Navy Supply:

Improved Backorder Management Will Reduce Material Costs

NSIAD-93-131: Published: Mar 19, 1993. Publicly Released: Mar 19, 1993.

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GAO reviewed the Navy's management of its backorder validation program, focusing on: (1) the adequacy of the validation practices for detecting invalid backorders; and (2) the Navy's exemption of certain categories of backorders from periodic validation.

GAO found that: (1) the Navy failed to identify and cancel a large number of invalid backorders during the required quarterly validation process because some field groups did not follow required validation procedures; (2) field groups that followed procedures had no invalid backorders; (3) some field personnel were not aware of the validation procedures, did not review backorders to determine if on-order quantities exceeded the stock, or verify the need for backordered equipment; (4) some field groups have established additional controls that go beyond the specified validation procedures; (5) invalid backorders resulted in unnecessary procurements and repairs, and excess inventories; (6) the Naval Supply Systems Command (NSSC) and inventory control officials did not make periodic field visits to monitor the backorder validation program; (7) the Navy exempted many materials from the validation program, which prevented the identification and cancellation of invalid backorders; and (8) about 29 percent of the exempt-stock backorders were invalid.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Chief of Naval Operations sent a message to field activities advising them of the GAO findings and reemphasizing compliance with the back order validation procedures. In addition, the Naval Supply Systems Command, in order to obtain field activity compliance with existing procedures, is requesting that validation procedures become a special interest item during command inspections.

    Recommendation: The Secretary of the Navy should direct the Commander, NSSC, to take steps to ensure that Navy field activities follow established backorder validation procedures.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: The Naval Supply Systems Command has completed a review of the exemptions and has removed all exemptions with the exception of foreign military sales. This exemption is required by DOD policy.

    Recommendation: The Secretary of the Navy should direct the Commander, NSSC, to rescind the exemptions from the backorder validation process and require that all backorders be periodically validated. Periodic visits to field activities should be one step to determine if they are following validation procedures.

    Agency Affected: Department of Defense: Department of the Navy

 

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