Air Force Logistics

Some Progress, But Further Efforts Needed to Terminate Excess Orders Gao ID: NSIAD-94-3 October 13, 1993

In response to earlier GAO recommendations, the Air Force has been increasing its terminations of excess material orders. Terminations rose to 47 percent in fiscal year 1991 alone ($676 million of $1.4 billion). Although the Air Force has made great strides, opportunities for improvements and economies still exist. The Air Force is missing potential terminations--$126 million worth in one quarter GAO reviewed--because it is using an unjustified six-month level of stock above item requirements as a buffer in computing termination levels for consumable items. In addition, weaknesses in policies and practices have caused some orders not to be terminated when it was economical to do so, and others to be terminated when it was uneconomical. Finally, the Air Force is not making use of the increased availability of deobligated funds from contract terminations to cut its annual budget. As a result, the Air Force is overstating its annual funding needs.

GAO found that: (1) the Air Force has taken a number of actions to place greater management emphasis and oversight on potential terminations including development of management information systems to measure its progress in terminating excessive orders and guidance on economic termination decisionmaking; (2) in fiscal year (FY) 1991, Air Force contract terminations increased to 47 percent; (3) the Air Force has not identified potential terminations because it is using an unjustified 6-month level of stock above item requirements as a buffer in computing termination levels for consumable items; (4) the Air Force's termination practices are not always cost-effective because of weaknesses in termination policies and procedures; (5) the Air Force is not making use of the increased availability of deobligated funds to reduce its annual budget; and (6) from fiscal year 1991 to date, $610 million in deobligated funds has become available from contract terminations.

Recommendations

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