Defense Logistics Agency

According to its own records, the Defense Logistics Agency (DLA) had nearly 500,000 different items on hand as of March 1991 that had not been requisitioned for at least three years. These items accounted for $980 million of DLA's entire $11.7 billion inventory. Although DLA created programs to reduce the number of national stock numbers managed and to remove the unneeded assets from its inventory, not all items are covered by these programs. Many item managers are unfamiliar with inactive items they are responsible for. Data files contain inaccurate data that may cause managers to make incorrect decisions on retaining or deleting stock. GAO found assets for locally purchased items that had been returned to warehouses with no established means to use them. Also, national stock numbers sponsored by nondefense agencies are not covered by DLA's programs. GAO found assets for nondefense users that were left sitting in warehouses. Since GAO's review, the Defense Department has told DLA to take corrective actions on these problems.

GAO found that: (1) in fiscal year 1991, DLA managed 497,572 different items valued at $980 million which had no demand for at least 3 years; (2) the value of the DLA 1.8-million item inventory totalled $11.7 billion; (3) many item managers were not familiar with inactive items and could only provide information when an inquiry was made on a particular item; (4) many items in the inventory data files had incorrect data and classification priority codes which resulted in incorrect management decisions; (5) there were no internal controls to ensure that items managers reviewed items referred to them; (6) DLA lacked directives or policy manuals for its two inventory management programs and the military services often failed to provide DLA with prompt technical support; (7) DLA lacked methods to track on-hand, locally purchased items which are returned to warehouses, and DLA failed to maintain specific transaction histories of locally purchased items; and (8) DLA did not have a method to refer potentially inactive items to civil agencies.