The Navy Can Increase Cancellations of Procurements for Unneeded Material
NSIAD-85-55
Published: Mar 22, 1985. Publicly Released: Mar 22, 1985.
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Highlights
GAO reviewed the Navy's procedures and practices for cancelling procurements of unneeded material to determine the controls established by the Naval Supply Systems Command (NAVSUP) for monitoring and evaluating the performance of the inventory control points.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSUP, to reconsider the reasonableness of the termination review threshold amounts and base the threshold amounts on a comparison of the administrative cost of cancelling procurements with the money to be saved by not purchasing unneeded material. |
Based on the Ship Parts Control Center's (SPCC) analyses, termination review thresholds have been reduced to zero on both purchase requests and contracts. At the Aviation Supply Office (ASO), termination thresholds have been reduced to $25 for both purchase requests and contracts.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSUP, to discontinue the routine use of added protection levels when making cancellation decisions. |
The Department of Defense (DOD) disagreed with this recommendation on the basis that added protection levels are required, cost-effective, and directly related to readiness. GAO believes that added protection levels are not needed. However, since DOD disagreed, further follow-up would be fruitless.
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| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSUP, to require that inventory managers review termination notices in a timely and objective manner and give consideration to making this requirement part of the inventory managers' performance evaluation. |
ASO implemented a mechanized system for identifying and following up on overdue termination recommendations. SPCC has not implemented a separate review program, but states that an existing mechanized system already provides the information needed to track termination requests.
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| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSUP, to direct that supervisors regularly review inventory manager decisions on termination notices. |
Termination recommendations at ASO are susceptible to a supervisory review similar to that required for procurement recommendations. At SPCC, all termination decisions for procurement requests over $25,000 and contracts over $50,000 must have supervisory approval.
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| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSUP, to establish controls for monitoring and evaluating inventory control point performance in cancelling procurements of unneeded material and obtain data on the value of unneeded material actually cancelled. |
On March 6, 1986, the Navy implemented an automated termination tracking system at SPCC that identifies termination recommendations acted upon by item managers and open recommendations requiring follow-up actions. The Navy implemented a mechanized system at ASO earlier. Operational and procedural instructions have been issued.
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Topics
Cost analysisInventory control systemsNaval procurementProcurement cancellationProperty and supply managementInventory controlMilitary forcesGovernment procurementProcurementInventory