Defense Inventory: Analysis of Consumption of Inventory Exceeding Current Operating Requirements Since September 30, 2001
GAO-04-689
Published: Aug 02, 2004. Publicly Released: Aug 02, 2004.
Skip to Highlights
Highlights
Since 1990, GAO has identified the Department of Defense's (DOD) inventory management as a highrisk area. Ineffective management practices--such as the use of inaccurate data, lack of inventory controls and visibility, and information system weaknesses--have contributed to high levels of inventory. DOD has reduced its inventory since 1990, from about $100 billion to about $67 billion as of September 30, 2002. However, at the start of Operation Enduring Freedom, about half of the inventory exceeded current operating requirements. GAO, under its statutory authority, analyzed the extent to which inventory that exceeded current operating requirements as of September 30, 2001, was consumed through cutoff dates ranging from March through October 2003 and identified three ineffective and inefficient inventory management practices.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To address the inventory management shortcomings that we identified, the Secretary of Defense should direct the military services and the Defense Logistics Agency to determine whether it would be beneficial to use the actual storage cost data provided by DLA in their computations, instead of using estimated storage costs, and include that data in their systems and models as appropriate. |
Closed – Implemented
DOD concurred with this recommendation. DOD stated that it would complete its review to determine if it were feasible to use this data instead of estimated storage costs in their computations. Review was to be completed by January 2005. In December 2005, DOD reported that the review was completed. The review concluded that (1) it was not feasible to update legacy systems to incorporate the actual storage cost data; and (2) as the military departments implement their modernized systems, they will work with DLA to include DLA storage cost data in their computations.
|
| Department of Defense | To address the inventory management shortcomings that we identified, the Secretary of Defense should direct the Secretary of the Air Force to establish and implement a systemwide process for correcting causes of inventory discrepancies between the inventory for which item managers are accountable and the inventory reported by bases and repair centers. |
Closed – Implemented
DOD concurred with this recommendation. Air Force organizations will work to resolve erroneous inventory discrepancies between retail and wholesale data systems. DOD also stated that the new logistics system (Expeditionary Combat Support System) being procured in the FY09-11 timeframe will eliminate discrepancies between wholesale and retail inventory systems. In the interim, DOD reported that the Air Force implemented in-transit reconciliations as an interim solution for items with high demand and those used at many locations. For items with high levels of contract repair, the Air Force implemented the Contractor Asset Visibility system as an interim solution. These solutions will remain in place until the new logistics system is in place.
|
| Department of Defense | To address the inventory management shortcomings that we identified, the Secretary of Defense should direct the Secretary of the Air Force to revise its policy to require item managers to code inventory so that the inventory is properly categorized. |
Closed – Implemented
DOD concurred with this recommendation. DOD stated that the Air Force, by September 2005, would report how it will ensure compliance with the existing policy. However, the existing policy, as stated, does not contain language that would require the use of codes that would properly categorize the inventory. In response, the Air Force issued a policy memo in June 2005 reiterating Air Force policy, as stated in AFMAN 23-110 Vol.3 Part 1, CH9 paras 9.49, 9.63, 9.64.2, and 9.64.3, and Attachment D-6 requiring that deferred disposal codes be used appropriately that and retention and disposal coding is done properly.
|
Full Report
Office of Public Affairs
Topics
Defense cost controlDefense economic analysisInventory controlInventory control systemsLogisticsMilitary inventoriesMilitary systems analysisProperty and supply managementSpare partsSurplus federal property