Army Maintenance: Clearer Guidance Needed to Ensure Programs Reflect Current Requirements

Published by the Government Accountability Office on 1990-08-13.

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


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                                                                                                              Clearer Guidance
                                                                                                              Needed to Ensure
                                                                                                              Programs Reflect
                                                                                                              Current Requirements


                                                          _.-..I-.--_--.-----.-.--------                       .__-._
             United States
             General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             August 13,lQQO
             General William G. T. Tuttle, Jr.
             Headquarters, Army Materiel Command
             6001 Eisenhower Avenue
             Alexandria, Virginia 22333-0001
             Dear General Tuttle:

             At the request of the Chairman of the Subcommitteeon Readiness,
             HouseCommittee on Armed Services,we recently completed a review of
             the Army’s processfor determining depot maintenancerequirements. At
             two of the Army’s six buying commands-the U.S. Army Tank-
             Automotive Command(TACDM)and the U.S. Army Aviation Systems
             Command(AvscoM)-we examined how the Army determined secondary
             item requirements for repair programs.’ In this follow-on report, we
             addressthe issue of whether controls were in place to ensure that repair
             programs established at Army depots were basedon current

             The Army’s processfor determining depot repair programs begins with
Background   budget projections included in the President’s budget presented to the
             Congressin January of each year. The depot repair programs are then
             refined at the start of each fiscal year when the buying commands
             define the actual quantities they need to repair. The buying commands
             enter into written Memorandumsof Agreement (MaA) with Army depots
             establishing the quantities of assetsthey consider most crucial to be
             repaired during the fiscal year. The items are selectedfor inclusion in
             the MOA basedon their potential impact on Army readinessand/or high-
             dollar value. Oncethe fiscal year repair programs begin, the commands
             and the depots participate in quarterly production reviews of all MOA
             TACOMhas provided   guidanceto item managersthat addressesthe need
             to use current requirements data when establishing depot maintenance
             requirements for use in budget submissions,which are prepared about
             10 months prior to the MOA.AVSCAIMguidance requires item managersto
             review and validate repair requirements quarterly. However, neither

             ‘Arm Maintenance:Concernsover the Validity of DepotRequirementsand Backlogs
             @ih’SfiD   _90_194BR, July 24,199O). .

             Page1                                       GAO/NSIAD-~~-~~~A~I~

                        command’sguidance specifically states that requirements need to be
                        updated when establishing MOArepair program quantities or that
                        updated requirements are to be consideredduring the quarterly produc-
                        tion reviews. Officials at both buying commandsagreedthat even
                        though the guidance is unclear on this issue, item managersshould be
                        using current requirements information to prepare the MOAS.

                        Our review indicated that the two buying commandslacked effective
Results in Brief        controls to ensure that repair programs established at Army depots
                        were basedon current requirements data. Specifically, requirements for
                        somedepot repair programs at these commandshad been established
                        using outdated data. Basing program decisionson such data has resulted
                        in the expenditure of money in somecasesto repair more items than
                        were neededto satisfy current requirements. In other casesthe com-
                        mands repaired fewer items than needed.In 1987, the Army Audit
                        Agency found a similar problem at the U.S. Army Communications-
                        Electronics Command.The Army Audit Agency reported that the com-
                        mand had failed to review and adjust maintenanceprograms to coincide
                        with changing requirements. The problems at the two commands,cou-
                        pled with the prior Army Audit Agency finding, indicate that the situa-
                        tion warrants your attention.

                        Our review of 31 judgmentally selectedsecondaryitems (23 from
TACOMand AVSCOM         TACOM'SM~A and 8 from AVSCOM'S    M~A) showed that MoA quantities for 13
Establish Repair        (42 percent) were basedon current updated requirements data. As
Requirements Using      detailed in appendix I, the requirements for the remaining 18 items
                        (68 percent) were computed 8 to 19 months prior to the preparation of
Outdated Information    the M~AS.In 16 of the 18 cases,more current information was available
                        at the time the MOASwere prepared. In the remaining two cases,the
                        requirements had not been updated since the MOAquantities were origi-
                        nally established.
                         Of the 23 items we examined from TACOM'Sfiscal year 1989 MOA,repre-
                         senting about 44 percent of the MOAitems, we found that repair program
                         quantities for 12 of the items had beenbasedon requirements reflected
                         in supply control studies that were 9 to 16 months old when the MOAwas
                         prepared. For 3 of the 12 items, quantities were adjusted after the MOA
                         was prepared to reflect more current requirements. Repair programs for
                         the remaining nine items, however, were basedon outdated require-
                         ments information. As a result, as shown in table 1, repair programs for
                       , six of the nine were carried out at levels abovecurrent requirements,

                        Page 2                              GAO/NSIAD99=229 Army Repair Requirements
                                          resulting in repair coststhat were excessto fiscal year 1989 require-
                                          ments by about $13.1 million.2 For the other three items, repair pro-
                                          grams were carried out below current requirements, resulting in
                                          shortagesof items valued at about $1.2 million.

Table 1: TACOM Repair Costs in Excess of or Below Current Requirements
                                                      Requirement     Re$;;;po;             Difference between      Value of arsets in
                                                      as defined in                           MOA quantity and    excess of or below
National stock number    item name                             MOA was initiated            current requirement current requirements
-_.                                             Excess to current requirements
2520-00-973-4086         Transmission                           238             0                               238                   $571,200
2815-00-239-5819          Engine                                1,212                405                        807                   4,599,900
2520-00-140-7531          Transmission                            281                204                         77                     654,500
2520-00-971-5016          Transmission                            416a                 0                        416                   1,123,200
2815-00-178-0268          Engine                                  907                 15                        892                   5,976,400
~20-00-741~1141           Axle                                     42                  0                         42                     134,400

Total                                                                                                                           $13,059,600

                                                    Below current requirements
2520-00-884-4833          Transmission                          1,184              1,485                       (301)                   (361,200)
2520-00-089-8287          Transfer                              1,318              1,685                       (367)                   (440,400)
2815-01-105-6445          Engine                                   74                111                        (37)                   (403,300)

Total                                                                                                                               $(1,204,900)
                                          BThe program quantity shown in the MOA was 522. However, due to a lack of unserviceable    assets, the
                                          program was subsequently reduced to 416.

                                          TACOM’Streatment   of the multifuel engine for the &ton truck (national
                                          stock number 2816-00-239-6819)illustrates the conditions that existed
                                          at that command.While TACOMshowed a requirement to repair
                                          1,212 multifuel enginesin its fiscal year 1989 MOA, it had basedthis
                                          requirement on a June 1987 supply control study generated 16 months
                                          prior to the preparation of the MOA. A more current study, prepared in
                                          September 1988, about 1 month prior to the start of fiscal year 1989,
                                          showed that requirements had decreasedto 406-a reduction of
                                          807 engines.TACOMtook no action to reduce the planned program but did
                                          adjust fiscal year 1990 requirements by 807 enginesto balance off the
                                          fiscal year 1989 excess.By repairing an additional 807 multifuel engines
                                          at a cost of $6,700 per engine,the Army spent $4.6 million more than

                                           21nfive of the six cases,which wcount for $12.4million, TACOMlater adjustedfiscal years 1990,
                                           1991,or 1992requirementsdownward to balancethe fiscal year 1989excess.

                                           Page 9                                            GAO/NSIAIMO-229 Army Repah Requirements
                      necessaryto meet its fiscal year 1989 requirements. By repairing more
                      items than it needsto, the Army risks being unable to repair needed
                      items. The Army also increasesthe risk that someof the repaired items
                      will becomeexcessto future needs.

                      In our examination of 8 of 114 items from kwxm’s fiscal 1990 MOA, we
                      found that repair requirements for 6 items were basedon outdated
                      information that had been determined 8 to 19 months prior to the prepa-
                      ration of the MOA. Quantities for four of the six items were later adjusted
                      after the MOA was prepared. Requirementsfor the other two items had
                      not been updated since the MOA quantities were originally established.
                      Therefore, we were unable to determine whether the requirements
                      included in the MOA were more or less than what is currently required.
                      Item managersdid not always know about the existing procedures,
                      which call for the quarterly review and validation of repair require-
                      ments, or these procedureswere not clear to them. SomeTACOMand
                      AVSCOMitem managerswho were not aware of these procedureshad not
                      validated requirements prior to preparing the MOA. Item managerswho
                      were aware of these procedures had not always implemented them
                      becausethey believed that changing the original requirements could dis-
                      rupt scheduling at the depots. Officials at both commandsagreedthat
                      requirements should be validated prior to performing the repair work.

                      The 1987 Army Audit Agency report concludedthat improvements were
Army Audit Agency     neededin the proceduresand controls used to establish and develop in-
Reported Similar      house depot maintenanceprograms at the Army’s Communications-
Problems at Another   Electronics Command.That report stated that item managershad estab-
                      lished maintenanceprograms for secondary items, even though suffi-
Command               cient serviceablestocks were on hand to satisfy repair requirements. In
                      addition, the Army Audit Agency found that several scheduledmainte-
                      nance programs could have been reduced,but preplanned maintenance
                      programs were seldom reviewed or adjusted to coincide with changing
                      requirements. As a result, the Army Audit Agency concludedthat some
                      maintenance programs had been established unnecessarily and that
                      assetsthat exceededrequirements had beengenerated.

                      The Army’s controls for ensuring that planned maintenanceprograms
Conclusion and        are basedon the most current available information would be strength-
Recommendation        ened if item managerswere specifically required to use the latest avail-
                      able requirements data prior to the preparation of MoAS. This practice

                      Page 4                               GAO/NSIAD90-229 Army Repair Requirementa
              would allow item managersto cancel,reduce,or increasemaintenance
              requirements that have changedover time.
              Therefore, we recommendthat you clarify existing guidance to specifi-
              cally require the major subordinate commandsto baserequirements for
              depot maintenance programs on the latest information available at the
              time MOASare prepared.

              We reviewed TACOMand AVSCOMguidanceprovided to the item managers
Scopeand      to determine what procedureswere in place for determining quantities
Methodology   of repair items to be included in the MOAS. We discussedthe guidance
              with the item managersand obtained commandofficials’ views on what
              requirements data should be used when preparing the MOA. To assessthe
              validity of the quantities of assetsscheduledto be repaired, we judg-
              mentally selected23 of 62 items from TACOM'S 1989 MOA and 8 of
              114 items from AVSCOM'S1990 MOA. We analyzed these items and inter-
              viewed responsibleitem managersto determine what requirements data
              they had used to support the MOAS and whether more current require-
              ments data had been available when the MOASwere prepared.
              We conducted our review from June 1989 to March 1990 in accordance
              with generally acceptedgovernment auditing standards. We obtained
              informal oral commentsfrom agencyofficials on this report.
              Department of Defenseand Army officials stated that they had no
              reasonto question the report.

              We would appreciate your advising us of what action you plan to take
              regarding our recommendation.
              We are sending copiesof the report to the Secretariesof Defenseand the
              Army; the Director of the Office of Managementand Budget; and the
              Chairmen of the HouseCommittee on Government Operations, Senate
              Committee on Governmental Affairs, and the Houseand Senate
              Committeeson Appropriations and on Armed Services.

              Page 6                             GAO/NSIADQO-229 Army Repair Requlrementa

Pleasecontact me at (202) 276-4141if you have any questions con-
cerning this report. Major contributors to this report are listed in
appendix II.
Sincerely yours,

Richard Davis
Director, Army Issues

Page 6                              GAO/NSIAD-90-229 Army Repair Requirements

    Page 7   GAO/NSIAD-90-229 Army Repair Requirements
Appendix I

TACOM and AVSCOM MOA Programs Based ori-
Outdated Data

                                                                                                                    Date of supply
                                                                                                                     control study      Months that elapsed
                                                                                               MOA repair           used to define      between study date
National stock number                             Item name                                     quantity’            MOA quantity                  and MOA
        __ _.. .._-.-_.                                                        TACOM
2520.00-884-4833 .-.-.--_.-.-__                   Transmission                                         1,184                   06187                     16
28i 5-~~.~~~~5949
         . _._-... ~~ -~.--_..-.-_                Enaine                                                 343                   06187                     16b
2935.01-l 78-7245
           _- ..__. _      ..--.- .._..
                                     -__-.        Engine rear module                                     176                   08;87                     14b
2526-00-089-8287 _...-. -..                       Transfer                                             1,318                   12187                     10
2815-01-1056445   _._.. ..~~ .-..                 Engine                                                  74                   01188                       9
2520-00-973-4086                                  Transmission                                           238                   06187                     16
2530-oo:~~~.~~~.-.          ..-.-..- __...- ._^   Steering gear                                          922                   12187                     lob
        _ .             _-. .._-- ___-.__
                                      --..-       Engine                                               1,212                   06187                     16
 ~... .._ .40-7531
                     -. . ..--.. __----           Transmission                                           281                  oat87                      14
              -- _.._-_. ____--_.                 Transmission                                           522                  OS;87                      16
2615-00-178-0268                                  Engine                                                 907                  06187                      1%
2520-00-741-t 141                                 Axle                                                    42                  06187                      16

            _.-_.- .._...~...~                                                AVSCOM
 ._      ~..--- _.-...._
                       ._. _--.-. _               Helicooter   enaine overhaul                            86                  12188                      1Ob
2840-O 1.030-4890                                 Helicopter   engine inspect/repair                      35                  12;88                      lob
2840.OO-134-4803   -.“. - ---_--                  Helicopter   engine overhaul                           430                  02189                        8b
2840-00-I 34-4603                                 Helicopter   engine inspect/repair                     171                  02189                        8b
16 15-00-l _.-.
                -.-.- ~.                          Helicopter   transmission                              550                  03188                      19
i 615:6;:237-0512                                 Helicopter   hub assembly                              546                  06188                      16
                                                          aThe TACOM fiscal year 1989 MOA was prepared around October 1988.The AVSCOM fiscal year 1990
                                                          MOA was prepared around October 1989.
                                                          bThese items were adjusted after the MOA was prepared to reflect more current information

                                                          Page 8                                               GAO/NSIAD9O-229 Army Repair Requirements

&p&dix          II

lS&jor Contributors to This &port

                             Henry L. Hinton, Associate Director
National Security and        Kenneth R. Knouse,Jr., Assistant Director
International Affairs        StephenG. De Sart, Evaluator-in-Charge
Division, Washington,        Beverly Schladt, Reports Analyst

Detroit Regional Office Robert
                        GilbertW. Herman, RegionalAssignment Manager
                               w Kruper  SiteSenior
                             Yasmina T. Musaliam, Evaluator

(3%3840)                     Page 9                             GAO/NSIAtMtb222   Army Repair Rewirement8
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