C-17 Aircraft Program: Improvements in Initial Provisioning Process
(Letter Report, 01/21/94, GAO/NSIAD-94-63).

Since 1989, when it began initial provisioning for the C-17 aircraft
program, the Air Force has often ordered spare parts prematurely.  As of
July 1993, the Air Force had $111.2 million worth of C-17 spare parts on
order.  In GAO's view, all of these spare parts were ordered prematurely
because existing inventories could have met the Air Force's needs.
These premature procurements were made under a Defense Department (DOD)
policy that called for maximizing procurement of support items for the
provisioning period.  Premature ordering occurred because the Air Force
used inaccurate and outdated information to determine how many spare
parts to buy and when to buy them, bought more spare parts than computed
stockage levels justified, and failed to follow regulations governing
the initial provisioning process.  DOD recently revised its guidance to
stress the need to limit the initial procurement of spare parts, thereby
minimizing costs.  As of July 1993, the Air Force had already canceled
nearly $40 million of the $111.2 million worth of C-17 parts on order.
Although the prime contractor has not determined the cancellation costs
for canceled actions, one subcontractor estimated cancellation costs of
about $88,000 on $2.9 million worth of parts that were canceled.

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

 REPORTNUM:  NSIAD-94-63
     TITLE:  C-17 Aircraft Program: Improvements in Initial Provisioning 
             Process
      DATE:  01/21/94
   SUBJECT:  Spare parts
             Military aircraft
             Air Force procurement
             Procurement regulation
             Military inventories
             Military materiel
             Aircraft components
             Military cost control
             Procurement cancellation
             Military budgets
IDENTIFIER:  C-17 Aircraft
             
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