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Report to the Chairman, Subcommittee on Defense, Committee on 
Appropriations, House of Representatives:

United States General Accounting Office:

GAO:

August 2003:

Defense Inventory:

Opportunities Exist to Improve Spare Parts Support Aboard Deployed Navy 
Ships:

Defense Inventory:

GAO-03-887:


GAO Highlights:

Highlights of GAO-03-887, a report to the Chairman, Subcommittee on 
Defense, Committee on Appropriations, House of Representatives 

Why GAO Did This Study:

GAO is conducting a series of reviews in response to a congressional 
request to identify ways to improve the Department of Defense’s 
(DOD’s) availability of high-quality spare parts for ships, aircraft, 
vehicles, and weapons systems. This report focuses on the 
effectiveness of the U.S. Navy’s spare parts support to deployed 
ships. It examines (1) the extent to which the Navy is meeting its 
spare parts supply goals, (2) the reasons for any unmet supply goals, 
and (3) the effects of spare parts supply problems on ship operations, 
mission readiness, and costs.

To conduct the review, GAO looked at data on parts requisitions, 
maintenance work orders, and casualty reports for various Navy ship 
deployments between fiscal years 1999 and 2003.

What GAO Found:

In typical 6-month deployments at sea, Navy ships are generally unable 
to meet the Navy’s supply performance goals for spare parts. GAO’s 
analysis of data for 132,000 parts requisitions from ships in 6 
Atlantic and Pacific battle groups deployed in fiscal years 1999 and 
2000 showed that 54 percent could be filled from inventories onboard 
ship. This supply rate falls short of Navy’s long-standing 65 percent 
goal. When parts were requisitioned, maintenance crews waited an 
average of 18.1 days to get the parts—more than 3 times the Navy’s 
wait-time goal of 5.6 days for ships outside the continental United 
States. The Navy recognizes it has not met its supply goals for over 
20 years.

Two key problems contribute to the Navy’s inability to achieve its 
supply goals. Its ship configuration records, which identify the types 
of equipment and weapons systems that are installed on a ship, are 
often inaccurate because they are not updated in a timely manner and 
because audits to ensure their accuracy are not conducted 
periodically. In addition, the Navy’s historical demand data are often 
out-of-date, incomplete, or erroneous because supply crews do not 
always enter the right information into the ships’ supply system 
databases or do not enter it on a timely basis. Because configuration-
record and demand data are used in models to estimate what a ship 
needs to carry in inventory, inaccuracies in this information can 
result in a ship’s not stocking the right parts for the equipment on 
board or not carrying the right number of parts that may be needed 
during deployment. The Navy’s reasons for unfilled requisitions are 
shown in the figure below.

While precise impacts are not always well defined, the Navy’s spare 
parts supply problems can affect a deployed ship’s operations, mission 
readiness, and costs. GAO’s analysis of data on 50,000 work orders 
from 6 deployed battle groups showed that 58 percent could not be 
completed because the right parts were not available onboard. More 
complete reporting of work orders identified as critical or important 
would have resulted in a more complete assessment of ship mission 
readiness. In addition, the Navy expends substantial funds—nearly $25 
million for six ships GAO reviewed—to maintain large inventories that 
are not requisitioned during deployments.

What GAO Recommends:

GAO is recommending that the Navy (1) develop plans to conduct 
periodic ship configuration audits and ensure that configuration 
records are updated and maintained, (2) ensure that parts demand data 
are entered into ship supply systems promptly and accurately as 
required, (3) periodically purge unneeded spare parts from ship stocks 
to reduce costs, and (4) ensure casualty reports are issued consistent 
high-priority maintenance work orders as required. DOD concurred with 
the first three recommendations and the intent of the fourth 
recommendation. 

www.gao.gov/cgi-bin/getrpt?GAO-03-887.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact William M. Solis at 
(202) 512-8412 or solisw@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Deployed Ships' Supply Goals Go Unmet As Only About Half of Needed 
Spare Parts Are Onboard:

Inaccurate Configuration and Demand Data Contribute to Unmet 
Supply Goals:

Spare Parts Supply Problems Can Affect Ship Operations and Mission 
Readiness and Increase Costs:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Navy Work Order Priority Code Descriptions:

Appendix III: Navy Reasons for Spare Parts Not Onboard Deployed Ships:

Appendix IV: Comments from the Department of Defense:

Tables:

Table 1: Navy Spare Parts Supply Rates for Six Selected Deployed Battle 
Groups, Fiscal Years 1999-2000:

Table 2: Navy Spare Parts Average Wait-Times, in Days, for Six Selected 
Deployed Battle Groups, Fiscal Years 1999-2000:

Table 3: Percentages of Parts Types and Quantities Allowed to Be 
Stocked Onboard and the Parts Supply Effectiveness Rates for Lincoln 
Battle Group Surface Ships during the First 90 Days of Deployment, 
July-September 2002:

Table 4: Impact of Spare Parts Shortages on Completion of Maintenance 
Jobs for Selected Fiscal Years 1999 to 2000 Deployments:

Table 5: Number of Different Types of Parts Carried Compared with Total 
and Filled Requisitions for Lincoln Battle Group Surface Ships after 
6 Months of Deployment, July-December 2002:

Figures:

Figure 1: Estimated Value of the Spare Parts Inventory Carried Onboard 
and Actually Used during First 6 Months of Deployment on Lincoln Battle 
Group Surface Ships, Fiscal Year 2002:

Figure 2: Spare Parts Requisitions Filled and Unfilled for Six Selected 
Battle Groups, Fiscal Years 1999-2000, According to Reasons Identified 
by the Navy:

Abbreviations:

3-M: Maintenance and Material Management:

CASREP: Casualty Report:

COSAL: Coordinated Shipboard Allowance List:

DOD: Department of Defense:

SORTS: Status of Resources and Training System:

United States General Accounting Office:

Washington, DC 20548:

August 29, 2003:

The Honorable Jerry Lewis 
Chairman, 
Subcommittee on Defense 
Committee on Appropriations 
House of Representatives:

Dear Mr. Chairman:

During deployments of U.S. Navy ships around the world, it is 
inevitable that some of the equipment or weapons systems on board these 
ships will break down and need repairs. To meet this eventuality, the 
Navy stocks each ship with tens of thousands of spare parts to enable 
the ship's crew to maintain and repair the equipment in a timely 
manner. If the needed spare parts are not on board the ship, the repair 
work could be delayed--and equipment disabled--while supply crews 
obtain the parts from off-ship sources.[Footnote 1] During this delay, 
the ship's operations and mission readiness may be compromised.

This report is one of a series of reviews that we are conducting in 
response to your request that we identify ways to improve the 
Department of Defense's (DOD's) availability of high quality spare 
parts for aircraft, ships, vehicles, and weapons systems. In one of 
these reviews, we found that the Navy's servicewide strategic plan does 
not specifically address means to mitigate critical spare parts 
shortages.[Footnote 2] This report focuses on the effectiveness of 
spare parts support provided to deployed U.S. Navy ships. To address 
this issue, we examined (1) the extent to which the Navy is meeting its 
spare parts supply goals on deployed ships, (2) the reasons for any 
unmet supply goals, and (3) the effects of spare parts supply problems 
on ships' operations, mission readiness, and costs.

In performing our work, we examined a variety of data related to Navy 
spare parts supply and ship maintenance. These data covered different 
time periods between 1999 and 2003 and represented the most current or 
accessible information available during the period of our analysis. As 
part of our study, we analyzed spare parts requisitions from Navy ships 
deployed in Atlantic and Pacific fleet battle groups,[Footnote 3] 
amphibious readiness groups, and Marine Corps expeditionary forces for 
varying periods during fiscal years 1999 to 2001. We also analyzed 
maintenance work order and casualty report data from the 6-month 
deployments of the Truman battle group (Atlantic Fleet) in fiscal year 
2000, and spare parts carried and used by the Lincoln battle group 
(Pacific Fleet) in fiscal year 2002. In addition, we reviewed 
historical information from 1982 to 2000 on the Navy's ability to fill 
onboard spare parts requests for both deployed and nondeployed ships. 
We conducted our review from July 2002 to May 2003 in accordance with 
generally accepted government auditing standards. Further details on 
the scope and methodology we used in our work are found in appendix I.

Results in Brief:

During typical 6-month deployments at sea, Navy ships generally have 
been unable to meet the goals that the Navy fleets use in assessing 
spare-parts supply performance. Our analysis of data for ships in 6 
battle groups from the Atlantic and Pacific fleets that deployed during 
fiscal years 1999 and 2000 indicated that only about 54 percent of the 
total of 131,855 requisitions could be filled from onboard ship stocks 
and that the remainder had to be requested from off-ship sources. 
This performance falls short of the average supply effectiveness 
rate[Footnote 4] of 65 percent that the Navy fleets use as a goal for 
filling spare parts requisitions from onboard stocks. When needed high-
priority parts were requisitioned, maintenance crews had to wait an 
average of about 18.1 days to receive the parts--more than three times 
the Navy's wait-time goal of 5.6 days for ships outside the continental 
United States. Moreover, other Navy data suggest that these wait times 
can even be longer. These unmet goals are not a new problem. The Navy 
recognizes that its ship supply effectiveness performance has fallen 
short of its goals for more than 20 years.

Our analysis identified two key problems that contribute to the 
Navy's inability to achieve its supply goals for deployed ships. First, 
the Navy's ship configuration records, which identify the kinds of 
equipment or weapons systems installed on a ship, are often inaccurate. 
These inaccuracies occur because configuration records are not always 
captured or updated in a timely manner when new equipment is installed 
aboard ship and because audits to ensure correct records are not 
conducted periodically. Second, the Navy's historical demand data, 
which reflect the failure rates of specific parts, are frequently out-
of-date, incomplete, or erroneous because the right information is not 
always entered, or entered on a timely basis, into the supply system 
databases as required. Because the Navy uses configuration records and 
demand data in its allowance models to estimate what a ship needs to 
carry in its inventory during deployment, inaccuracies in this data can 
result in a ship's not stocking the right parts--or not carrying the 
right number of parts--for the equipment or systems installed on board. 
Thus, even though a ship may stock nearly all of the parts identified 
on its allowance list, it may still fall short of meeting the Navy's 
supply goals.

The Navy's spare parts supply problems can adversely affect a deployed 
ship's operations and mission readiness because necessary repairs may 
be delayed while equipment remains disabled, and they also can increase 
costs. Our analysis of data on more than 50,000 maintenance work orders 
opened during the deployments of 6 battle groups indicated that about 
29,000, or 58 percent, could not be completed because the needed repair 
parts were not available on board ship. The full impact of such 
shortages on a ship's operations and mission readiness is not easily 
determined because of discrepancies in the numbers of high-priority 
maintenance work orders and casualty reports issued.[Footnote 5] An 
inspection of data for one battle group showed that, although many of 
the work orders were identified as high-priority because they affected 
equipment critical for the ship's operations and mission readiness, 
ship crews did not always issue the required casualty reports. Where 
casualty reports were issued, these problems were generally reflected 
in ship's readiness reporting. However, fuller casualty reporting would 
have likely resulted in a more complete assessment of readiness. The 
Navy's parts supply problems can also affect costs. Although the exact 
amounts have not been quantified, Navy officials recognize that they 
incur additional costs--when needed spare parts are not available on 
board ship--to locate and transport the needed parts from off-ship 
sources. The Navy also expends substantial funds--totaling nearly 
$25 million for the 6 ships we reviewed--to maintain large inventories 
that are not requisitioned during deployments because its efforts to 
periodically identify and remove unneeded spare parts from ship 
inventories are given low priority.

Given the critical nature of spare parts shortages and their impact on 
ship operations and readiness, we are recommending that the Secretary 
of Defense direct the Secretary of the Navy to (1) develop plans to 
improve ship configuration records; (2) ensure that historical demand 
data are recorded promptly and accurately as required, (3) periodically 
identify and, when appropriate, purge unnecessary spare parts from its 
ships' inventories to reduce costs; and (4) ensure that casualty 
reports are issued consistent with high priority maintenance work 
orders as required to determine clearly the impact of spare parts 
shortages on ships' operations and mission readiness. DOD concurred 
with the first three recommendations and concurred with the intent of 
the fourth recommendation. DOD's comments and our evaluation of them 
are on page 20 of this report.

Background:

The Chief of Naval Operations is responsible to the Secretary of the 
Navy for the command, utilization of resources, and operating 
efficiency of the operational forces of the Navy and of the Navy's 
shore activities. The shore establishment provides support to the 
operating forces (known as the fleet), including facilities for the 
repair of machinery and electronics, ships, and aircraft, and for the 
storage of spare parts. The Naval Supply Systems Command provides naval 
forces with supplies and services through a worldwide, integrated 
supply system. Its Naval Inventory Control Point exercises centralized 
control over different line items of repair parts, components, and 
assemblies for ships, aircraft, and other weapons systems.

Supplying spare parts to deployed ships requires coordination between 
the supply command and the Naval operating forces. The operating forces 
report to the Chief of Naval Operations and provide, train, and equip 
naval forces. The operating forces also report to the appropriate 
Unified Combatant Commanders. As units of the Navy enter one of the 
designated worldwide areas of Naval responsibility, they are 
operationally assigned to the appropriate numbered fleet. All Navy 
units also have an administrative chain of command with the various 
ships reporting to the appropriate ship type commander: aircraft 
carriers, aircraft squadrons, and air stations are under the Commander, 
Naval Air Force; submarines come under the Commander, Submarine Force; 
and all other ships fall under the Commander, Naval Surface Forces. 
Normally, the type commander controls the ship during its primary and 
intermediate training cycles, and then it moves under the operational 
control of a fleet commander.

The Navy determines what kinds of spare parts to carry on board 
deployed ships by identifying the kinds of equipment that are installed 
(the ship's configuration) and the types and quantities of repair parts 
and any special tools, test equipment, or support equipment needed to 
do preventive and corrective maintenance during extended and 
unreplenished periods at sea. Specifically, the Navy identifies 
maintenance requirements and uses them to develop a list of allowable 
parts for the equipment. For parts on the list, the Navy uses predicted 
failure rates, which it updates using actual demand for parts data in 
inventory allowance models. The office of the Chief of Naval Operations 
approves these models.

Although the Navy revised its instruction for determining spare parts 
supply effectiveness in October 1999, it continues informally to use 
the supply-system performance goals that were established in 
1983.[Footnote 6] These performance goals measure a ship's ability to 
fill all of the repair part requisitions that it receives. Two 
important goals are: (1) that gross availability of 65 percent of 
repair parts required by ships and aircraft carriers are to be filled 
from onboard inventories[Footnote 7] and (2) that the average customer 
wait-time for the delivery of high-priority parts from ships' supply 
inventories and off-ship sources is to occur within 135 hours (or about 
5.6 days) for ships outside of the continental United States. This 
average customer wait-time is the supply system's response time from 
the date an order for a required part is issued until it is received by 
the customer. The Navy is in the process of revising its supply 
performance goals but it has not yet completed this work.[Footnote 8]

The Navy's annual budgets contain about $750 million for ships' spare 
parts, including about $200 million for initial spares and about 
$525 million for replenishment spares. However, the Navy also 
identifies requirements for spare parts that have not been funded. For 
example, it identified $200 million in unfunded requirements in the 
fiscal years 2002 to 2004 budgets to increase safety-level stock for 
repairable items.

Deployed Ships' Supply Goals Go Unmet As Only About Half of Needed 
Spare Parts Are Onboard:

Only about 54 percent of spare parts requisitions for ships in 6 battle 
groups in the Atlantic and Pacific fleets deployed in fiscal years 1999 
and 2000 could be filled from onboard sources--a supply effectiveness 
rate that fell below the Navy's goal of 65 percent. When priority parts 
were not on board, ships had to wait an average of 18.1 days, more than 
3 times the Navy's wait-time goal of 5.6 days for ships outside the 
continental United States. The Navy has fallen short of meeting its 
ship supply performance goals for more than 20 years.

Ships Average 54 Percent Onboard Parts Supply Rates:

Our analysis of ships in 6 selected Atlantic and Pacific fleet battle 
groups deployed in fiscal years 1999 and 2000 showed that on average 
they were able to supply about 54 percent of the spare parts that were 
requisitioned from onboard inventories. As table 1 shows, this average 
supply effectiveness rate ranged from 51 to 61 percent for different 
battle groups during that period. The rates fell short of the 
Navy's supply system performance goal of 65 percent for surface ships 
and aircraft carriers, which it has used informally since 1999.

Table 1: Navy Spare Parts Supply Rates for Six Selected Deployed Battle 
Groups, Fiscal Years 1999-2000:

Atlantic Fleet:

Battle group (year deployed): Enterprise (1999)[B]; Total number of 
requisitions: 33,346; Number filled onboard: 17,123; Supply rate[A]: 
51; Number not filled onboard: 16,213; Percent not filled: 49.

Battle group (year deployed): Kennedy (1999); Total number of 
requisitions: 35,992; Number filled onboard: 19,127; Supply rate[A]: 
53; Number not filled onboard: 16,865; Percent not filled: 47.

Battle group (year deployed): Truman (2000); Total number of 
requisitions: 22,253; Number filled onboard: 12,069; Supply rate[A]: 
54; Number not filled onboard: 10,184; Percent not filled: 46.

Pacific Fleet:

Battle group (year deployed): Constellation (1999); Total number of 
requisitions: 12,432; Number filled onboard: 7,556; Supply rate[A]: 61; 
Number not filled onboard: 4,876; Percent not filled: 39.

Battle group (year deployed): Stennis (2000); Total number of 
requisitions: 16,175; Number filled onboard: 9,668; Supply rate[A]: 60; 
Number not filled onboard: 6,507; Percent not filled: 40.

Battle group (year deployed): Lincoln (2000); Total number of 
requisitions: 11,657; Number filled onboard: 5,937; Supply rate[A]: 51; 
Number not filled onboard: 5,720; Percent not filled: 49.

Battle group (year deployed): Total/average percent; Total number of 
requisitions: 131,855; Number filled onboard: 71,490; Supply rate[A]: 
54; Number not filled onboard: 60,365; Percent not filled: 46.

Source: GAO analysis of Navy data.

[A] The supply rate is the percentage of requisitions filled from parts 
available on board ships.

[B] The Enterprise battle group deployed in October 1998, the first 
month of fiscal year 1999.

[End of table]

These supply rates for the deployed battle groups are consistent with 
fleetwide historical data available from Navy reports. These data show 
that from 1982 to 2000 Navy ships in both deployed and nondeployed 
status were, on average, able to fill about 55 percent of their parts 
requisitions from onboard inventories. These rates have not varied much 
over the past 20 years, indicating that little overall progress has 
been made in meeting the Navy's 65 percent goal.

These findings were further reinforced by our analysis of Navy data for 
Pacific Fleet surface ships in amphibious readiness groups and ships in 
Marine Corps expeditionary forces. These groups, which included a total 
of 42 ships, showed an average availability of about 54 percent of 
spare parts requisitioned during deployments in calendar years 1999 to 
2001, although individual ships reported a wide range of supply rates. 
For example, a destroyer in one Marine expeditionary force group 
reported an average supply rate of about 31 percent during deployment, 
whereas a ship used to transport and land Marines and their equipment 
and supplies in a deployed amphibious readiness group averaged 
62 percent.

Average Wait-Times Exceed Navy Goal:

When requisitioned parts were not on board ship, the Navy maintenance 
crew had to wait far longer than the Navy's stated wait-time goals to 
obtain the needed parts from off-ship sources. The wait-time goal for 
critical, high-priority items for ships outside the continental United 
States is 5.6 days.[Footnote 9] The Navy's data for these ships, which 
were deployed between fiscal year 2000 and February 2003, showed that 
when needed high-priority parts were requisitioned, maintenance crews 
had to wait an average of 18.1 days--more than 3 times the Navy's wait-
time goal--to receive the parts.[Footnote 10]

The average wait-times for all spare parts, not just priority items, 
are even longer. For the six Atlantic and Pacific battle groups 
deployed in fiscal years 1999 and 2000 that we analyzed, repair crews 
experienced an overall average wait-time of about 25.6 days, with a 
range of 16.2 to 32.5 days. Table 2 shows the wait-times for spare 
parts supplied both from off-ship sources, as well as from 
onboard supplies.

Table 2: Navy Spare Parts Average Wait-Times, in Days, for Six Selected 
Deployed Battle Groups, Fiscal Years 1999-2000:

Atlantic Fleet: 

Battle group (year deployed): Enterprise (1999)[A]; On-ship average 
wait-time days: 7.2; Off-ship average wait-time days: 57.2; Overall 
average wait-time days: 29.1.

Battle group (year deployed): Kennedy (1999); On-ship average wait-time 
days: 9.3; Off-ship average wait-time days: 39.7; Overall average 
wait-time days: 21.4.

Battle group (year deployed): Truman (2000); On-ship average wait-time 
days: 9.6; Off-ship average wait-time days: 55.5; Overall average 
wait-time days: 28.4.

Pacific Fleet: 

Battle group (year deployed): Constellation (1999); On-ship average 
wait-time days: 4.1; Off-ship average wait-time days: 39.1; Overall 
average wait-time days: 16.2.

Battle group (year deployed): Stennis (2000); On-ship average wait-time 
days: 17.7; Off-ship average wait-time days: 54.5; Overall average 
wait-time days: 32.5.

Battle group (year deployed): Lincoln (2000); On-ship average wait-time 
days: 10.6; Off-ship average wait-time days: 46.9; Overall average 
wait-time days: 23.8.

Battle group (year deployed): Total average wait-time; On-ship average 
wait-time days: 9.9; Off-ship average wait-time days: 49.6; Overall 
average wait-time days: 25.6.

Source: GAO analysis of Navy data.

[A] The Enterprise battle group deployed in October 1998, the first 
month of fiscal year 1999.

[End of table]

Navy supply officials said they are concerned about the lengthy average 
wait-time data being reported and are analyzing how this response time 
can be shortened. They were especially concerned that the number 
of days required for getting the parts to do the repair work seemed 
higher than what would be reasonable.

The best of the Navy's wait-time performance is for parts that are 
needed to repair high-priority, mission-critical equipment. Navy supply 
officials said that wait-times of about 12 to 14 days for these 
critical parts are about the best the Navy is achieving because it uses 
expeditors to locate the parts and it employs premium transportation to 
deliver the parts to the ships. For example, a ship will send a 
requisition for a critical part to a shore-based team whose job is to 
determine quickly if the part is available anywhere in the military 
supply system or elsewhere, and identify the fastest mode of 
transportation available (usually commercial overnight delivery) to an 
overseas point. The Navy will then pick up the part for final delivery 
to the ship while it is either in port or at sea.

Inaccurate Configuration and Demand Data Contribute to Unmet 
Supply Goals:

Our analysis identified two key problems that contribute to the Navy's 
inability to achieve its supply goals for deployed ships: inaccurate 
ship configuration records and incomplete, outdated, or erroneous 
historical parts demand data. The Navy uses these data in models that 
estimate the types of parts (range) and the number of each part (depth) 
that should be stocked on board a ship during its deployment. However, 
because of data inaccuracies, the ships may stock all of the parts they 
are allowed to carry but still find they cannot fill a large number of 
parts requisitions from onboard inventories, thus failing to meet the 
Navy's supply performance goals.

Ship Configuration Records Are Often Inaccurate:

Navy headquarters and fleet officials acknowledge that the accuracy 
of ship configuration data is a serious concern. Specifically, they 
said that (1) ship configuration records are not always updated in a 
timely manner when equipment or weapons systems are modified and 
(2) required configuration audits are not conducted regularly to ensure 
that configuration data correspond with the equipment or weapons 
systems on board. The Navy identifies current and accurate 
configuration data as the cornerstone of logistics support to its 
ships. Configuration records provide a detailed description of the 
characteristics, including dimensions and technical information, of 
each piece of equipment or weapon system on board the ship. This 
information is used in allowance models to prepare a Coordinated 
Shipboard Allowance List (COSAL). The allowance list identifies the 
individual spare parts related to each piece of equipment or weapon 
system on board. Ships depend on accurate configuration records to 
ensure that, among other things, the right spare parts and special 
tools, along with the proper manuals and other documentation, are 
available on board ship.

Navy officials said that while it is difficult to attribute any one 
cause to spare parts shortages on board, inaccurate ship configuration 
records are a major problem. If inaccurate configuration records are 
used in allowance models, the resulting allowance lists may identify 
some parts that should be stocked but that do not match the equipment 
that is actually on board. As a result, repair crews could requisition 
a part for a failed piece of equipment but find that the part is not on 
the allowance list and, thus, not in stock. The requisitions data from 
our sample of 6 battle group deployments showed that about 17.3 percent 
of the 60,365 unfilled requisitions were for parts that were not on the 
ships' allowance parts lists (see app. III).

One reason that ship configuration records are not current or accurate 
is that they are not updated or changed, as required, when equipment or 
systems are installed, removed, or modified. This problem can occur on 
both new and older ships. According to Navy supply and fleet officials, 
the allowance lists for new ships are often based on the configuration 
of the first ship to be built in the production line, and subsequent 
changes to follow-on ships' configurations are not always documented. 
Thus, a ship's actual configuration could change--and the records not 
be modified--even before the ship is delivered from the shipbuilder. On 
older ships, the equipment and systems are frequently upgraded or 
replaced without properly updating configuration data because the 
procedures in place to change configuration records as equipment is 
changed are not always followed. For example, when equipment is 
installed, removed, or modified by contractors, ship personnel do not 
always promptly or accurately enter these changes into the ship's 
configuration database in order that the spare parts required to 
support the altered equipment can be ordered.

Moreover, the Navy has not performed the configuration audits it has 
identified as needed to ensure that configuration data for equipment 
and weapons systems on board are accurate.[Footnote 11] According to 
Navy officials, these audits are supposed to be done periodically but 
none were conducted between 1995 and 2000 because of budget 
constraints. Officials said they are beginning to perform configuration 
audits again and are developing an audit program, but its 
implementation will depend on the funding available and whether funding 
is earmarked specifically for audits. The officials estimated that a 
viable program might cost about $500,000 a year. Without these audits, 
the extent of the configuration records' accuracy will remain unclear.

While audits have not been conducted for a period of time, validations-
-which are more in-depth than audits--of ships' configuration data have 
revealed problems with their accuracy. The Navy performs validations to 
establish the precise configuration of critical systems and equipment 
that is experiencing problems and corrects the configuration data 
(e.g., items are added or deleted) to reflect what is actually found on 
board the ships. Seven Pacific Fleet validations completed between 
October 2002 and January 2003 identified inaccuracies averaging 
37 percent of the records reviewed. For example, Navy Pacific Fleet 
officials provided us with information about a configuration record 
validation of a new ship delivered to the fleet. The validation 
identified 901 errors (588 added and 313 deleted records) in the 
selected systems and equipment, or about 39 percent of the 2,337 
configuration records that were reviewed. On an older aircraft carrier, 
a January 2003 validation identified 3,712 errors (1,790 added and 
1,922 deleted records) in the selected systems and equipment, or about 
43 percent of 8,555 configuration records reviewed.

Parts Demand Data Are Frequently Incomplete and Out-of-Date:

In addition to inaccurate ship configuration information, the Navy 
frequently uses incomplete, outdated, or erroneous historical demand 
data in its parts allowance models. This can lead to incorrect 
estimates of the number of parts needed during a deployment period and 
result in unmet supply goals. Historical parts demand data provides the 
projected failure rates or actual replacement rates for spare parts 
over a long period of time. Each repair part listed on the allowance 
list is expected to fail at some point in normal ship operations during 
deployment and is a potential allowance item. However, only those parts 
with sufficiently high projected failure rates or actual replacement 
rates, along with items required for planned maintenance or for safety 
measures, will normally be authorized as onboard repair parts.

According to Navy officials, data on parts' failure rates are supposed 
to be accurately, promptly, and continuously updated, but this updating 
does not always happen. In some cases, ship or shore personnel may not 
report that a particular spare part has been used and, thus, the 
information does not get into the supply system database. As a result, 
the Navy's parts allowance list will be based on incomplete, outdated, 
or erroneous historical failure-rate data and the ship will stock too 
few or too many spare parts of a particular type.

Our analysis of the requisitions on board deployed battle group ships 
revealed that about 38 percent of the 60,365 unfilled requisitions were 
mainly for parts that were on the allowance list, but were not in stock 
when requisitioned (see app. III). Navy officials told us that this 
problem could result partly from inaccuracies in the demand data that 
are used to develop allowance lists. Officials also suggested that it 
could stem from the inability of a ship's crew to obtain a 
high percentage of the spare parts on their allowance lists prior to 
deployment. However, our analysis showed that, at deployment, Navy 
ships generally are stocked with a high percentage of the types of 
parts (range) and the quantities of parts (depth) that are on their 
allowance lists. Supply officials from the Navy's Pacific Fleet told us 
that their goal for surface ships was to stock 93 percent of the range 
and 90 percent of the depth identified on their allowance lists and 
that deploying ships, which were usually given a high funding priority, 
generally deployed with percentages higher than these.

As table 3 shows, our analysis of data for the Lincoln battle group 
(Pacific Fleet) deployed in fiscal year 2002 indicated that the ships 
were stocked with an average of 98.1 percent of the different types of 
parts (range) and an average of 93.1 percent of the quantities of each 
part (depth) that were on their allowance lists, which included the 
parts expected to be needed during the first 90 days of deployment 
(July to September 2002). In contrast, during this period, an average 
of only 58.3 percent of the ships' requisitions were filled from parts 
carried on board. This assessment shows that, although these ships 
carried a high percentage of the types and quantities of allowed items, 
they continued to fall short of meeting the Navy's supply effectiveness 
rate goal of 65 percent.

Table 3: Percentages of Parts Types and Quantities Allowed to Be 
Stocked Onboard and the Parts Supply Effectiveness Rates for Lincoln 
Battle Group Surface Ships during the First 90 Days of Deployment, 
July-September 2002:

Lincoln battle group ships: Camden; Percent of types allowed (range): 
97.9; Percent of quantities allowed (depth): 96.4; Supply rate[A]: 
53.0.

Lincoln battle group ships: Fletcher; Percent of types allowed (range): 
97.5; Percent of quantities allowed (depth): 83.4; Supply rate[A]: 
37.2.

Lincoln battle group ships: Mobile Bay; Percent of types allowed 
(range): 97.0; Percent of quantities allowed (depth): 96.5; Supply 
rate[A]: 59.0.

Lincoln battle group ships: Paul Hamilton; Percent of types allowed 
(range): 99.1; Percent of quantities allowed (depth): 98.8; Supply 
rate[A]: 78.7.

Lincoln battle group ships: Reuben James; Percent of types allowed 
(range): 98.9; Percent of quantities allowed (depth): 87.8; Supply 
rate[A]: 56.6.

Lincoln battle group ships: Shiloh; Percent of types allowed (range): 
98.6; Percent of quantities allowed (depth): 95.2; Supply rate[A]: 
60.1.

Lincoln battle group ships: Average; Percent of types allowed (range): 
98.1; Percent of quantities allowed (depth): 93.1; Supply rate[A]: 
58.3.

Source: GAO analysis of Navy data.

[A] The supply rate is the percentage of parts requisitions that could 
be filled from stocks on board ship.

[End of table]

Spare Parts Supply Problems Can Affect Ship Operations and Mission 
Readiness and Increase Costs:

The Navy's spare parts supply problems can delay the completion 
of needed maintenance and repair jobs on deployed ships and can 
affect their operations and mission readiness, although their precise 
impacts are not always well defined. Our analysis of data on more than 
50,000 maintenance work orders for 6 battle group deployments in 1999 
and 2000 indicated that about 58 percent were delayed because the 
needed repair parts were not available on board ship. Our closer 
analysis of maintenance work orders and casualty reports for one battle 
group indicated a discrepancy in reporting the extent to which 
equipment failures occurred and, thus, the extent to which these 
problems were reflected in readiness assessments is unclear. The Navy's 
supply problems also have an impact on costs. Although the exact 
amounts have not been quantified, Navy officials recognize that they 
incur substantial costs to obtain needed parts from off-ship supply 
sources. The Navy also expends substantial funds--totaling nearly 
$25 million for the six ships we reviewed--to maintain large 
inventories that are not requisitioned during deployments because it 
has given low priority to identifying and purging unneeded spare parts 
from ship inventories.

Lack of Spare Parts Can Delay Needed Ship Repairs:

Shortages of required parts can often delay the completion of 
needed maintenance and repair jobs. Our analysis of more than 
50,000 maintenance work orders opened during 6 recent battle 
group deployments indicates that about 29,000 (almost 58 percent of 
the total) could not be completed because one or more needed repair 
parts were not on board ship. Table 4 summarizes this information.

Table 4: Impact of Spare Parts Shortages on Completion of Maintenance 
Jobs for Selected Fiscal Years 1999 to 2000 Deployments:

Atlantic Fleet: 

Battle group (year deployed): Enterprise (1999)[A]; Total number 
of jobs: 12,607; Number of jobs completed with all parts onboard: 
4,727; Percent of jobs completed with all parts onboard: 37.5; Number 
of jobs requiring off-ship parts: 7,880; Percent of jobs requiring 
off-ship parts: 62.5.

Battle group (year deployed): Kennedy (1999); Total number of jobs: 
13,362; Number of jobs completed with all parts onboard: 5,256; Percent 
of jobs completed with all parts onboard: 39.3; Number of jobs 
requiring off-ship parts: 8,106; Percent of jobs requiring off-ship 
parts: 60.7.

Battle group (year deployed): Truman (2000); Total number of jobs: 
9,553; Number of jobs completed with all parts onboard: 4,118; Percent 
of jobs completed with all parts onboard: 43.1; Number of jobs 
requiring off-ship parts: 5,435; Percent of jobs requiring off-ship 
parts: 56.9.

Pacific Fleet: 

Battle group (year deployed): Constellation (1999); Total number 
of jobs: 4,501; Number of jobs completed with all parts onboard: 2,318; 
Percent of jobs completed with all parts onboard: 51.5; Number of jobs 
requiring off-ship parts: 2,183; Percent of jobs requiring off-ship 
parts: 48.5.

Battle group (year deployed): Stennis (2000); Total number of jobs: 
5,557; Number of jobs completed with all parts onboard: 2,823; Percent 
of jobs completed with all parts onboard: 50.8; Number of jobs 
requiring off-ship parts: 2,734; Percent of jobs requiring off-ship 
parts: 49.2.

Battle group (year deployed): Lincoln (2000); Total number of jobs: 
4,780; Number of jobs completed with all parts onboard: 2,123; Percent 
of jobs completed with all parts onboard: 44.4; Number of jobs 
requiring off-ship parts: 2,657; Percent of jobs requiring off-ship 
parts: 55.6.

Battle group (year deployed): Total/average; Total number of jobs: 
50,360; Number of jobs completed with all parts onboard: 21,365; 
Percent of jobs completed with all parts onboard: 42.4; Number of jobs 
requiring off-ship parts: 28,995; Percent of jobs requiring off-ship 
parts: 57.6.

Source: GAO analysis of Navy data.

[A] Deployed in October 1998.

[End of table]

Navy fleet officials told us that a maintenance job is generally not 
started until all the needed parts are on board ship. This delay is due 
to the time and labor involved in tearing down equipment and possibly 
losing parts if equipment is left partially disassembled awaiting 
repair.

Data Unclear on Impact of Spare Parts Shortages on Ship Operations and 
Mission Readiness:

A complete picture of the impact of the Navy's spare part shortages, 
however, is unclear because the Navy's two forms of reporting on the 
extent to which significant equipment malfunctions affect a ship's 
operations and mission readiness are inconsistent. The two forms of 
reporting are high-priority maintenance work orders and casualty 
reports. The Navy uses four priority codes for maintenance work, 
with priorities 1, 2, and 3 considered high priority.[Footnote 12] High 
priority work is defined as critical, extremely important, or important 
to a ship's essential equipment and systems, operations, or mission 
(see app. II for complete definitions of these codes). Navy maintenance 
reporting instructions require that any maintenance job with one of 
these three priority codes should generate a casualty report. According 
to Navy guidance on casualty reports, they are directly related to a 
unit's readiness reporting and identify the ship's equipment status and 
impact on the ship's operations and mission readiness.[Footnote 13] 
Where casualty reports are issued, these problems are to be reflected 
in a ship's readiness reporting. Our review of about 4,000 casualty 
reports issued for deployed Pacific Fleet ships from 1999 to 2001 
indicated that they generally resulted in degraded ship readiness, as 
reported by the Status of Resources and Training System 
(SORTS).[Footnote 14] SORTS is used DOD-wide to report the degree to 
which a unit is capable of undertaking its assigned wartime missions.

However, our analysis of ship maintenance work orders and casualty 
reports for one battle group (Truman) in the Atlantic Fleet deployed in 
fiscal year 2000 showed a discrepancy between the number of work orders 
with priority 1, 2, or 3 and the number of casualty reports that were 
filled out when a job was assigned one of these priority codes. The 
work orders indicated that, of 5,435 total maintenance jobs, 2,635 were 
identified as priority 1, 2, or 3. Although there should have been a 
similar number of casualty reports, only 906, or one-third of the 
2,635, were issued for these ships during this period of time. One must 
assume that a more complete reporting of casualty reports, as required 
for high priority maintenance work orders, would provide the basis for 
a more complete assessment of readiness.

A similar discrepancy occurred between the number of high-priority 
work orders and casualty reports issued for maintenance jobs on surface 
ships in the Pacific Fleet between fiscal years 1995 and 2002. 
According to a Pacific Fleet maintenance analyst, of about 1 million 
surface ship maintenance jobs coded with priority 1, 2, or 3, only 
about 50,000 casualty reports, or about 5 percent, were issued.

Although Navy guidance calls for up-to-date and accurate casualty 
reports, Navy officials said that the final decision on whether to 
submit a casualty report is left to the judgment of the ships' 
commanders and is based on their perception of the importance of the 
degraded equipment to the ships' assigned missions and the status of 
redundant equipment that the ships carry. Navy officials said that the 
number of casualty reports that are issued should be higher, but they 
suggested that commanders' concerns that a high number of such reports 
could reflect negatively on their leadership may limit the number of 
reports that are issued. For example, we were told that casualty 
reports are usually not generated when ships are getting ready to 
deploy; if too many are generated, it might be seen as a failure of the 
ships' command leadership.

Some ships that issued only a few minor casualty reports were found, 
on closer inspection, to have significant ship operations and mission 
readiness problems. For example, Navy ships are required to have 
periodic inspections to determine if they are fit for further service 
and to identify any conditions that limit their capability to carry out 
assigned missions.[Footnote 15] Inspection reports we reviewed 
identified various deficiencies,[Footnote 16] such as the failure of 
equipment to meet performance and safety requirements or the need for 
excessive maintenance resources. During an inspection in February 2002 
of a destroyer forward-deployed in Yokosuka, Japan, which had issued 16 
low-priority casualty reports prior to the inspection, inspectors gave 
the ship an unsatisfactory rating--the lowest possible rating--in the 
areas of self-defense, full power, and steering tests; they also found 
that it had significant material deficiencies and equipment operational 
capabilities discrepancies. Inspectors told us such discrepancies 
between casualty reporting and the actual conditions found during the 
inspections of the ships were not uncommon.

Navy Incurs Substantial Costs to Obtain Off-Ship Parts and Maintain 
Large Inventories:

Another effect of the Navy's spare parts supply problems is increased 
costs. The Navy expends additional funds to obtain needed spare parts 
from off-ship sources. To get these parts, it must identify where they 
are available (e.g., from a shore-based Navy supply center or a 
commercial vender) and then transport them to the ship.

The Navy also incurs substantial costs to carry large parts inventories 
that are not requisitioned. Our analysis of data for six ships in the 
Lincoln battle group (Pacific Fleet) during deployment in 2002 showed 
that the ships requisitioned only a small percentage of the different 
types of parts carried on board. As shown in table 5, the ships carried 
a total of 62,727 different types of parts. By the end of 6 months, the 
supply crews had received 10,471 requisitions for spare parts and 
filled 6,549 of them from onboard stocks. This number (6,549) 
represented 10.4 percent of the total part types carried on board. Navy 
fleet officials acknowledged that ships generally carry many times more 
parts than are requisitioned during their deployments and indicated 
that there are opportunities to reduce inventories without adversely 
affecting ship operations if more accurate data was available.

Table 5: Number of Different Types of Parts Carried Compared with Total 
and Filled Requisitions for Lincoln Battle Group Surface Ships after 
6 Months of Deployment, July-December 2002:

Lincoln battle group ships: Camden; Number of all part types carried: 
7,797; Total requisitions: Number: 1,443; Total requisitions: Range 
(percent): 18.5; Requisitions filled from onboard stocks: 
Number: 843; Requisitions filled from onboard stocks: Percent of all 
part types used: 10.8.

Lincoln battle group ships: Fletcher; Number of all part types carried: 
11,744; Total requisitions: Number: 1,717; Total requisitions: Range 
(percent): 14.6; Requisitions filled from onboard stocks: 
Number: 689; Requisitions filled from onboard stocks: Percent of all 
part types used: 5.9.

Lincoln battle group ships: Mobile Bay[A]; Number of all part types 
carried: 12,291; Total requisitions: Number: 2,167; Total requisitions: 
Range (percent): 17.6; Requisitions filled from onboard 
stocks: Number: 1,637; Requisitions filled from onboard stocks: Percent 
of all part types used: 13.3.

Lincoln battle group ships: Paul Hamilton; Number of all part types 
carried: 11,815; Total requisitions: Number: 1,652; Total requisitions: 
Range (percent): 14.0; Requisitions filled from onboard 
stocks: Number: 1,322; Requisitions filled from onboard stocks: Percent 
of all part types used: 11.2.

Lincoln battle group ships: Reuben James; Number of all part types 
carried: 7,573; Total requisitions: Number: 1,733; Total requisitions: 
Range (percent): 22.9; Requisitions filled from onboard 
stocks: Number: 1,018; Requisitions filled from onboard stocks: Percent 
of all part types used: 13.4.

Lincoln battle group ships: Shiloh; Number of all part types carried: 
11,507; Total requisitions: Number: 1,759; Total requisitions: Range 
(percent): 15.3; Requisitions filled from onboard stocks: 
Number: 1,040; Requisitions filled from onboard stocks: Percent of all 
part types used: 9.0.

Lincoln battle group ships: Total; Number of all part types carried: 
62,727; Total requisitions: Number: 10,471; Total requisitions: Range 
(percent): 16.7; Requisitions filled from onboard stocks: 
Number: 6,549; Requisitions filled from onboard stocks: Percent of all 
part types used: 10.4.

Source: GAO analysis of Navy data.

[A] The Mobile Bay data overstate the number of onboard requisitions 
filled because the ship filed 452 individual requisitions for bulk 
issue items (light bulbs) that should have been included on a smaller 
number of requisitions for larger quantities, according to type command 
supply officials.

[End of table]

Furthermore, the Navy spent far more to carry this inventory of spare 
parts than it spent for the parts that it actually used during the 
Lincoln battle group's 6-month deployment in 2002. Using available Navy 
data on the value of the six ships' onboard inventories, we estimated 
the value of the inventory carried onboard ship be about $27.6 million 
and the value of the used inventory to be about $2.9 million. See 
figure 1.

Figure 1: Estimated Value of the Spare Parts Inventory Carried Onboard 
and Actually Used during First 6 Months of Deployment on Lincoln Battle 
Group Surface Ships, Fiscal Year 2002:

[See PDF for image]

[End of figure]

According to Navy supply officials, to minimize the inventory of 
unneeded spare parts carried on board ships, ships could purge their 
existing inventories periodically and revise the allowance parts lists 
based on accurate configuration records, demand data, and allowance 
models. The revised allowance would identify both shortages of needed 
parts and excesses of unneeded parts. They said that allowance lists 
used to be reviewed and updated periodically, but these reviews are no 
longer performed. Although officials acknowledged that the inventory of 
unneeded parts should be minimized, they said a higher priority has 
been placed on correcting the shortages of needed spare parts because 
of their impact on ships' operations and mission readiness. They said 
that the existing inventories of unneeded parts have already been 
purchased, and the costs cannot be recouped.

Conclusions:

The Navy's long-standing failure to meet its spare parts supply 
performance goals has led to shortages of needed parts on board 
ships and some degradation in ships' operations and mission readiness 
during long deployments at sea. These shortages stem from the Navy's 
inability to determine, in a reliable way, what types of spare parts 
and how many of each type need to be stocked on board ship. The Navy 
uses inaccurate, out-of-date, or incomplete ship configuration and 
historical demand information to develop the parts allowance lists that 
identify what repair parts, manuals, and other related items a ship 
should carry in its onboard inventory. Even though a ship may stock 
almost all of the parts on the allowance list, it is likely to fall 
short of meeting the Navy's supply performance goals because the data 
used to develop the allowance lists are inaccurate. When needed parts 
are not available on board, a large number of repair jobs are delayed 
and equipment is not functional--sometimes for weeks or months--until 
the ships' crews can obtain the parts from off-ship sources. Moreover, 
the Navy may not have a complete picture of the actual impact that 
equipment downtime has on the ships' operations and mission readiness 
because of discrepancies in the reporting systems the Navy uses to 
monitor these problems.

The Navy's spare parts supply problems also substantially increase 
costs. Because of inaccuracies in the information the Navy uses to 
develop its allowance lists, it often stocks the wrong types or the 
wrong quantities of parts on board ships. As a result, the Navy has to 
spend additional money to obtain the parts it needs from off-ship 
sources, often incurring high expenses to locate the parts and 
transport them to the ships. It also expends substantial funds to 
maintain large inventories on board its ships that are not 
requisitioned during deployments. However, the Navy has given low 
priority to purging unneeded parts from its ships' inventories and, 
instead, has focused on purchasing additional spare parts to avoid 
future shortages.

Until the reliance on poor ship configuration records and historical 
demand information to identify what spare parts should be carried on 
board is broken, the Navy's deployed ships will continue to experience 
critical spare parts shortages that undermine their ability to fulfill 
their missions at sea.

Recommendations for Executive Action:

In order to improve supply availability, enhance operations and mission 
readiness, and reduce operating costs for deployed ships, we recommend 
the Secretary of Defense direct the Secretary of the Navy to:

* develop plans to conduct periodic ship configuration audits and to 
ensure that configuration records are updated and maintained in order 
that accurate inventory data can be developed for deployed ships;

* ensure that demand data for parts entered into ship supply systems 
are recorded promptly and accurately as required to ensure that onboard 
ship inventories reflect current usage or demands;

* periodically identify and purge spare parts from ship inventories to 
reduce costs when parts have not been requisitioned for long periods of 
time and are not needed according to current and accurate configuration 
and parts demand information; and:

* ensure that casualty reports are issued consistent with high priority 
maintenance work orders, as required by Navy instruction, to provide a 
more complete assessment of ship's readiness.

Agency Comments and Our Evaluation:

In written comments on a draft of this report, DOD concurred with three 
recommendations and concurred with the intent of the fourth 
recommendation, but not its specific action. DOD's written comments are 
reprinted in their entirety in appendix IV.

In concurring with our first recommendation, DOD said that, although 
the Navy has an audit plan to look at current ship configurations and 
provide updated allowance listings, the Navy needs to be more 
aggressive in following up on configuration changes to ensure that the 
configuration records on board ship match those in the Navy's main 
configuration database. At the time of our review, the procedures had 
not been validated and reconciled, for example, with the high 
percentages of inaccuracies identified during validations done to 
identify and correct problems; moreover, sufficient funding to 
implement the program was not assured. DOD also noted that the Navy 
recently set up a Maritime Allowancing Working Group that is 
undertaking a comprehensive review of its current inventory and 
allowance practices, including ship configuration management. However, 
at the time of our review, the Navy had not established time frames for 
reporting on this effort.

Although DOD concurred with our second recommendation, it asserted that 
our report does not adequately substantiate our claim about the 
accuracy of demand data. In our report, however, we cited Navy 
officials who told us that spare parts' failure rates, which rely on 
demand data, are not always updated promptly or accurately. Moreover, 
60,000 requisitions for spare parts were not on ships in 6 battle 
groups deployed in fiscal years 1999 and 2000 either because they were 
not on allowance parts lists or were on these lists but were not in 
stock when requisitioned (see app. III). Navy officials told us that 
such shortages occur in part from relying on inaccurate demand data. 
DOD pointed out that many items on the lists do not qualify for 
allowances. They said that these parts are not stocked on board because 
of a ship's designated repair capability, the results of the readiness 
optimization calculation used in the sparing model, and the forecast 
for demand falling below the sparing threshold. However, these 
determinations also rely on accurate and timely demand data.

In concurring with our third recommendation, DOD said that the Navy 
needs to undertake a more comprehensive program to identify and, 
when appropriate, purge excess spare parts from ship inventories, but 
it added that such efforts should not be based solely on parts demand 
history. In our recommendation, we said that decisions to remove spare 
parts from ship inventories should be based on both demand data and 
current and accurate ship configuration information. DOD correctly 
noted that critical items related to safety requirements and readiness 
optimization should not be removed because they could jeopardize a 
ship's safety and mission. We support the Navy's plan to focus 
initially on identifying and purging those spare parts that support 
systems that are no longer installed on board ships.

DOD concurred with the intent of our fourth recommendation that called 
for the Navy to ensure that casualty reports are issued consistent with 
high priority maintenance work orders as required by Navy instruction, 
to provide a more complete assessment of ship's readiness. We based our 
recommendation on the Navy's current maintenance instruction that calls 
for casualty reports to be issued for certain high-priority maintenance 
actions according to the level of importance that the failed equipment 
has on a ship's operations and mission. DOD said that casualty reports 
and maintenance orders are inherently different in purpose, and the 
instructions should be updated to ensure that casualty reports are 
generated when deemed appropriate to get the attention required from 
the logistics system. We believe that, while the instruction may need 
to be updated or revised, the maintenance data that are gathered under 
the current instruction are both relevant and important to the Navy's 
ability to assess fully a ship's operations and mission readiness. In 
its response, DOD said the Navy has emphasized the need to use 
standardized reporting procedures and that fleet commanders have asked 
their commanding officers to report on ship status accurately and in a 
timely manner through the Status of Resources and Training System 
report.

We are sending this report to other interested congressional 
committees; the Secretary of Defense; the Secretary of the Navy; and 
the Director, Office of Management and Budget. 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) 512-8412 if you or your staff has any 
questions concerning this report. Key staff members who contributed to 
this report were Allan Roberts, Lionel Cooper, Gary Kunkle, Joel 
Aldape, Odilon Cuero, Dale Yuge, Jean Orland, and Nancy Benco.

Sincerely yours,

William M. Solis 
Director, Defense Capabilities and Management:

Signed by William M. Solis: 

[End of section]

Appendix I: Scope and Methodology:

To identify the extent of spare parts shortages on deployed Navy ships, 
we focused on spare parts requisitions by deployed battle groups in the 
Atlantic and Pacific fleets during fiscal years 1999-2002. We analyzed 
the Navy's goal and supply effectiveness data from its Maintenance and 
Material Management (3-M) Database Open Architectural Retrieval System 
by identifying supply requisitions for repair parts that were either 
filled or not filled from inventories on board deployed ships. We 
reviewed reports regarding the Navy's overall ability to fill onboard 
spare parts requisitions on deployed ships between 1982 and 2001 in 
order to identify any long-term trends. We also reviewed the Navy's 
goals and data on the average customer wait-time for critical and 
noncritical parts on deployed ships during fiscal years 1999 and 2002.

To determine the reasons for spare parts shortages, we analyzed Navy 
data on unfilled requisitions for 6 battle groups deployed during 
fiscal year 1999-2000. We analyzed and categorized the reasons for 
parts shortages based on the reported data. We also examined Navy 
policies and procedures regarding ships' spare parts, including the 
need for accurate data and the impact of inaccurate data on the allowed 
parts carried on deployed ships. We examined and discussed with Navy 
officials the procedures that are used to ensure that accurate ship 
configuration and demand data records are maintained and the 
circumstances that can affect this accuracy. Moreover, we analyzed the 
reasons for the differences between the spare parts provisions, (e.g., 
the range and depth) and the amounts that are actually used to fill 
spare parts requisitions in order to gain a better understanding of why 
the Navy's provisioning process does not more effectively and 
efficiently meet the deployed ships' spare parts requirements.

To examine the impact of spare parts shortages on deployed ships' 
operations and mission readiness, we analyzed data on maintenance work 
orders and requests for spare parts that were not available on board 
the 6 battle groups during selected fiscal year 1999-2000 deployments. 
Also, we reviewed the Navy's criteria for assessing the effects of 
failed equipment on a ship's ability to accomplish its mission, 
particularly the standards for determining what maintenance work orders 
result in casualty reports. We then applied the criteria to maintenance 
work orders for the Truman (Atlantic Fleet) battle group deployed in 
fiscal year 2000 to identify those that should have resulted in 
casualty reports reflecting ship operations and mission readiness. We 
compared the results of this analysis with data on Navy casualty 
reporting to determine if the number of failed equipment items meeting 
the criteria for reporting mission readiness degradation were reported 
in accordance with Navy criteria, policies, and procedures. We also 
reviewed data on casualty reports and SORTS data submitted by deployed 
Pacific Fleet surface ships during calendar years 1999, 2000, and 2001 
to determine if the casualty reports were reflected in SORTS equipment 
readiness reporting. In addition, for six ships in the Lincoln (Pacific 
Fleet) battle group deployed in fiscal year 2002, we identified the 
total number of parts carried, both range and depth, and compared this 
to the number of requisitions submitted and filled from onboard 
inventories. We compared the Navy's data on the estimated value of the 
onboard inventory with the estimated value of the inventory actually 
used in order to gain insight into the dollar impacts of carrying parts 
that are not used during ships' deployments. We discussed the results 
of this analysis with Navy headquarters and fleet officials.

We reviewed Navy briefings and prior GAO reports regarding the effects 
of parts shortages on Navy supply and maintenance actions, and we 
discussed the Navy's goals and initiatives intended to assess the 
effects of parts shortages on ships' operations and military readiness 
with Navy officials at the various locations we visited. These 
locations included the Naval Warfare Assessment Station, Corona, 
Calif.; the Fleet Technical Support Center, the Naval Air Force, and 
the Naval Surface Force, U.S. Pacific Fleet, San Diego, Calif.; the 
headquarters, U.S. Pacific Fleet and the Submarine Force, U.S. Pacific 
Fleet, Pearl Harbor, Hawaii; the Naval Supply Systems Command, its 
Naval Inventory Control Point, and the Naval Sea Logistics Center, 
Mechanicsburg, Pa.; and Naval Sea Systems Command and the office of the 
Chief of Naval Operations, Washington D.C.

We performed our work from July 2002 to May 2003 in accordance with 
generally accepted government auditing standards.

[End of section]

Appendix II: Navy Work Order Priority Code Descriptions:

According to Navy maintenance reporting instructions, Navy ship crews 
are required to identify maintenance work order priorities.[Footnote 
17] High-priority (Priority 1, 2, and 3) work orders affect equipment 
that is critical, extremely important, or important for a ship's 
operation. Any maintenance job with one of these three priority codes 
is required to generate a casualty report (CASREP). Casualty reports 
are directly related to a unit's readiness reporting and identify the 
ship's equipment status and impact on the ship's operations and mission 
readiness.[Footnote 18]

Priority 1--Mandatory: Critical safety or damage control item. 
Required for performance of ship's mission. Required to sustain 
bare minimum acceptable level of human needs and sanitation. C-4 CASREP 
(Casualty Report) on equipment.

Priority 2--Essential: Extremely important safety or damage control 
item. Required for sustained performance of ship's mission. Required to 
sustain normal level of basic human needs and sanitation. Required to 
maintain overall integrity of ship or a system essential to ship's 
mission. Will contribute so markedly to efficient and economical 
operation and maintenance of a vital ship system that the pay-off in 
the next year will overshadow the cost to accomplish. Required for 
minimum acceptable level of preservation and protection. C-3 CASREP on 
equipment.

Priority 3--Highly Desirable: Important safety or damage control 
item. Required for efficient performance of ship's mission. Required 
for normal level of human comfort. Required for overall integrity of 
equipment or systems that are not essential, but are required as 
backups in case of primary system failure. Will contribute so markedly 
to efficient and economical operation and/or maintenance of a vital 
ship system that the payoff in the next year will at least equal the 
cost to accomplish. Will effect major reduction in future ship 
maintenance in an area or system that presently cannot be maintained 
close to acceptable standards. Required to achieve minimum acceptable 
level of appearance. C-2 CASREP on equipment.

Priority 4--Desirable: Some contribution to efficient performance. Some 
contribution to normal level of human comfort and welfare. Required for 
overall integrity of other than an essential system or its backup 
system. Will contribute to appearance in an important area. 
Will significantly reduce future maintenance.

[End of section]

Appendix III: Navy Reasons for Spare Parts Not Onboard Deployed Ships:

Our analysis of the 60,365 unfilled requisitions from the deployments 
of six battle groups in fiscal years 1999 and 2000 showed that there 
are a number of reasons why the Navy might not stock needed parts on 
board ship (see fig. 2). These unfilled requisitions represented 
46 percent of all 131,855 requisitions submitted during these 
deployments. Our analysis of the reasons identified in the Navy's 
database showed that:

* about 17.3 percent (10,472) of the unfilled requisitions were for 
parts that were not on the allowance parts list;

* about 44.4 percent (26,787) of the unfilled requisitions were for 
parts that were on the allowance parts list but the Navy decided not to 
carry them on board; and:

* about 38.3 percent (23,106) of the unfilled requisitions were for 
parts that were on the allowance parts list, the Navy decided to carry 
them, but they were not in stock when needed.

Figure 2: Spare Parts Requisitions Filled and Unfilled for Six Selected 
Battle Groups, Fiscal Years 1999-2000, According to Reasons Identified 
by the Navy:

[See PDF for image]

Note: Because of rounding, percentages may not add to 100.

[End of figure]

[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:

August 18, 2003:

Mr. William M. 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 
report, "DEFENSE INVENTORY: Opportunities Exist to Improve Spare Parts 
Support Aboard Deployed Navy Ships," dated July 18, 2003, (GAO Code 
350210/GAO-03-887).

The Department concurs with recommendations one through three, while 
concurring with the intent of recommendation four. An explanation of 
the DoD position is enclosed. The Department appreciates the 
opportunity to comment on the draft report.

Sincerely,

Diane K. Morales:

Enclosure: As stated:

Signed by Diane K. Morales:

GAO DRAFT REPORT - DATED JULY 18, 2003 GAO CODE 350210/GAO-03-887:

"DEFENSE INVENTORY: OPPORTUNITIES EXIST TO IMPROVE SPARE PARTS SUPPORT 
ABOARD DEPLOYED NAVY SHIPS ":

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Navy to develop plans to conduct periodic 
ship configuration audits and to ensure that configuration records are 
updated and maintained in order that accurate inventory data can be 
developed for deployed ships. (p.25/GAO Draft Report):

DoD RESPONSE: Concur. Configuration accuracy is a critical element in 
providing accurate spare parts support. Navy does have an audit plan 
that looks at the current configuration of a ship and provides updated 
allowance listings via automated files based on the latest 
configuration data. Navy does agree that it needs to be more aggressive 
in following up on these configuration changes to ensure the 
configuration files on board the ship match those on file in the main 
configuration database.

In addition to the ongoing efforts regarding the configuration 
management audit plan, a Maritime Allowancing Working Group (MAWG) was 
established in 2002 at the Fleet's request to perform a comprehensive 
review of the current inventory strategy and allowance processes 
including Configuration Management.

RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Navy to ensure that demand data for parts 
entered into ships supply systems are recorded promptly and accurately 
as required to ensure that onboard ship inventories reflect current 
usage or demands. (p.25/GAO Draft Report):

DoD RESPONSE: Concur. Good demand reporting is essential but this 
report does not adequately substantiate the assertion regarding demand 
data accuracy.

Regarding the 38% of the unfilled requisitions contained on the 
allowance list but not in stock, the report appears to assume this is 
due entirely to inaccurate data reporting. This is not always the case 
and many items listed on Allowance Parts Listings (APLs) do not qualify 
for allowances for the following reasons: The ship's designated repair 
capability; results of the readiness optimization calculation used in 
the sparing model; and the forecasted demand falling below the sparing 
threshold.

RECOMMENDATION 3: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Navy to periodically identify and purge 
spare parts from ship inventories when they have not been requisitioned 
for long periods of time and are not needed according to current and 
accurate configuration and parts demand information. (p.25/GAO Draft 
Report):

DoD RESPONSE: Concur. It is agreed that a more comprehensive effort 
must be applied to identifying excess material, and when deemed 
appropriate, purge those items from the ship's inventory.

We do not agree that the criteria for purging material should be based 
solely on demand history. Processes currently exist that judiciously 
remove parts based on several factors, to include demand, criticality, 
safety, and cost. There is currently an automated process that 
automatically triggers removal of the spare based on configuration 
changes. Typically, many items are onboard in support of safety 
requirements and readiness optimization, and although some have little 
or no demand history, removal of these critical items could jeopardize 
the safety of our sailors and the operational mission of the ships. The 
Navy will focus its attention and initial efforts on identifying and 
purging those spares parts that support systems no longer installed on 
ships.

RECOMMENDATION 4: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Navy to ensure that casualty reports are 
issued consistent with high priority maintenance work orders, as 
required by Navy instruction, to provide a more complete assessment of 
ship's readiness. (p. 25/GAO Draft Report):

DoD RESPONSE: Concur with intent. It is agreed that that the Navy's 
current maintenance instruction needs to be updated to ensure that 
Casualty Reports are generated only when deemed appropriate to ensure 
they get the level of attention required of the logistics system. It is 
not agreed that casualty reports should be issued consistent with 
maintenance orders as discussed on page 19 of this report.

Casualty Reports and maintenance orders are inherently different in 
purpose. Critical repairs completed within 48 hours are generally not 
to be reported on a casualty report, and there is little correlation 
between casualty report severity and maintenance order priority as 
suggested by the draft report. Specifically, a priority 1 maintenance 
order might qualify as a C2 vice C3/C4 Casualty Report if the 
degradation applies to secondary mission equipment. Similarly, a 
primary mission system requiring maintenance may or may not justify a 
C2 Casualty Report depending on the amount of redundancy within that 
system. That being said, the Navy has emphasized that standardized 
reporting procedures must be adhered to and the Fleet Commanders have 
notified their Commanding Officers to ensure they report the status of 
their ships accurately and on time via the Status of Resources and 
Training System (SORTS) report.

[End of section]

FOOTNOTES

[1] Off-ship sources include shore-based suppliers, such as Navy and 
Defense Logistics Agency warehouses and commercial vendors, and other 
ships in the fleet where needed spare parts may be obtained.

[2] 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).

[3] Battle groups generally consist of 8 to 12 ships and include an 
aircraft carrier and 1 or more cruisers, destroyers, frigates, 
submarines, and supply ships.

[4] Supply effectiveness rates refer to gross availability, or the 
percentage of parts that were in stock on the ship when requisitioned.

[5] According to Navy guidance, each high-priority maintenance work 
order (with priority codes 1, 2, and 3) filled out by a ship's crew is 
supposed to generate a casualty report (CASREP). Casualty reports are 
directly related to a unit's readiness reporting; they identify a 
ship's equipment status and its impact on ship operations and mission 
readiness. Appendix II shows the relationship between these two 
reporting systems, according to Navy maintenance reporting guidance.

[6] These goals were defined in the Navy instruction OPNAVINST 
4441.12B, dated May 1983, Retail Supply Support of Naval Activities and 
Operating Forces.

[7] While the Navy's supply effectiveness goals vary, the goal is 
65 percent for surface ships and aircraft carriers, not including the 
aircraft.

[8] OPNAVINST 4441.12D, Apr. 29, 2003, Retail Supply Support of Naval 
Activities and Operating Forces.

[9] The Navy has used a wait-time goal of 135 hours, or about 5.6 days, 
for supplying high-priority parts to ships outside the continental 
United States. This number is based on an average of the times needed 
to fill parts requisitions from both onboard ship inventories and off-
ship sources. It assumes that 65 percent of all requisitions are filled 
from onboard inventories within 2 hours and the remaining 35 percent 
are filled from off-ship sources within 16 days.

[10] These are parts needed for immediate maintenance-related use.

[11] The Navy Sea Systems Command has set a goal of 95 percent accuracy 
in its configuration data for ships. Ships can have 35,000 to 125,000 
configuration records each. An audit entails examining a randomly 
selected sample of configuration records and actual equipment installed 
onboard and comparing them with each other for accuracy. 
COMNAVSURFLANT/COMNAVSURPAC Instruction 4400.1J, dated Aug. 17, 2000.

[12] Ships' Maintenance and Material Management (3-M) Manual, OPNAV 
Instruction 4790.4C, Nov. 7, 1994.

[13] Operational Reports NWP 1-03.1, (Formerly NWP 10-1-10, letter of 
promulgation Nov. 1987).

[14] Status of Resources and Training System (SORTS), NWP 10-1-11 
(Rev. A).

[15] Title 10 U.S.C. Section 7304 requires a board of Naval officers to 
conduct a material inspection of all naval ships at least once every 
3 years, if practicable, and to report when, as a result of a material 
inspection, a ship is found unfit for further service.

[16] A deficiency is an item that requires corrective action to bring 
the material condition of the ship into compliance with required 
standards.

[17] Ships' Maintenance and Material Management (3-M) Manual, OPNAV 
Instruction 4790.4C, Nov. 7, 1994.

[18] Operational Reports NWP 1-03.1 (formerly NWP 10-1-10, letter of 
promulgation Nov. 1987).

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