GAO

United States General Accounting Office

Report to the Chairman, Subcommittee

on Military Readiness, Committee on

Armed Services, House of

Representatives

April 1999 AIR FORCE SUPPLY

Management Actions 

Create Spare Parts 

Shortages and 

Operational Problems

GAO/NSIAD/AIMD-99-77

GAO United States

General Accounting Office

Washington, D.C. 20548 Letr

National Security and

International Affairs Division Letr

B-280237 Letter

April 29, 1999

The Honorable Herbert H. Bateman

Chairman, Subcommittee on Military Readiness

Committee on Armed Services

House of Representatives

Dear Mr. Chairman:

This is the second report in response to your request that we review financial management and 

operational issues related to the Supply Management Activity Group of the Air Force Working 

Capital Fund. Our June 1998 report1

 discussed the (1) long-standing problems that the 

Department of Defense (DOD), including the Air Force, had in preparing accurate financial 

reports on its working capital fund operations, (2) difficulties that the Air Force had in 

developing prices that the Supply Management Activity Group charged customers, and 

(3) problems that the Air Force Working Capital Fund and the Supply Management Activity 

Group had in managing cash, including the practice of advance billing customers to maintain 

an adequate cash balance. This second report discusses the effectiveness of the Supply 

Management Activity Group in providing inventory items to its customers.

We are sending copies of this report to Representative Solomon P. Ortiz, Ranking Minority 

Member, Subcommittee on Military Readiness, House Committee on Armed Services; Senator 

John Warner, Chairman, and Senator Carl Levin, Ranking Minority Member, Senate Committee 

on Armed Services; Senator Ted Stevens, Chairman, and Senator Daniel K. Inouye, Ranking 

Minority Member, Subcommittee on Defense, Senate Committee on Appropriations; 

Representative Jerry Lewis, Chairman, and Representative John P. Murtha, Ranking Minority 

Member, Subcommittee on Defense, House Committee on Appropriations. We are also sending 

copies of this report to the Honorable William S. Cohen, Secretary of Defense, and the 

Honorable F. Whitten Peters, Acting Secretary of the Air Force. 

1

Air Force Supply Management: Analysis of Activity Group’s Financial Reports, Prices, and Cash

Management (GAO/AIMD/NSIAD-98-118, June 8, 1998).
B-280237

Page 2 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Copies will also be made available to others upon request. If you have any 

questions about this report, please call Mr. Greg Pugnetti, Assistant 

Director, at (202) 512-6240. Other major contributors to this report are 

listed in appendix III.

Sincerely yours,

Jack L. Brock, Jr.

Director, Governmentwide and Defense Information Systems

Accounting and Information Management Division

David R. Warren

Director, Defense Management Issues

National Security and International Affairs Division
B-280237

Page 3 GAO/NSIAD/AIMD-99-77 Air Force Supply Management
Page 4 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Executive Summary

Purpose Congressional committees, as well as Air Force officials, have expressed 

concerns about reported spare parts shortages and the possibility that 

these shortages are causing readiness problems. This report responds to a 

request from the Chairman, Subcommittee on Military Readiness, House 

Armed Services Committee, asking GAO to review the effectiveness of the 

Air Force Supply Management Activity Group in meeting its military 

customers needs. Specifically, the report discusses (1) the extent and 

impact of military customers not receiving aircraft spare parts when 

needed and (2) the reasons why parts were not always available when 

needed.

Background The Supply Management Activity Group is part of the Air Force Working 

Capital Fund, a revolving fund that relies on sales revenue, rather than 

direct appropriations, to finance its operations. The wholesale division1

 of 

this group obligated a reported $3.4 billion in fiscal year 1998 to buy new 

inventory items or pay for the repair of existing items. Working capital 

funds are expected to (1) generate sufficient revenue to cover the full costs 

of their operations and (2) operate on a break-even basis over time—that 

is, not make a profit nor incur a loss. Customers primarily use Operations 

and Maintenance appropriations to pay for inventory items. Payments from 

customers replenish the cash balance in the Air Force Working Capital 

Fund, which is used to finance ongoing operations, such as purchasing new 

items or paying for the repair of broken items. The Air Force Materiel 

Command oversees the operations of the Supply Management Activity 

Group through inventory control points located at its five Air Logistics 

Centers. 

The Air Force is working to improve the efficiency of its logistics systems 

and as part of that effort is making a fundamental shift in the way it 

manages inventory under a program called Agile Logistics.2

 In the past, the 

inventory moved through a long, slow process where broken items went 

from bases to storage depots to repair depots and, once repaired, back 

again to the bases. The current concept calls for expedited transportation 

to move broken items from bases to repair depots. Once the items arrive at 

1Items in the wholesale division are managed by the Air Force and generally support aircraft and other 

weapon systems. These include items such as transmitters and landing gears. 

2

GAO will report separately on the implementation of the Agile Logistics program. 
Executive Summary

Page 5 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

the repair depot, they are to be promptly fixed and sent back to the bases 

quickly. Under this concept, the Air Force wants to achieve more timely 

processing and repair of broken items so it can reduce the amount of 

inventory it needs to purchase and store. 

Results in Brief Over the last several years, the effectiveness of the supply activity group in 

meeting customer needs has declined. Key Air Force indicator reports used 

to monitor supply effectiveness showed that major aircraft not mission 

capable due to supply problems increased from 6.4 percent in fiscal year 

1990 to 13.9 percent in fiscal year 1998. GAO specifically reviewed B-1B, 

F-16, and C-5 aircraft supply problems and found that these problems were 

causing inefficient maintenance actions, excessive use of spares 

designated to support deployed operations, and aircrews to be not fully 

trained. For example:

• At two major commands, significant personnel resources were used to 

remove parts from B-1B, F-16, and C-5 aircraft and to put those same 

parts on other aircraft in order to keep them mission capable. While the 

total magnitude of the problem is not known, records at two Air Force 

commands showed maintenance personnel time involved in this 

practice equated to about 43 people working 8 hours a day, 5 days a 

week for 2 years.

• Spares packages purchased to support deployed operations were being 

used to meet day-to-day operational needs. This was particularly the 

case for the C-5 and B-1B aircraft where usage of items from the 

packages increased by 14.2 and 13.5 percent, respectively, over a 2-year 

period.

• B-1B and F-16 reports show that only 83 percent of their peacetime 

flying hour training program was accomplished and Air Force officials 

cited supply and maintenance problems as major causes. As a result, 

one squadron reported that some of its aircraft commanders, pilots, and 

weapons system officers were not combat mission ready.

GAO also analyzed selected parts that were most frequently causing supply 

problems for the B-1B, F-16, and C-5 aircraft. The key reasons contributing 

to supply problems were (1) weaknesses in forecasting inventory 

requirements and executing inventory procurement and repair budgets, 

(2) not achieving Agile Logistics goals, and (3) untimely repair by depot 

maintenance activities. The inventory forecasting error caused a 

$500 million shortfall in funding in the fiscal year 1997 supply activity 

group’s budget. The Air Force also reduced the supply activity group’s 
Executive Summary

Page 6 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

budget by $948 million between fiscal year 1997 and 1999 to reflect Agile 

Logistics efficiency goals. However, since these efficiency goals were not 

achieved, fewer items than projected were available for sale to customers. 

As a result of these actions, even though military units had funds to 

purchase spare parts, the supply group did not always have sufficient funds 

to buy new parts or pay for the repair of broken parts that customers 

needed. 

The Air Force has studies underway to improve supply effectiveness and 

has increased funding for the purchase and repair of spares. GAO is making 

a recommendation to the Secretary of the Air Force to improve the 

availability of items needed by military units.

Principal Findings

Inventory Problems 

Adversely Affected 

Customers’ Operations

Performance data that the Air Force uses to monitor the performance of its 

Supply Management Activity Group indicate increased instances of aircraft 

not being mission capable due to supply problems. This situation 

contributed to several problems for operational units. These included 

(1) usable parts being removed from one aircraft to keep other aircraft 

mission capable, (2) mobility readiness spares packages being used to meet 

day-to-day supply needs, and (3) aircrews not completing annual training 

requirements. Also, Air Force officials stated that the parts shortage 

problem could potentially impede their ability to effectively accomplish 

contingency missions, particularly if several squadrons were required to 

deploy at the same time.

Due primarily to a shortage of spare parts, Air Force aircraft mission 

capability rates3 have declined in recent years from 84.6 percent in fiscal 

year 1990 to 74.3 percent in fiscal year 1998.4

 As shown in table 1, in fiscal 

year 1998, major aircraft that were reported not mission capable due to 

supply problems about doubled the percentage reported in fiscal year 1990. 

3The mission capability rate is based on all aircraft that are in a unit’s possession at a specific point in 

time. On the other hand, the Status of Resources and Training System (SORTS) identifies the current 

level of selected resources and training status of a unit—that is, its ability to undertake its wartime

mission. As a result, a unit could have a low mission capability rate but still be considered able to 

accomplish its wartime mission.

4

Reported mission capable rates for major Air Force aircraft do not include data on helicopters,

training aircraft such as the T-37, and some low density aircraft such as the SR-71.
Executive Summary

Page 7 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 1: Reported Total Not Mission Capable Rates Due to Supply Problems for Air 

Force Major Aircraft

Source: The Air Force’s Multi-Echelon Resource and Logistics Information Network and the Reliability 

and Maintainability Information System.

The lack of needed inventory items raised the following concerns:

• Maintenance personnel were performing double work, in some cases, by 

removing parts from one aircraft and then putting them on another. The 

total magnitude of this practice is not known because time spent in 

performing required operational checks was not always reflected in 

base reports. However, Air Combat Command and Air Mobility 

Command records showed that from October 1, 1996, through 

September 1998 maintenance personnel spent about 178,000 hours 

removing inventory items on the B-1B, F-16, and C-5 aircraft to replace 

broken items on other aircraft. This equates to about 43 people working 

8 hours a day, 5 days a week for 2 years. In addition, it took maintenance 

personnel weeks and, in some cases, months to put an aircraft back 

together once parts were removed from the aircraft.

• Mobility readiness spares packages are air transportable supplies to 

support deployed operations. While items from these packages can be 

used to meet unit supply shortages, Air Force officials cautioned that 

the packages need to contain sufficient items to support deployments. 

The percentage of items used from the C-5 and B-1B packages increased 

by 14.2 and 13.5 percent, respectively, between fiscal year 1996 and 

1998.

• Training missions were also impacted by supply and maintenance 

problems. According to Air Combat Command records, B-1B and F-16 

customers flew 79,267 hours, or 83 percent, of their total flying hour 

program dedicated to pilot and aircrew training during fiscal year 1998. 

Fiscal year

Percent of aircraft not mission

capable due to supply problems

1990 6.4

1991 8.6

1992 9.5

1993 10.2

1994 10.3

1995 10.8

1996 11.0

1997 12.6

1998 13.9
Executive Summary

Page 8 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

This is a decrease from the previous year when the Air Combat 

Command flew about 90 percent of the flying hours available for 

training. Supply and maintenance problems were identified as the key 

reasons for this reduction in flying hours due to the lack of aircraft 

availability. Further, one B-1B squadron official explained that supply 

shortages were a major contributor to (1) 6 of 30 aircraft commanders, 

(2) 2 of 13 pilots, and (3) 5 of 41 weapons system officers not meeting 

annual training requirements. 

Budgeting, Agile Logistics, 

and Inventory Repair 

Problems Were Major 

Causes of Parts Shortages

GAO judgmentally selected and reviewed B-1B, F-16, or C-5 spare parts that 

were causing aircraft to be not mission capable or were potential supply 

problem items. As shown in table 2, for the 155 items reviewed, the key 

factors causing the support problems can be generally categorized as 

weaknesses in forecasting inventory requirements and execution in 

procurement and repair budgets; not achieving inventory management 

improvements under the Agile Logistics program; and untimely depot 

repairs.5

 Because of the integrated nature of the supply system there is a 

general interrelationship among these causes.

Table 2: Primary Reasons Why Problem Items Were Not Available as of September 1997 and September 1998

aPrimarily technical problems that affect the reliability of an item.

Inventory Requirements 

Forecasting and Budgeting 

Problems

Problems related to the forecasting of inventory requirements and the 

execution of the Supply Management Activity Group’s fiscal year 1997 

budget resulted in a funding shortfall for 57 of the items reviewed. This 

severely limited the group’s ability to buy and repair the items needed by its 

5

In our analysis, we considered an item to still be a problem in September 1998 if it caused aircraft to be 

not mission capable for more than 100 hours during that month.

Cause category

September 1997 September 1998

Number Percent Number Percent

Forecasting and budgeting 57 36.8 0 0.0

Agile Logistics 31 20.0 26 27.1

Untimely repair 53 34.2 63 65.6

Othera 14 9.0 7 7.3

Total 155 100.0 96 100.0
Executive Summary

Page 9 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

customers. Air Force records show that the primary cause of this funding 

shortfall was an inaccurate inventory requirement forecast. As a result, the 

fiscal year 1997 budget was about $500 million less than needed to buy new 

inventory items and pay for the repair of broken items. Because of funding 

shortfalls that resulted from these problems, activity group officials took 

action to optimize the use of available funds. The actions included directing 

that high priority be given to items that were causing aircraft to be not 

mission capable. The effect of this policy was that the number of usable 

items available at the base and wholesale levels declined resulting in 

shortages of different inventory items, which caused aircraft to be not 

mission capable. The Air Force is in process of studying the requirements 

forecasting problem and plans to report on its findings in May 1999. 

Overly Optimistic Agile Logistics 

Goals

The Air Force reduced its supply group’s budget in anticipation of savings 

from the implementation of new logistics processes as part of its Agile 

Logistics program. However, for 31 of the 155 items reviewed, supply 

problems occurred principally because Agile Logistics process 

improvement goals were not achieved. These goals related to improving 

processes such as the timely return of broken items to depots and reducing 

the time it takes to receive an item once it is ordered by a unit. These and 

other process improvements were the basis for a $948-million reduction 

over a 3-year period in the Supply Management Activity Group’s budget. 

Since these goals were not achieved, the supply group had less funding 

than needed to meet customers needs. Consequently, even though 

customers had funds to purchase items, the supply group could not provide 

them. As a result, units relied on uneconomical maintenance actions to 

meet supply needs. These actions included taking parts off of one aircraft 

and putting them on another aircraft and using supplies designated for 

deployments.

Untimely Repair of Broken 

Inventory Items

The other major cause of parts shortages in September 1997 was the depot 

maintenance activities’ inability to accomplish timely repair for 53 items 

reviewed. A major reason for this situation was the shortages of 

component parts to fix broken repairable items and repair shop personnel. 

Although component part shortages have been a long-standing and 

well-documented problem, the Air Force Materiel Command has not yet 

developed an effective plan to correct the problem. Further, although 

manpower shortages were frequently a major constraint, maintenance 

activities were being asked to repair the items that were breaking on a daily 

basis, as well as, to reduce the reported backlog of work from prior years. 

This situation also contributed to Agile Logistics goals not being met.
Executive Summary

Page 10 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Recommendation Since GAO is reporting separately on the Agile Logistics program 

implementation and the Air Force is in the process of reviewing the 

requirements forecasting process, GAO is making no recommendations on 

these issues in this report. However, in order for the supply group to 

provide more timely and responsive support to its customers, the Air Force 

must resolve the component parts shortage problem. GAO recommends 

that the Secretary of the Air Force direct the Commander of the Air Force 

Materiel Command to address this problem by developing (1) a strategy for 

identifying and correcting the underlying causes of the problem, (2) a 

systematic process for identifying and focusing management attention on 

the most critical awaiting parts problem items, (3) a standardized approach 

that item managers can use to obtain and analyze data on awaiting parts 

problems, and (4) more reliable data on the number and type of component 

parts that will be needed to repair broken repairable items.

Agency Comments In its comments on a draft of this report, DOD concurred with GAO’s 

recommendation and identified two studies underway that should help the 

Department identify areas for improvement. Further, additional funding 

has been provided to purchase additional spare parts critical to future 

operations. DOD further stated that the above actions plus the 

implementation of GAO’s recommendation should improve the reliability 

and accuracy of the Air Force’s supply activity group’s operations.

DOD’s comments also stipulated that despite shortfalls in the Agile 

Logistics program, it has helped the Air Force reduce its supply pipeline 

from 67 days in fiscal year 1994 to 52 days in 1998. GAO recognizes that the 

Air Force has initiated numerous process improvements attempting to 

reduce its processing time, and its fiscal year 1998 budget was predicated 

on an average pipeline time frame of 52 days. The Air Force reduced its 

budget based on these predicated savings. Data available to GAO indicated 

that the supply group’s average actual pipeline time for the fourth quarter 

of fiscal year 1998 was 87.5 days. GAO noted in this report the Air Force’s 

inability to achieve the 52-day goal was due largely to a shortage of 

component parts and items on backorder. The pipeline time associated 

with a shortage of component parts and backorders accounted for 37.1 of 

the 87.5 days. DOD’s comments are included in appendix II.
Page 11 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Contents

Executive Summary 4

Chapter 1

Introduction 

 14

Process for Providing Aircraft Spare Parts to Air Force Units 14

Air Force Is Changing Its Approach to Managing Inventory 16

Objective, Scope, and Methodology 16

Chapter 2

Inventory Problems 

Adversely Affected 

Customer Operations

 20

Performance Data Indicate a Steady Decline in the Supply 

Management Activity Group's Effectiveness 20

Lack of Parts Hindered Peacetime Missions 26

Conclusions 29

Chapter 3

Budget, Inventory 

Management, and 

Repair Problems Were 

Primary Causes of 

Spare Parts Shortages

 30

Inventory Requirements Forecasting and Budget Problems 30

Overly Optimistic Agile Logistics Goals 33

Untimely Repairs Were a Major Cause of Supply Support Problems 36

Conclusions 40

Recommendation 41

Agency Comments 41

Appendixes Appendix I: Listing of the Reports in This Series 44

Appendix II: Comments From the Department of Defense 45

Appendix III: Major Contributors to This Report 47

Tables Table 1: Reported Total Not Mission Capable Rates Due to Supply 

Problems for Air Force Major Aircraft 7

Table 2: Primary Reasons Why Problem Items Were Not Available 

as of September 1997 and September 1998 8 

Table 2.1: Reported Average Mission Capable Rates for Air Force 

Major Aircraft 21

Table 2.2: Reported Total Not Mission Capable Supply Rates for 

Air Force Major Aircraft 22

Table 2.3: Reported Number of Cannibalizations Per 100 Sorties for 

the F-16, B-1B, and C-5 Aircraft 23 

Table 2.4: Reported Cannibalization Hours for ACC and AMC B-1B, 

F-16, and C-5 Aircraft for Fiscal Years 1997 and 1998 23
Contents

Page 12 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 2.5: Use of Mobility Readiness Spares Packages to Satisfy Parts 

Shortages for B-1B, C-5, and F-16 Aircraft That Were Not Mission 

Capable 25

Table 2.6: Supply Issue Effectiveness Rates for the B-1B, F-16, and 

C-5 for Fiscal Years 1994 Through 1998 26

Table 2.7: ACC Flying Hours That Were Available and Used for Pilot 

and Aircrew Training in Fiscal Year 1998 27

Table 2.8: AMC Estimated Loss of Revenue From Declined Missions 

for Its C-5, C-17, and C-141 Aircraft From September 1, 1997 

Through August 31, 1998 28

Table 3.1: Primary Reasons Why Problem Items Were Not Available 

as of September 1997 and September 1998 30

Table 3.2: Primary Causes of Repair Problems as of 

September 1997 and September 1998 37

Figures Figure 1.1: Process of Providing Spare Parts to Customers 16

Abbreviations

ACC Air Combat Command

AFMC Air Force Materiel Command

ALC Air Logistics Center

AMC Air Mobility Command

AWP Awaiting parts

DLA Defense Logistics Agency

DOD Department of Defense 

GAO General Accounting Office
Page 13 GAO/NSIAD/AIMD-99-77 Air Force Supply Management
Page 14 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Chapter 1

Introduction Chapte1r

The Chairman, Subcommittee on Military Readiness, House Committee on 

Armed Services, requested that we conduct a series of reviews on the 

financial operations and effectiveness of Defense business operations. As 

part of this series, we reported on the Air Force Supply Management 

Activity Group’s financial operations in June 1998.1 This report discusses 

the supply group’s ability to effectively provide inventory items to its 

customers. Ineffective or inefficient operations in these activities can 

adversely affect readiness and the use of operations and maintenance and 

other Defense appropriated dollars.

The Air Force Supply Management Activity Group helps to maintain 

combat readiness and sustainability by supplying the Air Force with items 

necessary to support troops, weapon systems, aircraft, communications 

systems, and other military equipment. In doing so, the group is responsible 

for about two million items, ranging from weapon system spare parts, to 

fuels, medical and dental supplies and equipment, and uniforms. The 

Department of Defense (DOD) reported that the supply group generated 

$10.2 billion in revenue during fiscal year 1998 and had $27.6 billion in 

inventory at the end of fiscal year 1998. 

Process for Providing 

Aircraft Spare Parts to 

Air Force Units

The supply group’s operations are financed as part of the Air Force 

Working Capital Fund. The supply group operates under the revolving fund 

concept of breaking even over time by charging customers the full costs of 

goods and services provided to them as currently defined in DOD’s 

Financial Management Regulation, Volume 11B, Reimbursable Operations, 

Policy and Procedures—Defense Business Operations Fund. The supply 

group receives orders from customers to purchase inventory items. 

Customers use appropriated funds, primarily operations and maintenance 

appropriations, to finance these orders. The supply group uses payments 

from customers to replenish the inventory sold to customers by (1) 

ordering repair services of existing inventory from industry and DOD depot 

maintenance activities or (2) buying new inventory items.

The supply group procures critical material and makes repair parts 

available to its customers through five inventory control points: Ogden Air 

Logistics Center (ALC), Ogden, Utah; Oklahoma City ALC, Oklahoma City, 

Oklahoma; Sacramento ALC, Sacramento, California; San Antonio ALC, 

San Antonio, Texas; and Warner Robins ALC, Warner Robins, Georgia. The 

1

Appendix I provides a listing of the reports issued in this series. 
Chapter 1

Introduction

Page 15 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Air Force is in the process of closing the Sacramento and San Antonio 

ALCs based on the 1995 Base Realignment and Closure recommendations. 

The five ALCs report to the Air Force Materiel Command (AFMC), located 

at Dayton, Ohio.

Air Force spare parts are classified as either consumables or repairables, 

and are procured in order to support either peacetime or wartime 

operations. Consumable items, which are mostly managed by the Defense 

Logistics Agency (DLA), are those items that are discarded when they fail. 

Repairable items, managed by the Air Force Supply Management Activity 

Group, are those items that can be cost effectively repaired. Peacetime 

operating spares are those items that are bought to support peacetime 

training and to ensure an adequate force is available for initial wartime 

operations (readiness). Mobility readiness spares packages (these 

packages replaced the war reserve spares kits) are air transportable 

packages of repair parts and maintenance supplies required to support 

planned deployed operations until resupply can begin.

The process used to repair failed repairable items begins when unit 

maintenance personnel at an Air Force base removes a failed item from the 

aircraft. At this point, base maintenance attempts to either repair the item 

or obtain a serviceable replacement from base supply. However, if base 

maintenance cannot repair the item and a suitable replacement item is not 

available, the base must (1) return the broken item to a maintenance depot2

for repair and (2) request a replacement from the appropriate inventory 

control point. The inventory control point, in turn, attempts to find a 

replacement in its existing wholesale inventory. If a replacement is not 

available, the inventory control point must either acquire a new one or 

repair a broken one. This process is illustrated in figure 1.1.

2

Some items are repaired by contractor repair facilities.
Chapter 1

Introduction

Page 16 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Figure 1.1: Process of Providing Spare Parts to Customers

Air Force Is Changing 

Its Approach to 

Managing Inventory

To improve the operations of its logistical activities, including the 

management of inventory, the Air Force is implementing a program called 

Agile Logistics. This program focuses on reengineering the old “batch 

processing” approach where repair requirements were determined once a 

quarter. The new program is based on a repair-on-demand concept where 

decisions are made daily to repair only those items that have been 

requisitioned by customers. Under this program, the Air Force plans to 

(1) reduce the time required to repair inventory items, (2) reduce inventory 

levels, (3) match the repair of items with the demand from customers, and 

(4) rapidly move items to and from customers.

Objective, Scope, and 

Methodology

The objective of our review was to evaluate the effectiveness of the Supply 

Management Activity Group. Specifically, this report addresses (1) the 

extent to which military customers are receiving aircraft spare parts when 

needed to ensure that aircraft are available and capable of carrying out 

their assigned mission and (2) the reasons why parts were not always 

available to customers when they needed them. This review is a 

Customer

 Aircraft needs

 a part.

Base

Maintenance

Removes the

broken part and

orders new part

from base supply.

Installs new part

when received.

Base Supply

Ships the part if

they have it. If

they don't have

it, part is ordered

and broken part

is sent to DLA

warehouse for

storage.

Depot

Maintenance

The Air Force Supply

Management Activity

Group pays the Air

Force Depot

Maintenance Activity

Group and

contractors to fix

broken inventory

items. Fixed items

are sent back to DLA

warehouse for

storage until parts

are ordered by base

supply.

DLA Warehouse

Air Force Supply

Management Activity

Group directs DLA

warehouse to

provide items to base

supply. DLA also

stores broken item in

need of repair until

the Air Force Supply

Management Activity

Group determines

that the part needs to

be fixed.
Chapter 1

Introduction

Page 17 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

continuation of our work on the activity group’s financial reports, prices, 

and cash management practices (GAO/AIMD/NSIAD-98-118, June 8, 1998).

To assess whether the group was providing effective support to its 

customers, we obtained and analyzed trend data on the group’s 

performance indicators that included (1) mission capable rates for major 

Air Force aircraft (the percentage of major aircraft that were capable of 

accomplishing their mission), (2) total not mission capable supply 

rates for major Air Force aircraft (the percentage of aircraft that were 

not capable of accomplishing their mission because of parts problems), 

(3) cannibalization rates (the number of times per 100 sorties that a 

serviceable part was removed from one aircraft and put on another), 

(4) the use of inventory items in the mobility readiness spares packages to 

keep aircraft mission capable so they could perform peacetime missions, 

and (5) issue effectiveness rates (the percentage of time that the group was 

able to satisfy customer requests with stock on hand in base supply).

The data on mission capable rates and total not mission capable supply 

rates were originally collected in various logistical systems and 

consolidated in the Air Force’s Multi-Echelon Resource and Logistics 

Information Network. We did not independently verify this data. However, 

we (1) compared the data available at Air Force headquarters, major 

commands, and bases to determine if it was consistent and (2) discussed 

the accuracy and usefulness of the data with officials and/or managers at 

Air Force headquarters, major commands, and bases. We determined that 

(1) the data were consistent at the multiple locations that we visited, (2) Air 

Force officials and managers use these data to monitor readiness and make 

key funding decisions, and (3) these officials consider the data to be 

reliable. 

To determine why inventory items were not available to customers, we 

reviewed 155 individual inventory items for the B-1B, F-16, and C-5 aircraft 

that were not available to customers as of September 1997. We selected 

these aircraft because they represented different types of aircraft (bomber, 

fighter, and cargo) which had lower-than-average mission capable rates for 

the respective aircraft types in September 1997. We also reviewed Air Force 

reports on the Supply Management Activity Group’s effectiveness and 

discussed the group’s support problems with cognizant officials and 

managers at the Air Force headquarters, AFMC headquarters, and ALC 

levels.
Chapter 1

Introduction

Page 18 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

The inventory items selected for review included the following for each 

type of aircraft: (1) the 25 items that caused aircraft to be grounded the 

most hours during September 1997, (2) the 25 items that had the most 

incidents grounding an aircraft (number of times a certain inventory item 

grounded an aircraft) during September 1997, (3) the 15 items that were 

cannibalized the most frequently during the fourth quarter of fiscal

year 1997, (4) the 35 items that the major command considered to be the 

biggest problems, and (5) the 9 to 10 items that the major commands 

identified as likely sustainability problems in the event of a major 

contingency. Many of the items we reviewed were included in two or more 

of the above categories.

For each of the 155 inventory items, we obtained the views of cognizant 

ALC officials and/or item managers on the reasons why items were not 

available as of September 1997 and, if an item caused aircraft to be 

grounded more than 100 hours in September 1998, the primary cause as of 

then. We also obtained documentation on the items’ usage and repair 

history. In selecting the items to be reviewed, we focused on items directly 

managed by the Supply Management Activity Group’s wholesale division.3

We did not review items managed by DLA since this review focused on the 

effectiveness of the Air Force Supply Management Activity Group. 

To determine if B-1B, F-16, and C-5 customers could obtain the inventory 

items they needed from the Supply Management Activity Group and, if not, 

the impact on the customers’ operations, we obtained and analyzed 

information on (1) inventory items cannibalized or removed from aircraft 

to determine the number of items cannibalized from aircraft as well as the 

number of hours involved in removing the inventory items from one 

aircraft and installing the items on another aircraft, (2) training received by 

aircrews to determine if the lack of aircraft due to inventory shortages 

prevented aircrews from receiving planned training, and (3) revenue lost by 

the Transportation Working Capital Fund because aircraft were not 

available, due to inventory shortages, to perform missions in support of 

customers.

We did not perform a review of Air Force’s readiness and the impact parts 

shortages would have on contingency missions. However, we interviewed 

Air Force wing commanders as well as other officials at Air Force bases to 

3

The supply group’s retail inventory operations encompass items that are managed by the other 

services, defense agencies, or government agencies. These non-Air Force entities are the inventory 

control points for these items, not the Air Force Supply Management Activity Group.
Chapter 1

Introduction

Page 19 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

determine the impact of the low-mission capability rates due to inventory 

and maintenance problems on the Air Force’s ability to accomplish its 

wartime mission in the event of two major theater wars.

We performed our review at the 

• Headquarters, Office of the Under Secretary of Defense (Comptroller) 

and Air Force, Washington, D.C.; 

• Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio; 

• Oklahoma City Air Logistics Center, Tinker Air Force Base, Oklahoma; 

• Ogden Air Logistics Center, Hill Air Force Base, Utah; 

• San Antonio Air Logistics Center, Kelly Air Force Base, Texas; 

Sacramento Air Logistics Center, McClellan Air Force Base, California; 

• Warner Robins Air Logistics Center, Robins Air Force Base, Georgia; 

• Air Combat Command, Langley Air Force Base, Virginia; 

• Air Mobility Command, Scott Air Force Base, Illinois;

• Dover Air Force Base, Delaware;

• Dyess Air Force Base, Texas;

• Ellsworth Air Force Base, South Dakota;

• Moody Air Force Base, Georgia;

• Shaw Air Force Base, South Carolina; and

• Travis Air Force Base, California.

Our review was performed from May 1998 through February 1999 in 

accordance with generally accepted government auditing standards.
Page 20 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Chapter 2

Inventory Problems Adversely Affected 

Customer Operations Chapte2r

Key performance data on supply operations indicate that the Air Force 

Supply Management Activity Group’s effectiveness has declined steadily 

since the early 1990s. Detailed review of supply problems being 

experienced for the C-5, B-1B, and F-16 aircraft showed negative trends for 

such things as mission capability, removing usable parts from one aircraft 

for use on another, and excessive use of spares that are purchased to 

support deployed operations. Further, some C-5, B-1B, and F-16 units 

experienced operational problems related to completing required training 

or accomplishing airlift mission goals. Officials also noted that supply 

problems could potentially adversely affect their ability to meet 

contingency operations.

Performance Data 

Indicate a Steady 

Decline in the Supply 

Management Activity 

Group’s Effectiveness

Performance data that the Air Force uses to monitor the performance of its 

Supply Management Activity Group indicate a negative trend. Specifically, 

Air Force performance data indicate increased instances of (1) aircraft 

not being mission capable, which was primarily due to supply problems, 

(2) usable parts being removed from one aircraft to keep other aircraft 

mission capable, and (3) mobility readiness spares package assets used to 

keep aircraft mission capable. The performance data also indicate that the 

supply group frequently did not have the parts that customers needed.

Reported Mission Capability 

Rates for Major Aircraft 

Have Declined Since the 

Early 1990s

The Air Force measures the availability of aircraft through the use of 

mission capable rates that represent the reported percent of unit aircraft1

that are capable of performing at least one of their assigned missions. 

Aircraft that are not capable of accomplishing any of the missions are 

classified as (1) not mission capable supply if they cannot accomplish the 

missions because of parts shortages, (2) not mission capable maintenance 

if they cannot accomplish the missions because of required base-level 

maintenance, or (3) not mission capable both if both parts problems and 

required base-level maintenance are preventing the aircraft from 

accomplishing the missions. 

1

The mission capability rate is based on all aircraft that are in a unit’s possession at a specific point in 

time. Aircraft that are not available to a unit, such as those that are at a depot undergoing programmed 

depot maintenance, are not included in mission capable rates. On the other hand, the Status of 

Resources and Training System (SORTS) identifies the current level of selected resources and training 

status of a unit—that is, its ability to undertake its wartime mission. As a result, a unit could have a 

low-mission capability rate but still be considered able to accomplish its wartime mission.
Chapter 2

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Customer Operations

Page 21 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

As summarized in table 2.1, data provided by Air Force headquarters 

indicate that the average mission capable rate for Air Force major aircraft2

declined steadily from 84.6 percent in fiscal year 1990 to 74.3 percent in 

fiscal year 1998. 

Table 2.1: Reported Average Mission Capable Rates for Air Force Major Aircraft

Source: The Air Force’s Multi-Echelon Resource and Logistics Information Network and the Reliability 

and Maintainability Information System.

While Air Force major aircraft experienced a decline in mission capable 

rates from fiscal year 1990 through fiscal year 1998, most of that decline 

was attributed to supply problems. Specifically, as summarized in table 2.2, 

the reported total not mission capable supply rates for Air Force major 

aircraft more than doubled from 6.4 percent in fiscal year 1990 to 

13.9 percent in fiscal year 1998.

2

Reported mission capable rates for the Air Force major aircraft do not include data on (1) helicopters, 

(2) training aircraft such as T-37, and (3) some low density aircraft such as the SR-71.

Figures expressed as a percentage

Fiscal year

Mission capable rates for

major aircraft

1990 84.6

1991 83.4

1992 82.7

1993 80.8

1994 79.3

1995 78.7

1996 78.5

1997 76.6

1998 74.3
Chapter 2

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Page 22 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 2.2: Reported Total Not Mission Capable Supply Rates for Air Force Major 

Aircraft 

Source: The Air Force’s Multi-Echelon Resource and Logistics Information Network and the Reliability 

and Maintainability Information System.

Customers Were Frequently 

Removing Good Parts From 

Aircraft to Keep Other 

Aircraft Mission Capable

Because mission capable rates for major aircraft have steadily declined 

since 1990, we selected three aircraft—the B-1B, F-16, and C-5—to obtain 

additional indicators on the performance of the Supply Management 

Activity Group. We selected these aircraft because they represented 

different types of aircraft (bomber, fighter, and cargo) which had 

lower-than-average mission capable rates for their respective aircraft types 

in September 1997.

We found that in the last several years, there has been an increase in the 

removal of usable parts from these aircraft to replace broken parts on 

other, like aircraft to keep them mission capable. The Air Force refers to 

this practice as cannibalizing parts. The Air Force performance indicator 

for this practice is called the cannibalization rate, which is the average 

number of cannibalization actions per 100 sorties flown. In many cases, a 

part is cannibalized when base supply cannot deliver a good part when 

needed and mission requirements demand the aircraft be returned to a 

mission capable status. Even though bases were cannibalizing parts more 

frequently in recent years, the aircraft mission capable rates have 

continued to decline as shown in table 2.1. As table 2.3 shows, the 

cannibalization rate for Air Combat Command’s (ACC) F-16s and B-1Bs and 

the Air Mobility Command’s (AMC) C-5 aircraft have increased over the last 

several years but especially from fiscal year 1995 to fiscal year 1998.

Figures expressed as a percentage

Fiscal year

Total not mission capable supply

rates for major aircraft

1990 6.4

1991 8.6

1992 9.5

1993 10.2

1994 10.3

1995 10.8

1996 11.0

1997 12.6

1998 13.9
Chapter 2

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Page 23 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 2.3: Reported Number of Cannibalizations Per 100 Sorties for the F-16, B-1B, 

and C-5 Aircraft

Source: Air Combat Command and Air Mobility Command.

Table 2.3 also shows that (1) the cannibalization rate for the F-16 has more 

than doubled from fiscal year 1993 through fiscal year 1998, (2) for B-1B 

aircraft, maintenance personnel were cannibalizing a part from an aircraft 

for almost every one sortie flown during fiscal year 1998, and (3) for C-5 

aircraft, maintenance personnel were cannibalizing a part from an aircraft 

every time two sorties were flown during fiscal year 1998. While 

cannibalizing parts from aircraft is considered a normal part of the 

maintenance process and is used as a maintenance tool to work around 

parts shortages, maintenance personnel expended a large amount of time 

cannibalizing parts. Table 2.4 shows the hours spent in fiscal years 1997 and 

1998 by ACC and AMC maintenance personnel cannibalizing B-1B, 

F-16, and C-5 parts.

Table 2.4: Reported Cannibalization Hours for ACC and AMC B-1B, F-16, and C-5 

Aircraft for Fiscal Years 1997 and 1998

Source: Air Combat Command and Air Mobility Command.

As the above table shows, ACC and AMC expended about 178,000 hours 

removing usable parts from one aircraft and putting those same parts 

on other aircraft in order to keep them mission capable during fiscal 

Figures represent average cannibalization actions per 100 sorties flown

Fiscal year F-16 B-1B C-5

1993 5.3 55.7 37.9

1994 7.8 61.1 30.9

1995 8.4 53.5 40.5

1996 10.0 66.9 41.4

1997 12.8 93.9 45.9

1998 12.1 96.3 54.0

Type of aircraft

Cannibalization hours

Fiscal year 1997 Fiscal year 1998

F-16 35,472 43,431

B-1B 31,377 29,342

C-5 19,123 19,271

Total hours 85,972 92,044
Chapter 2

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Customer Operations

Page 24 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

years 1997 and 1998. This equates to about 43 people working 8 hours a day, 

5 days a week for the entire 2 fiscal years. However, the total magnitude of 

the number of hours spent removing parts from aircraft and putting them 

on other aircraft is not known. For example, the amount of time spent in 

performing required operational checks to determine if cannibalized parts 

were working properly once they were installed was not always reflected in 

base reports on cannibalizations.

Cannibalization actions resulting from parts shortages also doubled the 

workload for these personnel since they had to take parts off of one aircraft 

and put them on another aircraft. In addition, it took maintenance 

personnel weeks and, in some cases, months to put an aircraft back 

together once parts were removed from the aircraft. For example, every 

time Dover Air Force Base rotated its C-5 aircraft used for 

cannibalization—about 8 times a year—10 to 15 maintenance personnel 

worked 12 hour shifts for 10 to 14 days in order to take good parts off the 

new cannibalization aircraft and rebuild the old cannibalization aircraft. 

Maintenance personnel at a Dyess Air Force Base B-1B squadron usually 

worked two, 10-hour shifts to rotate cannibalization aircraft. Data provided 

by Dyess showed that for the five most recent cannibalized aircraft, it took 

the squadron anywhere from 10 to 66 days, for an average of 39 days, to 

rebuild the aircraft. The rebuild time for the squadron at Dyess does not 

include the time it took to take the parts that were used to rebuild the old 

cannibalization aircraft off the new cannibalization aircraft—because 

Dyess did not track this type of information.

Mobility Readiness Spares 

Package Assets Used to 

Keep Aircraft Mission 

Capable

Another indication of supply problems is the use of mobility readiness 

spares package assets to satisfy peacetime requirements. Mobility 

readiness spares packages are air transportable packages of repair parts 

and maintenance supplies required to support planned deployed operations 

until resupply can begin. However, the Air Force is using these assets to 

satisfy peacetime critical parts shortages as shown in table 2.5.
Chapter 2

Inventory Problems Adversely Affected 

Customer Operations

Page 25 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 2.5: Use of Mobility Readiness Spares Packages to Satisfy Parts Shortages for B-1B, C-5, and F-16 Aircraft That Were Not

Mission Capable

Source: Weapon System Management Information System.

As shown in table 2.5, the use of mobility reserve spares package assets to 

sustain aircraft mission capability has increased over the last several years 

for the B-1B and C-5. Specifically, the use of such assets to satisfy parts 

shortages has worsened for the B-1B and C-5 from fiscal year 1996 through 

fiscal year 1998, while the use of the mobility readiness spares package 

assets has remained about the same for the F-16 during the same time 

period. While DOD policy allows this practice and there are no restrictions 

on the number of assets that can be used to support peacetime operations, 

Air Force headquarters officials stated that it is imperative that the 

packages be maintained at sufficient levels to sustain operations. The 

practice of using mobility readiness spares package assets is another 

indication that the Supply Management Activity Group is encountering 

problems in meeting the needs of its customers. This practice, in effect, 

trades off the Air Force’s ability to sustain its forces during wartime for the 

ability to prepare its peacetime forces for war.

Base Supply Frequently Did 

Not Have the Parts That 

Customers Needed

Another indicator measuring the effectiveness of the Supply Management 

Activity Group is the supply issue effectiveness rate, which is the percent 

of time that base supply will have a part in stock when a maintenance 

organization needs the part for repairing an aircraft. This indicator is used 

to measure how well the customer is supported by the supply group since 

base supply cannot possibly stock every part. A high issue effectiveness 

rate reflects success in anticipating customer needs while a low rate 

reflects poor forecasting of customer needs.

As table 2.6 shows, ACC and AMC data indicate that the supply 

effectiveness rate has declined for the (1) B-1B and F-16 from fiscal 

year 1994 through fiscal year 1998 and (2) C-5 from fiscal year 1996 through 

Fiscal year

B-1B C-5 F-16

Number

of parts

Percent

of total

Number

of parts

Percent

of total

Number

of parts

Percent

of total

1996 147 1.5 809 3.8 3,613 6.4

1997 780 6.2 3,156 15.1 3,600 5.5

1998 2,006 15.0 4,308 18.0 3,783 5.6
Chapter 2

Inventory Problems Adversely Affected 

Customer Operations

Page 26 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

fiscal year 1998. Further, the actual rate has been below the standard set by 

the two major commands for fiscal years 1996 and 1997.

Table 2.6: Supply Issue Effectiveness Rates for the B-1B, F-16, and C-5 for Fiscal Years 1994 Through 1998

aInformation was not available.

bStandards were not established for fiscal year 1998.

Source: Air Combat Command and Air Mobility Command.

The table combines consumable items, which are primarily managed by 

DLA, and repairable items, which are managed by the supply group. When 

looking just at repairable items, we found that the issue effectiveness rate 

was 46.7 percent and 41.3 percent for the B-1B and 49.3 percent and 

48.7 percent for the F-16 in fiscal years 1997 and 1998, respectively. These 

figures indicate that bases only have one out of every two repairable items 

in stock when maintenance personnel need them to repair aircraft. 

Lack of Parts Hindered 

Peacetime Missions

We also selected the B-1B, F-16, and C-5 aircraft to assess the impact of 

parts shortages on customers’ operations. Because aircraft were not 

always available due to spare parts shortage problems as well as other 

problems, such as aircraft maintenance and deployments, Air Force units 

were not able to perform all of their peacetime missions. Specifically, the 

lack of spare parts prevented (1) some units from accomplishing all of their 

pilot and/or aircrew training and (2) AMC from performing all customer 

requested airlift services. Lastly, officials indicated that the shortage of 

spare parts has the potential to adversely affect contingency operations, 

particularly if several squadrons were required to deploy at the same time.

Figures expressed as a percentage

Fiscal year

B-1B F-16 C-5

Actual Standard Actual Standard Actual Standard

1994 67.4 62 74.9 64 a a

1995 66.7 70 74.6 74 a a

1996 65.3 70 71.8 74 71.2 75

1997 63.2 70 70.2 74 69.5 75

1998 59.1 b 71.6 b 69.5 75
Chapter 2

Inventory Problems Adversely Affected 

Customer Operations

Page 27 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Air Force Customers Unable 

to Perform All Training 

Missions

Because aircraft were not available for flying sorties due to supply 

problems and other problems such as aircraft maintenance and 

deployments, some Air Force customers were unable to perform all of their 

required training missions. Training is an essential part of Air Force 

customers’ operations because it provides pilots and other aircrew 

members with the necessary training to be (1) qualified to fly certain types 

of aircraft such as the B-1B and (2) proficient at performing certain tasks 

such as midair refueling at night, following terrain at night, and releasing or 

firing aircraft weapons as necessary during deployment missions. Table 2.7 

shows that during fiscal year 1998, B-1B and F-16 customers only flew 

79,267 hours, or 83 percent, of their total flying hours available for pilot and 

aircrew training.

Table 2.7: ACC Flying Hours That Were Available and Used for Pilot and Aircrew 

Training in Fiscal Year 1998

Source: Air Combat Command information.

At Air Force bases we visited, officials confirmed that, in some cases, 

aircraft were not available for training sorties because of supply problems. 

For example, at one B-1B squadron, parts shortage problems were cited as 

a major contributor to aircraft not being available for training. Due to the 

lack of available aircraft, some aircrew members could not meet their 

annual training sortie requirements during the training year from July 1, 

1997, through June 30, 1998. Specifically, aircrew members were not 

classified as combat mission ready as follows: (1) 6 out of 30 aircraft 

commanders, or 20 percent, (2) 2 out of 13 pilots, or 15 percent, and 

(3) 5 out of 41 weapons system officers, or 12 percent. According to the 

squadron commander, these crew members could not be used on combat 

missions until they accomplished the required training.

Air Force officials at another B-1B base also cited the lack of parts, as well 

as maintenance problems, as reasons why aircraft were not available and 

why aircrews did not receive all their needed training. For example,

because of unavailable aircraft, the base did not have sufficient B-1Bs to 

provide aircrews training in tactical formation flying that requires the use 

Description F-16 B-1B Totals Percent of total

Available training hours 76,546 19,343 95,889 100

Training hours used 63,112 16,155 79,267 83

Training hours not used 13,434 3,188 16,622 17
Chapter 2

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Customer Operations

Page 28 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

of two aircraft flying close together in formation. Only four personnel at the 

base were qualified in tactical formation flying. Officials said that in the 

event of a wartime mission, the aircrews not qualified in tactical formation 

flying would have to fly their aircraft so as to maintain a certain distance 

from the nearest B-1B, a situation that was described as dangerous in 

wartime conditions. Further, this base is also tasked four times a year to 

provide four of its aircraft to a B-1B weapons training school at another 

base. However, for such a deployment during October 1998, the base could 

only send two of the four required aircraft—-the other two aircraft had to 

be sent from other B-1B bases. According to an Air Force official, the lack 

of spare parts was a major reason why the base could not send two of its 

aircraft to the weapons training school.

Parts Shortages Cited as a 

Major Contributor to an 

Estimated $64 Million in 

Lost Revenue

An important mission of the transportation activity group, which is part of 

the Air Force’s Working Capital Fund, is to provide strategic airlift services 

by moving cargo and passengers worldwide for wartime deployments of 

fighting forces and peacetime missions to include humanitarian efforts. 

These airlift services are provided by the Air Force’s AMC, which, like other 

working capital fund activities, relies on sales revenue from services 

provided to customers to finance its operations. We found, however, that 

because some C-5, C-17, and C-141 aircraft were not available, AMC did not 

perform customer airlift services as shown in table 2.8. Although these 

aircraft were not mission capable for a variety of reasons such as 

maintenance problems, AMC cited parts shortages as a major contributor 

as to why the aircraft were not available to perform airlift services.

Table 2.8: AMC Estimated Loss of Revenue From Declined Missions for Its C-5, C-17, and C-141 Aircraft From September 1, 1997, 

Through August 31, 1998

Source: Air Mobility Command.

NA—Not applicable.

Type aircraft

Missions

declined

Estimated

flying hours per

mission

Revenue per

flying hour

Estimated lost

revenue

C-5 167 20.2 $12,605 $42,521,707

C-17 25 15.8 7,025 2,774,875

C-141 183 19.1 5,349 18,696,359

Total 375 NA NA $63,992,941
Chapter 2

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Customer Operations

Page 29 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Table 2.8 shows that from September 1, 1997, to August 31, 1998, AMC 

declined 375 requests from customers to perform airlift services because of 

unavailable aircraft. Since aircraft were not available to meet these 

requests, AMC estimated that it lost at least $64 million in revenue. A 

Mobility Command official stated that they used a conservative estimate of 

the flying hours per mission to calculate the lost revenue and, therefore, the 

estimated revenue not earned due to unavailable aircraft is probably 

understated.

Parts Shortages Also Have 

Potential Adverse Impact on 

Contingency Missions

Although we did not perform a review of Air Force’s readiness in terms of 

contingency deployments, we found indications at the bases we visited that 

parts shortages have the potential to adversely impact their ability to 

effectively accomplish contingency missions. Air Force base officials said 

the impact that parts shortages would have on contingency deployments is 

difficult to determine and depended on a variety of factors, including the 

(1) number of squadrons a base would be required to deploy, (2) number of 

aircraft to be taken, (3) number of sorties to be flown and the duration of 

the sorties, and (4) location of the deployment. At some bases, officials 

stated that sending one squadron would not present much of a problem, 

but that sending two or more would be more difficult to do. Officials at one 

base stated that parts shortages have a definite impact on their ability to 

respond to contingency missions. Similarly, officials at another base stated 

that parts shortages were their most significant problem regarding 

readiness.

Conclusions Mission capability rates reported for major Air Force aircraft have declined 

significantly over the last 8 years. Further, more specific analysis on three 

aircraft—the B-1B, F-16, and C-5—shows similar trends as well as 

significant increases in cannibalization rates and the use of supplies 

intended to support deployed operations. At some Air Force bases, this 

situation has adversely affected maintenance operations as well as aircrew 

training programs. Further, based on discussions with Air Force officials, 

there are indications these problems could potentially impact contingency 

missions.
Page 30 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Chapter 3

Budget, Inventory Management, and Repair 

Problems Were Primary Causes of Spare Parts 

Shortages Chapte3r

To assess the reasons why spare shortages existed, we judgmentally 

selected and reviewed B-1B, F-16, or C-5 inventory items. The 155 items we 

selected were (1) causing aircraft to be not mission capable and/or 

(2) considered actual or potential problem items by ACC or AMC. This 

analysis identified three key factors causing support problems that 

generally can be categorized as weaknesses in (1) forecasting inventory 

requirements and executing inventory procurement and repair budgets, 

(2) not achieving Agile Logistics goals, and (3) repairing items when 

needed by customers. Because of the integrated nature of the supply 

systems there is a general interrelationship among these causes.

Table 3.1 shows the results of our analysis for the 155 items that were not 

available as of September 1997 and for 96 of the 155 items that were still 

causing support problems as of September 1998.1

Table 3.1: Primary Reasons Why Problem Items Were Not Available as of September 1997 and September 1998

aPrimarily technical problems that affect the reliability of an item.

Inventory 

Requirements 

Forecasting and 

Budget Problems

For 57 of the 155 items we reviewed, problems related to the forecasting of 

inventory requirements used in developing the supply budget were cited as 

the reason why the Supply Management Activity Group could not meet its 

customers’ needs as of September 1997. This happened primarily because 

inventory requirements were understated by 18 percent. Some minor 

problems related to obligating funds and the timely receipt of obligation 

data also contributed to the problems. The Air Force is in the process of 

reviewing possible corrective actions. 

1

In our analysis, we considered an item to still be a problem in September 1998 if it caused aircraft to be 

not mission capable for more than 100 hours during that month.

September 1997 September 1998

Cause category Number Percent Number Percent

Forecasting and budgeting 57 36.8 0 0.0

Agile Logistics 31 20.0 26 27.1

Untimely repair 53 34.2 63 65.6

Othera 14 9.0 7 7.3

Total 155 100.0 96 100.0
Chapter 3

Budget, Inventory Management, and Repair 

Problems Were Primary Causes of Spare 

Parts Shortages

Page 31 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Underestimation of 

Customers’ Inventory 

Requirements Resulted in 

Support Problems

Air Force records indicate that the Supply Management Activity Group 

received about $2.5 billion in fiscal year 1997 obligation authority even 

though inventory requirements (purchase of new items and repair of 

broken items) were estimated at $3 billion. This clearly limited the supply 

group’s ability to buy and repair the items its customers needed and was 

the primary cause of spare parts shortages, as of September 1997, for the 

155 items we reviewed. It also caused (1) the number of serviceable items 

available at the base and wholesale levels to decline because items were 

used but not replenished during fiscal year 1997 and (2) a large backlog of 

procurement and repair requirements to carry over from fiscal year 1997 to 

fiscal year 1998.

Air Force headquarters officials identified two primary reasons for the 

differences between the budget estimate and the requirements for fiscal 

year 1997. First, because of a computer interface problem, about 

$200 million in procurement and repair requirements were inadvertently 

left out of the inventory requirements estimate. Second, Air Force officials 

estimate that the group’s inventory requirements increased by about 

$300 million between March 1995, when they initially determined their 

fiscal year 1997 inventory requirements, and March 1996, when the Air 

Force updated its inventory requirements. For example, documentation 

provided by Air Force headquarters showed that force structure changes 

resulted in an expansion in the overhaul program for B-52 engines. This 

expansion increased the group’s fiscal year 1997 inventory requirements by 

$26 million which was to be used for the repair of struts and the 

replacement of inventory items that could no longer be repaired. 

Because of the differences between the budget and the actual funding 

needed, supply officials took action in January 1997—less than 4 months 

into the fiscal year—to ensure the most effective possible use of their 

available obligation authority. Specifically, they attempted to optimize their 

obligation authority by directing activities to

• repair only high priority requirements, such as items that were causing 

aircraft to be not mission capable;

• repair items on an as-needed basis to avoid repairing unneeded items; 

and

• severely limit the procurement of new repairable items because they 

believed that repairing items and procuring the component parts needed 

to accomplish the repairs would have a more positive near-term effect 

on aircraft mission capable rates.
Chapter 3

Budget, Inventory Management, and Repair 

Problems Were Primary Causes of Spare 

Parts Shortages

Page 32 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

This approach limited the likelihood that scarce resources would be 

wasted on the repair or procurement of unneeded items, but it also created 

supply shortages at the base level. Since repairs were generally limited to 

high priority requirements, relatively low priority requirements such as 

replenishing base stockage levels were generally not satisfied. As a result, 

base supply activities were less likely to have items in stock when units 

needed them. Further, because repairs were accomplished as the needs 

arose rather than in anticipation of the needs, it frequently took the supply 

group longer to provide the items that were needed by units. These factors 

and the resulting base-level shortages were reasons why, as discussed in 

chapter 2, the supply group’s issue effectiveness rates were low during 

fiscal year 1997. Moreover, because these shortages were carried into the 

next year,2

 they also contributed to the low issue effectiveness rates that 

continued during fiscal year 1998.

Budget Execution Problems 

Also Contributed to Supply 

Group’s Fiscal Year 1997 

Support Problems

To a minor extent, budget execution problems also prevented supply group 

managers from fully using their available obligation authority. For example, 

the supply group’s wholesale division was given about $3.2 billion of 

obligation authority in fiscal year 1997,3

 but the group reported obligations 

of about $3.15 billion—a $50-million difference. While the $50 million 

represents only 1.5 percent of the supply group’s obligation authority, 

obligating this money would have made more inventory items available to 

customers. According to an Air Force budget official, since the Defense 

Finance and Accounting Service’s accounting systems did not provide 

September obligation data until 6 or more weeks after the end of the 

month, supply managers did not know that additional obligation authority 

was available until after the end of the fiscal year.

Similarly, the Air Force would have been in a position to request additional 

obligation authority if the supply group had timely sales data from the 

Defense Finance and Accounting Service. Specifically, because (1) DOD 

established the group’s obligation authority based on projected sales4 and 

2

AFMC officials estimate that, as of September 1997, the supply group needed about $427 million to buy 

and/or fund the repair of items that were (1) causing aircraft to be not mission capable and (2) needed 

to fill bases’ authorized stockage levels. 

3This obligation authority was available to not only purchase new items and repair broken items but 

also to finance the supply group’s operating costs, such as the salaries of item managers.

4

The Office of the Under Secretary of Defense (Comptroller) established the supply group’s fiscal 

year 1997 wholesale budget based on a unit cost target of $0.959, which meant that it was authorized to 

obligate $0.959 for every $1.00 of projected sales.
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(2) the supply group’s actual fiscal year 1997 wholesale sales were about 

$188 million higher than expected, the Air Force could have used the higher 

sales level and the customer support problems discussed previously as a 

basis for requesting additional obligation authority from the Office of the 

Under Secretary of Defense (Comptroller). However, Air Force 

headquarters officials stated that managers did not receive timely sales 

data from the Defense Finance and Accounting Service systems and, 

therefore, did not know until sometime in fiscal year 1998 that their fiscal 

year 1997 sales were higher than the budget estimate. As a result, this 

option was not even considered.

DOD Directed the Air Force 

to Address Its Forecasting 

Problems

In its fiscal year 2000 budget document for the supply group, the Office of 

the Under Secretary of Defense (Comptroller) raised concerns about the 

readiness of all military services and cited a lack of spare parts as a major 

contributor to a decline in the mission capability of aircraft. To help 

improve readiness, about $141 million in obligation authority was added to 

the supply group’s fiscal year 2000 budget to buy and repair additional 

inventory items. However, the budget document raised concerns about the 

Air Force’s ability to use this additional obligation authority to purchase the 

correct inventory items. Accordingly, the Deputy Secretary of Defense 

directed AFMC to conduct a review of the process it uses to determine the 

inventory requirements of its customers.

AFMC’s review, which is currently underway, is to identify the underlying 

causes of the forecasting problems. In doing so, it is to comprehensively 

evaluate the procedures, methodologies, and practices that the supply 

group uses to forecast its customers’ requirements. The AFMC Commander 

is required to provide a report on the review’s findings, conclusions, and 

any recommendations to both Air Force headquarters and the Office of the 

Under Secretary of Defense (Comptroller) by May 15, 1999.

Overly Optimistic Agile 

Logistics Goals

The Air Force reduced its supply group’s budget by $948 million over a 

3-year period in anticipation of savings resulting from process 

improvements related to the Agile Logistics program. However, for 31 of 

the 155 items we reviewed, problems occurred because of inventory 

management weaknesses, including the Air Force’s inability to achieve the 

Agile Logistics reduced processing time goals. Further, the Air Force’s 

inability to achieve the reduced processing time goals was a contributing 

factor for many other problem items. The ultimate result of not achieving 

these goals was that the supply group had less funding than required to 
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meet customer inventory needs. This situation is in addition to the 

requirements forecasting problem discussed in the prior section.

Air Force Reduced Supply 

Group’s Budget in 

Anticipation of Savings

The Air Force’s Agile Logistics program is consistent with DOD’s goals for 

improving logistics support5

 and is based on three key assumptions: 

(1) reduced logistics response time,6

 (2) seamless logistics systems, and 

(3) streamlined logistics infrastructure. It also assumes that the use of 

current and future technologies will allow units to order spare parts 

virtually “real time” and that more efficient commercial and military 

transportation alternatives will make large inventories unnecessary.

The Air Force used anticipated Agile Logistics improvements as a basis for 

reducing the supply group’s buy and repair funding by about $948 million 

over a 3-year period. Specifically, the Air Force reduced the supply group’s 

fiscal year 1997 budget by $336 million based on the assumption that total 

pipeline and logistics response time could be reduced to 57 days (from a 

fiscal year 1994 baseline of 67 days); reduced it an additional $289 million 

in fiscal year 1998 based on the assumption that the total time could be 

reduced to 52 days; and reduced it another $323 million in fiscal year 1999 

based on the assumption that the total time could be reduced to 41 days. 

This means, for example, that the activity group’s fiscal year 1997 

requirement would have been about $336 million higher had it been based 

on a total pipeline and logistics response time of 67 days (the fiscal 

year 1994 baseline) rather than the Agile Logistics goal of 57 days.

New Supply Support Goals 

Were Not Achieved

Data we obtained showed that Agile Logistics goals were not being 

achieved. For example, one ALC indicated that the total pipeline time for 

the items it managed was about 68 days during fiscal year 1998 (compared 

to a standard of 52 days) and AFMC headquarters indicated that the 

Command’s average logistics response time for repairable items during 

fiscal year 1998 was 44.7 days (compared to a budget goal of 9 days). 

5DOD’s conceptual framework for the future of the United States Armed Forces calls for the military 

services to fuse information, logistics, and transportation technologies in a manner that will allow them 

to (1) provide rapid crisis response, (2) track and shift assets, even while enroute, (3) deliver tailored 

logistics packages when and where needed, and (4) ensure the availability of spare parts and other 

items needed to sustain combat operations. Under this “Focused Logistics” concept, operational units 

can reduce their logistical “tails” because it is assumed that they will receive timely, continuous, and 

flexible support from wholesale supply activities. 

6

Logistics response time begins when a unit requests an item that is not available in base supply and 

that must, therefore, be requisitioned from the wholesale storage activity. It ends when the base 

receives the item. In this report, when we refer to pipeline times it includes logistics response times.
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Consequently, although we found some problems with the accuracy and 

completeness of the data used to monitor actual pipeline times, (1) the 

results of our review of the 155 problem items, (2) our discussions with 

cognizant Air Force logistics officials, and (3) the relative consistency of 

the data that we obtained from Air Force headquarters, AFMC, and the 

ALCs, indicate that the untimely processing of repairable items is a 

problem that warrants close management attention.

Air Force headquarters officials agree that the untimely processing of 

repairable items is a serious problem that has adversely affected the 

mission capability of aircraft. Specifically, they stated that the inability to 

achieve their depot repair time goal was due largely to a shortage of 

component parts needed to repair broken items—a condition called 

Awaiting Parts (AWP). Similarly, they stated that the inability to achieve the 

logistics response time goal was due primarily to backorder time.7

 They 

also stated that DOD policy, which they agree with, precludes them from 

considering AWP and backorder time when determining funding 

requirements. Air Force and DOD officials said that the AWP problem and 

backorders are both indications that the supply system is not working as 

intended and once the underlying cause(s) of these problems are fixed, any 

inventory purchased to support the longer pipeline would become 

excessive.

The Air Force’s ability to effectively support its units in the future will 

depend, to a large extent, on whether logistics managers throughout the 

service are able to do a better job of identifying and correcting the 

problems that have prevented them from achieving their Agile Logistics 

goals. This is unlikely to happen until (1) accurate and complete data on 

pipeline processing times are developed and analyzed consistently 

throughout the Air Force, (2) individuals responsible for managing the 

various pipeline segments are clearly identified and held accountable, and 

(3) commanders and managers throughout the Air Force periodically 

monitor the progress that is being made in achieving Agile Logistics goals. 

In those instances where goals appear unrealistic or unattainable, budget 

estimates must be adjusted accordingly.

We are reporting separately on the Air Force’s problems in implementing 

the Agile Logistics program. The report will detail specific implementation 

7

When an item requested by a customer is not available at the wholesale level, it is placed on backorder 

until it can be obtained by repairing a broken item or by some other means.
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issues the Air Force needs to address and actions the Air Force plans to 

take.

Untimely Repairs Were 

a Major Cause of 

Supply Support 

Problems

Because it significantly reduces the amount of usable inventory available at 

the wholesale level, the Air Force’s Agile Logistics program significantly 

increases the importance of depot maintenance activities’ role in providing 

timely and effective support to supply group customers. In many instances, 

how quickly the supply group can support its customers now depends 

primarily on how quickly depot maintenance activities can complete 

repairs on broken items. At the same time, because the Agile Logistics 

program changed depot repair operations from a batch-oriented process 

where repair requirements were determined once a quarter to a repair-ondemand approach where repair decisions are made daily, it also makes it 

much more difficult for these maintenance activities to plan their work and 

operate efficiently. 

AFMC officials knew in advance that Agile Logistics could adversely affect 

the efficiency of their depot maintenance operations as previously 

configured, but believed this potential disadvantage would be more than 

offset by improved processing times and lower inventory levels. 

Specifically, they assumed that (1) the shift from a batch repair concept to a 

repair-on-demand concept would allow them to reduce shop flow times and 

(2) these and other process improvements would reduce the supply group’s 

inventory requirements by $948 million.

However, as discussed previously, the Air Force has not achieved the Agile 

Logistics goals. As a result, the budgeted Agile Logistics savings reduced 

the supply group’s funding, but the effect of these “savings” has been less 

timely and effective support to customers. The next sections discuss two 

key factors that have limited depot maintenance activities’ ability to 

achieve anticipated reductions in their repair times: (1) shortages of 

component parts and (2) personnel skill limitations. Table 3.2, which is a 

further breakout of the repair problem cause category shown in table 3.1, 

shows the extent to which these factors are contributing to untimely 

repairs.
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Table 3.2: Primary Causes of Repair Problems as of September 1997 and September 1998

aIncludes problems related to test equipment.

Component Parts Shortages 

Have Been a Major 

Impediment to Timely 

Repairs

A shortage of the component parts needed to repair broken items—a 

condition that, as noted previously, the Air Force refers to as AWP—was 

the most frequent cause of untimely repairs for the items we reviewed. This 

AWP problem adversely affected the supply group’s ability to support its 

customers because it increased the number of broken items in the supply 

pipeline which, in turn, limited the number of usable items that could be 

provided to customers.

Our work showed that AWP is a pervasive problem that adversely affected 

repairs at both the depot and base levels. For example, one of the biggest 

readiness problems for the B-1B bomber during fiscal year 1998 was the 

Band 8 Transmitter that was experiencing significant AWP problems. 

Specifically, the Air Force’s spares inventory for this item was more than 

$40 million (64 items at $644,237 each), but the item nevertheless caused 

B-1B aircraft to be not mission capable for a total of 59,925 hours during 

fiscal year 19988 because much of this inventory was in an AWP status at 

both the depot and base levels. For example, as of July 1998, 26 Band 8 

Transmitters were at the repair contractor in an AWP status—16 of which 

had been in that status for more than a year. Additionally, 19 transmitters 

were in an AWP status at base level, had been in that status for an average 

of 139 days, and were awaiting an average of 5.5 component parts each. 

Some of the needed component parts were managed by DLA but most were 

managed by the Air Force supply group.

September 1997 September 1998

Cause category Number

Percent of total

problem Number

Percent of total

problem

Component parts shortages 38 71.7 34 54.0

Personnel/Skills constraints 8 15.1 21 33.3

Othera 7 13.2 8 12.7

Total 53 100.0 63 100.0

8

At any given time more than one part may be causing an aircraft to be not mission capable.
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Similarly, the Band 7 Transmitter used on the B-1B, which caused B-1B 

aircraft to be not mission capable for about 36,400 hours in fiscal year 1998, 

was also a problem because of untimely depot repairs, in general, and a 

shortage of the component parts needed to accomplish the repairs, in 

particular. For example, as of October 1998, 15 of these ALC-repaired items 

were in an AWP status at the depot level, 12 were in an AWP status for more 

than a year, and all but three needed more than one component part. In 

addition, although 10 additional Band 7 Transmitters were in the shop 

undergoing repairs, 55 component parts were needed in order to complete 

repairs on them. As was the case with the Band 8 Transmitters, most of the 

needed component parts were managed by the Air Force supply group.

Studies Have Identified AWP 

Problem

Recent Air Force studies have identified problems similar to those 

discussed above and/or have identified some of the underlying causes of 

the problems. For example, these problems were identified in a survey that 

AFMC headquarters conducted in early 1998 of item managers who were 

responsible for problem items. Specifically, when asked if parts shortages 

were a significant problem, about 56 percent of the 622 item manager 

responses stated that they were. Similarly, when asked if a shortage of 

carcasses to repair was a problem, about 11 percent of the responses 

indicated that it was.

However, the Air Force, in general, and AFMC, in particular, have done very 

little to resolve the AWP problem. For example, as of December 1998, 

AFMC headquarters had not yet developed (1) a long-term strategy for 

identifying and correcting the root cause(s) of the AWP problem, (2) a 

systematic process for identifying and focusing management attention on 

the most critical AWP problem items, or (3) a standardized approach that 

item managers can use to analyze data on AWP problems. Further, AFMC 

officials acknowledged that the AWP problem was due partly to a lack of 

reliable data on the number and type of component parts that will be 

needed to repair broken items, but have not developed a specific plan for 

resolving the problem.

Finally, AFMC officials realize that, to effectively manage the AWP 

problem, the supply group’s material managers must have easy access to 

the automated data they need to identify and analyze individual AWP 

problem items. However, presently, data on (1) the number of items that 

are in an AWP status and (2) the number and type of component parts each 

item needs must be obtained from several different sources, and even then 

may not be available in automated format.
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Page 39 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Manpower Constraints Have 

Caused Maintenance Delays

A shortage of personnel or skills was another major factor that limited 

depot maintenance activities’ ability to repair items in a timely manner. Our 

recent work on the Air Force’s logistics reform initiatives indicated that 

one of the key reasons for personnel and skill shortages was that AFMC 

officials had made little progress in developing the multi-skilled workers 

that their depot maintenance activities will need in order to operate 

effectively in a repair-on-demand environment. As discussed below, two 

additional reasons for personnel and skills shortages were (1) the 

temporary workload increase that resulted when the supply group carried a 

large backlog of repair requirements into fiscal year 1998 and (2) the 

disruptions associated with the on-going closure of two ALCs.

Repair Backlog Caused 

Temporary Manpower 

Constraints

Due largely to the budget and funding problems discussed previously, the 

Air Force entered fiscal year 1998 with a substantial backlog of repair 

work. This, in turn, increased some maintenance shops’ workloads to the 

point where they could not accomplish all of the work during fiscal 

year 1998. However, because of funding constraints and the possibility that 

some shops’ workloads may decrease once the backlog is eliminated, ALC 

officials decided not to hire full-time maintenance personnel to accomplish 

most of the additional work. Instead, they used the existing workforce and, 

where appropriate, overtime to reduce the backlog.

This approach allowed the supply group to alleviate, but not eliminate, 

some of its support problems during fiscal year 1998. For example, the 

shop that repairs the constant speed drive used in the B-1B aircraft cited 

insufficient manpower as the reason why it had problems keeping up with 

repairs for this item. During fiscal year 1998, the shop repaired more items 

than failed—139 items broke and 169 were repaired. However, the item 

caused B-1B aircraft to be not mission capable for 7,792 hours during fiscal 

year 1998 and, as of September 30, 1998, bases still had an outstanding 

requirement for 13 constant speed drives. On a more positive note, the 

constant speed drive caused aircraft to be not mission capable for only 

197 hours in September 1998.

Personnel Turbulence and 

Productivity Are Problems as 

ALC Closures Transfer Work to 

Other Locations

Our review of the 155 problem items indicates that the on-going closure of 

two ALCs and transfer of their workloads to the three remaining ALCs and 

other sources of repair has already had some impact. Specifically, as of 

September 1998, closure-related personnel and skill shortages were the 

primary cause of the support problem for eight of the items we reviewed. 

Further, the closures may become a more significant problem as the 

workload transfers proceed.
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Page 40 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

For example, 10 of the problem items we reviewed were part of the C-5 

Malfunction Detection Analysis Subsystem that was repaired at the San 

Antonio ALC until the workload was transferred to the Warner Robins ALC 

in January 1999. The San Antonio ALC was able to reduce the number of 

hours these 10 items caused aircraft to be not mission capable from 24,130 

hours in September 1997, to 2,308 hours in September 1998, or about 

90 percent. However, the San Antonio ALC shop supervisor stated that his 

shop’s ability to keep up with the repair workload had been adversely 

affected by the loss of trained maintenance technicians, especially during 

the first quarter of fiscal year 1999. Further, both the San Antonio and 

Warner Robins shop supervisors acknowledged that there was likely to be a 

temporary loss of productivity and efficiency during and immediately 

following the workload transition. Nevertheless, both supervisors said they 

were working together to ensure a smooth transition—by taking such 

action as (1) having Warner Robins personnel train at San Antonio prior to 

the workload transfers, (2) moving some of the test equipment to Warner 

Robins prior to the transition date, and (3) having San Antonio personnel 

visit Warner Robins after the transfer to provide assistance. 

AFMC’s Work Force Plan AFMC officials are taking action to alleviate their depot maintenance 

manpower problems. For example, by the end of fiscal year 1999, they plan 

to identify (1) the work force they will need in order to accomplish their 

depot maintenance workload through the year 2005 and (2) requirements 

for not only permanent employees, but also the temporary, term, and 

contract field team employees that will be needed to augment the 

permanent workforce during unplanned peaks in demand. They also plan 

to develop an enhanced technical training program to cross train workers, 

thereby making them more versatile and providing maintenance 

supervisors the flexibility they need in order to operate effectively in a 

repair-on-demand environment.

Conclusions Several factors contributed to the Supply Management Activity Group not 

being able to achieve its goals for meeting customer needs. Management 

actions related to forecasting requirements and estimating savings from 

logistics process improvements resulted in the group having fewer funds 

than needed to meet customer needs. As a result, even though customers 

had operations and maintenance funds to purchase inventory, the supply 

group did not have sufficient obligation authority to buy or repair items 

needed by customers.
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Page 41 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

A number of the problems experienced are related to implementation 

issues associated with the Air Force Agile Logistics program. Since we are 

reporting separately on the Agile Logistics program implementation and 

the Air Force is in the process of reviewing the requirements forecasting 

process, we are making no recommendations on these issues in this report. 

We will monitor the results of the Air Force study and report to the 

Subcommittee, as appropriate. Further, if the supply group is to provide 

more timely and responsive support to its customers, the Air Force must 

resolve the problem of not having the necessary component parts needed 

to fix broken repairable items.

Recommendation We recommend that the Secretary of the Air Force direct the AFMC 

Commander to implement a comprehensive program to address depot 

maintenance activities’ AWP problems. As a minimum, the AFMC 

Commander should develop (1) a strategy for identifying and correcting the 

underlying causes of the problem, (2) a systematic process for identifying 

and focusing management attention on the most critical AWP problem 

items, (3) a standardized approach that item managers can use to obtain 

and analyze data on AWP problems, and (4) more reliable data on the 

number and type of component parts that will be needed to repair broken 

repairable items.

Agency Comments In its comments, DOD concurred with our recommendation and stated that 

the Air Force is taking action to improve its supply parts availability. 

Specifically, additional funding was provided for the purchase of spare 

parts in fiscal year 1999, and DOD also provided the Air Force with 

$382 million in additional contract authority to purchase parts to improve 

parts availability beginning in fiscal year 2000. The Air Force is also 

conducting two studies to (1) improve the forecasting of inventory items 

that customers need and (2) help correct the awaiting parts problems. DOD 

also noted that the aging of aircraft, increased operations tempo, and 

technical surprises have all contributed to increased demands on the 

supply system and the Air Force is working to fix the problems noted in the 

audit.

DOD’s comments also stipulated that despite shortfalls in the Agile 

Logistics program, it has helped the Air Force reduce its supply pipeline 

from 67 days in fiscal year 1994 to 52 days in 1998. We recognize that the Air 

Force has initiated numerous process improvements attempting to reduce 
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its processing time, and its fiscal year 1998 budget was predicated on an 

average pipeline time frame of 52 days. The Air Force reduced its budget 

based on these predicated savings. Data available to us indicated that the 

Supply Group’s average pipeline time for the fourth quarter of fiscal year 

1998 was 87.5 days. As noted in our report, the Air Force’s inability to 

achieve the 52 day goal was due largely to a shortage of component parts 

(called awaiting parts) and items on backorder. The pipeline time 

associated with awaiting parts and backorders accounted for 37.1 of the 

87.5 days
Page 43 GAO/NSIAD/AIMD-99-77 Air Force Supply Management
Page 44 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Appendix I

Listing of the Reports in This Series ApeInxdi

DOD Information Services: Improved Pricing and Financial Management 

Practices Needed for Business Area (GAO/AIMD-98-182, Sept. 15, 1998).

Air Force Supply Management: Analysis of Activity Group’s Financial 

Reports, Prices, and Cash Management (GAO/AIMD/NSIAD-98-118, 

June 8, 1998).

Navy Ordnance: Analysis of Business Area Efforts to Streamline 

Operations and Reduce Costs (GAO/AIMD/NSIAD-98-24, Oct. 15, 1997).

Navy Ordnance: Analysis of Business Area Price Increases and Financial 

Losses (GAO/AIMD/NSIAD-97-74, Mar. 14, 1997).
Page 45 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Appendix II

Comments From the Department of Defense ApeInxdi
Appendix II

Comments From the Department of Defense

Page 46 GAO/NSIAD/AIMD-99-77 Air Force Supply Management

Now on pp. 10, 40.
Page 47 GAO/XXXX-??-?? Document Name

Appendix III

Major Contributors to This Report ApIenxdi

Accounting and 

Information 

Management Division, 

Washington D.C.

Gregory E. Pugnetti, Assistant Director

Ron L. Tobias, Accountant-in-Charge

William A. Hill, Senior Accountant

Cristina Chaplain, Communications Analyst

San Francisco Field 

Office

Eddie W. Uyekawa, Evaluator-in-Charge

Karl J. Gustafson, Senior Evaluator

Christine D. Frye, Senior Evaluator

Donald Y. Yamada, Senior Evaluator

(709337 and 511641) Lret
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