a

GAO

United States Government Accountability Office

Report to Congressional Requesters

December 2005 DEFENSE 

INVENTORY

Army Needs to 

Strengthen Internal 

Controls for Items 

Shipped to Repair 

Contractors

GAO-06-209
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

December 2005

DEFENSE INVENTORY

Army Needs to Strengthen Internal 

Controls for Items Shipped to Repair 

Contractors 

Highlights of GAO-06-209, a report to 

congressional requesters 

GAO has previously reported that

the lack of control over inventory 

shipments increases the

Department of Defense’s (DOD)

vulnerability to undetected loss or 

theft. GAO evaluated the Army’s 

effectiveness in maintaining

accountability of inventory shipped 

to repair contactors. To conduct its 

review, GAO analyzed shipment

data for fiscal year 2004, surveyed

repair contractors that were

recipients of inventory shipments, 

and assessed the Army’s adherence 

to internal control procedures.

Inventory shipments included both

secondary repair items—

components, assemblies, and 

subassemblies, other than major 

end items, which may be sent to 

commercial facilities for repair, 

alteration, or modification—and

government-furnished materiel—

assemblies, parts, and other items 

provided in support of this work. 

What GAO Recommends

GAO recommends that the Army 

take actions to strengthen its 

accountability over secondary

repair items and governmentfurnished materiel shipped to its 

repair contractors. DOD concurred 

with six of GAO’s 

recommendations and 

nonconcurred with one. GAO has 

deleted this recommendation based 

on follow-up work by the Army 

showing that the Army had

erroneously provided a duplicate 

shipment record. 

The Army has not maintained accurate accountability for inventory shipped 

to repair contractors, thereby placing these assets at risk of loss or theft. 

Although DOD policy requires the military services to confirm receipt of all 

assets shipped to contractors, the Army is not consistently recording 

shipment receipts in its inventory management systems. In an analysis of 

fiscal year 2004 shipment data obtained from two Army inventory control 

points, GAO could not reconcile shipment records with receipt records for 

42 percent of the unclassified secondary repair item shipments, with a value 

of $481.7 million, or for 37 percent of the classified secondary repair item 

shipments, with a value of $8.1 million. These data show that the Army 

cannot confirm that all inventory items shipped to repair contractors were 

received. The Army’s data contained no receipts for government-furnished 

materiel. 

GAO survey results showed that repair contractors could confirm receipt of 

most, but not all, of the shipments. Specifically, on the basis of its survey 

results and follow-up work, GAO estimated that about 15 percent of the 

unclassified secondary repair item shipments in the survey population could 

not be confirmed as being received. GAO estimated that these lost or 

unaccounted for shipments have a value of approximately $68 million. All 

shipments of classified government-furnished materiel and secondary repair 

items were reported as received by the contractors in our survey. For 

shipments of unclassified government-furnished materiel, almost all 

shipments were reported by the contractors in our survey as being received. 

The Army’s accountability for shipments of items sent to repair contractors 

is impeded by three internal control weaknesses. First, Army inventory 

control points lack systematic procedures for (1) obtaining and documenting 

contractor receipt of shipments of secondary repair items, (2) following up 

in cases where receipt was not confirmed by the contractors, and (3) 

providing advance notification of shipments to contractors. Second, the 

Army does not confirm receipt of government-furnished materiel shipments,

reflecting a discrepancy between the Army’s practices and DOD regulations 

regarding the need to confirm receipt of these shipments. DOD regulations 

require receipts for all shipments, including government-furnished materiel. 

Third, inventory control points do not provide the Defense Contract 

Management Agency with required quarterly reports that show the status of 

government-furnished materiel shipments. As a result, Defense Contract 

Management Agency officials may lack data to corroborate contractorgenerated data during their inventory audits. These weaknesses in the 

Army’s ability to account for inventory shipped to repair contractors 

increase the risk of undetected loss or theft. Moreover, inaccurate receipt 

records can diminish asset visibility and distort on-hand inventory balances,

leading to unnecessary procurement of items. 

www.gao.gov/cgi-bin/getrpt?GAO-06-209.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis

at (202) 512-8412 or solisw@gao.gov. 
Page i GAO-06-209 Defense Inventory

Contents

Letter 1

Results in Brief 3

Background 5

Internal Control Weaknesses Impede Army’s Accountability for 

Inventory Shipments 8

Conclusions 14

Recommendations for Executive Action 15

Agency Comments and Our Evaluation 16

Appendixes

Appendix I: Scope and Methodology 18

Appendix II: GAO Contractor Survey 21

Appendix III: Comments from the Department of Defense 26

Appendix IV: GAO Contact and Staff Acknowledgments 30

Tables Table 1: Fiscal Year 2004 Shipments of Government-Furnished 

Materiel and Secondary Repair Items Used to Draw Our 

Samples 6

Table 2: Fiscal Year 2004 Unclassified Secondary Repair Item 

Shipments That Lacked Matching Receipts or Showed 

Discrepancies with Receipt Records 9

Abbreviations

DCMA Defense Contract Management Agency

DOD Department of Defense

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Page 1 GAO-06-209 Defense Inventory

United States Government Accountability Office

Washington, D.C. 20548

A

December 13, 2005 Letr

The Honorable Richard J. Durbin

The Honorable Tom Harkin

United States Senate

The Honorable Peter A. DeFazio

The Honorable Carolyn B. Maloney

House of Representatives

Every year the Army ships thousands of items from its inventory to 

commercial contractors for repair, alterations, or modification. These 

items range from small components, such as circuit card assemblies, to 

larger, expensive items like turbine engines. In addition, contractors may 

receive parts from the Army supply system for use in this work. In fiscal 

year 2004, for example, Army records show that the U.S. Army Aviation and 

Missile Command and the U.S. Army Tank-automotive and Armaments 

Command authorized shipment of about 70,000 items worth approximately 

$970 million to repair contractors. To safeguard government-owned assets 

while they are in transit, Department of Defense (DOD) and Army policies 

require Army supply activities to follow specific procedures for managing 

and maintaining accountability of inventory provided to commercial 

contractors. 

Since at least 1990, we have considered DOD supply chain and inventory 

management to be a high-risk area due to ineffective management systems 

and procedures. Among the issues facing the department has been a lack of 

control over inventory shipments, which increases DOD’s vulnerability to 

undetected loss or theft and also increases the risk that millions of dollars 

will be spent on procuring unnecessary items. 

In response to your request, we evaluated the Army’s effectiveness in 

maintaining accurate accountability of inventory shipped to repair
Page 2 GAO-06-209 Defense Inventory

contactors. Our review included shipments of both secondary repair items 

and government-furnished materiel.1

This report is the third and last in a series of reports focusing on the 

services’ inventory management procedures for controlling materiel 

shipped to repair contractors. In July 2002, we reported that the Air Force 

either did not adhere to, or did not establish, effective controls for assets 

shipped to its repair contractors for repair or for use in the repair of other 

assets.2

 More recently, we reported in July 2004 that the Naval Inventory 

Control Point and its repair contractors did not follow a number of DOD 

and Navy procedures for maintaining accountability and visibility of 

government-furnished materiel provided to contractors.3

To perform our review, we analyzed Army inventory shipment data, 

surveyed repair contractors that were recipients of inventory shipments, 

and assessed the Army’s adherence to policies for managing and 

maintaining accountability for inventory shipments. We obtained fiscal 

year 2004 shipment data from two of the Army’s three major inventory 

control points—the U.S. Army Aviation and Missile Command and the U.S. 

Army Tank-automotive and Armaments Command.4

 For secondary repair 

items, we analyzed the data to reconcile inventory shipment records with 

receipt records. To assess the reliability of the Army data, we randomly 

selected 200 secondary repair item shipments for which the inventory 

shipment records and receipt records had not been reconciled in the 

Army’s inventory management systems. We also randomly selected 200 

government-furnished materiel shipments. Because these were random 

1

Secondary repair items comprise reparable components, assemblies, and subassemblies, 

other than major end items (e.g., tanks and helicopters), which may be sent to either 

government or commercial facilities for repair, alteration, or modification. Governmentfurnished materiel is materiel in the possession of, or acquired by, the government and later 

made available to contractors for use in repairs, alterations, and modifications. Generally, 

this materiel includes assemblies, components, parts, raw and processed materiel, and small 

tools and supplies that contractors use in support of this work.

2

GAO, Defense Inventory: Air Force Needs to Improve Control of Shipments to Repair 

Contractors, GAO-02-617 (Washington, D.C.: July 1, 2002).

3

GAO, Defense Inventory: Navy Needs to Improve the Management Over GovernmentFurnished Materiel Shipped to Its Repair Contractors, GAO-04-779 (Washington, D.C.: July 

23, 2004).

4

We excluded the U.S. Army Communications-Electronics Command from our data analysis 

because at the time of our review its inventory management system was undergoing 

stabilization and could not provide all data elements needed to conduct our audit. 
Page 3 GAO-06-209 Defense Inventory

samples, the results of our analysis can be projected to the entire universe 

of shipments that met our selection criteria. Additionally, we selected all 

shipments of classified items5

—90 total shipments—that were present in 

our data population.6 We then sent surveys to 72 Army contractors 

requesting property record information on these shipments to assess 

whether these items had been received and accounted for by the 

contractors.7

 We received and reviewed survey responses from 66 of the 72 

contractors, representing 184 unclassified secondary repair item 

shipments, or 92 percent of our randomly selected sample; 169 unclassified 

government-furnished materiel shipments, or 85 percent of our randomly 

selected sample; and 100 percent of the classified shipments. We followed 

up with repair contractor officials and Army item managers to obtain 

additional information on specific shipments where our survey data 

indicated a potential loss of accountability. On the basis of the survey 

results and our follow-up analysis, we believe that the data are sufficiently 

reliable for our purposes. We conducted our review from October 2004 

through November 2005 in accordance with generally accepted 

government auditing standards. Appendix I provides more details about 

our scope and methodology. A copy of the survey we sent to repair 

contractors is reprinted in appendix II.

Results in Brief The Army has not maintained accurate accountability for inventory 

shipped to repair contractors, thereby placing these assets at risk of loss or 

theft. Although DOD policy requires the military services to confirm receipt 

of all assets shipped to contractors, the Army is not consistently recording 

shipment receipts in its inventory management systems. In our analysis of 

fiscal year 2004 shipment data obtained from two Army inventory control 

5

Classified items, such as frequency converters and other types of electronic equipment, are 

those that require the highest degree of protection in the interest of national security. 

6

Army records showed a total of 94 classified shipments—11 government-furnished materiel 

shipments and 83 secondary repair item shipments. Because we could not determine the 

contractor that received 3 of the secondary repair item shipments, we excluded them from 

our survey. After we obtained comments on a draft of this report, the Army conducted an 

analysis and discovered that one of the classified secondary repair item shipments in our 

survey population was a duplicate shipment record that the Army erroneously provided to 

us. Thus, we have deleted this shipment from our analysis.

7

We did not send a survey to one contractor, accounting for 3 of the 200 shipments of 

unclassified secondary repair items, because the contractor declined to participate in the 

survey.
Page 4 GAO-06-209 Defense Inventory

points, we could not reconcile materiel shipment records with receipt 

records for 42 percent of the unclassified secondary repair item shipments, 

with a value of $481.7 million, or for 37 percent of the classified secondary 

repair item shipments, with a value of $8.1 million. These data show that 

the Army, on the basis of receipt records maintained in its inventory 

management systems, cannot confirm that a substantial portion of 

inventory items shipped to repair contractors were in fact received. The 

Army’s data contained no receipts for government-furnished materiel.

Our survey results showed that repair contractors could confirm receipt of 

most, but not all, of the shipments. Specifically, on the basis of our survey 

results and follow-up work, we estimated that about 15 percent of the 

unclassified secondary repair item shipments in our population could not 

be confirmed as being received. We estimated that these lost or 

unaccounted for shipments have a value of approximately $68 million. All 

shipments of classified government-furnished materiel and secondary 

repair items were reported as received by the contractors in our survey. 

For shipments of unclassified government-furnished materiel, almost all 

shipments were reported by the contractors in our survey as being 

received.

The Army’s accountability for shipments of items sent to repair contractors 

is impeded by three internal control weaknesses. First, Army inventory 

control points lack systematic procedures for (1) obtaining and 

documenting contractor receipt of shipments of secondary repair items, 

(2) following up in cases where receipt was not confirmed by the 

contractors, and (3) providing advance notification of shipments to 

contractors. Second, the Army does not confirm receipt of governmentfurnished materiel shipments, reflecting a discrepancy between the Army’s 

practices and DOD regulations regarding the need to confirm receipt of 

these shipments. DOD regulations require receipts for all shipments, 

including government-furnished materiel. Third, inventory control points 

do not provide the Defense Contract Management Agency (DCMA) with 

required quarterly reports that show the status of government-furnished 

materiel shipments. As a result, DCMA officials may lack data to 

corroborate contractor-generated data during their inventory audits. These 

weaknesses in the Army’s ability to account for inventory shipped to repair 

contractors increase the risk of undetected loss or theft because the Army 

cannot ensure control over assets after they have been shipped from its 

supply system. Moreover, inaccurate and incomplete receipt records 

diminish asset visibility and can distort on-hand inventory balances, 

leading to unnecessary procurement of items. 
Page 5 GAO-06-209 Defense Inventory

We are making recommendations to strengthen the Army’s accountability 

over secondary repair items and government-furnished materiel shipped to 

its repair contractors. In written comments on a draft of this report, DOD 

concurred with six of our recommendations and nonconcurred with one. 

We have deleted this recommendation based on follow-up work by the 

Army showing that the Army had erroneously provided a duplicate 

shipment record. DOD’s comments are discussed in the “Agency 

Comments and Our Evaluation” section.

Background Responsibility for controlling and accounting for materiel shipped to repair 

contractors is shared between the Army and its contractors. Army 

inventory control points within the Army Materiel Command manage the 

movement of assets from the Army supply system to commercially 

operated repair facilities. The Army’s three major inventory control points 

for secondary repair items are the U.S. Army Aviation and Missile 

Command, the U.S. Army Tank-automotive and Armaments Command, and 

the U.S. Army Communications-Electronics Command. Repair contractors 

are generally required to establish and maintain a property control system 

for the control, use, maintenance, repair, protection, and preservation of 

government property in their possession.8

Inventory control points, as part of their materiel management functions, 

maintain the Army’s data systems that support inventory and financial 

management, requirements determination, maintenance planning, and 

procurement. These inventory management systems retain the accountable 

records for inventory transactions, including shipment and receipt records. 

The U.S. Army Aviation and Missile Command and the U.S. Army Tankautomotive and Armaments Command use the Commodity Command 

Standard System as their inventory management system. This system will 

eventually be replaced with the Logistics Modernization Program, which 

will integrate inventory functions performed by legacy inventory 

management systems. The U.S. Army Communications-Electronics 

Command uses the Logistics Modernization Program. 

The inventory shipment data we obtained from the U.S. Army Aviation and 

Missile Command and U.S. Army Tank-automotive and Armaments 

Command included shipments of secondary repair items and government8

DOD 4161.2-M, DOD Manual for the Performance of Contract Property Administration, 

December 1991, para. C3.4, Federal Acquisition Regulation, Subpart 45.502.
Page 6 GAO-06-209 Defense Inventory

furnished materiel sent to contractor facilities located in the continental 

United States during fiscal year 2004. Many shipments contained multiple 

items. According to these records, the inventory control points together 

authorized shipments of more than 25,000 secondary repair items worth 

approximately $852 million to repair contractors. The records show they 

also authorized shipments of more than 44,000 government-furnished 

materiel items valued at approximately $118 million. The survey population 

we used to draw our sample included all shipments of secondary repair 

items for which we could not identify matching receipt records for 

corresponding inventory shipment records,9

 all shipments of governmentfurnished materiel, and all shipments of classified government-furnished 

materiel and secondary repair items. Table 1 shows the population of 

shipments from which we drew our samples.

Table 1: Fiscal Year 2004 Shipments of Government-Furnished Materiel and 

Secondary Repair Items Used to Draw Our Samples

Source: GAO analysis of Army inventory control point data.

a

Because we could not determine the contractor that received three of the secondary repair item 

shipments, we excluded them from our survey. After we obtained comments on a draft of this report, 

the Army conducted an analysis and discovered that one of the classified secondary repair item 

shipments in our survey population, valued at $16,938, was a duplicate shipment record that the Army 

had erroneously provided to us. Thus, we have deleted this shipment from our analysis.

9

We identified matching receipts for 1,457 secondary repair item shipments valued at $348.3 

million. These shipments were excluded from our survey population.

Shipment type

Number of

Shipments Items Value

Government-furnished materiel

Classified 11 500 $2,596, 972

Unclassified 3,476 43,954 $115,777,299 

Secondary repair items

Classified 82a 323 $21,695,757

Unclassified 1,076 13,175 $481,697,529

Total 4,645 57,952 $621,767,557
Page 7 GAO-06-209 Defense Inventory

DOD has established policies for maintaining accountability for assets 

shipped to repair contractors.10 Under these policies, for example, 

contractors are responsible for posting receipts in their property control 

records and notifying the appropriate inventory control point once they 

have received shipped assets. The inventory control point establishes a 

“due-in” record when a shipment is issued to track inventory that will 

eventually return to the Army supply system. Once notified of receipt by 

the contractors, the inventory control point processes receipt of a 

transaction in its inventory management system to reflect the contractors’ 

receipt of the shipment. If the inventory control point is not notified of 

receipt within 45 days of shipment, it is required to follow up with the 

intended recipient to determine shipment status. Without a confirmation of 

receipt, the status of a shipment is uncertain. In addition, DOD policy states 

that the military services may establish requirements for their inventory 

control points to provide advance notification of scheduled shipments to 

repair contractors.

DOD also requires inventory control points to submit quarterly reports to 

DCMA identifying quantities and types of government-furnished materiel 

provided to repair contractors.11 DCMA assesses the accuracy of repair 

contractor records and accounts for government property furnished to 

contractors. The quarterly reports are intended to help contract officers 

verify that repair contractors have maintained accountability for all 

government-furnished materiel shipped to their facilities without relying 

strictly on contractor inventory records.

The Army has established a system for formally reporting errors in 

shipments. Under DOD and Army regulations, recipients of repair materiel 

are required to investigate and report shipment discrepancies, such as 

incorrect quantities and types of items and items sent to the wrong

10DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures 

(MILSTRAP), September 2001 (as amended by changes 1, 2, and 3), paras. C4.3, C4.5, and 

C4.6; C4.10 through C4.12; C6.6; and C6.7.

11DOD 4140.1-R, DOD Supply Chain Materiel Management Regulation, May 23, 2003, para. 

C5.11.2.4, and DOD 4161.2-M, DOD Manual for the Performance of Contract Property 

Administration, December 1991, para. C5.2.6.
Page 8 GAO-06-209 Defense Inventory

location.12 If the discrepancy results from shipper error, the recipient 

submits a supply discrepancy report to the appropriate inventory control 

point.13 Inventory control point officials review and validate these reports 

and provide recipients with instructions for resolving the discrepancy. For 

example, the customer may be instructed to return misdirected items to the 

Army supply system or to retain items for future repair work. 

In addition to these policies, the Army is obligated to establish and 

maintain effective internal control systems. The Federal Managers’ 

Financial Integrity Act of 1982 requires GAO to issue standards for internal 

control in the federal government.14 According to these standards, internal 

controls are an integral component of an organization’s management that 

provide reasonable assurance that assets are being safeguarded and other 

objectives are being met. Internal controls should be designed to provide 

reasonable assurance regarding prevention or prompt detection of 

unauthorized acquisition, use, or disposition of an agency’s assets. 

Effective and efficient internal control activities help ensure that an 

agency’s control objectives are accomplished. Control activities are the 

policies, procedures, techniques, and mechanisms that enforce 

management directives, such as the process of adhering to DOD 

requirements for receipting of shipped assets and generation of quarterly 

government-furnished status reports.

Internal Control 

Weaknesses Impede 

Army’s Accountability 

for Inventory 

Shipments

Internal control weaknesses have impeded the Army’s accountability for 

assets shipped to repair contractors. Army inventory control points do not 

consistently record receipts for secondary repair items shipped to repair 

contractors. Furthermore, the Army does not verify receipt of governmentfurnished materiel. In addition, the Army does not provide shipment status 

reports to DCMA as required under DOD regulations. A lack of accurate 

accountability for shipments of secondary repair items and governmentfurnished materiel places these assets at risk of loss or theft, diminishes 

12DLAI 4140.55/Army Regulation 735-11-2, Reporting of Supply Discrepancies, August 6, 

2001. 

13Customers may submit the reports using a paper form (Standard Form 364) or 

electronically through the Army Electronic Product Support Web site.

14Pub. L. No. 97-255 (Sept. 8, 1982). See also GAO, Internal Control: Standards for Internal 

Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 

1999).
Page 9 GAO-06-209 Defense Inventory

asset visibility and can distort on-hand inventory balances, leading to 

unnecessary procurement of items.

Army Does Not Consistently 

Record Receipts for 

Secondary Repair Item 

Shipments

Army inventory control points are not consistently recording receipts of 

shipments of secondary repair items in their inventory management 

systems. In our analysis of fiscal year 2004 shipment data obtained from 

two Army inventory control points, we could not reconcile shipment 

records with receipt records for 1,076 (42 percent) of the unclassified 

secondary repair item shipments, with a value of $481.7 million, or for 30 

(37 percent) of the classified secondary repair item shipments, with a value 

of $8.1 million. In this analysis, we identified shipments that lacked a 

matching receipt record as well as those shipments for which there was a 

discrepancy between the number of items shipped and the number 

receipted. Table 2 displays the results of our analysis for shipments of 

unclassified secondary repair items.

Table 2: Fiscal Year 2004 Unclassified Secondary Repair Item Shipments That 

Lacked Matching Receipts or Showed Discrepancies with Receipt Records

Source: GAO analysis of Army inventory control point data.

Note: Percentages do not total because of rounding.

These data show that Army inventory control points, on the basis of receipt 

records maintained in its inventory management systems, cannot confirm 

that a substantial portion of inventory items shipped to repair contractors 

were in fact received. In the absence of accurate and complete receipt 

records, the Army lacks inventory transaction data needed for maintaining 

accurate accountability for an asset as it moves through the repair cycle. 

Furthermore, inaccurate or incomplete receipt records can lead to a 

distortion of on-hand inventory balances, thus placing the Army at risk of 

procuring more items than are needed to support the warfighter. The Army 

Number Percentage

Receipt Record

No receipt 583 54.2

Receipt(s) for fewer items 

than shipped

302 28.1

Receipt(s) for more items 

than shipped

191 17.8

Total 1,076 100.0
Page 10 GAO-06-209 Defense Inventory

Audit Agency, in September 2004, noted that the Army lacked accurate 

receipt records for shipments both to contractors and to governmentowned depot facilities, and that, as a result, on-hand inventory balances for 

some items were understated by about $40.8 million.15

Our survey results showed that repair contractors could confirm receipt of 

most, but not all, of the fiscal year 2004 shipments. On the basis of our 

analysis of the survey results and follow-up work with contractors and 

Army item managers, we estimated that about 15 percent of the 

unclassified secondary repair item shipments in our survey population 

could not be confirmed as being received. We estimated that these lost or 

unaccounted for shipments have a value of approximately $68 million.16

For example, our sample of secondary repair items included a shipment of 

30 aircraft rotary wing components with a total value of $8.3 million. The 

Army’s inventory management system did not show a receipt for this 

shipment, and the contractor had no record of receiving the shipment. On 

the basis of our work, the status of this shipment remains uncertain. 

For classified items, the contractor confirmed receipt for 79 of the 80 

secondary repair item shipments but could not confirm receipt for 1 

shipment in our survey population with a value of about $17,000. In a 

subsequent analysis conducted by the Army to determine the status of this 

classified shipment, the Army discovered that it had erroneously provided 

us with a duplicate shipment record, causing this shipment to appear 

unaccounted for based on the original data that the Army had provided for 

this review. According to the Army, this was not a classified shipment sent 

to the contractor for repair, but rather a shipment record that pertained to a 

repaired asset coming from the contractor back into its inventory. The 

Army provided documentation to confirm the receipt of this asset back into 

15The Army Audit Agency identified problems with on-hand balances contained in the 

Commodity Command Standard System used by the U.S. Army CommunicationsElectronics Command—the same system used by the two Army inventory control points in 

our review. During this audit, this inventory control point began transitioning to its new 

inventory management system—the Logistics Modernization Program—and the existing 

balances for on-hand assets were transferred to the new system as baseline data. See Army 

Audit Agency, Asset Visibility of Military Equipment During Conversions—U.S. Army 

Communications-Electronics Command, A-2004-0529-FFG (Alexandria, Va.: Sept. 30, 

2004).

16These estimates represent mean values. We are 95 percent confident that contractors 

could not confirm receipt for from 9.9 percent to 20.5 percent of shipments with a value of 

from $26.7 million to $109.5 million. Because we sampled by shipment, not by dollar value, 

the range of variance for these two estimates is different.
Page 11 GAO-06-209 Defense Inventory

its inventory. On the basis of this data, we deleted this record from our 

analysis. Thus, all shipments of classified secondary repair items were 

received by the contractors.

Although required to obtain confirmation of receipt from repair 

contractors, Army inventory control points lack systematic procedures for 

obtaining and documenting receipt of shipments of secondary repair items 

and for following up within 45 days in cases where receipt was not 

confirmed by the contractors. Army regulations concerning receipt 

notification do not specify the method or form by which contractors are to 

notify the inventory control point when they receive shipments. Moreover, 

multiple individuals at the inventory control points may become involved in 

the receipting process. Item managers, who manage specific inventory 

items and authorize shipments of secondary repair items to contractor 

facilities, are generally responsible for ensuring repair contractors receive 

shipments. We found that various methods are used to confirm receipt. 

Some item managers rely on routine reports provided by the contractors or 

on data obtained from contractors’ inventory data systems. Other item 

managers confirm receipt by telephone calls to contractor officials. Once 

the receipt confirmation is obtained, the item manager may pass the receipt 

information to other inventory control point personnel, who then update 

the record in the inventory management system. In most cases, these 

personnel enter the receipt information into the inventory management 

system manually.17 Manual updating increases the probability of 

inaccuracies in receipt data.

Although we could not reconcile 42 percent of the shipments in the Army’s 

data with matching receipt records, our follow-up survey with repair 

contractors indicated they were able to confirm receipt for a majority of 

the shipments. In addition, on the basis of our survey of repair contractors, 

we estimate that for 82 percent of the shipments, contractors stated they 

had notified the Army of shipment receipt.18 However, these receipt 

notifications were not always recorded in the Army’s inventory 

management systems. Systematic follow-up within 45 days of shipment by 

the Army inventory control points could have identified these confirmed 

17Some contractors have an automated link to the Army’s Commodity Command Standard 

System through the Commercial Asset Visibility system, but at the time of our review only 

about one-third of contractors had use of this system.

18We estimate, at the 95 percent confidence level, that for from 78.9 percent to 84.1 percent 

of the shipments, contractors stated they had notified the Army of shipment receipt. 
Page 12 GAO-06-209 Defense Inventory

receipts, enabling an update of the inventory record to accurately reflect 

the shipment status.

While contractors are required to report shipment discrepancies through 

the Army’s supply discrepancy reporting program, we found that this 

practice does not always occur. In our survey, repair contractors noted 

discrepancies in shipments that were not formally reported through the 

Army’s reporting program. It is unclear why all discrepancies were not 

reported. One explanation provided by several contractors was that Army 

officials do not routinely provide advance notification to contractors prior 

to shipment. Because the Army had not notified them in advance of the 

shipments, they did not expect the shipments to arrive and, therefore, did 

not file supply discrepancy reports. Some contractors said they only 

became aware of certain shipments sent to them when they received our 

survey. Neither DOD nor Army regulations require inventory control points 

to provide advance notification to repair contractors at the time of 

shipment. However, DOD regulations state that the military services may 

require their inventory control points to provide advance notification.19

Army Does Not Confirm 

Receipt of GovernmentFurnished Materiel

Army inventory control points are not confirming receipt of governmentfurnished materiel shipments as required under DOD regulation. For 

shipments of government-furnished materiel, almost all shipments were 

reported by the contractors in our survey as being received. On the basis of 

our survey, we estimate that repair contractors could not confirm about 2 

percent of all unclassified government-furnished materiel shipments with 

an approximate value of $3.2 million.20 These shipments, therefore, are 

unaccounted for, and thus are vulnerable to loss or theft. Repair 

contractors confirmed receipt of all 11 shipments of classified governmentfurnished materiel.

19DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures 

(MILSTRAP), September 2001 (as amended by changes 1 and 2), para. C4.3.

20These estimates represent mean values. We are 95 percent confident that contractors 

could not confirm receipt for from 0.2 percent to 4.6 percent of shipments with a value of 

from $0 to $9.2 million. Because we sampled by shipment, not by dollar value, the range of 

variance for these two estimates is different.
Page 13 GAO-06-209 Defense Inventory

DOD regulations require Army inventory control points to obtain receipt 

confirmation for all shipments, including government-furnished materiel,21

and require Army inventory control points to conduct follow-ups if receipt 

is not confirmed within 45 days of shipment. Army regulations require 

receipt and follow-up for secondary repair item shipments but do not 

explicitly address receipting for government-furnished materiel.22

According to inventory control point officials, the data systems used to 

manage government-furnished materiel shipments do not store receipting 

information. Furthermore, these officials told us they do not obtain receipt 

notification from contractors for government-furnished materiel shipments 

but, instead, assume contractors receive shipments of governmentfurnished materiel unless the contractors notify them otherwise. During 

our review, we noted that the Army’s data systems for managing 

government-furnished materiel shipments provide automated checks of 

requisitions to ensure their validity.23 However, without receipt data, the 

Army inventory control points lack assurance that contractors have 

received government-furnished materiel, and as a result, they cannot 

conduct follow-up within the required time frame to determine whether 

corrective action is necessary. Moreover, while our analysis shows that 

contractors could confirm receipt for the majority of the governmentfurnished materiel shipments, the Army needs to maintain effective 

internal controls to safeguard its assets and to ensure optimal management 

of its resources, in accordance with the Federal Managers’ Financial 

Integrity Act of 1982.

Army Does Not Provide 

Shipment Status Reports to 

DCMA

According to DCMA officials, inventory control points do not provide 

DCMA with quarterly reports showing the status of government-furnished 

materiel shipments as required under DOD regulation. As a result, DCMA 

officials may lack data to corroborate contractor-generated data during 

21DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures 

(MILSTRAP), September 2001 (as amended by changes 1 and 2), paras. C6.6 and C6.7.

22Army Regulation 725-50, Requisitioning, Receipt, and Issue System, November 15, 1995, 

paras. 5-22 and 5-23.

23The Army inventory control points manage government-furnished materiel shipments 

using automated systems that validate requisitions and process shipments. According to 

Army officials and documentation provided by them, these systems automatically reject 

requisitions that are inconsistent with contract terms, such as requisitions for items with 

national stock numbers not covered under the contract or for item quantities that exceed 

contract terms. We did not test these systems to determine their effectiveness or reliability.
Page 14 GAO-06-209 Defense Inventory

their inventory audits. Both DOD and Army regulations require inventory 

control points to generate and submit reports on requisitioned governmentfurnished materiel to DCMA.24 The purpose of the reports is to assist DCMA 

in independently verifying contractor records of government-furnished 

materiel. These reports are required to identify items under contract, 

requisitions that have been rejected, quantities and dollar values of 

shipments, and the number of shipments for which receipts are unknown. 

However, we found in our work that the inventory control points do not 

have procedures in place to ensure that this reporting requirement is 

implemented as required. As result, DCMA officials commonly rely on 

contractor-generated data to conduct inventory audits and lack an 

independent data source to corroborate those data. 

Conclusions The Army has not implemented all the internal controls required to ensure 

that assets shipped to repair contractors are being received. Although DOD 

has established policies for controlling these assets, we found the Army 

lacked systematic procedures for implementing the policies, resulting in 

inaccurate and incomplete receipt records. Moreover, on the basis of our 

analysis of Army data and survey of repair contractors, some assets remain 

lost or unaccounted for. 

The Army could improve accountability for inventory shipments by 

strengthening its internal control procedures for receipting secondary 

repair items and following up in cases where the contractor has not 

provided notification that items were received, obtaining and documenting 

receipts for government-furnished materiel, and providing required status 

reports on government-furnished materiel to DCMA. In addition, DOD 

guidance for providing advance notification to recipients at the time of 

shipment, while not a requirement, offers another potential internal control 

for maintaining accountability of shipments. As the Army continues to 

move from its legacy inventory management systems to the Logistics 

Modernization Program, strong internal control procedures will be critical 

24Although DOD requires inventory control points to generate and distribute these reports 

on a quarterly basis, the Army requires them semiannually. See DOD 4140.1-R, DOD Supply 

Chain Materiel Management Regulation, May 23, 2003, para. C5.11.2.4; DOD 4161.2-M, 

DOD Manual for the Performance of Contract Property Administration, December 1991, 

para. C5.2.6; and Army Regulation 725-50, Requisitioning, Receipt, and Issue System, 

November 15, 1995, para. 16-10. 
Page 15 GAO-06-209 Defense Inventory

to ensuring that data transferred into the new system are accurate and 

complete.

Recommendations for 

Executive Action

To improve accountability of inventory shipped to Army repair contractors, 

we recommend that the Secretary of Defense direct the Secretary of the 

Army to instruct the Commanding General, Army Materiel Command, to 

take the following six actions:

• Establish systematic procedures to obtain and document contractors’ 

receipt of secondary repair item shipments in the Army’s inventory 

management systems, and to follow up on unconfirmed receipts within 

45 days of shipment.

• Institute policies, consistent with DOD regulations, for obtaining and 

documenting contractors’ receipt of government-furnished materiel 

shipments in the Army’s inventory management systems.

• Provide quarterly status reports of all shipments of Army governmentfurnished materiel to DCMA, in compliance with DOD regulations.

• Examine the feasibility of implementing DOD guidance for providing 

advance notification to contractors at the time of shipment and, if 

warranted, establish appropriate policies and procedures for 

implementation.

• Analyze receipt records for secondary repair items shipped to 

contractors and take actions necessary to update and adjust inventory 

management data prior to transfer to the Logistics Modernization 

Program. These actions should include investigating and resolving 

shipments that lack matching receipts to determine their status.

• To ensure consistent implementation of any new procedures arising 

from the recommendations in this report, provide periodic training to 

appropriate inventory control point personnel and provide clarifying 

guidance concerning these new procedures to the command’s repair 

contractors.
Page 16 GAO-06-209 Defense Inventory

Agency Comments and 

Our Evaluation

In written comments on a draft of this report, the Department of Defense 

concurred with six of the recommendations and cited specific actions it 

plans to take to implement these recommendations. DOD also specified 

implementation timelines for five of its proposed actions. Specifically, DOD 

reported that the Army intends to create the functionality within the Army’s 

new Logistics Modernization Program by fiscal year 2007 to 

(1) create automated suspense files for following-up on nonreceipted 

shipments, (2) establish receipting capability for government-furnished 

materiel shipments, and (3) produce quarterly government-furnished 

materiel status reports and submit them to DCMA. The Army also plans to 

establish Integrated Product Teams to examine the feasibility and 

availability of a Web-based query capability to make advanced shipment 

information available to contractors, and to develop training to ensure that 

Army inventory management personnel understand the procedures that are 

in place to strengthen the internal controls for items shipped to repair 

contractors. These teams are expected to have their results by July 2006. 

DOD also stated that the Army is currently taking actions to improve the 

accuracy of the data contained in its inventory management system; 

however, a timeframe for when this process would be completed was not 

provided. We believe that these actions cited by DOD are generally 

responsive to our recommendations. 

DOD did not concur with our recommendation in a draft version of this 

report to investigate and resolve the status of a shipment of an 

unserviceable classified secondary repair asset that appeared lost or 

unaccounted for on the basis of our review. However, DOD’s response 

indicates that the Army complied with our draft recommendation by 

analyzing its inventory management system records. This analysis showed 

that the contractor had received the shipment in question, repaired the 

unserviceable classified item, and later returned this item to the Army’s 

inventory. In subsequent follow-up work, we obtained the Army inventory 

data supporting the information cited in DOD’s response. During further 

analysis of this classified shipment, the Army discovered that the data used 

in our analysis was a duplicate shipment record that it had erroneously 

provided to us. On the basis of the new information provided, we were able 

to verify the status of the classified shipment in question. Consequently, we 

have deleted this recommendation from our report. DOD’s written 

comments are reprinted in appendix III.
Page 17 GAO-06-209 Defense Inventory

We are sending copies of this report to the appropriate congressional 

committees, and it will be available at no charge on GAO’s Web site at 

http://www.gao.gov. If you or your staff have any questions on the matters 

discussed in this report, please contact me at (202) 512-8412 or 

solisw@gao.gov. Contact points for our Offices of Congressional Relations 

and Public Affairs may be found on the last page of this report. GAO staff 

who made major contributions to this report are listed in appendix IV.

William M. Solis

Director

Defense Capabilities and Management
Page 18 GAO-06-209 Defense Inventory

Appendix I

Scope and Methodology AAppenednxidexiIs

To evaluate the Army’s effectiveness in maintaining accountability of 

inventory shipped to repair contactors, we analyzed Army inventory 

shipment data, surveyed repair contractors that were recipients of 

inventory shipments, and assessed the Army’s adherence to policies for 

managing and maintaining accountability for inventory shipments. Our 

review included shipments of both secondary repair items and governmentfurnished materiel. 

We reviewed Department of Defense (DOD) and Army regulations 

pertaining to shipped inventory, and discussed inventory management 

procedures with officials from the following locations: Headquarters, Army 

Materiel Command, Fort Belvoir, Virginia; the U.S. Army Aviation and 

Missile Command, Redstone Arsenal, Alabama; the U.S. Army Tankautomotive and Armaments Command, Warren, Michigan, and Rock Island, 

Illinois; the U.S. Army Communications-Electronics Command, Fort 

Monmouth, New Jersey; the Surface Deployment and Distribution 

Command, Fort Eustis and Alexandria, Virginia; and the Defense Contract 

Management Agency (DCMA), Alexandria, Virginia.

To identify the quantity, value, and security classification of assets shipped 

to repair contractors, we obtained electronic records from inventory 

management databases at the U.S. Army Aviation and Missile Command 

and the U.S. Army Tank-automotive and Armaments Command. We 

obtained records for Army-owned assets shipped during fiscal year 2004 

(Oct. 1, 2003 through Sept. 30, 2004). The records contained descriptive 

information about each shipment, including item nomenclature, national 

stock number, unit price, date of shipment, and quantity shipped. Records 

for secondary repair item shipments also listed the quantity of items 

received in each shipment. We did not obtain inventory data from U.S. 

Army Communications-Electronics Command because at the time of our 

review its inventory management system was undergoing stabilization and 

could not provide all data elements needed for our audit. 

To assess the reliability of the inventory data, we performed manual and 

electronic testing for errors in accuracy and completeness in the records. 

When we found discrepancies in the data, such as missing data elements, 

illogical shipment date sequences, or abnormal data entries, we contacted 

inventory control point officials to obtain explanations for the 

discrepancies. As needed, the officials provided corrections to discrepant 

data. We also reviewed the data to ensure that shipments occurred in fiscal 

year 2004, were directed to contractor facilities located in the continental 

United States, and comprised assets that met our criteria for item class and 
Appendix I

Scope and Methodology

Page 19 GAO-06-209 Defense Inventory

condition code. For secondary repair items, we analyzed the Army data to 

reconcile shipments for which the receipt record and shipment record had 

the same document number and suffix,1

 where applicable; national stock 

number; and quantity. In cases of multiple receipt records for a given 

shipment, we eliminated all receipt records associated with supply depot 

transactions and totaled all contractor receipt records, including inventory 

reversals. When the adjusted quantity receipted, which included the 

quantity for multiple inventory reversals, did not total the quantity shipped, 

we classified the shipment as unmatched. 

After the validation process, we drew samples of the data population for 

review. Our sampling methodology enabled us to independently verify the 

accuracy of the Army’s data on secondary repair items and governmentfurnished materiel provided to repair contractors. To select repair 

contractors and items shipped to them, we randomly selected 200 

shipments of unclassified secondary repair items from a total population of 

1,076 shipments that did not have receipt records that corresponded to 

shipment records in the Army’s inventory management system. We also 

randomly selected 200 shipments of unclassified government-furnished 

materiel from a total population of 3,476 shipments. In addition, we 

selected all shipments of classified items that appeared in the inventory 

records, including 11 government-furnished materiel shipments and 79 

secondary repair items shipments.2

 For this data sample, we sent a survey 

to 72 repair contractors, of which 66 responded to the survey. See appendix 

II for a copy of the survey. The results of our analysis can be projected to 

the entire universe of shipments that met these selection criteria.

To determine whether repair contractors had received and accounted for 

the selected shipments, we surveyed each randomly selected contractor to 

assess whether item types and quantities had been received as documented 

in Army inventory records. Furthermore, our survey also asked contractors 

to note any discrepancies between the Army’s data and data in their 

property control records, and to explain what actions they took to resolve 

1

Document numbers are unique identifiers for shipments. In cases where document 

numbers are used multiple times, a suffix is added to distinguish each shipment.

2

Three additional secondary repair item shipments were excluded from our survey because 

we could not determine the contractor that received the shipments. After we obtained 

comments on a draft of this report, the Army conducted an analysis and discovered that one 

of the classified secondary repair item shipments in our survey population was a duplicate 

shipment record that the Army had erroneously provided to us. Thus, we have deleted this 

shipment from our analysis. 
Appendix I

Scope and Methodology

Page 20 GAO-06-209 Defense Inventory

discrepancies such as shipments of incorrect items or quantities. In 

following up on the survey results, we reviewed survey responses for 

logical inconsistencies and incomplete data, such as document number, 

national stock number, quantity shipped, and date receipted, to determine 

whether the contractor responses were accurate. In cases where one or 

more of these data fields were inconsistent with data provided from the 

Army inventory system, we identified the shipment as not received by the 

contractor and adjusted our estimate of unaccounted for assets. We also 

obtained data from DOD’s supply tracking system to determine whether the 

transportation carriers showed proof of delivery for these assets. We also 

followed up with contractors and Army item managers regarding specific, 

high-value shipments. On the basis of this follow-up work, we adjusted our 

initial survey results.

To evaluate the Army’s compliance with DOD regulations requiring 

submission to DCMA of quarterly government-furnished materiel status 

reports, we interviewed DCMA officials who oversee contracts for the 

items included in our statistical sample of government-furnished materiel 

shipments. These officials were located at DCMA field offices and 

contractor facilities throughout the United States.

We conducted our review from October 2004 through November 2005 in 

accordance with generally accepted government auditing standards. 
Page 21 GAO-06-209 Defense Inventory

Appendix II

GAO Contractor Survey ApendxiI

CaseID: «MasterID»

United States Government Accountability Office

Survey on Army Shipments to 

Repair Contractors

1

Introduction

The U.S. Government Accountability Office (GAO)—the audit, 

evaluation, and investigative arm of Congress—is conducting a 

review of Army inventory management practices for government

furnished materiel (GFM) and secondary repair items shipped to

commercial repair contractors. For the purposes of this review, we

are defining GFM as “A” condition serviceable assets that are used

in the repair, alteration, modification, or production of a higher

assembly. We are defining secondary repair items as unserviceable

assets requiring repair, alteration, or modification, to exclude

major end items. GAO’s review will focus on the Army’s controls

over in-transit assets. As a part of our study, we randomly selected

commercial contractors to which the Army shipped GFM and/or

secondary repair items during fiscal year 2004 (October 1, 2003 to

September 30, 2004). This electronic survey asks for information

on your processes for receiving and accounting for GFM and/or

secondary repair items, as applicable, and requests data for specific

items that were identified as shipped to you from the Army supply

system. In our final report, all responses will be aggregated and

there will be no linkages between data and specific contractors.

Directions for Completing This Survey

Several individuals may be involved with the processes of

receiving and accounting for GFM and secondary repair items.

This survey should be coordinated with these individuals as

necessary, but please designate one individual to have overall

responsibility for coordinating, completing, and returning this

survey for your company. Please provide the following

information on the person designated to coordinate the completion

of the survey so we can call or e-mail that individual if additional

information is necessary.

Company «ContrName1»

Name Last Name, First Name, MI 

Title Provide your Title

Phone XXX-XXX-XXXX

E-mail

Fax XXX-XXX-XXXX

In some cases, we may need to follow-up this survey with

telephone calls and/or contractor facility site visits to discuss your

responses to the survey.

The survey is in two parts. Part 1 contains general questions on the

processes you use to receive and account for GFM and/or

secondary repair items from the Army supply system. Part 2

contains questions on specific Army-supplied GFM and/or

secondary repair items that were identified as shipped to your

company. This list of items was obtained as a part of a random

sample from Army inventory management databases.

You will need to answer the questions in Part 2 of the survey for

each of the GFM and/or secondary repair items listed. You will

need to complete Part 2 for «GFM» GFM items and «Secondary»

secondary items shipped to you under the following Contracts:

DOD Contracts 

«Contr1» «Contr10»

«Contr2» «Contr11»

«Contr3» «Contr12»

«Contr4» «Contr13»

«Contr5» «Contr14»

«Contr6» «Contr15»

«Contr7» «Contr16»

«Contr8» «Contr17»

«Contr9»

Most questions in this survey can be answered by left-clicking on

the shaded response fields and selecting appropriate answers.

Some questions require you to type data or comments into the 

shaded response fields ____.

Part 1 of the survey should take about 10 minutes to complete.

The time for completing Part 2 will vary by the number of GFM 

and/or secondary repair items listed, and by the time required to 

review files associated with the information requested.

Please save your answers electronically, and return this file as an email attachment to Mr. Paul Rades at radesp@gao.gov or Ms.

Jackie McColl at mccollj@gao.gov by July 25, 2005. If you have

any difficulty using this electronic survey, please contact the GAO

staff named below to request a paper version.

If you have any questions about the survey, you may contact either

(1) Paul Rades at radesp@gao.gov or (202) 512-3641, or (2)

Jackie McColl at mccollj@gao.gov or (404) 679-1948.

Thank you in advance for responding to this survey.
Appendix II

GAO Contractor Survey

Page 22 GAO-06-209 Defense Inventory

Part 1: General Information

This section contains general questions on the processes you

use to receive and account for government furnished material

(GFM) and/or secondary repair items supplied to your company by

either the Army supply system or a prime contractor. To answer

the questions, left-click on the shaded response fields and select

the appropriate response. For questions that require you to enter

data or comments, left-click on the shaded response fields and type

in your responses.

Company: «ContrName1»

1. Do you have a Defense Contract Management Agency

(DCMA) approved property control system?

2

Yes.............. If Yes, please list the date of

the notification letter for

your most recent approval.

MM/DD/YYYY

 No...............

2. Do you receive GFM items at this facility? GFM is

 defined as “A” condition serviceable assets that are used

 in the repair, alteration, modification, or production of a

 higher assembly.

Yes..............

 No...............

3. Do you receive secondary repair items at this facility?

 Secondary repair items are defined as unserviceable

assets requiring repair, alteration, or modification,

 excluding major end items.

Yes.............

 No..............

4. Does your property control system maintain records for 

GFM and/or secondary repair items received from either

the Army supply system or a prime contractor?

Yes............

 No.............. If No, please explain below.

If No, please explain.

5. Do you enter receipt information (e.g., document number,

stock number, quantity, date received, etc.) into your

property control system for GFM and/or secondary items

received from the Army supply system?

 Yes.............

 No..............

6. Do you use the Commercial Asset Visibility system (CAV

or CAV II) to report on the status of GFM and/or

secondary repair items received from the Army supply

system?

 No.................................

 Yes, for GFM only..............

 Yes, for secondary repair 

 items only........................

 Yes, for both GFM and

 secondary repair items.........

7. If you have any additional comments, please type them

in the space below. Please specify the question(s) to

which your comments refer.

Type your comments here. 

Please continue with the Part 2 e-mail

attachment(s) for each Contract.
Appendix II

GAO Contractor Survey

Page 23 GAO-06-209 Defense Inventory

«SurveyID»

Part 2: Government Furnished

Material (GFM) and Secondary 

Repair Item Shipments

This section contains questions on specific GFM and/or

secondary repair items that were identified as shipped to your

company from the Army supply system by an Army Inventory

Control Point, to include AMCOM, TACOM-Warren, TACOMRock Island, and SBCCOM. For the purposes of this review, we

are defining GFM as “A” condition serviceable assets that are

used in the repair, alteration, or modification, or production of a 

higher assembly. We are defining secondary repair items as

unserviceable assets requiring repair, alteration, or modification,

to exclude major end items.

1

Please answer the questions for the shipped item(s) identified

below. You can answer most questions by left clicking on the

shaded response fields and selecting the appropriate responses.

For questions that require you to enter data such as dates and

national stock numbers, left-click on the shaded response fields

and type in the appropriate information.

Contract Number: «Contract»

Item type: «Strata» -- Item «Seq» of «MaxSeq»

Document Number: «DOC» 

Document Suffix (If applicable): «Suffix»

National Stock Number: «STK_NO»

Description: «NAME»

Quantity Shipped: «Shipped»

Date Shipped: «ShpDate»

1. Do your property records reflect that you received the

 item(s)?

 Yes...............,

 No................ If No, skip to Question 11.

2. For the shipped item(s), does the contract number that 

authorized you to receive the item(s) at the time of 

shipment match with «Contract»?

 Yes...............

No................ If No, enter the contract

number contained in your records:

Enter the contract number here.

3. Was the item(s) shipped to your company under a 

Performance Based Logistics (PBL) or similar nontraditional contract?

Yes............... If Yes, list the type of

 contract below. 

List the contract type here.

 No................

4. At the time of shipment, were you authorized to receive

the item(s) as the prime contractor or the subcontractor?

 Prime contractor............

 Sub-contractor...............

5. For the shipped item(s), please enter in line 5a the date

that the shipment receipt was posted in your records.

Note: If you received multiple shipments under this

document number, please enter under line 5b the receipt

dates posted for the first and last shipments received.

a. Single Shipment Receipt Date MM/DD/YYYY

 b. Multiple Shipment Receipt Dates

First Receipt Date MM/DD/YYYY

Last Receipt Date MM/DD/YYYY

6. For the shipped item(s), does the document number

 posted in your records match with «DOC»? 

 Yes...............

 No................ If No, enter the document

number posted in your

 records: Your Number

7. For the shipped item(s), does the national stock number

(NSN) posted in your records match with «STK_NO»?

 Yes...............

 No................ If No, enter the national

stock number posted in

 your records: Your NSN 
Appendix II

GAO Contractor Survey

Page 24 GAO-06-209 Defense Inventory

«SurveyID»

8. For the shipped item(s), does the quantity posted in your 

records match with «Shipped»?

 Yes................

No................

2

If No, enter the quantity

 posted in your records:

 Your Quantity

9. Did you notify the responsible Army organization (e.g.,

 Inventory Control Point, Program Manager, Program

 Office, field activity, etc.) or prime contractor that you

 had received the item(s)?

 Yes...............

No................ If No, skip to Question 11.

10. How did you notify the responsible Army

 organization (e.g., Inventory Control Point, Program

Manager, Program Office, field activity, etc.) or prime

 contractor that you had received the item(s)? Please

 select all that apply.

Select all

that apply

Entered receipt through electronic interface with

Command Commodity Supply System (CCSS)

or Logistics Modernization Program (LMP).

Entered receipt for the item(s) through the

Commercial Asset Visibility

(CAV or CAVII) system.

Sent memo or email to the responsible Army

organization or prime contractor to acknowledge

receipt of the item(s).

 Called the responsible Army organization or 

prime contractor to acknowledge receipt of

the item(s).

Provided routine reports to the Army or prime

contractor that identified items on hand, (e.g.,

asset picture).

Other: Describe other means used to notifiy the responsible

Army organization or prime contractor.

11. Was there a discrepancy in the shipment of the

 item(s)?

 Yes.............

 No.............. If No, skip to Question 18.

12. What was the reason for the discrepancy? Please

 select all that apply. 

Select all

that apply

Item was never received.

Quantity of items received was not correct. 

Item received was not the correct item.

Item received was an unacceptable

substitute item.

Item received was damaged or in

poor condition.

Item received had not been requisitioned.

Item was misdirected and addressed to the

wrong activity.

Other: Describe other reasons for the discrepancy

13. Did you report the discrepancy for the shipped item(s)

 to the responsible Army organization (e.g., Inventory

 Control Point, Program Manager, Program Office,

 field activity, etc.) or prime contractor? 

 Yes.............

 No.............. If No, skip to Question 16.
Appendix II

GAO Contractor Survey

Page 25 GAO-06-209 Defense Inventory

«SurveyID»

14. How did you report the discrepancy? Please select all

 that apply.

Select all

that apply

Submitted a Report of Discrepancy

(ROD)/Supply Discrepancy Report (SDR)

using Standard Form (SF) 364. 

Submitted a Transportation Discrepancy Report

(TDR) using Standard Form (SF) 361. 

Submitted a discrepancy report online through

the Army Electronic Product Support

(AEPS) website.

Contacted the responsible Army organization

(e.g., Inventory Control Point, Program

Manager, Program Office, field activity, etc.) 

or prime contractor by telephone, e-mail, or 

faxed memo.

Other: Describe other method for reporting discrepancy.

3

15. Did you receive a response from the responsible Army

organization (e.g., Inventory Control Point, Program

Manager, Program Office, field activity, etc.) with

which you filed the discrepancy report? 

 Yes.............

 No..............

16. Was the discrepancy resolved?

 Yes.............

 No.............. If No, please explain below,

 and then skip to Question 18.

Type your explanation here.

17. Was the discrepancy resolved to your

 satisfaction?

 Yes.............

 No.............. If No, please explain below.

Type your explanation here.

18. What is the current status of the GFM or secondary

 repair item(s)? Please select all that apply.

 If GFM item(s), select from the responses

 listed below.

Select all

that apply

Item was consumed in the repair,

alteration, modification, or

production of a higher assembly.

Item was not consumed, and

remains in your inventory.

Item was not consumed, and was

passed to another commercial or

government repair facility.

Item was returned to the Army

supply system or to the original

source of supply.

Other: Describe other status of the GFM item.

If secondary repair item(s), select from the

 responses listed below.

Select all

that apply

 Item(s) is currently being repaired

or awaiting repair.

Item(s) was repaired and returned

to the Army supply system, Army

field activity, or a prime contractor

Item(s) was repaired and remains

in your inventory.

Item(s) is awaiting disposition.

Item(s) was disposed as directed 

by the responsible Army

organization.

Other: Describe other status of the secondary

item.

19. If you have any additional comments, please type

 them in the space below. Please specify the

 question(s) to which your comments refer. 

Comments?
Page 26 GAO-06-209 Defense Inventory

Appendix III

Comments from the Department of Defense ApendxiI
Appendix III

Comments from the Department of Defense

Page 27 GAO-06-209 Defense Inventory

Now on page 15.

Now on page 15.
Appendix III

Comments from the Department of Defense

Page 28 GAO-06-209 Defense Inventory

Now on page 15.

Now on page 15.

Now deleted.
Appendix III

Comments from the Department of Defense

Page 29 GAO-06-209 Defense Inventory

Now on page 15.

Now on page 15.
Page 30 GAO-06-209 Defense Inventory

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact William Solis, (202) 512-8365 or solisw@gao.gov

Acknowledgments In addition to the contact named above, Thomas Gosling, Assistant 

Director; Arthur James; Stanley Kostyla; Jacqueline McColl; Marjorie Pratt; 

and Paul Rades made key contributions to this report.

(350541)
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

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