissions

    internally benefits an organization, larger benefits

    are reaped by managing them throughout the

    organizations supply chain.That management

    involves collaboration with upstream and down-

    stream supply chain partners to reduce environ-

    mental impacts while optimizing supply chain

    performance.

    LMI has embraced an integrated approach that

    draws from our expertise in energy and environ-

    mental management as well as in supply chain

    management. Our thought leadership in this area

    began with the development of GreenSCOR,

    which integrates environmental management

    principles with the Supply Chain Operations

    Reference model, a standard supply chain man-

    agement framework embraced by federal agen-

    cies and the commercial industry.The result is a

    12 LMI 2008 ANNUAL REPORT

    ENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURALGAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTIONENERGY COST OF FUEL TRANSPORT PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTEETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURAL

    In 2008, we also advised DESC on the implementation of the Energy Independence

    and Security Act elements related to greenhouse gas emissions

    from fuel supplies.

  • fully integrated framework that allows managers to con-

    sider environmental and business issues simultaneously

    rather than separately.

    We continue to build on the GreenSCOR concept by

    adding greenhouse gas and environmental footprint met-

    rics to enable use of the framework to assist with manag-

    ing climate change impacts in the supply chain.We are

    also continuing to work with the World Resources

    Institute and World Business Council for Sustainable

    Development to develop a standard protocol for measur-

    ing climate change impacts of supply chain operations.

    By having a standard protocol, every organization could

    focus on greenhouse gas emissions issues with partners

    across all supply chains using a single data foundation.

    In support of this protocol development, we conducted

    a series of case studies on companies that are measuring

    greenhouse emissions throughout their supply chain.We

    found that they encounter several major barriers:

    Difficulty in defining relevant activities. Scoping the sup-ply chain for measuring greenhouse gas emissions

    can be difficult. Project leaders need to identify

    material activities among the myriad direct and in-

    direct activities involved. Should the data center be

    included? Employee business travel? Headquarters

    facility heating? With no standards to guide the scop-

    ing process, managers must rely on their experience

    and expertise to decide.

    Lack of partner data. More organizations are measur-ing their corporate greenhouse gas emissions, but this

    practice is far from ubiquitous. Companies have

    found that many supply chain partners, especially

    smaller firms and those located in developing coun-

    tries, do not account for their greenhouse gas emis-

    sions. Without readily available data, managers must

    work with their partners to develop emission esti-

    mates.

    Lack of standard practices. Although greenhouse gasaccounting is being performed by a growing number

    13LMI 2008 ANNUAL REPORT

  • of companies, the absence of standards means

    that a variety of methods are used, so collec-

    tion of emissions information from partners

    needs to be accompanied with an explana-

    tion of the methods used. Overall, these dif-

    ferent methods make comparing supply

    chain partner greenhouse gas emissions per-

    formance difficult without undergoing an

    effort to normalize the data across the supply

    chain.

    Lack of allocation methods for emissions. Whenmeasuring greenhouse gas emissions, much

    like measuring activity costs, overhead activi-

    ties need to be allocated to assess their impact

    on unit-level emissions. For example, in a

    facility that supports several supply chains,

    how should the facility heating and lighting

    be allocated to each? Multiply this question

    by the number of nodes on a supply chain

    and the need for standard guidance is clear.

    Difficulty in capturing use and disposal emissions.Companies tend to have a good handle on

    the path a product takes to get into a cus-

    tomers hands.What the customer does with

    the product and how it is disposed of is

    murkier. However, most greenhouse gas

    accounting programs attempt to measure

    these phases of the product life cycle.

    Without proven methods for estimating use

    and disposal emissions, this task is extremely

    difficult.

    The barriers are not the whole story.We found

    that the companies that best measured green-

    house gas emissions in their supply chain shared

    common attributes.We identified the following

    success factors for measuring the greenhouse gas

    footprint of a supply chain:

    Prepare a structured action plan. It should be nosurprise that the companies successful in

    measuring greenhouse gas emissions

    throughout their supply chains start with a

    structured action plan with a realistic time-

    line. These plans typically include the meth-

    ods and standards used to measure emissions

    as well as a clear project scope and objective.

    Move beyond the buyer-seller relationship. Mostcompanies have a transactional, often adver-

    sarial, buyer-seller relationship with their

    supply chain partners. By moving beyond

    this relationshipthrough environmental

    managers talking with environmental man-

    agersthe sharing of greenhouse gas infor-

    mation and data is smoother.

    Select a standard. Successful companies oftenstart their greenhouse gas measurement proj-

    ects by selecting a standard.A standard makes

    the information needed from partners and

    internal organizations clear, greatly stream-

    lining the measurement process.

    Start small. Collecting and processing green-house gas emissions data throughout a supply

    chain is a resource-intensive effort that

    requires significant learning. Companies that

    start with a pilot study and then expand

    improve the overall measurement process.

    Get help. Measurement of greenhouse gasemissions throughout a supply chain is an

    emerging practice.A company is unlikely to

    possess enough internal expertise for this

    effort. Successful companies recognize this

    situation and often bring in outside experts

    to help collect and process the data.They

    also have internal personnel learn directly

    from the outside experts and build internal

    expertise.

    Measuring and managing greenhouse gas emis-

    sions in the supply chain is an emerging practice.

    14 LMI 2008 ANNUAL REPORT

  • The organizations that have been successful tout

    benefits ranging from the money saved through

    reduced energy use to the operational advantages

    gained from more strategic relationships with

    suppliers and customers. More important, these

    companies have also found innovative ways to

    change supply chain operations.Those innova-

    tions often go beyond reducing environmental

    impacts and into customer value creation.

    We will stay on the forefront of sustainable

    supply chain management.Working with our

    clients and organizations like the World

    Resources Institute and the World Business

    Council for Sustainable Development, we can

    build supply chains that effectively meet cus-

    tomer requirements for services and material

    while reducing environmental impacts and

    energy consumption.

    Summary

    The depletion of traditional energy sources is

    inevitable. Eventually, new alternatives must be

    found, but, in the meantime, federal leaders

    should take intermediate measures to decrease

    energy use and find innovative sources of energy.

    An even graver problem is global climate

    change, which will continue even if we stop

    emissions now. Federal executives need a famil-

    iarity with the science behind the changes and a

    working knowledge of measures for mitigation

    and adaptation.

    LMI is therewith our deep knowledge and

    broad experienceto perform the research and

    analysis that will result in practical solutions to

    help the federal government respond to these

    daunting challenges.

    15LMI 2008 ANNUAL REPORT

  • 16 LMI 2008 ANNUAL REPORT

    Client StudiesTHROUGH RESEARCH AND ANALYSIS, LMI has helped a broad range of

    clients enhance their government management processes.The cases that

    follow demonstrate the multifaceted expertise we offer to enable them

    to find lasting, practical solutions to the complex problems of public

    administration.

    INFORMATION SYSTEMS INTELLIGENCE PROGRAMS INFORMATION ASSURANCE ELECTRONIC HEALTH RECORDSIMPROVED VETERANS HEALTH CARE INCREASED EFFICIENCY ENERGY CHANGE MANAGEMENT CONTINUITY OFOPERATIONS STAFFING PUBLIC MANAGEMENT NETWORKS ORGANIZATIONAL ANALYSIS COMPETENCY MODELINGLEADERSHIP DEVELOPMENT EXECUTIVE COACHING PERFORMANCE MANAGEMENT ECOLOGY ACQUISITIONENVIRONMENT GREEN BUILDINGS ISO 9001 BUSINESS PROCESS REENGINEERING LOGISTICS HUMAN CAPITAL

  • AcquisitionNNaavvaall SSuuppppllyy SSyysstteemmss CCoommmmaanndd

    EEvvaalluuaattiinngg PPBBLL BBuussiinneessss CCaassee AAnnaallyyssiiss

    The Naval Supply Systems Command (NAVSUP)asked LMI to evaluate its use of a business case analysis

    (BCA) when comparing the costs and benefits of tradi-

    tional maintenance support with a performance-based lo-

    gistics (PBL) contract proposal. The objective of the BCA

    was to provide the information necessary to make a fully

    informed decision, helping choose an outcome that im-

    proves system availability while reducing costs.

    Our evaluation consisted of three major tasks: reviewing

    the processes and methods currently used, validating their

    conformance with government policy guidance, and com-

    paring the PBL BCA model with government and indus-

    try benchmarks.

    After reviewing BCA documents and assessing their effi-

    cacy, we concluded that NAVSUP should use net present

    value to compute the time-weighted costs and benefits of

    a PBL arrangement; omit the nonrelevant costs that BCAs

    currently contain, such as inventory control point costs;

    and subject the PBL arrangements to periodic postaward

    audits to determine whether actual performance matches

    that predicted in the BCA.

    DDeeppaarrttmmeenntt ooff HHoommeellaanndd SSeeccuurriittyy

    IInncceennttiivviizziinngg BBeetttteerr PPrrooccuurreemmeenntt RReeqquueessttss

    The Director of the Office of Procurement Operations(OPO), Department of Homeland Security (DHS),

    17LMI 2008 ANNUAL REPORT

  • wanted to change how DHS charged its cus-

    tomers for executing contract actions on their be-

    half. We were asked to evaluate OPOs current

    fee-for-service pricing model and to design an

    alternative that incentivized customers to furnish

    better inputs to the acquisition system. These im-

    proved inputs would allow OPO to promulgate

    solicitations more quickly and cheaply. The spe-

    cific objectives of this 3-month study were to

    (1) assess the OPO pricing model, (2) explore and

    test alternative pricing models, and (3) investigate

    whether it was feasible and desirable for OPO to

    offer discounts to customers on the basis of the

    quality of the acquisition request documents they

    submitted to OPO.

    We began our assessment of OPOs operations

    by looking at the composition of its total annual

    operating costs. We then examined the current

    and projected workload in the OPO divisions

    that directly perform procurement activities for

    customers in DHS and gathered information

    about cost models used by other fee-for-service

    procurement organizations in the federal govern-

    ment. We used these findings to develop an alter-

    native cost model, which we applied to the

    current and projected composition of OPOs

    business base.

    The OPO director was well satisfied with our

    recommendations, stating that the alternative

    model would improve financial management op-

    erations and enable more businesslike, productive

    customer relationships. The director further com-

    mended us for delivering a high-quality product

    that responded to all requirements. We are cur-

    rently helping the OPO staff implement the new

    cost model.

    OOppeerraattiioonnaall TTeesstt aanndd EEvvaalluuaattiioonn

    DDeevveellooppiinngg aa RReelliiaabbiilliittyy IInnvveessttmmeenntt

    MMooddeell

    Because of alarming unsuitability trends,the Director of Operational Test and Evaluation

    (DOT&E), Office of the Secretary of Defense

    (OSD), commissioned LMI in 2007 to assess the

    costs to the government of acquisition programs

    failing to achieve adequate levels of operational

    suitability. DOT&E sought to establish the empir-

    ical relationships between reliability investment

    and life-cycle support costs.

    That assessment, which was performed by our

    Investment and Cost Analysis group, showed a

    strong relationship between investment and relia-

    bility improvement. We concluded that prospects

    are good for capturing the predictive properties of

    this relationship in a forecasting model. During

    the second phase of this effort, we developed an

    intermediate-level model that captures the trend

    of cost as a function of improvement reasonably

    well. We are continuing the effort by obtaining

    data from more reliability programs to improve

    the calibration of our model and better under-

    stand the relation between reliability improve-

    ment and cost in the design period. We are also

    building a more detailed design model to grasp

    how the maturity of reliability engineering affects

    the efficiency with which an investment in relia-

    bility is translated into a reliability improvement.

    Facilities and Asset ManagementCCoorrrroossiioonn OOffffiiccee

    UUnnddeerrssttaannddiinngg CCoorrrroossiioonn IImmppaaccttss oonn

    WWeeaappoonn SSyysstteemmss aanndd IInnffrraassttrruuccttuurree

    As a strategic partner with DoDs Office of

    Corrosion Policy and Oversight, we formulated a

    method for establishing a corrosion cost baseline

    and then collected and assessed detailed corrosion

    information. The data are weapon system specific

    down to the work unit code or work breakdown

    structure level and are further segmented into

    structure or parts, labor or material, and mainte-

    nance level (depot or field).

    18 LMI 2008 ANNUAL REPORT

  • Our cost-of-corrosion studies have been universally ac-

    claimed because, for the first time, DoD has credible and

    actionable corrosion cost data available for making re-

    source allocation decisions. Consequently, the military

    services are now able to focus on their high corrosion cost

    and readiness drivers. For example, using our method, we

    identified the corrosion costs of Army aircraft, helicopters,

    missiles, and ground combat vehicles ($3.6 billion); Navy

    ships and submarines ($2.4 billion); Marine Corps ground

    combat vehicles ($0.7 billion); Navy and Marine Corps

    aviation and missiles ($3 billion); and DoD facilities world-

    wide ($1.8 billion). The DoD science and technology

    community is now using our findings as a basis for jointly

    funding corrosion mitigation research and development

    projects with the military services.

    The Government Accountability Office (GAO) was suf-

    ficiently impressed with the quality of our analysis to rec-

    ommend in its report, High-Level Leadership Commitment

    and Actions Are Needed to Address Corrosion Issues, GAO-07-

    618, that DoD develop an action plan to use the results of

    our study. In addition, DoD Instruction 5000.67, Preven-

    tion and Mitigation of Corrosion on DoD Military Equipment

    and Infrastructure, has recently institutionalized the effort by

    requiring recurring assessments of cost-of-corrosion base-

    line studies.

    DDeeppaarrttmmeenntt ooff EEnneerrggyy

    PPllaannnniinngg RRaaddiiooaaccttiivvee WWaassttee CClleeaannuupp

    The Department of Energy (DOE) has an ongoingproject at its Hanford Site near Richland, WA, to build a

    plant to treat approximately 53 million gallons of chemi-

    cally hazardous and radioactive wastes for subsequent dis-

    posal at more permanent repositories. Established in 1943,

    the Hanford Site, a former nuclear production complex

    19LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM BIODIESEL SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTE ETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURAL GAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS

    Our cost-of-corrosion studies have been

    universally acclaimed because,

    for the first time, DoD has credible

    and actionable corrosion cost data available

    for making resource allocation decisions.

  • on the Columbia River, was also home to the first full-

    scale plutonium production reactor in the world.

    The magnitude and complexity of the cleanup are

    unprecedented. Planners are faced with overlapping

    technical, political, regulatory, and cultural interests. Con-

    sequently, DOE (along with the Washington State Depart-

    ment of Ecology and U.S. Environmental Protection

    Agency) launched an effort to evaluate a wide range of

    technologies as potential options for building a second

    low-activity waste treatment facility.

    The Assistant Secretary of Energy for Environmental

    Management commissioned an independent review panel

    of five subject matter experts from industry and govern-

    ment to ensure all viable options have been considered

    and appropriately evaluated. We provided one member of

    the panel to help review the technical plans from the en-

    gineering economics and financial perspectives. This staff

    members probabilistic methods of analyzing the likely

    costs of the various alternatives and the projected budget

    levels required to finance those alternatives added a unique

    insight to the panels assessment. The panels recommenda-

    tions affected DOE priorities for planning future technical

    efforts. The panel also briefed its results to the staff of the

    congressional committees responsible for overseeing the

    waste treatment plant operations.

    CCuussttoommss aanndd BBoorrddeerr PPrrootteeccttiioonn

    SSeeccuurriinngg AAmmeerriiccaass BBoorrddeerrss

    We are helping the U.S. Customs and Border Protection(CBP) execute its Secure Border Initiative, a comprehen-

    sive multiyear plan to secure Americas borders and reduce

    illegal entry. Our support includes overseeing the program

    management for the design and construction of physical

    fences and barriers on the U.S. southwest border. We are

    providing support in four broad areas: civil engineering,

    20 LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTE ETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET

    We provided one member of the panel

    to help review the technical plans

    from the engineering economics

    and financial perspectives.

  • real-estate management, environmental engineering and

    sciences, and supply chain management.

    In the area of civil engineering, we led the development

    and organization of the project delivery teams. We also had

    a major role in the day-to-day management oversight of

    the project, including value engineering. We developed

    and managed the real-estate acquisition strategy for three

    distinct barrier projects consisting of more than 500 miles

    of fence. We are also continuing to support planning and

    everyday management of the real-estate activities associ-

    ated with those projects. In the area of environmental en-

    gineering and sciences, we developed and managed a

    strategy for complying with environmental laws and regu-

    lations. We are now managing the daily review and moni-

    toring of environmental activities. Finally, we are assisting

    with the development and management oversight of the

    construction-related supply chain activities for the three

    projects.

    UU..SS.. PPoossttaall SSeerrvviiccee

    RReeaalliiggnniinngg tthhee FFaacciilliittiieess OOrrggaanniizzaattiioonn

    The U.S. Postal Service (USPS) manages 30,000 facili-ties and properties nationwide. At the end of FY07, we

    entered into a partnership with USPS to develop standard

    operational processes for its facilities, analyze its organiza-

    tional structures, and develop a plan for optimizing per-

    sonnel use.

    After collecting and reviewing sample data, we found no

    standard output expectations for employees or standard

    management and reporting structures. We further found

    that output rates for measurable processes varied by loca-

    tion and that these processes were performed by a cross-

    section of employees drawn from a variety of classification

    types.

    We used an iterative process to develop performance

    measurements and goals using a statistical analysis

    of performance across the USPS Facilities organization.

    We also estimated the number and types of employees

    needed to perform the work at each location and recom-

    mended restructuring through a combination of outsourc-

    ing, consolidation, and centralization to improve Facilities

    customer service and increase efficiency and effectiveness.

    21LMI 2008 ANNUAL REPORT

  • Financial ManagementUU..SS.. AAggeennccyy ffoorr IInntteerrnnaattiioonnaallDDeevveellooppmmeenntt

    CChheecckkiinngg CCoommpplliiaannccee wwiitthh FFFFMMIIAA

    In November 2006, as part of the annual inter-nal review of financial statements, the U.S. Agency

    for International Development (USAID) inspec-

    tor general asked LMI to test the recently com-

    pleted core financial system (referred to as

    Phoenix) to confirm its compliance with Federal

    Financial Management Improvement Act

    (FFMIA) requirements. To do so, we developed a

    checklist-based test method as a cost-effective

    alternative to a detailed transaction-based test. We

    also engaged the services of an independent pub-

    lic accounting firm to ensure that the documenta-

    tion we produced would withstand an audit.

    In its annual report (GAO-07-914) on govern-

    ment compliance with FFMIA, GAO singled out

    USAID as the only Chief Financial Officers Act

    agency that produced positive assurance that its fi-

    nancial management systems were substantially in

    compliance with requirements.

    We further found that USAIDs Global Acquisi-

    tion System (GLAS)/Phoenix integrated system

    complies with approximately 72 percent of the

    Acquisition/Financial Systems Interface Requirements

    issued in 2002 by the Joint Financial Management

    Improvement Program. We recommended that

    USAID develop a remediation plan that addresses

    the requirements with which GLAS/Phoenix

    does not comply. We specifically suggested that

    USAID determine whether the areas of noncom-

    pliance are necessary for its business and, if so, that

    it make use of any functionality already available

    in the GLAS/Phoenix system, configuring or up-

    grading it to support USAID in these areas.

    Information and TechnologyCCeenntteerrss ffoorr MMeeddiiccaarree aanndd MMeeddiiccaaiiddSSeerrvviicceess

    DDeetteerrrriinngg MMeeddiiccaarree aanndd MMeeddiiccaaiidd

    FFrraauudd aanndd AAbbuussee

    The Centers for Medicare and MedicaidServices (CMS) asked LMI to help manage theimplementation of a data repository of integrated

    Medicare and Medicaid data from all of the states

    and territories. The repository will allow investi-

    gatorsfor the first timeto perform detailed

    cross-state and cross-program analyses.

    We prepared the business case for the data repos-

    itory, which CMS had projected would provide a

    minimal savings of $25 billion when imple-

    mented (although analysis of the business value

    during the proof-of-concept phase indicated that

    the savings estimate may be low).

    By the end of FY09, the project will move to

    production with data on 44 million beneficiaries

    and 12 billion claims. CMS will then expand the

    use of the data to a broad range of health care

    analyses, such as treatment effectiveness, drug effi-

    cacy, quality of care, and cost metrics. Although

    these analyses have been performed in the past, no

    assemblage of data has even remotely equaled the

    size and breadth of the information that this proj-

    ect will make available to CMS.

    22 LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTE ETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET

    We recommended that USAID develop a remediation

    plan that addresses the requirements with which

    GLAS/Phoenix does not comply.

  • OOccccuuppaattiioonnaall SSaaffeettyy aanndd HHeeaalltthh AAddmmiinniissttrraattiioonn

    LLaauunncchhiinngg aa NNeeww IInnffoorrmmaattiioonn MMaannaaggeemmeenntt

    SSyysstteemm

    This year, LMI worked with the Occupational Safetyand Health Administration (OSHA) to replace its

    aging information management systems with a single

    enterprise-wide software solution: OSHA Information

    System (OIS). This new web-based system integrates sev-

    eral market-leading technologies to provide Department

    of Labor and state occupational safety and health person-

    nel with the process-driven data collection, document and

    records management, and sophisticated business intelli-

    gence reporting tools needed to maximize effectiveness in

    22 separate business areasfrom compliance enforcement

    to safety management consultation. In support of this ef-

    fort, we designed and configured the new OIS and suc-

    cessfully deployed a pilot version to a nationwide

    community of more than 150 stakeholders.

    LogisticsAArrmmyy GG--44

    MMaappppiinngg 336600--DDeeggrreeee LLooggiissttiiccss RReeaaddiinneessss

    LMI helped the Army G-4 develop an enterprise-levelvalue stream map of 360-degree logistics readiness to

    identify metrics and recommend actions to institutionalize

    process improvements. Within the Army, 360-degree

    logistics readiness entails the capability to see, assess, and

    synchronize corporate enterprise assets in support of

    warfighting operating forces.

    In this effort, we reviewed Army policies associated with

    building a 360-degree materiel readiness picture to deter-

    mine the components of logistics readiness, especially out-

    side of brigade combat teams. Combat service support

    commands, units, and activities are particularly important

    to Army 360-degree awareness. The enterprise value

    stream map we developed featured overlays of areas of in-

    terest for six specified readiness indicators: unit materiel

    readiness, enterprise inventory visibility, operational re-

    quirements versus sustainment resources, sustainment base

    production, retrograde, and Army equipment loss replace-

    ment.

    23LMI 2008 ANNUAL REPORT

  • UU..SS.. AArrmmyy

    WWaatteerrccrraafftt PPllaannnniinngg aanndd SSuussttaaiinnmmeenntt

    For the Combined Arms Support Command, LMI au-thored, staffed, and published Army Watercraft Master Plan,

    which sets the course for watercraft development within

    the Army through the year 2025. We also assisted the

    Army Sustainment Command with planning for the use

    of prepositioned Army watercraft during exercise Pacific

    Reach 08 in Japan. Also for the Army Sustainment Com-

    mand, we provided technical, analytical, and planning as-

    sistance in implementing Army sustainment initiatives

    supporting the Global War on Terror. We further recom-

    mended performance metrics for the Army organizations

    responsible for reporting status and developed a plan of

    action and milestones required to institutionalize process

    improvements.

    DDeeffeennssee LLooggiissttiiccss AAggeennccyy

    SSuussttaaiinniinngg AAggiinngg WWeeaappoonn SSyysstteemmss

    LMI manages and executes the Defense LogisticsAgencys (DLAs) Weapon System Sustainment Program

    (WSSP), which conducts research and development

    (R&D) to improve readiness and reliability and reduce the

    cost of aging weapon systems. The 5-year-old DLA Aging

    Systems Partnership (DASP) focuses on providing technol-

    ogy development, demonstration, and specialized analyses.

    The effort provides WSSP with a firm, fact-based under-

    standing of DLAs business challenges and opportunities

    for organizational improvement and of the quantitative

    impact of R&D outcomes on customer service, inventory

    investment, and procurement workload. Under DASP, we

    conducted several short-term projects to improve DLA

    support to the warfighter through the development and

    implementation of tools, methods, techniques, data, and

    24 LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTE ETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURAL GAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTION ENTERPRISE VALUE STREAM DATA REPOSITORY GROUND

    Also for the Army Sustainment Command,

    we provided technical, analytical,

    and planning assistance in implementing

    Army sustainment initiatives supporting

    the Global War on Terror.

  • products. Projects are approved on the basis of the assessed

    likelihood that their results will directly affect critical cus-

    tomer support metrics, such as backorders, customer wait

    time, and cost.

    We have overseen more than 40 short-term projects

    supporting the development and execution of more than

    $10 million in DLA R&D projects. We built and continue

    to maintain a unique and extensive array of business data

    spanning more than 10 years. In-house data allow timely

    access and rapid analysis of performance measures that

    drive DLA leadership decisions. We regularly delivered

    detailed characterizations of DLAs business trends for the

    aviation, land, and maritime supply chains, and we con-

    ducted numerous quick turnaround and what-if analyses

    in business areas such as long-term contracts, quality,

    suppliers, and new item entry. We further provided DLA

    with the unique ability to mine data, organize unstruc-

    tured or free-text data, and develop coherent views of data

    from multiple sources, allowing DLA to enhance its un-

    derstanding of the items and customers it supports.

    DDeeppaarrttmmeenntt ooff DDeeffeennssee

    AAnnaallyyzziinngg CCaappaabbiilliittyy--BBaasseedd LLooggiissttiiccss CCoossttss

    LMI continues to support the Assistant Deputy UnderSecretary of Defense for Supply Chain Integration in ef-

    forts to improve visibility and analysis of DoDs logistics

    resources. Our support has produced an analytic founda-

    tion for improving and expanding DoDs ability to link

    both programmed and budgeted resources with logistics

    capabilities, while allowing for greater visibility into pro-

    gram financing for informed decision making.

    Our work began with an assessment of the accuracy of

    previous DoD efforts to identify logistics resources in sup-

    25LMI 2008 ANNUAL REPORT

  • porting management decision making. Using the results

    from that assessment, we next reviewed DoDs current fi-

    nancial regulations, processes, and reporting systems. We

    then developed business rules through which logistics op-

    erations and maintenance resources can be more accu-

    rately and consistently reported from current financial

    reporting systems.

    Using a similar method, we are now expanding our work

    into procurement; research, development, test, and evalua-

    tion; and military personnel appropriations, as well as into

    logistics Defense Working Capital Fund operations. Al-

    though this is a long-term effort, we are achieving results

    that have near-term value in helping DoD understand the

    costs of logistics capabilities.

    SSuurrffaaccee DDeeppllooyymmeenntt aanndd DDiissttrriibbuuttiioonn CCoommmmaanndd

    AAnnaallyyzziinngg SSeeaappoorrtt CCaappaabbiilliittiieess

    The House Armed Services Committee directed theSecretary of Defense, through House Resolution 1585, to

    develop and implement a plan to optimize the use of U.S.

    strategic seaports. The Surface Deployment and Distribu-

    tion Command (SDDC) asked LMI to analyze the capa-

    bilities of the strategic seaports to handle DoD current

    and future requirements to deploy military equipment and

    supplies during contingency surge operations.

    We determined the optimum number of commercial

    and military seaports, identified the best strategic seaport

    locations, identified full-time manning targets for SDDC,

    and validated the 48-hour port planning order availability

    timeline. These results enabled DoD to submit a well-

    documented and substantiated plan to Congress in

    response to H.R. 1585.

    In addition, SDDC is implementing our recommenda-

    tions, which will improve port readiness, achieve better

    resource use, increase stakeholder understanding of the

    strategic seaport program, and greatly improve communi-

    cations between port authorities and federal agencies.

    MMiilliittaarryy SSeerrvviicceess

    SSuuppppoorrttiinngg RReeaaddiinneessss--BBaasseedd SSppaarriinngg

    LMI is supporting the Assistant Deputy Under Sec-

    retary of Defense for Supply Chain Integration and Air

    26 LMI 2008 ANNUAL REPORT

  • Force Materiel Command in implementing readiness-

    based sparing (RBS) in the enterprise resource planning

    (ERP) context. RBS allows the military services to opti-

    mize inventories on the basis of their impact on weapon

    system availabilityrather than suboptimizing on the basis

    of individual item performanceenabling the services to

    achieve the required availability with the smallest inven-

    tory investment.

    We are developing a joint approach to RBS that will

    synchronize requirements computations across multiple

    services. In March 2007, we hosted a joint RBS sympo-

    sium for Air Force, Army, Navy, and DLA representatives

    that resulted in the development of a paradigm for syn-

    chronizing joint requirements. We are continuing to work

    with the military services to refine and implement these

    concepts.

    We are also working to ensure the parts management

    portion of the Air Forces newly selected ERP system will

    meet its requirements. We implemented the parts manage-

    ment software and are collaborating with the Air Force to

    generate test scenarios and compare the softwares per-

    formance with the current requirements system.

    Organizations and Human CapitalUU..SS.. AArrmmyy

    EEssttaabblliisshhiinngg aa 2211sstt CCeennttuurryy BBuussiinneessss

    SSttrruuccttuurree

    The 160,000 contractors in Iraq, Afghanistan, and

    Kuwait represent more than half of the total force. If

    this situation is any predictor of the future, successful 21st

    century military operations must acknowledge the

    impact of the many contractors involved in expedi-

    tionary operations and their potential influence on

    27LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM BIODIESEL

    We are developing a joint approach to RBS

    that will synchronize requirements

    computations across multiple services.

  • mission success. The Secretary of the Army established a

    Commission on Army Acquisition and Program

    Management in Expeditionary Operations to assess the

    current, in-theater system and provide forward-looking

    recommendations for an Army business structure that

    would best enable 21st century military operations.

    We supported the commission throughout its review

    and subsequent monitoring of implementation initiatives.

    The commissions analysisconducted within a com-

    pressed 45-day time frame indicative of the immediate

    challenges facing the Armyresulted in a report, Urgent

    Reform Required: Army Expeditionary Contracting. Its key

    findings included the observation that the Armyand,

    more broadly, DoDfaces systemic challenges in execut-

    ing expeditionary operations, from both operational and

    institutional vantage points. The report calls for a change

    in culture, through which the Army rapidly recognizes

    the importance of contracting. A key recommendation

    was to increase the stature, quantity, and career develop-

    ment of military contracting personnel. As a direct

    result, for the first time in more than a decade, Congress

    increased the Armys authorized number of general offi-

    cers by five and added five joint general or flag officer

    positions.

    Because many of the commissions recommendations

    apply to the rest of the armed forces, we are helping DoD

    implement these broader recommendations. We continue

    to be part of a dedicated DoD contingency contracting

    workforce focused on enabling effective and efficient con-

    tracting in support of deployed forces, humanitarian and

    peacekeeping operations, and disaster relief through inno-

    28 LMI 2008 ANNUAL REPORT

    CORROSION WEAPON SYSTEMS INFRASTRUCTURE BASELINE COST DATA RADIOACTIVE WASTE CLEANUP FUTURE TECHNICAL EFFORTS SECURE BORDERS CIVIL ENGINEERING SUPPLY CHAIN MANAGEMENT ENVIRONMENTAL REGULATIONS VALUE ENGINEERING PERFORMANCE MEASUREMENT CUSTOMER SERVICE BUSINESS CASE ANALYSIS NET PRESENT VALUE ACQUISITION SYSTEM PRICING MODEL WORKLOAD FORECASTING MODEL SYSTEMS ENGINEERING GOVERNMENT COMPLIANCE GLOBAL ACQUISITION SYSTEM REMEDIATION PLAN DATA REPOSITORY COST EFFECTIVE TREATMENT EFFECTIVENESS DRUG EFFICACY QUALITY OF CARE SOFTWARE RECORDS MANAGEMENT LOGISTICS READINESS 360-DEGREE LOGISTICS ENTERPRISE VALUE STREAM WATERCRAFT DEVELOPMENT MARITIME READINESS CAPABILITY-BASED LOGISTICS STRATEGIC SEAPORT PORT AUTHORITIES READINESS-BASED SPARING ENTERPRISE RESOURCE PLANNING SERVICE PARTS DOMESTIC FREIGHT DISTRIBUTION NETWORK 3PL PETROLEUM GROUND SYSTEMS COST EFFECTIVE TRANSFORM MILITARY WASTE ETHANOL BIODIESEL ALTERNATIVE FUEL FEDERAL FLEET FUELING STATIONS HYBRID ELECTRIC COMPRESSED NATURAL GAS BIOFUEL CLIMATE CHANGE GREENHOUSE GAS EMISSIONS GREENSCOR SUPPLY CHAIN OPERATIONS ACTION ENTERPRISE VALUE STREAM DATA REPOSITORY GROUND

    As a direct result, for the first time in more

    than a decade, Congress increased the

    Armys authorized number of general officers

    by five and added five joint general

    or flag officer positions.

  • vative policy, guidance, and oversight. We are fo-

    cused on continuity of contracted support to the

    warfighter, from deployment throughout a con-

    tingency operation; seamless integration of con-

    tracted assets with deployed forces is critical in

    todays military environment.

    DDeeffeennssee MMeeddiiaa AAccttiivviittyy

    TTrraannssffoorrmmiinngg PPuubblliicc AAffffaaiirrss

    The Defense Media Activity (DMA)estab-lished in response to the 2005 Defense Base Clo-

    sure and Realignment Commission (BRAC)

    legislationintegrates media service and produc-

    tion functions across DoD. The Assistant Secretary

    of Defense for Public Affairs asked LMI to help

    exploit the full transformational potential of

    BRAC to achieve unprecedented synergy and

    efficiency in the defense media community.

    Following a comprehensive assessment of

    DMAs strategic direction, business position, and

    functional configuration, we concluded that the

    newly established DMA offered DoD multiple

    opportunities for organizational consolidation,

    improvement, and innovation. We recommended

    several options that supported DMAs commit-

    ment to customer service and its desire to be a

    thought leader in the media industry.

    DMA is now positioned to leverage new tech-

    nology and business practices to apply media con-

    vergence principles that combine multiple sources

    of media content in one product. As DMA transi-

    tions to interim operating capability in 2009 and

    full operating capability in 2011, it should be pre-

    pared to communicate with both traditional mili-

    tary audiences and young service members who

    consider themselves digital natives.

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