Procedures and Practices Used by Army and Navy Inventory Managers and Their Shipping Activities To Respond to Requests for Cancellation of Requisitions for Materiel

LCD-77-201: Published: Feb 17, 1977. Publicly Released: Feb 17, 1977.

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The Navy, having responded to earlier GAO recommendations, has implemented an automatic data processing system which has saved an estimated $44 million in procurement and transportation costs between July 1974 and March 1976 by identifying and cancelling unfilled orders for materiel which the requisitioners no longer needed.

Unlike the Navy system, the Army's automated logistic systems only provide for demand removal on the basis of confirmed requisition cancellations. The Army could benefit by adopting the Navy's system for automatic removal of invalid demands. Army and Navy inventory control points are required to cancel direct delivery back orders if procurement action has not been started when the request is cancelled, but action should be taken only for cancellation of materiel valued at more than $50 if procurement has been started. This practice has not been followed. The cancellation of requisitions has not been quickly processed and has cost millions of dollars. Many unnecessary procurements and shipments have occurred because of weakness in the system. The Navy's controls are inadequate to prevent duplicate filling of direct delivery of back orders.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Army should provide for automated removal of invalid recurring past demands from requirement computation databases; require monthly use of special detection programs for unprocessed cancellation requests and prompt action on unprocessed cancellation requests; and require compliance with the Department of Defense criteria for cancellation of procurement or diversion of shipment. The Navy should establish automated controls to prevent duplicate filling of back orders. Uniform time standards and management controls for processing cancellation requests similar to the standards for processing requisitions should be established.

    Agency Affected:


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