    Defense Inventory: The Department Needs a Focused Effort to
    Overcome Critical Spare Parts Shortages (27-JUN-03, GAO-03-707).

    The Department of Defense's (DOD) annual appropriation totals
    billions of dollars for spare parts. In addition, it has received
    supplemental funding totaling $1.5 billion since fiscal year 1999
    to increase the availability of spare parts. However, DOD
    continues to experience critical spare parts shortages that
    impact military readiness. GAO examined whether (1) DOD's
    logistics strategic plan addresses the mitigation of critical
    spare parts shortages that adversely affect readiness, (2) DOD's
    logistics initiatives are likely to mitigate spare parts
    shortages that affect readiness, and (3) DOD has the ability to
    identify the effect of increased investments for spare parts on
    readiness.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-707
        ACCNO:   A07377
      TITLE:     Defense Inventory: The Department Needs a Focused Effort
    to Overcome Critical Spare Parts Shortages
         DATE:   06/27/2003
      SUBJECT:   Logistics
    	     Spare parts
    	     Strategic planning
    	     Combat readiness
    	     Equipment inventories
    	     Military inventories
    	     H-53 Helicopter
    	     H-60 Helicopter
    	     Pavehawk Helicopter

    ******************************************************************
    ** This file contains an ASCII representation of the text of a  **
    ** GAO Product.                                                 **
    **                                                              **
    ** No attempt has been made to display graphic images, although **
    ** figure captions are reproduced.  Tables are included, but    **
    ** may not resemble those in the printed version.               **
    **                                                              **
    ** Please see the PDF (Portable Document Format) file, when     **
    ** available, for a complete electronic file of the printed     **
    ** document's contents.                                         **
    **                                                              **
    ******************************************************************
    GAO-03-707

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

    United States General Accounting Office

    GAO

    June 2003 DEFENSE INVENTORY

    The Department Needs a Focused Effort to Overcome Critical Spare Parts
    Shortages

    GAO- 03- 707

    The Office of the Secretary of Defense*s (OSD) logistics strategic plan
    focuses on transforming the department*s logistics operations by
    emphasizing weapon system support, customer service, and enterprise
    integration, but does not specifically address mitigating spare parts
    shortages. In addition, while it contains some key attributes of a
    strategic plan, such as broad goals and implementation strategies, it
    lacks other key attributes. In June 2002, the department published the
    Future Logistics Enterprise, which serves as the

    strategic plan behind efforts to transform logistics operations within the
    department to ensure consistent, reliable support that meets the
    warfighters* requirements. This plan presents its vision for accelerating
    logistics improvement, enhancing support to the warfighter and aligning
    logistics processes with the operational demands of the 21 st Century.
    While the Future Logistics Enterprise plan identifies six departmentwide

    initiatives under three broad topical areas to improve weapon system
    availability, none of the initiatives specifically address mitigating
    critical spare parts shortages. However, DOD has directed a separate
    Defense Logistics Agency effort to improve the availability of critical
    aviation spare parts. Under

    the three topics of weapon system support, customer service, and
    enterprise integration, OSD*s six agencywide initiatives aim to improve
    supply operations and readiness. In fact, two* Condition Based Maintenance
    Plus and Total Life Cycle System Management* specifically identify
    improving readiness as an objective. For example, the Condition Based
    Maintenance Plus initiative is

    designed to improve maintenance capabilities and business processes that
    could increase operational availability and readiness throughout the life
    cycle of the department*s weapon systems. If successfully implemented,
    this initiative would improve maintenance operations and might affect
    spare parts shortages, but it does not have goals and performance measures
    related to mitigating spare parts shortages. As a result, DOD may not know
    whether it is investing its resources in the most efficient and effective
    manner.

    Recent OSD efforts to link funding to readiness could enhance its ability
    to identify the affect of funding for critical spare parts on readiness.
    In an August 2002 study report, the DOD Comptroller identified the value
    of investing in critical parts that adversely affect readiness and
    recommended the Defense

    Logistics Agency and the services link budget requests to weapon system
    readiness rates. The Comptroller*s recommendations stemmed from concern
    that the Defense Logistics Agency and the services* inventory systems tend
    to purchase low- cost/ high- demand items and not those that would most
    improve readiness rates. While citing some improvement, the Comptroller
    made eight recommendations, four of which were specifically aimed at
    improving efforts to increase investment in critical spare parts and link
    funding requests to readiness rates. In addition, the Comptroller changed
    the budget justification document (budget exhibit) to provide such
    information to Congress. The Department of Defense*s

    (DOD) annual appropriation totals billions of dollars for spare parts. In
    addition, it has received

    supplemental funding totaling $1.5 billion since fiscal year 1999 to
    increase the availability of spare parts. However, DOD continues to
    experience critical spare parts shortages that impact military readiness.
    GAO examined whether (1) DOD*s logistics strategic plan

    addresses the mitigation of critical spare parts shortages that adversely
    affect readiness, (2) DOD*s logistics initiatives are likely to mitigate
    spare parts shortages that affect readiness, and (3) DOD has the ability
    to identify the effect

    of increased investments for spare parts on readiness. GAO recommends that
    the Secretary of Defense:

    Incorporate clear goals, objectives, and performance measures pertaining
    to mitigating spare parts shortages in the Future Logistics Enterprise or
    appropriate agencywide initiatives to include efforts

    recommended by the Under Secretary of Defense Comptroller in his August
    2002 study report.

    Establish milestones and define how it will measure progress in
    implementing the August 2002 Inventory Management Study recommendations.
    In written comments, DOD generally concurred with the intent

    of our recommendations, but not with the approach recommended.

    www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 707. To view the full report,
    including the scope and methodology, click on the link above. For more
    information, contact William M. Solis at (202) 512- 8365 or solisw@ gao.
    gov. Highlights of GAO- 03- 707, a report to the

    Subcommittee on Defense, Committee on Appropriations, House of
    Representatives June 2003

    DEFENSE INVENTORY

    The Department Needs a Focused Effort to Overcome Critical Spare Parts
    Shortages

    Page i GAO- 03- 707 Defense Inventory Letter 1 Results in Brief 3
    Background 5 DOD*s Strategic Plan Is Aimed at Logistics Transformation,
    Not

    Specifically Spare Parts Shortages 8 Initiatives Focus on Weapons System
    Availability, Not Critical Spare Parts Shortages 9 Recent Efforts Could
    Strengthen Link Between Funding and Readiness 11 Conclusions 13
    Recommendations for Executive Action 13 Agency Comments and Our Evaluation
    14 Scope and Methodology 16 Appendix I Initiatives Included in the Future
    Logistics

    Enterprise 18

    Appendix II Inventory Investment Budget Submission Material 20

    Appendix III Comments from the Department of Defense 24

    Appendix IV GAO Contacts and Staff Acknowledgements 27 Contents

    This is a work of the U. S. Government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. It may contain
    copyrighted graphics, images or other materials. Permission from the
    copyright holder may be necessary should you wish to reproduce copyrighted
    materials separately from GAO*s product.

    Page 1 GAO- 03- 707 Defense Inventory

    June 27, 2003 The Honorable Jerry Lewis Chairman, Subcommittee on Defense
    Committee on Appropriations House of Representatives

    Dear Mr. Chairman: The Department of Defense*s (DOD) fiscal year 2002
    parts related annual operations and maintenance funding totaled
    approximately $11.2 billion and working capital fund obligation authority
    totaled approximately $22.9 billion. Since fiscal year 1999, it has also
    received supplemental funding totaling $1.5 billion to increase the
    availability of spare parts. While the Army and Defense Logistics Agency
    are reporting that they are meeting the overall supply performance goal of
    having parts available to meet customer demands 85 percent of the time,
    the department still reports shortages of critical spare parts 1 that
    affect readiness. Recognizing that spare parts shortages will never be
    eliminated, it is reasonable to

    expect the department to place a priority on efforts to mitigate (reduce)
    those shortages that adversely affect readiness. This priority should be
    inherent in the overall planning and stewardship of funds requested from
    Congress and the accountability for making spare parts investment
    decisions that provide a good readiness return. In our January 2003 High
    Risk Series Report, we again identified DOD*s management of inventory as
    high- risk because of long standing management weaknesses that could
    result in unnecessary expenditures and that DOD was experiencing equipment
    readiness problems because of the lack of spare parts. 2 1 Critical spare
    parts shortages refer to supply items that cause a degradation of the
    readiness status of the associated weapon system or equipment.

    2 U. S. General Accounting Office, Major Management Challenges and Program
    Risks: Department of Defense, GAO- 03- 98 (Washington, D. C.: January
    2003).

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 03- 707 Defense Inventory

    This is one in a series of reports responding to your request that we
    identify ways to improve the availability of spare parts. 3 As agreed,
    this report addresses the strategic planning efforts of the Office of the
    Secretary of Defense (OSD) to transform the way DOD conducts its logistics
    business operations in order to mitigate critical spare parts shortages.
    More specifically, we are reporting on the following:

    1. Does OSD*s logistics strategic plan address the mitigation of critical
    spare parts shortages* those that adversely affect readiness?

    2. Will OSD logistics initiatives likely mitigate spare parts shortages
    that affect readiness?

    3. Does OSD have the ability to identify the effect on readiness of
    increased investments for spare parts?

    We reviewed the OSD*s current logistics strategic planning document to
    determine whether it contained a focus on mitigating spare parts
    shortages. We also assessed the extent to which the strategy and
    initiatives provided a basis for guiding the defense agencies* and
    military services* efforts and were consistent with Government Performance
    and Results Act of 1993 (GPRA) guidelines for preparing a strategic plan.
    4 We interviewed OSD and Joint Staff officials about the strategic
    planning document to identify their views on mitigating spare part
    shortages and readiness. We also compared OSD*s current initiatives to
    issues identified in GAO*s High Risk Series to determine if they contained
    specific goals and objectives linked to mitigating spare parts and
    measures relating to readiness. To assess DOD*s ability to link funding
    for spare parts to improved readiness, we reviewed DOD documents and
    reports relevant to linking additional funding for spare parts to
    readiness.

    3 U. S. General Accounting Office, Defense Inventory: Air Force Item
    Manager View of Repair Parts Issues Consistent With Issues Reported in the
    Past, GAO- 03- 684R (Washington, D. C.: May 21, 2003); Defense Inventory:
    The Army Needs a Plan to Overcome

    Critical Spare Parts Shortages, GAO- 03- 705 (Washington, D. C.: June 27,
    2003); Defense Inventory: Air Force Plans and Initiatives to Mitigate
    Spare Parts Shortages Need Better Implementation, GAO- 03- 706
    (Washington, D. C.: June 27, 2003); Defense Inventory: Navy Logistics
    Strategy and Initiatives Need to Address Spare Parts Shortages, GAO- 03-
    708 (Washington, D. C.: June 27, 2003); and Defense Inventory: Several
    Actions Are Needed to

    Further DLA*s Efforts to Mitigate Shortages of Critical Parts, GAO- 03-
    709 (forthcoming). 4 Pub. L. 103- 62, Aug. 3, 1993.

    Page 3 GAO- 03- 707 Defense Inventory

    The Office of the Secretary of Defense*s logistics strategic plan is
    focused on transforming the department*s logistics operations through an
    emphasis on improving weapon system support, customer service, and
    enterprise integration. While this could improve weapon system readiness
    over time, it does not specifically focus on mitigating spare parts
    shortages. In addition, although it contains some key attributes of a
    strategic plan, such as broad goals and implementation strategies, it
    lacks other key attributes. In June 2002, the department published the
    Future Logistics Enterprise, which serves as the strategic plan behind
    efforts to transform logistics operations within the department to ensure
    consistent, reliable support that meets the warfighters* requirements.
    This plan

    presents its vision for accelerating logistics improvement, enhancing
    support to the warfighter and aligning logistics processes with the
    operational demands of the 21st Century. However, according to OSD
    officials, because the plan is focused on the high- level goal of
    transforming operations, it does not focus on specific issues such as the
    need to mitigate spare parts shortages. Even though DOD considers the
    Future Logistics Enterprise plan to be in its infancy, the plan includes
    some key elements of a good plan. For example, it cites general goals such
    as meeting warfighter requirements and implementation strategies such as
    adopting Total Life Cycle Systems Management, and recognizes the need to
    develop broad performance measures such as weapons system

    availability. However, the plan lacks other key elements, which are
    considered important. It does not contain specific goals, objectives, or
    performance measures; does not require subordinate organizations such as
    the Defense Logistics Agency and the services to develop supporting plans
    or submit annual progress reports; and does not provide the comprehensive
    overarching guidance needed to integrate the multitude of ongoing
    initiatives. By not focusing on mitigating spare parts shortages as part
    of a well developed overall strategy to improve logistics operations, DOD
    increases the likelihood there will be ineffective or duplicate efforts
    within the Defense Logistics Agency and the services to address this
    important problem that affects readiness. As a result, OSD will lack
    assurance that it is investing in those highest priority items, which
    would yield the greatest return on investment and effect on readiness.

    The Future Logistics Enterprise plan identifies six departmentwide
    initiatives under three broad topical areas to improve weapon system
    availability, but none of the initiatives specifically address mitigating

    critical spare parts shortages. However, in a separate initiative, DOD
    directed the Defense Logistics Agency to improve the availability of
    critical aviation spare parts. Under the three topics of weapon system
    support, customer service, and enterprise integration, OSD*s six Results
    in Brief

    Page 4 GAO- 03- 707 Defense Inventory

    agencywide initiatives focus on improving supply operations and readiness.
    In fact, two* Condition Based Maintenance Plus and Total Life Cycle System
    Management* specifically identify improving readiness as an objective. For
    example, the Condition Based Maintenance Plus initiative focuses on
    improving maintenance capabilities and business processes that could
    increase operational availability and readiness throughout the life cycle
    of the department*s weapon systems. If successfully implemented, this
    initiative would improve maintenance operations and might affect spare
    parts shortages, but it does not have goals and performance measures
    related to mitigating spare parts

    shortages. As a result, DOD may not know if it is investing in those items
    that would give the greatest return on investment or effect on readiness,
    or may achieve readiness at a higher than necessary cost by simply buying
    more parts rather than addressing the cause of shortages. While not an

    agencywide initiative, DOD has directed the Defense Logistics Agency to
    implement a focused effort called the Aviation Investment Strategy to
    reduce specific critical spare parts shortages. Under this initiative, the
    Defense Logistics Agency has spent $500 million to buy more of these
    parts, thereby increasing their availability.

    Recent OSD efforts to link funding to readiness could enhance its ability
    to identify the effect of funding for critical spare parts on readiness.
    In an August 2002 study report, the DOD Comptroller identified the value
    of investing in critical parts that adversely affect readiness and
    recommended the Defense Logistics Agency and the services link budget
    requests to weapon system readiness rates. The Comptroller*s
    recommendations stemmed from concern that the Defense Logistics Agency and
    the services* inventory systems tend to purchase lowcost/ high- demand
    items and not those that would most improve readiness rates. Although he
    cited some improvement efforts, the Comptroller made eight
    recommendations, four of which specifically focused on improving efforts
    to increase investment in critical spare parts and link funding requests
    to individual weapon system readiness rates. In addition, the Comptroller
    changed the budget justification document (budget exhibit) to provide such
    information to Congress. However, his recommendations did not cite
    reporting deadlines or how OSD would measure Defense Logistics Agency and
    service progress in implementing the four recommendations.

    Given the adverse effect of critical spare parts shortages on readiness,
    we are recommending that the Secretary of Defense incorporate clear goals,
    objectives, and performance measures pertaining to mitigating spare parts
    shortages in either the Future Logistics Enterprise or appropriate

    Page 5 GAO- 03- 707 Defense Inventory

    agencywide initiatives to include efforts recommended by the Under
    Secretary of Defense Comptroller in his August 2002 study report. In
    addition, we are recommending that OSD identify milestones and define how
    it will measure progress in implementing the August 2002 Inventory

    Management Study recommendations. DOD concurred with the intent of our
    first recommendation, but not all of the suggested actions. DOD stated
    that spare parts shortages are a symptom of imperfect supply chain
    processes and that components of the Future Logistics Enterprise would

    transform these processes. Furthermore, the August 2002 recommendation has
    been incorporated in the Financial Management Regulation and their
    implementation would be reviewed in annual budget conferences. Therefore,
    DOD does not need to incorporate additional goals, objectives and
    performance measures into the strategy or agencywide initiatives to
    address this issue. We recognize OSD*s focus on transforming logistics
    processes and endorse the actions taken to monitor implementation of the
    August 2002 study report recommendations. However, we believe that process
    improvements alone do not meet the intent of our recommendation. Further,
    we continue to believe that including a focus on mitigating spare parts
    with clear goals, objectives and performance measures included in its
    logistics strategy or agencywide initiatives is needed to provide the
    framework for ensuring this issue is addressed as part of DOD*s overall
    logistics effort. DOD partially concurred with the second recommendation
    in that it believes separate reporting milestones to measure the progress
    in implementing the Under Secretary of Defense, Comptroller*s August 2002
    recommendations are not needed because progress would be measured as an
    integral part of the resource allocation process in its annual budget
    conferences. When implemented, these actions meet the intent of our
    recommendation provided goals, objectives, and performance measures
    pertaining to mitigating spare parts shortages are included in the
    scorecard. The department*s comments and our evaluation are on page 14 of
    this report.

    To support the warfighter, DOD maintains an extensive supply system to
    provide the spare parts necessary to keep weapons systems operational. The
    department currently maintains an inventory in excess of $60 billion, with
    annual sales to operating forces of approximately $30 billion. The
    operating forces rely on operations and maintenance appropriations to
    procure spare parts from this supply infrastructure. In recent years,
    Congress has fully funded the operation and maintenance budget request of
    the department and has provided supplemental funding targeted for spare
    parts. Traditionally, the department has measured the effectiveness of
    supply operations in terms of supply availability rate* the frequency
    Background

    Page 6 GAO- 03- 707 Defense Inventory

    with which a part is available for delivery upon a customer*s first
    request. The current supply availability goal is 85 percent and the Army
    and Defense Logistics Agency report they are achieving this goal.
    Nevertheless, the Defense Logistics Agency and the services continue to
    experience critical spare parts shortages that affect the operational
    readiness of the warfighter.

    The department, Congress, and GAO have long recognized the importance of a
    supply system that operates efficiently and effectively. The department
    has taken a number of actions to improve the logistics system. First,
    beginning in fiscal year 1994, the Under Secretary of Defense for
    Acquisition and Technology developed the department*s initial strategic
    plan for guiding improvements to the logistics support systems. This
    planning effort continued with the development of the fiscal year 2000
    Logistics Strategic Plan to direct the transformation of the logistics
    system. This plan required the services and defense commands to develop
    implementation plans that reflected the vision, objectives, and metrics of
    the departmentwide plan. Although GAO identified shortcomings in the
    departmentwide and subordinate plans, we acknowledge that this planning
    effort was a positive step toward improving the economy and efficiency of
    logistics support systems. 5 In fiscal year 2002, this strategic plan was
    replaced with the current Future Logistics Enterprise, which focused on
    three key areas with the overall goal of operating DOD logistics as a
    single end- to- end enterprise. In achieving this end, the Future
    Logistics Enterprise is designed to support the national defense strategy,
    meet the requirements of the warfighter, support the ongoing initiatives

    within the services, and focus the objectives of corrective actions. In
    section 362 of the National Defense Authorization Act for fiscal year
    2000, 6 Congress directed an independent study of DOD*s secondary
    inventory and parts shortages to focus on any items that adversely affect
    readiness. This study, performed by the Logistics Management Institute and
    the Center for Naval Analysis, found that while overall supply
    availability met department goals, declining inventory levels had resulted
    in reduced aircraft readiness. DOD also recognized the need to improve

    supply performance in its August 2001 Defense Planning Guidance which 5 U.
    S. General Accounting Office, Defense Logistics: Strategic Planning
    Weaknesses Leave Economy, Efficiency and Effectiveness of Future Support
    Systems at Risk, GAO- 02- 106 (Washington, D. C.: October 11, 2001). 6
    Pub. L. 106- 65, Oct. 5, 1999.

    Page 7 GAO- 03- 707 Defense Inventory

    directed a review of inventory management practices and stockage levels
    during the fiscal year 2003 program/ budget review. The initial results of
    this study were included in the fiscal year 2002 Program Budget Decision
    422, which recommended the department further study inventory management
    including developing a plan to streamline inventory management practices
    and improve supply chain management. More specifically, it suggested the
    department address the effect of inventory levels on weapons systems
    readiness. In August 2002, the DOD Comptroller published the results of
    these further efforts in the Inventory Management Study report, which
    outlined eight recommendations for improving inventory and supply
    readiness, four of which are directly aimed at improving efforts to
    increase investments in readiness related spares and link funding requests
    to readiness rates. In addition to these departmentwide plans and
    policies, according to Deputy Under Secretary of Defense for Logistics and
    Material Readiness, there are about 500 logistics improvement initiatives
    underway at various DOD activities.

    Beginning in 1990, GAO identified the department*s management of secondary
    inventories as a high- risk area because inventory levels were too high
    and management systems and procedures were ineffective and wasteful. In
    the most recent high- risk report, 7 GAO identified the need to address
    seven key weaknesses, one of which is overcoming key spare parts
    shortages. More importantly, the report focused on the need for an
    overarching strategic plan to guide the department*s logistics
    transformation efforts. GPRA provides guidance to executive agencies for
    establishing and monitoring strategic plans. GPRA specifies that virtually
    every agency is required to prepare multiyear strategic plans, annual
    performance plans, and annual performance reports. These strategic plans
    are to include an agency*s mission statement, long- term general goals,
    and the strategies that the agency will use to achieve these goals. GPRA
    also

    requires executive agencies to prepare an annual performance plan
    including among other things, (1) the performance goals for agencies*
    major programs and activities; (2) the performance indicators or measures
    that will be used to gauge performance; (3) the processes, skills,
    technology and resources required to achieve the performance goals; and
    (4) the procedures that will be used to verify and validate performance
    information. Finally, GPRA requires each agency to prepare annual reports
    on program performance for the previous fiscal year.

    7 GAO- 03- 98.

    Page 8 GAO- 03- 707 Defense Inventory

    The Office of the Secretary of Defense*s strategic logistics plan is
    focused on transforming the department*s logistics operations through an
    emphasis on improving weapon system support, customer service, and
    enterprise integration. While this could improve weapon system readiness
    over time, it does not specifically focus on mitigating spare parts
    shortages. According to OSD officials, the plan*s focus on the higher-
    level goal of improving weapon systems availability subsumes the issue of

    critical spare parts shortages. In addition, while that planning document*
    the Future Logistics Enterprise* includes some key elements of an
    effective strategic plan, others are not included. The department*s Future
    Logistics Enterprise published in June 2002

    replaced the 2000 strategic plan and is intended to accelerate the
    department*s implementation of its integrated logistics systems and its
    commercial information system to meet warfighter needs. The ultimate
    objective of this plan is to ensure that the logistics system provides
    consistent, reliable support that meets the warfighters requirements. To
    accomplish this, the Future Logistics Enterprise concentrated on changing
    policy, processes, and systems within the logistics environment that could
    improve weapon system support, customer service, and enterprise
    integration. The Future Logistics Enterprise contains some key elements
    necessary for

    a good strategic plan, but other key elements are missing. Because DOD
    considers this plan to be in its infancy, it has focused on initiating
    these efforts, setting policy for the new initiatives, and exploring
    potential approaches for evaluating progress toward achieving the
    objectives. The plan contains general goals such as meeting warfighter
    requirements and strategies to be employed such as implementing the
    agencywide initiatives. In addition, DOD is currently developing the
    performance measures to measure the effect of the plan. However, other
    essential elements are missing. For example, although, specific
    initiatives may require the Defense Logistics Agency and the services to
    develop an implementation plan for that initiative, there is no
    requirement for the development of Defense Logistics Agency and service
    plans or annual progress reports in support of the Future Logistics
    Enterprise. In addition, the plan is not all- inclusive and does not
    provide the overarching guidance necessary to integrate some 500 ongoing
    initiatives at the service and defense agencies or recommendations from
    DOD studies such as those cited in the August 2002 Inventory Management
    Study. For example, the 2002 study identified weaknesses in the models
    used by the Defense Logistics Agency and the services to determine which
    items they should buy to meet the 85 percent supply availability goal.
    Specifically the study DOD*s Strategic Plan

    Is Aimed at Logistics Transformation, Not Specifically Spare Parts
    Shortages

    Page 9 GAO- 03- 707 Defense Inventory

    concluded that the models do not routinely account for factors such as
    intended use, cost, or criticality in terms of readiness when establishing
    inventory requirements. Consequently, the models favor procurement of low-
    cost/ high- demand items and do not provide sufficient weight to highcost/
    low- demand items that were found to be a problem for aviation platforms.
    In addition to recommending that the Defense Logistics Agency and the
    services apply higher supply targets for these items in the shortterm, the
    study recommended that all new supply systems be capable of supporting
    readiness based sparing models. However, there is no apparent

    linkage of the study results and recommended actions to the Future
    Logistics Enterprise. Other key elements missing from the strategic plan
    include (1) how the department should be organized in the future to
    fulfill evolving logistics requirements and (2) the facilities and
    personnel needed

    to fulfill its future logistics requirements. GAO identified these same
    weaknesses in the department*s fiscal year 2000 Logistics Strategic Plan.
    8 Without these elements of a good plan, the department can not ensure
    that

    efforts undertaken by the Defense Logistics Agency and the services will
    support and achieve the department*s logistics transformation goals.

    The department*s Future Logistics Enterprise concentrates on three key
    areas* weapon systems support, customer service and enterprise
    integration* to focus the six agencywide initiatives that have the
    potential to affect readiness, but none specifically address mitigating
    critical spare parts shortages. Under a separate initiative, however, DOD
    has directed the Defense Logistics Agency to increase inventories of
    critical aviation spare parts. The six initiatives aligned with these
    areas include (1) Depot Maintenance Partnerships, (2) Conditioned Based
    Maintenance Plus, (3) Total Life Cycle Systems Management, (4) End- to-
    End Distribution, (5) Executive Agents, and (6) Enterprise Integration
    (see app. I). Of these, the Conditioned Based Maintenance Plus and the
    Total Life Cycle Systems Management initiatives specifically address
    improving readiness. While not specifically focused on, each of the
    departmentwide initiative has the potential to help reduce spare parts
    shortages. Although not agencywide, DOD has directed specific efforts such
    as the Aviation Investment Strategy

    to address specific critical spare parts problems. The Conditioned Based
    Maintenance Plus initiative is designed to increase operational
    availability and readiness throughout the weapon system life

    8 GAO- 02- 106. Initiatives Focus on

    Weapons System Availability, Not Critical Spare Parts Shortages

    Page 10 GAO- 03- 707 Defense Inventory

    cycle using real time diagnostic and prognostic techniques to determine
    the current operating status and predict the future condition of
    equipment. Data from these techniques will be utilized to better
    anticipate the maintenance requirements of the weapon system and its
    components. Currently, four Condition Based Maintenance Plus programs are
    being piloted within the military services: (1) the Army Diagnostic
    Improvement Program, (2) the Integrated Condition Assessment System, (3)
    the Joint

    Strike Fighter Prognostic Health Management, and (4) the Integrated
    Mechanical Diagnostics- Health Usage Monitoring System. These pilots
    demonstrate the use of diagnostic and prognostic tools on both existing
    weapon systems and systems in the acquisition pipeline. For example, the
    Integrated Mechanical Diagnostics- Health Usage Monitoring System provides
    in- flight monitoring and collects engine and mechanical drive

    systems information on the H- 53 and H- 60 helicopters, as well as
    accurate flight hour recording. Among the cited benefits of this program
    is a 10 percent reduction in total aviation depot level reparable/
    consumable costs due to vibration related maintenance actions. If
    successfully implemented, this initiative would improve maintenance
    operations and might affect spare parts shortages, but it does not have
    goals and performance

    measures related to mitigating spare parts shortages. The Total Life Cycle
    Systems Management initiative makes the program manager responsible for
    all activities associated with the acquisition, development, production,
    fielding, sustainment, and disposal of a weapon system across its life
    cycle. The goal is to create a procurement action where the sustainability
    and maintainability, as well as the operational needs of the warfighter,
    are incorporated into the acquisition decision. Performance Based
    Logistics is the preferred strategy to support Total Life Cycle System
    Management activities and enhance weapon system product

    support within the department. Under this concept, the program manager
    enters into contractual relationships for support of the weapon system or
    components that are based on the vendor meeting specific performance
    requirements for weapon system availability. In essence, the management
    risk for the spare parts support of the weapon system or component is
    transferred to the vendor through the performance requirements included in
    the contracts. By focusing on weapon system or component availability,

    OSD claims the effect of spare parts shortages on readiness could be
    mitigated to a level deemed acceptable to the warfighter.

    Although not an agencywide initiative, in 1999 DOD directed the Defense
    Logistics Agency to focus on particular shortages of aircraft parts. The
    Aviation Investment Strategy specifically targeted critical aviation spare
    parts. In 1999- 2000 the Office of the Secretary of Defense, Program

    Page 11 GAO- 03- 707 Defense Inventory

    Analysis and Evaluation, with support from the Logistics Management
    Institute, completed a study that concluded low stockage levels of
    highcost/ low- demand items were the predominant cause of supply related
    Not Mission Capable rates. As a result, the Office of the Secretary of
    Defense added $500 million in the 1999 Program Review to increase
    inventory levels for high- cost/ low- demand aviation parts managed by the
    Defense Logistics Agency. Since then, the Defense Logistics Agency has
    been buying more of these parts and increasing the amount of inventory on
    hand, but as discussed in our report on Defense Logistics Agency
    initiatives, 9 over half of these parts still remain below the 85 percent
    supply availability goal. Although DOD has long been monitoring readiness,
    it has recently

    undertaken efforts to link funding to readiness by weapons system. The
    department*s ability to link funding for critical spare parts to readiness
    should improve when the Defense Logistics Agency and the services
    implement four recent recommendations by the DOD comptroller. The
    Comptroller*s recommendations stemmed from concern that the Defense
    Logistics Agency and the services* inventory systems tend to purchase low
    cost/ high demand items and not those that would most improve readiness
    rates. Although the Comptroller cited some improvement efforts, he made
    four recommendations specifically aimed at improving their efforts to
    increase investment in critical spare parts and link funding requests to
    readiness rates. In addition, the Comptroller changed the budget
    justification material (budget exhibit) to provide such information to
    Congress. However, the report conveying these recommendations did not cite
    deadlines or how DOD would measure the Defense Logistics Agency and the
    services* progress in implementing the four recommendations.

    In the August 2002 report, the DOD Comptroller issued the Inventory
    Management Study report in response to Program Budget Decision 422, in
    which the Comptroller cited problems with the supply models currently
    being used by the Defense Logistics Agency and the services. Foremost, the
    models tended to purchase low- cost/ high demand items* not necessarily
    those that would most improve readiness rates. This occurred because the
    model forecasted inventory purchases based on historical demand for an
    item and aimed, as a goal, to have that part available for the customer 85
    percent of the time. Although the report noted numerous

    9 GAO- 03- 709. Recent Efforts Could

    Strengthen Link between Funding and Readiness

    Page 12 GAO- 03- 707 Defense Inventory

    commercial practices and supply management initiatives under way that need
    to be continued, it also stated that additional efforts are required to
    make better parts investment decisions based on readiness. For example,
    the report cited OSD*s continuing efforts to help supply managers identify
    where to focus their resources for optimal readiness gains. He also

    modified the budget justification material (budget exhibit) to show the
    rates at which each major weapon system is not available due to supply
    problems so that funding requests submitted to the Congress could be
    evaluated based on their ability to improve readiness. More specifically,
    the Comptroller made eight recommendations for improving inventory and
    supply readiness, four of which are directly aimed at improving efforts to
    increase investments in readiness related spares and link funding requests
    to readiness rates. The four recommendations are as follows:

     The Under Secretary of Defense, Acquisition, Technology, and Logistics
    should ensure that the logistics systems are capable of supporting
    readiness based sparing models and readiness drivers. The systems should
    also support life- cycle cost and trade- off analyses. All requests for
    systems initiatives or Enterprise Resource Planning must have Office of
    the Under Secretary of Defense, Comptroller approval through the Financial

    Management Modernization Plan before investment of milestone decisions.

     The Defense Logistics Agency and the military services should continue
    efforts to ensure that high- cost/ low- demand weapon system items are
    available when needed.

     Requests for funds to increase inventory investments should be justified
    by corresponding increases in weapon system readiness rates.

     OSD for Program Analysis and Evaluation should continue to investigate
    links between inventory funding levels and readiness to establish a
    readiness outcome metric for use in resource allocation and performance
    measurement processes.

    Although these recommendations are aimed at significantly improving
    inventory management and the spare parts investment decision process, the
    Comptroller did not establish milestones for their implementation or their
    performance measures. Without deadlines and performance measures, it is
    uncertain when these recommendations will be implemented and what results
    should be expected. For example, while the DOD Comptroller specified how
    the Defense Logistics Agency and the services should report data linking
    funding to readiness in the Financial

    Page 13 GAO- 03- 707 Defense Inventory

    Management Regulation, the services ability to report this information is
    linked to the status of their efforts to develop logistics data systems
    capable of collecting and performing the necessary trade off analyses. As
    a result, in the February 2003 budget submission, the Air Force was able
    to fully implement this reporting recommendation while the Army and Navy
    did not provide all of the desired information (see app. II).

    Due to the significant funding DOD receives annually to provide spare
    parts, the long- standing problems concerning critical spare parts, and
    accountability issues pertaining to the effective tracking of investment
    of these funds, it is important that the department*s strategic goals and
    objectives guide its effort to transform the logistics system and mitigate
    spare parts shortages that reduce readiness. Although the department has
    taken several significant steps to improve the economy and efficiency of
    the logistics support system and possibly provide valuable information for
    making future investment decisions that may result in better logistics
    support to the warfighter, its Future Logistics Enterprise lacks a
    specific focus on spare parts shortages and some of the elements needed
    for a strategic plan. Without a comprehensive strategic plan linked to
    subordinate plans, the results will likely be less effective or
    potentially

    duplicative efforts within the Defense Logistics Agency and the services.
    In addition, the lack of a departmentwide goal to address the issue of
    critical spare parts shortages could result in continued spare parts
    shortages that negatively affect readiness. Furthermore, without specific
    initiatives to address critical spare parts shortages that links to the
    strategic plan*s goals, objectives, and performance measures, the
    department may be unable to significantly reduce the effect of spare parts
    shortages on readiness and there is no assurance that investments in spare
    parts will be based on the greatest return on investment or effect on
    readiness. Finally, because OSD did not establish deadlines or how it
    would measure progress in implementing its August 2002 recommendations to
    provide Congress with information linking increased investments in spare
    parts inventories to include weapon system readiness

    rates, there is no assurance when this information will be available to
    Congress for use in making future funding decisions.

    In order to improve the department*s logistics strategic plan to achieve
    results for overcoming spare parts shortages, improving readiness, and
    address the long- standing weaknesses that are limiting the overall
    economy and efficiency of logistics operations, we recommend that the
    Conclusions

    Recommendations for Executive Action

    Page 14 GAO- 03- 707 Defense Inventory

    Secretary of Defense direct the Under Secretary for Acquisition,
    Technology and Logistics to

     incorporate clear goals, objectives, and performance measures pertaining
    to mitigating spare parts shortages in the Future Logistics Enterprise or
    appropriate agencywide initiatives to include efforts recommended by the
    Under Secretary of Defense, Comptroller in his August 2002 study report;
    We also recommend that the Secretary of Defense direct the Under

    Secretary of Defense, Comptroller to  establish reporting milestones and
    define how it will measure progress in

    implementing the August 2002 Inventory Management Study recommendations
    related to mitigating critical spare parts shortages.

    In written comments on this report, DOD generally concurred with the
    intent of the recommendations, but not all of the specified actions we
    recommended. DOD*s written comments are reprinted in their entirety in
    appendix III.

    In concurring with the intent of our first recommendation, DOD expressed
    concern that because spare parts shortages are a symptom of imperfect
    supply management processes, its plans must focus on improving those
    processes, not the symptoms. According to DOD, the Future Logistics
    Enterprise focuses on achieving improvement through three threads: Weapon
    System Support, End- to- End Warfighter Support, and Enterprise
    Integration. Specifically, End- to- End Warfighter Support implements
    performance based agreements that include goals, objectives, and
    performance measures between the source of supply and the customer to
    eliminate potential gaps in support to ensure the readiness of weapons
    systems. Weapon system support focuses on a fully integrated life- cycle
    development process where weapon system managers procure performance of
    the weapon system including sustainment. According to DOD, this represents
    a major shift in the approach to weapon system support by emphasizing
    purchasing a predetermined level of availability to meet the warfighter*s
    objectives rather than buying set levels of spares, repairs and data. In
    addition, DOD said that Enterprise Integration enables these transformed
    supply processes by allowing collaboration across the logistics domain and
    will enhance the ability to forecast supply and demand to ensure weapon
    system readiness. Furthermore, efforts recommended by the Under Secretary
    of Defense, Comptroller in his Agency Comments

    and Our Evaluation

    Page 15 GAO- 03- 707 Defense Inventory

    August 2002 study report have already been incorporated into the Financial
    Management Regulation. The implementation of the efforts by the Defense
    Logistic Agency and military services will be reviewed within the annual
    budget conferences. Therefore, DOD does not agree that additional goals,
    objectives, and performance measures or additional initiatives are needed
    to mitigate spare parts shortages.

    We disagree that the actions taken are sufficient to address our
    recommendation. We believe that modification of the Financial Management
    Regulation reporting requirements along with actions taken in response to
    our second recommendation are sufficient to address the

    recommendations made by the Under Secretary of Defense, Comptroller.
    Furthermore, our report recognizes that the Future Logistics Enterprise
    focuses on transforming DOD*s logistics operations and that improving
    logistics processes is part of the solution to mitigating spare parts
    shortages. However, we believe that process improvements alone do not meet
    our recommendation. The intent of our recommendation was for OSD to
    include a focus on mitigating spare parts shortages in either the Future
    Logistics Enterprise or agencywide initiatives. Without a focus on
    mitigating spare parts shortages that includes clear goals, objectives,
    and milestones included in the strategic plan or departmentwide
    initiatives, we

    believe DOD efforts will not establish the framework necessary to assess
    the department*s progress in addressing this issue. In addition, without
    this framework, DOD*s progress in mitigating spare parts shortages will be
    limited because it efforts may be ineffective or duplicative in mitigating
    spare parts shortages that are critical to equipment readiness. Therefore,
    we continue to believe implementation of our recommended actions is
    necessary for improving readiness of legacy and future weapon systems.

    In partially concurring with our second recommendation, DOD stated that
    progress in implementing the Under Secretary of Defense, Comptroller
    recommendations would be measured as an integral component of its resource
    allocation process and that separate reporting milestones are not needed.
    DOD also stated that budget guidance for fiscal year 2005 will

    include additional performance metrics that will be further refined as the
    logistics balanced scorecard 10 is implemented under the Future Logistics
    Enterprise and Business Management and Modernization Program initiatives.
    Successful implementation of these actions and DOD*s ongoing

    10 The balanced scorecard links strategic goals, strategies, objectives
    and performance measures to an organization*s strategic plan..

    Page 16 GAO- 03- 707 Defense Inventory

    development of a balanced scorecard as a mechanism for measuring progress
    in implementing these recommendations will meet the intent of our
    recommendation provided goals, objectives, and performance measures
    pertaining to mitigating spare parts shortages are included in the
    scorecard.

    To determine the adequacy of DOD*s current strategic plans to address
    spare parts shortages, we obtained current DOD logistics and strategic
    planning documents that identified guidance on improving spare parts
    support for military readiness.

    To determine how adequately the strategic plan addressed spare parts
    shortages, we reviewed the Future Logistics Enterprise and supporting
    documents to ascertain whether the plan addressed mitigating spare parts
    shortages as one of its objectives or goals. We also reviewed the Future
    Logistics Enterprise to determine whether it contained the elements
    necessary for a strategic plan as outlined in the Government Performance
    and Results Act of 1993 (GPRA). 11 In addition, we interviewed key
    officials responsible for logistics and strategic planning efforts in the
    Office of the Secretary of Defense and the Joint Chiefs of Staff. To
    determine how likely the initiatives in the Future Logistics Enterprise

    were to achieve the intended results and contribute to mitigating spare
    parts shortages to improve readiness, we reviewed the six initiatives to
    determine if any had goals and objectives related to readiness or
    mitigating spare parts shortages. We focused our analysis on whether the
    initiatives addressed spare parts shortages and the need for quantifiable
    and measurable performance targets as identified in GPRA. In addition, we

    interviewed officials responsible for each of the initiatives within the
    Office of the Secretary of Defense.

    To determine the extent to which the department can identify the effect of
    increased funding for spare parts on readiness, we reviewed the Inventory
    Management Study completed in August 2002. In addition, we interviewed

    officials at the Office of the Secretary of Defense to determine the
    status of efforts to establish a link between funding for spare parts and
    readiness.

    11 Pub. L. 103- 62, Aug. 3, 1993. Scope and

    Methodology

    Page 17 GAO- 03- 707 Defense Inventory

    Further, we compared the Future Logistics Enterprise initiatives to GAO*s
    High Risk Series and GPRA to determine if the initiatives contained (1) a
    clear mission and vision, (2) specific objectives and attributes linked to
    spare parts and readiness, (3) milestones, and (4) performance metrics and
    reporting requirements. We also coordinated our efforts with the four
    other GAO engagements evaluating strategic planning documents and
    initiatives for mitigating spare parts shortages within the Defense
    Logistics Agency, Army, Navy, and Air Force.

    We performed our review from July 2002 through May 2003 in accordance with
    generally accepted government auditing standards. We are sending copies of
    this report to the Secretary of Defense and other interested congressional
    committees and parties. 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- 8365 if you or your staff have any
    questions concerning this report. Major contributors to this report are
    included in appendix III.

    Sincerely yours, William M. Solis, Director Defense Capabilities and
    Management

    Appendix I: Initiatives Included in the Future Logistics Enterprise

    Page 18 GAO- 03- 707 Defense Inventory

    The following six initiatives represent the department*s integrated
    approach to accelerate logistics improvement, enhance support to the
    warfighter, and align logistics processes with the operational demands of
    the 21st century.

    Initiative Objective/ goals Accomplishments/ additional actions Weapon
    System Support

    Depot Maintenance Partnership Increase the level of public- private
    partnerships resulting in  greater private sector investment,

     better facility utilization,

     reduced ownership cost,

     workforce integration,

     more efficient business processes,

     greater credibility, and

     more collegial working relationship with Congress. Accomplishments:

     Legislative changes included in the National Defense Act for fiscal year
    2002

     Policy memorandum promulgated

     Three Legislative Proposals under consideration

     Service implementation plans Additional Actions:

     Develop reports and measures Condition Based Maintenance Plus Increase
    operational availability and readiness throughout the weapon system life
    cycle at a reduced cost.

    Additional Actions:

     Draft policy completed

     Incorporated in DOD 5000 series

     Service implementation plans Total Life Cycle System Management Improve
    weapon system sustainment

    through

     timely acquisition of weapon systems,

     meeting warfighter performance requirements,

     integration of sustainment and maintainability during the acquisition
    process, and

     weapon system sustainment to meet warfighter performance requirements at
    a best corporate value.

    Accomplishments:

     Improved Defense Acquisition University curriculum

     Service Performance Based Logistics implementation schedules

     Revised DOD publications 5000.1.5000.2 Additional Actions:

     Develop financial mechanisms with Under Secretary of Defense

    Customer Service

    End- to- End Distribution Streamlining warfighter support by providing
    material from the source of supply or point of origin to the point of use
    or disposal on a worldwide basis. The intent is to influence acquisition,
    sourcing, positioning, and transportation to facilitate the flow of
    material and

    ensure that deployment and sustainment are synchronized.

    Accomplishments:

     Identify additional improvements in the management of end- to- end
    distribution Additional Actions:

     Synchronize policies and initiatives for end- to- end distribution

     Advocate greater consideration of distribution in acquisition decisions

    Executive Agents Assess and align Executive Agent designations with
    warfighter requirements arising from the National Defense Strategy.

    Additional Actions:

     Prepare a schedule for assessing potential EA assignments for
    construction and medical material

     Prepare Concept of Operations and draft DOD directives for bulk
    petroleum and subsistence

     Complete initial analyses of emerging Executive Agents

    Appendix I: Initiatives Included in the Future Logistics Enterprise

    Appendix I: Initiatives Included in the Future Logistics Enterprise

    Page 19 GAO- 03- 707 Defense Inventory

    Initiative Objective/ goals Accomplishments/ additional actions Enterprise
    Integration

    Enterprise Integration Create highly trained and skilled people within DOD
    logistics enterprise to have access to near real time, actionable
    information from modern, commercially based software produces that will
    enable reengineered logistics processes and business rules.

    Additional Actions:

     Incorporate Triangle Working Groups plans of action and milestones
    Implement phase two of fact finding review of Enterprise Initiatives
    Draft Policy Recommendations Source: GAO.

    Appendix II: Inventory Investment Budget Submission Material

    Page 20 GAO- 03- 707 Defense Inventory

    February 2003 Working Capital Fund Budget submissions for the Air Force,
    Army, and Navy provide an example of the information reported by each
    service pertaining to inventory investment.

    1 NMCSR * Not Mission Capable Supply Rate is the percentage of time a
    weapon system is down for parts. Assuming no other factors impact aircraft
    availability, then the aircraft availability is computed 1 minus NMCSR.
    NMCSR is computed only for weapon systems. NMCSR is not computed for
    weapon system parts such as engines.

    Legend SOF * Special Operating Forces Common EW * Common Electronic
    Warfare1 NIMSC5 * Nonconsumable Item Material Support Code 5

    Appendix II: Inventory Investment Budget Submission Material

    Appendix II: Inventory Investment Budget Submission Material

    Page 21 GAO- 03- 707 Defense Inventory

    Legend MSE * Mobile Subscriber Equipment MLRS * Multiple Launch Rocket
    System HMMWV * High Mobility Multipurpose Wheeled Vehicle

    Appendix II: Inventory Investment Budget Submission Material

    Page 22 GAO- 03- 707 Defense Inventory

    Legend SNT * Serial Number Tracking NIS PBL * Not In Stratification
    Performance Based Logistics PBL Savings * Performance Based Logistics
    Savings LECP * Logistics Engineering Change Proposal

    Appendix II: Inventory Investment Budget Submission Material

    Page 23 GAO- 03- 707 Defense Inventory

    Appendix III: Comments from the Department of Defense

    Page 24 GAO- 03- 707 Defense Inventory Appendix III: Comments from the
    Department of Defense

    Appendix III: Comments from the Department of Defense Page 25 GAO- 03- 707
    Defense Inventory

    Appendix III: Comments from the Department of Defense Page 26 GAO- 03- 707
    Defense Inventory

    Appendix IV: GAO Contacts and Staff Acknowledgments Page 27 GAO- 03- 707
    Defense Inventory

    Richard G. Payne (757) 552- 8119 John Wren (757) 552- 8235

    In addition to those named above, Latrealle Lee, Margaret Giammarco,
    Marjorie Jane Hunt, and Barry L. Shillito also made significant
    contributions to this report. Appendix IV: GAO Contacts and Staff

    Acknowledgments GAO Contacts Acknowledgments

    (350252)

    The General Accounting Office, the audit, evaluation and investigative arm
    of Congress, exists to support Congress in meeting its constitutional
    responsibilities and to help improve the performance and accountability of
    the federal government for the American people. GAO examines the use of
    public funds; evaluates federal programs and policies; and provides
    analyses, recommendations, and other assistance to help Congress make
    informed oversight, policy, and funding decisions. GAO*s commitment to
    good government is reflected in its core values of accountability,
    integrity, and reliability.

    The fastest and easiest way to obtain copies of GAO documents at no cost
    is through the Internet. GAO*s Web site (www. gao. gov) contains abstracts
    and fulltext files of current reports and testimony and an expanding
    archive of older products. The Web site features a search engine to help
    you locate documents using key words and phrases. You can print these
    documents in their entirety, including charts and other graphics.

    Each day, GAO issues a list of newly released reports, testimony, and
    correspondence. GAO posts this list, known as *Today*s Reports,* on its
    Web site daily. The list contains links to the full- text document files.
    To have GAO e- mail

    this list to you every afternoon, go to www. gao. gov and select
    *Subscribe to daily E- mail alert for newly released products* under the
    GAO Reports heading.

    The first copy of each printed report is free. Additional copies are $2
    each. A check or money order should be made out to the Superintendent of
    Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
    copies mailed to a single address are discounted 25 percent. Orders should
    be sent to: U. S. General Accounting Office 441 G Street NW, Room LM
    Washington, D. C. 20548 To order by Phone: Voice: (202) 512- 6000

    TDD: (202) 512- 2537 Fax: (202) 512- 6061

    Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm E- mail:
    fraudnet@ gao. gov Automated answering system: (800) 424- 5454 or (202)
    512- 7470 Jeff Nelligan, Managing Director, NelliganJ@ gao. gov (202) 512-
    4800

    U. S. General Accounting Office, 441 G Street NW, Room 7149 Washington, D.
    C. 20548 GAO*s Mission Obtaining Copies of

    GAO Reports and Testimony

    Order by Mail or Phone To Report Fraud, Waste, and Abuse in Federal
    Programs Public Affairs
    *** End of document. ***