Defense Supply: Controls Over Hand Tools Can Be Improved (Letter Report,
01/27/95, GAO/NSIAD-95-44).
The Defense Department (DOD) each year buys significant quantities of
hand tools, such as wrenches and screwdrivers, to do maintenance and
repair work at military installations worldwide. However, GAO was unable
to determine the extent of unnecessary purchases and losses of hand
tools because DOD has insufficient cost data to identify and track tools
purchases and inventory levels, as well as costs associated with
missing, lost, and stolen tools. DOD and the military services have not
provided enough guidance and oversight to ensure that hand tools are
adequately safeguarded and controlled at military units. Further, GAO
visited military units and found that (1) personnel were allowed to buy
tools without prior authorization; (2) tool purchases could not be
identified and traced to inventory records; and (3) discrepancies
existed between inventory records and actual tool quantities. GAO also
found that Air Force operating units were buying new warranted tools to
replace perfectly good tools and, contrary to regulations, were using
local purchases to buy the same warranted tools that were available
through normal DOD supply channels. In August 1994, Air Force
headquarters sent a message to all of the major commands advising them
of GAO's findings and reminding them to comply with established policies
and procedures.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-95-44
TITLE: Defense Supply: Controls Over Hand Tools Can Be Improved
DATE: 01/27/95
SUBJECT: Internal controls
Military inventories
Military procurement
Accounting procedures
Inventory control
Military cost control
Military materiel
Losses
Military bases
Logistics
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Cover
================================================================ COVER
Report to Congressional Requesters
January 1995
DEFENSE SUPPLY - CONTROLS OVER
HAND TOOLS CAN BE IMPROVED
GAO/NSIAD-95-44
Hand Tool Controls
Abbreviations
=============================================================== ABBREV
DOD - Department of Defense
GSA - General Services Administration
Letter
=============================================================== LETTER
B-259057
January 27, 1995
The Honorable Floyd D. Spence
Chairman
The Honorable Ronald V. Dellums
Ranking Minority Member
Committee on National Security
House of Representatives
The Honorable James V. Hansen
The Honorable Norman Sisisky
House of Representatives
The Department of Defense (DOD) buys hand tools (such as wrenches and
screwdrivers) for use in performing maintenance and repair work at
military installations worldwide. In fiscal year 1993, DOD spent
about $155 million to purchase tools from the General Services
Administration (GSA), the federal manager for hand tools. Military
units spent an additional undeterminable amount for local tool
purchases.
As requested by the former Chairman and Ranking Minority Member of
the Subcommittee on Oversight and Investigations, House Committee on
Armed Services, we reviewed the controls over hand tools in each of
the military services. Specifically, we determined (1) the adequacy
of policies and procedures for preventing the loss or unnecessary
purchase of hand tools; (2) if information is available on the costs
associated with missing, lost, and stolen hand tools; (3) how well
installations and operating units are controlling these tools; and
(4) the extent these controls are being reviewed. The specifics of
our scope and methodology appear in
appendix I.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
DOD buys significant quantities of hand tools each year. However, we
were not able to determine the extent of unnecessary purchases and
losses of hand tools because DOD has insufficient cost data at the
headquarters, command, and installation levels to identify and track
tool purchases and inventory levels, as well as costs associated with
missing, lost, and stolen tools. DOD and the military services have
not provided sufficient guidance and oversight to ensure that hand
tools are adequately safeguarded and controlled at military operating
units.
Military units, in turn, do not have adequate internal controls and
records to properly account for tool purchases and inventories. We
visited selected military units and found situations where (1)
personnel were allowed to purchase tools without prior authorization;
(2) tool purchases could not be identified and traced to inventory
records; and (3) discrepancies existed between available inventory
records and actual tool quantities.
We also found that Air Force operating units were buying new
warranted tools to replace perfectly good tools and, contrary to
regulations, were using local purchases to buy the same warranted
tools that were available through normal DOD supply channels. On
July 28, 1994, we sent a letter to the Secretary of the Air Force
recommending that she direct Air Force units to (1) replace only
unserviceable tools with warranted tools so that existing tool
inventories can be effectively used and (2) use local purchases only
when needed tools cannot be obtained through normal supply channels.
On August 25, 1994, Air Force headquarters sent a message to all of
the major commands advising them of our findings and recommendations
and reminding them to comply with established policies and
procedures.
BACKGROUND
------------------------------------------------------------ Letter :2
DOD buys hand tools for a wide range of maintenance and repair
activities that include maintaining everything from facilities and
vehicles to aircraft and ships. DOD buys tools either from GSA or by
local purchase. DOD regulations state that use of established supply
sources, such as GSA, should be maximized. If the supply system
cannot be used, local purchases may be considered if they are in the
best interest of the government in terms of the combination of
quality, timeliness, and cost.
DOD aircraft maintenance units use silhouetted tool boxes and
displays, which contain shadow drawings of the tools, to control
tools at the user level and prevent foreign object damage to aircraft
resulting from tools left in or on an aircraft during maintenance.
Generally, the tool box or kit has a foam insert in each drawer that
is cut and shaped to the size of the tools to facilitate the physical
inventories taken at the time a mechanic checks out and returns the
tool box to the tool room (see fig. 1.) Other military units, such
as artillery and transportation units, use tool boxes that do not
maintain the tools as neatly and are less easily inventoried.
(See figure in printed edition.)Figure 1: Composite Tool Box at
Langley Air Force Base Illustrating the Cut Out Silhouette for Each
Tool
Executive agencies are required to establish and maintain systems of
internal controls that provide reasonable assurance that resource use
is consistent with applicable laws, regulations, and policies;
resources are safeguarded to prevent waste, loss, and misuse;
transactions and other events are adequately documented and fairly
disclosed; and resources are accounted for. With regard to hand
tools, basic internal controls should include prior authorization of
specific tool purchases by an individual knowledgeable of a unit's
tool needs; independent checks to ensure that tool purchases are
properly received; and accurate inventory records to reflect tool
receipts, issues, and on-hand quantities.
DOD DOES NOT PROVIDE ADEQUATE
GUIDANCE
------------------------------------------------------------ Letter :3
DOD has not issued guidance establishing controls over hand tools at
the user level. DOD does have overall guidance for the physical
security of government property located at military installations,
but the guidance does not contain specific procedures for controlling
tool purchases, inventories, and related receipts and issues.
The military services also have not provided adequate guidance to
installations and operating units. Other than requiring periodic
physical inventories, the guidance does not provide specific controls
over hand tools. The Air Force has recognized the need for better
guidance and, in November 1993, established an Air Force Tool
Committee to develop new guidance for use Air Force-wide.
Although guidance on tool purchases and inventories is lacking, the
military services have issued guidance to prevent foreign object
damage to aircraft from tools left on or in aircraft during
maintenance. Air Force mechanics are required to sign out for tool
kits or individual tools, and an inventory of the tools is performed.
After the work is completed, the mechanics return the tools, and the
contents again are inventoried to ensure that none are left in the
aircraft. The Navy and the Marine Corps use a similar system to
prevent foreign object damage.
COST INFORMATION IS NOT
UNIFORMLY MAINTAINED
------------------------------------------------------------ Letter :4
DOD has insufficient cost data at the headquarters, command, and
installation levels to identify and track hand tool purchases,
inventory levels, and losses. Also, because the military services
consider hand tools to be expendable items representing small dollar
values, losses that are identified by operating units often are not
reported to investigative organizations and higher commands.
DOD headquarters does not maintain cost information reflecting hand
tool purchases, inventory levels, and losses. DOD does report
information on losses of all government property annually to the
Congress, but DOD officials told us that the reported information
includes very limited data on hand tools because such losses often
get little visibility and generally do not meet the minimum reporting
threshold of $1,000 per incident.
Representatives at the headquarters of all of the military services
and the commands we visited also told us that they do not receive or
maintain information that reflects hand tool purchases, inventory
levels, or losses. The representatives stated that they do not
manage down to that level and that such information only would be
available at the installation level. However, we visited Fort Bragg,
Oceana Naval Air Station, Langley Air Force Base, and Camp Lejeune
Marine Corps Base and found that data were very limited at the
installation and operating unit levels.
At our request, certain units compiled data on the amount of recent
tool purchases. For example, one unit at the Oceana Naval Air
Station was able to provide lists of individual tool purchases for 20
months that totaled $25,844. However, most of the installations and
units visited did not know the value of the tool inventories and
could not provide complete data on tool purchases. For example,
units at Camp Lejeune had data reflecting the number and types of
tools owned but did not know the value of the tool inventories.
Agents at the security investigating organization of each
installation told us that they maintain a log of all investigations
of suspected stolen government property but do not report such losses
to anyone. The logs, which are used to monitor trends in thefts and
other crimes, include very little information on tool losses.
Reports prepared to document losses of government property and
provide the basis for an investigation of the reasons for the losses
generally were not prepared for tools due to the small dollar values
involved. At Langley Air Force Base, for example, these reports had
not included any hand tools for the past 2 years.
TOOL PURCHASES AND INVENTORIES
ARE NOT PROPERLY ACCOUNTED FOR
------------------------------------------------------------ Letter :5
The absence of adequate management guidance has contributed to a
general lack of basic internal controls at individual installations
and operating units. We identified weaknesses in basic internal
controls at each of the four installations and eight operating units
we visited. These weaknesses related to purchase authorizations and
inventory record-keeping.
AUTHORIZATION FOR SPECIFIC
PURCHASES NOT REQUIRED AT
AIR FORCE UNITS
---------------------------------------------------------- Letter :5.1
All units we visited required prior authorization for specific tool
purchases except for the two units at Langley Air Force Base.
Instead, personnel used a blanket authorization from the unit that
was entered into the base service store's computer system. One
squadron we visited authorized six persons to buy tools at the base
service store, and the other, smaller unit we visited authorized two
persons to buy tools.
Some of the personnel authorized to purchase tools also were
responsible for establishing the tool requirements for the unit.
Further, unit personnel not involved in the purchases did not
routinely check to see that the unit actually received the tools.
Without these controls, there was no assurance that the purchases
were necessary or that the unit received the tools.
INVENTORY RECORDS ARE
INADEQUATE
---------------------------------------------------------- Letter :5.2
At all units we visited, either inventory records were inaccurate or
no records were available that could be used to identify and track
hand tool purchases and related receipts, issues, and on-hand
quantities.
The only records the Army units we visited at Fort Bragg could
provide were (1) copies of a register showing a list of all items
purchased by the units, including hand tools, and (2) hand receipts
showing the authorized and on-hand quantities of tools in tool rooms,
trailers, and boxes that were assigned to specific individuals in the
units. No inventory records were available to show tool receipts and
issues or the disposition of the purchases.
The Air Force units we visited at Langley Air Force Base did not have
records showing receipts and issues. They only had
computer-generated lists of the current inventory of tools in each
tool box or tool room drawer. Some of these lists were not dated and
did not accurately reflect the total number of tool boxes on hand.
For example, one unit's undated documentation stated that six
avionics tool boxes with 65 tools in each box were on hand. However,
our physical inspection disclosed that 10 tool boxes were on hand.
The Marine Corps units we visited at Camp Lejeune did not have
inventory records showing tool purchases and related receipts and
issues. Both units had stock lists of tools in each tool box. One
unit also had hand receipts for spare tools in the tool room, and the
other unit had inventory cards for the spare tools.
One Navy unit at Oceana Naval Air Station had established an
automated system for monitoring on-hand quantities of tools in its
tool room and tool kits. However, this system did not reflect tool
receipts and issues. The other Oceana unit had set up a manual
inventory record system about
6 months prior to our visit to get better control over purchases,
receipts, issues, and inventory levels for the tool room. However,
we found that the records were not accurate. For example, some tool
purchases were not entered on the inventory record cards before they
were issued to users. In June 1994, the squadron commander revised
the unit's procedures to tighten the controls over tool purchases and
inventories.
We made several physical counts at each operating unit we visited to
test the accuracy of the records that were available. We found
inaccuracies at each unit, with discrepancy rates of up to 68
percent. In total, the records for 99 of 515 tools in the tool rooms
(19 percent) were inaccurate, and the records for 173 of 2,700 tools
in the tool boxes (6 percent) were inaccurate. For example, the
inventory records at one unit indicated that nine diagonal cut pliers
were on hand, but our physical count showed that six pliers actually
were on hand.
We requested the results of physical inventories by the military
services and found that they often were not documented. Personnel in
the Air Force and Navy units and one of the Marine Corps units stated
that they conducted physical inventories but did not maintain
documentation of the results of these inventories. Personnel in the
Army units and one of the Marine Corps units told us that they
conducted the required periodic physical inventories and that the
results were reflected on hand receipts. We reviewed the documents
and noted that some missing tools had been identified.
OVERSIGHT EFFORTS HAVE BEEN
LIMITED
------------------------------------------------------------ Letter :6
DOD has provided only limited oversight to determine how effectively
installations and operating units control tool purchases and
inventories since the last comprehensive DOD Inspector General review
of this area was performed over 10 years ago. This review identified
a need for better procedures and controls. No comprehensive reviews
have been made since that time, and audit efforts have been limited
to local reviews at individual installations. During recent years,
the Army and Navy audit agencies have done only one or two local
audits while the Air Force audit agency has performed 35 local audits
since 1989. The audits identified problems with the controls over
hand tools.
Routine inspections and surveys by command level management and
inspector general staff also generally do not include an evaluation
of tool procedures and controls. For example, an inspector general
representative of the Air Force's Air Combat Command told us that the
inspector general's policy is not to perform compliance type
inspections and reviews and that the staff did not have any knowledge
of the adequacy of hand tool controls. We did find that the Marine
Corps' Field Supply and Maintenance Analysis Office performs periodic
inspections at units, which include tool controls. The inspections
disclosed deficiencies in these controls during the past 3 years
relating to the lack of inventory records, absence of physical
inventories, and accumulation of excess tools.
RECOMMENDATIONS
------------------------------------------------------------ Letter :7
We recommend that the Secretary of Defense take the following actions
to ensure that hand tool purchases and inventories are adequately
controlled:
Require that the military services and major commands provide
guidance to installations and operating units specifying the needed
internal controls over hand tools. These controls should include
requirements for prior authorization of tool purchases and
maintenance of accurate inventory records that reflect tool receipts,
issues, and quantities on hand.
Require that inspector general and internal audit staffs incorporate
controls over hand tools into the periodic inspections that are
performed at installations and operating units.
We are not recommending that DOD and the military services obtain and
report overall cost information on tool purchases, inventory levels,
and losses. If military units put adequate internal controls in
place, including accurate inventory records, such information should
be readily available at the installation and unit levels.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
DOD agreed that, to varying degrees, the military services' policies
and procedures governing the purchase and accountability of hand
tools are inadequate (see app. II). DOD also agreed that internal
controls should be reviewed by the services and strengthened as
necessary. By March 31, 1995, DOD expects to issue a memorandum to
the military services directing that closer scrutiny be paid to hand
tool accountability and that regulations, policies, and procedures
governing hand tool purchases be strengthened. The memorandum also
will direct that each military service secretary advise their
inspector general and internal audit staffs to incorporate control of
hand tools in periodic inspections at installations and operating
units.
Although generally agreeing with our report, DOD did question some
aspects. DOD believes that our findings were insufficient to
indicate a systemic problem with inadequate inventory accountability
and record-keeping. DOD also believes that our findings reflect a
problem with implementation of existing guidance and that no
additional guidance is needed for existing hand tool inventories.
Because our review was limited to four installations and eight
operating units, we cannot state unequivocally that our findings
indicate a systemic problem. However, we did identify problems at
each location visited, which would indicate to us that similar
problems may exist elsewhere. With regard to the adequacy of
guidance, we continue to believe that additional guidance is needed.
Personnel at the units visited consistently stated that one of the
reasons for the problems we noted was the lack of guidance specifying
the internal controls needed for receipts, issues, and inventories at
the operating units. Furthermore, individual services, such as the
Air Force, acknowledge the need for better guidance.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Chairmen and Ranking
Minority Members, House and Senate Committees on Appropriations,
Senate Committees on Armed Services and on Governmental Affairs, and
House Committee on Government Reform and Oversight; the Secretaries
of Defense, the Army, the Navy, and the Air Force; and the Director,
Office of Management and Budget.
Please contact me at (202) 512-5140 if you have any questions. The
major contributors to this report are listed in appendix III.
Mark E. Gebicke
Director, Military Operations and
Capabilities Issues
SCOPE AND METHODOLOGY
=========================================================== Appendix I
We reviewed the Department of Defense's (DOD) and the military
services' policies and procedures for controlling hand tools. We
discussed program operations, guidance, and oversight with officials
at the headquarters of DOD and each of the military services and
obtained overall program data when available. We also visited the
General Services Administration to discuss its functions as federal
manager for hand tools and to obtain available information on tool
sales to DOD.
We visited one installation in each of the military services--Langley
Air Force Base, Virginia; Oceana Naval Air Station, Virginia Beach,
Virginia; Fort Bragg, Fayetteville, North Carolina; and Camp Lejeune
Marine Corps Base, Jacksonville, North Carolina-- to review controls
over hand tools. At each installation, we (1) requested overall
information on hand tool purchases, inventories, and losses and (2)
visited two operating units to evaluate internal controls over hand
tools. We visited the following units at each installation:
Langley Air Force Base
94th Fighter Squadron, 1st Fighter Wing
72nd Helicopter Squadron, 1st Fighter Wing
Oceana Naval Air Station
Aircraft Intermediate Maintenance Department
Fighter Squadron VF-41, Fighter Wing, U. S. Atlantic Fleet
Fort Bragg
2nd Battalion, 504th Parachute Infantry Regiment, 82nd Airborne
Division
546th Transportation Company, 189th Maintenance Battalion, 1st Corps
Support Command
Camp Lejeune Marine Corps Base
1st Battalion, 10th Artillery Regiment, 2nd Marine Division
At each unit, we (1) discussed internal controls with unit personnel,
(2) reviewed available documents related to tool purchases and
inventories, and (3) made physical counts to test the accuracy of
inventory records.
We also contacted the major command responsible for each installation
visited and obtained overall information related to hand tools. As
part of our evaluation of management oversight, we contacted
inspector general offices, military audit services, and investigative
organizations to discuss their oversight of hand tool controls and
review audit, inspection, and investigative reports.
We performed our review between February and October 1994 in
accordance with generally accepted government auditing standards.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
=========================================================== Appendix I
(See figure in printed edition.)
Now on pp. 1-3.
(See figure in printed edition.)
Now on pp. 3-4.
(See figure in printed edition.)
(See figure in printed edition.)
Now on pp. 4-5.
(See figure in printed edition.)
(See figure in printed edition.)
Now on pp. 5-7.
(See figure in printed edition.)
Now on p. 7.
(See figure in printed edition.)
Now on pp. 7-8.
Now on p. 8.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C.
James Murphy, Assistant Director
NORFOLK REGIONAL OFFICE
Larry Peacock, Evaluator-in-Charge
Linda Koetter, Evaluator
Dawn Godfrey, Evaluator