**GAO-11-240R**                      Published: Jan 07, 2011. Publicly Released: Jan 07, 2011.                  

-   
-   
-   
-   

    Jump To:  
-  Elder Abuse 
-  Services for Older Adults 
-  State and Local-Level Drivers and Trends 
-  State and Local Fiscal Projections 
-  Federal Borrowing 
-  Managing the Debt 
-  Summary of Funding Provisions 
-  Auditing the Government's Books 
-  Unpacking the Financial Report 
-  Highlights 
-  Recommendations 
-  Background 
-  About This Work 
-  About This Work 
-  Trends 
-  About the Center 
-  Why It's High Risk 
-  What Remains To Be Done 
-  Key Reports 
-  Newest COVID-Related Reports 
-  AI Use Cases 
-  Flood Insurance 
-  Past Pandemic-Related Reports 
-  CARES Act Oversight Reports 
-  All COVID-19 Reports 
-  Report Suspected Fraud 
-  Subjects 
-  How to Get Notified 
-  Past Reports 
-  Public Health Threats 
-  Explore the FY 2022 and 2023 Funds 
-  Lessons Learned 
-  Agency Reports 
-  Recent Reports 
-  Recommendations 
-  Supplemental Material 
-  Full Report 
-  Additional Data 
-  View Decision 
-  Downloads 
-  Previously Identified Actions 
-  Related Pages 
-  Associated Agencies 
-  Tough Choices and Opportunities Ahead 
-  Americas Fiscal Future Key Areas 
-  Retirement Security Key Areas 
-  Current List 
-  About The High Risk List 
-  Area Ratings 
-  Previous High Risk Products 
-  Search Federal Vacancies 
-  Past Federal Vacancies 
-  Violation Letters 
-  About the Yellow Book 
-  Advisory Council 
-  Related Resources 
-  Comment Letters 
-  Related Publications 
-  Contacts and Resources 
-  Major Issues Facing the Nation 
-  Meeting Strategic Challenges 
-  Additional Resources 
-  Resources 
-  GAO Contacts 
-  Mission Teams 
-  Operations and Staff Offices  
-  Organization Chart  
-  Why a Career at GAO? 
-  Am I Qualified? 
-  Company Culture 
-  Reasonable Accommodations 
-  Video Gallery 
-  Paid Internships 
-  Student Volunteers 
-  Professional Development Program 
-  Advancement 
-  Executive Candidate Program 
-  Summer Associates 
-  Externships 
-  Benefits 
-  Contacts 

Skip to Highlights

## Highlights

The Department of Defense (DOD) spends billions of dollars to purchase, manage, store, track, and deliver spare parts and other supplies needed to keep military equipment ready and operating. Given the need to support ongoing U.S. military operations, DOD reported that it currently manages more than 4 million secondary inventory items valued at more than $91 billion as of September 2009. However, DOD reported that $10.3 billion (11 percent) of its secondary inventory has been designated as excess and categorized for potential reuse or disposal. According to DOD, another $15.2 billion (17 percent) of its secondary inventory exceeds the approved acquisition objective and is being retained because it was determined to be more economical to retain than to dispose of it or it might be needed in the future. Since 1990, we have identified DOD supply chain management as a high-risk area due in part to ineffective and inefficient inventory management practices and procedures, weaknesses in accurately forecasting demand for spare parts, and challenges in achieving widespread implementation of key technologies aimed at improving asset visibility. These factors have contributed to the accumulation of billions of dollars in spare parts that are excess to current requirements. Moreover, we have recently reported on the inventory management practices of the military departments and the Defense Logistics Agency (DLA) and recommended DOD take steps to improve demand forecasting, modify policies to provide incentives to reduce on-order inventory that is not needed to support requirements (i.e., on-order excess), ensure proper, documented reviews are conducted to validate methodologies for making retention decisions, and establish metrics and goals for tracking and assessing the cost efficiency of inventory management. To provide high-level strategic direction, DOD issued its Logistics Strategic Plan in July 2010, which, among other things, established a goal to improve supply chain processes, including inventory management practices. Section 328 of the National Defense Authorization Act (NDAA) for Fiscal Year 2010 requires us to submit to the congressional defense committees an assessment of the extent to which the Plan meets the specified requirements no later than 60 days after the Plan's submission. Our objectives were to (1) determine the extent to which DOD's Plan addresses the reporting elements required by section 328 of the NDAA and (2) assess the extent to which the Plan addresses six key characteristics that help establish a comprehensive, results-oriented management framework to guide implementation. These characteristics were not required to be included by section 328, but our prior work examining national strategies and logistic issues has shown that these characteristics help establish a results-oriented management framework for effective implementation.

## Full Report

Full Report (27 pages)

Accessible Text 

## Office of Public Affairs

Sarah Kaczmarek
kaczmareks@gao.gov

(202) 512-4800

## Topics

Human Capital

AssetsDefense capabilitiesDefense procurementEquipment inventoriesInventory controlInventory control systemsLogisticsMilitary inventoriesMilitary materielProcurement planningSpare partsSupply chain managementProcurement policyAsset management