Defense Inventory

Extent of Diminishing Manufacturing Sources Problems Still Unknown Gao ID: NSIAD-95-85 April 21, 1995

The Pentagon believes that diminishing manufacturing sources is a major problem, particularly in the electronics and microcircuit areas. According to industry sources and Defense Department (DOD) officials, because of rapidly changing technology in the electronics and microcircuit industry, decreasing demands due to military downsizing, and DOD increasing use of commercial off-the-shelf items, the private sector is increasingly more sensitive to its commercial customers than DOD. As a result, DOD expects the availability of DOD specification items to decrease and manufacturing sources to diminish. This report discusses (1) DOD's progress since GAO's August 1990 report (GAO/NSIAD-90-126) toward implementing a Diminishing Manufacturing Sources and Material Shortages program and (2) whether DOD has determined the cost-effectiveness of the actions taken to resolve diminishing manufacturing sources.

GAO found that: (1) DOD has not collected departmentwide data on DMSMS situations and resolutions because the services do not have monitoring systems that provide quantitative information on the magnitude of the DMSMS problem; (2) the services' and the Defense Logistics Agency's responses to DMSMS situations have been primarily reactive; (3) the Air Force is studying its DMSMS problems before it commits itself to a DMSMS program; (4) although the Navy and the Army have begun development of predictive analysis systems, they do not have servicewide approaches for all affected parts and have not evaluated the cost-effectiveness of DMSMS corrective actions; (5) the services pay for private contractors to conduct predictive analyses, which limits their use; and (6) DOD does not know which approach is the preferred course of action for dealing with DMSMS problems.

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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