Continued Improvements Needed in Air Force Procedures and Practices

PLRD-83-36: Published: Feb 7, 1983. Publicly Released: Feb 7, 1983.

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GAO completed a follow-up review of the effectiveness of actions taken by the Air Force to improve its procedures and practices for identifying and cancelling excess on-order stocks of system support stock fund items.

In response to an earlier GAO report, the Air Force made a policy change which increased the potential for cancelling excess on-order stocks by $39 million or more. A follow-up review showed that the Air Force can further correct identified weaknesses and increase its potential for cancellation of such stocks by $58 million or more. In computing requirements and termination levels for on-order stocks, the Air Force is still using excessive buffers of stock above item requirements. This practice precludes timely identification and cancellation of on-order stocks which exceed requirements. In addition, GAO found that the Air Force still does not have an effective system to monitor the performance of air logistics centers in cancelling excess on-order stocks. The Air Force could further increase its dollar potential for cancelling excess on-order stocks by excluding unfunded war reserve requirements from computation of termination levels for on-order stocks. Improvements in Air Force procedures and practices for maximum reduction of on-order stock excesses are especially appropriate now because of current and anticipated shortfalls in the Air Force's fiscal year 1982 and 1983 stock fund obligational authority.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Action was completed in September 1984 to eliminate the use of unfunded war reserve requirements in computing termination levels. Action on buffer stocks was not taken because DOD determined that it should raise the issue DOD-wide. The Inspector General (IG) is studying the services' and DLA termination practices and actions will be based on the results of a DOD/IG review.

    Recommendation: The Secretary of the Air Force should direct the Commander, Air Force Logistics Command (AFLC), to revise its on-order stock termination policy and D062 requirement computation system for system support stock fund items to provide for: (1) a 3-month reduction in the on-order stock termination level buffer for items with annual dollar demands of more than $500; (2) elimination of the 12-month stock buffer used to compute termination levels for items with annual dollar demands of $500 or less; and (3) elimination of the use of unfunded war reserve requirements in computing on-order termination levels for all items.

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

  2. Status: Closed - Implemented

    Comments: On April 14, 1983, AFLC initiated a system requiring its five air logistics centers to submit quarterly reports showing data on the extent to which termination notices were issued and cancellations and terminations had been effected. GAO followed up and found that cancellation and termination actions had increased significantly.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to require the air logistics centers to establish uniform information systems which will enable management to evaluate the performance of the centers in making maximum reductions in excess on-order stocks. At a minimum, the centers should develop and accumulate statistics showing the number of: (1) termination notices for on-order stocks on purchase requests and their value; (2) termination notices for on-order stocks on contract and their value; and (3) cancellations and terminations resulting from these notices and their value broken out by purchase request and by contract.

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

 

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