Army Inventory:

A Single Supply System Would Enhance Inventory Management and Readiness

NSIAD-90-53: Published: Jan 25, 1990. Publicly Released: Jan 25, 1990.

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Richard Davis
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Pursuant to a congressional request, GAO assessed 13 Army retail-level activities' inventory management, focusing on the extent to which the activities identified and reported inventory excesses to the wholesale level for return to the supply system.

GAO found that: (1) the retail activities generally did not comply with Army regulations that they report excess inventory; (2) the 13 retail activities had $184 million in excess inventory of about 24,000 line items, and about $33 million in shortages of about 6,300 line items; (3) the wholesale system's lack of visibility and control of retail-level inventory resulted in both wholesale and retail activities' lack of awareness of other activities' excess inventory; (4) wholesale activities lacked authority to direct retail activities to distribute their excess inventory to retail activities with shortages; (5) the Army's inability to redistribute excess inventory adversely affected units' ability to maintain equipment in operable condition; (6) the wholesale activities had 6,116 outstanding high-priority requisitions that the 13 retail activities' excess inventory could address; (7) the 3 commands responsible for buying 23 percent of the inventory at the 13 retail activities had $66.9 million in ongoing procurement actions for 1,669 items that were in excess at the 13 retail activities; (8) Army efforts to address the excess inventory problems focused on increasing redistribution among retail activities within the same theater; and (9) the Army has not reported its long-standing, significant excess inventory issue as a material weakness in its annual report on internal controls.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army reported the accumulation of excess material as a material weakness in its latest FMFIA report.

    Recommendation: The Secretary of the Army should report the accumulation and retention of retail-level excesses as material weaknesses in the Army's next annual assessment of internal controls, as required by the Federal Managers' Financial Integrity Act (FMFIA).

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: Through a series of incremental steps, the Army plans to achieve a fully integrated supply system. While the process will not be completed until 1994, keeping the recommendation open until the process is completed serves no useful purpose.

    Recommendation: Because the retail-level activities are not complying with Army regulations that require that excess items be reported and returned to the wholesale-level supply system, the Secretary of the Army should establish a single supply system that provides the inventory supply system manager with systemwide asset visibility and the authority to redistribute excesses from locations where they are not needed to locations where they are.

    Agency Affected: Department of Defense: Department of the Army


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