Defense Inventory:

Inadequate Controls Over Air Force Suspended Stocks

NSIAD-98-29: Published: Dec 22, 1997. Publicly Released: Dec 22, 1997.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) secondary inventory management, focusing on the: (1) reported quantity and value of suspended inventory; (2) weaknesses in managing suspended inventory and their potential effect on logistics support costs and readiness; and (3) reasons why suspended inventory is not well managed.

GAO noted that: (1) significant management weaknesses exist in the Air Force's management of inventory that it categorizes as suspended; (2) as a result, the Air Force is vulnerable to incurring unnecessary repair and storage costs and avoidable unit readiness problems; (3) this situation exists largely because management controls are not being implemented effectively or are nonexistent; (4) among DOD components, the Air Force reported the largest amount of suspended inventory--more than 70 percent of the $3.3 billion of all DOD suspended inventory; (5) in April 1997, the Air Force had 403,505 secondary items, valued at $2.4 billion, in a suspended status; (6) the Warner Robins Air Logistics Center (ALC) had the highest reported value of suspended inventory, accounting for about $1.3 billion (53 percent) of the Air Force's suspended inventory; (7) the vast majority of the suspended items reviewed are not being reviewed in a timely manner; (8) of the 1,820 suspended items reviewed with established standards, 97 percent failed to meet these standards; (9) about 64 percent of the inventory reviewed had been in a suspended category for over 1 year, and some had been suspended for over 6 years; (10) delays in determining the usability of suspended inventory can result in increased logistics support costs and readiness problems; (11) Warner Robins had over 2,000 unfilled customer demands (valued at about $53 million) while similar items were in suspension; (12) over 500 of these unfilled demands (valued at about $7 million) could have potentially been filled with these items; (13) two B-52H aircraft had not been fully operational for 175 days and 24 days because two $16,000 data entry keyboards were not available for issue in the Air Force supply system, yet two such keyboards had been maintained in a suspended status for two years; (14) management controls at Warner Robins over items categorized as suspended inventory have broken down and contributed to inventory being in a suspended status beyond established timeframes; (15) Air Force Materiel Command guidance does not comply with DOD policy and safeguard against lengthy suspensions, and Materiel Command and Warner Robins oversight of inventory management has generally been nonexistent; (16) Warner Robins lacks clearly defined suspended inventory management procedures for, and sufficient emphasis on, controlling suspended inventory; and (17) further, management of suspended inventory has not been identified in Air Force assessments of internal controls as a significant weakness, as provided in the Federal Managers' Financial Integrity Act of 1982.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Air Force provided revised policy guidance for suspended condition-coded material. Interim Change 99-1 to AFMAN 23-110, USAF Supply Manual, has gone out to those at Air Force Air Logistics Centers (ALCs) who have responsibilities associated with suspended condition-coded material. This interim policy will be posted to the web first as an interim change and later incorporated into AFMAN 23-110 online at http://afpubs.hq.af.mil, no later than January 1, 2000. The Air Force has also tasked the Air Logistics Centers to produce metrics for submission in accordance with Federal Managers' Financial Integrity Act (FMFIA) policy to include monthly reviews and quarterly reporting through HQ AFMC/LGIA to HQ USAF/ILSP.

    Recommendation: To improve the management of suspended items, the Secretary of Defense should direct the Secretary of the Air Force to ensure that, at Warner Robins: (1) suspended inventory is properly identified, monitored, inspected, and classified within established DOD timeframes; and (2) suspended items receive adequate visibility at all management levels, up to and including the service headquarters, through targeting suspended inventory problems as an issue for review in the Federal Managers' Financial Integrity Act assessments.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: Headquarters, Air Force Materiel Command/LGI has revised policy guidance for suspended condition coded material. Interim Change 99-1 to Air Force Manual 23-110, USAF Supply Manual was posted on the Headquarters, Air Force Material Command's D035 System website home page on February 4, 2000. Air Force Manual 23-110, Volume III, Part Three, Chapter 2 was submitted for major commend coordination on February 25, 2000. The changes should be reflected in the October 2000 CD release of Air Force Manual 23-110.

    Recommendation: The Secretary of the Air Force should direct Warner Robins ALC to establish explicit guidance on responsibility and accountability for resolving suspended inventory status, carry out necessary actions, and follow up to make sure that the actions have been promptly and correctly taken.

    Agency Affected: Department of Defense: Department of the Air Force

  3. Status: Closed - Implemented

    Comments: Recommendations in the report specifically addressed the Warner Robins Air Logistics Center only. However, in implementing those recommendations, the Air Force will consider all four of its Air Logistics Centers.

    Recommendation: The Secretary of the Air Force should conduct assessments of suspended inventory practices at the four other ALCs to determine the need for similar remedial actions and direct any affected ALC to take such actions.

    Agency Affected: Department of Defense: Department of the Air Force

 

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