Defense Inventory: Air Force Item Manager Views of Repair Parts Issues Consistent With Issues Reported in the Past

Published by the Government Accountability Office on 2003-05-21.

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

United States General Accounting Office
Washington, DC 20548

                                   May 21, 2003

                                   The Honorable C.W. Bill Young
                                   Committee on Appropriations
                                   House of Representatives

                                   The Honorable Jerry Lewis
                                   Subcommittee on Defense
                                   Committee on Appropriations
                                   House of Representatives

                                   Subject: Defense Inventory: Air Force Item Manager Views of Repair
                                   Parts Issues Consistent With Issues Reported in the Past

                                   Since 1990 we have consistently identified the Department of Defense’s
                                   (DOD) management of secondary inventory (spare and repair parts,
                                   medical supplies, and other items to support the operating forces) as a
                                   high-risk area because inventory levels were too high and management
                                   systems and procedures were ineffective. In addition, DOD has attributed
                                   readiness problems to parts shortages. Previously, we reported on the
                                   wide variety of reasons for inventory of spare parts being above or below
                                   the levels needed to satisfy current inventory requirements.1 This is one in
                                   a series of reports addressing defense inventory vulnerabilities to fraud,
                                   waste, and abuse. You asked that we specifically obtain the views about
                                   defense inventory imbalances from item managers, i.e., those who are
                                   responsible for maintaining the right amount of inventory.2 This report

                                    U.S. General Accounting Office: Air Force Inventory: Parts Shortages Are
                                   Impacting Operations and Maintenance Effectiveness, GAO-01-587 (Washington, D.C.:
                                   June 27, 2001); Army Inventory: Parts Shortages Are Impacting Operations and
                                   Maintenance Effectiveness, GAO-01-772 (Washington, D.C.: July 31, 2001); Navy
                                   Inventory: Parts Shortages Are Impacting Operations and Maintenance Effectiveness,
                                   GAO-01-771 (Washington, D.C.: July 31, 2001); Defense Logistics: Much of the Inventory
                                   Exceeds Current Needs, GAO/NSIAD-97-71 (Washington, D.C.: Feb. 28, 1997); and Air
                                   Force Supply: Management Actions Create Spare Parts Shortages and Operational
                                   Problems, GAO/NSIAD/AIMD-99-77 (Washington, D.C.: Apr. 29, 1999).
                                    Item managers perform materiel management functions such as worldwide item
                                   distribution and redistribution, materiel requirements determinations, budget estimates,
                                   cataloging, repair programs, and other related functions.

                                   Page 1                                                   GAO-03-684R Defense Inventory
          responds to your request, and other work is being done for you under
          separate reports that address related issues. Our objective was to obtain
          from Air Force item managers their views on the reasons for and
          operational impacts of having repaired parts either above or below the
          levels needed to satisfy current inventory requirements, and compare them
          with the reasons and impacts found in our previous reports.

          We chose the Air Force for this review because of the large dollar value of
          repair parts in that service. To respond to your request, we conducted a
          survey of item managers overseeing 150 sample items—75 items we found
          to be below requirements (shortage) and 75 items we found to be above
          requirements (excess)—at the Air Force’s three air logistics centers (ALC)
          in Ogden, Utah; Oklahoma City, Oklahoma; and Warner Robins, Georgia.
          We then compared our results with those in our previous reports to
          determine whether there were any consistencies between the results
          regarding the reasons for imbalances and their operational impacts. The
          scope and methodology for our review is discussed at the end of this

          We found that the reasons and operational impacts item managers cited
Summary   for our sample items being either above or below the levels needed to
          satisfy current inventory requirements were similar to the reasons and
          impacts cited in our prior reports. For shortages, item managers often
          cited the lack of component parts and repair shop capacity/process
          problems. In our 1999 report, we discuss the Air Force’s effectiveness in
          providing inventory items to its customers, and identified component parts
          shortages as the most frequent cause of aircraft repair work not being
          done on time.3 For causes of excess items, the managers often cited a
          buildup of inventory to support a new program, or for an aircraft retrofit,
          modification, upgrade, or replacement. In 1997, we reported that a similar
          reason for inventory items being in excess—purchases made to support a
          system before it was activated—was common.4 The operational impacts
          cited by item managers were also similar to those given in our past work.
          As in the past, shortages were often cited as a contributing factor to
          reduced mission capability of aircraft or delays in planned maintenance.
          In addition, excesses were often cited as contributing to the consumption
          of warehouse space and related storage costs.


          Page 2                                         GAO-03-684R Defense Inventory
                            Maintenance and repair services for military aircraft are provided by the
Background                  Air Force’s three ALCs in Ogden, Utah; Oklahoma City, Oklahoma; and
                            Warner Robins, Georgia. These centers manage the supply of certain
                            repair parts as well as provide the primary source of repair for broken
                            items that can be repaired and returned to service. As supply managers,
                            the three ALCs manage almost 25,000 different reparable items. Repairs
                            are performed either by the center managing the item, by or with another
                            center, by a contractor, or by another military service. From those
                            25,000 reparable items, we identified nearly 9,500 items where the same
                            center was both the supply manager and the primary source of repair for
                            an item, and formed the basis for our sample items mentioned above.

                            Item managers responding to our survey provided multiple reasons and
Reasons for and             operational impacts for our sample items being either above or below the
Impacts of Spare            levels needed to satisfy current inventory requirements that were similar
                            to the reasons and impacts cited in our prior reports. Item managers’
Parts Imbalances            reasons for spare parts shortages were similar to past problems, and in
Cited by Item               roughly the same order of magnitude as previously reported. The reasons
                            for spare parts excesses, and the operational impacts of spare parts
Managers Similar to         imbalances, were also similar to those identified in our previous reports.
Previously Reported

Item Managers’ Reasons      Item managers provided similar reasons for shortages among our sample
for Spare Parts Shortages   items in about the same order of magnitude as we have previously
Reflect Similar Problems    reported. Table 1 lists categories of the most frequently cited reasons
                            provided by item managers for inventory shortages among our sample
of the Past                 items. Many of the reasons shown in the table may be caused by
                            unanticipated demands for parts, which is one of the primary reasons for
                            parts shortages cited in our 2001 report on the reasons for and impacts of
                            spare parts shortages on three selected Air Force systems.5


                            Page 3                                         GAO-03-684R Defense Inventory
                             Table 1: Item Manager Reasons for Reparable Parts Shortages
                                 Reason                                                              Number of responses
                                 Lack of component parts to complete the repairs                                       42
                                 Repair shop process and/or capacity problems                                          41
                                 Higher than expected condemnation rates of the part                                    9
                                 Broken items in the field not turned in to depot for repairs                           7
                                 Rarely used item                                                                       4
                                 Funding constraints                                                                    4
                             Source: GAO survey of Air Force item managers.
                              The response total exceeds the 75 shortage sample item total due to multiple reasons received from
                             item managers.

Lack of Component Parts      Air Force item managers, along with our prior work, indicate that the most
                             frequent reason for repair parts shortages is the lack of component parts.
                             These are the individual parts used to fix other spare parts. For example,
                             item managers cited a shortage of rotors and backing plates needed to fix
                             the brakes for the KC-135 and C-130 aircraft. Similarly, in our 1999 report
                             discussing the Air Force’s effectiveness in providing inventory items to its
                             customers, we found that component parts shortages were the major
                             cause of aircraft repair work not being done on time.6 We noted in that
                             report that there was a lack of several component parts, sometimes for
                             more than a year, for two radio band transmitters used in the B-1B aircraft.
                             Also, our 2001 report indicated that unanticipated demands for a machine
                             bolt on an aircraft engine caused a lack of component parts.

Repair Shop Process and/or   Parts shortages due to various shop process and/or shop capacity
Capacity Problems            problems were noted by both the item managers in our current review as
                             well as being an issue in prior reports. Shop process problems include
                             broken machines, a lack of personnel or experienced personnel, or the
                             process repaired the part the wrong way. For example, an inoperable
                             machine held up the repair of a high-pressure turbine rotor used in aircraft
                             engines. In another example, the existing repair process presented safety
                             issues and a new process was being developed to replace it. Shop capacity
                             problems are generally related to space constraints—such as for the lack
                             of space needed to repair an F-15 aircraft wing assembly—or for
                             competing demands for the same equipment or space. Furthermore, item
                             managers indicated that 13 of our selected 75 sample items had both shop


                             Page 4                                                         GAO-03-684R Defense Inventory
                       process and shop capacity problems. For example, the repair of an
                       F-15 countermeasure receiver was delayed due to a lack of testing
                       equipment (shop capacity) as well as a lengthy repair process that was
                       being reviewed to cut down on the repair time (shop process). Similar
                       issues, such as the lack of testing equipment and limited repair facility
                       capacity, were reported in our 2001 report.

                       As mentioned above, the most frequently cited reason for repair parts
                       shortages in the 2001 report was unanticipated demands, such as the
                       sudden demand for a part after no demands for 7 years. Two of the sample
                       items that item managers identified from our current sample as having
                       shop process and capacity issues had these problems due to unanticipated
                       demands. For example, an electronic countermeasure control device for
                       the B-52 and C-130 aircraft experienced a surge in demands after the
                       September 11, 2001, terrorist attacks. The repair facility did not have the
                       floor space to keep up with demand for this part.

Higher Than Expected   Both the current review and prior reports contained instances of either
Condemnation Rates     higher than expected condemnation rates or component reliability
                       problems that created parts shortages. Repair parts can only be repaired
                       so many times before they can no longer be repaired, and then they are
                       “condemned” as beyond repair. Anticipated condemnation rates are
                       formed from either engineering estimates or repair records.

                       In our review, item managers said that shortages of a C-130 aircraft
                       ballscrew assembly stemmed from very high condemnations for the last
                       3 years. Sometimes the higher condemnation rate was for a component
                       part of our sample item, and not the sample item itself. For example, item
                       managers said that a piston in a retractable landing gear experienced a
                       high condemnation rate, and, in another example, a roll pin encountering
                       high condemnations created a shortage for a C-5 aircraft landing gear
                       strut. Although our 2001 report did not indicate higher than expected
                       condemnation rates that led to parts shortages, it did report that the life of
                       some parts was shorter than the Air Force predicted. For example, a skid
                       detector for the C-5 aircraft failed faster than expected, experiencing a
                       50-percent increase in failures that exhausted the parts in stock before
                       they could be replaced.7


                       Page 5                                           GAO-03-684R Defense Inventory
Other Reasons for Shortages   The remaining three reasons in the above table represent more of the
                              variety of reasons contributing to parts shortages. In some cases, item
                              managers indicated that units in the field would keep broken items to be
                              used as spare parts to fix other broken parts. These broken items not
                              turned in to the repair facility for repair involve different items, such as a
                              circuit card assembly for a jammer in the F-15 aircraft, a turbine nozzle for
                              aircraft engines, and a B-1B aircraft rudder. Rarely used items are those
                              experiencing little or no demand, as in the case cited by an item manager
                              of no demand in 2 years for a test system’s circuit card assembly. Funding
                              constraints represented another reason for parts shortages. For example,
                              the lack of funds to increase the repair rate of an aircraft engine’s
                              compression rotors created a shortage of this item.

                              Our prior reports in 1999 and 2001 contained examples of unanticipated
                              demands (for example, no demands since 1993) causing parts shortages,
                              or repairs not being done when needed due to the lack of broken parts
                              returned from units in the field. One issue reported to some degree by
                              both our 1999 and 2001 reports that did not surface as an issue in our
                              current review was the transfer of repair work to current Air Force repair
                              facilities due to the closure of some Air Force repair facilities. Some
                              operational, personnel, and productivity problems experienced during that
                              closure were not specifically cited by item managers during our current
                              review as a factor influencing parts shortages.

Reasons for Excess Parts      Item managers provided a variety of reasons for repair parts excesses
also Identified in Previous   among our sample items that were similar to those identified in our
GAO reports                   previous reports. Table 2 lists categories of the most frequently cited
                              reasons for inventory excesses.

                              Table 2: Item Manager Reasons for Reparable Parts Excesses
                                  Reason                                                             Number of responses
                                  Buildup of repair parts to support a new program or for a
                                  retrofit, modification, upgrade or replacement                                        23
                                  Foreign Military Sales program requirements                                            8
                                  Low or decreasing demand for a part                                                    6
                                  Retirement or phasing out of an aircraft                                               5
                                  Other                                                                                 18
                              Source: GAO survey of Air Force item managers.
                              The number of reasons is lower than our 75 excess sample items because a number of item
                              managers responded that there were some items that were not in an excess condition.

                              Page 6                                                      GAO-03-684R Defense Inventory
                          The predominant reason for excesses cited by item managers was the
                          inventory buildup of repair parts to anticipate the future support for a
                          new program or for major changes in an existing program. This is similar
                          to our 1997 report where we reported that a common reason for inventory
                          items being in excess was purchases made to support a system before it
                          was activated.8

                          Foreign Military Sales program requirements or potential requirements
                          are cited as a contributing factor for excesses eight times. Item managers
                          told us that the Air Force stocks and services some reparable items that
                          are used to support systems sold to or anticipated to be sold to other
                          countries. These items include various radio items such as receivers and
                          transmitters for the F-111, and disk brakes for the F-16. Our 1997 report
                          indicated unneeded quantities in inventory for the wiring harness of an
                          airborne radio communication system. Although demand for this harness
                          decreased as modifications to the radio system were made, quantities
                          were being retained to support the military services, the Coast Guard, and
                          foreign military sales and to reconfigure other radios.

                          The most common reason cited in 1997—demands for an item decreased
                          or did not materialize—echoes our third most commonly cited reason, low
                          or decreasing demand for a part. Aircraft or system retirement was cited
                          as the third most common reason for excesses in 1997 and is fourth in our
                          current analysis.

                          Other reasons affecting only one or two of our sample items include a
                          repair made that was not required, program changes, or an item becoming
                          a throwaway item instead of one that would typically be repaired.

Impacts Cited by Item     Item managers cited operational impacts from the inventory
Managers Similar to Our   imbalances that were similar to impacts cited in our past reports.
Past Work                 Sometimes there was more than a single impact for some individual
                          items. Of the 75 shortage sample items, 38 had more than one impact
                          cited by item managers and there was no impact cited for 16 items. Of the
                          75 excess sample items, item managers cited no impact for 40 items.

                          One of the most frequently cited (41 cases) operational impacts of repair
                          parts shortages provided by item managers was some form of mission


                          Page 7                                         GAO-03-684R Defense Inventory
                  impairment at one time or another that kept a weapon system from
                  performing its mission. For example, the previously mentioned shortage
                  of rotors and backing plates needed to fix the brakes for the KC-135 and
                  C-130 aircraft due to a lack of component parts caused both aircraft to be
                  unavailable for flying. Although in our 2001 report we selected all sample
                  items from three Air Force systems because each item caused mission
                  capability problems, the causes of many of these problems—such as
                  unanticipated demands, parts production problems, or component
                  reliability—were similar.9

                  Item managers cited 14 parts shortages that led to delays in planned
                  maintenance. For example, one ALC was always behind in providing C-5
                  aircraft retractable landing gears for the scheduled maintenance lines. In
                  our 1999 report, repairs not being done when needed were cited as an
                  impact of component parts shortages.10 In 54 cases, item managers cited
                  unfilled or empty stock levels resulting from parts shortages, thus
                  contributing to the ALC’s inability to meet the stocking requirements for
                  the aircraft or system it serviced. For example, one center had no shelf
                  supply of a retractable landing gear for the B-52 bomber.

                  Air Force item managers did not cite nearly as many impacts of parts
                  excesses. However, in 28 cases item managers cited the consumption of
                  warehouse space for parts that were in excess of inventory requirements.
                  While some item managers cited space problems, others cited the related
                  costs associated with storing excess items. Among a number of items in
                  these categories are engine blades and shafts, landing gear pistons, C-141
                  aircraft rear access doors, and B-52 bomber electronic warfare circuit
                  cards. What is not clear from item manager survey responses, however, is
                  how these warehousing space and cost issues would be any different if the
                  quantities of the item had not exceeded repair requirements.

                  Eight other items contained miscellaneous impacts, such as two items
                  needing fewer repairs than expected, namely the ignition component of an
                  aircraft engine and the F-16 aircraft’s radar signal processor.

                  In written comments on a draft of this report, DOD stated that it generally
Agency Comments   concurred with the draft report. DOD’s comments can be found in
                  enclosure I.


                  Page 8                                          GAO-03-684R Defense Inventory
              To identify reasons repaired parts are in a short or excess condition (by
Scope and     comparing available worldwide assets to worldwide requirements at one
Methodology   point in time), we selected 25 items of each type from those repair parts
              both supplied and repaired at each of the following ALCs: Ogden, Ogden,
              Utah; Oklahoma City, Oklahoma City, Oklahoma; and Warner Robins,
              Warner Robins, Georgia. For each group of 25 items, we selected 20 items
              from among the highest dollar value of shortages or excesses. The other
              five items in each group were selected randomly. Using a structured
              questionnaire, we held on-site discussions for this 150-item sample with
              86 item managers to identify reasons for and operational impacts of the
              excesses and shortages, among other points. We looked at collaborating
              data obtained via the questionnaire to assure ourselves that other factors,
              such as production data and procurement history, did not conflict with the
              reason and impact data. We did not independently verify the responses we
              received from item managers. We also reviewed our past work to
              determine if similar reasons were previously identified for shortages
              and excesses.

              We also met with officials of the Air Force Materiel Command,
              Wright Patterson Air Force Base, Dayton, Ohio.

              We performed our work from November 2001 through February 2003 in
              accordance with generally accepted government auditing standards.

              We are sending copies of this report to the Honorable Donald Rumsfeld,
              Secretary of Defense, and interested congressional committees. The
              report will also be available at no charge on GAO’s Web site at

              Page 9                                         GAO-03-684R Defense Inventory
We appreciate the opportunity to be of assistance. If you or your staff have
any questions regarding this letter, please contact me at (202) 512-8365 or
Lawson “Rick” Gist, Jr., Assistant Director, at (202) 512-4478. Other key
contributors to this review were Gerald Thompson, Jay Willer, and
R.K. Wild.

William M. Solis, Director
Defense Capabilities and Management

Page 10                                         GAO-03-684R Defense Inventory
                     Enclosure I: Comments from the Department
Enclosure I: Comments from the Department
                     of Defense

of Defense

           Page 11                                           GAO-03-684R Defense Inventory
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