C-17 Aircraft Program

Since 1989, when it began initial provisioning for the C-17 aircraft program, the Air Force has often ordered spare parts prematurely. As of July 1993, the Air Force had $111.2 million worth of C-17 spare parts on order. In GAO's view, all of these spare parts were ordered prematurely because existing inventories could have met the Air Force's needs. These premature procurements were made under a Defense Department (DOD) policy that called for maximizing procurement of support items for the provisioning period. Premature ordering occurred because the Air Force used inaccurate and outdated information to determine how many spare parts to buy and when to buy them, bought more spare parts than computed stockage levels justified, and failed to follow regulations governing the initial provisioning process. DOD recently revised its guidance to stress the need to limit the initial procurement of spare parts, thereby minimizing costs. As of July 1993, the Air Force had already canceled nearly $40 million of the $111.2 million worth of C-17 parts on order. Although the prime contractor has not determined the cancellation costs for canceled actions, one subcontractor estimated cancellation costs of about $88,000 on $2.9 million worth of parts that were canceled.

GAO found that: (1) as of July 1993, the Air Force had ordered $111.2 million of C-17 spare parts; (2) the Air Force prematurely ordered the spare parts under a Department of Defense (DOD) policy that calls for maximizing the procurement of support items for the provisioning period; (3) the Air Force uses an outdated program checklist and inaccurate lead-time information, buys spare parts in quantities in excess of computed stockage levels, and fails to follow regulations governing the initial provisioning process; (4) the Air Force has ordered expensive durable items before they are needed, items whose design is still evolving, and duplicate inventory items; (5) the Air Force has required its C-17 program managers to recompute their spare parts needs using up-to-date data, assess the impact of program changes on support procurements, and make appropriate adjustments periodically; (6) DOD has revised its guidance to emphasize limiting the procurement of spare parts during the initial provisioning period to minimize costs; and (7) the Air Force has cancelled $39.6 million of the $111.2 million of C-17 spare parts on order, but cancellation costs have not been calculated.

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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