Review of the Material Utilization Program at the Defense Logistics Services Center

Published by the Government Accountability Office on 1971-10-06.

Below is a raw (and likely hideous) rendition of the original report. (PDF)



    3             Dear     o Seeretav:    B

                        Our recent rev%ew of the material utilization  prograsn at the
               J Defense Logist%cs Services Center (DISC) and f%ve imentory con- ::->r:"/
                 trol po5xts showed that substantial    imprcmments have been achieved
                 since our last rexdew in 196Be Inventory control points are 2mprov-
                 Brag the accuracy of Iufomation   reported to DISC aud are advistig
                 IX-SKh-on a more timely bas%s-- of material accepted, rejected, and
                 shzipments denied.
                         aping ftscal years 1969 - 1.971, material valued at $173
                  milliona was transferned withIn and betweeu serv%ees under the cen-
                  tralized    screeM.ng program. In 1969, matedah transferred  was val-
                  ued at $5l.9 mzUfon, while in 1971 ft had increased to $68.1tillion.
                  !iW.s represents an increase of about 3l. percent.
                        however, we belleve the program could be more effective   if I&SC
                  were to screen regtirements for the Defense Supply Agency (ISA) as
                  it t3oes for the other military  activities.   We believe the fnclusiou
                  of ESA reqltiremeuts under the centralized   screening program would
                  eliminate the meed for separate screen&ngs now petiomed by TEA
                  centers e
                        During OUT revdew, we noted that actions taken by the Army and .' :.
                 Air Force have        oved the amuracy of the 5nfomation they are re- ?:'
                 portLl.ng to Jlrxsc. On the other hand, we noted that the Navy has not 4-
               4 Improved the accuracy of its iuformation.
                        We are advlsdng you of these matters so that needed management
                  attent%on WEU be given to them to further Increase the effectfve-
                  ness of the matertil  utilfzatiou program.

                        As a meaus of more effectively   determiniplg whether material
                   was available 5x1 oue servfce to satisfy the need of another service,

                                         50TH ANNIVERSARY 1921-

    DGDassigned IKSC the responsibility    of establishing,   operating, and
    mabta%8lhg a centralized    screentig program, Under thk screen%ng
    program, each milrH$ary service kvemtory control pofnt Informs T&SC
    regarding material. ft needs and assets available for transfer,      From
    that &nformation, '&SC detexm%nes whether tmsfers       of material can
    be made and notU’fes the organization that needs mater%1 where it
    can obtain It.

          Tixms In certatn federal supply classes have been assigned for
    sole management to des      ted EEA centers. 'Hhose ?EA centers nor-
    mally have the canplete bformahtiolz on defense-wide reqtirements and
    avaflabU.ity  of stock for those Pkms without resorting to a special
    screening programd
          However, as early as 1966, EBA recognized that assets supposedly
    under tts sole management were being reported to the I&SC screen3ng
    program by m%l8tary service inventory contx?oP points.   To preclude
    concurrent buy%ng and selling of those assets, ESA set up a system
    whereby assets reported for centralized   screening are reviewed to
    determine whether they have been assigned for sole management.
    Assets thus identiffed  are reported to the applicable DA center
    where they are screened to detemzine whether they are needed. This
    double screening has Increased the use of excess material.     For
    example, %n 1970 the I&SC screentig process id.entWLed over $l millfan
    wotih of assets whtch were needed by one DSA center to meet its re-
    qutiements 0
          The BLSC screentig paeogram is operaking effectively  for the Army,
    Navy, ATr Force, and rine Corps and could be just as effective’ for
    the IEA centers 3.f they reported thefr requirements to I&SC. Inclu-
    sion of E3A center regtiements    in the DISC screen%ng program wofid
    eH.d.nate the need for the double screening.

          B 1968, we reported that        ormation suhm3tted to I&SC was
    not always accurate.   Our current review showed that the Army and
    Air Force activB=3es are now report%ng more dependable data, but
    the Havy is not. Because of %ts Waccwkate S.nform.t%on, the Navy
    $n fiscal year 1969 was unable to sh%p 68 percent of the dollar
    value of reqtis5.tions  received for assets they had repotied to I&SC
    as available for transfer.     In fiscal year 19'7l., the &v-y was unable
    to sh%p 80 percent of %ts reqti&.t%ons.

L         3 ~-163478

                     The Navy's inability   to fill requisitions    was due in large part
               to inaccurate asset and requirements data reported by the Navy Aviation
               Supply Office (ASO). Some of the data were submitted to DLSC even
               though they were known to be inaccurate,        Other data were considered
               by AS0 officials   to contain such errors that they were withheld
               completely from DLSC.

                     Inaccurate information   results in the reporting of incorrect
               quantities   available for redistribution   and misleading data regard-
               ing needed material,,   We believe that the Navy should place increased
               emphasis on submitting accurate data to DLSC,
                      We believe that the inaccurate information   submitted by AS0 re-
                sulted in part from its failure to maintain historical     records which
               are necessary for adequate management. ASO's computerized supply
                system is designed to operate on a real-time basis, and provisions
               have not been made for maintaining readily available historical      files.
               Once a decision has been made and the records updated, the basis for
               the decision is lost,     No historical  record has been provided for
               determining whether any action was taken, whether the action taken
               was appropriate,    or whether the action was based on accurate data.
                      In our opinion, historical records are essential     in any supply
               system because an item's past activity    is the principal    basis for
               projecting   future requirements,  Moreover, without these data, AS0
               management cannot adequately evaluate how effective      they have been
               in carrying out their assigned mission.
          .r        We recommend that you require DSA centers to submit their needs            '27
               to DLSC for screening under the centralized    screening program. To
               hold offer rejects and shipment denials to a minimum, we recommend
               that the Navy be directed to place greater emphasis on improving
               the accuracy of data submitted to DLSC, In addition,      we recommend
               that AS0 incorporate    in its computer system the capability   to main-
               tain historical   data.
                     The above recommendations are subject to the     provisions of
               Section 236 of the Legislative  Reorganization Act     of 19'70. We
               will appreciate receiving copies of the statements      you furnish
               the specified committees in accordance with these      provisions.
                     If you desire, we will be glad to discuss these matters      in
               greater detail with you or with your staff.

    -   ~-163478

             Copies of this letter are befng sent to the Secretaries of the
        Army, Navy, and A%r Force, and to the Director, Defense Suprply
                                                Sincerely   yours,

        The ffonorable
        The Secretary    of Defense