Army Inventory:

Army Annually Spends Millions to Keep Retention-Level Stocks

NSIAD-90-236: Published: Sep 11, 1990. Publicly Released: Sep 11, 1990.

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Pursuant to a congressional request, GAO provided information about the Army's retention of inventory in excess of its current operating and war reserve needs.

GAO found that: (1) the Army Aviation Systems Command, one of six national inventory control points (ICP), had retention-level inventory valued at about $1 billion, and retained many times the amount of inventory that was reasonably required to support end items; (2) 50 percent of the retention-level inventory was at least twice as large as needed; (3) item managers did not document the reasons for retaining contingency and numeric inventories, but instead accepted the retention levels determined by a computer program; (4) the large retention-level inventories were costly to store and manage, and reduced supply efficiency; (5) the Army has taken actions to reduce its retention-level inventory; (6) the lack of system documentation contributes to difficulty in fixing systemic problems; and (7) the database that item managers relied upon to make retention decisions included inaccurate data and lacked some necessary data.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army has developed guidance to assist the item managers in making these decisions. It has also provided training courses and developed advisory groups at each ICP to assist in determining how much and what should be retained. There is no reason to keep the recommendation open.

    Recommendation: The Secretary of the Army should direct the Commander, Army Materiel Command (AMC), to develop specific implementation guidance for item managers to use in determining what and how much inventory to retain, in accordance with the revised retention-level inventory policy.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: Actions are being taken to better document current system changes. Nothing can be done to correct past problems. Therefore, there is no reason to keep the recommendation open.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to ensure that, when computer programs used in making retention decisions are changed, the changes are better documented so that when systemic problems arise, fixes can be incorporated, and a historical trail is created for future reference.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: The Army eliminated the numeric retention category and has increased the number and amount of items sent to disposal. Item managers are now required to justify and document the reasons for retaining items over and above the economic retention level.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to modify the computer programs to classify inventory in excess of the economic retention level as potential excess stock unless the item manager can justify and document that the item is needed for some other purpose. As part of this process, item managers should: (1) ensure that the database is accurate and complete; and (2) determine whether the item should be retained or processed for disposal, in accordance with the implementation guidance issued as part of the revised retention policy.

    Agency Affected: Department of Defense: Department of the Army

 

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