Army Logistics:

Better Management of the Army's Unserviceable Inventories Could Save Millions

NSIAD-91-23: Published: Nov 30, 1990. Publicly Released: Dec 7, 1990.

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Pursuant to a congressional request, GAO examined the Army's plans for using its unserviceable asset inventories.

GAO found that: (1) at three Army inventory control points, item managers initiated purchases for new assets without considering the potential for repairing unserviceable items in storage; (2) the Army could have repaired between 167 and 285 of the 815 items the inventory control points procured for less than the cost of purchasing new assets; (3) those item repairs could have saved $21.1 million to $35.9 million and enhanced readiness by making the assets available sooner; (4) the Army's emphasis on high stock availability and funding plans contributed to buying instead of repairing items; (5) the Army continued to store 27 percent of irreparable and consumable assets that it could dispose of; (6) of 140 sampled stored items, 30 unserviceable assets valued at $485,391 were beyond economic repair; (7) the inventory control points retained unneeded materiel, since current retention policies allowed item managers to keep any item and disposal actions were low priority; and (8) although issues involving unserviceable assets were reported before, the Army's internal controls were not effective in ensuring the implementation of corrective actions.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army has integrated the Missile Command's procedures for identifying and disposing unneeded assets into its Commodity Command Standard System.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to, if the Missile Command program to identify candidates for disposal proves unacceptable, develop an effective automated procedure for use Army-wide that will identify and initiate the disposal of assets that the Army does not plan to repair.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: AMC provided its buying commands its latest disposal policy in June 1991. It emphasized disposal of unserviceable field-level reparable stocks on wholesale records that do not have scheduled repair programs. In October 1991, AMC gave DESCOM depots permission to dispose of items which "wash out" during depot maintenance without asking for permission from the item manager.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to clarify to item managers that existing regulations allow them to dispose of items the Army: (1) has determined to be uneconomical to repair; or (2) does not plan to include in a repair program.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: AMC has instructed the other inventory control points in October 1990 to implement the MICOM-developed program. GAO will obtain data on the results of this program and, if warranted, prepare an accomplishment report.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to evaluate the program developed by the Army's Missile Command to match assets due in from procurement with on-hand unserviceable assets and determine whether the other inventory control points should be using it.

    Agency Affected: Department of Defense: Department of the Army

  4. Status: Closed - Implemented

    Comments: AMC reviewed the management of unserviceable assets at four buying commands after the GAO audit had started, and emphasized the need, during its on-site visits, to follow Army policy in repair versus buy decisions.

    Recommendation: The Secretary of the Army should direct the Commander, Army Materiel Command (AMC), to establish a means to monitor the inventory control points' compliance with Army policy and regulations that require unserviceable assets to be repaired when it is more economical than purchasing new ones.

    Agency Affected: Department of Defense: Department of the Army

  5. Status: Closed - Implemented

    Comments: AMC indicated that it will evaluate planned corrective actions during visits to the buying commands. The evaluations are to be conducted on an "as needed" basis.

    Recommendation: The Secretary of the Army should direct the Commander, AMC, to regularly follow up on planned corrective actions that have responded to audit findings and recommendations to ensure that the actions have been successfully implemented.

    Agency Affected: Department of Defense: Department of the Army

 

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