Defense Logistics Agency Could Better Identify and Cancel Unneeded On-Order Material

NSIAD-84-42: Published: Jan 10, 1984. Publicly Released: Jan 10, 1984.

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GAO reviewed the Defense Logistics Agency's (DLA) procedures and practices for identifying and cancelling unneeded on-order material.

GAO found that DLA supply centers do not effectively identify and cancel such material, and management practices contribute to unnecessary procurement costs and inventory investment. To achieve better use of stock fund resources, GAO concluded that DLA needs to: (1) establish internal management controls; and (2) modify its procedures and practices for the identification and cancellation of excessive on-order material.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DLA developed and implemented a mechanized output control over item in a potentially over procured status. Provisions have been made for mechanized recording of action taken and automatic follow up for nonresponse.

    Recommendation: The Director, DLA, should direct the centers to establish controls for monitoring and evaluating item manager performance in cancelling unneeded on-order material. As a minimum, such controls should ensure that supervisors routinely review item manager decisions on cancellation notices.

    Agency Affected: Department of Defense: Defense Logistics Agency

  2. Status: Closed - Implemented

    Comments: DLA developed and implemented revised specifications for inclusion in the SAMMS system, which considers all due-in computing potential cancellations of on-order quantities.

    Recommendation: The Director, DLA, should revise the program for computing system due-in review levels to consider all types of dues-in from procurement equally unless it has been absolutely determined that they are invalid.

    Agency Affected: Department of Defense: Defense Logistics Agency

  3. Status: Closed - Implemented

    Comments: DLA implemented an existing policy change which modifies criteria used in determining cancellation notices.

    Recommendation: The Director, DLA, should revise the program for computing system due-in review levels to limit the amount of buffer stocks included in the determination of cancellation levels. One way this can be done is to adjust the procurement cycle percentage in relation to the length of the procurement cycle.

    Agency Affected: Department of Defense: Defense Logistics Agency

 

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