GAO: Army system for tracking repair shipments substandard
Poor inventory controls place shipped items at risk of loss or theft, report says.
The Army does not maintain an accurate accounting of equipment shipped to contractors for repair, leaving it vulnerable to loss or theft, according to a recent report from congressional auditors.
The Government Accountability Office report (GAO-06-209), sent to Congress Dec. 13, 2005, and released publicly later in the month, found that the Army fails to consistently follow Pentagon policy in recording shipment receipts in its inventory management systems.
In analyzing fiscal 2004 shipment data from two of the Army's three inventory control points -- the Army Aviation and Missile Command and the Army Tank-Automotive and Armaments Command -- GAO found that the Army could not confirm that an estimated 42 percent of the unclassified repair shipments, valued at $481.7 million, and 37 percent of the classified repair shipments, valued at $8.1 million, were actually received by contractors.
Repair contractors surveyed by GAO were able to confirm receipt of all but about 15 percent of the unclassified shipments, valued at about $68 million. Contractors were able to confirm receipt of all classified shipments, according to the GAO review, which was conducted from October 2004 to November 2005.
GAO cited an example of a repair shipment of 30 aircraft rotary wing components worth $8.3 million. A receipt confirming this shipment was not in the Army's inventory management system and the contractor could not provide a record of receiving the shipment. Its status remains uncertain, the auditors said.
In fiscal 2004, the two inventory control points shipped more than 70,000 items worth about $970 million to repair contractors. Shipments can contain anything from circuit card assemblies to large turbine engines.
The third inventory control point--the Army Communications-Electronics Command--was not included in the survey because, at the time, its inventory management system was undergoing maintenance.
The Army's inventory control points lack systematic procedures for accounting shipments and fail to provide the Defense Contract Management Agency with required quarterly reports that would give the status of shipments, increasing the risk of the items going missing and resulting in the unnecessary purchase of items, according to GAO.
The Defense Department generally agreed with GAO's report.
Since 1990, GAO has considered the Pentagon's supply chain and inventory management to be a high-risk area due to poor management systems and procedures. This report is the third and last in a series that has focused on inventory management for shipments to repair contractors.
A July 2002 report (GAO-02-617) found that the Air Force lacked effective controls for equipment shipped for repair. And in July 2004, GAO found that the Naval Inventory Control Point and its repair contractors failed to follow Pentagon procedures for maintaining accountability in the delivery process (GAO-04-779).