Military Logistics:

Buying Spares Too Early Increases Air Force Costs and Budget Outlays

NSIAD-86-149: Published: Aug 1, 1986. Publicly Released: Aug 1, 1986.

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GAO reviewed the Air Force's practices for purchasing recoverable aircraft spare parts to determine whether it was buying them at the appropriate time.

GAO found that: (1) two of the five air logistics centers regularly bought recoverable spares up to 14 months earlier than necessary; (2) the two centers prematurely invested about $374.5 million in spare parts inventories in 1984, increasing their inventory holding costs by about $52.2 million; (3) approximately $125.4 million of the total amount the centers invested prematurely represented purchases made more than 1 year too early; and (4) the Air Force could have deferred requests for the two fund appropriations for 1 year. GAO also found that elimination of the practice of early procurement would result in significant reductions in inventory holding costs and deferrals in procurement outlays and budget requests.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: GAO and the Department of Defense (DOD) have reached an impasse. Further action is dependent on the House Appropriations Committee, Subcommittee on Defense.

    Recommendation: The Secretary of the Air Force should direct the Commander, Air Force Logistics Command (AFLC), in providing annual buy guidelines to the air logistics centers, to require compliance with the current AFLC Regulation 57-4.

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

  2. Status: Closed - Not Implemented

    Comments: GAO and DOD have reached an impasse. Further action is dependent on the House Appropriations Committee, Subcommittee on Defense.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to review the five air logistics centers' in-process recoverable spares purchases and: (1) identify those initiated earlier than necessary; (2) cancel or defer premature purchase requests so that the material will be received when the recoverable-consumption item requirements computation system indicates it will be needed; (3) defer, if economically feasible, delivery of material on contract, to preclude its being received before it is needed; and (4) report the extent and value of these cancellations and deferrals to him for consideration in compiling future budget requests.

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

  3. Status: Closed - Not Implemented

    Comments: GAO and DOD have reached an impasse. Further action is dependent on the House Appropriations Committee, Subcommittee on Defense.

    Recommendation: The Secretary of the Air Force should ensure that future requests for appropriations reflect the deferral or avoidance of outlays that will result from discontinuing the present early procurement practice.

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

 

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