Navy Supply:

Questionable Decisions Increased Initial Spares Costs for AV-8B Aircraft

NSIAD-89-103: Published: Mar 2, 1989. Publicly Released: Mar 2, 1989.

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Martin M. Ferber
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In response to a congressional request, GAO reviewed the Navy's initial provisioning policies and practices for the AV-8B aircraft program, focusing on whether the Navy: (1) complied with Department of Defense (DOD) guidelines for ordering the aircraft's initial spare parts; and (2) purchased the amount of aviation materials that it required.

GAO found that: (1) the Navy spent about $203,000 for parts the aircraft would not require during initial service; (2) the Navy's Aviation Supply Office (ASO) failed to follow DOD directives regarding comparative analysis when it placed initial orders for aircraft spare parts; (3) although the ASO mathematical approach followed the DOD guidelines, it authorized purchases for all types of spare parts without considering the outcome of its requirements calculations; (4) ASO had spare parts in excess of its current needs because of its minimum-buy policy, its failure to consider prior orders, and its adherence to contractor-imposed minimum order requirements; and (5) ASO lacked internal control mechanisms to correct inadvertent errors or omissions and contract processing problems.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Navy resystemization is being developed to modernize computer programs at inventory control points in four phases extending until October 1994. The recommended actions will be incorporated as the automated capabilities evolve.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command, to ensure that ASO and other supply organizations comply with the DOD policy on minimizing initial provisioning costs. Specifically, the Commander should take steps to ensure that: (1) appropriate mechanisms are established to assure upper-level management that policies are being followed or, if not, why not; (2) only the number of spares calculated as needed by the requirements formula are ordered unless it can be shown that special circumstances justify larger quantities; (3) spares already on hand and on order are considered in determining current order quantities; (4) efforts are made to reduce or eliminate contractor minimum order requirements to the extent possible; and (5) consideration is given to whether an item is essential to the mission capability of a weapon system prior to ordering currently needed spare parts.

    Agency Affected: Department of Defense: Department of the Navy


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