Defense Inventory: Management of Repair Parts Common to More Than One
Military Service Can Be Improved (Letter Report, 10/20/1999,
GAO/NSIAD-00-21).

Pursuant to a congressional request, GAO reviewed the Department of
Defense's (DOD) management of identical repairable parts used by more
than one DOD component, focusing on: (1) DOD's progress in correcting
problems in the management of identical parts; and (2) opportunities to
improve management of these parts.

GAO noted that: (1) DOD initiatives dating to the early 1970s to improve
the management of identical parts have been largely ineffective; (2)
many identical parts continued to be managed by more than one service,
even though opportunities for savings and management efficiencies exist
by using a single manager when there are multiple users of the same
part; (3) while GAO cannot precisely quantify the savings from improving
management of identical parts, GAO's work and past DOD studies showed
that they would be considerable; (4) for example, GAO's analysis of
7,683 identical parts, with assets on hand valued at $474 million,
showed that they should have been managed by one DOD component; (5) this
condition is similar to what existed in 1995 when the DOD Inspector
General reported that the primary inventory manager did not have
information on over $400 million in assets held by the other services
and that over $140 million of these assets could have been used to fill
the needs of the primary manager; (6) due to planning and management
weaknesses, the DOD initiatives have not been successful in moving to an
approach that would result in a single manager performing all inventory
management functions; (7) these weaknesses include not developing an
implementation plan that contains performance objectives, milestones,
and outcome measures linked to DOD's Logistics Strategic Plan, and not
establishing oversight accountability for implementing the single
manager approach Department-wide; and (8) these weaknesses are similar
to long-standing problems noted in GAO's high risk reporting on DOD's
inventory management that have hindered other major inventory management
improvement initiatives.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-00-21
     TITLE:  Defense Inventory: Management of Repair Parts Common to
	     More Than One Military Service Can Be Improved
      DATE:  10/20/1999
   SUBJECT:  Inventory control systems
	     Redundancy
	     Equipment repairs
	     Internal controls
	     Spare parts
	     Defense cost control
	     Accountability
	     Strategic planning
	     Logistics
	     Federal property management
IDENTIFIER:  DOD Strategic Logistics Plan

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Report to Congressional Requesters

October 1999

DEFENSE INVENTORY

Management of Repair Parts Common to More Than One Military Service Can Be
Improved
*****************

*****************

GAO/NSIAD-00-21

Letter                                                                     3

Appendixes

Appendix I:Scope and Methodology

                                                                         18

Appendix II:Comments From the Department of Defense

                                                                         20

Related GAO Products

                                                                         22

Table 1:  Repairable Parts Used by More Than One Service6

Figure 1:  Primary Manager Assignments for Identical Parts7

Figure 2:  User Assignments for Identical Parts  9

DOD     Department of Defense

DOD-IG  Department of Defense Inspector General

DOD refers to these parts as multiservice repair items. Each identical
item has a unique national stock number. National stock number refers to a
13-digit stock number that DOD and other agencies use to identify and
manage items of supply. It consists of a four-digit federal supply class
that designates the general commodity grouping of the item and a 
Management of Common Use Repairable Items in the Department of Defense
(DOD-IG Report No. 95-303, Sept. 1, 1995).
Management of Repairable Items Used by More Than One Service (DOD-IG
Report No. 
92-071, Apr. 7, 1992).
Procurement of Repairable Items Used by More Than One Service (DOD-IG
Report No. 
86-067, Feb. 18, 1986).
                                                     National Security and 
                                             International Affairs Division

B-280313

October 20, 1999

The Honorable Tom Harkin
The Honorable Richard Durbin
United States Senate

The Honorable Peter DeFazio
The Honorable Carolyn B. Maloney
House of Representatives

This report is one in a series of reports on the Department of Defense's
(DOD) management of secondary inventory-spare and repair parts, clothing,
medical supplies, and other items that support DOD's operating forces on
land, at sea, and in the air./Footnote1/ We have identified the management
of defense inventory as a high-risk area./Footnote2/ Past reports have
identified management weaknesses that make some portion of DOD's inventory
vulnerable to waste and inefficiency. As requested, we reviewed DOD's
management of identical repairable parts used by more than one DOD
component (hereafter referred to as identical parts)./Footnote3/ Over
57,000 identical parts, with an estimated value of $4 billion, are used
and typically managed by more than one service. They include such supply
items as hydraulic pumps, computer circuit card assemblies, wing sections,
and landing gear. This report discusses (1) DOD's progress in correcting
problems in the management of identical parts and (2) opportunities to
improve management of these parts. The scope and methodology of our work
can be found in appendix I.

Results in Brief

DOD initiatives dating to the early 1970s to improve the management of
identical parts have been largely ineffective. Many identical parts
continue to be managed by more than one service, even though opportunities
for savings and management efficiencies exist by using a single manager
when there are multiple users of the same part. While we cannot precisely
quantify the savings from improving management of identical parts, our
current work and past DOD studies showed that they would be considerable.
For example, our analysis of 7,683 identical parts, with assets on hand
valued at $474 million, showed that they should have been managed by one
DOD component. This condition is similar to what existed in 1995 when the
DOD Inspector General reported that the primary inventory manager did not
have information on over $400 million in assets held by the other services
and that over $140 million of these assets could have been used to fill
the needs of the primary manager.

Due to planning and management weaknesses, the DOD initiatives have not
been successful in moving to an approach that would result in a single
manager performing all inventory management functions. These weaknesses
include not developing an implementation plan that contains performance
objectives, milestones, and outcome measures linked to DOD's Logistics
Strategic Plan, and not establishing oversight accountability for
implementing the single manager approach Department-wide. These weaknesses
are similar to long-standing problems noted in our high risk reporting on
DOD's inventory management that have hindered other major inventory
management improvement initiatives.

We are recommending that the Secretary of Defense establish DOD-wide goals
to improve the management of identical parts and develop an implementation
plan with short- and long-term actions to guide accomplishment of these
goals. Further, clear accountability for overseeing the execution of the
implementation plan should be established.

Background

DOD has had inventory management problems for decades. In 1990, we
identified DOD's management of secondary inventories as a high-risk area
because levels of inventory were too high and management systems and
procedures were ineffective. While some improvements have been made,
particularly in the management of medical, food, and clothing items, these
general conditions still exist. Program implementation problems have
resulted largely from long-standing issues that have hindered other major
management initiatives. These issues include cultural resistance to
change; service parochialism; and lack of outcome-oriented goals,
performance measures, and management accountability.

Inventory management problems have been identified in many areas. One
problem relates to missed opportunities to standardize parts that have
different stock numbers but actually are very similar. This report focuses
on identical parts that have one stock number but have more than one
manager. Managing parts includes functions such as determining what is
needed; buying needed parts; and storing, maintaining, distributing, and
disposing of these parts once they are received. DOD policy is to have a
single manager to handle these functions for each item. Although DOD's
goal is to have a single manager for identical parts used by more than one
service, this goal has not been achieved. DOD has divided these management
functions between what it refers to as a primary inventory control
activity and a secondary inventory control activity (hereafter referred to
as primary manager and secondary manager). The primary manager is
responsible for most of the inventory management functions; however, the
secondary manager retains some functions such as developing supply support
requirements.

The Deputy Under Secretary of Defense (Logistics) is responsible for
providing policy and guidance on inventory management in DOD. The DOD
components are responsible for the day-to-day inventory management
operations. In December 1994, the Deputy Under Secretary established a
Nonconsumable Integrated Materiel Management Committee to improve the
management of repair parts. Repairable parts are generally expensive and
can be fixed and used again. The Deputy Under Secretary chairs a senior
steering group, comprised of senior logistics personnel from DOD and its
components, that is responsible for overseeing the work of the committee.

DOD's inventory of secondary items contained a reported 524,396 repairable
parts as of February 1999. Almost 90 percent of the repairable parts are
used by only one service, and management functions are handled by that
service. The other 57,429 repairable parts are used and, to varying
degrees, managed by more than one service. The number of identical parts
used by more than one service has not changed significantly since October
1995, remaining steady at about 11 percent of total repairables, as shown
in table 1.

Table****Helvetica:x11****1:    Repairable Parts Used by More Than One
                                Service

-------------------------------------------------------------------------
| Date             :          Total :    More than one :      Percent   |
|                  :    repairables :          service :                |
|-----------------------------------------------------------------------|
| October 1995     :        552,772 :           60,315 :          10.9  |
|-----------------------------------------------------------------------|
| October 1996     :        550,645 :           63,819 :          11.6  |
|-----------------------------------------------------------------------|
| November 1997    :        537,319 :           59,131 :          11.0  |
|-----------------------------------------------------------------------|
| June 1998        :        530,550 :           58,879 :          11.1  |
|-----------------------------------------------------------------------|
| October 1998     :        528,255 :           58,202 :          11.0  |
|-----------------------------------------------------------------------|
| February 1999    :        524,396 :           57,429 :          11.0  |
-------------------------------------------------------------------------

Figure 1 shows the primary manager assignments for identical parts used by
more than one service as of February 1999. The number of primary managers
does not represent inventory management personnel because individual
inventory managers have more than one part assigned to them. DOD records
indicate that these identical parts are valued at a latest acquisition
cost of almost $4 billion.

Figure****Helvetica:x11****1:    Primary Manager Assignments for Identical
                                 Parts
*****************

*****************

Note: Organizations in the "Other" category include the Defense Logistics
Agency and civilian agencies such as the Federal Aviation Administration
and the National Weather Service.

Improvement Initiatives Have Not Been Successful

DOD initiatives to improve the management of identical parts have been
largely ineffective. Many identical parts continue to be managed by more
than one service, even though opportunities for savings and management
efficiencies exist by using a single manager when there are multiple users
of the same part. While we cannot precisely quantify the savings from
improving management of identical parts, our current work and past DOD
studies showed that they would be considerable.

Management Initiatives Have Yielded Minimal Progress 
-----------------------------------------------------

Although DOD has had initiatives dating to the early 1970s to improve
management of identical parts, they have not accomplished the results DOD
wants, leaving some portion of this inventory vulnerable to waste and
inefficiency. DOD initiatives to improve the management of identical parts
involves a two-phased process. Under the phase one process, the primary
manager handles cataloging, procurement, disposal, and where appropriate,
maintenance, while a secondary manager develops supply support
requirements for its users and sends them to the primary manager. The
secondary manager also maintains stocks and issues them to its users.
Under the phase two process, the primary manager performs most of the
inventory management functions required of a single inventory manager. In
addition to carrying out all of the functions described for a primary
manager in phase one, the primary manager stocks, stores, and issues
repair parts and establishes, budgets, and funds stock requirements for
all secondary users. The secondary manager still determines some
requirements and submits them to the primary manager for consolidation
with the requirements of other users.

Even though DOD's goal is to have a single manager for each identical
part, its two-phased initiatives are interim steps toward achieving this
goal. Notwithstanding these initiatives, many identical parts are still in
phase one and none are managed under the single manager approach. In fact,
under the two-phase process the number of phase two secondary manager
assignments stayed at about 51 percent from October 1996 to February 1999,
as indicated in figure 2. The number of secondary managers shown in the
figure does not represent inventory manager personnel because individual
inventory managers have more than one part assigned to them. Also,
although each identical part has one primary manager, it may have more
than one secondary manager. For this reason, of the 57,429 identical parts
in February 1999, there were 11,322 parts with three or more users.

Figure****Helvetica:x11****2:    User Assignments for Identical
                                 Parts
*****************

*****************

Potential Savings Can Be Obtained Through Improved Management
-------------------------------------------------------------

If DOD moves more identical parts from phase one into phase two, and
ultimately to a single manager approach, the resulting improved management
can provide potential savings. Although we cannot precisely quantify the
overall savings, past DOD Inspector General (DOD-IG) reports and our
current work show that waste and inefficiencies continue.

We analyzed June 1998 Defense Logistics Information Service cataloging
data on identical parts in phase two and found that the secondary managers
had parts on hand that should have been in the hands of the primary
manager as prescribed by DOD regulations. These assets were valued at
nearly $474 million for 7,683 parts. For over 1,000 of these parts, the
primary manager had no assets to meet current needs while the secondary
managers had assets on hand valued at nearly $47 million. DOD also
identified a number of secondary managers holding assets that should have
been held by the primary managers, according to the February 1999 minutes
of the DOD Nonconsumable Integrated Materiel Management Committee.

We reviewed a judgmental sample of 38 identical parts, each of which was
used by the Army, the Navy, and the Air Force. Of these parts, 13 were in
phase one and 25 were in phase two. We found that secondary managers for
22 of the 25 parts had assets on hand that they should not have because,
according to the applicable DOD regulation, the primary manager stocks,
stores, and issues the parts. For example, two secondary managers had 
107 radio receivers on hand, valued at $783,000, even though the primary
manager had 598 receivers on hand, valued at $4.1 million. In another
case, a secondary manager had 12 radar receiver-generators on hand, valued
at $3.2 million, while the primary manager had 43 on hand, valued at 
$9.4 million. Parts in the hands of secondary managers create the
potential for unnecessary procurements because primary managers may not be
aware of these assets. Several item managers, in their role as a primary
manager, told us that they did not have information on the amount of
inventory held by the secondary managers.

The DOD-IG issued four reports over the 13-year period ending 1995 that
discussed problems and issues in the area of identical parts./Footnote4/
The reports contained recommendations for improvement, and DOD promised
corrective actions. However, our current work shows that problems still
exist. Findings from the DOD-IG audits ranged from basic operational
issues among the services to the primary manager unnecessarily procuring
assets when the secondary manager had assets on hand. The 1995 report
noted that the primary managers did not have information on over 
$400 million in assets held by the secondary managers. Over $140 million
of these assets could have been used to fill the inventory needs of the
primary manager. In addition, the report discussed unnecessary
procurements, required inventory being disposed of, and excess inventory
not being disposed. Similar points were made in a 1992 DOD-IG report.

A recent DOD-IG audit report, issued in May 1999, dealt with the disposal
of identical parts./Footnote5/ A main finding of that review was that
secondary managers were disposing of assets without notifying the primary
manager. As a result, the primary manager was purchasing parts at the same
time the disposal actions were occurring. The report stated that
procurements could have been avoided if procedures were followed and
secondary managers notified primary managers of their asset disposal plans. 

Moreover, savings could result if DOD eliminated the multiple levels of
management under the primary/secondary manager process and moved to a
single manager for identical parts. According to the minutes of a
September 1998 meeting, the DOD Nonconsumable Integrated Materiel
Management Committee discussed moving toward a global, or single, manager
concept for identical parts, where the role of the secondary manager is
eliminated. In a July 1998 briefing, the Air Force, in particular,
questioned the need for secondary managers and advocated single managers
for identical parts. Eliminating secondary managers would make management
of repairables similar to the Defense Logistics Agency's single management
of consumables (supply items that are used and discarded when their useful
life is completed). The Defense Logistics Agency is the single manager for
most of the 4.3 million consumables in the DOD supply system.

Opportunities for Improvement Exist by Addressing Planning and Management
Weaknesses

While DOD in the past has established goals to improve the management of
identical parts, DOD initiatives have not been successful in moving to a
single manager approach. The lack of progress in reaching the program
goals stems largely from a lack of sustained and clearly formulated
commitment to the program. Key management actions needed to guide program
implementation were absent. These include a lack of implementation plans
containing performance objectives, milestones, and outcome measures linked
to a DOD-wide Logistics Strategic Plan, and not establishing oversight
accountability for the improvement efforts. These weaknesses are similar
to long-standing issues noted in our high risk reporting on DOD's
inventory management that have hindered other major management initiatives.

DOD periodically issues Logistics Strategic Plans to provide a DOD-wide
guide to the operation of the logistics process. Its efforts to improve
the management of identical parts were emphasized in the fiscal year 1995
DOD Logistics Strategic Plan, which set a goal to move identical parts
from phase one to phase two by October 1996. This second phase would have
a primary manager assigned to perform almost all of the inventory
management functions for all DOD components. A similar goal to fully
implement the second phase by October 1997 was included in the Logistics
Strategic Plan for fiscal years 1996/97. Moreover, another aspect of this
goal was to implement a single (or "global") manager concept for identical
parts, thus eliminating the primary/secondary manager process.

However, implementation plans with performance objectives, milestones,
time frames, and outcome measures-such as improved efficiency, reduced
costs, and better service to the customer-were not developed and none of
these goals were achieved. Also, comprehensive cost data associated with
the management of identical parts by more than one service was not
developed. The 1996/97 DOD Logistics Strategic Plan contained a strategy
to perform a study to determine the costs of duplication due to
primary/secondary manager assignments, but the study was not done. Goals
were not included in the most recent plan-the fiscal year 1998 Logistics
Strategic Plan.

The DOD Nonconsumable Integrated Materiel Management Committee formed in
December 1994 to renew the efforts begun 20 years earlier to improve
management of identical parts has provided limited management oversight.
The activities of the committee, which consists of mid-level managers from
the DOD components, have been sporadic. The committee met frequently in
1995 but less frequently thereafter. While the committee reports to a
senior logistics steering group chaired by the Deputy Under Secretary of
Defense (Logistics), the activities of the committee have not been on the
agenda of this oversight steering group.

Several issues that cut across service lines evidence the lack of top
level management attention that has been provided in this area. More
specifically, these issues point out the need for an implementation plan
that contains short- and long-term actions to address the underlying
obstacles to more efficient management of identical parts. Identifying
assets held by secondary managers is one major example. Further, the
services find it difficult to track their assets in the hands of another
service for repair and experience difficulties in receiving credit for
assets turned in for repair in exchange for functioning assets. The DOD
Nonconsumable Integrated Materiel Management Committee has been dealing
with these issues for many years but has not yet resolved them. In some
cases, incompatible data systems contribute to the problems. However, the
lack of implementation plans monitored by an active oversight body results
in no accountability for progress toward the long-standing DOD goal of
improving the management of identical parts.

Conclusions

Although DOD in the past has established goals to improve the management
of identical parts, DOD initiatives were not successful in moving to a
single manager approach. The lack of progress in reaching the program
goals stems largely from a lack of sustained and clearly formulated
commitment to the program. Key management actions needed to guide program
implementation were absent. These include a lack of implementation plans
containing performance objectives, milestones, and outcome measures linked
to a DOD-wide Logistics Strategic Plan, and not establishing oversight
accountability for the improvement efforts. As a consequence, segments of
DOD's inventory management system remain vulnerable to inefficiency and
waste.

Recommendations

In order to address the systemic management weaknesses that have hindered
DOD's progress toward achieving a single manager for identical parts, we
recommend that the Secretary of Defense take the following actions.

o Establish goals to support the next DOD Logistics Strategic Plan
  designed to improve management of identical parts by moving to a single
  manager approach.

o Develop an implementation plan that addresses short- and long-term
  actions to improve the management of identical parts. Short-term
  actions should include improvements in communications and reporting and
  long-term actions should include the elimination of primary and
  secondary managers so that a single manager will manage identical
  parts. The implementation plan should contain performance objectives,
  milestones, timetables, and outcome measures that support the Logistics
  Strategic Plan. The plan should provide outcome measures, such as
  improved efficiency, reduced costs, and better service to the customer.

o Establish clear accountability for Department-wide oversight and
  component execution of the implementation plan and achievement of
  desired results.

Agency Comments and Our Evaluation

In commenting on a draft of this report, DOD partially agreed with the
report and our recommendations. (See app. II for DOD's complete comments.)
The Department agreed that continuous improvements are needed in the
management of repair parts, especially identical parts with more than one
user. The Department stated, however, that a single manager approach by
item is not feasible until a more modernized information system is
developed. We agree that implementation of a Department-wide modernized
information system would facilitate the effectiveness of the single
manager approach to managing identical parts. However, modernizing
information systems will require a lengthy period of time. Consequently,
we have modified our report recommendations to reflect both short- and
long-term solutions for improving the management of identical parts.

With regard to our recommendation that a goal be established to improve
management of identical parts to support the next Logistics Strategic
Plan, DOD stated that one of the goals of the Nonconsumable Integrated
Materiel Management Committee has been to improve the management of
identical parts by moving to a single manager approach where feasible. The
Department stated, however, that this approach is rarely the best because
costly changes to existing information systems are required. According to
DOD, while improvements have been made in data sharing between primary and
secondary managers, there will continue to be a small number of items with
multiple managers until information systems can be modernized.

While we agree that the single manager approach would be facilitated by
improved information systems, improved systems are not necessary to taking
action now to provide opportunities for savings and management
efficiencies. For example, improvements can be made by (1) improving
communications using telephonic or fax capability before initiating
procurement, repair, or disposal actions; (2) having secondary managers
provide periodic manual reports to primary managers on their on-hand
inventories; and (3) making cost-effective interim changes to existing
information systems, such as improving compatibility between existing
systems. As a result, we have not made any specific changes to the
recommendation on the basis of DOD's comments. Our recommendation is
directed toward establishing a goal to support the next Logistics
Strategic Plan and is consistent with the Department's past actions in
setting goals for identical parts management in the 1995 and 1996/1997
Logistics Strategic Plans. This goal could be the basis for guiding an
implementation plan designed to make short- and long-term improvements to
the management of identical parts.

In commenting on our recommendation to develop an implementation plan for
managing identical parts by a single manager, DOD agreed that
implementation plans that include outcome measures such as improved
efficiency, reduced costs, and better services to the customer are factors
of success. However, the Department reiterated that the single manager
approach is rarely feasible because costly changes to existing systems are
required and stated that an implementation plan to move all items to this
concept would be inappropriate at this time. It also stated that
improvements in data sharing have been made but further improvements
require Department-wide modernized information systems. As previously
stated, we believe there are opportunities to take interim measures at
this time as well as work toward long-term solutions. We have, therefore,
modified our recommendation to recognize the need for an implementation
plan that includes performance objectives, milestones, timetables, and
outcome measures covering short- and long-term measures.

With regard to our recommendation to establish clear accountability for
oversight and execution of the implementation plan, the Department stated
that this will be done as implementation plans are developed for systems
or items moving to a new management concept. However, DOD did not explain
the new management concept and again cited the need to first modernize its
information system before a single manager approach could be implemented.
In addition, the Department's comments did not address the accountability
and oversight problems that exist under the current management structure.
Accordingly, we continue to believe that establishing clear accountability
and oversight now is critical to implementing short- and long-term
solutions to the problems we identified. Therefore, we have not modified
our recommendation.

As arranged with your offices, we plan no further distribution of this
report until 7 days from its issue date unless you publicly announce the
report's contents earlier. At that time, we will send copies of this
report to the appropriate congressional committees; the Honorable William
S. Cohen, Secretary of Defense; the Honorable Louis Caldera, Secretary of
the Army; the Honorable F. Whitten Peters, Secretary of the Air Force; the
Honorable Richard Danzig, Secretary of the Navy; General James L. Jones,
Commandant of the Marine Corps; Lieutenant General Henry T. Glisson,
Director, Defense Logistics Agency; and the Honorable Jacob J. Lew,
Director, Office of Management and Budget.

Please contact me at (202) 512-8412 if you or your staff have any
questions concerning this report. Key contributors to this report are
Charles Patton, James Murphy, Gerald Thompson, and George Surosky.

*****************

*****************

David R. Warren, Director
Defense Management Issues

--------------------------------------
/Footnote1/-^See Related GAO Products at the end of this report.
/Footnote2/-^In 1990, we began a special effort to review and report on
  the federal program areas that we identified as high risk because of
  vulnerabilities to waste, fraud, abuse, and mismanagement. This effort,
  which was supported by the Senate Committee on Government Affairs and
  the House Committee on Government Reform, brought a much needed focus on
  problems that were costing the government billions of dollars. We
  identified inventory management as high risk in our 1992, 1995, 1997,
  and 1999 high-risk reports because of the high levels of inventory in
  excess of current needs and the lack of adequate systems for determining
  inventory requirements.
/Footnote3/-^nine-digit item identification number that differentiates one
  supply item from another.
/Footnote4/-^Management of Nonconsumable Items Used by More Than One
  Service (DOD-IG Report No. 83-053, Dec. 17, 1982).
/Footnote5/-^Interservice Availability of Multiservice Used Items (DOD-IG
  Report No. 99-159, May 14, 1999).

SCOPE AND METHODOLOGY
=====================

To obtain an overall perspective on the magnitude of the parts managed by
more than one service, we analyzed reports prepared by the Defense
Logistics Information Service, Battle Creek, Michigan, and information in
Segment B of the Federal Logistics Information System as of June 1998. We
also obtained from the services their Master Data Records/Files as of
February and March 1999 and calculated an inventory value for those parts
managed by more than one service.

To evaluate the Department of Defense's (DOD) progress in correcting
problems in the management of identical parts and identify opportunities
to improve management of these parts, we reviewed pertinent documents and
interviewed DOD officials. We contacted officials located at Army
Headquarters, Washington, D.C.; Naval Supply Systems Command,
Mechanicsburg, Pennsylvania; and Air Force Materiel Command, 
Wright-Patterson Air Force Base, Ohio. We interviewed the chairperson of
the Nonconsumable Integrated Materiel Management Committee in the Office
of the Deputy Under Secretary of Defense (Logistics), Washington, D.C.
These offices provided us with documents and information on the efforts to
eliminate dual management of parts by more than one service. We also
reviewed the reports issued on this subject by the DOD Inspector General.

We analyzed the September 30, 1997, inventory stratification reports for
the Army, the Navy, and the Air Force for overall data regarding parts
used by more than one service. We used this data to identify identical
parts being used by more than one service and developed four matches
between the services-Army and Navy; Army and Air Force; Air Force and
Navy; and Army, Navy, and Air Force.

We selected a judgmental sample of 38 parts from the data match among the
Army, the Navy, and the Air Force. We selected those parts that had the
highest inventory on-hand, highest unit price, highest inventory on order,
and highest requirements at representative inventory control points in
each service. Using information from the Federal Logistics Information
System, we identified for these parts their primary and secondary
inventory control points.

We held discussions and collected information from item managers and
analyzed inventory records during visits to the Army's Communications-
Electronics Command, Fort Monmouth, New Jersey; the Air Force's Warner
Robbins Air Logistics Center, Georgia; and the Naval Inventory Control
Point, Philadelphia, Pennsylvania. In addition, we collected and analyzed
records from the Naval Inventory Control Point, Mechanicsburg,
Pennsylvania. We also met with other inventory control officials, as
needed, to discuss various subjects and concepts related to the overall
management of parts used by more than one service. In collecting data on
individual sample items, we used the same data the services use for
inventory management, reporting, and budgeting purposes. We did not
validate the data from the various systems cited above.

This review concentrated on identical parts with the same stock number.
There are other parts in the DOD supply system that are very similar, or
even identical, but have different stock numbers. Because the stock
numbers are different, identification of these parts would take a major
effort. As a result, we did not include these parts in the current review.
However, prior DOD studies have identified opportunities to standardize
them.

We performed our review between May 1998 and July 1999 in accordance with
generally accepted government auditing standards.

COMMENTS FROM THE DEPARTMENT OF DEFENSE
=======================================

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RELATED GAO PRODUCTS
====================

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).

Defense Inventory: Navy's Procedures for Controlling In-Transit Items Are
Not Being Followed (GAO/NSIAD-99-61, Mar. 31, 1999).

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

High Risk Series: An Update (GAO/HR-99-1, Jan. 1999).

Inventory Management: More Information Needed to Assess DLA's Best
Practices Initiatives (GAO/NSIAD-98-218, Sept. 2, 1998).

Navy Inventory Management: Improvements Needed to Prevent Excess Purchases
(GAO/NSIAD-98-86, Apr. 30, 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: Expanding Use of Best Practices for Hardware
Items Can Reduce Logistics Costs (GAO/NSIAD-98-47, Jan. 20, 1998).

Defense Inventory: Inadequate Controls Over Air Force Suspended Stocks
(GAO/NSIAD-98-29, Dec. 22, 1997).

Defense Logistics: Much of the Inventory Exceeds Current Needs (GAO/NSIAD-
97-71, Feb. 28, 1997).

Defense Inventory: Spare and Repair Parts Inventory Costs Can Be Reduced
(GAO/NSIAD-97-47, Jan. 17, 1997).

(709341)

Figure 1:  Primary Manager Assignments for Identical Parts7

Figure 2:  User Assignments for Identical Parts  9

Table 1:  Repairable Parts Used by More Than One Service6

*** End of document. ***