Less Costly Ways To Budget and Provision Spares for New Weapon Systems Should Be Used

PLRD-81-60: Published: Sep 9, 1981. Publicly Released: Sep 9, 1981.

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GAO reviewed the budgeting and provisioning procedures employed by the Army, Navy, and Air Force for spare parts for new weapon systems. GAO initiated the review of spare provisioning for new aircraft and helicopters in response to: (1) congressional concern about the low readiness rates of new aircraft being deployed because of a lack of spare parts; (2) previous GAO reviews which discussed both the excesses and shortages of aircraft spares; and (3) broad congressional interest in reducing the life cycle costs of major weapon systems.

While funding for the investment spares needed to initially support new aircraft and helicopters being fielded is requested by the weapon system, the majority of investment spares needed to support follow-on buys are consolidated and requested as replenishment spares. This split budgeting for similar items does not give Congress the visibility it should have on total aircraft or helicopter system costs. When the delivery time for a part is long, a contractor can order it in advance so that it will be available for the production line. However, Department of Defense (DOD) policy greatly inhibits the services from advance ordering the same part when it is to be used as a spare. Combined purchasing offers large potential savings from economies of scale, ensures that spares are delivered in the same configuration as those on the aircraft to be supported, and improves early support of new systems. The services buy spares based on engineering estimates. However, the underlying reason behind the amount purchased appears to be the amount of money available. While there may have been sound management reasons for the stock levels, the services need to better justify the stock levels to be used. In addition, the services need to comply with DOD policy to minimize the investment cost of initial spares. Advantages of high stock levels, in terms of increased support or possibly reduced costs, should be better justified, recognizing the potential consequences. The services could also reduce the range of spares by using phased provisioning more often, a technique that DOD encourages.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should review and revise DOD guidance on using operational demand data to: (1) clarify language that could result in differing interpretations; and (2) require that the services establish demand development periods as early as possible and start using operational demand data after 6 months to adjust requirements computations.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should redefine, for budget purposes, initial spares to include all spares needed to field a weapon system and provide a breakdown of the initial spares budget request in more descriptive categories, such as "investment spares" (peacetime and war reserve shown separately) and "spare engines."

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require that the services better justify how their levels of initial provisioning of spares meet DOD policy on minimizing initial investment costs.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should direct that other systems be evaluated for potential use of the combined purchasing concept and request the money needed to use the concept.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should amend the DOD policy on the use of advanced funding and allow its use for spare parts to take advantage of combined purchases of spare parts with production components.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should direct the services to use the phased provisioning concept as was recommended by the Defense Audit Service.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should, in submitting budget requests for major weapon systems, show total spare needs by weapon system.

    Agency Affected: Department of Defense

 

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