Defense Inventory:

Several Actions Are Needed to Further DLA's Efforts to Mitigate Shortages of Critical Parts

GAO-03-709: Published: Aug 1, 2003. Publicly Released: Aug 1, 2003.

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DOD's management, funding, and reporting of spending for spare parts programs have been a focus of GAO high risk reports for over a decade. They noted that spare parts shortages adversely affect military operations and readiness. Despite funding of about $1.9 billion over fiscal years 1999-2002 to increase availability of spare parts, managing to mitigate shortages still challenges the Defense Logistics Agency (DLA). GAO examined if (1) DLA's strategic planning addresses mitigating critical spare parts shortages that affect readiness, (2) strategic initiatives will likely mitigate these shortages, (3) a DOD-directed initiative has improved availability of critical aviation parts, and (4) DLA can identify the impact of added investment on parts availability.

DLA's Strategic Management System, meant to transform its 2002-2007 logistics operations, addresses the mitigation of readiness-affecting shortages of critical spare parts. The system includes a strategic plan with goals, strategies, and objectives; a balanced scorecard to monitor progress; and a business plan that contains 97 initiatives. Of these initiatives, DLA identified 24 as linked to spare parts shortages. The DLA strategic system incorporates attributes of strategic planning outlined in the Government Performance and Results Act of 1993. The 24 initiatives, if fully implemented, could help mitigate critical spare parts shortages and improve supply readiness because, in part, they address causes for the shortages. Of the 24 DLA-identified initiatives, 18 should improve availability of parts identified by the services as critical to readiness; and 6 should indirectly improve parts availability through modernized logistics systems and business processes. A $500-million DOD-directed aviation investment initiative, not part of DLA's strategic system, increased critical parts availability and likely supply readiness. It improved the aggregate, or total average, availability of three critical groups of DLA-managed parts in the first 3 fiscal years--2000-2002--of the 4-year initiative. However, DLA's aggregate 85-percent goal does not clearly reveal that many parts are still far below 85 percent. For example, at the end of fiscal year 2002, of the 10,291 critical aviation parts selected for investment, about 4,900 met or exceeded the aggregate measure, but over 5,400 did not. Of these, about 2,900 parts were available under 35 percent of the time. A DOD regulation, since revised to allow waivers, caused 3,342 parts to be below the 85-percent availability goal. DLA can estimate the impact of increased funding on supply availability. Investment costs, however, will be significant--DLA estimated $748 million to obtain an 85-percent minimum availability of the 219,071 most critical parts. Also, necessary inventory levels may take years to build, and increases in unit readiness are not assured because supply is only one readiness factor.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD acknowledged that it will submit waivers as appropriate. DOD 4140.1R, dated May 2003, gives the DLA authority to waive the lead time in cases where creditable evidence exists.

    Recommendation: To improve the supply availability of critical readiness degrading spare parts that may improve the overall readiness posture of the military services, the Secretary of Defense should direct the Director of the Defense Logistics Agency to submit, as appropriate, requests for waiver(s) of the provisions of the DOD Supply Chain Materiel Management Regulation 4140.1-R that limit the safety level of supply parts to specific demand levels. Such waivers would allow DLA to buy sufficient critical spare parts that affect readiness of service weapon systems to attain an 85-percent minimum availability goal.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD agreed with the intent of the recommendation, but not the prescribed action. DODIG has closed the recommendation based on its proposal to link item availability to desired readiness levels instead of adopting an 85 percent minimum goal for critical items.

    Recommendation: To improve the supply availability of critical readiness degrading spare parts that may improve the overall readiness posture of the military services, the Secretary of Defense should direct the Director of the Defense Logistics Agency to change the agency's current aggregate 85-percent supply availability goal for critical spare parts that affect readiness, to a minimum 85-percent supply availability goal for each critical spare part, and because of the long lead times in acquiring certain critical parts, establish annual performance targets for achieving the 85-percent minimum goal.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DODIG has closed this recommendation because DOD's proposed action is to fund according to agreed priorities for item availability and desired readiness levels. DOD will not be replacing the aggregate 85-percent supply availability goal with an 85-percent minimum goal.

    Recommendation: To improve the supply availability of critical readiness degrading spare parts that may improve the overall readiness posture of the military services, the Secretary of Defense should direct the Director of the Defense Logistics Agency to prioritize funding as necessary to achieve the annual performance targets and ultimately the 85-percent minimum supply availability goal.

    Agency Affected: Department of Defense

 

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