GAO

United States General Accounting Office

Report to Congressional Committees

November 1999 DEFENSE 

INVENTORY

Improved 

Management 

Framework Needed to 

Guide Air Force Best 

Practice Initiatives

GAO/NSIAD-00-2

Page 1 GAO/NSIAD-00-2 Defense Inventory

Contents

Letter 3

Appendixes Appendix I: Summary of Air Force Initiatives 14

Appendix II: Comments From the Department of Defense 20

Appendix III: GAO Contacts and Staff Acknowledgments 22

Related GAO Products 24

Tables Table 1: Air Force Initiatives and Projected Completion Dates 7

Abbreviations

CREP Contract Repair Enhancement Program

DOD Department of Defense

DREP Depot Repair Enhancement Program
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-281460 Letr

November 18, 1999

Congressional Committees

Section 347 of the Strom Thurmond National Defense Authorization Act for 

Fiscal Year 1999 requires the secretary of each military department to 

submit to the Congress a schedule for implementing best commercial 

inventory practices for the acquisition and distribution of secondary 

inventory items.1

 Best commercial practices are defined as practices that 

enable the Department to reduce inventory levels while improving the 

responsiveness of the supply system to user needs. Section 347 further 

requires that the schedule provide for implementation of such best 

practices to be completed within 5 years of its enactment, or by October 17, 

2003. The act also requires us to evaluate the extent to which the secretary 

of each military department has complied with the act’s requirements. 

In this report, we discuss our evaluation of the Air Force’s best practices 

implementation schedule for the acquisition and distribution of secondary 

inventory items, which the Secretary of the Air Force submitted to the 

Congress on July 19, 1999.2

 Specifically, we (1) determined the extent to 

which the schedule responds to the provisions of the act and (2) identified 

specific elements of a management framework needed for effective 

implementation and oversight of the Air Force’s best practice initiatives. 

Results in Brief The Air Force’s schedule is generally responsive to the act. It describes 17 

initiatives that address the acquisition and distribution of secondary items 

that the Air Force manages, and with one exception, provides for 

implementation of these initiatives to be completed within 5 years.3

 The 

initiatives are aimed at reducing the Air Force’s infrastructure and 

1

Secondary inventory includes spare parts, clothing, and medical supplies to support 

Department of Defense (DOD) forces worldwide.

2

We are providing separate reports on the Army, Air Force, and Navy best practice 

implementation schedule. 

3

The Pipeline Tracking Analysis and Metrics initiative is planned to be completed between 

2004 and 2006.
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improving the maintenance, information management, and acquisition 

processes. 

Though generally responsive to the act’s requirements, the Air Force’s 

schedule provides a management framework that lacks an overall strategy 

and specific elements needed to assess implementation progress, measure 

success, and identify needed changes. While the schedule’s initiatives are 

linked to higher level Air Force logistics goals and objectives, there is no 

strategy that ensures the efforts are coordinated, nor are specific 

performance goals and baselines established to measure the overall results 

of the initiatives. In prior work,4

 we noted that the lack of a detailed 

management framework contributed to DOD’s difficulty in implementing 

new initiatives. The Government Performance and Results Act offers a 

model for developing an effective management framework through the use 

of strategic plans and establishment of performance measures to assess the 

results of the initiatives and improve the likelihood of successful 

implementation. 

So that progress and results information is available to the Congress and 

DOD managers, we are recommending that the Secretary of the Air Force 

develop a management framework for implementing these initiatives that 

would include a comprehensive strategy and performance plans. 

Background To provide reparable parts to support its operations, the Air Force uses an 

extensive logistics system that is based on procedures and concepts that 

have evolved over time. Reparable parts are expensive items, such as 

hydraulic pumps, navigational computers, wing sections, and landing gear, 

that can be fixed and used again. The Air Force’s logistics system, often 

referred to as a logistics pipeline or supply chain, consists of a number of 

interrelated activities that provide parts where and when they are needed.5

These activities include the purchase, storage, repair, and distribution of 

parts, which together require billions of dollars of investments in 

4

Defense Inventory: DOD Could Improve Total Asset Visibility Initiative With Results Act 

Framework (GAO/NSIAD-99-40, Apr. 12, 1999).

5

The Air Force also relies on this pipeline for consumable parts that are not intended for 

repair, such as screws, fuses, clothing, and food. Some of these are used extensively to fix 

reparable parts and aircraft. The Defense Logistics Agency provides most of the consumable 

parts that Air Force repair activities use and handles a large portion of the warehousing and 

distribution of reparable parts.
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personnel, equipment, facilities, and inventory. In 1998, DOD reported that 

the Air Force’s secondary inventory was valued at $25.9 billion, or

42 percent of DOD’s total secondary inventory.6

Since 1990, we have identified DOD’s management of secondary 

inventories as a high-risk area because levels of inventory were too high 

and management systems and procedures were ineffective.7

 In addition, 

our financial statement audits have identified continuing significant 

problems with the integrity of DOD’s inventory data. For example, we 

reported that inaccurate inventory data resulted from weaknesses in DOD’s 

procedures relied on to maintain visibility over, and conduct physical 

counts of, on-hand inventories. Until these problems are effectively 

resolved, DOD’s ability to reliably measure and assess performance will 

continue to be impaired.8

 While DOD has made some improvements, these 

general conditions still exist, and this area remains on our high-risk list.9

We have reported that adopting best business practices in inventory 

management and improving the reliability of financial management 

information are key steps toward solving these problems.

The Congress has recently taken specific actions to encourage DOD to 

adopt best commercial practices to improve its inventory management. 

The National Defense Authorization Act for Fiscal Year 1998 required the 

Director of the Defense Logistics Agency to develop and submit to the 

Congress a schedule for implementing best commercial practices for the 

acquisition and distribution of nine categories of consumable-type 

6

Inventory value reported in the Department of Defense Supply System Inventory Report, 

Sept. 30, 1998. The Air Force Working Capitol Fund financial statements report this 

inventory value at $19.8 billion.

7

In 1990, we began a special effort to review and report on the federal program areas that we 

identified as high risk because of vulnerabilities to waste, fraud, abuse, and 

mismanagement. This effort, which was supported by the Senate Committee on 

Government Affairs and the House Committee on Government Reform, brought a

much-needed focus to problems that were costing the government billions of dollars. 

8

Results Act: DOD’s Annual Performance Plan for Fiscal Year 1999 (GAO/NSIAD-98-188R, 

June 5, 1998), DOD Financial Management: More Reliable Information Key to Assuring 

Accountability and Managing Defense Operations More Efficiently

(GAO/T-AIMD/NSIAD-99-145, Apr. 14, 1999), and Department of Defense: Status of Financial 

Management Weaknesses and Actions Needed to Correct Continuing Challenges

(GAO/T-AIMD/NSIAD-99-171, May 4, 1999).

9

Major Management Challenges and Program Risks: Department of Defense

(GAO/OCG-99-4, January 1999).
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supplies. The Strom Thurmond National Defense Authorization Act for 

Fiscal Year 1999 placed a similar requirement on the secretary of each 

military department, with implementation to be completed by October 17, 

2003. 

DOD is working to adopt best practices in its operations. In November 

1997, the Secretary of Defense issued the Defense Reform Initiative report, 

which identified a number of reengineering initiatives aimed at adopting 

modern business practices to achieve world-class standards of 

performance. In addition, the DOD performance plan for fiscal year 2000 

noted that the inventory supply system is larger than required to support 

today’s smaller force structure and outlined goals to reduce inventory 

levels and streamline infrastructure. In March 1999, the Under Secretary of 

Defense (Acquisition Reform) stated that DOD needed “a revolution in 

business affairs . . . that embodies the best of modern business practices, 

the ability to access the full range and scope of technologies to meet the 

speed and agility demanded by the new battlespace, and an absolute 

commitment to finding the best, most efficient means of delivering goods 

and services to our warfighters.” 

Air Force’s Schedule 

Generally Responds to 

the Act’s Requirements

The Air Force’s schedule is generally responsive to the requirements of the 

act. It contains 17 initiatives that address the acquisition and distribution of 

secondary inventory items the Air Force manages and provides for 

implementation of these initiatives to be completed within 5 years, with 

one exception.10 The initiatives are aimed at improving the maintenance, 

information management, and acquisition processes and reducing 

infrastructure. For example, the Contract Repair Enhancement Program 

initiative is designed to reduce not only the time it takes to provide a 

customer with a needed item (called logistics response time) but also the 

number of days it takes to repair items. Another initiative is intended to 

track items removed from aircraft through the repair pipeline until they are 

ready for reissue, as well as track items ordered until they are received by 

the customer. 

For most of the initiatives, the schedule provided a description; specific 

goals and objectives; linkage to higher level Air Force goals and objectives; 

10The final phase of the Pipeline Tracking Analysis and Metrics System is dependent on 

receiving 2 to 3 years of data from other information management initiatives. Therefore, 

implementation is expected to be completed between 2004 and 2006. 
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an estimate of the portion of inventory to be affected by the initiative; and 

general outcome measures, such as increased readiness. For a few 

initiatives, the schedule provided the accountable organization and interim 

milestones to measure progress. The schedule also contained a description 

of the inventory management functions the initiatives would affect and 

projected dates for completion. Table 1 lists the initiatives and the 

projected dates for implementation to be completed. (See app. I for a 

description of each initiative.)

Table 1: Air Force Initiatives and Projected Completion Dates

a

Although formally completed in March 1998, the Air Force continues to examine potential 

improvements.

Initiative category Initiative Projected completion date

Maintenance Depot Repair Enhancement Program

Contract Repair Enhancement Program

Aircraft Repair Enhancement Program

Mar. 1998a

Sept. 2001

Dec. 2000

Information 

Management

Integrated Maintenance Data System

Integrated Logistics System-Supply

Pipeline Tracking Analysis and Metrics System

Execution and Prioritization of Repair Support System

Merger of D041 and D062 Systems

Requirements Management System

Sept. 2003

Sept. 2001

2004−2006

July 2001

Sept. 1999

Jan. 2000

Outsourcing or 

Otherwise Reducing 

Infrastructure

Virtual Prime Vendor

Reengineering Supply Support Process

Express Transportation

Depot Maintenance Consolidation

Regional Supply Squadron

Supply and Transportation Unit Reengineering

July 2000

June 2002

Dec. 1999

Sept. 2000

July 2002

Sept. 2001

Acquisition Corporate Contracts June 1999

Other Logistics Transformation and Functional Integration Mar. 2000
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Management 

Framework Is Key to 

Implementing 

Initiatives

The Air Force’s schedule for implementing its initiatives provides a 

management framework that lacks an overall strategy and specific 

elements needed to assess implementation progress, measure success, and 

identify needed changes. The Government Performance and Results Act 

can provide a model for developing an effective management framework to 

guide the implementation of the initiatives and to provide the Congress and 

DOD managers with information on progress and results.

Schedule Provides a Limited 

Management Framework 

In our past work, we reported that the lack of a management framework 

containing an overall strategy and outcome-oriented goals and 

performance measures contributed to DOD’s difficulty in implementing 

new initiatives. For example, we reported that DOD did not have an 

adequate management framework to clearly determine the progress being 

made in achieving the Total Asset Visibility initiative goals and that the 

initiative’s strategic and implementation plans were inadequate.11 As a 

result, DOD managers did not have a clear picture of the initiative’s 

implementation status or know how various initiatives within each service 

contributed to achieving overall DOD goals and objectives. In addition, we 

reported that there was confusion over who would use the system and how 

it would be used. 

The schedule represents a collection of best practice initiatives the Air 

Force plans to complete within the next 5 years to improve the acquisition 

and distribution of secondary supply items managed by the Air Force. 

While the schedule included goals and objectives for each initiative, most 

were stated in very general terms. For example, the Express Transportation 

initiative is designed to replace the current way items are delivered with 

faster commercial or in-house air delivery, which could reduce inventories 

and increase unit readiness ratings. However, the schedule included no 

specific performance measures or baselines for these goals. Without this 

information, it is difficult to determine the impact these initiatives may 

have on overall Air Force operations. Also, objective information on 

implementation progress and achievement of desired outcomes may not be 

available to the Congress and defense managers. 

11Total Asset Visibility is a DOD-wide initiative to provide users with timely and accurate 

information on the location, status, and identity of units, personnel, equipment, and 

supplies. For additional information, see Defense Inventory: DOD Could Improve Total 

Asset Visibility Initiative With Results Act Framework (GAO/NSIAD-99-40, Apr. 12, 1999). 
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In some cases, the schedule did provide some elements of a management 

framework. Each initiative was linked to Air Force logistics improvement 

goals, which the Air Force has aligned with the DOD Logistics Strategic 

Plan. The schedule also provided a general estimate of what portions of the 

existing inventory may be affected by each initiative. Also, five initiatives 

contained interim actions and milestones that could be used to measure 

progress toward full implementation, and four initiatives had specific 

results and outcome measures that could be used to assess whether the 

initiatives were achieving the desired results. 

Results Act Management 

Framework

The Results Act framework generally consists of establishing strategic 

plans, performance plans, and mechanisms for measuring program 

progress and results. Such a framework for the Air Force’s initiatives would 

include (1) establishing broad general initiative goals and objectives, 

(2) linking the goals to overall DOD goals and objectives, (3) establishing 

quantifiable performance measures and baselines to assess whether the 

initiatives are achieving desired results, (4) defining levels of accountability 

and responsibility for implementing the initiatives and identifying the 

resources that will be required to achieve goals, (5) establishing milestones 

necessary to measure progress toward full implementation, and

(6) defining an evaluation plan for periodically comparing actual results to 

established goals and objectives. This information would allow the 

Congress and other decisionmakers to measure initiative implementation 

progress and to determine whether the initiatives are achieving their 

desired results. 

In addition to these potential benefits, considering the initiatives as 

interrelated efforts maximizes their systemwide improvement potential. 

Our prior work on best inventory management practices has shown that 

efforts to reengineer a logistics system are more successful when various 

logistics activities are viewed as a series of interrelated processes rather 

than isolated functional areas.12 For example, when one airline began 

changing the way it purchased parts from suppliers, it considered how the 

changes would affect mechanics in repair workshops. Additionally, airline 

officials described how a combination of supply chain improvements could 

lead to continuous improvements. They also described how culture 

changes, improved data accuracy, and more efficient processes lead to 

12Inventory Management: DOD Can Build on Progress by Using Best Practices for Reparable 

Parts (GAO/NSIAD-98-97, Feb. 27, 1998).
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reductions in inventories and complexity of operations. These reductions 

can lead to further efficiencies and process improvements. 

One Initiative Can Assist in 

Developing Needed 

Management Framework 

The Logistics Transformation and Functional Integration initiative, which 

began in March 1999, is a 1-year study designed to identify the steps needed 

to reengineer the Air Force logistics system and identify opportunities for 

value-added changes. According to the schedule, this initiative will use 

integrated supply chain management techniques to identify “. . . the means 

to accurately predict requirements, acquire the right amount of inventory, 

rapidly move serviceable and reparable items, and select the optimum path 

for each item as it moves through the supply chain.” If successful, this 

initiative might produce many of the management framework components 

discussed earlier, such as an overarching improvement strategy and 

integrated implementation plans. It is also expected to identify outcome 

measures that focus on customer support and optimize operating costs. 

Conclusions The Air Force’s schedule generally meets the requirements of the act by 

providing information on 17 initiatives that, with one exception, are 

expected to have implementation completed within 5 years. Achieving the 

Air Force’s goal of improved management of secondary items will depend 

on the successful implementation of these initiatives. Implementation of 

the initiatives is generally linked to and guided by the Air Force Logistics 

Support Plan. However, the strategy set forth in that document is general in 

nature, and implementation and assessment of the Air Force’s initiatives 

would benefit from more specific guidance. The Results Act provides a 

model for developing a more effective management framework that could 

provide this information and allow for more meaningful evaluations of 

progress and results.

Recommendations To provide a mechanism to improve the potential for successful 

implementation of Air Force initiatives and measure results, we 

recommend that the Secretary of the Air Force develop a management 

framework for implementing best practice initiatives based on the 

principles embodied in the Results Act. Specifically, the management 

framework should include 

• a strategy that is directly linked to top-level DOD goals and objectives 

and that recognizes the interrelationship of the initiatives and the 
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overall impact the initiatives will have on the Air Force’s logistics 

pipeline, such as reduced pipeline time, improved customer service, and 

reductions in total inventory and

• a performance plan that includes clearly defined goals and objectives, 

defined levels of accountability, quantifiable performance measures and 

baselines, interim schedule milestones, and plans to periodically assess 

the overall impact the initiatives have achieved in reducing inventory 

levels while improving the responsiveness of the supply system to user 

needs. 

Agency Comments and 

Our Evaluation

In commenting on a draft of this report, DOD concurred with our 

recommendation and stated that the Air Force is revising its Logistics 

Support Plan to more clearly articulate the relationships, goals, objectives, 

and metrics of logistics initiatives. It will also provide regularly scheduled 

review and analysis to the Air Force Deputy Chief of Staff (Installations and 

Logistics). DOD further stated that approval of the expanded Air Force 

Logistics Support Plan structure by the Air Force Deputy Chief of Staff 

(Installations and Logistics) is anticipated during the second quarter of 

fiscal year 2000. DOD’s comments are included in their entirety as 

appendix II. 

DOD did express concern that the draft report implied that the current 

management framework for implementing the initiatives included in the 

schedule was inadequate. DOD stated that the initiatives are linked to Air 

Force improvement goals, which, in turn, are aligned with the DOD 

Logistics Strategic Plan. Further, DOD cited results that have been 

achieved and asserted that such results would not have been possible 

without adequate management oversight. Our report states that the 

schedule links each initiative to Air Force improvement goals, and those 

goals are aligned with higher level DOD goals and objectives. However, the 

goals and objectives for most initiatives were stated in broad terms and 

related performance measures were not included in the schedule to assess 

progress and results. Without this information, it will be difficult to 

determine whether the initiatives are improving overall Air Force 

operations. 

Scope and 

Methodology

Our analysis of the Air Force’s schedule was based on the information 

contained in the schedule, discussions with Air Force officials, and our 

prior work comparing DOD and private sector logistics practices. 
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We also identified areas in which the schedule could be improved to guide 

initiative implementation and improve management of secondary inventory 

items. Specifically, we examined the schedule in terms of outcome-oriented 

Results Act principles to determine whether the schedule provided an 

overall strategy for adopting best practices and contained key elements to 

guide implementation. We did not assess the merits of the Air Force’s 

initiatives or the initiatives’ likelihood for success.

We interviewed officials and obtained information about ongoing and 

planned initiatives at Air Force Headquarters in Washington, D.C.; the Air 

Force Materiel Command at Wright-Patterson Air Force Base in Ohio; 

Warner Robins Air Logistics Center at Robins Air Force Base in Georgia; 

and the Air Combat Command at Langley Air Force Base in Virginia. In 

addition, we used information from our related reports that have been 

issued since 1993 and are listed in GAO related products at the end of the 

report.

We conducted our review from November 1998 to August 1999 in 

accordance with generally accepted government auditing standards.

We are sending copies of this report to the appropriate congressional 

committees; the Honorable William S. Cohen, Secretary of Defense; the 

Honorable F. Whitten Peters, Secretary of the Air Force; Lieutenant General 

Henry T. Glisson, Director, Defense Logistics Agency; and Jacob Lew, 

Director, Office of Management and Budget. We will also make copies 

available to others upon request.

Please contact me at (202) 512-8412 if you or your staff have any questions 

concerning this report. Key contributors to this assignment are listed in 

appendix III.

David R. Warren, Director

Defense Management Issues
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List of Congressional Committees

The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

The Honorable Jerry Lewis

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Page 14 GAO/NSIAD-00-2 Defense Inventory

Appendix I

Summary of Air Force Initiatives ApApenednxidexiIs

The Air Force’s best practices implementation schedule lists 17 initiatives. 

The initiatives are aimed at improving the Air Force’s maintenance, 

information management, and acquisition processes; transferring logistics 

activities to the private sector; or otherwise reducing infrastructure. The 

schedule describes each initiative and identifies goals and objectives, 

plans, areas of improvement, the portion of inventory affected, and 

projected dates for implementation to be completed. 

Maintenance Three initiatives in the Air Force’s schedule are designed to improve Air 

Force and contractor depot maintenance processes. Each initiative is 

focused on a different aspect of depot-level maintenance: Air Force organic 

component repair, aircraft maintenance, and contractor repair operations. 

We recently issued a report discussing the status of these three initiatives.1

Depot Repair Enhancement 

Program

The Air Force considers the Depot Repair Enhancement Program (DREP) 

initiative its standard repair process for organic depot repair of aircraft 

component parts. The key principles of the program are a standardized 

repair process, focus on the movement of an asset through the repair 

process, daily repair based on greatest Air Force need, supply support on 

the shop floor, standardized functions with defined roles and 

responsibilities, alignment of responsibility and authority of key players, 

standardized data systems, and customer performance measures. The 

program is intended to reduce the time it takes a customer to receive an 

order, as well as increase unit readiness. This initiative began in June 1996 

and in March 1998 was considered completed, although improvements are 

ongoing.

Contract Repair 

Enhancement Program

The Contract Repair Enhancement Program (CREP) initiative is for depot 

repair of aircraft component parts by contractors. Its purpose is to improve 

processes and thus improve customer support while reducing repair times 

and inventory costs. The Air Force has established specific CREP goals for 

fiscal years 1999 and 2000, such as to reduce the time it takes for a 

requisitioning activity to receive an order. The program was started in 

February 1996, and implementation is to be completed by September 2001. 

1

Air Force Depot Maintenance: Management Changes Would Improve Implementation of 

Reform Initiatives (GAO/NSIAD-99-63, June 25,1999). 
Appendix I

Summary of Air Force Initiatives

Page 15 GAO/NSIAD-00-2 Defense Inventory

Aircraft Repair 

Enhancement Program

The Aircraft Repair Enhancement Program initiative is designed to be the 

Air Force’s program to improve depot maintenance of aircraft by such 

steps as streamlining the process for aircraft repair, improving requirement 

visibility and planning, and standardizing a programmed depot 

maintenance scheduling system. The program’s goals are to reduce the 

time an aircraft is in depot repair, the number of aircraft at the depot, and 

material to support aircraft, while delivering aircraft on schedule. This 

initiative was started in October 1998, and implementation is to be 

completed by December 2000. 

Information 

Management

Six initiatives in the Air Force’s schedule involve improvements to data 

systems and forecasting capability. Two of these initiatives are for new data 

systems, one initiative is designed to support the repair-on-demand 

philosophy in the DREP and CREP initiatives, and three initiatives are to 

combine systems. For example, over 30 data systems, which provide data 

for 2 systems, were analyzed to determine where changes were needed and 

which interfaces could be eliminated. 

Integrated Maintenance 

Data System

The Integrated Maintenance Data System initiative is designed to be the Air 

Force’s system for collecting and processing maintenance data for 

production support of assets such as aircraft, engines, and support 

equipment. It is intended to combine historical and legacy data contained 

in other databases to enhance maintenance production, thus improving the 

flow, accuracy, and availability of essential logistics information. This 

initiative is designed to reduce the time it takes for a customer to receive an 

order. This initiative was started in May 1995, and implementation is to be 

completed by September 2003.

Integrated Logistics

System-Supply

The Integrated Logistics System-Supply initiative is a new system for 

base-level supply operations that is to replace the Standard Base Supply 

System. The new system is designed to use commercial off-the-shelf 

products to provide a wider range of processing options to ensure an 

integrated logistics system. This initiative started in February 1997, and 

implementation is to be completed by September 2001. 
Appendix I

Summary of Air Force Initiatives

Page 16 GAO/NSIAD-00-2 Defense Inventory

Pipeline Tracking Analysis 

and Metrics System

The Pipeline Tracking Analysis and Metrics System initiative is designed to 

be a new single integrated information management and decision support 

system. The system is to provide more timely information on the 

performance of the various segments of the logistics pipeline (supply, 

distribution, transportation, and maintenance), produce decision support 

metrics, and track individual assets throughout the pipeline (from removal 

to return of an asset to serviceable condition and issuance of the asset). It 

is intended to reduce the time it takes for a customer to receive an order 

and to be completed in three phases. Implementation of the first phase is to 

be completed by June 2000; the second phase by June 2001; and the third 

phase, which depends on other data systems to provide 2 to 3 years of data, 

between 2004 and 2006. According to an Air Force official, this third phase 

is an ongoing improvement phase to use and validate data generated from 

new systems coming on-line.

Execution and Prioritization 

of Repair Support System

The Execution and Prioritization of Repair Support System initiative is 

designed as an automated system to prioritize repair and distribution of 

reparable aircraft parts based on weapon system availability. It is to 

identify and prioritize customer needs, determine the ability of existing 

resources to support the repair, and provide the data and mechanism that 

are needed to move an item into repair. This initiative is intended to 

maximize aircraft availability and reduce the time it takes for a customer to 

receive an order. It is designed to support the repair-on-demand philosophy 

of DREP and CREP. This initiative started in June 1996, and 

implementation is to be completed by July 2001.

Merger of D041 and D062 

Systems

Upon completion of the merger of the D041 reparable item computation 

system and the D062 financial system, all secondary item requirements 

(reparable and consumable) and budgeting processes should be integrated 

into a single process. This merger is designed to provide more accurate 

planning for reparable items by accurately forecasting requirements for the 

consumable items that are used to repair the reparable parts. This initiative 

is intended to improve requirement forecasting and unit readiness ratings 

and reduce the time it takes for a requisitioning activity to receive an order. 

This initiative started in November 1996, and implementation is to be 

completed by September 1999.
Appendix I

Summary of Air Force Initiatives

Page 17 GAO/NSIAD-00-2 Defense Inventory

Requirements Management 

System

The Requirements Management System initiative is designed to combine 

the systems for secondary item requirements computation and for item 

stratification into a single system. For example, items that make up a 

weapon system could be stratified by cost, level of repair, or time to repair. 

It is designed to provide more timely updates on items, as well as item and 

summary level projected expenditures for depot level repair and buy 

decisions. It is also to automate as many manual tasks as possible while 

enhancing requirement accuracy. This initiative is intended to replace the 

D041 system and provide a more responsive requirements determination 

process that better serves customer needs by implementing a modern, near 

real-time, user friendly system. It started in July 1997 and is projected to be 

complete by January 2000.

Outsourcing or 

Otherwise Reducing 

Infrastructure

Six initiatives involve moving work to the private sector or otherwise 

reducing inventory holdings and/or infrastructure. Three initiatives call for 

private industry support to government. The other three are intended to 

reduce existing government infrastructure. For example, the Depot 

Maintenance Consolidation initiative is the transfer of two Air Force 

depots’ workload to the remaining three depots. 

Virtual Prime Vendor The Virtual Prime Vendor initiative is designed to allow the use of a single 

contractor to supply parts to repair shops and depot maintenance facilities 

for Air Force aircraft. It is to allow the contractor to use preexisting 

distribution networks and state-of-the-art information technology systems. 

This initiative is intended to increase the effectiveness of the supply system 

and reduce the time it takes to fill customers’ orders. This initiative started 

in October 1998 and is still under development, but a contract is to be 

awarded by July 2000.

Reengineering Supply 

Support Process

The Reengineering Supply Support Process initiative is designed to support 

the management of spare parts by certifying contractors rather than the 

government to manage parts for certain Air Force weapon systems. 

Weapon systems being considered are the C-17, C-130J, F-22, and AWACS. 

This initiative is intended to reduce order and ship time and the time it 

takes for a requisitioning activity to receive an order and increase unit 

readiness ratings. This initiative started in July 1998, and implementation is 

to be completed by June 2002.
Appendix I

Summary of Air Force Initiatives

Page 18 GAO/NSIAD-00-2 Defense Inventory

Express Transportation Express Transportation is an initiative designed to use commercial and

in-house air transportation to deliver parts faster to Air Force customers in 

the continental United States and overseas. This initiative is designed to 

increase unit readiness ratings and reduce the time it takes for a 

requisitioning activity to receive an order. The U.S. and overseas systems 

are on separate implementation timetables. The continental United States 

delivery system was implemented on October 1998, with improvements 

ongoing. The overseas contract was awarded in July 1998, with a 

performance start of October 1998. A test of the overseas concept is 

scheduled for the first quarter of fiscal year 2000. 

Depot Maintenance 

Consolidation

The Depot Maintenance Consolidation initiative is transferring the 

workload from two air logistics centers, which are being closed, to the 

three remaining centers and the Army. This initiative is intended to 

generate a 10-percent savings by identifying new processes, lowering 

general and administrative costs, improving efficiency, and increasing 

output. Ultimate goals are to reduce operating costs, depot repair cycle 

time, and the time it takes for a requisitioning activity to receive an order. 

The initiative started in October 1997, and implementation is to be 

completed by September 2000. 

Regional Supply Squadron The Regional Supply Squadron initiative is designed to consolidate 

requisitioning, funding, computer support, equipment management, and 

record maintenance into four regional squadrons. These squadrons are to 

provide peacetime, contingency, and major regional conflict support for 

units within or deployed to each area. The regions are under the Air 

Combat Command, the Air Material Command, the Pacific Air Force, and 

the U.S. Air Force Europe. The goals of regionalization are to eliminate 

redundancy, save manpower, streamline processes, improve core tasks, 

leverage technology, and improve customer support. This initiative started 

in August 1997, and implementation is to be completed by July 2002.

Supply and Transportation 

Unit Reengineering

The Supply and Transportation Unit Reengineering initiative is designed to 

eliminate duplicate efforts in base level cargo shipping, delivery, pickup, 

and receiving, thus reducing time, manpower, and vehicles. The initiative is 

being done in two phases. Phase one is examining pickup, delivery, cargo 

in-check, and receiving processes. Phase two is verifying the merits of 

express carrier direct delivery to flightline organizations and the value of 
Appendix I

Summary of Air Force Initiatives

Page 19 GAO/NSIAD-00-2 Defense Inventory

integrating outbound shipping processes. This initiative started in July 1998 

at the Air Combat Command, with testing in other major commands 

ongoing. The projected completion date for this initiative is under 

evaluation; however, if adopted Air Force-wide, it is intended to be 

implemented within the time period set by section 347.

Acquisition

Corporate Contracts The Corporate Contracts initiative is designed to consolidate government 

requirements for spares or repair work from a single contractor into one 

long-term contract with preestablished pricing. A corporate contract would 

replace multiple contracts, combining requirements for several 

Department of Defense customers. This would allow multiple customers to 

order from a single contract. This initiative is intended to reduce cost and 

acquisition time for the three remaining air logistics centers. This initiative 

started in November 1998, and implementation is to be completed by June 

1999. 

Other

Logistics Transformation 

and Functional Integration

The Logistics Transformation and Functional Integration initiative is a 

study designed to identify improvements needed in logistics processes and 

develop an overall strategy for implementing these improvements. The 

current processes and improvements needed are to be evaluated by a team 

of contractor and Air Force members. The team is to use integrated 

logistics chain management techniques to develop processes that 

accurately predict requirements, acquire the right amount of inventory, 

rapidly move serviceable and reparable items, and select the optimum path 

for each item as it moves through the logistics chain. This initiative is 

intended to optimize performance and cost while delivering support to 

customers at the right time, cost, and condition. The study started in March 

1999 and is to be completed in March 2000.
Page 20 GAO/NSIAD-00-2 Defense Inventory

Appendix II

Comments From the Department of Defense ApendxiI
Appendix II

Comments From the Department of Defense

Page 21 GAO/NSIAD-00-2 Defense Inventory

Now on p. 10
Page 22 GAO/NSIAD-00-2 Defense Inventory

Appendix III

GAO Contacts and Staff Acknowledgments ApendxiI

GAO Contacts Charles Patton, (202) 512-4412

Robert Repasky, (202) 512-9868

Acknowledgments In addition to those named above, Leslie Gregor, Willie Cheely, and William 

Woods made key contributions to this report.
Page 23 GAO/NSIAD-00-2 Defense Inventory
Page 24 GAO/NSIAD-00-2 Defense Inventory

Related GAO Products

Financial Management: Better Controls Essential to Improve the Reliability 

of DOD’s Depot Inventory Records (GAO/AIMD-99-132, June 28, 1999).

Department of Defense: Status of Financial Management Weaknesses and 

Actions Needed to Correct Continuing Challenges

(GAO/T-AIMD/NSIAD-99-171, May 4, 1999).

DOD Financial Management: More Reliable Information Key to Assuring 

Accountability and Managing Defense Operations More Efficiently

(GAO/T-AIMD/NSIAD-99-145, Apr. 14, 1999).

Defense Inventory: DOD Could Improve Total Asset Visibility Initiative 

With Results Act Framework (GAO/NSIAD-99-40, Apr. 12, 1999).

Major Management Challenges and Program Risks: Department of Defense

(GAO/OCG-99-4, Jan. 1999).

Inventory Management: More Information Needed to Assess DLA’s 

Best Practice Initiatives (GAO/NSIAD-98-218, Sept. 2, 1998).

Results Act: DOD’s Annual Performance Plan for Fiscal Year 1999 

(GAO/NSIAD-98-188R, June 5, 1998).

Inventory Management: DOD Can Build on Progress by Using Best

Practices for Reparable Parts (GAO/NSIAD-98-97, Feb. 27, 1998).

Defense Inventory Management: Expanding Use of Best Practices for

Hardware Items Can Reduce Logistics Costs (GAO/NSIAD-98-47, 

Jan. 20, 1998).

Inventory Management: Greater Use of Best Practices Could Reduce

DOD’s Logistics Costs (GAO/T-NSIAD-97-214, July 24, 1997).

Inventory Management: The Army Could Reduce Logistics Costs for

Aviation Parts by Adopting Best Practices (GAO/NSIAD-97-82, 

Apr. 15, 1997).

Defense Inventory Management: Problems, Progress, and Additional

Actions Needed (GAO/T-NSIAD-97-109, Mar. 20, 1997).
Related GAO Products

Page 25 GAO/NSIAD-00-2 Defense Inventory

Inventory Management: Adopting Best Practices Could Enhance Navy

Efforts to Achieve Efficiencies and Savings (GAO/NSIAD-96-156, 

July 12, 1996).

Best Management Practices: Reengineering the Air Force’s Logistics

System Can Yield Substantial Savings (GAO/NSIAD-96-5, Feb. 21, 1996).

Inventory Management: DOD Can Build on Progress in Using Best

Practices to Achieve Substantial Savings (GAO/NSIAD-95-142, 

Aug. 4, 1995).

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