Defense Logistics:

Requirement Determinations for Aviation Spare Parts Need to Be Improved

NSIAD-96-70: Published: Mar 19, 1996. Publicly Released: Mar 19, 1996.

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GAO reviewed the Air Force's and Navy's policies and procedures for procuring aviation spare parts, focusing on whether their requirements and budgets reflect the amounts they actually need.

GAO found that: (1) the Air Force and Navy budgeted $132 million more than needed for aviation spare parts because they used questionable policies to determine their requirements and assign accountability for depot maintenance assets; (2) the Air Force did not include $72 million of its on-hand assets in preparing its fiscal year (FY) 1996 budget request; (3) the Navy twice counted $60 million in depot maintenance requirements when preparing its FY 1997 budget request; (4) Air Force and Navy computation errors were a result of unsupported and incorrect maintenance replacement rates, demand rates, planned program requirements, repair costs, lead times, due-out quantities, and asset quantities on hand and on order; and (5) errors found in the sample items reviewed totalled $35 million and resulted in some requirements being overstated by as much as $25 million and some being understated by $10 million.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD did not agree that procedures related to reserving on-hand assets for depot maintenance resulted in overstated requirements and does not plan any corrective action. GAO disagrees with the DOD position because wholesale requirements include depot maintenance needs that are based on past recurring demands. GAO believes it would be reasonable inventory management and would save money to use reserved assets to offset wholesale requirements when making procurement decisions.

    Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to revise buy and budget requirement computation policies and procedures to require that on-hand assets reserved for depot maintenance needs be considered in periodic requirement and annual budget computations.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The budget requirements review process established at the Air Logistics Center level and further review by the Air Force Materiel Command places greater emphasis on requirements at all management levels. The review process will be documented in the budget review manual.

    Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to strengthen management oversight procedures and internal controls to ensure that the key elements (such as on-hand and due-out quantities and lead times) of requirement and budget computations are accurate.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD did not agree that buy and budget computations result in overstated depot maintenance requirements and does not plan any corrective action. GAO believes that DOD is wrong because some of the depot demands to satisfy depot maintenance needs are included once as recurring demands based on past usage, and again as nonrecurring demands to meet planned program requirements.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to revise policies and procedures for buy and budget requirement computations to eliminate duplication of depot maintenance requirements.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: The Navy implemented an automated system to improve data element validation. The system (called IM Toolkit) provides an online checkoff list of key data elements for the item manager to validate when making decisions on requirements execution and budget development.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to strengthen management oversight procedures and internal controls to ensure that key elements of requirement and budget computations are accurate.

    Agency Affected: Department of Defense

 

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