Less Costly Ways To Budget and Provision Spares for New Weapon Systems Should Be Used

GAO reviewed the budgeting and provisioning procedures employed by the Army, Navy, and Air Force for spare parts for new weapon systems. GAO initiated the review of spare provisioning for new aircraft and helicopters in response to: (1) congressional concern about the low readiness rates of new aircraft being deployed because of a lack of spare parts; (2) previous GAO reviews which discussed both the excesses and shortages of aircraft spares; and (3) broad congressional interest in reducing the life cycle costs of major weapon systems.

While funding for the investment spares needed to initially support new aircraft and helicopters being fielded is requested by the weapon system, the majority of investment spares needed to support follow-on buys are consolidated and requested as replenishment spares. This split budgeting for similar items does not give Congress the visibility it should have on total aircraft or helicopter system costs. When the delivery time for a part is long, a contractor can order it in advance so that it will be available for the production line. However, Department of Defense (DOD) policy greatly inhibits the services from advance ordering the same part when it is to be used as a spare. Combined purchasing offers large potential savings from economies of scale, ensures that spares are delivered in the same configuration as those on the aircraft to be supported, and improves early support of new systems. The services buy spares based on engineering estimates. However, the underlying reason behind the amount purchased appears to be the amount of money available. While there may have been sound management reasons for the stock levels, the services need to better justify the stock levels to be used. In addition, the services need to comply with DOD policy to minimize the investment cost of initial spares. Advantages of high stock levels, in terms of increased support or possibly reduced costs, should be better justified, recognizing the potential consequences. The services could also reduce the range of spares by using phased provisioning more often, a technique that DOD encourages.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Henry W. Connor Team: General Accounting Office: Procurement, Logistics, and Readiness Division Phone: (202) 275-4141