Defense Inventory:

Defense Logistics Agency's Materiel Returns Program

NSIAD-90-58: Published: Mar 14, 1990. Publicly Released: Apr 16, 1990.

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Pursuant to a congressional request, GAO examined the Defense Logistics Agency (DLA): (1) materiel returns program and its impact on inventory growth; and (2) efforts to reduce excess and returns.

GAO found that for fiscal years 1981 through 1988: (1) DLA customer returns totalled $3.1 billion and averaged about 8.5 percent of its sales; (2) DLA total inventory increased 184 percent from $3.1 billion to $8.8 billion; (3) stocks excess to current operations and war reserve needs increased from $1 billion to $3.5 billion; (4) it could not determine the amount of DLA inventory growth caused by materiel returns, due to the high number of transactions and the lack of data; and (5) DLA and the military services implemented initiatives to avoid excess materiel, reduce returns, and improve the internal redistribution procedures.

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