Better Methods for Validating and Reconciling Unfilled Materiel Orders Could Provide Substantial Economies to the Army

PLRD-82-76: Published: Jun 2, 1982. Publicly Released: Jun 2, 1982.

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GAO made this follow-up review to assess the effectiveness of actions taken by the Army to strengthen its policies, procedures, and practices for periodically validating and reconciling older, outstanding materiel orders.

GAO found that the Army continues to spend millions of dollars annually on unneeded materiel. GAO estimated that, on the basis of its sampling test, 65,000 invalid orders were on hand at Army wholesale supply sources, and the Army will spend $100 million over a 3-year period to fill invalid orders to fund inflated forecasted requirements for the related items. Invalid orders revealed to GAO validation checks included orders for parts to repair inoperable equipment which did not exist or had already been repaired, orders for the wrong item, duplicate orders, and orders for materiel for special projects that had been terminated. Additionally, GAO found that the Army procedures and practices for reconciling and validating materiel orders have not been effective in ensuring that an acceptable level of compatibility is sustained for related materiel order data shown on supply records kept at wholesale and retail supply levels. Significant imbalances of as much as 53 percent exist between the records of Army wholesalers and their customers relative to either the number of outstanding orders or the quantities on order. The Army problems in reconciling and validating older, outstanding materiel orders continue because prescribed policies and procedures are either inadequate or not being observed and because of inadequacies in automated logistics and systems.

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 direct the Secretary of the Army to revise the automated reconciliation process at the wholesale level so that intermediate supply activities' requisition follow-up responses to validation requests are accepted and acted on.

    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 direct the Secretary of the Army to revise the automated reconciliation process at the intermediate supply level to restrict quarterly reconciliations with wholesalers to open orders in a backorder status. The Army should also revise the automated process at this level to provide preparation of the appropriate follow-up document to notify wholesalers of action needed to correct open orders at the retail level which are not on record at the wholesale level.

    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 direct the Secretary of the Army to strengthen prescribed procedures by requiring that underlying causes of significant materiel order reconciliation discrepancies be investigated and corrected.

    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 the Army to establish, as a part of the proposed standard Army validation and reconciliation procedures, an information system which will enable local management and higher command levels to evaluate and monitor the effectiveness of customer performance in validating materiel orders.

    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 direct the Army to strengthen provisions of the proposed standard procedures applicable to cancellation of orders repeatedly not validated by customers, by requiring that the customers be notified in writing at the start of a validation cycle that their validation responses will be subject to independent sampling checks and that orders not validated will be canceled.

    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 Army to strengthen existing and proposed procedures and controls by requiring that customer validation responses of continuing need for ordered materiel be subjected to independent sampling accuracy checks and authenticated in writing by a higher command level.

    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 direct the Army to revise existing and proposed policy and procedures to expand time allowed for materiel validation checks and to restrict such checks to outstanding materiel orders meeting the Department of Defense's age criteria for validation.

    Agency Affected: Department of Defense

  8. 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 Army to establish and include in all pertinent Army regulations and technical manuals a uniform definition of materiel order validation and detailed guidance for conducting indepth validation checks. The Secretary should also require Army commands to establish and implement at the divisional and nondivisional user levels standard operating procedures for performing materiel order validation checks.

    Agency Affected: Department of Defense

  9. 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 Secretary of the Army to revise the automated system at the wholesale level to send on-line all requisition coded reject documents to intermediate supply levels.

    Agency Affected: Department of Defense

 

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