Defense Inventory:

Shortcomings in Requirements Determination Processes

NSIAD-91-176: Published: May 10, 1991. Publicly Released: May 12, 1991.

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Pursuant to a congressional request, GAO summarized deficiencies in the Department of Defense's (DOD) inventory requirements determination processes for secondary items.

GAO found that the DOD inventory requirements determination process had such serious problems as: (1) inaccurate or unsupported data leading to misstated inventory requirements; (2) management overrides of computational models without sufficient rationale; (3) inadequate consideration of an item's essentiality when ordering spare parts; (4) item managers' failure to cancel unnecessary or excess on-order material; and (5) ineffective management controls. GAO also found that: (1) fundamental shortcomings in DOD management control systems have resulted in continued excess inventory growth; (2) inventory growth of secondary items can be attributed to the introduction of new weapons systems, modernization of current systems, and overall increased support levels; (3) overstated inventory requirements can result in the maintenance of too much inventory; and (4) the primary objective of the requirements determination process is providing the needed parts to the right location in the most timely and cost-efficient manner possible.