Military Logistics: Buying Army Spares Too Soon Creates Excess Stocks and Increases Costs
NSIAD-89-196
Published: Aug 28, 1989. Publicly Released: Aug 28, 1989.
Skip to Highlights
Highlights
GAO reviewed the Department of the Army's internal inventory control practices, focusing on: (1) whether they allowed premature spare parts purchases; (2) the extent to which they contributed to excessive stock levels, premature deliveries, and increased holding costs; and (3) whether they supported item management decisions and precluded unnecessary purchases.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Army | The Secretary of the Army should direct the Commander, Army Materiel Command (AMC), to reinforce guidance to buying commands instructing them to adhere to Army Regulation 710-1, which does not provide for routinely initiating the procurement of spares in advance of the computed reorder points or purchasing quantities that exceed levels unless such action is economically justified. |
Closed – Implemented
GAO is satisfied that AMC has made its intentions clear to buying commands that premature buys are unauthorized. It has issued guidance to the commands reinforcing its policy. For these reasons, this recommendation is being closed out. An accomplishment for $102.2 million has been processed and approved.
|
| Department of the Army | The Secretary of the Army should direct the Commander, Army Material Command (AMC), to perform routine, periodic management reviews of buying commands to confirm that: (1) established procedures for cancelling or reducing unnecessary on-order item quantities are being followed; (2) guidance for documenting repair, procurement, and cutback transactions has been consolidated and the importance of understanding this guidance has been adequately emphasized to the involved staff as they carry out their daily duties; and (3) all transactions are reviewed and approved at the levels established by AMC. |
Closed – Implemented
A DOD Inspector General official stated that AMC is no longer doing compliance reviews due to the lack of personnel and funding. The official added, however, that database management advisory groups established at the buying commands are doing the compliance review function and reporting their results to AMC quarterly. No further follow up is required.
|
| Department of the Army | The Secretary of the Army should require that the next annual Financial Integrity Act assessment include a review of the internal control weaknesses discussed in this report. |
Closed – Implemented
The Army's DCSLOG reported this area as a weakness in March 1990. It stated Army policy was not followed for reducing quantities of items procured, an issue GAO presented in this report. For this reason, this recommendation should be closed out.
|
Full Report
Office of Public Affairs
Topics
Army procurementArmy suppliesDefense contingency planningDemurrage chargesInternal controlsInventory control systemsMilitary cost controlMilitary inventoriesReporting requirementsSpare parts