Military Logistics

GAO reviewed the Department of the Army's internal inventory control practices, focusing on: (1) whether they allowed premature spare parts purchases; (2) the extent to which they contributed to excessive stock levels, premature deliveries, and increased holding costs; and (3) whether they supported item management decisions and precluded unnecessary purchases.

GAO found that: (1) one Army command prematurely invested more than $87 million in spare and repair parts between 1987 and 1988, but did not need about $30 million because the projected requirements did not materialize; (2) another command initiated procurement of three items about 12 months in advance of reorder points, purchased quantities exceeding authorized requirements, which resulted in more than $4.6 million being spent prematurely, and did not need about $448,000 because its projected requirements did not materialize; (3) the Army could have deferred some purchases by as much as 1 year if the commands had followed Army policy and ordered items needed to meet requirements; (4) the two commands stated that they followed 1987 guidance to obligate funds early in the year, even though the 1988 guidance changed that advice; (5) one command would spend an estimated additional $6 million to hold its extra items in its inventories until needed; (6) the commands did not follow Army policy for cancelling or reducing excess orders, producing required documentation to support item management decisions, documenting item procurements, or conducting supervisory reviews; and (7) neither command identified material weaknesses in internal controls for purchasing spares and repair parts in their 1986, 1987, and 1988 financial assessments.

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.

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