Defense Inventory

In March 1991, the Defense Department (DOD) estimated in its Inventory Reduction Plan Progress Report that its stock funds would spend $25 billion in fiscal year 1992 to buy secondary items and run supply centers. DOD also estimated in its Defense Business Operations Fund Overview that its stock funds would sell about $23 billion in secondary items to DOD components in fiscal year 1992. GAO found that DOD requested $21 billion in fiscal year 1992 appropriations: $2.4 billion to its stock funds to procure and repair Army and Air Force items at the depot level and purchase Air Force war reserves and $18.6 billion to DOD components to buy secondary items. Of the $18.6 billion requested for DOD components, $16.6 billion would be used to purchase secondary items from DOD stock funds. The $16.6 billion request was less than the $23.1 billion estimate because DOD budget documents did not always identify funds requested for secondary items and because stock fund sales included sales between stock funds, which do not affect the need for appropriations.

GAO found that: (1) in FY 1992, DOD estimated that its stock funds would obligate $25 billion to purchase secondary items and operate supply centers; (2) of the $25 million, DOD estimated that it would use $16.9 billion to procure secondary items, $4.5 billion to purchase fuel, and $3.6 billion to cover the cost of operating supply centers; (3) in FY 1992, DOD estimated that its stock funds would sell about $23.1 billion in secondary items to DOD components; (4) DOD requested at least $21 billion in appropriations for secondary items in FY 1992, but since budget documents did not always identify the intended use of the requested funds, DOD might have requested additional amounts for secondary items; (5) of the $21 billion, DOD requested $2.4 billion for its stock funds to procure and repair Army and Air Force items at the depot level and purchase Air Force war reserves and $18.6 billion for DOD components to purchase secondary items; (6) of the $18.6 billion for secondary items, DOD would use $16.6 billion to purchase secondary items from DOD stock funds, $500 million from the General Services Administration, and $1.4 billion from other sources; and (7) the $16.6-billion request was less than the $23.1-billion estimate because DOD budget documents did not always identify funds requested for secondary items and stock fund sales included between stock funds, which did not affect the need for appropriations.