Navy Supply:

Excess Inventory Held at the Naval Aviation Depots

NSIAD-92-216: Published: Jul 22, 1992. Publicly Released: Jul 22, 1992.

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Pursuant to a congressional request, GAO provided information on materiel management practices at the Naval Aviation Depots, focusing on depots': (1) efforts to minimize excess inventories; and (2) compliance with instructions prohibiting unrecorded inventory accumulation.

GAO found that: (1) from 1987 to 1991, depots maintained large excess materiel inventories totalling $138 million; (2) in 1991, $64 million in excess inventory was eliminated, but the remaining excess inventory totalled $40 million; (3) excess materiel is returned to the wholesale supply system, but $22 million was sent for disposal; (4) reasons for the accumulation of excess inventories include imprecise forecasting, equipment configuration changes, forecasting and ordering errors, untimely packaging and return of materiel to wholesale level or disposal, low value of unused parts, a lack of recoverable credit for unneeded parts, and undisciplined management practices; (5) Navy efforts to control excess inventories center upon extraordinary expense writeoffs and implementation of an automated system to limit ordering and increase managers' access to excess materiel; (6) unrecorded materiel that was ready to use totalled $3 million, and materiel that could have filled outstanding orders totalled $392,000; (7) unrecorded inventory weakens inventory management and internal controls, distorts demand and accounting data, and results in waste; and (8) unrecorded inventories continue despite instructions, memoranda, discussions, and unannounced inspections.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Naval Air Systems Command has issued guidance that requires periodic shop sweeps and the return of material to the supply stores. The Commander, NAVAIR, requires top management involvement in these shop sweeps. The guidance (NAVAIR 4400.5) was issued in March 1993.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Air Systems Command, to take steps to help ensure that unrecorded material is identified, returned to inventory control, and not permitted to accumulate. As one of these steps, the Commander should issue guidance requiring that top management at each depot make periodic spot checks for unrecorded inventory.

    Agency Affected: Department of Defense: Department of the Navy

 

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