Excessive Air Force Inventories Result From Duplicative Spare Parts Requirements

NSIAD-85-7: Published: Oct 25, 1984. Publicly Released: Oct 25, 1984.

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GAO reviewed the operations of five Air Force logistics centers which support Air Force weapons systems to assess the validity of the factors used to compute maintenance needs and to determine how these needs are included in Air-Force-wide requirements.

GAO found that the programming logic used to compute Air-Force-wide requirements resulted in some maintenance requirements' being counted twice. All maintenance requirements are included in Air-Force-wide forecasts of usage. Through the computer logic some of the same requirements, in the form of a depot supply level, are added to compute a systemwide reorder point. Consumable parts are purchased when established reorder levels are reached, and duplicating requirements causes reorder points to be reached prematurely. GAO determined, through analysis of computer tapes, that the Air Force was investing about $119 million in unnecessary inventory. It costs about $21.5 million annually to maintain this inventory. As a result of this finding, the air logistics centers took action to reduce requirements by $3.6 million, resulting in a yearly savings of $612,000 in holding costs. However, elimination of excesses of about $115.4 million will require action at the headquarters level or above. GAO also found that depot supply levels were overstated due to: (1) inflated order and shipping time; (2) unwarranted safety levels; and (3) invalid backorders.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Defense (DOD) position on the first part of the recommendation was nonconcur. DOD plans no action on this portion of the recommendation. GAO is continuing to attempt to bring about implementation. A follow-up letter to the DOD response was sent on June 11, 1985.

    Recommendation: The Secretary of the Air Force should direct the Commander of the Air Force Logistics Command to take the following actions to ensure that inventory investment is limited to the level needed to support mission requirements: (1) correct the logic in the interface of the D033 and D062 systems to prevent the duplication of depot requirements; and (2) reduce the overstated inventories by excluding atypical data which unduly impact order and shipping time quantities from actual time required to allocate assets from one depot account to another, eliminating unwarranted safety levels in estimating depot supply level requirements, and eliminating the practice of using backorders to document rob-back actions.

    Agency Affected: Department of Defense: Department of the Air Force

 

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