Air Force Uses Inaccurate Production Leadtime To Compute Spare Parts Requirements

PLRD-83-85: Published: Jun 16, 1983. Publicly Released: Jun 16, 1983.

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GAO analyzed a random sample of items being managed at two Air Force logistics centers to determine whether the Air Force is using current and accurate production leadtimes to compute requirements for consumable items and whether long leadtimes can be reduced.

GAO found that the two logistics centers have overstated their requirements for many consumable parts by an estimated $137.5 million and have understated requirements for others by about $12 million. In addition, they were unnecessarily stocking an estimated $16.7 million worth of parts with annual holding costs of $2.9 million. GAO believes that the primary reason for invalid requirements determinations are the use of outdated leadtime data in computing the requirements. The centers are not using up-to-date leadtimes because: (1) regulations do not require them to periodically obtain timely leadtime data from contractors; and (2) management practices encourage the use of long leadtimes as a buffer to avoid shortages. Although the centers recognize that long leadtimes can result in additional inventory investment and readiness problems, only limited efforts have been made to reduce leadtimes. Furthermore, GAO found that several contractors provided the Air Force with inaccurate data by: (1) including in their proposed leadtimes inappropriate standards and contingency factors; and (2) not recognizing that many raw materials were already on hand or on order. GAO does not believe that the Air Force has made sufficient use of government representatives who are familiar with contractor operations and conditions which affect production leadtimes.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit sample. DOD issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to require the air logistics centers to coordinate with Air Force plant representatives and Defense Contract Administration Services Management area offices in working with contractors to reduce long production leadtimes in the requirements computation when possible.

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

  2. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit sample. DOD issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to require the air logistics centers to work more closely with contractors to identify and resolve conditions, such as contingency factors and administrative leadtime standards, that result in excessive leadtimes being used in requirements computations.

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

  3. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit report. DOD issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to implement improved procedures and controls to ensure that appropriate production leadtimes are maintained at the air logistics centers. Such procedures and controls should ensure that center personnel frequently and periodically obtain and use leadtime updates from contractors on items with long production leadtimes and high annual demands.

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

  4. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit sample. DOD issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to implement improved procedures and controls to ensure that appropriate production leadtimes are maintained at the air logistics centers. Such procedures and controls should ensure that center personnel stress the importance of up-to-date and accurate leadtimes and monitor logistics center progress in correcting outdated and inaccurate data.

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

  5. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit sample. The Department of Defense (DOD) issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander of the Air Force Logistics Command (AFLC) to implement improved procedures and controls to ensure that appropriate production leadtimes are maintained at the air logistics centers. Such procedures and controls should ensure that center personnel limit the use of historical data to forecast leadtimes for items when current updates cannot be obtained from contractors.

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

  6. Status: Closed - Implemented

    Comments: The Air Force took corrective action on specific spares items included in the GAO audit sample. DOD issued DOD Instruction 4140.55 implementing standard policy for all military services to address this recommendation.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to require the air logistics centers to accept advance deliveries only when advantageous to the Air Force.

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

 

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