Army Inventory

Current Operating and War Reserve Requirements Can Be Reduced Gao ID: NSIAD-93-119 April 14, 1993

Although the Army has reduced its requirements for spare parts, its current operating and war reserve requirements are still significantly overstated. At the Aviation Systems Command and the Tank-Automotive Command, requirements for needed inventory were overstated by upwards of $1.6 billion, resulting in millions of dollars in unnecessary repairs as well as potentially unnecessary procurements. The systems and policies being used by the Tank-Automotive Command and the Aviation Systems Command for forecasting requirements are also being used by the other four national inventory control points, suggesting that overstated requirements may be a widespread and a very costly problem for the Army.

GAO found that: (1) two Army commands have significantly overstated their current operating and war reserve needs by $1.6 billion; (2) overstated war reserve requirements result in unnecessary repair programs and unneeded procurements; (3) the Army is revising its war reserve requirements to reflect its current threat and force structure, which should reduce requirements by about 60 percent; (4) the Department of Defense (DOD) has instructed the services to include in their requirements only those items acquired with funds appropriated for that purpose, but one command has not taken action to reduce its funded requirements; (5) the Army Materiel Command (AMC) advised its inventory control points to include in requirement objectives items from contracts that are uneconomical to reduce or terminate; (6) overstated demands contributed to excess inventories; (7) DOD has issued guidance providing for the inclusion of nonrecurring demands in the demand database only if it improves the item forecast; and (8) DOD policy requires that demand data be adjusted to reflect the return of serviceable items, but the commands' data systems preclude them from managing serviceable returns on an item-by-item basis.

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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