The Navy Can Increase Cancellations of Procurements for Unneeded Material

Gao ID: NSIAD-85-55 March 22, 1985

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.

The review indicated that the number of procurement cancellations can be increased, thereby reducing unnecessary procurement and inventory investment costs. An examination of cancellations for May 1983, the most current month available at the start of the review, showed that potentially excess procurements identified by the inventory control points totalled $293 million. GAO tests of possible termination actions for that month showed that less than 1 percent were actually cancelled. GAO found that cancellations are not higher because: (1) the inventory control points have established high dollar review thresholds; (2) the inventory control points apply protection levels to provide an added buffer against running out of stock; (3) inventory managers do not always act on cancellation notices in a timely manner; and (4) management and supervisory attention to the cancellation process is limited.

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: John Landicho Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-6504


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