Defense Logistics:

Much of the Inventory Exceeds Current Needs

NSIAD-97-71: Published: Feb 28, 1997. Publicly Released: Feb 28, 1997.

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Pursuant to a congressional request, GAO analyzed the Department of Defense's (DOD) secondary inventory, focusing on the: (1) number of inventory items with inventory that was not needed to satisfy war reserve and current operating requirements and their dollar value, referred to as unneeded inventory; (2) reasons why DOD held 100 years or more of unneeded inventory for some items; and (3) reasons why DOD had 20 years or more of unneeded inventory on hand and had additional inventory on order.

GAO found that: (1) although DOD has made progress in reducing the value of its secondary inventory, GAO's analysis of inventory valued at $67 billion showed that $41.2 billion of the inventory was not needed; (2) the unneeded inventory represents many years of supply; (3) about $14.6 billion of the unneeded inventory did not have projected demands and will likely never be used; (4) of the $26.6 billion with projected demands, unneeded inventory valued at $1.1 billion represented 100 years or more of supply; (5) DOD representatives and supporting documents gave many reasons for having 100 years or more of unneeded inventory on hand; (6) officials cited changed requirements as a contributing factor for most items; (7) the requirement changes involved recurring or nonrecurring demands that decreased, fluctuated, or did not materialize, parts or the systems on which the parts were used were obsolete, and weapon system programs were being reduced; (8) other reasons included purchases to cover the expected life of weapon systems and adherence to minimum buy policies; (9) DOD representatives could not give reasons for 24 percent of the 328 items reviewed because necessary supporting records were not available or the representatives had recently assumed responsibility for the items and were not sufficiently familiar with their histories; (10) Army, Navy, and Air Force records indicated that unneeded inventory items valued at $28.4 million had 20 years or more of inventory on hand and another $11.3 million of inventory on order; (11) however, because the records for almost 40 percent of the reviewed items were in error (generally on-order quantities had been delivered but not recorded), these items, in fact, did not have additional stock on order; and (12) in cases where inventory was actually on order, the reasons included requirement changes, buys to cover the life of weapon systems, and adherence to minimum buy policies.

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