Defense Inventory: Air Force Item Manager Views of Repair Parts  
Issues Consistent With Issues Reported in the Past (21-MAY-03,	 
GAO-03-684R).							 
                                                                 
Since 1990 we have consistently identified the Department of	 
Defense's (DOD) management of secondary inventory (spare and	 
repair parts, medical supplies, and other items to support the	 
operating forces) as a high-risk area because inventory levels	 
were too high and management systems and procedures were	 
ineffective. In addition, DOD has attributed readiness problems  
to parts shortages. Previously, we reported on the wide variety  
of reasons for inventory of spare parts being above or below the 
levels needed to satisfy current inventory requirements. This is 
one in a series of reports addressing defense inventory 	 
vulnerabilities to fraud, waste, and abuse. Congress asked that  
we specifically obtain the views about defense inventory	 
imbalances from item managers, i.e., those who are responsible	 
for maintaining the right amount of inventory.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-684R					        
    ACCNO:   A06965						        
  TITLE:     Defense Inventory: Air Force Item Manager Views of Repair
Parts Issues Consistent With Issues Reported in the Past	 
     DATE:   05/21/2003 
  SUBJECT:   Inventory control					 
	     Military inventories				 
	     Spare parts					 
	     B-1B Aircraft					 
	     B-52 Aircraft					 
	     C-130 Aircraft					 
	     C-141 Aircraft					 
	     C-5 Aircraft					 
	     Eagle Aircraft					 
	     F-111 Aircraft					 
	     F-16 Aircraft					 
	     Galaxy Aircraft					 
	     Hercules Aircraft					 
	     KC-135 Aircraft					 
	     Raven Aircraft					 
	     Starlifter Aircraft				 

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GAO-03-684R

Page 1 GAO- 03- 684R Defense Inventory May 21, 2003 The Honorable C. W.
Bill Young Chairman

Committee on Appropriations House of Representatives

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

Subject: Defense Inventory: Air Force Item Manager Views of Repair Parts
Issues Consistent With Issues Reported in the Past Since 1990 we have
consistently identified the Department of Defense*s

(DOD) management of secondary inventory (spare and repair parts, medical
supplies, and other items to support the operating forces) as a high- risk
area because inventory levels were too high and management systems and
procedures were ineffective. In addition, DOD has attributed readiness
problems to parts shortages. Previously, we reported on the wide variety
of reasons for inventory of spare parts being above or below the levels
needed to satisfy current inventory requirements. 1 This is one in a
series of reports addressing defense inventory vulnerabilities to fraud,
waste, and abuse. You asked that we specifically obtain the views about
defense inventory imbalances from item managers, i. e., those who are
responsible for maintaining the right amount of inventory. 2 This report

1 U. S. General Accounting Office: Air Force Inventory: Parts Shortages
Are Impacting Operations and Maintenance Effectiveness, GAO- 01- 587
(Washington, D. C.: June 27, 2001); Army Inventory: Parts Shortages Are
Impacting Operations and Maintenance Effectiveness, GAO- 01- 772
(Washington, D. C.: July 31, 2001); Navy

Inventory: Parts Shortages Are Impacting Operations and Maintenance
Effectiveness,

GAO- 01- 771 (Washington, D. C.: July 31, 2001); Defense Logistics: Much
of the Inventory Exceeds Current Needs, GAO/ NSIAD- 97- 71 (Washington, D.
C.: Feb. 28, 1997); and Air Force Supply: Management Actions Create Spare
Parts Shortages and Operational Problems, GAO/ NSIAD/ AIMD- 99- 77
(Washington, D. C.: Apr. 29, 1999).

2 Item managers perform materiel management functions such as worldwide
item distribution and redistribution, materiel requirements
determinations, budget estimates, cataloging, repair programs, and other
related functions.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 684R Defense Inventory responds to your request, and other
work is being done for you under separate reports that address related
issues. Our objective was to obtain

from Air Force item managers their views on the reasons for and
operational impacts of having repaired parts either above or below the
levels needed to satisfy current inventory requirements, and compare them
with the reasons and impacts found in our previous reports.

We chose the Air Force for this review because of the large dollar value
of repair parts in that service. To respond to your request, we conducted
a survey of item managers overseeing 150 sample items* 75 items we found
to be below requirements (shortage) and 75 items we found to be above
requirements (excess)* at the Air Force*s three air logistics centers
(ALC) in Ogden, Utah; Oklahoma City, Oklahoma; and Warner Robins, Georgia.
We then compared our results with those in our previous reports to
determine whether there were any consistencies between the results
regarding the reasons for imbalances and their operational impacts. The
scope and methodology for our review is discussed at the end of this
report.

We found that the reasons and operational impacts item managers cited for
our sample items being either above or below the levels needed to satisfy
current inventory requirements were similar to the reasons and

impacts cited in our prior reports. For shortages, item managers often
cited the lack of component parts and repair shop capacity/ process
problems. In our 1999 report, we discuss the Air Force*s effectiveness in
providing inventory items to its customers, and identified component parts
shortages as the most frequent cause of aircraft repair work not being
done on time. 3 For causes of excess items, the managers often cited a
buildup of inventory to support a new program, or for an aircraft
retrofit,

modification, upgrade, or replacement. In 1997, we reported that a similar
reason for inventory items being in excess* purchases made to support a
system before it was activated* was common. 4 The operational impacts
cited by item managers were also similar to those given in our past work.
As in the past, shortages were often cited as a contributing factor to
reduced mission capability of aircraft or delays in planned maintenance.
In addition, excesses were often cited as contributing to the consumption
of warehouse space and related storage costs.

3 GAO/ NSIAD/ AIMD- 99- 77. 4 GAO/ NSIAD- 97- 71. Summary

Page 3 GAO- 03- 684R Defense Inventory Maintenance and repair services for
military aircraft are provided by the Air Force*s three ALCs in Ogden,
Utah; Oklahoma City, Oklahoma; and

Warner Robins, Georgia. These centers manage the supply of certain repair
parts as well as provide the primary source of repair for broken items
that can be repaired and returned to service. As supply managers, the
three ALCs manage almost 25,000 different reparable items. Repairs are
performed either by the center managing the item, by or with another
center, by a contractor, or by another military service. From those 25,000
reparable items, we identified nearly 9,500 items where the same center
was both the supply manager and the primary source of repair for

an item, and formed the basis for our sample items mentioned above. Item
managers responding to our survey provided multiple reasons and
operational impacts for our sample items being either above or below the
levels needed to satisfy current inventory requirements that were similar
to the reasons and impacts cited in our prior reports. Item managers*
reasons for spare parts shortages were similar to past problems, and in
roughly the same order of magnitude as previously reported. The reasons
for spare parts excesses, and the operational impacts of spare parts
imbalances, were also similar to those identified in our previous reports.

Item managers provided similar reasons for shortages among our sample
items in about the same order of magnitude as we have previously reported.
Table 1 lists categories of the most frequently cited reasons provided by
item managers for inventory shortages among our sample items. Many of the
reasons shown in the table may be caused by unanticipated demands for
parts, which is one of the primary reasons for parts shortages cited in
our 2001 report on the reasons for and impacts of spare parts shortages on
three selected Air Force systems. 5 5 GAO- 01- 587. Background

Reasons for and Impacts of Spare Parts Imbalances Cited by Item Managers
Similar to Previously Reported Problems

Item Managers* Reasons for Spare Parts Shortages Reflect Similar Problems
of the Past

Page 4 GAO- 03- 684R Defense Inventory Table 1: Item Manager Reasons for
Reparable Parts Shortages Reason Number of responses a

Lack of component parts to complete the repairs 42 Repair shop process
and/ or capacity problems 41 Higher than expected condemnation rates of
the part 9 Broken items in the field not turned in to depot for repairs 7
Rarely used item 4 Funding constraints 4 Source: GAO survey of Air Force
item managers. a The response total exceeds the 75 shortage sample item
total due to multiple reasons received from

item managers.

Air Force item managers, along with our prior work, indicate that the most
frequent reason for repair parts shortages is the lack of component parts.
These are the individual parts used to fix other spare parts. For example,
item managers cited a shortage of rotors and backing plates needed to fix
the brakes for the KC- 135 and C- 130 aircraft. Similarly, in our 1999
report discussing the Air Force*s effectiveness in providing inventory
items to its customers, we found that component parts shortages were the
major cause of aircraft repair work not being done on time. 6 We noted in
that report that there was a lack of several component parts, sometimes
for more than a year, for two radio band transmitters used in the B- 1B
aircraft. Also, our 2001 report indicated that unanticipated demands for a
machine bolt on an aircraft engine caused a lack of component parts. Parts
shortages due to various shop process and/ or shop capacity

problems were noted by both the item managers in our current review as
well as being an issue in prior reports. Shop process problems include
broken machines, a lack of personnel or experienced personnel, or the
process repaired the part the wrong way. For example, an inoperable
machine held up the repair of a high- pressure turbine rotor used in
aircraft engines. In another example, the existing repair process
presented safety issues and a new process was being developed to replace
it. Shop capacity problems are generally related to space constraints*
such as for the lack of space needed to repair an F- 15 aircraft wing
assembly* or for competing demands for the same equipment or space.
Furthermore, item managers indicated that 13 of our selected 75 sample
items had both shop

6 GAO/ NSIAD/ AIMD- 99- 77. Lack of Component Parts

Repair Shop Process and/ or Capacity Problems

Page 5 GAO- 03- 684R Defense Inventory process and shop capacity problems.
For example, the repair of an F- 15 countermeasure receiver was delayed
due to a lack of testing

equipment (shop capacity) as well as a lengthy repair process that was
being reviewed to cut down on the repair time (shop process). Similar
issues, such as the lack of testing equipment and limited repair facility
capacity, were reported in our 2001 report.

As mentioned above, the most frequently cited reason for repair parts
shortages in the 2001 report was unanticipated demands, such as the sudden
demand for a part after no demands for 7 years. Two of the sample items
that item managers identified from our current sample as having shop
process and capacity issues had these problems due to unanticipated
demands. For example, an electronic countermeasure control device for the
B- 52 and C- 130 aircraft experienced a surge in demands after the
September 11, 2001, terrorist attacks. The repair facility did not have
the floor space to keep up with demand for this part.

Both the current review and prior reports contained instances of either
higher than expected condemnation rates or component reliability problems
that created parts shortages. Repair parts can only be repaired so many
times before they can no longer be repaired, and then they are

*condemned* as beyond repair. Anticipated condemnation rates are formed
from either engineering estimates or repair records.

In our review, item managers said that shortages of a C- 130 aircraft
ballscrew assembly stemmed from very high condemnations for the last 3
years. Sometimes the higher condemnation rate was for a component part of
our sample item, and not the sample item itself. For example, item
managers said that a piston in a retractable landing gear experienced a
high condemnation rate, and, in another example, a roll pin encountering

high condemnations created a shortage for a C- 5 aircraft landing gear
strut. Although our 2001 report did not indicate higher than expected
condemnation rates that led to parts shortages, it did report that the
life of some parts was shorter than the Air Force predicted. For example,
a skid detector for the C- 5 aircraft failed faster than expected,
experiencing a

50- percent increase in failures that exhausted the parts in stock before
they could be replaced. 7 7 GAO- 01- 587. Higher Than Expected

Condemnation Rates

Page 6 GAO- 03- 684R Defense Inventory The remaining three reasons in the
above table represent more of the variety of reasons contributing to parts
shortages. In some cases, item managers indicated that units in the field
would keep broken items to be

used as spare parts to fix other broken parts. These broken items not
turned in to the repair facility for repair involve different items, such
as a circuit card assembly for a jammer in the F- 15 aircraft, a turbine
nozzle for aircraft engines, and a B- 1B aircraft rudder. Rarely used
items are those experiencing little or no demand, as in the case cited by
an item manager of no demand in 2 years for a test system*s circuit card
assembly. Funding constraints represented another reason for parts
shortages. For example, the lack of funds to increase the repair rate of
an aircraft engine*s compression rotors created a shortage of this item.

Our prior reports in 1999 and 2001 contained examples of unanticipated
demands (for example, no demands since 1993) causing parts shortages, or
repairs not being done when needed due to the lack of broken parts
returned from units in the field. One issue reported to some degree by
both our 1999 and 2001 reports that did not surface as an issue in our

current review was the transfer of repair work to current Air Force repair
facilities due to the closure of some Air Force repair facilities. Some
operational, personnel, and productivity problems experienced during that
closure were not specifically cited by item managers during our current
review as a factor influencing parts shortages.

Item managers provided a variety of reasons for repair parts excesses
among our sample items that were similar to those identified in our
previous reports. Table 2 lists categories of the most frequently cited
reasons for inventory excesses.

Table 2: Item Manager Reasons for Reparable Parts Excesses Reason Number
of responses a Buildup of repair parts to support a new program or for a
retrofit, modification, upgrade or replacement 23 Foreign Military Sales
program requirements 8 Low or decreasing demand for a part 6 Retirement or
phasing out of an aircraft 5 Other 18 Source: GAO survey of Air Force item
managers. a The number of reasons is lower than our 75 excess sample items
because a number of item

managers responded that there were some items that were not in an excess
condition.

Other Reasons for Shortages Reasons for Excess Parts also Identified in
Previous GAO reports

Page 7 GAO- 03- 684R Defense Inventory The predominant reason for excesses
cited by item managers was the inventory buildup of repair parts to
anticipate the future support for a

new program or for major changes in an existing program. This is similar
to our 1997 report where we reported that a common reason for inventory
items being in excess was purchases made to support a system before it was
activated. 8 Foreign Military Sales program requirements or potential
requirements

are cited as a contributing factor for excesses eight times. Item managers
told us that the Air Force stocks and services some reparable items that
are used to support systems sold to or anticipated to be sold to other
countries. These items include various radio items such as receivers and
transmitters for the F- 111, and disk brakes for the F- 16. Our 1997
report

indicated unneeded quantities in inventory for the wiring harness of an
airborne radio communication system. Although demand for this harness
decreased as modifications to the radio system were made, quantities were
being retained to support the military services, the Coast Guard, and
foreign military sales and to reconfigure other radios.

The most common reason cited in 1997* demands for an item decreased or did
not materialize* echoes our third most commonly cited reason, low or
decreasing demand for a part. Aircraft or system retirement was cited as
the third most common reason for excesses in 1997 and is fourth in our
current analysis.

Other reasons affecting only one or two of our sample items include a
repair made that was not required, program changes, or an item becoming a
throwaway item instead of one that would typically be repaired.

Item managers cited operational impacts from the inventory imbalances that
were similar to impacts cited in our past reports. Sometimes there was
more than a single impact for some individual items. Of the 75 shortage
sample items, 38 had more than one impact cited by item managers and there
was no impact cited for 16 items. Of the 75 excess sample items, item
managers cited no impact for 40 items.

One of the most frequently cited (41 cases) operational impacts of repair
parts shortages provided by item managers was some form of mission 8 GAO/
NSIAD- 97- 71. Impacts Cited by Item

Managers Similar to Our Past Work

Page 8 GAO- 03- 684R Defense Inventory impairment at one time or another
that kept a weapon system from performing its mission. For example, the
previously mentioned shortage of rotors and backing plates needed to fix
the brakes for the KC- 135 and

C- 130 aircraft due to a lack of component parts caused both aircraft to
be unavailable for flying. Although in our 2001 report we selected all
sample items from three Air Force systems because each item caused mission
capability problems, the causes of many of these problems* such as
unanticipated demands, parts production problems, or component
reliability* were similar. 9 Item managers cited 14 parts shortages that
led to delays in planned

maintenance. For example, one ALC was always behind in providing C- 5
aircraft retractable landing gears for the scheduled maintenance lines. In
our 1999 report, repairs not being done when needed were cited as an
impact of component parts shortages. 10 In 54 cases, item managers cited
unfilled or empty stock levels resulting from parts shortages, thus
contributing to the ALC*s inability to meet the stocking requirements for
the aircraft or system it serviced. For example, one center had no shelf
supply of a retractable landing gear for the B- 52 bomber.

Air Force item managers did not cite nearly as many impacts of parts
excesses. However, in 28 cases item managers cited the consumption of
warehouse space for parts that were in excess of inventory requirements.
While some item managers cited space problems, others cited the related
costs associated with storing excess items. Among a number of items in
these categories are engine blades and shafts, landing gear pistons, C-
141 aircraft rear access doors, and B- 52 bomber electronic warfare
circuit cards. What is not clear from item manager survey responses,
however, is how these warehousing space and cost issues would be any
different if the quantities of the item had not exceeded repair
requirements.

Eight other items contained miscellaneous impacts, such as two items
needing fewer repairs than expected, namely the ignition component of an
aircraft engine and the F- 16 aircraft*s radar signal processor.

In written comments on a draft of this report, DOD stated that it
generally concurred with the draft report. DOD*s comments can be found in
enclosure I. 9 GAO- 01- 587.

10 GAO/ NSIAD/ AIMD- 99- 77. Agency Comments

Page 9 GAO- 03- 684R Defense Inventory To identify reasons repaired parts
are in a short or excess condition (by comparing available worldwide
assets to worldwide requirements at one

point in time), we selected 25 items of each type from those repair parts
both supplied and repaired at each of the following ALCs: Ogden, Ogden,
Utah; Oklahoma City, Oklahoma City, Oklahoma; and Warner Robins,

Warner Robins, Georgia. For each group of 25 items, we selected 20 items
from among the highest dollar value of shortages or excesses. The other
five items in each group were selected randomly. Using a structured
questionnaire, we held on- site discussions for this 150- item sample with
86 item managers to identify reasons for and operational impacts of the
excesses and shortages, among other points. We looked at collaborating
data obtained via the questionnaire to assure ourselves that other
factors, such as production data and procurement history, did not conflict
with the reason and impact data. We did not independently verify the
responses we received from item managers. We also reviewed our past work
to determine if similar reasons were previously identified for shortages
and excesses.

We also met with officials of the Air Force Materiel Command, Wright
Patterson Air Force Base, Dayton, Ohio.

We performed our work from November 2001 through February 2003 in
accordance with generally accepted government auditing standards.

We are sending copies of this report to the Honorable Donald Rumsfeld,
Secretary of Defense, and interested congressional committees. The report
will also be available at no charge on GAO*s Web site at http:// www. gao.
gov. Scope and

Methodology

Page 10 GAO- 03- 684R Defense Inventory We appreciate the opportunity to
be of assistance. If you or your staff have any questions regarding this
letter, please contact me at (202) 512- 8365 or

Lawson *Rick* Gist, Jr., Assistant Director, at (202) 512- 4478. Other key
contributors to this review were Gerald Thompson, Jay Willer, and R. K.
Wild.

William M. Solis, Director Defense Capabilities and Management

Enclosure I: Comments from the Department of Defense

Page 11 GAO- 03- 684R Defense Inventory Enclosure I: Comments from the
Department of Defense

(350115)

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