Defense Inventory: Navy Needs to Improve the Management Over Government-Furnished Material Shipped to Its Repair Contractors
Highlights
GAO has reported in a number of products that the lack of control over inventory shipments increases vulnerability to undetected loss or theft and substantially increases the risk that million of dollars can be spent unnecessarily. This report evaluates the Navy's and its repair contractors' adherence to Department of Defense (DOD) and Navy inventory management control procedures for government-furnished material shipped to Navy repair contractors. Government-furnished material includes assemblies, parts, and other items that are provided to contractors to support repairs, alterations, and modifications. Generally, this material is incorporated into or attached onto deliverable end items, such as aircraft, or consumed or expended in performing a contract.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve the control of government-furnished material shipped to Navy repair contractors, the Secretary of Defense should direct the Secretary of the Navy to instruct the Commander, Naval Inventory Control Point, to require Navy repair contractors to acknowledge receipt of material that is received from the Navy's supply system as prescribed by DOD procedure. |
The Navy has added new functionality to its Commercial Asset Visibility (CAV) II system that enables a repair contractor to acknowledge receipt of government-furnished material. This enhancement was added as part of version 6.0 for the CAV II system that was released in 2006. The Navy also updated its CAV statement of work in 2007. This updated statement of work will be incorporated into all new contracts that have CAV reporting requirements.
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| Department of Defense | To improve the control of government-furnished material shipped to Navy repair contractors, the Secretary of Defense should direct the Secretary of the Navy to instruct the Commander, Naval Inventory Control Point, to follow up on unconfirmed material receipts within the 45 days as prescribed in the DOD internal control procedures to ensure that the Naval Inventory Control Point can reconcile material shipped to and received by its repair contractors. |
The Navy stated that while it could already generate follow-up actions through an existing application, implementation of this recommendation for government-furnished material required program enhancements to its Commercial Asset Visibility (CAV) II system. These CAV II enhancements were made in 2006, and the Navy reported in 2007, that it was now able to reconcile material shipped to and received by repair contractors for government-furnished material.
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| Department of Defense | To improve the control of government-furnished material shipped to Navy repair contractors, the Secretary of Defense should direct the Secretary of the Navy to instruct the Commander, Naval Inventory Control Point, to implement procedures to ensure that quarterly reports of all shipments of government-furnished material to Navy repair contractors are generated and distributed to the Defense Contract Management Agency. |
The Navy stated that, as of May 2005, quarterly reports are being produced for each DCMA office that include all government-furnished material shipped to contractors.
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