United States Government Accountability Office

GAO Report to Congressional Committees

DEFENSE 

INVENTORY 

Opportunities Exist to 

Improve the 

Management of DOD’s 

Acquisition Lead 

Times for Spare Parts 

March 2007 

 

GAO-07-281 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2007

DEFENSE INVENTORY

Opportunities Exist to Improve the 

Management of DOD’s Acquisition Lead 

Times for Spare Parts 

Highlights of GAO-07-281, a report to 

congressional committees 

GAO has identified the Department

of Defense’s (DOD) management of

its inventory as a high-risk area since 

1990 due to ineffective and 

inefficient inventory systems and 

practices. Management of inventory 

acquisition lead times is important in 

maintaining cost-effective

inventories, budgeting, and having 

material available when needed, as

lead times are DOD’s best estimate

of when an item will be received. 

Under the Comptroller General’s 

authority to conduct evaluations on 

his own initiative, GAO analyzed the 

extent to which (1) DOD’s estimated

lead times varied from actual lead 

times, and (2) current management 

actions and initiatives have reduced

lead times as compared to past

years. To address these objectives,

GAO computed the difference

between the components’ actual and 

estimated lead times, and compared 

component initiatives to reduce lead 

times for 1994-2002 to 2002-2005. 

What GAO Recommends

GAO recommends that DOD take

actions to improve the accuracy and 

strengthen its management of lead 

times, such as review lead time data

to detect and correct errors, review 

and revise the methodology used for 

setting lead times, set lead time

reduction goals, and direct the 

components to measure and report 

the impact of initiatives to reduce

overall lead times within each of the

military components. In its 

comments, DOD generally

concurred with nine and 

nonconcurred with two of our 

recommendations. 

The military components’ estimated lead times to acquire spare parts varied 

considerably from the actual lead times experienced. The effect of the lead 

time underestimates was almost $12 billion in spare parts arriving more than 

90 days later than anticipated, which could negatively affect readiness rates 

because units may not have needed inventory. If orders had been placed 

earlier, readiness rates could potentially have been improved. While having 

spare parts arrive earlier than estimated could potentially improve readiness,

the effect of lead time overestimates resulted in obligating almost $2 billion 

more than 90 days earlier than necessary. As the table shows, the Army 

underestimated lead times, DLA overestimated lead times, and the Air Force 

and Navy both overestimated and underestimated lead times. 

Acquisition Lead Time Difference for FY 2005 Deliveries (in percentages) 

>90 days 

early

> 1 week to 

90 days 

early

Up to 1 week 

early – Up to 

1 week late 

> 1 week to 

90 days 

late 

> 90 days 

late

Total

number of

deliveries

Air Force 23.8 15.7 3.0 15.2 42.3 18,335

Army 11.8 9.7 4.6 15.3 58.5 9,380

Navy 39.3 17.0 3.0 12.7 27.9 19,304

DLA 39.5 45.7 5.0 6.7 3.0 1,031,779

Total 39.0 44.4 5.0 7.0 4.6 1,078,798

Source: GAO analysis of components’ delivery order information.

The variances were due to problems such as miscoding late deliveries as not 

representative of future delivery times, lack of recorded lead time data, data 

input errors, estimates that did not reflect improvements made in actual lead 

times, and the use of standard default data instead of other data that may 

have been obtainable. Absent actions to address these problems, lead time 

estimates will continue to vary from actual lead times and will contribute to 

inefficient use of funds and potential shortages or excesses. 

The Under Secretary of Defense for Acquisition, Technology, and Logistics 

(USD (AT&L)) and the components’ actions and initiatives to reduce lead 

times from 2002 to 2005 were less effective overall than previous efforts 

from 1994 to 2002. From 2002 to 2005, DOD-wide lead times were reduced by 

an average of 0.9 percent annually as compared to an average reduction of 

5.6 percent annually from 1994 to 2002, potentially leading to an additional 

$2.7 billion in lead time requirements, tying up money that could have been 

obligated for other needs. The higher rate of reduction from 1994 to 2002 can 

be attributed to three areas of focus: streamlining internal administrative

processes, oversight from USD (AT&L), and developing strategic 

relationships with suppliers. However, from 2002 to 2005, USD (AT&L) no 

longer provided active oversight such as establishing lead time reduction 

goals, reporting metrics, reporting the impact of specific initiatives, or 

estimating the financial impact of reduced lead times, as had been done 

previously. Until steps are taken to renew management focus on reducing 

lead times, the components may continue to experience spare parts 

shortages and increased inventory levels to cover lead times. 

www.gao.gov/cgi-bin/getrpt?GAO-07-281.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis

at (202) 512-8365 or solisw@gao.gov. 
Contents 

Letter 1

Results in Brief 4

Background 7

Actual Lead Times Varied Considerably from Estimated Lead

Times for All Components 9 

Management Actions and Initiatives to Reduce Lead Times from 

2002 to 2005 Less Effective than Previous Initiatives from 1994

to 2002 17 

Conclusions 27

Recommendations for Executive Action 28 

Agency Comments and Our Evaluation 29 

Appendix I Scope and Methodology 33 

Appendix II Comments from the Department of Defense 36 

Appendix III GAO Contact and Staff Acknowledgments 41 

 

Tables 

Table 1: Primary Logistics Agencies and Their Inventory 

Management Centers 9 

Table 2: DOD-Wide Difference in Actual and Estimated Acquisition 

Lead Times 10 

Table 3: Army Differences between Actual and Estimated 

Acquisition Lead Times 11 

Table 4: DLA Differences between Actual and Estimated 

Acquisition Lead Times 14 

Table 5: Air Force Differences between Actual and Estimated 

Acquisition Lead Times 15 

Table 6: Navy Differences between Actual and Estimated 

Acquisition Lead Times 16 

Table 7: Lead Time Reductions from 2002 to 2005 Compared to 

Lead Time Reductions from 1994 to 2002 18 

Table 8: Component Initiatives and Management Actions to Reduce 

Acquisition Lead Times from 1994 to 2005 19 

Page i GAO-07-281 Defense Inventory
Figure 

Figure 1: Potential Impact of Reduced Lead Time Inventory 

Requirements 26

Abbreviations 

DLA Defense Logistics Agency

DOD Department of Defense 

USD (AT&L) Under Secretary of Defense for Acquisition, Technology, 

 and Logistics 

TACOM Tank-Automotive and Armaments Command 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page ii GAO-07-281 Defense Inventory
United States Government Accountability Office

Washington, DC 20548 

March 2, 2007

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Duncan L. Hunter 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

The Department of Defense (DOD) maintains a military force with diverse 

capabilities but continues to confront a pervasive, decades-old supply 

chain management problem that relates to retaining the appropriate 

amount of inventory. The fundamental premise of supply chain

management is the operation of a continuous, unbroken, comprehensive, 

and all-inclusive logistics process, from initial customer order for materiel 

or services to the ultimate satisfaction of the customer’s requirements. 

Supply chain management in DOD consists of processes and activities to 

purchase, produce, and deliver materiel to a force that is highly dispersed 

and mobile. Supply support to the warfighter affects readiness and military 

operations. In fact, the supply chain can be the critical link in determining 

whether our frontline military forces win or lose on the battlefield. Given 

the high demand for goods and services to support ongoing U.S. military 

operations, the investment of resources in the supply chain is substantial. 

DOD reported that, as of September 30, 2005,1

 it owned about $80 billion of

secondary inventory of spare parts.2

 This represents a $17 billion, or 27 

 1

 This was the most up-to-date information available during our review. 

2

 DOD’s secondary inventory consists of a wide variety of parts that includes

communication and detection equipment; electrical and electronic equipment components; 

engines, turbines, and their components; aircraft components and accessories; instruments

and laboratory equipment; aircraft and airframe structural components; fire control 

equipment; guided missiles; electric wire and power and distribution equipment; medical 

supplies; and clothing and textiles. 

Page 1 GAO-07-281 Defense Inventory
percent, increase since fiscal year 2001, when the department reported 

about $63 billion in inventory. 

Critically important to maintaining cost-effective inventories, budgeting,

and having materiel available when it is needed is the development of 

successful processes that identify and manage acquisition lead times for 

the purchase of parts for equipment and weapon systems. Acquisition lead 

time, also known as procurement lead time,3

 measures the length of time 

between the initiation of a procurement action and the receipt of items 

into the supply system. DOD’s management of its acquisition lead times 

affects whether DOD and its military components4

 have the right quantities

of the right items at the right locations at the right time to meet customer 

needs. Generating lead time estimates is a protracted and complex process 

that requires DOD inventory managers to project, in some cases, parts 

usages over several years, which can decrease forecast accuracy and 

reduce DOD’s flexibility to react to changes in demand. Additionally, longstanding data problems, internal control weaknesses, and 

noninteroperable business systems within DOD further complicate the 

process of generating accurate acquisition lead time estimates. 

Since 1990, we have reported on weaknesses in DOD’s supply chain

management in our high-risk reports. In 1994, we reported5

 that DOD had 

made only limited progress in reducing acquisition lead times because its 

initiatives had been unevenly implemented by the military components. 

We recommended that DOD renew emphasis on implementing lead time 

reduction initiatives, review and update certain lead time data, and give

consideration to buying items directly from the manufacturers instead of 

from contractors. DOD partially concurred with each of our findings and 

recommendations. In addition to our review, a 1998 DOD Inspector 

General report6

 reviewed initiatives underway at that time to improve 

acquisition lead times. The report concluded that the military components 

had made progress in reducing acquisition lead times and pointed out that 

 3

 Hereafter, we will refer to the term as acquisition lead time. 

4 For purposes of this report, DOD’s military components are defined as the Army, Navy, 

Air Force, and the Defense Logistics Agency (DLA). 

5

 GAO, Defense Supply: Acquisition Leadtime Requirements Can Be Significantly

Reduced, GAO/NSIAD-95-2 (Washington, D.C.: Dec. 20, 1994). 

6

 Department of Defense Inspector General, Initiatives to Improve Acquisition Lead 

Time, Report Number 99-037 (Nov. 23, 1998). 

Page 2 GAO-07-281 Defense Inventory
reducing acquisition lead times decreases inventory levels and associated

inventory holding costs, thus freeing up funds for other uses. The DOD 

Inspector General report contained no recommendations. 

Because of the potential effects of DOD’s management of acquisition lead 

times on readiness and inventory expenditures and because of the 

continued weaknesses in DOD’s supply chain management that we had 

identified, we performed this engagement under the Comptroller General’s 

authority to conduct evaluations on his own initiative. We are providing 

this report to you because of your committee’s oversight responsibilities. 

Our objectives were to determine the extent to which (1) DOD’s estimated 

lead times varied from the actual lead times experienced, and (2) current 

management actions and initiatives have reduced lead times as compared 

to past years.

To compare and analyze the estimated to actual lead times, we (1) 

obtained and reviewed the military components’ regulations and directives 

on the policies, procedures, and processes used in computing and 

maintaining acquisition lead times and interviewed relevant officials; (2) 

obtained from each of the military components the estimated and actual 

acquisition lead time values for all of the more than one million orders 

valued at almost $19 billion of spare parts that they received during fiscal

year 2005; and (3) computed the differences between the estimated and 

actual lead time for each order. Each order’s variance was then 

categorized according to how closely the estimate approximated the 

actual lead time, ranging from no variance to more than 90 days off as we 

believe this interval was an appropriate measure to use in our analyses. 

We then calculated overall statistics to show the extent to which the 

military components accurately estimated the actual lead times. We also 

calculated the effect in dollars for spare parts where the estimates were 

longer or shorter than the actual lead times. We assessed the reliability of 

DOD’s acquisition lead time data by obtaining information from the 

components’ management of their data reliability procedures. We 

determined that the data obtained from DOD’s automated systems were 

sufficiently reliable for the purposes of this report. Further, to compare 

the management actions and initiatives to reduce lead times, we reviewed 

relevant documents regarding efforts, policies, and initiatives to reduce 

lead times and interviewed officials from the Office of the Under Secretary 

of Defense for Acquisition, Technology, and Logistics (USD (AT&L)) and 

each of the military components. We conducted our review from 

November 2005 through November 2006 in accordance with generally 

accepted government auditing standards. For more detailed information 

on our scope and methodology, see appendix I. 

Page 3 GAO-07-281 Defense Inventory
The military components’ estimated lead times to acquire spare parts 

varied considerably from the actual lead times they experienced. DOD’s 

Supply Chain Materiel Management Regulation7

 provides guidance for 

developing materiel requirements based on customer expectations while 

minimizing the investment in inventories. Further, accurate lead time 

estimates are critically important in enabling the military components to 

have the proper amount of inventory on hand. However, rarely (5 percent) 

did the components’ acquisition lead time estimates come within a week 

of the actual lead times, while about 44 percent of the lead time estimates 

varied either earlier or later than the actual lead times by at least 90 days. 

The combined effect of the understated lead time estimates for all the 

components was slightly over $12 billion in spare parts arriving more than 

90 days later than anticipated, which has the potential for negatively

affecting readiness rates because units may not have the necessary 

inventory to support and sustain ongoing military operations. If orders had 

been placed and funds obligated earlier, in some instances readiness rates 

could potentially have been improved. Further, the combined effect of the 

overstated lead time estimates for all the components resulted in them 

obligating almost $2 billion more than 90 days earlier than necessary, 

although spare parts that come in early could potentially improve 

readiness. 

Results in Brief 

• Of the 9,380 Army deliveries we reviewed, we found that 58 percent 

(valued at $10.6 billion) had actual lead times longer than estimated by at 

least 90 days due to such problems as miscoding of late deliveries as not 

representative of future deliveries, lack of lead time data in one of its 

computer systems, and data input errors that caused the Army to 

underestimate lead times and receive items later than expected. 

• Conversely, we found that almost 40 percent of the estimated lead times 

for the 1,031,779 DLA deliveries we reviewed8

 (valued at $568.8 million) 

were overstated by at least 90 days and did not accurately reflect the 

improvements made in actual lead times because the methodology DLA 

used for computing lead times had not been reviewed or revised to reflect 

recent improvements due to the use of long-term contracts. 

 7

 Office of the Deputy Under Secretary of Defense for Logistics and Materiel Readiness, 

Department of Defense Supply Chain Materiel Management Regulation, DOD 4140.1-R 

(May 2003). 

8

 The majority of the items we reviewed belonged to DLA, which manages more than 5

million items. These items tend to be smaller, less expensive consumable products as 

compared to the items managed by the military components. 

Page 4 GAO-07-281 Defense Inventory
• Of the 18,335 Air Force deliveries we reviewed, we found that more than 

42 percent (valued at $155.2 million) had actual lead times longer and 

about 24 percent had actual lead times shorter than estimated by at least 

90 days due, in part, to the use of standard default data instead of other 

data that may have been obtainable, such as data from the suppliers. 

• Additionally, of the 19,304 Navy deliveries we reviewed, we found that 

about 28 percent had actual lead times longer and almost 40 percent 

(valued at $164.9 million) had actual lead times shorter than estimated by 

at least 90 days due to such problems as data input errors. 

Absent actions by the military components to address these problems and 

institute corrective procedures, DOD’s acquisition lead time estimates will 

continue to vary greatly from the actual lead times and will contribute to 

inefficient use of funds and potential inventory shortages or excesses. 

USD (AT&L) and the military components’ management actions and 

initiatives to reduce acquisition lead times from 2002 to 2005 were less 

effective overall than previous actions and initiatives from 1994 to 2002. 

DOD regulations state that the components should aggressively pursue the 

lowest possible acquisition lead times. However, from 2002 to 2005, DODwide lead times were reduced by an average of 0.9 percent annually as 

compared to an average reduction of 5.6 percent annually from 1994 to 

2002. The USD (AT&L) and the components’ management actions and 

initiatives were more effective from 1994 to 2002 than they were from 2002 

to 2005 because they placed greater emphasis on three areas that 

contributed to the higher rate of lead time reduction: streamlining internal

administrative processes, improving oversight, and developing strategic 

relationships with suppliers. First, from 1994 to 2002, each of the military 

components began new initiatives to streamline administrative processes. 

While all components continued these initiatives from 2002 to 2005, the 

Army and the Navy reduced focus on these initiatives and were less 

aggressive than the DLA and the Air Force in implementing new initiatives 

to reduce lead times. For example, DLA and the Air Force reduced their 

lead times by an average of 3.3 and 4.1 percent annually, respectively,

while the Army’s average lead times increased and the Navy’s were 

unchanged. Second, in 1994, USD (AT&L) began providing enhanced 

oversight to acquisition lead times, but by 2002 it was no longer providing 

active oversight. For example, from 2002 to 2005, USD (AT&L) did not 

establish lead time reduction goals, require reporting of metrics to 

measure reductions in lead times, collect data to report the impact and

costs of specific initiatives on lead times, or measure and provide 

estimates of the financial impact of reduced lead times, as had been done 

Page 5 GAO-07-281 Defense Inventory
previously. USD (AT&L) officials stated that they no longer provided 

oversight because management focus shifted from reducing lead times to 

improving performance on broader metrics, such as backorders. 

Component officials stated that because USD (AT&L) placed less 

emphasis on lead times from 2002 to 2005, their organizations also placed 

less emphasis on lead time reductions. Officials suggested that renewed 

emphasis on lead time reduction by USD (AT&L) could increase the 

components’ management focus on reducing lead times. Third, all military 

components were able to reduce lead times from 1994 to 2002 by 

implementing initiatives that developed relationships with suppliers, such 

as using long-term contracts and other innovative practices. However, 

unlike the Air Force and the DLA, the Army and the Navy have not begun 

any new initiatives to improve strategic relationships with suppliers to 

help reduce lead times from 2002 to 2005. The military components could 

have decreased inventory requirements and potentially saved hundreds of 

millions of dollars if more aggressive lead time reductions had been 

realized from 2002 to 2005, as they had from 1994 to 2002. As a result of 

the reduced rate of lead time reduction from 2002 to 2005, lead time 

requirements are up to $2.7 billion higher than they would have been if the 

lead time reduction rate had remained constant, thus tying up money that 

could have been obligated for other needs. Until USD (AT&L) and the 

components take steps to renew their focus on reducing lead times by 

aggressively continuing prior initiatives and implementing successful new 

initiatives, the components may continue to experience spare parts 

shortages and may spend significantly more money to purchase additional 

inventory. 

To improve the accuracy in setting acquisition lead time values, we are 

recommending that the Army take steps to determine when lead time 

values are representative and should be updated, and update and maintain

automated lead time data in computer systems; the Army and Navy review

and validate lead time data to detect and correct errors; DLA review and 

update the methodology used for updating lead times; and the Air Force 

evaluate sources of lead time values. To strengthen management of lead 

times, we are recommending that USD (AT&L) establish lead time 

reduction goals, develop metrics to measure progress in meeting lead time 

reduction goals, develop an estimate of the financial impact of lead time 

reductions, direct the military components to measure and report to it on 

the results and costs of individual initiatives to reduce overall lead times, 

and work closely with the Army and Navy to develop joint strategic

relationships with suppliers that would be beneficial in reducing lead

times. 

Page 6 GAO-07-281 Defense Inventory
In written comments on a draft of this report, DOD generally concurred 

with 9 of our 11 recommendations. DOD identified actions that it is taking

or plans to take to implement these recommendations, and, for most of 

them, we agree that its actions are responsive and reasonably address our 

findings. However, DOD did not concur with 2 of our 11 

recommendations, the first being our recommendation for DLA to review 

and revise the methodology used to update lead times. The department 

stated that we used data from DLA’s legacy computer system in our 

review, which did not have the benefit of DLA’s newly implemented 

computer system. We believe that our recommendation remains valid 

because the basic methodology for calculating lead times remains the 

same between DLA’s old and new computer systems. Therefore, 

improvements in the accuracy of DLA’s lead time estimates seem unlikely 

to result from the use of the old methodology in the new computer system. 

DOD also did not concur with our recommendation for USD (AT&L) to 

work closely with the Army and Navy to develop joint strategic 

relationships with suppliers that would be beneficial in reducing lead

times, stating that it is actively pursuing a joint strategy to develop 

strategic relationships and that to instruct the services to develop strategic 

relationships separately would lead to a duplication of effort. We believe 

that DOD may have misinterpreted our recommendation as having these 

services independently pursue strategic supplier relationships without 

USD (AT&L) oversight. However, our recommendation was not for the 

Army and Navy to develop strategic relationships separately but for USD 

(AT&L) to work closely with them to develop these relationships. 

Therefore, we believe that this recommendation remains valid. The 

department’s comments are reprinted in appendix II, and our response to 

its comments appears at the end of this report. 

The basic challenge of inventory management is having the proper amount 

of items on hand when required—neither too much nor too little. If 

inventory levels are too low, DOD and its components may experience 

supply shortages and be unable to satisfy customer demands. This could 

result in DOD undertaking costly and often wasteful efforts to recover 

from being out of stock. If inventory levels are too high, money is invested

on items that may never be used. Additionally, a series of unnecessary 

expenditures is incurred for more warehouses, transportation, and 

personnel; storage and distribution facilities become more crowded; 

maintenance workloads may increase; and inventory excesses are 

generated which eventually may have to be disposed of, perhaps at a 

severe financial loss. 

Background 

Page 7 GAO-07-281 Defense Inventory
Inventory levels are influenced by the amount of time between the 

initiation of a procurement action and the receipt of the item into the 

supply system. This time frame is known as acquisition lead time, and it 

consists of two parts: administrative and production lead times. 

Administrative lead time is the time interval from the initiation of a 

procurement action to the contract award, while the production lead time

is the interval from the contract award to delivery of the items. Since 

acquisition lead times are the components’ estimates as to when an item 

will arrive, varying from that expectation results in consequences when 

items arrive too early or too late. 

To promote accuracy and completeness in the management of acquisition 

lead times, having appropriate policies, procedures, and instructions is an

important component of an agency’s internal control framework. As 

discussed in GAO’s Internal Control Standards guidance, we identified that 

other important activities related to information processing systems, 

performance measures and indicators, and the recording and classification 

of transactions and events are also necessary.9

 Inventory management and 

oversight is the shared responsibility between the USD (AT&L) and the 

military components. USD (AT&L) has overall responsibility for the 

development of acquisition policies for monitoring the overall

effectiveness and efficiency of the DOD acquisition system. The 

components are responsible for implementing the materiel management 

policies and activities. The DOD Supply Chain Materiel Management 

Regulation states that the military components should aggressively pursue 

the lowest possible acquisition lead times, and in coming up with lead time 

estimates, they may use contractor information, historical information 

from representative procurements, technical documentation, or the best 

judgment of acquisition personnel. It also establishes for the military 

components overarching guiding principles, assigns responsibility, defines, 

and provides guidelines for developing acquisition lead time, and states 

that they should identify and track deviations from normal historical or 

projected patterns in such areas as demand, stock levels, and lead times. 

The military components have an inventory management agency that 

purchases and delivers items and services to the warfighter. The primary 

inventory agencies that provide this support to the warfighter are (1) the 

U.S. Air Force Materiel Command, (2) the U.S. Army Materiel Command, 

 9

 GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington,

D.C.: August 2001). 

Page 8 GAO-07-281 Defense Inventory
(3) the Defense Logistics Agency, and (4) the Naval Inventory Control 

Point. Table 1 shows the primary logistics agencies and their inventory 

management centers. 

Table 1: Primary Logistics Agencies and Their Inventory Management Centers 

Air Force Materiel Command

Ogden Air Logistics Center 

Okalahoma City Air Logistics Center 

Warner Robins Air Logistics Center 

Army Materiel Command 

Aviation and Missile Life Cycle Management Command 

Communications-Electronics Life Cycle Management Command 

U.S. TACOM Life Cycle Management Command 

Defense Logistics Agency

Defense Supply Center Columbus 

Defense Supply Center Philadelphia 

Defense Supply Center Richmond 

Naval Inventory Control Point 

Naval Inventory Control Point Mechanicsburg 

Naval Inventory Control Point Philadelphia 

Source: DOD. 

To implement DOD’s acquisition lead time policy, each of the military 

components developed their own procedures for managing acquisition 

lead times, and as such, each used slightly different methodologies to 

calculate their estimated administrative lead time and production lead

time values.

The military components’ acquisition lead time estimates to acquire spare 

and repair parts varied considerably from the actual lead times 

experienced. More specifically, estimated lead times for all of the 

components rarely approximated actual lead times, with only 5 percent of

the deliveries we reviewed having actual acquisition lead times that were 

within 1 week of the estimated lead time. While each of the military 

components had instances of both underestimated and overestimated lead 

times, the Army’s acquisition lead time estimates were generally 

understated, while DLA’s estimates were generally overstated. The Air 

Force’s and the Navy’s estimates were both overstated and understated. 

Actual Lead Times 

Varied Considerably

from Estimated Lead 

Times for All 

Components 

Page 9 GAO-07-281 Defense Inventory
For the more than one million spare part deliveries we reviewed, the 

military components’ estimated acquisition lead times rarely approximated 

the actual lead times and were generally either understated or overstated.

DOD’s Supply Chain Materiel Management Regulation provides guidance 

for developing materiel requirements based on customer expectations 

while minimizing the investment in inventories. In addition, accurate lead

time estimates are critically important in enabling the military components 

to have the proper amount of inventory on hand. However, as table 2 

shows, 5 percent of the deliveries, totaling about $700 million, had actual 

acquisition lead times that were within a week of the estimate. The 

combined value of the lead time underestimates for all the components 

resulted in slightly over $12 billion in spare and repair parts arriving more 

than 90 days later than expected, which may have negatively affected 

equipment readiness and overall rates because units may not have had the 

necessary inventory to support and sustain ongoing military operations. If 

lead time estimates had been more accurate, orders could have been 

placed and funds obligated earlier, and in some instances readiness rates 

could potentially have been improved. Further, the combined value of the 

lead time overestimates resulted in the military components obligating 

almost $2 billion more than 90 days earlier than necessary, which could 

add to excess on-hand inventories, although spare parts that come in early

could potentially improve readiness.

Acquisition Lead Time 

Estimates for All 

Components Rarely 

Approximated Actual Lead 

Times

Table 2: DOD-Wide Difference in Actual and Estimated Acquisition Lead Times 

Dollar value (in thousands) of deliveries with variances Percent of deliveries reviewed with variances 

>90 days 

early 

>1 week to

90 days 

early 

Up to 1 

week early 

– Up to 1 

week late

>1 week 

to 90 days 

late

>90 days 

late

>90 

days 

early

>1 week to

90 days 

early 

Up to 1 

week early 

– Up to 1 

week late

>1 week 

to 90 

days 

late

>90 

days 

late

Total 

DOD-wide $1,909,523 $2,041,190 $699,378 $2,047,081 $12,023,766 39.0 44.4 5.0 7.0 4.6

Source: GAO analysis of delivery order information provided by each of the military components. 

We reviewed the two parts of acquisition lead time, administrative lead 

time and production lead time, and found that each of the military 

components more accurately estimated the administrative portion than the 

production portion. However, for administrative lead time, the military 

components’ estimates fell within the 1-week range only about 20 percent 

of the time while production lead time estimates matched the actual 

production lead times within the 1-week range just over 10 percent of the 

time. Officials explained that the accuracy of their administrative lead time 

estimates was better than their production lead time estimates because 

Page 10 GAO-07-281 Defense Inventory
they have more management control over their internal processes than 

over external contractor practices. Officials stated that variability always 

exists when generating lead time estimates, but they agreed that improved 

and more reliable lead time estimates can contribute to lower levels of 

inventory. They also stated that understated lead time estimates can result

in backorders or part shortages which may impact a unit’s readiness if the 

needed spare parts are not available when expected, and overstated 

estimates result in prematurely obligating funds that could have been used 

for other military needs and can unnecessarily increase inventory levels 

and associated costs. 

Army Tended to 

Underestimate Lead Time 

Estimates 

The Army tended to underestimate their acquisition lead times and receive 

items later than expected. Of the 9,380 Army deliveries we reviewed, more 

than 58 percent of their actual acquisition lead times were more than 90

days longer than their estimated lead times. This represented about $10.6 

billion worth of inventory arriving later than expected. Additionally, 

almost 12 percent had actual acquisition lead times that were more than 90 

days shorter than their estimated lead times and that resulted in about 

$900 million of premature obligations, as shown in table 3. 

Table 3: Army Differences between Actual and Estimated Acquisition Lead Times 

Dollar value (in thousands) of deliveries with variances Percent of deliveries reviewed with variances 

>90 days 

early 

>1 week 

to 90 

days 

early 

Up to 1 

week early 

-- Up to 1 

week late 

>1 week to

90 days 

late

>90 days 

late

>90 

days 

early

>1 week 

90 days 

early

Up to 1 week 

early – Up to

1 week late

>1 week 

to 90 

days 

late

>90 

days 

late

ARMY 

AMCOMAviation $851,500 $642,284 $333,998 $1,193,565 $10,309,932 11.7 8.0 2.6 15.1 62.7

CECOM 36,274 29,942 5,989 39,034 158,066 17.4 18.1 2.6 13.9 47.9

TACOMWarren 16,364 85,646 88,560 86,324 147,231 3.5 9.1 22.2 19.4 45.8

Total $904,138 $757,871 $428,547 $1,318,923 $10,615,229 11.8 9.7 4.6 15.3 58.5

Source: GAO analysis of delivery order information provided by Army Materiel Command. 

The variances between the Army’s actual and estimated lead times 

occurred, in part, because of miscoding of late deliveries as not 

representative of future delivery times, lack of accurate lead time data in

one of its computer systems, and data input errors. Of the data we 

examined, most of the underestimates occurred within the Army Aviation 

and Missile Life Cycle Management Command within the Army Materiel 

Page 11 GAO-07-281 Defense Inventory
Command. This command develops, acquires, fields, and sustains aviation,

missile, and unmanned vehicle systems. When this command cannot 

obtain items, such as landing gear, helicopter blades, and aircraft access 

doors in accordance with expectations, it can have immediate and serious 

ramifications on the operational readiness of many units. We found 

production lead times in 3,863 orders, for items valued at $10.3 billion of 

the $10.6 billion we analyzed, where the actual lead times were more than 

90 days later than the estimated lead times. According to our analyses of 

the command’s deliveries received in fiscal year 2005, nearly 63 percent 

arrived more than 90 days later than expected. Army officials stated that 

some of the variances between actual and estimated lead times occurred 

because some actual lead times were miscoded as nonrepresentative by

the command’s acquisition personnel, who initially believed that certain 

delivery delays would be short-lived and were not representative of future 

deliveries. Once Army officials realized the delays were not short-lived, 

they said that item managers made some adjustments for particular 

affected items. Army guidance states that lead times should be computed 

using the most recent representative procurement.10 However, it does not 

give clear guidance on when to decide if continuing late contractor 

deliveries should be considered representative, and any adjustments made 

to particular affected items would not prevent similar situations from 

occurring in the future. As a result, actual lead times can be miscoded and 

excluded from lead time updates, which makes subsequent estimates 

inaccurate. 

Army officials acknowledged that this command has experienced a 

problem in meeting supply demands for several years, especially after 

Operation Iraqi Freedom began, because of the surge in demand for their 

items. The high demand depleted much of the Army’s on-hand supply of 

inventory more quickly than anticipated and replacing the items was 

difficult since many aviation-related items had long lead times for 

replacement. At the same time, the Army was unable to order some items 

as quickly as needed because it lacked sufficient available funds to 

obligate and process orders. However, Army officials stated that many 

manufacturers were operating at their highest capacity and placing orders 

more quickly would not have resulted in the companies actually producing 

the additional items any faster. 

 10 Army Regulation 710-1, Centralized Inventory Management of the Army Supply System 

(Sept. 6, 2005).

Page 12 GAO-07-281 Defense Inventory
Officials from the U.S. Army TACOM Life Cycle Management Command in 

Warren, Michigan made similar statements to explain the lateness of some 

of their deliveries. They agreed that they had experienced delays in getting

items from certain contractors due to the high level of demand. They also 

acknowledged budgetary constraints during the years of our sample that 

resulted in hiring freezes and other personnel challenges that added to 

their workload and hindered their ability to process contracts and orders 

and to periodically review, validate, and make corrections to any 

inaccurately recorded lead time estimates. 

Army officials also attributed inaccuracies in lead times to input errors 

that item managers were unable to detect and correct. At the Army’s 

Communications-Electronics Life Cycle Management Command, lead time 

data are not automatically maintained or updated in the Logistics 

Modernization Program, which was designed to improve Army 

maintenance logistical and financial operations, and officials had to 

manually input the data from the command’s older computer system. 

However, according to Army officials, the heavy workloads of item 

managers have not allowed them to validate these data to detect and 

correct any lead time data input errors. 

Absent actions by the Army, across each of its Life Cycle Management 

Commands, to determine when deliveries are representative and should be 

used to update lead time values, maintain and update lead time data in its 

new computer system, and validate data input to detect and correct errors, 

late deliveries and parts shortages will likely continue. 

DLA Tended to 

Overestimate Lead Time 

Estimates 

DLA tended to overestimate its acquisition lead times and receive items 

sooner than expected. Of the 1,031,779 DLA deliveries we reviewed, 

almost 40 percent had actual acquisition lead times that were more than 90 

days shorter than their estimated lead times. This resulted in about $568 

million being obligated earlier than necessary and inventory arriving 

earlier than expected. Conversely, only about 3 percent of DLA’s deliveries 

had actual acquisition lead times that were more than 90 days longer than 

their estimated lead times, totaling approximately $319 million, as shown 

in table 4. 

Page 13 GAO-07-281 Defense Inventory
Table 4: DLA Differences between Actual and Estimated Acquisition Lead Times 

Dollar value (in thousands) of deliveries with variances Percent of deliveries with variances 

>90 days 

early 

>1 week to

90 days 

early 

Up to 1 

week early 

-- Up to 1 

week late 

>1 week to

90 days late

>90 days 

late

>90 days 

early

>1 week 

to 90 

days 

early 

Up to 1 

week 

early – Up

to 1 week 

late 

>1 week 

to 90 

days 

late

>90 

days 

late

DLA $568,775 $1,021,343 $221,812 $481,150 $319,184 39.5 45.7 5.0 6.7 3.0

Source: GAO analysis of delivery order information provided by DLA.

DLA manages almost every consumable item the military services need to

operate, and according to officials, many of these items have been placed

on long-term contracts, thus allowing faster order processing. Since the 

deliveries from the contractors were also faster, there have been reduced

overall acquisition lead times. Even though DLA uses a methodology for 

computing and maintaining lead time estimates that is more heavily

weighted toward the recent actual lead times than the existing ones on 

file, the process did not compute revised estimates that accurately 

reflected the rapid improvements being made through their lead time 

initiatives. Additionally, DLA officials stated that they emphasized 

business practices that encouraged earlier deliveries as opposed to later 

ones. They went on to state that the storage and handling costs were 

minimal, although we were unable to confirm this statement, and being 

able to meet customers’ needs by having the necessary items on hand was 

most important to them. With the emphasis on meeting or beating the 

estimated lead times, there is reduced incentive for DLA to adjust its lead 

times to more precisely reflect actual lead times experienced. Absent 

actions by DLA to review and revise the methodology and inputs it uses in 

calculating lead time estimates so that the estimates more precisely reflect

its actual experiences, DLA will continue to obligate funds earlier than 

necessary and have early delivery of items. 

Air Force Tended to 

Underestimate and 

Overestimate Lead Time 

Estimates 

The Air Force tended to both underestimate and overestimate its 

acquisition lead times, receiving a significant amount of items both sooner 

and later than expected. Of the 18,335 Air Force deliveries we reviewed, 

more than 42 percent had actual acquisition lead times that were more 

than 90 days longer than estimated. This resulted in about $528 million 

worth of inventory that arrived later than estimated. At the same time, 

about 24 percent had actual acquisition lead times that were more than 90 

days shorter than estimated, which resulted in about $272 million of 

premature obligations, as shown in table 5. 

Page 14 GAO-07-281 Defense Inventory
Table 5: Air Force Differences between Actual and Estimated Acquisition Lead Times 

Dollar value (in thousands) of deliveries with variances Percent of deliveries with variances 

>90 days 

early 

>1 week to

90 days 

early 

Up to 1 

week early 

– Up to 1 

week late 

>1 week 

to 90 

days late

>90 days 

late 

>90 

days 

early

>1 week 

to 90 

days 

early 

Up to 1 week 

early – Up to 1 

week late

>1 week 

to 90 

days late

>90 

days 

late

Air Force 

Ogden, 

Utah $84,826 $31,463 $6,816 $24,778 $62,539 40.1 15.7 3.3 12.0 28.9

Oklahoma 

City 141,986 123,750 23,475 114,317 362,827 18.8 16.0 3.2 16.9 45.1

Warner 

Robins 44,852 27,081 3,198 16,081 103,004 22.3 14.5 2.0 13.1 48.1

Total $271,665 $182,293 $33,489 $155,176 $528,370 23.8 15.7 3.0 15.2 42.3

Source: GAO analysis of delivery order information provided by the Air Force Materiel Command. 

A sample of 30 Air Force deliveries selected from the ones with the 

greatest variances between actual and estimated lead times provided an 

explanation for some of these variances. In over half of the sampled late 

deliveries, the item managers at the air logistics centers had used their 

standard default lead time values for the estimates. It is the Air Force’s 

standard procedure to use the standard default administrative lead time 

value for spare parts that have not been bought in more than 5 years, but 

Air Force guidance does not direct the use of default production lead 

times for spare parts that have not been purchased for more than 5 years.11

However, many items we reviewed used the standard default production 

lead time value because, according to officials, it was an easy estimate for 

item managers to use given their workload. In these cases, the default 

values greatly understated the actual lead times and resulted in later 

arrivals of deliveries to the air logistics centers, which may have negatively 

impacted their operational units’ mission readiness if those items had not 

been available when needed. Officials said that these default values may 

not be the best information available, and there might be other 

information obtained or generated for use in place of the default values. 

One possibility might be contacting the supplier to determine the current 

lead time. They noted that the use of these default values could also be an

explanation for the overstated lead times as well as the understated lead 

times. Absent actions by the Air Force to review and validate its default 

 11 Air Force Materiel Command Manual 23-1, Requirement for Secondary Items (D200A, 

D200N) (Jan. 5, 2007). 

Page 15 GAO-07-281 Defense Inventory
lead time estimates and consider other options for better lead time data, 

mostly for infrequent buys, parts shortages or early obligation of funds will 

likely continue. 

Navy Tended to 

Underestimate and 

Overestimate Lead Time 

Estimates 

The Navy tended to both underestimate and overestimate its acquisition 

lead times, receiving a significant amount of items both sooner and later 

than expected. Of the 19,304 Navy deliveries we reviewed, just over 39

percent had actual acquisition lead times that were more than 90 days 

shorter than estimated. As a result, about $165 million worth of inventory 

arrived earlier than expected and the funds for this inventory were 

obligated prematurely. In addition, about 28 percent had actual lead times

that exceeded their estimates by more than 90 days, which resulted in 

almost $561 million of items arriving later than anticipated, as shown in 

table 6. 

Table 6: Navy Differences between Actual and Estimated Acquisition Lead Times 

Dollar value (in thousands) of deliveries with variances Percent of deliveries with variances 

>90 days 

early 

>1 week to

90 days 

early 

Up to 1 

Week early 

-- Up to 1 

week late

>1 week 

to 90 

days late

>90 more 

days late

>90 

days 

early

>1 week 

to 90 

days 

early 

Up to 1 

week early 

– Up to 1 

week late

>1 week 

to 90 

days late

>90 

days 

late

Navy 

Mechanicsburg $70,792 $29,343 $6,772 $30,950 $82,430 41.2 17.0 3.0 13.1 25.7

Philadelphia 94,154 50,339 8,759 60,882 478,554 34.9 17.1 3.1 11.8 33.0

Total $164,946 $79,682 $15,531 $91,832 $560,984 39.3 17.0 3.0 12.7 27.9

Source: GAO analysis of delivery order information provided by Naval Inventory Control Points at Mechanicsburg and Philadelphia. 

Navy officials stated that they believe these variances are acceptable and

reasonable due to the variability in generating lead times, especially for

ship parts that are bought infrequently. They said that updating the lead 

time estimates more often would not make the forecasts more accurate

because there are not enough observations per item to update more often. 

We did not evaluate whether more frequent updating of the lead time 

estimates would improve their accuracy. However, some of the variances 

between the Navy’s actual and estimated lead times occurred because of

data input errors. We found input errors in a sample of 30 Navy deliveries

selected from the ones with the greatest variances between the estimated

and actual lead times that affected the estimates’ accuracy. For example, 

in two cases, the lead time estimates were incorrectly loaded into the 

ordering system used by the inventory control points at 10 times longer 

Page 16 GAO-07-281 Defense Inventory
than what the correct estimates should have been, and the error was not 

detected. Also, many of the excessive estimated lead times of the sample 

items we reviewed could not be explained by Navy officials, who stated 

there were conflicting lead time data within their records. Until the Navy

addresses these concerns by reviewing and validating its lead time data 

and correcting errors, either parts shortages or early obligation of funds 

are likely to continue. 

USD (AT&L) and the military components’ management actions and 

initiatives to reduce lead times from 2002 to 2005 were less effective 

overall than previous initiatives from 1994 to 2002. Progress in reducing 

lead times varied greatly by service from 2002 to 2005, with DLA and the 

Air Force reducing their lead times by about 3.3 and 4.1 percent annually 

respectively, while the Navy’s lead times remained the same, and the Army 

experienced an increase in lead times by 0.3 percent annually. Of the 

various management actions and initiatives taken by the services from 

2002 to 2005, some were new and some were continuations of previous 

initiatives, with each service pursuing varying combinations of initiatives. 

For example, initiatives to streamline administrative processes were 

implemented by all military components from 1994 to 2002 and from 2002 

to 2005, with DLA and the Air Force more aggressively implementing new 

initiatives from 2002 to 2005 than did the Army and Navy. In addition, from

1994 to 2002, enhanced USD (AT&L) oversight contributed to the rapid 

pace of lead time reduction; however, from 2002 to 2005, USD (AT&L) no 

longer continued to monitor progress made by the components in 

reducing lead times, and all components experienced reduced

management oversight. Moreover, while new initiatives to improve 

contracting practices were implemented by all military components from 

1994 to 2002 and were continued by all components from 2002 to 2005, 

from 2002 to 2005 DLA and the Air Force began new initiatives to 

strategically manage relationships with suppliers, while the Army and 

Navy did not. The military components could have decreased inventory 

requirements and saved money if more aggressive lead time reductions 

had been realized from 2002 to 2005 as they had been from 1994 to 2002.

USD (AT&L) and the components’ management actions and initiatives to 

reduce lead times from 2002 to 2005 resulted in a slower rate of reduction

in DOD-wide lead times of an average of 0.9 percent annually as compared 

to an average reduction of 5.6 percent annually from 1994 to 2002. The 

DOD Supply Chain Materiel Management Regulation gives general 

guidance stating that the military components should aggressively pursue 

Management Actions 

and Initiatives to 

Reduce Lead Times 

from 2002 to 2005 

Less Effective than 

Previous Initiatives 

from 1994 to 2002 

Slower Rate of Reductions 

in Lead Times from 2002-

2005 than from 1994-2002 

Page 17 GAO-07-281 Defense Inventory
the lowest possible acquisition lead times. As shown in table 7, progress in 

reducing lead times varied by military component from 2002 to 2005. The 

Army experienced an average annual lead time increase of 0.3 percent per 

year from 2002 to 2005, as compared to an average yearly reduction of 9.7

percent from 1994 to 2002, in part due to higher demands and supplier 

capacity issues. The Navy’s lead times were unchanged from 2002 to 2005, 

after decreasing by 2.8 percent from 1994 to 2002. The Air Force reduced 

its lead times from 2002 to 2005, but at a lower rate than it did from 1994 to

2002. The Air Force reduced its acquisition lead times by an average of 4.1

percent per year from 2002 to 2005, compared to an average yearly 

reduction of 4.5 percent from 1994 to 2002. Similarly, DLA’s acquisition 

lead times also decreased at a lower rate from 2002 to 2005 than from 1994 

to 2002, being reduced by an average of 3.3 percent per year in the former 

as compared to 6.2 percent per year in the latter.

Table 7: Lead Time Reductions from 2002 to 2005 Compared to Lead Time Reductions from 1994 to 2002 

Average lead time in days Reduction FY 1994-2002 Reduction FY 2002-2005 

Component FY 1994 FY 2002 FY 2005 Total Average yearly Total Average Yearly

DLA 293 176 159 39.9% 6.2% 9.7% 3.3%

Army 690 305 308 55.8% 9.7% -1.0% -0.3%

Navy 522 416 416 20.3% 2.8% 0.0% 0.0%

Air Force 620 430 379 30.6% 4.5% 11.9% 4.1%

DOD Totala531 336 327 36.7% 5.6% 2.7% 0.9%

Source: GAO analysis of DOD budget stratification data. 

a

DOD total was collectively determined by averaging all lead times and reductions for the individual 

items from the military components.

Military Components 

Pursued Various Initiatives 

to Reduce Lead Times with 

Varying Results 

Each of the military components pursued various initiatives to reduce 

acquisition lead times during both the 1994-2002 and 2002-2005 time 

periods with varying results. The progress of the military components in 

reducing lead times varied because each pursued different combinations 

of new and continued initiatives and management actions. These 

initiatives and actions generally fell into three areas of focus: streamlining 

internal administrative processes, improving oversight, and developing 

relationships with suppliers, as shown in table 8.

Page 18 GAO-07-281 Defense Inventory
Table 8: Component Initiatives and Management Actions to Reduce Acquisition Lead Times from 1994 to 2005 

DLA Air Force Army Navy

Initiative or Management action ‘94-‘02 ‘02-‘05 ‘94-‘02 ‘02-‘05 ‘94-‘02 ‘02-‘05 ‘94-‘02 ‘02-‘05

Streamlining admin. processes 

 -Information technology —c√a—c√a—c√a—c—c

 -Process redesign √ √ √ √ √ √b√ √b

 -Lead time reduction teams √ √b√ √b√ √b√ √b

 -Pre-loading technical data — — √ √b√ √a— —

Oversight efforts 

 -Lead time reduction goal √ — √ — √ — √ —

 -Accurate, historical lead times √ √ √ √ √ √ √ √

 -Tracks savings for initiatives — √a— — — — — —

 -Managers held accountable √ √ √ √ √ √ √ √a

 -Track results of goals √ — — — √a√a√ √a

-Track results of individual initiatives — √a— — — — — —

Strategic supplier relationships

 -Direct vendor delivery √ √b√ √b√ √b√ √b

 -Strategic supply planning — √ — √ — — — —

 -Strategic supplies alliances — √ — √ — — — —

 -Long-term strategic contracts √ √ √ √ √ √ √ √

 -Supply chain analysis —c√a— √a— —c— —

Source: GAO analysis of information from DLA, Air Force, Army, and Navy. 

Legend: √ = initiative or action underway; — = initiative or action not undertaken. 

a

Initiative or action underway for part of component and/or is not being fully implemented. 

b

Initiative or action already institutionalized and will not generate additional lead time reductions. 

c

Initiative or action planned. 

DLA began a number of new initiatives and took several management 

actions from 2002 to 2005 that have helped it reduce lead times, and it also

continued several initiatives that it had instituted from 1994 to 2002. This 

combination of continued and new initiatives enabled DLA to reduce its 

average lead time to 159 days. The Air Force also began a number of new 

initiatives and took several management actions to reduce lead times from 

2002 to 2005, while continuing several initiatives that it had instituted from 

1994 to 2002. This combination of continued and new initiatives enabled

the Air Force to reduce its average lead time from 430 to 379 days from 

2002 to 2005. Conversely, although individual Army components began 

some new initiatives to reduce lead times, the Army began no new 

Page 19 GAO-07-281 Defense Inventory
componentwide initiatives to reduce lead times from 2002 to 2005. 

Furthermore, the Army has placed less effort in continuing new initiatives, 

which, combined with higher demands and supplier capacity issues, has 

resulted in the Army’s average lead time increasing from 305 to 308 days 

from 2002 to 2005. Likewise, the Navy also did not begin any new 

componentwide initiatives to reduce lead times from 2002 to 2005, 

resulting in lead times holding steady at 416 days from 2002 to 2005. 

Initiatives to Streamline 

Administrative Processes 

Implemented by All 

Components 

Initiatives to streamline administrative processes were implemented or 

continued by all military components from 1994 to 2002 and from 2002 to

2005, with DLA and the Air Force more aggressively implementing new 

initiatives from 2002 to 2005 than did the Army and Navy. All components 

are working to design new information technology systems that could 

potentially improve administrative lead times. For example, DLA has just 

transitioned to its newly implemented information technology system, 

which officials said will help reduce process times for a number of 

transactions, shaving days off of administrative lead time. The components 

are also working on noninformation technology solutions. For example, 

Air Force officials recently said that they completed an initiative to reduce

clutter on work desks, which involved redesigning all workspaces so that 

if an employee is absent, another employee can find any needed document 

in the absent employee’s desk within 5 minutes. They attributed this 

initiative to preventing bottlenecks that could occur if employees had to

search for needed documents and information, potentially delaying the 

acquisition of items. The Army’s information technology initiative has only 

been implemented at one of its Life Cycle Management Commands and the 

Navy’s is still in the planning stages.

One particular initiative that officials cited as having been effective in 

reducing administrative lead times for the Air Force and Army over the 

last decade has been the entering of technical data into the inventory 

control computer systems for items in stock before a need arises to order 

them again. According to officials, from 1994 to 2002, the Army in 

particular made significant progress in reducing lead times because of the

entering of technical specification data. Before technical data for items 

were entered into computers, engineers often had to delay the acquisition 

process while they prepared technical drawings and wrote technical 

specifications. These delays ranged from days to several months. By 

determining technical specifications before there was a need for an item 

and saving these data in the computer system, officials were able to 

greatly reduce administrative lead times. They said that already having 

them in the system helped reduce lead times even when the technical 

Page 20 GAO-07-281 Defense Inventory
specifications subsequently needed changing; however, they added that

they have not completed entering technical specifications for all items. 

Although Army engineers have reduced workloads during certain periods 

of time when they have fewer orders to process, there are no efforts 

underway to enter technical specification data during these periods. An 

Army official indicated they were not entering technical specifications for 

items where the lead time savings would typically be fewer than 2 weeks, 

because such savings are not considered significant by Army officials. 

Army officials, however, made this determination without using any 

metrics or measures to determine the actual savings or cost of entering 

technical specifications for items with savings of fewer than 2 weeks. 

USD (AT&L) No Longer 

Provided Oversight and 

Guidance on Lead Times 

from 2002 to 2005 

From 1994 to 2002, enhanced USD (AT&L) oversight and guidance 

contributed to the rapid pace of lead time reduction; however, from 2002 

to 2005, USD (AT&L) no longer continued to monitor progress made by 

the components in reducing lead times, and all components experienced 

reduced management oversight. In 1994, we reported that USD (AT&L) 

was unaware of the lack of progress made in reducing lead times from

1990 to 1994 because of the absence of adequate oversight information.12

We also indicated that the data reported by military components did not 

include historical trends to indicate changes in lead time days before and

after the lead time reduction initiatives were begun. Likewise, we reported 

that the statistics at that time were not comprehensive enough to tie 

specific initiatives to the lead time reductions experienced for individual 

initiatives. At the time, however, USD (AT&L) was able to provide a

general estimate of the financial benefit of lead time reductions, 

determining that for each day that the DOD-wide average lead time is 

reduced, a procurement savings of $10 million can be realized. If the 

financial benefits of lead time reductions are the same in 2005 as they 

were in 1994, the value of the savings in 2005 dollars would be $12.5 

million per day. 

On November 23, 1994, USD (AT&L) issued a memorandum to its 

components emphasizing the importance of fully implementing its 

guidance on reducing acquisition lead times. On March 8, 1995, according

to DOD officials, components were challenged to reduce business process 

cycle times by at least 50 percent over the next 5 years (from 1995 to 

2000). According to DOD officials, guidance and oversight were then 

 12 GAO/NSIAD-95-2. 

Page 21 GAO-07-281 Defense Inventory
applied to acquisition lead times through the budget process. However, by

2002, USD (AT&L) officials said they no longer provided active oversight 

on acquisition lead time or monitored the progress made by the 

components in reducing lead times, because management focus shifted 

from reducing lead times to improving performance on more broad 

metrics such as backorders. They added that they continued to monitor 

other broad metrics from 2002 to 2005 and did not establish lead time 

reduction goals or require standardized reporting of metrics designed to 

measure reductions in lead times. In addition, with the exception of DLA’s 

Strategic Material Sourcing initiative, USD (AT&L) and component 

officials said they did not collect data, establish metrics, or measure and 

report the impact and costs of any specific initiative on lead times. 

Without this information, USD (AT&L) and the components were unable 

to provide effective oversight on lead time reduction efforts. Furthermore, 

from 2002 to 2005, USD (AT&L) officials said they no longer measured the 

financial impact of lead time reductions on inventories. USD (AT&L) and 

the components thus have been unable to determine the relative value of

pursuing lead time reductions when determining the best use of their 

resources. The inability to determine the financial impact on inventories of 

lead time reductions and the projected time saved from the proposed 

initiatives impedes the ability of decision makers to make informed 

choices as to which initiatives to implement. 

According to officials, without active USD (AT&L) oversight, all 

components experienced reduced management oversight from 2002 to 

2005. Officials from the military components indicated that, because less 

emphasis was placed on lead times by USD (AT&L), less emphasis was 

placed on lead times at the component level. These officials said that 

component managers tend to place enhanced management focus on what 

they are held accountable for by USD (AT&L). Component officials 

suggested that renewed emphasis on lead time reduction by USD (AT&L), 

including the setting of lead time reduction goals, could increase the 

components’ management focus on reducing lead times. Until USD 

(AT&L) takes steps to exercise oversight as it did from 1994 to 2002, such 

as reemphasizing guidance, establishing lead time reduction goals, 

collecting data and establishing metrics to measure progress toward 

meeting lead time reduction goals, measuring and reporting on the results 

of individual initiatives, and measuring the financial impact of lead time 

reductions, the components and USD (AT&L) will not have available the 

information needed to effectively manage and provide oversight of lead

times, hampering their ability to reduce lead times. Further, without this 

information, USD (AT&L) and the components will not be able to 

prioritize or reevaluate lead time reduction initiatives, determine the 

Page 22 GAO-07-281 Defense Inventory
relative importance of lead time reduction when making contracting 

decisions, or determine the cost-effectiveness of lead time reduction 

efforts. 

Subsequent to September 2005, Air Force and DLA officials said they 

began planning and implementing new efforts to improve oversight, 

including setting lead time reduction goals, holding managers accountable

for lead times, tracking lead times to ensure that goals were met, and 

regularly reporting lead times to managers. In addition, a new metric is 

also currently under development by DLA, called attainment to plan, 

which measures the ability of item supply planners to have material 

available when needed. DLA officials stated that they anticipate increased 

focus on lead times will improve performance of this metric. Moreover, 

USD (AT&L) officials stated they were working with the military 

components to define a DOD-wide lead time metric. They also stated in 

August 2006 that they were in the process of awarding a contract to a 

private company to evaluate if USD (AT&L) oversight of lead times would 

be worthwhile and stated that they currently were providing no oversight. 

USD (AT&L) officials indicated that increases in lead times could lead to

increases in backorders, and said that they provide oversight on 

backorders.13

Initiatives to Develop 

Relationships with 

Suppliers Implemented by 

Components 

Initiatives to develop relationships with suppliers were implemented by all 

of the military components from 1994 to 2002. All military components 

implemented initiatives to improve contracting practices from 1994 to 

2002 and continued them from 2002 to 2005. For example, each 

component used initiatives to increase use of long-term contracts to 

reduce lead times. According to Navy officials, one example of a 

successful initiative begun in the late 1990s was the Navy’s practice of 

considering lead times as criteria in contract awards for spare parts. 

Whenever issuing a new contract for spare parts, they said that the Navy 

sets as a criterion for the bid a 25 percent reduction in the item’s 

production lead time, and by adding this as a factor, the Navy is able to 

encourage suppliers to reduce lead times. 

 13 Backorders are orders that are held in an unfilled status pending receipt of additional 

parts or equipment through procurement or repair. DOD’s supply chain management 

improvement plan specifies annual performance targets for backorders for each of the

components and DOD overall. 

Page 23 GAO-07-281 Defense Inventory
In addition to continuing these prior initiatives, from 2002 to 2005 the DLA 

and the Air Force began new initiatives to strategically develop 

relationships with suppliers. According to DLA and Air Force officials, 

these new initiatives not only helped reduce lead times by allowing for 

streamlined and simplified purchasing of items on long-term contracts, but 

also (1) allow for increased information sharing with suppliers, (2) enable 

components to leverage their buying power, and (3) empower components 

to strategically target key items to ensure their availability. 

For example, according to DLA officials, their Strategic Material Sourcing 

initiative is intended to improve procurement for 3.6 million items 

designated as critical. Items are designated as critical based on a series of 

factors, then are grouped into categories, with different acquisition 

strategies being used for different categories of items. Of the 3.6 million 

items marked as critical, 390,000 were identified for placement on 

contracts strategically designed to leverage DLA’s market power to 

improve sourcing for these items. By forming alliances with producers of 

these items, DLA officials told us they have been able to reduce lead times 

by taking advantage of DLA’s buying power and by negotiating contracts 

that ensure supply availability in otherwise volatile markets. As of August 

2006, one-half of these targeted items were already on strategic long-term 

contracts. According to officials, this initiative has thus far generated $247 

million in gross savings with over $64 million generated in 2005 alone, 

while costing only $5.6 million to implement. These savings do not include 

savings from reduced storage costs, nor do they include the future savings 

expected as the program continues. This initiative is also unique in that 

DLA officials said they are using metrics to measure and report the 

effectiveness of the initiative, thereby improving accountability. An 

example identified by Air Force officials is the purchase supply chain

management initiative. One of many parts of this initiative aimed at 

reducing lead times is the use of Commodity Councils to help improve 

acquisition of select items. Commodity Councils are groups of experts in

particular commodity groupings who work together to improve acquisition 

of these items. They do so through commodity management, which is the 

process of developing a systematic approach to the entire usage cycle for a

group of items. In addition, USD (AT&L) is in the process of implementing 

a new initiative to improve commodity management DOD-wide. This new 

initiative seeks to emulate the successes of commodity management 

programs run by DLA and the Air Force across DOD. 

In contrast, the Army and the Navy, while continuing old initiatives, have 

not developed new initiatives to develop strategic relationships with 

suppliers for critical items. Army and Navy officials indicated that they are 

Page 24 GAO-07-281 Defense Inventory
content with the lead time reductions experienced and stated that new 

initiatives were not undertaken because of a lack of USD (AT&L) focus 

and oversight on lead time reduction. Officials cited ongoing military 

operations as one of the primary factors diverting attention away from 

reducing lead times. While the Army and Navy continue to benefit from the 

lead time reductions generated from past initiatives, until these two 

components begin initiatives to develop strategic relationships with 

suppliers, they may be unable to realize the potential benefits from 

improved supplier relationships and may continue to experience lower 

rates of lead time reductions than DLA and the Air Force. 

More Aggressive Lead 

Time Reductions Could 

Have Resulted in 

Decreases in Inventory 

Requirements and 

Monetary Savings 

The military components could have decreased inventory requirements 

and saved money if more aggressive lead time reductions had been 

realized from 2002 to 2005, as they had from 1994 to 2002. DOD budget 

documents indicate that inventory requirements to cover lead times 

increased from $15.6 billion in 2002 to $19.9 billion in 2005. According to 

officials, the primary reason for the increase in inventory has been 

increased demand due to recent military operations. As a result, even as 

lead times were reduced by an average of 0.9 percent a year from 2002 to 

2005, requirements to cover lead times rose. If the military components 

had been able to continue reducing lead times by an average of 5.6 percent 

a year, as they did from 1994 to 2002, the military components’ lead time 

inventory requirements would only have risen to $17.2 billion, rather than 

to $19.9 billion, as shown in figure 1. The additional lead time 

requirements potentially tied up $2.7 billion that could have been obligated 

for other needs. 

Page 25 GAO-07-281 Defense Inventory
Figure 1: Potential Impact of Reduced Lead Time Inventory Requirements 

Source: GAO analysis of DOD’s summary budget stratification data.

0

5

10

15

20

25

Actual lead time requirements

Requirements if lead time reduction had continued at 1994–2002 rate

2002 2003 2004 2005

Lead time requirements (Dollars in billions)

Year

In addition to the potential savings associated with decreased inventory 

requirements, if the military components had been able to continue 

reducing their lead times at 5.6 percent per year, it would have led to a 

significant savings from a reduced need to maintain “safety” inventory,14

which is the amount of inventory the military components maintain onhand to cover supply and demand fluctuations. This level is determined by 

a formula that includes a number of factors, including lead times. 

Reductions in lead times can significantly impact safety inventories 

needed. Due to reduced USD (AT&L) oversight of lead times, we were 

unable to determine how reducing lead times would financially impact 

procurement costs for safety inventories. However, in 1994 we reported 

that if the components could reduce their overall lead times by 25 percent

by 2000, it would lead to a procurement savings of about $910 million. 

Until USD (AT&L) and the components take steps to renew their focus on

 14 Safety level inventory is the quantity of materiel required to be on hand to permit 

continued operation in the event of a minor interruption of normal replenishment or 

fluctuation in demand. 

Page 26 GAO-07-281 Defense Inventory
reducing lead times by aggressively continuing prior initiatives and 

implementing successful new initiatives, the components may continue to 

experience spare parts shortages and may spend significantly more money 

to purchase additional inventory. 

Acquisition lead times are the military components’ estimates as to when 

items will arrive, and varying from that expectation increases the 

likelihood that the right supplies will not be at the right place at the right 

time. When the components understate their lead time estimates, material 

shortages and reduced readiness can occur. Without more accurate lead 

time estimates, the components will not place orders and obligate funds as 

early as necessary, and they may miss opportunities to potentially improve 

readiness rates. Conversely, overstated and lengthy acquisition lead time 

estimates can cause early obligation of funds as well as increases in onhand inventories, although spare parts that come in early could potentially

improve readiness. Until the Army reviews and evaluates when deliveries 

are representative and should be used to update lead time values, 

maintains lead time data in each of its computer systems, and validates 

data input, later than expected deliveries and potential parts shortages will 

likely occur. In addition, absent actions by DLA to review and revise the 

methodology and inputs it uses to compute lead time estimates, DLA will 

continue to obligate funds earlier than necessary and have early delivery

of items. Moreover, without taking steps to review and validate default 

lead time estimates and consider other options for obtaining better lead 

time data, the Air Force will continue to experience early obligation of 

funds and potential parts shortages. Finally, until the Navy reviews and 

validates its lead time data and corrects errors, parts shortages and early

obligation of funds are likely to continue. Absent actions by all of the 

military components to address these problems and institute corrective 

procedures, their acquisition lead time estimates will continue to vary 

greatly from their actual lead times. 

Conclusions 

The military components have also slowed their efforts to reduce 

acquisition lead times as compared to earlier years. Their current lead time

reduction rate may not be significant enough to offset the costs of growing 

requirements. Until USD (AT&L) and the military components take steps 

to renew their focus on reducing lead times by continuing prior initiatives

and implementing successful new initiatives to streamline administrative 

processes, improve oversight, and develop strategic relationships with 

suppliers, they will be unable to significantly reduce lead times as they 

were able to do in the past. As a result, the military components may 

potentially spend hundreds of millions of dollars to purchase additional 

Page 27 GAO-07-281 Defense Inventory
inventory. Increased emphasis on improved lead time estimates and 

overall lead time reductions will improve the military components’ ability 

to efficiently use available resources. 

To improve the military components’ accuracy in setting acquisition lead 

time values, we recommend that the Secretary of Defense take the 

following six actions. 

Recommendations for 

Executive Action 

1. Direct the Secretary of the Army to have the Commanding General, 

Army Materiel Command, direct the Aviation and Missile Life Cycle 

Management Command to establish clear guidelines for item managers 

to know when to review and how to determine whether deliveries 

should be considered representative and thus used to update lead 

times. 

2. Direct the Secretary of the Army to have the Commanding General, 

Army Materiel Command, direct the Life Cycle Management 

Commands to reemphasize the importance of periodically reviewing 

and validating their recorded lead time data to detect and correct data 

input errors and other inaccurate information. 

3. Direct the Secretary of the Army to have the Commanding General, 

Army Materiel Command, direct Communications-Electronics Life 

Cycle Management Command to maintain and update automated lead 

time data within its Logistics Modernization Program computer 

system. 

4. Direct the Director of DLA to have its supply centers review the 

methodology and inputs used to compute its lead time estimates and 

revise them to incorporate recent improvements in DLA actual lead 

times. 

5. Direct the Secretary of the Air Force to have the Commander, Air 

Force Materiel Command, direct its air logistic centers to use better 

sources of lead time information, such as supplier estimates, if 

available, rather than default values for items that have not been 

ordered in the last 5 years. 

6. Direct the Secretary of the Navy to direct the Commander, Naval 

Inventory Control Point, to reemphasize the importance of having its 

inventory control points periodically review and validate their 

recorded lead time data to detect and correct data input errors or 

other inaccurate information. 

Page 28 GAO-07-281 Defense Inventory
To strengthen DOD’s and the military components’ management of 

acquisition lead times, we recommend that the Secretary of Defense direct

the Under Secretary of Defense for Acquisition, Technology, and Logistics 

to take the following five actions. 

1. Establish component lead time reduction goals over a 5-year period 

from October 2007-2012.

2. Develop metrics to measure components’ progress toward meeting 

lead time reduction goals and require the periodic reporting of these 

metrics. 

3. Develop a general estimate of the financial impact of lead time

reductions, and use that as a metric to help components weigh the 

importance of lead time reductions. 

4. Direct the components to collect data, establish metrics, and measure 

and report the impact of individual lead time reduction initiatives, to 

include the cost of each initiative and its estimated cost savings. 

5. Work closely with the Army and Navy to develop joint strategic 

relationships with suppliers that would be beneficial in reducing lead

times. 

In written comments on a draft of this report, DOD concurred with eight, 

partially concurred with one, and did not concur with two of our 

recommendations. For the eight recommendations with which DOD 

concurred, the department identified actions and plans that are being 

taken to implement these recommendations. We agree that most of the 

identified actions are responsive and reasonable to address our concerns, 

although in several cases the final actions may not be completely 

implemented for several years. However, some of the department’s 

comments did not appear to address our concerns. More specifically, for 

one of the recommendations with which DOD concurred, we do not 

believe that its comments address our recommendation that the Army 

maintain and update automated lead time data within its Logistics 

Modernization Program computer system. In its comments, DOD said that 

this computer system does not provide automatic updates of data for 

calculation but it does have information needed to make decisions for 

manual implementation. As stated in our report, manual input errors have 

contributed to inaccuracies in lead times, and we believe these 

inaccuracies will continue if the department relies on manual 

implementation. We continue to believe that automated updates and 

Agency Comments 

and Our Evaluation 

Page 29 GAO-07-281 Defense Inventory
maintenance of lead time data are needed to improve the accuracy of lead 

time estimates. Further, DOD stated in its comments that it already had 

actions underway to address our recommendation to develop metrics to 

measure progress toward meeting lead time reduction goals. However, the 

contract for reviewing lead times is not to be awarded until later in fiscal 

year 2007. Since this effort was not underway at the time of our review, we 

believe that it is important to recommend that this effort be pursued until 

fully implemented. 

DOD partially concurred with our recommendation that the Under 

Secretary of Defense for Acquisition, Technology, and Logistics develop a 

general estimate of the financial impact of lead time reductions, and use 

that as a metric to help components weigh the importance of lead time 

reductions. DOD stated that to the extent that financial impact can be 

estimated, it will be one of the elements considered in a review DOD 

expects to conclude in 2008. DOD further stated that the challenge in

estimating the financial impact of lead time reductions was that there are

many other variables, and the effect of individual variables on lead time 

estimates cannot be separately identified. We recognize that the Office of 

the Under Secretary of Defense for Acquisition, Technology, and Logistics 

has concerns about its ability to estimate the financial impact of lead time

reductions, but note that it was able to provide an estimate of $10 million

in financial impact for each day that lead time was reduced when we 

published our 1994 report. Moreover, during our review, TACOM officials 

informed us that they have the ability to simulate the impact of reductions 

in lead times using their requirements determination process system on an 

item-by-item basis. The potential savings generated from the simulations 

could be helpful in estimating the savings from lead time reduction 

initiatives. We further note that the inability to determine the financial

impact of lead time reductions does not provide the needed incentives for 

the components to reduce lead times and impedes the ability of decision 

makers to make informed choices as to which initiatives to implement. 

Therefore, we continue to believe that the recommendation to the Under 

Secretary of Defense for Acquisition, Technology, and Logistics is valid. 

In addition, DOD did not concur with our recommendation to DLA to have 

the supply centers review the methodology and inputs used to compute its 

lead time estimates and revise them to incorporate recent improvements 

in DLA actual lead times. DOD stated that our review used data primarily 

from DLA’s legacy system from 2002 to 2005, which was prior to DLA’s 

implementation of its new computer system called Business Systems 

Modernization, and stated that consequently the benefits of this new 

system and processes were not taken into account in our review. While we 

Page 30 GAO-07-281 Defense Inventory
agree that the implementation of this new computer system should 

provide DLA with more tools to manage acquisition lead times, according 

to DLA’s Cross-Process Policy Memorandum 06-001 dated June 1, 2006, the 

basic methodology for automatic adjustments to both administrative and 

production lead times remains the same in the new system as under the 

legacy system (i.e., each is calculated as a weighted average based on onethird of the existing lead time of record and two-thirds of the actual or 

new lead time for the current award). Calculating the lead times in the 

same manner but recording the values in a newly implemented computer 

system will not improve the accuracy of the lead time estimates. 

Therefore, we continue to believe that the recommendation to DLA is 

valid. 

Moreover, DOD did not concur with our recommendation that the Under 

Secretary of Defense for Acquisition, Technology, and Logistics work 

closely with the Army and Navy to develop joint strategic relationships 

with suppliers that would be beneficial in reducing lead times. The 

department stated that it is actively pursuing a joint strategy to develop

strategic relationships, and that to instruct the services to develop 

strategic relationships separately with these suppliers would lead to a 

duplication of effort and dissipate the department’s leverage. We believe 

that DOD misunderstood our recommendation. The joint strategy initiative 

that DOD is actively pursuing, according to documentation provided by 

DOD, is focused on commodity management, not on developing strategic 

relationships to reduce lead times. Our recommendation calls for the 

Under Secretary of Defense for Acquisition, Technology, and Logistics to 

work closely with the Army and Navy to move beyond simply managing 

the acquisition of individual parts, and to form strategic partnerships with

key suppliers for ranges of items in situations where it would be possible 

to leverage these relationships to reduce lead times. Documentation from

DOD further states that DOD’s commodity management plan 

acknowledges that service initiatives will produce improvements, and that 

it respects those initiatives. Our recommendation, for the Under Secretary 

of Defense for Acquisition, Technology, and Logistics to work closely with

the Army and Navy to develop similar initiatives to those already 

underway by DLA and the Air Force, is not duplicative of ongoing efforts,

but would complement them. Until the Army and the Navy begin initiatives

to develop strategic relationships with suppliers, they may be unable to 

realize the potential benefits from improved supplier relationships and 

may continue to experience lower rates of lead time reductions than DLA 

and the Air Force. Therefore, we continue to believe that the

recommendation to the Under Secretary of Defense for Acquisition, 

Technology, and Logistics is valid. 

Page 31 GAO-07-281 Defense Inventory
The department’s comments are reprinted in appendix II. 

We are sending copies of this report to the Chairmen and Ranking 

Minority Members of the Senate Committee on Armed Services; the 

Subcommittee on Readiness and Management Support, Senate Committee 

on Armed Services; the Subcommittee on Defense, Senate Committee on 

Appropriations; the House Committee on Armed Services; the 

Subcommittee on Readiness, House Committee on Armed Services; and

the Ranking Minority Member, Subcommittee on Defense, House 

Committee on Appropriations. We are also sending copies to the Secretary 

of Defense; the Secretaries of the Army, Navy, and Air Force; the Director

of DLA; and the Under Secretary of Defense for Acquisition, Technology,

and Logistics. Copies will be made available to others upon request. 

Should you or your staff have any questions concerning this report, please 

contact William M. Solis, Director, at (202) 512-8365 or solisw@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Key contributors to 

this report are listed in appendix III. 

Sincerely yours, 

William M. Solis 

Director, Defense Capabilities and Management 

Page 32 GAO-07-281 Defense Inventory
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To address our objectives, we reviewed relevant documents, guidance, 

reports, and other information, as available, which related to acquisition 

lead times for class IX spare parts and any initiatives the Department of 

Defense (DOD) or the military components were undertaking in this area. 

We also interviewed cognizant officials within the Office of the Under 

Secretary of Defense (Acquisition, Technology, and Logistics); the Defense 

Logistics Agency Headquarters; the Army Materiel Command

Headquarters; Headquarters Air Force, the Deputy Chief of Staff, 

Installations, and Logistics, Inventory Management and Stockage Branch; 

and the Naval Supply Systems Command, Naval Inventory Control PointMechanicsburg, Pennsylvania. We also performed additional work at the 

Air Force Materiel Command Headquarters at Wright-Patterson Air Force 

Base, Ohio, had discussions with officials at the U.S. Army Tank 

Automotive and Armaments (TACOM) Life Cycle Management Command 

in Warren, Michigan, and obtained data from U.S. Army CommunicationsElectronics Life Cycle Management Command, U.S. Army Aviation and

Missile Life Cycle Management Command, and the Naval Inventory 

Control Point-Philadelphia, Pennsylvania. 

To examine the extent to which the military components’ estimated lead 

times varied from actual lead times, we obtained and reviewed 

information from each military component concerning any relevant 

policies, procedures, regulations, instructions, or memorandums about 

acquisition lead time development, maintenance, or management. We also 

obtained information regarding the processes used by the military 

components in generating their acquisition lead times from discussions 

with cognizant officials. To test the accuracy of the military components in 

estimating the acquisition lead times and the related actual arrival of items 

ordered, we requested that each military component provide us with a 

data file that contained the following information for class IX spare parts 

they each received between October 1, 2004, and September 30, 2005: 

• item name, 

• item NSN, 

• date ordered, 

• ordered from what company, 

• quantity ordered, 

• date delivered, 

• quantity delivered, 

• where delivered, 

• purchase order number or some other financial related reference, 

• cost per item, 

Page 33 GAO-07-281 Defense Inventory
Appendix I: Scope and Methodology 

• total cost of order, 

• forecasted/on-file administrative lead time for item at time of 

order, 

• forecasted/on-file production lead time for item at time of order, 

and 

• overall acquisition lead time for item. 

For DLA and the Air Force, we obtained data that covered deliveries to all 

three of their supply centers and Air Logistic Centers, respectively. In

regard to the Army, we obtained data from three Life Cycle Management 

Commands: TACOM, Communications-Electronic, and Aviation and 

Missile. We also obtained data from the Naval Inventory Control Points 

that are located in Mechanicsburg, Pennsylvania and Philadelphia, 

Pennsylvania. We compared the forecasted/on-file estimated lead times for 

each delivery with the actual lead times experienced, and then grouped 

the variances into five different categories. The categories were the actual

lead time (1) was within plus or minus 1 week from the estimated lead 

time, (2) was greater than 1 week to less than 90 days earlier than the 

estimated lead time, (3) was 90 or more days earlier than the estimated 

lead time, (4) was greater than 1 week to less than 90 days later than the 

estimated lead time; and, (5) was 90 or more days later the estimated lead

time. For all of the records in each category, we calculated the percent of

records in each category as compared to the total number of records 

reviewed and also calculated their dollar value. We took steps to ensure 

the reliability of the data we used in our review. We provided a list of 

specific data elements to the Army, Navy, Air Force, and DLA officials. The 

military components returned the requested information to us. To assess 

the reliability of these data, we reviewed the data for obvious 

inconsistency and completeness errors. In addition, we worked with 

agency officials to identify any data problems. When we found 

discrepancies (such as nonpopulated fields or data discrepancies), we 

brought them to the officials’ attention and worked with them to correct 

the errors. In addition, we sent an electronic questionnaire with questions 

regarding our use of the data and followed up on issues we believed were 

pertinent regarding the reliability of the data. Based on these efforts, we 

determined that the data were sufficiently reliable for the purposes of our 

report. 

To examine the extent to which military components’ current management 

actions, initiatives, and other programs have reduced lead times and 

affected inventory and budget requirements, we obtained and reviewed 

information from each military component concerning any relevant 

policies, procedures, regulations, instructions, or memorandums regarding 

Page 34 GAO-07-281 Defense Inventory
Appendix I: Scope and Methodology 

efforts, policies, actions, or initiatives to reduce lead times. We also 

interviewed officials within the Office of the Under Secretary of Defense 

(Acquisition, Technology, and Logistics); the Defense Logistics Agency 

Headquarters; the Army Materiel Command Headquarters; Headquarters 

Air Force, The Deputy Chief of Staff, Installations, and Logistics, Inventory

Management and Stockage Branch; and Naval Supply Systems Command, 

Naval Inventory Control Point-Mechanicsburg, Pennsylvania. We also 

performed additional work at the Air Force Materiel Command

Headquarters at Wright-Patterson Air Force Base, Ohio and had 

discussions with officials at the U.S. Army TACOM Life Cycle Management 

Command in Warren, Michigan. We further examined budget stratification 

data from the Army, Navy, Air Force, and the Defense Logistics Agency.

Using that budget stratification data, we reviewed all items present in the 

September 30 budget stratification reports for both 2002 and 2005 to 

determine the changes in average acquisition lead time for those items. We 

were unable to obtain budget stratification data for the components for 

1994, and thus simply reported the results of our 1994 GAO report 

evaluating overall lead times for each component. Additionally, we 

requested and analyzed the summary budget stratification reports for all 

components for September 2002 through September 2005 to determine any 

changes in average acquisition lead time and budget requirements from 

2002 to 2005. Based on our efforts, we determined that the data were 

sufficiently reliable for the purposes of our report. 

We conducted our work from November 2005 through November 2006 in

accordance with generally accepted government auditing standards. 

Page 35 GAO-07-281 Defense Inventory
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense 

of Defense 

Page 36 GAO-07-281 Defense Inventory
Appendix II: Comments from the Department 

of Defense 

Page 37 GAO-07-281 Defense Inventory
Appendix II: Comments from the Department 

of Defense 

Page 38 GAO-07-281 Defense Inventory
Appendix II: Comments from the Department 

of Defense 

Page 39 GAO-07-281 Defense Inventory
Appendix II: Comments from the Department 

of Defense 

Page 40 GAO-07-281 Defense Inventory
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 41 GAO-07-281

Appendix III: GAO Contact and Staff 

Acknowledgments 

William M. Solis, (202) 512-8365 

In addition to the contact listed above, Lawson Gist, Jr., Assistant Director, 

Rebecca Beale, Christopher Miller, Terry Richardson, Grant Mallie, 

Catherine Hurley, Minette Richardson, Nancy Hess, Art James, Renee 

Brown, Gayle Fischer, Kenneth Patton, and Nicole Harms made key 

contributions to this report. 

Defense Inventory

GAO Contact 

Acknowledgments 

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