Defense Inventory
Air Force Plans and Initiatives to Mitigate Spare Parts Shortages Need Better Implementation Gao ID: GAO-03-706 June 27, 2003Despite reporting $10.5 billion in appropriations spent on spare parts since fiscal year 2000, the Air Force continues to report shortages of spare parts. The service has taken numerous actions to address these shortages. GAO examined whether the Air Force's strategic plan addresses the mitigation of spare parts shortages, whether key initiatives are likely to mitigate the shortages, and the impact on readiness identified from increased investments for spare parts.
The Air Force Strategic Plan generally provides an appropriate framework for mitigating spare parts shortages. However, one of two subordinate plans does not contain performance measures and targets linked to the strategic plan, and the other does not contain any performance targets. Therefore, the Air Force is not in a position to determine if the actions taken pursuant to its subordinate plans overcome spare parts shortages and provide assurance that it is getting the greatest readiness return on its spare parts investment. Key logistics initiatives under the Spares Campaign and Depot Maintenance Reengineering and Transformation (DMRT) efforts may help to mitigate spare parts shortages, but the initiatives' potential effectiveness is limited because of some key problems. First, the Air Force is not starting all identified initiatives that relate to the causes of shortages because it did not have needed personnel and funding. It assessed its logistics processes and identified more than 80 initiatives to solve more than 300 deficiencies; 43 initiatives were to improve processes that affect spare parts shortages, with about half relating to depot maintenance and the other half to supply. Although all depot maintenance-related initiatives have been started, 12 of the supply related initiatives have not been started. Second, 23 of the 31 initiatives lack both output-related performance measures and targets. Without output-related measures and targets to assess the initiatives' impact, the Air Force has little means of determining the extent to which it has successfully mitigated spare parts shortages and improved readiness. Third, the Air Force chose not to use the results of one of its initiatives, which identified a new total spares requirement as the basis for its fiscal year 2004 budget request. This decision resulted in a $578 million unfunded spare parts requirement. Finally, management problems--including failure to articulate the need for change, a lack of top-level commitment, and failure to address organizational issues--have hampered implementation of the initiatives. In February 2003, the Air Force established the Innovation and Transformation Directorate to address these problems, but its plans and priorities have not been set. The Air Force can estimate the impact of increased funding on individual weapon systems' supply availability and has done so. Based on its approximately $5.3 billion fiscal year 2004 spare parts budget request, the Air Force reported that aircraft supply availability would range from 73 to 100 percent. However, it cautioned that higher supply availability does not automatically result in higher mission capable rates because of other factors.
RecommendationsOur 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.
Director: Team: Phone:GAO-03-706, Defense Inventory: Air Force Plans and Initiatives to Mitigate Spare Parts Shortages Need Better Implementation
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Report to the Chairman, Subcommittee on Defense, Committee on
Appropriations, House of Representatives:
United States General Accounting Office:
GAO:
June 2003:
DEFENSE INVENTORY:
Air Force Plans and Initiatives to Mitigate Spare Parts Shortages Need
Better Implementation:
GAO-03-706:
GAO Highlights:
Highlights of GAO-03-706, a report to the Chairman, Subcommittee on
Defense, Committee on Appropriations, House of Representatives
Why GAO Did This Study:
Despite reporting $10.5 billion in appropriations spent on spare parts
since fiscal year 2000, the Air Force continues to report shortages of
spare parts. The service has taken numerous actions to address these
shortages.
GAO examined whether the Air Force‘s strategic plan addresses the
mitigation of spare parts shortages, whether key initiatives are
likely to mitigate the shortages, and the impact on readiness
identified from increased investments for spare parts.
What GAO Found:
The Air Force Strategic Plan generally provides an appropriate
framework for mitigating spare parts shortages. However, one of two
subordinate plans does not contain performance measures and targets
linked to the strategic plan, and the other does not contain any
performance targets. Therefore, the Air Force is not in a position to
determine if the actions taken pursuant to its subordinate plans
overcome spare parts shortages and provide assurance that it is
getting the greatest readiness return on its spare parts investment.
Key logistics initiatives under the Spares Campaign and Depot
Maintenance Reengineering and Transformation (DMRT) efforts may help
to mitigate spare parts shortages, but the initiatives‘ potential
effectiveness is limited because of some key problems. First, the Air
Force is not starting all identified initiatives that relate to the
causes of shortages because it did not have needed personnel and
funding. It assessed its logistics processes and identified more than
80 initiatives to solve more than 300 deficiencies; 43 initiatives
were to improve processes that affect spare parts shortages, with
about half relating to depot maintenance and the other half to supply.
As shown below, although all depot maintenance-related initiatives
have been started, 12 of the supply related initiatives have not been
started. Second, 23 of the 31 initiatives lack both output-related
performance measures and targets. Without output-related measures and
targets to assess the initiatives‘ impact, the Air Force has little
means of determining the extent to which it has successfully mitigated
spare parts shortages and improved readiness. Third, the Air Force
chose not to use the results of one of its initiatives, which
identified a new total spares requirement as the basis for its fiscal
year 2004 budget request. This decision resulted in a $578 million
unfunded spare parts requirement. Finally, management problems”
including failure to articulate the need for change, a lack of top-
level commitment, and failure to address organizational issues”have
hampered implementation of the initiatives. In February 2003, the Air
Force established the Innovation and Transformation Directorate to
address these problems, but its plans and priorities have not been
set.
The Air Force can estimate the impact of increased funding on
individual weapon systems‘ supply availability and has done so. Based
on its approximately $5.3 billion fiscal year 2004 spare parts budget
request, the Air Force reported that aircraft supply availability
would range from 73 to 100 percent. However, it cautioned that higher
supply availability does not automatically result in higher mission
capable rates because of other factors.
What GAO Recommends:
GAO recommends the Secretary of Defense
* incorporate Strategic Plan‘s performance measures and targets
relating to spare parts into its subordinate plans,
* start remaining initiatives to address the causes of parts shortages
or show how they were incorporated into others,
* adopt performance measures and targets to show impact of initiatives
on parts shortages,
* direct the Innovation and Transformation Directorate to operate
consistent with the Strategic Plan, and
* request funds in the Air Force budget consistent with results of its
spare parts requirements determination process.
In its written comments on a draft of this report, the Department of
Defense concurred with the intent of our recommendations, but not all
actions.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Strategic Plan Has an Appropriate Framework but Is Not Adequately
Supported by Subordinate Plans:
Initiatives Might Help Mitigate Spare Parts Shortages, but Their
Potential Effectiveness Is Limited:
The Air Force Can Identify the Impact of More Funding on Supply
Availability, but Not on Readiness:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendix I: Air Force Projected Aircraft Supply Availability Rates for
Fiscal Year 2004:
Appendix II: Description and Estimated Completion Dates of Spares
Campaign and Depot Maintenance Reengineering and Transformation
Spare-Parts-Related Initiatives:
Appendix III: Not-Mission-Capable Supply Rate Targets by Weapon System:
Appendix IV: Comments from the Department of Defense:
Appendix V: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: Focus of Spares Campaign Review Teams:
Table 2: Summary of Initiatives Related to Spare Parts:
Table 3: Status of Spares Campaign Initiatives:
Table 4: Projected Air Force Aircraft Availability Rates:
Table 5: Spares Campaign Spare-Parts-Related Initiatives:
Table 6: Depot Maintenance Reengineering and Transformation Spare-
Parts-Related Initiatives:
Table 7: Not-Mission-Capable Supply Rate Targets by Weapon System:
Figure:
Figure 1: Relationship between Air Force Strategic Plan and Major
Subordinate Plans:
Abbreviations:
DMRT: Depot Maintenance Reengineering and Transformation:
GPRA: Government Performance and Results Act of 1993:
United States General Accounting Office:
Washington, DC 20548:
June 27, 2003:
The Honorable Jerry Lewis Chairman, Subcommittee on Defense Committee
on Appropriations House of Representatives:
Dear Mr. Chairman:
Since fiscal year 2000, the Air Force reportedly has spent
approximately $10.5 billion from its annual operations and maintenance
appropriations for spare parts, including additional supplemental
funding totaling approximately $745 million.[Footnote 1] The Air Force
has reportedly exceeded the Department of Defense's overall supply
performance goal of having parts available 85 percent of the time when
they are requested. Nevertheless, the Air Force continues to report
spare parts shortages. While recognizing that spare parts shortages may
never be eliminated, it is reasonable to expect the services to place a
priority on efforts to mitigate (reduce) those shortages that adversely
impact readiness. This priority should be inherent in their overall
stewardship of funds they request from Congress and their
accountability for making spare parts investment decisions that provide
a good readiness return.[Footnote 2] In numerous reports, we have
stated that DOD's inventory management is a high-risk area because of
long-standing management weaknesses that could result in unnecessarily
spending funds that could be directed to higher priorities, such as
modernization or readiness.[Footnote 3]
This report is one in a series that responds to your request that we
assist your committee in determining ways to improve the availability
of spare parts.[Footnote 4] As agreed with your office, this report
focuses on the following issues:
1. Does the Air Force's strategic plan address the mitigation of
critical spare parts shortages--those that adversely affect
readiness?[Footnote 5]
2. How likely will key Air Force initiatives mitigate critical spare
parts shortages?
3. Does the Air Force have the ability to identify the impact on
readiness of increased investments for spare parts?
To address these questions, we visited the Air Force Headquarters'
Logistics Directorate and the Air Force Materiel Command, and we
interviewed officials responsible for strategic planning, initiatives
development and implementation, and requirements determination for
spare parts funding. We also analyzed the strategic plans and key
initiatives identified by the Air Force that address spare parts
shortages and logistics support. We used the Government Performance and
Results Act of 1993, prior GAO reports, and other key DOD documents as
criteria to evaluate the Air Force's strategic plans and
initiatives.[Footnote 6]
Results in Brief:
The Air Force Strategic Plan, issued between April 1998 and May 2000,
generally provides an appropriate framework for mitigating critical
spare parts shortages that affect readiness. However, its two
subordinate logistics plans do not incorporate the same performance
measures and targets, key elements of this framework. As a result, the
Air Force is not in a position to determine if the actions taken
pursuant to its subordinate plans mitigate the critical spare parts
shortages, giving it the greatest readiness return on its spare parts
investment. The Strategic Plan contains three long-term strategic
goals, output-related performance measures, and performance targets.
Goal 2 of the plan addresses two mission critical tasks that relate to
mitigating spare parts shortages and identifies 19 performance
measures, many specifically related to improving spare parts
inventories. For example, one mission critical task is "to improve
mission effectiveness while minimizing risk." To measure progress in
implementing this task, the plan cites the need to track the percentage
of time that aircraft cannot perform their mission because spare parts
are not available. Moreover, the plan specifies performance targets for
reducing the frequency at which this should occur, such as 9 percent
for the F-15E and 22 percent for the B-1. Rather than use these
performance measures and targets to guide its efforts, the Air Force in
its subordinate Logistics Support Plan usually cited measures, such as
the need to develop and apply combat support doctrine, without
reference to a particular output that could be used to measure
progress.[Footnote 7] Although the other subordinate logistics plan,
the Supply Strategic Plan, cited output-related performance measures
like those in Goal 2 of the Air Force Strategic Plan, it did not
contain any performance targets against which to measure progress.
While key Air Force logistics initiatives that are intended to improve
logistics processes might help mitigate spare parts shortages, their
potential is limited for several reasons. First, the Air Force has not
started 12 of the 43 initiatives it had identified as necessary to
address the causes of spare parts shortages nor have they demonstrated
that all key aspects of these 12 have been incorporated into other
initiatives. According to the Air Force, it intends to reevaluate when
and which of these initiatives should be started but has not specified
a date for doing this. Without a commitment to implement all of the
necessary initiatives, the Air Force is not assured that all the causes
of shortages will be sufficiently addressed. Second, 23 of the 31
initiatives implemented lack both performance measures and targets.
Without output-related performance measures and targets to assess the
initiatives' impact, the Air Force has little means of determining the
extent to which it has successfully mitigated spare parts shortages and
improved readiness. Third, the Air Force chose not to use the results
of one of its initiatives, which compiled all of the service's spare
parts requirements to identify a total requirement of approximately
$5.9 billion. Instead, in its fiscal year 2004 budget request, the Air
Force asked for approximately $5.3 billion and identified a $578
million unfunded requirement, thereby raising questions about the
validity of its new requirements computation process and its budget
request. Finally, in 2002 an Air Force review team identified several
management problems, which have hampered implementation of its
initiatives. These problems include failure to clearly articulate the
need for change, a lack of strong top-level commitment, and failure to
address organizational issues. Although a directorate established in
February 2003 is intended to address these issues, it has not
established its plans or priorities. If concerns about these
initiatives are not resolved, the Air Force cannot be assured that it
has taken all the actions necessary to address the causes of spare
parts shortages, measured the affect of its initiatives, and
established effective management oversight.
The Air Force can estimate the impact of increased spare parts funding
on individual weapon systems' supply availability and has done so. In
its fiscal year 2004 budget request, the Air Force reported how its
spare parts funding request would allow each of its major weapon
systems to achieve a specified aircraft supply availability rate (see
app. I for the rate for each aircraft).[Footnote 8] Based on its
approximately $5.3 billion fiscal year 2004 budget request, the Air
Force reported that aircraft supply availability would range from 73
percent for the H-60 helicopter to 100 percent for the F-111 attack
aircraft. This information came from the service's Funding/Availability
Multi-Method Allocator for Spares model, which was developed to predict
the affects of supply funding on mission capable rates. Using this
model, the Air Force can also estimate how 1 percent increments in
additional funding could increase spare parts availability. The Air
Force cautioned, however, that increased supply availability does not
automatically result in increased mission capable rates because other
factors, such as maintenance and transportation can affect these rates.
Due to the critical impact of spare parts shortages on readiness as
well as the Air Force's need to make good investment decisions, we are
making recommendations to the Secretary of Defense aimed at ensuring
that the Air Force Strategic Plan, subordinate plans, and initiatives
have consistent performance measures and targets to show how successful
the service has been at improving spare parts availability and
readiness. We also recommend that the Air Force commit to starting the
remaining initiatives that are aimed at addressing the causes of spare
parts shortages or clearly identify how the initiatives are included in
other initiatives already started. In addition, we recommend the Air
Force request funds in its budget consistent with its spare parts
requirements determination process. In written comments on a draft of
this report, the Department of Defense concurred with the intent of our
five recommendations, but not all actions cited in our second
recommendation. In concurring with the second recommendation related to
starting the remaining initiatives, the Department of Defense's
position was that the initiatives were either already incorporated into
other initiatives or overtaken by other events. Given the importance of
overcoming causes of shortages that reduce the overall effectiveness of
the Air Force's logistics efforts, the thrust of our recommendation is
for the service to show clearly which initiatives have been
incorporated into those already started and what events have overtaken
the others to ensure that all causes of spare parts shortages
identified by the Air Force are adequately addressed. Therefore, we
continue to believe the actions prescribed in the recommendation are
needed. In concurring with the funding recommendation, the Air Force
stated that its 2004 budget request was developed consistent with its
new requirements process, but its funding was constrained. This
response confirms our statement that the Air Force has underfunded its
spare parts requirements and thereby created the potential for a
supplemental budget request or for additional shortages that could
negatively affect readiness. The department's comments and our
evaluation are on pages 17 and 18 of this report.
Background:
The Air Force recognized that reductions in spare parts inventories
since the early 1990s have negatively affected aircraft readiness
indicators such as mission capable rates, not-mission-capable supply,
not-mission-capable maintenance, and cannibalizations.[Footnote 9]
Recognizing the need to reverse this trend and that previous attempts
to pinpoint specific spare parts shortages were piecemeal, temporary,
and lacked adequate personnel to implement, the Air Force began a 5 to7
year logistics transformation effort in 1999 aimed at improving the
efficiency and economy of the entire logistics process to enhance
support to the warfighter. Rather than focusing on fully eliminating
specific spare parts shortages, the Air Force chose to focus on
addressing the process disconnects that caused the shortages. This
included an end-to-end look at all aspects of the logistics process
including commercial supply chain management, supply, maintenance,
transportation, logistics planning, and financial management. The
Spares Campaign initiated in February 2001 and the Depot Maintenance
Reengineering and Transformation (DMRT) effort started in July 2001
were two key parts of the end-to-end review.[Footnote 10] In total,
they identified the need for 84 initiatives, 43 of which related to
spare parts.
The Spares Campaign focused on supply process deficiencies, and it was
intended to improve parts supportability to weapon systems and reverse
declining readiness related to spares management. This was considered
a major transformation effort and included five teams that reviewed the
processes needed to produce spares and identified disconnects and
solutions that would improve mission capability and manage cost
(see table 1).
Table 1: Focus of Spares Campaign Review Teams:
Spares campaign teams: Programming and financial management; Team
focus: Reviewed how spares budgets are determined, funding obtained,
and cost managed.
Spares campaign teams: Requirements determination; Team focus: Reviewed
processes for identifying spares requirements.
Spares campaign teams: Requirements allocation, execution, and
distribution; Team focus: Analyzed the processes and policies involved
in getting spares and repair parts to depots and field locations.
Spares campaign teams: Spares command and control; Team focus: Studied
management control of the spares processes.
Spares campaign teams: Supplier relationships; Team focus: Explored
options for improving how the Air Force deals with suppliers of parts.
Source: U.S. Air Force.
[End of table]
Each team developed a flowchart showing how it believed processes
related to its focus area should function and be managed to improve
weapon system availability and cost management. The teams also
identified disconnects or barriers preventing the processes from
functioning as they should and recommended solutions to correct
these disconnects. Twelve major deficiencies were noted, and more than
190 corrective actions were identified, which resulted in 20
initiatives, 19 of which were related to spare parts shortages. As of
February 2003, 7 of 19 spare parts initiatives have been started.
The DMRT effort, focused on deficiencies in depot maintenance
processes. Various teams identified disconnects and barriers in these
processes, reviewed Air Force current initiatives that affected depot
maintenance, and identified industry best practices and benchmarking,
receiving input from Air Force management, major commands, and
Air Logistics Centers. More than 300 barriers to depot maintenance
operational and financial performance were identified and consolidated
into more than 40 major issues organized around 8 overarching focus
areas. This resulted in 64 initiatives, 24 of which were related to
spare parts. All 24 of the spare parts related initiatives have been
started. Table 2 below summarizes the status of the Spares Campaign and
DMRT initiatives as of February 2003. Appendix II provides a
description of the 31 Spares Campaign and DMRT initiatives that have
been started and estimated completion dates.
Table 2: Summary of Initiatives Related to Spare Parts:
Spares campaign; Initiatives identified: 20; Initiatives related to
spares: 19; Initiatives started: 7.
Depot maintenance reengineering and transformation; Initiatives
identified: 64; Initiatives related to spares: 24; Initiatives started:
24.
Totals; Initiatives identified: 84; Initiatives related to spares: 43;
Initiatives started: 31.
Source: U.S. Air Force.
[End of table]
Strategic Plan Has an Appropriate Framework but Is Not Adequately
Supported by Subordinate Plans:
The Air Force Strategic Plan is appropriately structured to provide a
framework for mitigating spare parts shortages, but its two subordinate
plans are not aligned with it in terms of performance measures.
Consistent with sound management principles underlying the Government
Performance and Results Act of 1993 (GPRA), the strategic plan includes
a mission statement, long-term goals, and performance measures and
targets, and some of these elements relate to spare parts shortages.
However, the performance measures and targets in the subordinate plans
are not consistent with those in the strategic plan or none are stated.
This lack of alignment with the Air Force Strategic Plan's performance
measures and targets means that the service cannot measure the
contribution of the actions it takes in response to the subordinate
plans toward overcoming spare parts shortages and be assured
that implementing the subordinate plans will mitigate critical spare
parts shortages and give the Air Force its greatest readiness return
on investment.
Strategic Plan Complies with Most GPRA Requirements:
The Air Force Strategic Plan, issued between April 1998 and May 2000,
generally includes an effective strategy consistent with GPRA
guidelines, and it generally represents an effective framework for
reducing spare parts shortages. The plan applies to the Air Force as a
whole and contains a mission statement, strategic goals, and output-
related performance measures and targets. Specifically, the strategic
plan has three goals: Goal 1 is to ensure a high quality force of
people, Goal 2 is to enable commanders to respond to all types of
crises, and Goal 3 is to prepare for an uncertain future by pursuing a
modernization program. Each goal contains mission critical tasks (such
as "Maximize the efficiency of operating and maintaining Air Force
resources") along with related performance measures and targets for
determining progress toward achieving its strategic goals.
Of the three strategic goals, Goal 2 addresses the mitigation of spare
parts shortages. It has two mission critical tasks and 19 performance
measures, many specifically related to improving spare parts
inventories. One mission critical task, to "improve mission
effectiveness while minimizing risk," cites the percentage of aircraft
that cannot perform their mission because spare parts are not available
as a performance measure. It also cites performance targets for each
aircraft. For example, the target for the F-15E is 9 percent and for
the B-1 it is 22 percent, meaning that percent of the aircraft cannot
perform their mission because of spare parts shortages (see appendix
III for the not mission capable supply rate targets). The second
mission critical task, to "maximize the efficiency of operating and
maintaining the Air Force resources," has the elapsed time between when
a customer submits an order and receives the part as a performance
measure.
Performance Measures and Targets in Subordinate Plans Are Not
Consistent with Strategic Plan:
The major subordinate plans for implementing the Air Force Strategic
Plan include goals similar to those in the strategic plan. However,
their performance measures and targets are not linked to those in the
strategic plan. The subordinate plans are the Logistics Support Plan
and the Supply Strategic Plan (see fig. 1).
Figure 1: Relationship between Air Force Strategic Plan and Major
Subordinate Plans:
[See PDF for image]
[End of figure]
The Logistics Support Plan was developed to provide authoritative,
strategic direction and front-end guidance for Air Force logistics
capabilities planning. It includes the same goals as the higher plan,
and it contains objectives for accomplishing these goals. The plan does
not include quantitative or qualitative output-related performance
measures and targets that will yield the performance information needed
to assess goal accomplishment at either the subordinate or strategic
plan levels in order to measure results. Instead, it includes measures
that will only yield information about whether or not a specific
process was implemented. For example, the completion of combat support
doctrine is the performance measure cited for accomplishing the
objective to improve combat support to warfighters by developing and
applying an Agile Combat Support doctrine. Another nonquantitative or
qualitative performance measure was full fielding of identified total
asset visibility capabilities for the objective to fully implement
total asset visibility.
The Supply Strategic Plan was intended to (1) create an integrated
process for Air Force supply planning, (2) establish the planning
infrastructure to facilitate information exchange throughout Air Force
Supply, and (3) improve Air Force Supply's measures of effectiveness.
This plan contains five long-term goals that are consistent with the
higher plan's goals, and it has 19 objectives, 71 tasks to accomplish
these objectives, and a projected end-state for some of these
tasks.[Footnote 11] Some end-states are similar to the strategic plan's
output-related performance measures, but do not have corresponding
performance targets. For example, one end-state discusses incidents of
aircraft being not mission capable due to the lack of spare parts, but
it does not specify a target (i.e., the desired percentage of
incidences) against which to measure improvement. Other end-states did
not discuss performance measures at all. For example, one end-state is
completion of the new Air Force Supply Stockage Policy Guide and making
it available to supply officers worldwide.
Without effective quantitative and qualitative measures that flow from
the Strategic Plan structure to the subordinate plans, the Air Force
cannot determine the extent to which the implementation of these plans
is contributing to its overall strategic goal relating to overcoming
spare parts shortages. Furthermore, the Air Force cannot be assured
that implementing the subordinate plans will give them the greatest
readiness return on their investment.
Initiatives Might Help Mitigate Spare Parts Shortages, but Their
Potential Effectiveness Is Limited:
Key logistics initiatives being implemented by the Air Force may help
to mitigate spare parts shortages, but their potential effectiveness is
limited for several reasons. The Air Force has begun a major logistics
transformation effort intended to improve the entire logistics process
and identified numerous initiatives to improve its logistics process by
addressing deficiencies, barriers, or disconnects. However, it has not
implemented 12 of the 43 initiatives it identified as needed to address
spare parts shortages nor demonstrated that all key aspects of these
12 have been incorporated into other initiatives underway. In addition,
23 of the 31 initiatives being implemented lack performance measures
and targets. The Air Force also chose not to use the results of one of
its initiatives, which identified a new consolidated requirement for
spare parts; consequently, additional spare parts shortages could
occur. Lastly, management problems identified by an Air Force review
team in 2002 have hampered implementation of the initiatives, and its
new directorate, established in February 2003, has not established a
plan or priorities to address these problems.
Air Force Has Not Started All Initiatives:
In 2001, the Air Force identified 43 initiatives to improve processes
related to spare parts shortages--19 as part of the Spares Campaign and
24 as part of the DMRT. As of February 2003, 31 of the 43 initiatives
have been started. The Air Force has started all 24 DMRT initiatives
that relate to improving spare parts shortages, but has started only 7
of the 19 initiatives that relate to spare parts shortages arising from
the Spares Campaign. Table 3 shows the implementation status of Spares
Campaign initiatives.
Table 3: Status of Spares Campaign Initiatives:
Initiatives: Improve depot-level repair throughput; Started: No;
Not started: Yes.
Initiatives: Establish virtual single inventory control point; Started:
Yes; Not started: No.
Initiatives: Improve spares budgeting; Started: Yes; Not started:
No.
Initiatives: Improve item demand and repair workload forecasting;
Started: Yes; Not started: No.
Initiatives: Develop alternative stockage policies to support
warfighter; Started: No; Not started: Yes.
Initiatives: Ensure a competent and skilled workforce; Started:
No; Not started: Yes.
Initiatives: Improve financial management; Started: Yes; Not started:
No.
Initiatives: Create common operating view and improve data accuracy;
Started: No; Not started: Yes.
Initiatives: Designate a single authority for spares management;
Started: No; Not started: Yes.
Initiatives: Implement integrated supply chain management; Started:
No; Not started: Yes.
Initiatives: Develop process to manage and reduce demands; Started:
No; Not started: Yes.
Initiatives: Align supply chain management focus; Started: Yes; Not
started: No.
Initiatives: Improve/restructure working capital fund; Started:
No; Not started: Yes.
Initiatives: Develop appropriate metrics; Started: No; Not
started: Yes.
Initiatives: Actively manage suppliers and supply base; Started:
No; Not started: Yes.
Initiatives: Enable a single logistics proponent; Started: No; Not
started: Yes.
Initiatives: Standardize use and role of regional supply squadrons;
Started: Yes; Not started: No.
Initiatives: Adopt improved purchasing and supply chain management;
Started: Yes; Not started: No.
Initiatives: Develop e-business strategy; Started: No; Not
started: Yes.
Source: U. S. Air Force.
[End of table]
According to the Air Force, it chose to start the seven Spares Campaign
initiatives that reflected its highest priorities, provided greatest
impact to the logistics processes, and resulted in highest payback to
the Air Force. The remaining 12 initiatives have not been started
because the Air Force said it did not have the needed personnel and
funding. Although the Air Force provided a document showing that some
aspects of the remaining initiatives had been embedded into the Ten
Focus Initiatives of the Spares Campaign, we could not verify that all
of these initiatives had been started. Also, we could not validate that
all of the deficiencies, disconnects, or barriers intended to be
addressed by the remaining 12 initiatives were actually being
addressed. Consequently, some of the process problems identified in the
Spares Campaign that cause spare parts shortages may not be addressed,
thereby reducing the overall effectiveness of the Air Force's efforts
to mitigate spare parts shortages.
Most Initiatives Lack Output-Related Performance Measures and Targets:
Twenty-three of the 31 Air Force initiatives that have been started
lack output-related performance measures and targets. One of the 23
initiatives, the Material Policy initiative, has revision of all
policies as its performance target. The other 22 initiatives were part
of the DMRT effort and did not have any performance measure or any
performance targets. Air Force officials said they are still trying to
develop measures and targets for each of these initiatives. The other
eight initiatives--such as the Weapon System Supply Chain Manager,
Regional Supply Squadron, and Demand and Repair Workload Forecasting--
have output-related measures, including how effective they are in
making weapon systems available, the amount of cannibalization done to
keep aircraft available, and the amount of aircraft that are not
mission capable due to supply or maintenance problems. Without
quantitative or qualitative performance-related measures and targets
relating to improving spare parts availability, the Air Force lacks the
means to determine the extent to which these initiatives have improved
readiness by reducing spare parts shortages.
Air Force Did Not Apply the Results of a Completed Initiative:
One Spares Campaign initiative recently established a new total
requirement for spare parts, but the service chose not to request all
the funds to meet the requirement. The Spares Campaign's Improve Spares
Budgeting initiative created a Spares Requirement Review Board to
identify a single, consolidated requirement for spare parts and
consumable items. In the past, the Air Force had budgeted for spares
based on annual flying-hour requirements with little consideration for
the spares needed to meet non-flying-hour requirements, such as the
pipeline or safety stock.[Footnote 12] As a result, the Air Force
experienced parts shortages because demands for non-flying-hour spare
parts had not been sufficiently budgeted. The review board compiled
flying-hour and non-flying-hour requirements into a single, agreed upon
requirement to be used for planning, programming, and budgeting.
The Air Force's new process yielded a new total spare parts requirement
of approximately $5.9 billion for the fiscal year 2004 budget
submission. However, in its fiscal year 2004 budget the service chose
to only request $5.3 billion. After the service submitted its fiscal
year 2004 budget, the Secretary of the Air Force reported $578 million
in unfunded spares requirements: $166 million of this was for pipeline
and other requirements, and $412 million was for the flying-hour
program. The Air Force's decision to request less funding than
identified in their most recent requirements determination process
raises concerns. Either the Air Force's new spare parts requirements
determination process is not a valid basis for future budget decisions,
or by not requesting the full amount to meet the requirement, the Air
Force has created the potential for additional spare parts shortages
that could negatively affect readiness or has created the need for a
supplemental budget request. Air Force officials said they took a risk
that the $5.3 billion budget request would be sufficient based on the
actual flying-hour cost experienced in fiscal year 2002. That year,
they said, the flying-hour program was executed at a cheaper rate than
budgeted.
Management Weaknesses Impeded Implementation of Initiatives:
The Air Force recently established a new directorate to address several
management issues that it believes adversely affects its logistics
transformation initiatives, but the extent to which this directorate
will improve overall management of these initiatives is not clear. In
2002, the Air Force formed a review team composed of retired general
officers, senior executives, and industry leaders that assessed
initiative implementation plans, identified problems with its logistics
transformation efforts, and developed recommendations to solve these
problems. The team concluded that a high risk of failure existed for
the transformation efforts because (1) the Air Force is not clearly
articulating throughout its organization the need for changes, (2) top-
level commitment to implementing initiatives is not as strong as needed
as evidenced by schedule slippage and lack of funding for initiatives,
and (3) clear roles and responsibilities concerning the Spares Campaign
are not being addressed. One of the team's recommendations was to merge
the Spares Campaign and DMRT efforts into a single, full-time logistics
transformation program. In February 2003, the Air Force established the
Innovation and Transformation Directorate, a new organization under the
Logistics Division, which according to an Air Force briefing,
consolidated the two efforts and placed oversight responsibility for
all Air Force logistics transformation efforts on top-level leadership
within one office.
According to the Air Force, some of the first steps for the new
directorate will be to review existing Spares Campaign and DMRT
initiatives, resolve deficiencies in the two efforts, set aggressive
timelines, goals, objectives, and performance measures, and obtain
senior leadership approval of their actions. However, according to Air
Force officials, the plans and priorities of this new directorate had
not been set as of April 2003. Without such plans, priorities, and
senior leadership commitment guiding the Air Force's efforts to
overcome these problems, the potential benefits from its initiatives to
mitigate spare parts shortages that impact readiness may be delayed or
possibly not achieved.
The Air Force Can Identify the Impact of More Funding on Supply
Availability, but Not on Readiness:
The Air Force can show that additional funding for spare parts would
improve aircraft supply availability if the funds were provided
directly to the working capital fund. However, the Air Force does not
link funding for spare parts directly to readiness because other
factors also affect readiness. In its fiscal year 2004 budget request
for spare parts funding, the Air Force included information on how
spare parts funding in the working capital fund affected the supply
availability for various types of aircraft (see app. I for projected
aircraft availability rates).[Footnote 13] The budget request indicated
that spare parts funding of approximately $5.3 billion would allow for
aircraft supply availability ranging from 73 percent for the H-60 to
100 percent for the F-111.
The Air Force drew this data from its Funding/Availability Multi-Method
Allocator for Spares model, which estimates how many and which
additional parts (i.e. supply availability) it can procure with
different amounts of operating authority.[Footnote 14] The Air Force
said that the model has some weaknesses, but it does provide a good
mechanism for projecting aircraft supply availability. One weakness,
according to DOD, is that while the model attempts to optimize supply
parts availability, it is generally biased towards the purchase of low
cost/high-demand items versus those critical spare parts that would
most improve mission capable rates.
The Air Force can also use this model to show how additional funding
could increase spare parts availability by estimating the cost of
additional supply availability in 1 percent increments by weapon
system. For example, in 2002 the cost for the F-15E to achieve an 88
percent supply availability rate was approximately $237 million. To
increase this availability 1 percent would have cost an additional $7
million. Similarly, it cost the Air Force approximately $301 million
for the C-5 to achieve an 82 percent supply availability rate. To
achieve an additional 1 percent supply availability would have cost an
additional $3.6 million.
According to the Air Force, additional supply availability results in
improved stockage effectiveness and reduced customer wait time,
back orders, and cannibalization rates, which all contribute to
increased readiness. However, the Air Force cautioned that increased
supply availability does not automatically result in increased mission
capable (readiness) rates because other factors, such as maintenance
and transportation, affect these rates. For example, if maintenance
staffing levels at depots are inadequate, then even with 100 percent
supply availability, mission capability will not be at its highest
possible level.
Conclusions:
An Air Force strategic goal is to address problems that adversely
affect mission accomplishment, such as critical spare parts shortages
that reduce readiness. While it has a strategic plan that provides a
good management framework, places emphasis on mitigating spare parts
shortages, and cites performance measures and targets for assessing
progress, the Air Force's potential for successful implementation of
the plan is hindered by several problems. Subordinate plans have not
adopted the Strategic Plan's readiness-related performance measures and
targets; all identified initiatives to deal with the causes of spare
parts shortages have not been started or key aspects clearly
incorporated into other initiatives; and many of those that have been
started lack effective performance measures and targets. Additionally,
some management weaknesses could significantly impede successful
initiative oversight and implementation. By not adopting specific
performance measures and targets related to mitigating the critical
spare parts shortages into subordinate plans and initiatives, following
through on initiatives to address the causes of parts shortages and
determine spare parts requirements, and resolving program management
deficiencies, the Air Force has little assurance that its program
emphasis and initiatives will improve spare-parts-related readiness.
Furthermore, as part of its stewardship and accountability for funds,
the Air Force will not be assured that the service's spare parts
spending is yielding the best readiness return on investment.
Recommendations for Executive Action:
We are recommending that the Secretary of Defense direct the Secretary
of the Air Force to take the following steps:
* Incorporate the Air Force Strategic Plan's performance measures and
targets into the subordinate Logistics Support Plan and the Supply
Strategic Plan.
* Commit to start those remaining initiatives needed to address the
causes of spare parts shortages or clearly identify how the initiatives
have been incorporated into those initiatives already underway.
* Adopt performance measures and targets for its initiatives that will
show how their implementation will affect critical spare parts
availability and readiness.
* Direct the new Innovation and Transformation Directorate to establish
plans and priorities for improving management of logistics initiatives
consistent with the Air Force Strategic Plan.
* Request spare parts funds in the Air Force's budget consistent with
results of its spare parts requirements determination process.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, the Department of
Defense concurred with the intent of all five recommendations, but not
all actions. The Department of Defense's written comments are reprinted
in their entirety in appendix IV.
In concurring with our first, third, and fourth recommendations
concerning incorporating and adopting performance measures and
targets into subordinate plans and initiatives, the Department of
Defense responded that the establishment of the Directorate of
Innovation and Transformation, the directorate's efforts to develop a
balanced scorecard and supporting metrics, and its draft campaign plans
which spell out and track milestones for each initiative were
consistent with the direction of the Strategic Plan.[Footnote 15] We
believe that if the Department of Defense follows through with its
plans for the new directorate, as laid out in its written response,
these planned actions should meet the thrust of our recommendations.
The Department of Defense concurred with the intent of our second
recommendation related to starting those remaining initiatives needed
to address the causes of shortages, but not the specific actions. In
its comments the Department of Defense stated the original 19
initiatives have been either consolidated into the Ten Focus
Initiatives or overtaken by other events making it unnecessary to
separately track progress for each of the individual actions. Based on
this action, the Department of Defense concluded that it had complied
with this recommendation. We disagree that the department's actions
fully respond to our recommendation. The thrust of our recommendation
is that the Air Force identify which of the 12 remaining initiatives
that were not started were incorporated into the Ten Focus Initiatives
and what events have overtaken the others to ensure that all causes of
spare parts shortages identified by the Air Force are being adequately
addressed.
In concurring with our fifth recommendation that the Air Force request
spare parts funds consistent with results of its spare parts
requirements determination process, the Department of Defense responded
that the Air Force's spare parts budget was developed consistent with
the new requirements determination process, but the amount of funding
requested was constrained. This response confirms our statement that
the Air Force has underfunded its spare parts requirements and thereby
created the potential for a supplemental budget request or for
additional spare parts shortages that could negatively affect
readiness.
Scope and Methodology:
To accomplish our three objectives, we visited the Air Force
Headquarters' Logistics Directorate, in Washington, D.C., the Air Force
Material Command, in Dayton, Ohio and contractor representatives at
Bearing Point (formerly KPMG Consulting) in McLean, Virginia.
To determine whether the strategic plans address the mitigation of
spare parts shortages, we reviewed the Air Force Strategic Plan, its
two subordinate plans--Logistics Support Plan and Supply Strategic
Plan--as well as other strategic planning documents and interviewed
officials to determine whether these plans included key actions
targeted at mitigating critical spare parts shortages and improving
readiness. We also reviewed these plans to determine if performance
measures and targets in the subordinate plans were similar and linked
to those in the higher-level strategic plan. Additionally, we reviewed
these plans to determine whether they included the elements of a
strategic plan as defined by the GPRA.
To determine the likelihood of whether key initiatives would mitigate
spare parts shortages to improve readiness, we interviewed Air Force
officials to identify the initiatives that they believe will mitigate
spare parts shortages and improve readiness. We obtained and reviewed
documents related to the 31 spare-parts-related initiatives that have
been started to determine the likelihood of whether they would mitigate
spare parts shortages. We evaluated these initiatives to determine
whether they included quantifiable and measurable performance targets
as described by GPRA that would allow an assessment of how
implementation of the initiatives would impact spare parts shortages.
We also assessed whether these initiatives included all identified
actions needed to overcome the causes of spare parts shortages. In
addition, we obtained a briefing and discussed with Air Force officials
the results of an Air Force review team's assessment of its logistics
transformation efforts that identified management weaknesses.
To determine what impact the Air Force could identify from additional
funding for spare parts, we interviewed officials and obtained
documents related to the Air Force's fiscal year 2004 budget
submission. We also discussed with Air Force budget officials their
Funding/Availability Multi-Method Allocator for Spares model, which
includes projected supply availability rates based on estimated funding
amounts and was used to provide the budget information.[Footnote 16]
We performed our review from August 2002 to March 2003 in accordance
with generally accepted government auditing standards.
We are sending copies of this report to the Secretary of Defense;
the Secretary of the Air Force; the Director, Office of Management
and Budget; and other interested congressional committees and parties.
We will also make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at http:/
/www.gao.gov.
Please contact me on (202) 512-8365 if you or your staff have any
questions concerning this report. Major contributors to this report are
included in appendix V.
Sincerely,
William M. Solis,
Director
Defense Capabilities and Management:
Signed by William M. Solis:
[End of section]
Appendix I: Air Force Projected Aircraft Supply Availability Rates for
Fiscal Year 2004:
In response to a recommendation in the Inventory Management Study of
the Office of the Secretary of Defense, the Air Force included supply
availability rates for its weapons systems in its fiscal year 2004
budget submission. As shown in table 4, the Air Force projected
aircraft supply availability rates ranging from 73 percent to 100
percent based on requested funding of approximately $5.3 billion.
Table 4: Projected Air Force Aircraft Availability Rates:
Aircraft: A-10; Budget request: (dollars in millions): 177.702;
Availability rate (percent): 85.70.
Aircraft: B-1B; Budget request: (dollars in millions): 258.001;
Availability rate (percent): 77.60.
Aircraft: B-2; Budget request: (dollars in millions): 109.886;
Availability rate (percent): 93.60.
Aircraft: B-52; Budget request: (dollars in millions): 147.867;
Availability rate (percent): 88.20.
Aircraft: C-5; Budget request: (dollars in millions): 371.571;
Availability rate (percent): 81.30.
Aircraft: C-130; Budget request: (dollars in millions): 310.825;
Availability rate (percent): 85.70.
Aircraft: C-135; Budget request: (dollars in millions): 367.465;
Availability rate (percent): 89.40.
Aircraft: C-141; Budget request: (dollars in millions): 16.009;
Availability rate (percent): 84.50.
Aircraft: E-3; Budget request: (dollars in millions): 82.819;
Availability rate (percent): 89.90.
Aircraft: E-4; Budget request: (dollars in millions): 0.121;
Availability rate (percent): 89.00.
Aircraft: E-8; Budget request: (dollars in millions): 0.000;
Availability rate (percent): 95.10.
Aircraft: F-4; Budget request: (dollars in millions): 5.659;
Availability rate (percent): 94.40.
Aircraft: F-15; Budget request: (dollars in millions): 572.037;
Availability rate (percent): 89.30.
Aircraft: F-16; Budget request: (dollars in millions): 392.210;
Availability rate (percent): 86.90.
Aircraft: F-111; Budget request: (dollars in millions): 0.26;
Availability rate (percent): 100.00.
Aircraft: F-117; Budget request: (dollars in millions): 0.067;
Availability rate (percent): 95.10.
Aircraft: H-1; Budget request: (dollars in millions): 9.413;
Availability rate (percent): 100.00.
Aircraft: H-53; Budget request: (dollars in millions): 51.095;
Availability rate (percent): 87.30.
Aircraft: H-60; Budget request: (dollars in millions): 5.101;
Availability rate (percent): 73.20.
Aircraft: Trainers; Budget request: (dollars in millions): 64.592;
Availability rate (percent): 95.00.
Aircraft: Other Aircraft; Budget request: (dollars in millions): 9.842;
Availability rate (percent): 94.00.
Aircraft: Special Operations Forces; Budget request: (dollars in
millions): 30.765; Availability rate (percent): 88.60.
Aircraft: Other[A]; Budget request: (dollars in millions): 2,358.843;
Aircraft: Total; Budget request: (dollars in millions): $5,342.150;
Source: U. S. Air Force.
[A] Engines, missiles, electronic warfare, etc. The Air Force does not
compute supply availability for these items.
[End of table]
[End of section]
Appendix II: Description and Estimated Completion Dates of Spares
Campaign and Depot Maintenance Reengineering and Transformation
Spare-Parts-Related Initiatives:
Table 5: Spares Campaign Spare-Parts-Related Initiatives:
Initiative: 1. Establish virtual inventory control point; Description:
Provide single visibility over buy and repair requirements and
distribution.; Estimated completion date[A]: Feb. 2004.
Initiative: 2. Align supply chain manager focus (Weapon system supply
chain manager); Description: Single weapons system manager to execute
buy and repair priorities and other management decisions.; Estimated
completion date[A]: Mar. 2003.
Initiative: 3. Standardize use and expand role of regional supply
squadron; Description: Provides for supply management on a regional
basis, visibility of items in region.; Estimated completion date[A]:
Sept. 2004.
Initiative: 4. Improve financial management; Description: Tracks
weapons system support against plans and budget; Estimated completion
date[A]: Sept. 2002.
Initiative: 5. Improve demand & repair workload forecasting;
Description: Predict more accurately number and type of items needing
repair and number of new items.; Estimated completion date[A]: Sept.
2007.
Initiative: 6. Improve spares budgeting (Spares requirement review
board); Description: Consolidated requirements determination.;
Estimated completion date[A]: Jan. 2003.
Initiative: 7. Adopt improved purchasing and supply chain management;
Description: Implement commercial best practices into Air Force supply
management.; Estimated completion date[A]: Mar. 2006.
Source: U. S. Air Force:
[A] This represents reported completion dates as of February 2003. The
Innovation and Transformation Directorate plans to review each
initiative and determine what further actions should be taken.
[End of table]
Table 6: Depot Maintenance Reengineering and Transformation Spare-
Parts-Related Initiatives:
Initiative: 8. Standard process improvement strategy; Description:
Establish and implement a corporate strategy for directing, overseeing,
coordinating, improving, and facilitating depot maintenance
operations.; Estimated completion date[A]: Sept. 2003.
Initiative: 9. Maintenance training; Description: Develop a maintenance
training organization as a single training entity for all depot
maintenance training. Build maintenance orientation and technical
training plans.; Estimated completion date[A]: Sept. 2003.
Initiative: 10. Maintenance first line supervisory training;
Description: Establish program that will train first line supervisory
candidates prior to assumption of duties.; Estimated completion
date[A]: Oct. 2003.
Initiative: 11. Maintenance professional development; Description:
Train and develop maintenance workers and leaders.; Estimated
completion date[A]: Oct. 2002.
Initiative: 12. Awards/appraisal systems; Description: Establish
performance plans that focus on cost, schedule, performance and quality
goals. Motivate work force by establishing incentive programs, which
instill a desire to excel.; Estimated completion date[A]: Sept. 2003.
Initiative: 13. Unresponsive hiring process; Description: Establish
hiring authorities to appoint the best qualified candidates and
streamline the staffing process (external & internal).; Estimated
completion date[A]: June 2003.
Initiative: 14. Engineering hiring/retention; Description: Develop
compensation packages competitive with the commercial market.;
Estimated completion date[A]: Sept. 2004.
Initiative: 15. Multi-skilling; Description: Determine how to employ
multi-skilling for best value implementation.; Estimated completion
date[A]: Jan. 2003.
Initiative: 16. Supervisor's distractors; Description: Continue to
assess impact of data systems on 1st level supervisor's time. Review
regulatory mandates assigning additional duties to first levels.;
Estimated completion date[A]: Feb. 2003.
Initiative: 17. Formalize the depot integrated infrastructure master
plan; Description: Formalize the depot infrastructure strategic
planning process.; Estimated completion date[A]: Sept. 2004.
Initiative: 18. Incentivize infrastructure investment in maintenance
and repair; Description: Incentivize infrastructure investment in
maintenance and repair.; Estimated completion date[A]: Sept. 2003.
Initiative: 19. Train the depot workforce in capital purchase program
and economic analysis processes; Description: Train the depot workforce
in capital purchase program and economic analysis.; Estimated
completion date[A]: Apr. 2004.
Initiative: 20. Improve preventative/ predictive maintenance programs;
Description: Improve preventative maintenance program.; Estimated
completion date[A]: Oct. 2003.
Initiative: 21. Identify and remove impediments to facility and
equipment maintenance system usage; Description: Remove impediments to
broad use of facility and equipment maintenance system.; Estimated
completion date[A]: May 2003.
Initiative: 22. Streamline maintenance & repair process and procedures;
Description: Improve maintenance and repair facility project delivery
process.; Estimated completion date[A]: June 2003.
Initiative: 23. Provide greater flexibility for implementing workload
changes; Description: Provide greater flexibility for implementing
workload changes.; Estimated completion date[A]: Oct. 2003.
Initiative: 24. Add surge requirements to infrastructure planning and
programming; Description: Add surge requirements to infrastructure
planning and programming.; Estimated completion date[A]: Sept. 2004.
Initiative: 25. Improve capital purchase program process; Description:
Improve capital purchase program process.; Estimated completion
date[A]: Apr. 2003.
Initiative: 26. Create a depot capital investment funding
appropriation; Description: Create two depot capital investment funding
appropriations lines--new system investments and recap of existing
systems (legacy).; Estimated completion date[A]: Nov. 2002.
Initiative: 27. Information technology master plan; Description:
Establish a comprehensive vision for managing information resources;
Estimated completion date[A]: Sept. 2002.
Initiative: 28. Automated information technology initiative;
Description: Insert devices used to automate data collection on the
shop floor to enhance depot productivity.; Estimated completion
date[A]: Mar. 2003.
Initiative: 29. Depot X; Description: Establish a lab environment
across air logistics centers, which will enhance the ability to rapidly
test solutions to meet user requirements/ enhancements across depot
maintenance systems.; Estimated completion date[A]: Apr. 2003.
Initiative: 30. Improve stock level processes; Description: Improve
stock levels for low demand items through policy changes.; Estimated
completion date[A]: Sept. 2002.
Initiative: 31. Improve material support policies; Description: Clarify
material support policies to better state objectives and establish
standards.; Estimated completion date[A]: Jan. 2004.
Source: U. S. Air Force.
[A] This represents reported completion dates as of February 2003. The
Innovation and Transformation Directorate plans to review each
initiative and determine what further actions should be taken.
[End of table]
[End of section]
Appendix III: Not-Mission-Capable Supply Rate Targets by Weapon System:
Goal 2 of the Air Force Strategic Plan cites the percentage of aircraft
that cannot perform their mission because spare parts are not
available, referred to as not-mission-capable supply, as a performance
measure. Table 5 provides the not-mission-capable supply rates for the
Air Force's weapons systems.
Table 7: Not-Mission-Capable Supply Rate Targets by Weapon System:
Aircraft: A-10; Target (percent): 8.
Aircraft: B-1; Target (percent): 22.
Aircraft: B-52; Target (percent): 12.
Aircraft: C-5; Target (percent): 8.5.
Aircraft: C-130; Target (percent): 12.
Aircraft: C-141; Target (percent): 6.
Aircraft: C-17; Target (percent): 4.6.
Aircraft: E-3; Target (percent): 6.
Aircraft: F-15; Target (percent): 9.
Aircraft: F-15E; Target (percent): 9.
Aircraft: F-16; Target (percent): 8.
Aircraft: F-117; Target (percent): 7.
Aircraft: KC-135; Target (percent): 8.5.
Source: U. S Air Force:
Note: Not-mission-capable supply rate is the percentage of time a
weapon system is down because parts are not available.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Defense:
DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS
3500 DEFENSE PENTAGON WASHINGTON, DC 20301-3500:
JUN 24 2003:
Mr. William Solis, Director:
Defense Capabilities and Management U.S. General Accounting Office:
441 G Street, N.W. Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the GAO draft GAO-
03-706, "DEFENSE INVENTORY: Air Force Plans and Initiatives to Mitigate
Spare Parts Shortages Need Better Implementation," dated May 15, 2003
(GAO Code 350249).. The DoD generally concurs with the intent of the
recommendations.
Detailed comments on the draft report recommendations are included in
the enclosure. The DoD appreciates the opportunity to comment on the
draft report.
Sincerely,
Allen W. Beckett
Principal Assistant:
Enclosure:
Signed for Allen W. Beckett Principal Assistant:
GAO CODE 350249/GAO-03-706:
"DEFENSE INVENTORY: AIR FORCE PLANS AND INITIATIVES TO MITIGATE SPARE
PARTS SHORTAGES NEED BETTER IMPLEMENTATION":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
direct the Secretary of the Air Force to incorporate the Air Force
Strategic Plan's performance measures and targets into the subordinate
Logistics Support Plan and the Supply Strategic Plan. (Page 16/Draft
Report):
DoD RESPONSE: Concur with intent. Air Force Directorate of Innovation
and Transformation (AF/ILI) is currently developing a balanced
scorecard and supporting metrics to measure the performance of each of
the Air Force (AF) Logistics Transformation initiatives. In addition,
AF/ILI is reviewing both higher and lower level strategic plans to
ensure initiatives and performance measures are in agreement throughout
the tier of planning documents. For instance, a review of the AF
Materiel Management Strategic Plan has been conducted and comments
provided will be incorporated and initiatives will be updated.
Therefore, no further direction is required and action consistent with
this recommendation is complete.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
direct the Secretary of the Air Force to commit to start those
remaining initiatives needed to address the causes of spare parts
shortages or clearly identify how they have been incorporated into
those initiatives already underway. (Page 16/Draft Report):
DoD RESPONSE: Concur with intent. The AF Spares Campaign has been
refined into the Ten Focus Initiatives that are being tracked. The
original 19 initiatives were developed through the periodic roll up of
related problem sets under a number of themes and many of the issues
were redundant in terms of problem or solution set. These initiatives
were refined and either consolidated under the ten focus initiatives or
were overtaken by other events. In either case, the Ten Focus
Initiatives of the Spares Campaign correctly encompasses the entire
supply chain process and adequately addresses areas requiring
improvement. Therefore, it would be inefficient and unnecessary to
track progress on individual actions from the original 19 initiatives
separately. Action consistent with this recommendation is complete.
RECOMMENDATION 3: The GAO recommended that the Secretary of Defense
direct:
the Secretary of the Air Force to adopt performance measures and
targets for its initiatives that will show how their implementation
will affect critical spare parts availability and readiness. (Page 16/
Draft Report):
DoD RESPONSE: Concur with intent. The establishment of the Directorate
of Innovation and Transformation (AF/ILI) with the mandate to drive
logistics transformation is consistent with the direction of the AF
Strategic Plan. The key is weapon system availability and readiness,
not parts availability. As part of the logistics transformation
mandate, AF/ILI will measure all initiatives in terms of meeting the
following weapon system availability (WSA) and cost stretch goals:
* 20 percent increase in aircraft availability within the next three
years:
* Zero real Operation and Support (O&S) growth over the FY 04-09 Future
Years Defense Plan (FYDP):
AF/ILI has also directed that all subordinate goals for each of the
individual initiatives be tied to these overall targets. Therefore, no
further direction is required and action consistent with this
recommendation is complete.
RECOMMENDATION 4: The GAO recommended that the Secretary of Defense
direct the Secretary of the Air Force to direct the new Innovation and
Transformation Directorate to establish plans and priorities for
improving management of logistics initiatives consistent with the Air
Force Strategic plan. (Page 16/Draft Report):
DoD RESPONSE: Concur with intent. AF/ILI is committed to ensure that
Air Force logistics initiatives plans and priorities are established
and harmonized with the Air Force Strategic Plan. Campaign plans are
currently in draft, which spell out and track milestones associated
with each initiative to execution. Therefore no further direction is
required and action consistent with this recommendation is complete.
RECOMMENDATION 5: The GAO recommended that the Secretary of Defense
direct the Secretary of the Air Force to request spare parts funds in
its budget consistent with results of its spare parts requirements
determination process. (Page 16/Draft Report):
DoD RESPONSE: Concur with intent. The Air Force is committed to
identifying the total spares requirement for funding and advocating
full funding for the requirement. In the instance cited in the draft
GAO report, the spares budget was projected consistent with the new
requirements determination process; however, funding is constrained. No
further direction is required and action consistent with this
recommendation is complete.
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contact:
Richard G. Payne, (757) 552-8119 Connie W. Sawyer, Jr., (757) 552-8140:
Acknowledgements:
In addition to the names above, Gina O. Ruidera, Alfonso Q. Garcia,
Susan K. Woodward, and Barry L. Shillito also made significant
contributions to this report.
FOOTNOTES
[1] These figures are based on the Air Force's fiscal year 2002 through
2004 OP-31 Budget exhibits about which GAO recently reported concerns.
U.S. General Accounting Office, Defense Inventory: Better Reporting on
Spare Parts Spending Will Enhance Congressional Oversight, GAO-03-18
(Washington, D.C.: October 2002).
[2] Office of Secretary of Defense, Inventory Management Study
(Washington, D.C.: August 2002)
[3] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Defense, GAO-03-98 (Washington, D.C.:
January 2003) and U.S. General Accounting Office, Air Force Inventory:
Parts Shortages Are Impacting Operations and Maintenance
Effectiveness, GAO-01-587 (Washington, D.C.: June 27, 2001).
[4] U.S. General Accounting Office, Defense Inventory: The Department
Needs a Focused Effort to Overcome Critical Spare Parts Shortages, GAO-
03-707 (Washington, D.C.: June 27, 2003); U.S. General Accounting
Office, Defense Inventory: The Army Needs a Plan to Overcome Critical
Spare Parts Shortages, GAO-03-705 (Washington, D.C.: June 27, 2003);
U.S. General Accounting Office, Defense Inventory: Navy Logistics
Strategy and Initiatives Need to Address Spare Parts Shortages, GAO-03-
708 (Washington, D.C.: June 27, 2003); U.S. General Accounting Office,
Defense Inventory: Several Actions Are Needed to Further DLA's Efforts
to Mitigate Shortages of Critical Parts, GAO-03-709 (forthcoming); and
U.S. General Accounting Office, Defense Inventory: Air Force
Item Manager Views of Repair Parts Issues Consistent With Issues
Reported in the Past, GAO-03-684R (Washington, D.C.: May 21, 2003).
[5] In the Air Force, critical spare parts are those that would prevent
a weapon system from accomplishing its assigned mission. For example,
the Air Force routinely reports the top items that prevent an aircraft
from being mission capable, such as hydraulic manifolds for the C-5.
[6] Pub. L. 103-62, Aug. 3, 1993.
[7] Output means the tabulation, calculation, or recording of activity
or effort and can be expressed in a quantitative or qualitative manner.
[8] The Air Force defines aircraft supply availability as 1 minus the
total not-mission capable supply rate. For example, a not-mission
capable supply rate of 9.6 percent would equate to 90.4 percent
aircraft supply availability.
[9] Mission capable rates indicate the percentage of aircraft that can
perform at least one of its assigned missions. Not-mission-capable
supply and not-mission-capable maintenance are indicators that aircraft
cannot perform any of their assigned missions because of supply
shortages and maintenance requirements, respectively. Cannibalizations
represent the removal of a good part from one aircraft in order to
install it on another aircraft.
[10] Originally called Depot Maintenance Review Team.
[11] An end-state is the desired outcome of the task.
[12] Pipeline represents the process flow from the source of
procurement of a part to its point of use. Safety stocks represent the
quantity of parts, in addition to amounts needed for day to day
operations, required to be available to permit continuous operations
should normal replacement systems become interrupted.
[13] The 2004 budget request included supply availability data
consistent with modifications in the budget exhibit, see Office of
Secretary of Defense, Inventory Management Study (Washington, D.C.:
August 2002).
[14] We did not independently verify the quality or validity of the Air
Force's model to predict supply availability.
[15] The balanced scorecard links goals, strategies, objectives and
measures to an organization's plan.
[16] We did not independently verify the quality or validity of the Air
Force's model to predict supply availability.
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