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Defense Inventory: Army Needs to Strengthen Internal Controls for Items Shipped to Repair Contractors

GAO-06-209 Published: Dec 13, 2005. Publicly Released: Dec 13, 2005.
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Highlights

GAO has previously reported that the lack of control over inventory shipments increases the Department of Defense's (DOD) vulnerability to undetected loss or theft. GAO evaluated the Army's effectiveness in maintaining accountability of inventory shipped to repair contractors. To conduct its review, GAO analyzed shipment data for fiscal year 2004, surveyed repair contractors that were recipients of inventory shipments, and assessed the Army's adherence to internal control procedures. Inventory shipments included both secondary repair items--components, assemblies, and subassemblies, other than major end items, which may be sent to commercial facilities for repair, alteration, or modification--and government-furnished materiel--assemblies, parts, and other items provided in support of this work.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to establish systematic procedures to obtain and document contractors' receipt of secondary repair item shipments in the Army's inventory management systems, and to follow up on unconfirmed receipts within 45 days of shipment.
Closed – Not Implemented
The Army cited actions it intends to take to implement this recommendation; however, actions are not expected to be instituted until 2011.
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to institute policies, consistent with DOD regulations, for obtaining and documenting contractors' receipt of government-furnished materiel shipments in the Army's inventory management systems.
Closed – Not Implemented
The Army cited actions it intends to take to implement this recommendation; however, actions are not expected to be instituted until 2011.
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to provide quarterly status reports of all shipments of Army government-furnished materiel to the Defense Contract Management Agency, in compliance with DOD regulations.
Closed – Implemented
Recommendation closed as implemented based on interim Army guidance to issue quarterly status report to the Defense Contract Management Agency.
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to examine the feasibility of implementing DOD guidance for providing advance notification to contractors at the time of shipment and, if warranted, establish appropriate policies and procedures for implementation.
Closed – Implemented
Recommendation closed as implemented due to actions taken to examine the feasibility of implementing DOD guidance and the Army's subsequent efforts to include this functionality in its centralized contractor receipt system.
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to analyze receipt records for secondary repair items shipped to contractors and take actions necessary to update and adjust inventory management data prior to transfer to the Logistics Modernization Program. These actions should include investigating and resolving shipments that lack matching receipts to determine their status.
Closed – Implemented
Recommendation closed as implemented based on ongoing data cleansing efforts and Army's plans to continue doing so until all sites are using LMP.
Department of Defense To improve accountability of inventory shipped to Army repair contractors, the Secretary of Defense should direct the Secretary of the Army to instruct the Commanding General, Army Materiel Command, to to ensure consistent implementation of any new procedures arising from the recommendations in this report, provide periodic training to appropriate inventory control point personnel and provide clarifying guidance concerning these new procedures to the command's repair contractors.
Closed – Not Implemented
The Army cited actions it intends to take to implement this recommendation; however, actions are not expected to be instituted until 2011.

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Topics

AccountabilityDepartment of Defense contractorsInternal controlsInventory controlInventory control systemsMilitary inventoriesMilitary materielRecordsRecords managementSurveysRepair contractsMilitary policies