    Army Inventory: Parts Shortages Are Impacting Operations and
    Maintenance Effectiveness (31-JUL-01, GAO-01-772).

    Having spare parts available when needed to perform required
    maintenance is critical to the Department of Defense's
    accomplishment of its missions. Shortages of spare parts are a
    key indicator of supply system problems that can result in the
    unavailability of weapon systems to meet mission requirements.
    Despite additional funding by Congress to address this issue, the
    Army is still reporting concerns about spare parts shortages.
    Aviation spare parts shortages for the Apache, Blackhawk, and
    Chinook helicopters have adversely affected operations and led to
    inefficient maintenance practices that have lowered morale of
    maintenance personnel. Specifically, while the three helicopters
    generally met their mission-capable goals, indicating that spare
    parts shortages have not affected their mission capability,
    supply availability rates and the cannibalization of parts from
    one aircraft to another indicate that spare parts shortages have
    indeed been a problem. Cannibalization is an inefficient practice
    that results in double the work for maintenance personnel, masks
    parts shortages, and lowers morale of maintenance personnel. The
    reasons for the unavailability of parts included actual demands
    for parts that were greater than anticipated, delays in obtaining
    parts from a contractor, and problems concerning overhaul and
    maintenance. Furthermore, according to Army and Defense Logistics
    Agency officials, a contributing factor to the shortages was the
    Army's inability to obtain parts for these aging aircraft from
    the original part manufacturers, which may no longer be in
    business. The Army and Defense Logistics Agency have initiatives
    underway or planned that are designed to improve the availability
    of aviation parts. Some of these initiatives are new or in the
    planning stages. Once they are more fully developed, GAO will
    review them to determine whether there are opportunities to
    enhance them.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-01-772
        ACCNO:   A01253
      TITLE:     Army Inventory: Parts Shortages Are Impacting Operations
                 and Maintenance Effectiveness
         DATE:   07/31/2001
      SUBJECT:   Aircraft maintenance
    	     Helicopters
    	     Inventory control systems
    	     Spare parts
    	     Combat readiness
    	     Logistics
    	     Aircraft components
    	     Military aircraft
    	     Army procurement
    	     Apache Helicopter
    	     Army Strategic Logistics Plan
    	     Army Velocity Management Program
    	     Army Working Capital Fund
    	     Blackhawk Helicopter
    	     Chinook Helicopter
    	     DOD Logistics Strategic Plan
    	     CH-47 Helicopter
    	     UH-60 Helicopter
    	     AH-64 Helicopter

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    GAO-01-772

    Report to Congressional Committees

    United States General Accounting Office

    GAO

    July 2001 ARMY INVENTORY Parts Shortages Are Impacting Operations and
    Maintenance Effectiveness

    GAO- 01- 772

    Page i GAO- 01- 772 Army Inventory Letter 1

    Results in Brief 2 Background 3 Parts Shortages Adversely Affect Operations,
    Maintenance, and

    Personnel 7 Key Reasons for Shortages Were Unanticipated Demands and

    Delays in Obtaining Parts From Contractors 15 Overall Initiatives May
    Address Parts Shortages 22 Agency Comments 27 Scope and Methodology 27

    Appendix I Management Weaknesses Have Contributed to Spare Parts Shortages
    31

    Appendix II Reasons for Shortages of Apache, Blackhawk, and Chinook
    Helicopters? Spare Parts 33

    Appendix III Comments From the Department of Defense 34

    Related GAO Products 35

    Table

    Table 1: Reasons for Shortages of 90 Spare Parts Reviewed 15

    Figures

    Figure 1: Apache, Blackhawk, and Chinook Helicopters 5 Figure 2: Process for
    Providing Spare Parts to Customers 6 Figure 3: Mission- Capable Rates for
    the Apache, Blackhawk, and

    Chinook Helicopters during Fiscal Years 1996- 2000 8 Figure 4: Gear for the
    Chinook Helicopter 9 Figure 5: Supply Availability Rates for the Apache,
    Blackhawk, and

    Chinook Helicopters during Fiscal Years 1999- 2000 10 Figure 6: Rotary Wing
    Heads for Chinook 12 Contents

    Page ii GAO- 01- 772 Army Inventory

    Figure 7: Repairs Require Two Steps, Cannibalizations Four 14 Figure 8:
    Apache Main Rotor Blade Attach Pin 17 Figure 9: Housing Assembly for Apache
    18 Figure 10: Rotor Damper for Apache 19 Figure 11: Fuel Boost Pump 20
    Figure 12: Blackhawk T- 700 Engine 21

    Page 1 GAO- 01- 772 Army Inventory

    July 31, 2001 Congressional Committees Having spare parts available when
    needed to perform required maintenance is critical to the Department of
    Defense?s accomplishment of its missions. Shortages of spare parts are a key
    indicator of supply system problems that can result in the unavailability of
    weapon systems to meet mission requirements. Despite additional funding
    provided by the Congress to address this issue, the Army is still reporting
    concerns about spare parts shortages. Since 1990 we have designated the
    Department of Defense?s management of its inventory, including spare parts,
    as high risk because its inventory is vulnerable to fraud, waste, and abuse
    and its management systems and procedures were ineffective.

    The National Defense Authorization Act for Fiscal Year 2000 (P. L. 106- 65,
    sec. 364) requires us to evaluate various aspects of the military services?
    logistics support capability, including the provision of spare parts. Also,
    the Chairman, House Committee on Appropriations, and the Chairman,
    Subcommittee on Defense, House Committee on Appropriations, requested that
    we review issues related to the quality and availability of spare parts for
    aircraft, ships, vehicles, and weapon systems. In response to the mandate
    and requests, we reviewed known spare parts shortages within the services.
    For this report, we determined (1) the impact spare parts shortages had on
    three selected Army helicopters and (2) the reasons for the shortages.
    Additionally, we identified the overall initiatives that the Army and the
    Defense Logistics Agency, which are responsible for managing and providing
    the spare parts, have in place or planned to address spare parts shortages.
    We will be discussing in separate reports our reviews on the availability of
    spare parts in the Air Force and the Navy, the quality of spare parts,
    funding for spare parts, and war reserves requirements for spare parts. 1

    To address our reporting objectives, we selected the Apache, Blackhawk, and
    Chinook helicopters. To determine the impact spare parts shortages had on
    these helicopters, we reviewed data that measure the effectiveness

    1 Defense Inventory: Information on the Use of Spare Parts Funding is
    Lacking

    (GAO- 01- 472, June 11, 2001) and Defense Inventory: Army War Reserve Spare
    Parts Requirements Are Uncertain (GAO- 01- 425, May 10, 2001).

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 01- 772 Army Inventory

    of inventory operations in fulfilling units? requests for spare parts. Also,
    we reviewed data that measure the aircraft?s highest operational readiness
    possible with available resources. To determine the reasons for the known
    shortages, we selected and reviewed 90 parts that were in short supply in
    fiscal year 2000 for these helicopters. To identify overall initiatives that
    address spare parts shortages, we obtained documentation and the Army?s and
    the Defense Logistics Agency?s views. However, we did not review the
    initiatives.

    Aviation spare parts shortages for the three helicopters we reviewed have
    adversely affected operations and led to inefficient maintenance practices
    that have lowered morale of maintenance personnel. Specifically, while the
    Apache, Blackhawk, and Chinook helicopters generally met their mission-
    capable goals, indicating that parts shortages have not affected their
    mission capability, supply availability rates and the cannibalization 2 of
    parts from one aircraft to another indicate that spare parts shortages have
    indeed been a problem. Cannibalization is an inefficient practice that
    results in double the work for maintenance personnel, masks parts shortages,
    and lowers morale of maintenance personnel. According to the Army?s Deputy
    Chief of Staff for Logistics, masking supply shortages through extensive use
    of cannibalization is a continuing problem the Army is working to resolve.

    The reasons for the unavailability of the 90 parts we reviewed included
    actual demands for parts that were greater than anticipated, delays in
    obtaining parts from a contractor, and problems concerning overhaul and
    maintenance. For example, because a cracked gear in a Chinook transmission
    was discovered during an overhaul, the entire fleet was grounded in August
    1999. As a result, the demand for the part has been much greater than
    anticipated. Also, Defense Logistics Agency records show that as a result of
    a contractor?s late deliveries of Apache shear bolts, the Agency did not
    have the parts available for Apache users. Additionally, due to a shortage
    of parts the Army experienced problems that prevented it from repairing and
    overhauling Blackhawk T- 700 engines in a timely

    2 The Navy and the Air Force refer to cannibalization as the removal of
    usable parts from one aircraft for installation on another. The Army refers
    to this practice as controlled exchange. The Army?s definition of
    cannibalization is the removal of components from equipment designated for
    disposal. Throughout the report, we refer to controlled exchange as
    cannibalization. Results in Brief

    Page 3 GAO- 01- 772 Army Inventory

    manner. Furthermore, according to Army and Defense Logistics Agency
    officials, a contributing factor to the shortages was the Army?s inability
    to obtain parts for these aging aircraft from the original part
    manufacturers, which may no longer be in business. However, we did not find
    this factor to be a reason for the shortages of the parts we reviewed.

    The Army and the Defense Logistics Agency have initiatives under way or
    planned that are designed to improve the availability of aviation parts. The
    initiatives generally address the reasons we identified for spare parts
    shortages. For example, the Army Materiel Command established a team to
    analyze the spare parts programs, and the team identified issues affecting
    spare parts shortages, such as unanticipated demands and changes in the
    useful life of parts because of safety concerns. To help resolve aircraft
    spare parts shortages, the Defense Logistics Agency implemented an
    investment strategy that focuses on replenishing aviation repair parts
    identified as having availability problems. Additionally, the Army has
    developed a Strategic Logistics Plan that is designed to change its current
    approach to one that is more effective, efficient, and responsive. The
    plan?s initiatives for resolving spare parts shortages are linked to the
    asset management process under the Army?s planned change in approach. Some
    of these initiatives are new or in the planning stages. Once the initiatives
    are more fully developed, we plan to review them to determine whether there
    are opportunities to enhance them.

    We have previously reported problems with the way the Army has implemented
    its logistics initiatives and recommended that it develop a management
    framework for its initiatives, to include a comprehensive strategy and
    performance plan. 3 The Army has actions under way to address the
    recommendation; therefore, we are not making any additional recommendations
    at this time. The Department of Defense generally concurred with this
    report.

    In January 2001, we reported on Department of Defense management challenges
    and noted that the Department has had serious weaknesses in its management
    of logistics functions and, in particular, inventory

    3 Defense Inventory: Improved Management Framework Needed to Guide Army Best
    Practice Initiatives (GAO/ NSIAD- 99- 217, Sept. 14, 1999). Background

    Page 4 GAO- 01- 772 Army Inventory

    management. 4 We have identified inventory management as a high- risk area
    since 1990. 5 Despite years of efforts to resolve its inventory problems,
    the Department still has spare parts shortages. (See app. I for examples
    from our reports on management weaknesses related to the Army?s spare parts
    shortages.) We are also reviewing Department of Defense?s practice of
    cannibalization of parts on aircraft; this report will be completed at a
    later date.

    In a separate report issued earlier this year, we indicated that current
    financial information did not show the extent to which funds were used for
    spare parts. 6 The Department of Defense planned to annually develop
    detailed financial management information on spare parts funding uses but
    had not planned to provide it to the Congress. When we recommended that the
    Secretary of Defense routinely provide this information to the Congress as
    an integral part of the Department?s annual budget justification, the
    Department agreed to do so.

    The Department of Defense submits quarterly reports to the Congress
    regarding military readiness. The reports describe readiness problems and
    remedial actions, comprehensive readiness indicators for active components,
    and unit readiness indicators. The Army?s readiness reports provide
    assessments of its major systems, which include aircraft. The readiness goal
    for aircraft is to have 70 to 80 percent mission capable. 7

    The Apache (AH- 64) is the Army?s main attack helicopter and is equipped to
    destroy, disrupt, or delay enemy forces. Originally produced in fiscal year
    1982, it is designed to fight and survive during the day and night and in
    adverse weather throughout the world. The Blackhawk (UH- 60), first fielded
    in 1978, primarily performs air assault, air cavalry, and medical evacuation
    missions. The Chinook (CH- 47), first used in Vietnam in 1962, moves
    artillery, ammunition, personnel, and supplies on the battlefield. Figure 1
    shows the Apache, Blackhawk, and Chinook helicopters.

    4 Major Management Challenges and Program Risks: Department of Defense

    (GAO- 01- 244, Jan. 2001). 5 High Risk Series: An Update (GAO- 01- 263, Jan.
    2001).

    6 Defense Inventory: Information on the Use of Spare Parts Funding is
    Lacking

    (GAO- 01- 472, June 11, 2001). 7 Mission- capable equipment and systems can
    fulfill at least one or more of their missions.

    Page 5 GAO- 01- 772 Army Inventory

    Figure 1: Apache, Blackhawk, and Chinook Helicopters

    Source: Defense Visual Information Center.

    The Army?s spare parts include reparable and consumable parts. Reparable
    parts are expensive items, such as hydraulic pumps, navigational computers,
    and landing gear, that can be fixed and used again. The Aviation and Missile
    Command manages reparable parts. The Corpus Christi Army Depot and
    contractors repair helicopters and aviation

    Page 6 GAO- 01- 772 Army Inventory

    reparable parts. The Defense Logistics Agency provides the Army consumable
    parts (e. g., nuts, bearings, and fuses), which are used extensively to fix
    reparable parts and aircraft, and manages a large part of the warehousing
    and distribution of reparable parts. The Defense Supply Center, Richmond, is
    the lead center for managing aviation consumable spare parts. Figure 2 shows
    the process for providing spare parts to Army helicopter units and the
    repair facilities.

    Figure 2: Process for Providing Spare Parts to Customers

    Source: GAO.

    Page 7 GAO- 01- 772 Army Inventory

    While the Apache, Blackhawk, and Chinook helicopters generally met their
    mission- capable goals during fiscal years 1999- 2000, indicating that parts
    shortages have not affected mission capability, supply availability rates
    and the cannibalization of parts indicate that spare parts shortages have
    indeed been a problem. These parts shortages created inefficiencies in
    maintenance processes and procedures that have lowered morale of maintenance
    personnel.

    As shown in figure 3, during fiscal years 1996- 2000, the three helicopters
    we reviewed generally met their mission- capable goals. In fiscal year 1996,
    the Blackhawk?s mission- capable rate was 79.25 percent, which according to
    an Aviation and Missile Command official, was just slightly below its
    readiness goal of 80 percent. Also, the Command official mentioned the
    Blackhawk probably did not exactly meet its mission- capable goal for many
    reasons, including several aviation safety action messages that were issued
    that year. These messages identified maintenance, technical, or general
    problems for which the safety condition of the aircraft had been determined
    to be a low to medium risk. The Chinook and the Apache did not meet their
    mission- capable goal of 75 percent in August and November 1999,
    respectively, when the entire fleet of helicopters was grounded because of
    ?safety restrictions.? A safety restriction pertains to any defect or
    hazardous condition that can cause personal injury, death, or damage to
    aircraft, components, or repair parts for which a medium to high safety risk
    has been determined. Parts Shortages

    Adversely Affect Operations, Maintenance, and Personnel

    Mission- Capable Goals for Helicopters Generally Met

    Page 8 GAO- 01- 772 Army Inventory

    Figure 3: Mission- Capable Rates for the Apache, Blackhawk, and Chinook
    Helicopters during Fiscal Years 1996- 2000

    Source: Our analysis of Army Deputy Chief of Staff for Logistics data.

    The Chinook was grounded because of a cracked gear in the transmission,
    which was already in short supply before the safety restriction. The gear
    changes the direction of power from the engine and reduces the speed that
    turns the rotor blades (see fig. 4). The Apache helicopters were grounded
    because of transmission clutch failures. According to an Army official, the
    clutch engages and disengages the gears in the transmission. Also, Aviation
    and Missile Command officials mentioned the grounding of these helicopters
    created demands for parts that the wholesale system did not have available.
    The safety concerns coupled with the lack of spare parts contributed to
    these helicopters? failure to meet their mission- capable goals.

    Page 9 GAO- 01- 772 Army Inventory

    Figure 4: Gear for the Chinook Helicopter

    Source: Army.

    As shown in figure 5, during fiscal years 1999- 2000, parts for the Apache
    and Blackhawk helicopters seldom met the Army?s supply availability goal of
    85 percent. 8 The supply availability rate is the percentage of requisitions
    filled at the wholesale 9 inventory level. The goal is designed to measure
    the overall effectiveness of the wholesale system. While the Blackhawk met
    the supply availability goal only twice during the 2- year period, the
    Apache never met the goal. We identified several reasons for spare parts
    shortages, which will be discussed later.

    8 The supply availability goal is not designed as a target for individual
    weapon systems. It is a Department of Defense funding goal, and there is no
    direct correlation between this goal and the operational readiness goals
    established for Army weapon systems.

    9 The wholesale system is comprised of subordinate commands that procure
    supplies directly from vendors and hold inventories of stock to meet demands
    of retail customers. Retail customers are field- operating commands, which
    receive support from the wholesale level. Spare Parts Not Available

    to Meet Supply Goals

    Page 10 GAO- 01- 772 Army Inventory

    Figure 5: Supply Availability Rates for the Apache, Blackhawk, and Chinook
    Helicopters during Fiscal Years 1999- 2000

    Note: The Army maintains supply availability rates for individual
    helicopters for only 2 years but maintains overall aviation supply rates up
    to 9 years. Therefore, we selected supply availability rates for individual
    helicopters for the past 2 fiscal years.

    Source: Our analysis using Army Materiel Command data.

    To compensate for the lack of spare parts, maintenance personnel use
    cannibalizations or substitutions of parts from one aircraft to another.
    According to the Army Aviation Maintenance Field Manual 3- 04.500,
    cannibalization is done when, among other things, (1) the aircraft from
    which the exchanged parts will be used is grounded and awaiting repair
    parts; (2) needed repair parts are on order before the cannibalization; (3)
    the parts will return the other aircraft to a mission- capable status; and
    (4) all possible alternatives (local procurement or manufacturers) have been
    tried without success. A January 2000 aviation logistics study showed Parts
    Shortages Have

    Resulted in Cannibalizations That Have Lowered Morale of Maintenance
    Personnel

    Page 11 GAO- 01- 772 Army Inventory

    that cannibalization is an accepted maintenance practice at the unit level
    to return aircraft to mission- capable status. 10 According to a Fort
    Campbell 101st Airborne Division official, the principal reason for
    cannibalizations is the nonavailability of serviceable repair parts. The
    results from our spare parts review showed that cannibalizations at Fort
    Campbell were done on the Apache and Blackhawk main fuel controls, the
    Blackhawk engines, and the Chinook rotary wing head. The rotary wing head is
    the main assembly of the rotor system that produces lift, thrust, and
    directional control needed for helicopter flight. Figure 6 shows the rotary
    wing head. Fort Campbell?s contractor maintenance personnel also used
    cannibalizations on the Apache housing assembly and actuator bracket and the
    Chinook aircraft access door. The actuator bracket anchors the servocylinder
    11 to the aircraft. Although the previous examples show units? reliance on
    cannibalization to overcome the unavailability of parts, the practice does
    not resolve spare parts shortages. According to the Army?s Deputy Chief of
    Staff for Logistics, supply shortages, which are masked through extensive
    use of cannibalizations, are a continuing problem the Army is working to
    resolve. 12

    10 Aviation Logistics Study 99: Controlled Substitution Study, Jan. 7, 2000.
    The Army study further states that the three primary reasons for the
    practice of controlled substitution are to (1) keep operational rates up,
    (2) circumvent long lead times for requisitioned parts, and (3) have parts
    available when funds are limited at the end of the fiscal year.

    11 The servocylinder is a hydraulically controlled cylinder that is attached
    to the main rotors and responds to the pilot?s steering the helicopter
    forward, backward, or from side to side.

    12 Statement by Lieutenant General Charles S. Mahan, Jr., Deputy Chief of
    Staff for Logistics, U. S. Army, to the Subcommittee on National Security,
    Veterans Affairs, and International Relations, House Committee on Government
    Reform, May 22, 2001.

    Page 12 GAO- 01- 772 Army Inventory

    Figure 6: Rotary Wing Heads for Chinook

    Note: The arrows point to the rotary wing heads. Source: Army.

    As we testified in May 2001, according to Army officials, only a small
    portion of Army cannibalizations are reported (only for serial- numbered
    parts). 13 The Army does not track cannibalizations servicewide and does not
    require subordinate commands to do so. Therefore, the full extent to which
    this practice is used is unknown. However, the Floyd D. Spence National
    Defense Authorization Act for Fiscal Year 2001 (P. L. 106- 398, sec. 371)
    requires the Department of Defense to measure, on a quarterly basis, the
    extent to which units remove usable parts, supplies, or equipment from one
    vehicle, vessel, or aircraft in order to render a different system
    operational. The Department is working to establish definitions, standards,
    and a shared framework for the collection and reporting of data on
    cannibalization. The first report of these data is

    13 Military Aircraft: Cannibalizations Adversely Affect Personnel and
    Maintenance

    (GAO- 01- 693T, May 22, 2001).

    Page 13 GAO- 01- 772 Army Inventory

    targeted for the April- June 2001 Quarterly Readiness Report to the
    Congress.

    Although cannibalization may keep aircraft flying, it is not an efficient
    practice. According to the January 2000 aviation logistics study, this
    practice doubles the hours dedicated to a single maintenance effort. With
    limited hours available to conduct repairs and maintenance, the duplication
    of effort is a significant factor in whether or not to use the practice.
    Also, as we testified in May 2001, this practice requires at least twice the
    maintenance time of normal repairs because it involves removing and
    installing components from two aircraft instead of one (see fig. 7).
    Additionally, when a mechanic removes a part from an aircraft to place on
    another one, the risk of damaging the aircraft and/ or the ?good?

    part in the process is magnified.

    Page 14 GAO- 01- 772 Army Inventory

    Figure 7: Repairs Require Two Steps, Cannibalizations Four

    Source: GAO.

    As we testified in May 2001, evidence suggests that cannibalizations have
    negatively affected morale because they are sometimes seen as routinely
    making unrealistic demands on maintenance personnel. According to a Fort
    Campbell official, the added workload of cannibalization detracts from the
    quality of life for aircraft maintenance soldiers. Also, an Army official
    said the added workload degrades maintenance soldiers? morale. 14
    Cannibalizations may need to be quickly performed at any time, day or

    14 Statement by Lieutenant General Charles S. Mahan, Jr., Deputy Chief of
    Staff for Logistics, U. S. Army, to the Subcommittee on National Security,
    Veterans Affairs, and International Relations, House Committee on Government
    Reform, May 22, 2001.

    Page 15 GAO- 01- 772 Army Inventory

    night, to meet operational commitments. In such cases, personnel must
    continue working until the job is done, regardless of how much time it
    takes. Further, in August 1999 we reported that the majority of factors
    cited by military personnel as sources of dissatisfaction and reasons for
    leaving the military were work- related circumstances such as the lack of
    parts and materials to successfully complete daily job requirements. 15

    Our review showed that the primary reasons for shortages of spare parts for
    the Apache, Blackhawk, and Chinook helicopters were demands not anticipated
    for parts and delays in obtaining parts from a contractor. Also, problems
    concerning overhaul and maintenance of spare parts created shortages. A
    contributing factor, which was not identified in our review but which Army
    and Defense Logistics Agency officials acknowledged, was the difficulty in
    obtaining parts for these aging helicopters because original manufacturers
    may no longer be in business.

    We selected for review 90 spare parts for the Apache (32 parts), Blackhawk
    (34 parts), and Chinook (24 parts) helicopters. Officials at the units and
    repair facilities identified shortages of these 90 parts as not being
    available to complete repairs. (See app. II for a list of these parts.)
    Table 1 shows the reasons for the shortages, by helicopter, for the 90 spare
    parts we reviewed.

    Table 1: Reasons for Shortages of 90 Spare Parts Reviewed Reason a Apache
    Blackhawk Chinook Total Percent

    Actual demand was greater than anticipated 21 23 13 57 63 Contractual delays
    11 4 6 21 23 Problems concerning overhaul/ maintenance 04 2 67 Other b 03 3
    67

    Total 32 34 24 90

    15 Military Personnel: Perspectives of Surveyed Service Members in Retention
    Critical Specialties (GAO/ NSIAD- 99- 197BR, Aug. 16, 1999). Key Reasons for

    Shortages Were Unanticipated Demands and Delays in Obtaining Parts From
    Contractors

    Selected Systems Have Experienced Parts Shortages for Several Reasons

    Page 16 GAO- 01- 772 Army Inventory

    a There were multiple reasons for parts shortages, but for the purpose of
    our analysis, we used the most predominant reason. b Includes unknown
    reasons for shortages and incorrect inventory records.

    Source: GAO.

    The major reason for the shortages of the 90 spare parts we reviewed was
    that demands for parts were not anticipated due to unforeseen safety
    concerns, the recalculation of parts? useful life, and other sudden
    increases in demands. The Army and the Defense Logistics Agency forecast the
    demand for parts using past data on the usage of parts, when available. 16
    According to an Army document, a demand that was not anticipated results in
    the need for parts that the Army had not planned for when determining
    requirements for parts. A June 2000 Army Audit Agency report also cited
    demands that were not anticipated as a main factor causing parts shortages.
    17

    Parts identified as causing safety problems resulted in unanticipated
    demands for spare parts and created shortages. For example, according to a
    safety message, because a cracked gear in a Chinook transmission was
    discovered during an overhaul, the entire fleet was grounded in August 1999.
    According to an Aviation and Missile Command item manager, units sent
    transmissions suspected of having problems to the Corpus Christi Army Depot
    for repair. Also, the item manager mentioned the safety issue exacerbated an
    already existing condition because the Command never had enough
    transmissions on hand to meet the average monthly demand. Causes of this
    condition were identified as long lead times to (1) award contracts and (2)
    manufacture and repair transmissions. Since the safety concerns, the demands
    have increased significantly; and as of March 2001, 75 transmissions were on
    back order. 18 Similarly, according to a February 2000 safety message, an
    engineering analysis indicated that the retirement life for the Apache main
    rotor blade attach pins (see fig. 8) needed to be reduced because specific
    pins might not provide the proper fit and would result in significant
    degradation of the pins? life due to fatigue. (The pins attach the
    helicopter blade to the main rotor.) Units were required to

    16 When demand data is not available, the Army uses engineering estimates to
    determine the quantities of spare parts to purchase. 17 Army Audit Agency
    Report: Survey of Quality of Spare Parts Report (AA 00- 745, June 2000). 18
    A back order is the quantity of an item requested by units that is not
    immediately available for issuance but is recorded as a stock commitment for
    future issuance. Actual Demand Was Greater

    Than Anticipated

    Page 17 GAO- 01- 772 Army Inventory

    inspect all main rotor pins and replace defected pins with new ones that
    last longer. In June 2000, demands for the pins increased, and the Command?s
    record shows that 81 pins were on back order and 14 pins were on hand to
    support the average monthly demands for 30 pins.

    Figure 8: Apache Main Rotor Blade Attach Pin

    Note: The arrow points to the main rotor blade attach pin. Source: Army.

    The recalculated useful life of parts also resulted in unanticipated demands
    for parts that the Army had not planned for and created shortages. According
    to an Aviation and Missile Command team leader of the Apache Systems
    Engineering Office, the useful life of the Apache?s housing assembly 19 (see
    fig. 9) and rotor damper 20 (see fig. 10) changed because the Command
    conducted test flights that recorded the accurate fatigue factors for parts.
    The official said that recalculating the parts?

    19 The housing assembly holds the Apache?s rotor blades. 20 The rotor damper
    is used on the helicopter?s rotor head assemblies and tail rotor hub
    assemblies to control and stabilize movements of rotor blades.

    Page 18 GAO- 01- 772 Army Inventory

    useful life based on accurate data instead of estimates reduced their useful
    life. In August 2000, the Aviation and Missile Command records show that the
    Command had only three usable Apache housing assemblies on hand when its
    useful life was recalculated and reduced from 1,981 to 1,193 hours, about a
    40- percent reduction. As a result, repairs had to be made more frequently,
    and there were more demands for the housing assemblies than were available.
    Similarly, the Command?s record shows that the Command had only seven usable
    Apache rotor dampers on hand when its useful life was reduced from 3,710 to
    2,057 hours, about a 45- percent reduction. In September 2000, demands for
    the rotor dampers increased, and the Command?s record shows that 53 were on
    back order and the average monthly demand was 65.

    Figure 9: Housing Assembly for Apache

    Source: Army.

    Page 19 GAO- 01- 772 Army Inventory

    Figure 10: Rotor Damper for Apache

    Source: Army.

    Finally, parts that were ordered more frequently than expected caused
    shortages when increases in demand for the items were not anticipated. For
    example, field units? demands for bearings used on the Blackhawk helicopters
    outpaced the contractor?s production. According to an Aviation and Missile
    Command item manager, a new bearing was introduced in 1996. The Command?s
    records show that before the new, improved bearing was introduced, units
    replaced this bearing every 70 hours. This new bearing lasts 4,000 hours and
    the contractor could not produce enough to meet the demand. In March 2000,
    Army records show that 976 bearings were on back order. According to a
    Command item manager, the increase in demand for the bearings occurred
    because (1) units were stockpiling the bearings and (2) the parts were being
    replaced worldwide on all Blackhawk helicopters because they lasted longer.
    The item manager stated the units were no longer ordering excessive
    quantities of bearings and that as of May 2001, there were 300 on hand and
    423 on back order.

    Likewise, the Command experienced a 25- percent increase in demands for
    Apache fuel boost pumps 21 (see fig. 11). A Command team leader for the

    21 Fuel enters the engine through the fuel boost (suction- type) pump, which
    is mounted on the engine.

    Page 20 GAO- 01- 772 Army Inventory

    Apache airframe was uncertain as to what caused the surge in demand but
    commented that it was not unusual for parts to fail because of the
    aircraft?s age. The Command?s record shows that unexpected failures of
    motors occurred during repairs, which delayed production of fuel boost pumps
    to meet increased demands. Also, the Command?s record shows that in October
    2000, there were 45 back orders and no usable fuel boost pumps on hand to
    meet the average monthly demand for three.

    Figure 11: Fuel Boost Pump

    Source: Army.

    Poor contractor performance and delays in negotiating a contract also
    resulted in parts shortages. For example, Defense Logistics Agency records
    show that as a result of a contractor?s late deliveries of Apache shear
    bolts, the Agency did not have the parts available for Apache users. Agency
    records show that the contract was terminated and another one was awarded to
    a different contractor. Also, Army records show that the Command had
    difficulty negotiating with a sole- source contractor to provide Apache
    servocylinders at reasonable prices. Because of the time it took the
    Aviation and Missile Command to award the contract, the parts were not
    provided to the users when needed.

    Due to a shortage of parts, the Corpus Christi Army Depot experienced
    problems that prevented it from repairing and overhauling aviation parts
    Contract Delays

    Problems Concerning Overhaul and Maintenance

    Page 21 GAO- 01- 772 Army Inventory

    in a timely manner. In May 1999, the Corpus Christi Army Depot received a
    requirement to overhaul 20 Blackhawk T- 700 engines (see fig. 12). In July
    1999, the depot received the fiscal year 2000 requirement to overhaul 30
    engines, which increased to 65 in October 1999 and to 80 in December 1999.
    Because of these increases, the depot did not have enough time to determine
    the parts needed to support the overhaul requirements and the parts were not
    available to complete repairs in a timely manner. Also, the depot did not
    have the personnel available to respond quickly to the dramatic increases in
    overhaul requirements and thus the Depot could not repair parts in a timely
    manner. Further, in June 2000 an Aviation and Missile Command record showed
    that the average demand for Blackhawk T- 700 engines was 7 per month, 66
    engines were on back order, and 249 engines needed to be repaired. Another
    maintenance problem we identified was a shortage of parts used to repair
    cold section modules, a compressor section in the T- 700 engine. The repair
    of cold section modules was also impacted by the need for personnel to
    support the overhauls of Blackhawk T- 700 engines.

    Figure 12: Blackhawk T- 700 Engine

    Source: Army.

    Aircraft age was not a reason for the 90 spare parts shortages we reviewed.
    However, Army and Defense Logistics Agency officials informed us the age of
    the Apache, the Blackhawk, and the Chinook is a factor Problems With Aging
    Aircraft

    Page 22 GAO- 01- 772 Army Inventory

    contributing to parts shortages for these systems. The aircraft were
    originally developed in the 1980s, 1970s, and 1960s, respectively, and they
    are expected to be useful for a number of years. The Commander of the Army
    Materiel Command said in 1999 that the Army expects to maintain an upgraded
    model of the almost 40- year- old Chinook for an additional 30 years. 22 He
    added that because of the aircraft?s ages, parts consumption increases,
    inventory is depleted, cannibalization is necessary, and procurement costs
    of replenishment stocks increase.

    According to the Defense Logistics Agency?s November 2000 Aging Aircraft
    Program Management Plan, because of the extended age of these systems, the
    Army is concerned about the degradation of their structural integrity and
    the hard- to- find structural and electrical parts. Also, according to a
    report prepared for the Defense Microelectronics Activity, manufacturing
    sources for spare parts can be diminished because of uneconomical production
    requirements and the limited availability or increasing cost of items and
    raw materials used in the manufacturing process. 23 Army and Defense
    Logistics Agency officials commented, and the plan states, that this issue
    is serious because the original contractors that produced some spare parts
    for aging weapon systems may no longer be in business or may have upgraded
    their production lines to accommodate technologically advanced parts.
    However, we did not find this factor to be a reason for the shortages of the
    parts we reviewed.

    The Army and the Defense Logistics Agency have initiatives under way or
    planned to revolutionize and integrate logistics processes, upgrade aging
    aircraft, and improve the supply of aviation parts. The concept for the
    initiatives generally addresses the reasons we identified for spare parts
    shortages. The Army has developed a Strategic Logistics Plan intended to
    integrate the modernization and transformation of logistics processes
    throughout many organizations. The Army initiatives we identified are linked
    to the plan?s asset management process, which is designed to match available
    assets with needs, identify shortages of assets, and interface with
    government and industry suppliers to buy additional assets. We have

    22 Statement by Commander, U. S. Army Materiel Command, to the Subcommittee
    on Military Readiness, House Committee on Armed Services, Oct. 7, 1999. 23
    Resolution Cost Factors for Diminishing Manufacturing Sources and Material
    Shortages, February 1999 (revised May 1999). Overall Initiatives

    May Address Parts Shortages

    Page 23 GAO- 01- 772 Army Inventory

    previously reported problems with the way Army has implemented its logistics
    initiatives and recommended that it develop a management framework for its
    initiatives, to include a comprehensive strategy and performance plan. The
    Army has actions under way to address the recommendation; therefore, we are
    not making any additional recommendations at this time. The various Army-
    wide, Army Materiel Command, and Defense Logistics Agency initiatives are
    described in the following sections.

    Among the efforts the Army has under way to improve the availability of
    spare parts are its Strategic Logistics Plan, Logistics Transformation Plan,
    Single Stock Fund, Velocity Management, and National Maintenance Program.

    The Army has developed a Strategic Logistics Plan intended to integrate the
    modernization and transformation of logistics processes throughout many
    organizations. Under its Strategic Logistics Plan, the Army hopes to change
    from its current reactive approach to one that is more effective, efficient,
    and responsive. The initiatives planned or under way that are designed to
    resolve spare parts shortages are linked to the asset management process
    under the Army?s planned change in approach. The plan was last updated on
    May 11, 2000, to show how the Army will achieve its synchronization goals by
    meeting the requirements of the Government Performance and Results Act (P.
    L. 103- 62 (1993)). The next update is planned for the fall 2001 and is to
    include a timeline with milestones and metrics to track, measure, and better
    manage the transformation process.

    In September 1999, we recommended that the Army develop a management
    framework to include a comprehensive strategy and a performance plan for
    implementing its initiatives. 24 In March 2000, the Department of Defense
    issued Defense Reform Initiative 54, which requires each military service to
    submit an annual logistics transformation plan. The purpose of this plan is
    to document, on an annual basis, the planned actions and related resources
    for implementing logistics initiatives, including actions that directly
    support the Department?s Logistics Strategic Plan. Initiative 54 requires
    that the services? transformation plans include each of the key management
    framework elements specified in our prior reports.

    24 Defense Inventory (GAO/ NSIAD- 99- 217, Sept. 14, 1999). Army- wide
    Initiatives

    Army Strategic Logistics Plan Army Logistics Transformation Plan

    Page 24 GAO- 01- 772 Army Inventory

    In response to our previous recommendation, in May 2000 the Army decided to
    combine preparation of its Strategic Logistics Plan with its response to
    Defense Reform Initiative 54. In July 2000, the Army developed its Logistics
    Transformation Plan in response to initiative 54. However, we did not
    evaluate this plan to determine whether its management framework included a
    comprehensive strategy and performance plan. Since the Army is taking
    actions on our previous recommendation to develop a management framework, we
    are not making new recommendations at this time. We are now reviewing the
    adequacy of the strategic logistics planning process within the Department
    of Defense and component commands, and this review will include the
    services? logistics transformation plans. This report will be completed
    later this year.

    The Army?s single stock fund is a business process reengineering initiative
    to improve the availability of secondary items 25 logistics and financial
    processes in the Army Working Capital Fund, Supply Management business area.
    The fund is aimed at improving the availability of spare parts by, among
    other things, (1) providing worldwide access to parts down to the
    installation levels, (2) consolidating separate national- level and retail
    elements into a single fund, and (3) integrating logistics and financial
    automated information systems. In 1987 the Army began to study its stock
    fund operations. The Army?s single stock fund program campaign plan was
    approved by the Vice Chief of Staff in November 1997, and during the first
    quarter of fiscal year 2002, the Army plans to transfer all stocks, which
    include wholesale and retail inventories, to the single management by Army
    Materiel Command.

    In September 1995, the Army established its Velocity Management Program to
    develop a faster, more flexible, and more efficient logistics pipeline. The
    program?s goals, concept, and top management support parallel improvement
    efforts in private sector companies. The program?s overall goal is to
    eliminate unnecessary steps in the logistics pipeline that delay the flow of
    supplies through the system. The program consists of Army- wide process
    improvement teams for the following four areas: the ordering and shipping of
    supplies, repair cycle, inventory levels and locations (also known as
    stockage determination), and financial management.

    25 Secondary inventory includes spare parts, clothing, and medical supplies
    to support Department of Defense operating forces worldwide. Army Single
    Stock Fund

    Velocity Management

    Page 25 GAO- 01- 772 Army Inventory

    This Army- wide initiative, which was announced in July 1999, is designed to
    maximize repair capabilities and optimize the use of available resources at
    all maintenance levels within the Army. The initiative centralizes the
    management of all Army sustainment maintenance programs while decentralizing
    the actual repair of components and parts. The workload will be distributed
    across depot and installation activities, and repairs will be made based on
    national need for an item.

    Additionally, the Army plans to upgrade its aging aircraft through its
    Recapitalization Program (a part of the National Maintenance Program), which
    it will achieve by overhauling components of and upgrading its aircraft. The
    purpose of this program is to (1) extend aircraft service life; (2) reduce
    operating and support costs; (3) improve reliability, maintainability,
    safety, and efficiency; and (4) enhance capability. A limited number of
    weapon systems will begin this process in fiscal year 2002, with full- scale
    upgrades beginning in fiscal year 2003. The Apache, Blackhawk, and Chinook
    helicopters have been identified as candidates for the program.

    The Army Materiel Command has several initiatives under way to help resolve
    spare parts shortages, including (1) identifying processes for forecasting
    requirements for spare parts, (2) analyzing the spare parts program to
    identify issues that affect aviation spare parts shortages, and (3) working
    with contractors to provide spare parts. These initiatives are separate from
    those in the Army?s Strategic Logistics Plan.

    In July 2000, the Army Materiel Command established the Forecasting and
    Support Techniques Working Group to identify processes for forecasting
    requirements for spare parts and to develop a plan to resolve any identified
    problems. The Army uses forecasting to develop quantity and resource
    requirements for inventory. Its basic principles are to maintain current
    data on customer demand, lead times for obtaining parts, internal process
    costs, stock levels, and replenishment of parts in a timely manner. In
    January 2001, the working group had prioritized several issues for its
    review.

    In August 2000, the Army Materiel Command established the Spare Parts
    Shortages Integrated Process Team to analyze the spare parts program and to
    initially focus on aviation parts managed by the Aviation and Missile
    Command. The team identified issues that have affected spare parts
    shortages, including (1) an increase in demands that led to reduced
    availability of reparable parts; (2) understated times for administration
    and National Maintenance Program

    Army Materiel Command Initiatives

    Plan to Resolve Forecasting Problems

    Analysis of Spare Parts Program

    Page 26 GAO- 01- 772 Army Inventory

    production of spare parts, which resulted in the reduced availability of
    consumable and reparable parts; and (3) changes in requirements as the
    result of problems with parts that affected aircraft safety and readiness
    and minimally affected the availability of spare parts. The team recommended
    the issues be used to influence the next budget submission.

    The Aviation and Missile Command is attempting to help resolve spare parts
    shortages by establishing partnerships with key contractors to reduce the
    time it takes to provide spare parts once a need has been identified. The
    Aviation and Missile Command focuses on ensuring that the prime contractors?
    focus is maintained on readiness, lead times, spare parts reliability, and
    rapid response to customer needs.

    Among the efforts the Defense Logistics Agency has under way to improve the
    availability of spare parts are its Aviation Investment Strategy, Aging
    Aircraft Program, and contracts for consumable parts.

    The Defense Logistics Agency?s major initiative to resolve aircraft spare
    parts shortages is its Aviation Investment Strategy. This fiscal year 2000
    initiative focuses on replenishing consumable aviation repair parts that
    have been identified as having availability problems that affect readiness.
    To achieve this initiative, the Agency plans to invest $17.3 million in
    aviation spare parts for the Army from fiscal years 2000 through 2003. As of
    fiscal year 2000, about $4.8 million had been obligated for this purpose.

    The purpose of the Defense Logistics Agency?s Aging Aircraft Program is to
    consistently meet the goals for spare parts availability for the Army, Navy,
    and Air Force aviation weapon systems. The program?s focus will be to (1)
    provide inventory control point personnel with complete, timely, and
    accurate information on current and projected parts requirements; (2) reduce
    customers? wait times for parts for which sources or production capability
    no longer exist; and (3) create an efficient and effective program
    management structure and processes that will achieve the stated program
    goals. The Aging Aircraft Program Management Plan was issued in November
    2000, and the Agency plans to invest about $20 million on this program
    during 2001- 2007.

    The Defense Supply Center Richmond has a 2- year contract with an option for
    3 years with one contractor and a 5- year contract with another contractor
    for consumable Army aircraft spare parts. According to a Contractor and
    Partnering

    Relationships Defense Logistics Agency Initiatives

    Aviation Investment Strategy Aging Aircraft Program

    Long- Term Contracts for Consumable Parts

    Page 27 GAO- 01- 772 Army Inventory

    Defense Supply Center Richmond document, the use of best commercial
    practices 26 will benefit aircraft users through improved delivery schedules
    and reduced inventory storage and administrative costs.

    In written comments on a draft of this report, the Principal Assistant
    Deputy Under Secretary of Defense for Logistics and Materiel Readiness
    indicated that the Department of Defense generally concurred with the
    report. The Department?s comments are reprinted in their entirety in
    appendix III.

    To determine the impact spare parts shortages had on three selected Army
    helicopters, we obtained and reviewed (1) Department of Defense Quarterly
    Readiness Reports to the Congress for April 1999 through September 2000 and
    (2) additional readiness data from the Army?s Deputy Chief of Staff for
    Logistics, Arlington, Virginia. Additionally, we had discussions with
    officials at the Army Materiel Command, Alexandria, Virginia. We did not
    independently verify the readiness data. We selected the three helicopters
    for review because the helicopters experienced spare parts shortages during
    fiscal year 2000. To determine whether selected helicopters met supply
    availability goals, we obtained and reviewed the Army Materiel Command?s
    fiscal year 1999- 2000 supply availability rates for the Apache, Blackhawk,
    and Chinook helicopters. We did not independently verify the supply
    availability data. To determine why the helicopters experienced spare parts
    shortages, we interviewed officials at the Army Aviation and Missile
    Command, Huntsville, Alabama, and reviewed selected Army safety messages
    from August 1999 through February 2000 to identify the parts that caused the
    safety concerns. To determine the impact of parts shortages on maintenance
    practices and personnel, we reviewed the Army regulation on materiel policy
    and retail maintenance operations and an Army study on cannibalizations. We
    also reviewed our previous work on how cannibalizations adversely affect
    personnel and maintenance and our report that cited the lack of spare parts
    as hampering retention of military personnel. Additionally, we interviewed
    an official at the 101st Airborne Division, Fort Campbell, Kentucky, on the
    impact cannibalizations had on maintenance.

    26 Best commercial practices are defined as practices that enable Department
    of Defense to reduce inventory levels while making the supply system more
    responsive to users? needs. Agency Comments

    Scope and Methodology

    Page 28 GAO- 01- 772 Army Inventory

    To determine the reasons for the shortages of spare parts for the Apache,
    Blackhawk, and Chinook helicopters, we obtained computerized lists of spare
    parts that caused the helicopters to be not mission capable from the Army
    Aviation and Missile Command from October 1999 through July 2000 and from
    the Defense Supply Center, Richmond, Virginia, for fiscal year 2000. Also,
    we visited and obtained lists of spare parts shortages that caused delays in
    repairing helicopters from (1) Fort Campbell?s 101st Airborne Division as of
    September 13, 2000; (2) Fort Campbell?s Aviation Logistics Management
    Division, DynCorp Aerospace Operations, as of April 18, 2000; and (3) the
    Corpus Christi Army Depot, Corpus Christi, Texas, as of August 23, 2000.
    From the lists, we selected all 15 parts from the Fort Campbell?s 101st
    Airborne Division and randomly selected 75 spare parts from the other
    locations for the Apache (32), Blackhawk (34), and Chinook (24) for further
    review (a total of 90 parts). Because of the size of our sample, we did not
    project the results of the sample to the universe of all helicopters? parts
    shortages. Once we identified the 90 spare parts shortages, we provided them
    to the inventory control points, the Army Aviation and Missile Command, and
    the Defense Supply Center, Richmond, to obtain their reasons for the
    shortages along with supporting documentation. To determine whether the
    aging of the aircraft contributed to spare parts shortages, we reviewed
    congressional Army testimony and documentation from the Defense Logistics
    Agency, Fort Belvoir, Virginia, and interviewed Army and Defense Logistics
    Agency officials. To determine whether management weaknesses contributed to
    spare parts shortages, we reviewed our prior reports on Army and Department
    of Defense inventory and financial management problems.

    To determine what overall actions are planned or under way to address spare
    parts shortages for Army aircraft, we visited and obtained documentation and
    views from program officials at the Army?s Office of the Deputy Chief of
    Staff, Logistics; the Army Materiel Command; the Army Aviation and Missile
    Command; the Defense Logistics Agency; and the Defense Supply Center,
    Richmond. We also compared the reasons for the spare parts shortages we
    found with the overall initiatives under way or planned to determine whether
    they were being addressed. We did not review the plans or the specific
    initiatives.

    Our review was performed from August 2000 to June 2001 in accordance with
    generally accepted government auditing standards.

    We are sending copies of this report to the Secretaries of Defense and the
    Army; the Director, Defense Logistics Agency; and the Director, Office of

    Page 29 GAO- 01- 772 Army Inventory

    Management and Budget. We will make copies available to other interested
    parties upon request.

    Please contact me at (202) 512- 8412 if you or your staff have any questions
    regarding this report. Key contributors to this report were Lawson Gist,
    Jr.; Jose Watkins; Carleen Bennett; and Nancy Ragsdale.

    David R. Warren Director, Defense Capabilities and Management

    Page 30 GAO- 01- 772 Army Inventory

    List of Congressional Committees The Honorable Carl Levin Chairman The
    Honorable John Warner Ranking Minority Member Committee on Armed Services
    United States Senate

    The Honorable Daniel Inouye Chairman The Honorable Ted Stevens Ranking
    Minority Member Subcommittee on Defense Committee on Appropriations United
    States Senate

    The Honorable Bill Young Chairman, Committee on Appropriations House of
    Representatives

    The Honorable Bob Stump Chairman The Honorable Ike Skelton Ranking Minority
    Member Committee on Armed Services House of Representatives

    The Honorable Jerry Lewis Chairman The Honorable John Murtha Ranking
    Minority Member Subcommittee on Defense Committee on Appropriations House of
    Representatives

    Appendix I: Management Weaknesses Have Contributed to Spare Parts Shortages

    Page 31 GAO- 01- 772 Army Inventory

    In January 2001, we reported that the Department of Defense had serious
    weaknesses in its management of logistics functions and, in particular,
    inventory management. 1 Although not specifically identified with the
    systems we reviewed, these management weaknesses directly or indirectly
    contribute to the shortage of spare parts the Army is facing. For example:

     We reported in April 1997 that the Army needed to improve its logistics
    pipeline for aviation parts and reduce logistics costs by incorporating
    private sector best practices. 2 We found that the Army?s repair pipeline
    was slow, unreliable, and inefficient. One contributing factor was a lack of
    consumable parts needed to complete repairs.

     We reported in October 1997 that the Army needed to improve its management
    of the weapon system and equipment modification program to eliminate
    difficulties in obtaining spare parts. 3 We found that program sponsors had
    been inconsistent in providing initial spare parts and ensuring spare parts
    were added to the supply system.

     We reported in June 2000 that the Army needed to strengthen and follow
    procedures to control shipped items, which include spare parts and other
    inventory items. 4 We found that the Army did not know the extent to which
    shipped inventory had been lost or stolen because of weaknesses in its
    inventory control procedures and financial management practices.

    In addition, the Department of Defense?s long- standing financial management
    problems may contribute to the Army?s spare parts shortages. As we recently
    reported, weaknesses in inventory accountability information can affect
    supply responsiveness. 5 Lacking reliable information, the Department of
    Defense has little assurance that all items purchased are received and
    properly recorded. The weaknesses increase the risk that responsible
    inventory item managers may request

    1 Major Management Challenges and Program Risks: Department of Defense

    (GA0- 01- 244, Jan. 2001). 2 Inventory Management: The Army Could Reduce
    Logistics Costs for Aviation Parts by Adopting Best Practices (GAO/ NSIAD-
    97- 82, Apr. 15, 1997).

    3 Army Equipment: Management of Weapon System and Equipment Modification
    Program Needs Improvement (GAO/ NSIAD- 98- 14, Oct. 10, 1997).

    4 Defense Inventory: Army Needs to Strengthen and Follow Procedures to
    Control Shipped Items (GAO/ NSIAD- 00- 109, June 23, 2000).

    5 Major Management Challenges and Program Risks (GAO- 01- 244, Jan. 2001).
    Appendix I: Management Weaknesses Have

    Contributed to Spare Parts Shortages

    Appendix I: Management Weaknesses Have Contributed to Spare Parts Shortages

    Page 32 GAO- 01- 772 Army Inventory

    funds to obtain additional, unnecessary items that may be on hand but not
    reported.

    Appendix II: Reasons for Shortages of Apache, Blackhawk, and Chinook
    Helicopters? Spare Parts

    Page 33 GAO- 01- 772 Army Inventory

    Reason for shortage a Apache part Blackhawk part Chinook part

    Actual demand was greater than anticipated 1. Cylinder charge

    2. Elbow assembly 3. Electric fan cover 4. Fuel booster pump 5. Housing
    assembly 6. Main pin blade 7. Nonmetallic seal b 8. Nonmetallic seal b 9.
    Plain encased seal 10. Plain hexagon nut 11. Relay assembly 12. Roller-
    droop stop 13. Rotor blade damper 14. Rotor pump 15. Shock head 16. Socket
    screw cap 17. Straight- headed pin 18. Striker plate 19. Swivel caster 20.
    Threaded pin- rivet 21. Transmission main

    1. Actuating cylinder 2. Bearing ball 3. Bearing plan 4. Cable assembly 5.
    Circuit card assembly 6. Connecting link 7. Digital microcircuit 8. Fuel
    tank 9. G axis seal kit 10. Gear box assembly 11. Magnetic compass 12.
    Metallic tube 13. Packing with retain 14. Pipe hanger 15. Preformed packing
    16. Pressurizing 17. Protective dust cap 18. Repair kit 19. Sas actuator
    assembly 20. Shaft assembly 21. Shaft fitting 22. Solid rivet 23. Tubeless
    tire

    1. Engine gas turbine 2. Machine bolt 3. Machine transmission 4. Nonmetallic
    bumper 5. O- ring 6. Plain encased seal 7. Plain seal 8. Preformed packing
    9. Quick coupling half b 10. Quick coupling half b 11. Ring spacer 12.
    Support structural 13. Time meter

    Contractual delays 22. Assembly actuator bracket 23. Left- hand nacelle 24.
    Modification kit 25. Mounting bracket 26. Power supply 27. Servocylinder b
    28. Servocylinder b 29. Servocylinder b 30. Servocylinder b 31. Shear bolt
    32. Shock strut assembly

    24. Armored wing assembly 25. Belt aircraft safety 26. Electro actuator 27.
    Roller bearing

    14. Aircraft access door 15. Annular bearing ball 16. Control swashplate 17.
    Hydraulic cylinder 18. Shouldered shaft 19. Time totalizator meter

    Problem concerning overhaul/ maintenance 28. Cold section module

    29. Engine aircraft 30. Main fuel control 31. T- 700 engine aircraft

    20. Aircraft engine 21. Rotary wing head

    Other c 32. Cylinder assembly 33. Flutter dampener 34. Multimeter

    22. Close tolerance bolt 23. Plastic spir tubing 24. Sleeve bushing a There
    were multiple reasons for parts shortages, but for the purposes of our
    analysis, we used the

    most predominant reason. b The spare parts with the same name have different
    stock numbers.

    c Includes agency?s lack of knowledge of reason for shortages and incorrect
    inventory records

    Appendix II: Reasons for Shortages of Apache, Blackhawk, and Chinook
    Helicopters? Spare Parts

    Appendix III: Comments From the Department of Defense Page 34 GAO- 01- 772
    Army Inventory

    Appendix III: Comments From the Department of Defense

    Related GAO Products Page 35 GAO- 01- 772 Army Inventory

    Defense Logistics: Information on Apache Helicopter Support and Readiness
    (GAO- 01- 630, July 17, 2001).

    Defense Inventory: Opportunities Exist to Expand the Use of Defense
    Logistics Agency Best Practices (GAO/ NSIAD- 00- 30, Jan. 26, 2000).

    Army Logistics: Status of Proposed Support Plan for Apache Helicopter

    (GAO/ NSIAD- 99- 140, July 1, 1999).

    Defense Inventory: Status of Inventory and Purchases and Their Relationship
    to Current Needs (GAO/ NSIAD- 99- 60, Apr. 16, 1999).

    Defense Inventory: DOD Could Improve Total Asset Visibility Initiative With
    Results Act Framework (GAO/ NSIAD- 99- 40, Apr. 12, 1999).

    Major Management Challenges and Program Risks: Department of Defense (GAO/
    OCG- 99- 4, Jan. 1, 1999).

    Defense Depot Maintenance: Use of Public- Private Partnering Arrangements
    (GAO/ NSIAD- 98- 91, May 7, 1998).

    Inventory Management: DOD Can Build on Progress by Using Best Practices for
    Reparable Parts (GAO/ NSIAD- 98- 97, Feb. 27, 1998).

    Defense Inventory: Management of Surplus Usable Aircraft Parts Can Be
    Improved (GAO/ NSIAD- 98- 7, Oct. 2, 1997).

    Inventory Management: The Army Could Reduce Logistics Costs for Aviation
    Parts by Adopting Best Practices (GAO/ NSIAD- 97- 82, Apr. 15, 1997).
    Related GAO Products

    (709529)

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