Air Force Inventory: Parts Shortages Are Impacting Operations and Maintenance Effectiveness
Published: 2001-06-27T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Spare parts shortages on the three Air Force systems GAO reviewed have undermined the performance of assigned missions and the economy and efficiency of maintenance activities. Specifically, the Air Force did not meet its mission-capable goals for the E-3 or C-5 aircrafts during fiscal years 1996-2000, nor did it have enough F-100-220 engines to meet peacetime and wartime goals during that period. These shortages may also affect personnel retention. GAO recently reported that the lack of parts and materials to successfully complete daily job requirements was one of six major factors causing job dissatisfaction among military personnel. Item managers at the maintenance facilities often indicated that spare parts shortages were caused by the inventory management system underestimating the need for spare parts and by delays in the Air Force's repair process as a result of the consolidation of repair facilities. Other reasons included difficulties with producing or repairing parts, reliability of spare parts, and contracting issues. The Air Force and the Defense Logistics Agency have planned or begun many initiatives to alleviate shortages of the spare parts for the three systems GAO reviewed.

section_title: Letter
paragraphs: Having spare parts available when needed to perform required maintenance is critical to the Department of Defense’s accomplishment of its missions. Shortages of spare parts are a key indicator of whether the billions of dollars annually spent on these parts are being used in an effective, efficient, and economical manner. Since 1990, we have designated the Department ‘s management of its inventory, including spare parts, as high risk because its inventory is vulnerable to fraud, waste, and abuse.
The National Defense Authorization Act for Fiscal Year 2000 requires us to evaluate various aspects of the military services’ logistics support capability, including the provision of spare parts. Also, the Chairman, House Committee on Appropriations, and the Chairman, Subcommittee on Defense, House Committee on Appropriations, requested that we review issues related to the quality and availability of spare parts for aircraft, ships, vehicles, and weapon systems. In response to these requests, we reviewed known spare parts shortages within the services. For this report, our objectives were to determine (1) the impact of spare parts shortages on three selected Air Force systems and (2) the reasons for the shortages. Additionally, we identified the overall initiatives that the Air Force and the Defense Logistics Agency have in place or planned to address the shortages.
To address our objectives, we reviewed the Air Force’s E-3 early airborne warning and control system aircraft; the C-5 transport aircraft; and the F-100-220 engine, which is used in some F-15 and F-16 fighter aircraft; we also reviewed 75 parts that were in short supply for these systems. We selected these systems because they are key to fulfilling Air Force missions. The Air Force sets goals to have a certain number of each aircraft available and capable of performing its missions at any given time. It measures the impact of parts shortages on aircraft availability by determining the percentage of aircraft that cannot meet mission requirements because parts needed for repairs are unavailable. The Air Force and the Defense Logistics Agency are responsible for managing and providing spare parts for the Air Force’s aircraft.
subsections: section_title: Background
paragraphs: In January 2001, we reported on Department of Defense management challenges and noted that the Department has had serious weaknesses in its management of logistics functions and, in particular, inventory management. We have identified inventory management as a high-risk area since 1990. In 1999, we reported on the Air Force’s specific problems in managing spare parts and noted an increase in the percentage of some of its aircraft that were not mission capable due to supply problems. (See appendix I for examples from our reports on management weaknesses related to the Air Force.) Also, the Secretary of the Air Force reported that the readiness of the Air Force has declined since 1996 and attributed this overall decline, in part, to spare parts shortages. Table 1 shows the percentage of all aviation systems that were mission capable and the percentage of aircraft that were not mission capable due to supply problems from fiscal year 1996 through the first quarter of fiscal 2001.
As table 1 shows, the percentage of all Air Force systems reported as not mission capable due to supply problems steadily increased from fiscal year 1996 through fiscal year 2000. The Air Force requested additional funding to address concerns with spare parts shortages. The Air Force states in the Department of Defense Quarterly Readiness Report to the Congress for July through September 2000 that funding Congress provided in earlier years has begun to improve the availability of spares, citing a 58-percent reduction in parts that have been ordered but not received since December 1998. The Secretary also expressed cautious optimism that recent congressional funding would improve the availability of spare parts and aircraft mission-capable rates. In the most recent quarterly readiness report (Oct. through Dec. 2000), the Air Force cautions that although as of early December 2000 overall mission-capable rates had improved from average fiscal year 2000 rates, this improvement had come at the cost of the increased use of the practice of removing parts from one aircraft for use on another, that is, cannibalization.
Because of concerns that spare parts shortages were causing readiness problems, the Air Force received in fiscal 1999 an additional $904 million in obligation authority from the Department of Defense to buy more spare parts. This amount consisted of $387 million to buy spare parts attributable to the Kosovo operation, $135 million to buy engine-related spare parts for the Oklahoma City Air Logistics Center, and $382 million to overcome the accumulated shortfall of spare parts inventories. Also in 1999, the Department of Defense announced plans to provide $500 million to the Defense Logistics Agency to purchase spare parts for all the services over fiscal years 2001-2004. Of that $500 million, $213.8 million is to be for parts to be used on Air Force aircraft. According to a Department of Defense official, the Air Force was provided the first $50 million in fiscal 2001 to pass on to the Defense Logistics Agency to pay for Air Force parts ordered in fiscal year 2000. The Air Force and the other military services received additional funds in fiscal year 1999 that, unlike the funds cited above, were placed largely in operations and maintenance accounts. In a separate report issued earlier this year, we indicated current financial information did not show the extent to which these funds were used for spare parts. However, the Department plans to annually develop detailed financial management information on spare parts funding uses but does not plan to provide it to Congress. We, therefore, recommended to the Secretary of Defense that the information to be developed annually by the Department and the services on the quantity and funding of spare parts be routinely provided to Congress as an integral part of the Department’s annual budget justification; the Department agreed to do so.
The aviation systems that we reviewed are vital to the Air Force achieving its missions. The E-3 provides surveillance of the airspace and manages the flight of all aircraft in an assigned battlefield area. The Air Force first received E-3s in 1977, and an Air Force official told us that it is the oldest aircraft in the Air Force in terms of operational hours flown. The C-5 is the Air Force’s largest cargo aircraft, carrying cargo such as Army tanks, and is one of the largest aircraft in the world. About 70 percent of the oversized cargo required in the critical first 30 days of one major war scenario would be the type of cargo the C-5 carries. The Air Force first received operational C-5 aircraft in 1970, and according to Air Force officials, one of the reasons for the lower than expected mission-capable rates in recent years for the C-5 aircraft is its age. The F-100-220 engine powers many of the Air Force’s F-15 and F-16 fighter aircraft and, according to an Air Force official, will become increasingly critical to operations as some older engines are replaced with the F-100-220. For each of these systems, we judgmentally selected for review 25 parts, a total of 75, with the highest number of hours or incidents of unavailability for given time periods.
Air Force spare parts are classified as either consumables or reparables. Consumable items, which are mostly managed by the Defense Logistics Agency, are those items that are discarded when they fail because they cannot be cost-effectively repaired. The Defense Supply Center Richmond is the lead center for managing aviation consumable spare parts. Reparable items, managed by the Air Force Materiel Command, are items that can be cost-effectively repaired. The Command’s mission is to research, develop, test, acquire, deliver, and logistically support Air Force weapon systems.
section_title: Spare Parts Shortages Adversely Affect Mission Performance, Economy and Efficiency of Operations, and Retention of Military Personnel
paragraphs: The shortages of spare parts for the three aircraft systems we reviewed have not only affected readiness but also have created inefficiencies in maintenance processes and procedures and may adversely affect the retention of military personnel. Two aircraft we reviewed, the E-3 and C-5, did not meet their mission-capable goals in fiscal years 1996-2000 and were not mission capable due to supply problems from 7.3 percent to 18.1 percent during the same period. The number of usable spare F-100-220 engines that the Air Force had on hand fell short of its goal by as few as 6 and as many as 104 engines during the same period.
subsections: section_title: Spare Parts Shortages Contributed to Three Systems’ Failure to Meet Mission Performance Goals
paragraphs: The Air Force did not achieve its mission-capable goals during fiscal years 1996-2000 for any of the three Air Force aircraft systems we reviewed, in part, due to spare parts shortages. Table 2 shows the mission-capable goals and actual rates for the E-3 aircraft for fiscal years 1996-2000, and table 3 shows the rates at which the E-3 was not mission capable due to supply problems during the same period.
The goal for the E-3 was lowered to 73 percent from March through September 2000 based on an Air Force assessment of its ability to achieve its mission-capable goal. The Air Force recognized that it had failed to achieve historical performance levels to the point that falling short of the standard had become the norm. Citing constraints regarding spare parts, maintenance personnel, and repair equipment, the Air Force lowered mission-capable goals for the E-3 and other aircraft with the intent of providing maintenance personnel with more achievable targets. The mission-capable goal for the E-3 aircraft rose to 81 percent in fiscal year 2001, and it is planned to return to 85 percent in fiscal year 2002.
The goal was 12 percent or less from March through September 2000 and was raised based on an Air Force assessment of the aircraft’s ability to achieve the not mission capable due to supply problems goal for the E-3 and other aircraft. The Air Force recognized that it had failed to achieve historical performance levels to the point that falling short of the standard had become the norm. Citing constraints regarding spare parts, maintenance personnel, and repair equipment, the Air Force raised its goal for not mission capable due to supply problems for the E-3 and other aircraft with the intent of providing maintenance personnel with more achievable targets. The not mission capable due to supply problems goal changed to 8 percent in fiscal year 2001, and it is planned to return to 6 percent in fiscal year 2002.
The reported rate for total not mission capable due to supply problems in fiscal year 2000, 11.3 percent, equated to about 3 or 4 E-3s of the total of 32 aircraft being not mission capable due to supply problems.
The C-5 also did not achieve its goals during fiscal years 1996-2000. Table 4 shows the C-5’s mission-capable goals and actual mission-capable rates for those years, and table 5 shows the rates at which the C-5 was not mission capable due to supply problems as well as its goals during the same period.
The reported rate for total not mission capable due to supply problems in fiscal year 2000, 18.1 percent, equated to almost 23 C-5s of the fleet of 126 aircraft being not mission capable, at least in part, due to supply problems.
With regard to the F-100-220 engine, the Air Force never met its goal, called the war readiness engine goal, during fiscal years 1996-2000 (see table 6). The goal can change each fiscal year for the number of usable— ready to be installed in an aircraft—spare engines the Air Force would like to have on hand to meet wartime needs. In some cases, it has had F-15s or F-16s grounded due to the lack of the engine. When the number of usable spare engines is shown as a negative number, there are not enough engines for all the aircraft required for peacetime operations; in other words, aircraft that would otherwise be available to fly are grounded because they lack engines. During fiscal years 1996 through 2000, this occurred in five different quarters.
To compensate for a lack of spare parts, maintenance personnel sometimes remove usable parts from aircraft for which spare parts are unavailable to replace broken parts on others. Maintenance personnel at Seymour-Johnson Air Force Base said that this practice is necessary to attempt to maintain mission-capable rates when spare parts are not available. As we have previously reported, the result of this practice is that maintenance personnel spend a large amount of time cannibalizing parts and performing double work. According to a Naval Postgraduate School thesis, there is also the potential for breaking the needed part or causing collateral damage while removing the part. Additionally, a part removed from another aircraft will likely not last as long as a part from the supply system and will require maintenance sooner.
Additionally, our past work shows that spare parts shortages may affect retention. In August 1999, we reported on the results of our December 1998 through March 1999 survey of about 1,000 Army, Navy, Air Force, and Marine Corps active duty personnel that were selected based on their work in jobs in which the Department of Defense believed were experiencing retention problems. More than half of the respondents stated that they were dissatisfied and intended to leave the military. The majority of factors were associated with work circumstances such as the lack of parts and materials needed to successfully complete daily job requirements. Both officers and enlisted personnel ranked the availability of needed equipment, parts, and materials among the top 2 of 44 quality-of-life factors that caused their dissatisfaction.
section_title: Shortages of Specific Spare Parts Occurred for Multiple Reasons
paragraphs: Spare parts shortages on the three systems we reviewed occurred for various reasons. In addition, an internal Department of Defense study found similar reasons for spare parts shortages.
subsections: section_title: Contracting Issues
paragraphs: Both the Air Force and the Defense Logistics Agency have encountered a variety of problems in contracting for spare parts needed for repairs. Ten (about 13 percent) of the parts we reviewed were unavailable, at least in part, because of contracting issues. These issues included lengthy price negotiations, a contract requirement to have a minimum number of units before beginning repairs, failure of a contractor to meet the delivery date, and termination of a contract. For example, the Defense Logistics Agency did not have a straight pin for the F-100-220 engine in stock because the sole-source company wanted a price that the Agency was unwilling to pay. This resulted in extended negotiations with the company before an award could be made. By the end of April 2000, the lack of this part had caused F-100-220 engines to be not mission capable in nine cases. In another case, to obtain an acceptable price for a contract for the repair of a temperature indicator for the E-3 aircraft, the Air Force was required to provide a minimum of 10 regulators for repair. By the time 10 units were accumulated and shipped, the demand for the part had exceeded the supply. Through March 2000, E-3 aircraft were not mission capable over 19 operational days due to the lack of this part. Also, a contract for an axle beam fitting for the C-5 aircraft had to be terminated because the contractor requested too many delivery schedule extensions. As of July 2000, the equivalent of one C-5 aircraft was not mission capable for 124 operational days.
subsections: section_title: Other Reasons
paragraphs: Twelve (16 percent) of the parts we reviewed were unavailable for reasons other than those we have already cited. In one case, the Air Force used an incorrect replacement rate for an engine core, and as a result, the repair of parts was not timely. Through April 2000, F-100-220 engines were not mission capable due to the lack of this part in 33 cases. Also, the limited repair facility capacity for certain spare parts, such as electric generators, created shortages of the parts. By the end of March 2000, E-3 aircraft had been not mission capable for almost 10 operational days due to the lack of this part. In another case, because maintenance facilities prioritize repairs based on current Air Force requirements, a receiver transmitter was not repaired in time to avoid a shortage because higher priority items had to be repaired first. As a result, over 15 operational days of not mission capable time had been accumulated on E-3s by the end of March 2000. In another case, the required part, a vaneaxial fan, was on hand, but E-3 aircraft had accumulated over 15 operational days of not mission capable time by the end of March 2000 because of the time it took to ship the part overseas. In some cases, no spare parts had been purchased when an aircraft was being modified or the technical data for the modification was incomplete. At the end of March 2000, over 10 operational days of not mission capable time had accumulated for E-3 aircraft due to the lack of a control indicator that fell into this category.
section_title: Department of Defense Internal Study Found Similar Reasons for Shortages
paragraphs: An internal study conducted by the Department of Defense found similar reasons for Air Force reparable spare parts shortages. The study examined parts causing aircraft to be not mission capable and found that there were two reasons for the shortages. The first reason was an insufficient inventory of certain reparable parts. The second was that although there were enough parts in the system, other constraints prevented a repair facility from repairing the parts in a timely manner. The study states that this may have happened for several reasons. The parts may not have been returned from units to the repair facility, a repair facility may have lacked capacity in certain key areas such as manpower or testing equipment, the consumable parts required to fix the reparable item may not have been available, or the item managers may not have requested the repair facility to repair a part because of a lack of funding.The study contained a recommendation that the Air Force provide $609 million for fiscal years 2002 to 2007 to improve the availability of reparable spare parts. According to a Department of Defense official, the Air Force plans to provide the funds.
section_title: Overall Initiatives Exist to Address Problems
paragraphs: The Air Force and the Defense Logistics Agency have overall initiatives under way or planned to improve the availability of spare parts. The initiatives are intended to improve the efficiency of the supply system and increase the requirements for spare parts. The initiatives generally address the specific reasons for shortages identified by our review, with the exception of changes in the location of repairs that is not a recurring problem. The Air Force has developed a Supply Strategic Plan that includes a management framework and specific goals and outcome- oriented measures for its initiatives. We have made various recommendations to address this issue. The Air Force has actions under way to respond to address these recommendations; therefore, we are not making any additional recommendations at this time. We will be reviewing the strategic plan’s initiatives, once they are more developed, to evaluate their likely effectiveness and to assess whether additional initiatives are needed.
subsections: section_title: Air Force Supply Strategic Plan
paragraphs: The Air Force is regularly monitoring which spare parts are unavailable for the longest period of time and undertakes ad hoc actions to resolve the problems causing the shortage. In 1999, the Air Force developed the Supply Strategic Plan to help create an integrated process for supply planning, to facilitate the exchange of information throughout the supply system, and to improve measures of effectiveness for the supply system. The plan, which was updated in January 2001, establishes five goals for the Air Force supply community to achieve by 2010.
Manage assets effectively   Organize, train, and equip supply personnel Support Department of Defense operations   Establish and implement fuel policy Each goal has associated objectives to be achieved in the next 4 to 7 years and tasks to be completed in the next 1 to 4 years.
section_title: Objectives to Support Supply Strategic Plan
paragraphs: In support of the Supply Strategic Plan, the Air Force Deputy Chief of Staff, Installations and Logistics, Directorate of Supply, established in 1999 the Supply Foundation Project, which includes 10 objectives with associated initiatives for each. The Directorate views the project as a comprehensive means of improving the supply system. The first objective is to improve spare parts management. The intent is to determine the baseline for formulating a spare parts policy; to determine the overall trend for spare parts, that is, are shortages increasing or decreasing; and to develop and implement initiatives to reduce the shortages of spare parts.
Within the objective of improving spare parts management, the Directorate has initiatives within the goal of managing assets under way or under study.
Improve the process for determining requirements for spare parts Improve the process for funding the parts Increase the stock of certain parts Increase the parts contained in readiness spares packages (deployment kits for maintaining aircraft)
Coordinate with the Defense Logistics Agency to ensure that it buys the most critically needed parts from the Air Force portion of the $500 million provided by the Department of Defense for fiscal years 2001 to 2004   Reduce the time that customers wait for parts For each of these initiatives, the Air Force has established short-term and long-term milestones and accountability for implementation by assigning program responsibility to specific offices and individuals. The measures for success include achieving goals such as (1) increasing the issuance of parts when requested, (2) increasing the stock of certain parts, (3) improving total rates for aircraft not mission capable for supply reasons, and (4) lowering cannibalization rates. (See appendix IV for a complete listing of these Air Force initiatives.)
section_title: Air Force Materiel Command Initiatives
paragraphs: In addition to the initiatives contained in the Air Force Supply Strategic Plan, the Air Force Materiel Command also has actions under way and planned to separately address more specific aspects of spare parts management and policies. According to Air Force officials, these actions are being coordinated with the Air Force Deputy Chief of Staff, Installations and Logistics, Directorate of Supply. As part of its Constraints Analysis Program, the Air Force Materiel Command identified six major problems that had prevented it from providing timely support to the warfighter. These problems were unavailability of consumable parts; unreliability of parts; poor management of the suppliers of parts; inadequate workload planning; ineffective inventory management; and inefficient policies regarding which parts are repaired and, if repair is needed, where the repairs should be made. The Command focused its initial efforts on studying ways to resolve the problems with supplier management, parts reliability, and unavailability of consumable parts. Implementation plans are being developed for actions for each of these problems while the remaining problems are being studied. The Command is also developing (1) a model to forecast the repair facilities’ demands for consumable spare parts and electronically transmit this data to the Defense Logistics Agency and (2) a pilot program to have contractors bypass the supply system and fill the supply bins for maintenance personnel directly.
section_title: Defense Logistics Agency Initiatives
paragraphs: Among the efforts the Defense Logistics Agency has under way to improve the availability of spare parts are its Aviation Investment Strategy and Aging Aircraft Program.
section_title: Aviation Investment Strategy
paragraphs: The Defense Logistics Agency’s major initiative to resolve aircraft spare parts shortages is its Aviation Investment Strategy. This fiscal year 2000 initiative focuses on replenishing consumable aviation repair parts with identified availability problems that affect readiness. Of the $500 million that the Defense Department budgeted for this purpose, $213.8 million was the Air Force portion. As of December 2000, $95.3 million had been targeted for Air Force spare parts and $22.3 million worth of parts had been delivered.
section_title: Aging Aircraft Program
paragraphs: The goal of the Defense Logistics Agency’s Aging Aircraft Program is to consistently meet the goals for spare parts availability for the Army, Navy, and Air Force aviation weapon systems. The program’s focus will be to (1) provide inventory control point personnel with complete, timely, and accurate information on current and projected parts requirements; (2) reduce customers’ wait times for parts for which sources or production capabilities no longer exist; and (3) create an efficient and effective program management structure and processes that will achieve the stated program goals. The Agency plans to spend about $20 million during fiscal years 2001-2007 on this program.
section_title: Air Force Has Responded to Our Recommendations for Better Planning
paragraphs: We recommended in November 1999 that the Secretary of the Air Force develop a management framework for implementing best practice initiatives based on the principles embodied in the Government Performance and Results Act. The Department of Defense concurred with our recommendation and stated that the Air Force is revising its Logistics Support Plan to more clearly articulate the relationships, goals, objectives, and metrics of logistics initiatives. As a part of the Supply Strategic Plan, the Air Force included initiatives intended to improve the availability of spare parts.
We also recommended in January 2001 that the Department develop an overarching plan that integrates the individual service and defense agency logistics reengineering plans to include an investment strategy for funding reengineering initiatives and details on how the Department plans to achieve its final logistics system end state.
Since the Air Force and the Department of Defense are taking actions on our previous recommendations to improve overall logistics planning, we are not making new recommendations at this time.
section_title: Agency Comments
paragraphs: The Acting Deputy Under Secretary of Defense for Logistics and Materiel Readiness, in commenting on a draft of this report, indicated that the Department of Defense generally concurred with the report. The Department’s comments are reprinted in their entirety in appendix V.
section_title: Scope and Methodology
paragraphs: To determine the impact of the shortages of spare parts, we reviewed data on the Air Force’s mission-capable goals and actual rates and goals and actual rates for aircraft not mission capable due to supply problems for selected months from the Office of the Secretary of the Air Force, Installations and Logistics Directorate. We did not independently verify these data. From these data, we selected three systems for review that had experienced difficulties in achieving mission-capable goals or in the case of the F-100-220 engine readiness goals for the number of usable engines on hand. We also reviewed data on cannibalizations provided by the Air Combat Command, Hampton, Virginia; the Office of the Secretary of the Air Force, Installations and Logistics Directorate, Washington, D.C.; and Seymour-Johnson Air Force Base, Goldsboro, North Carolina. Using the data, we discussed with maintenance personnel the impact of cannibalizations on spare parts shortages. We also used data from studies conducted by the Department of Defense regarding spare parts shortages and their impacts. Lastly, we drew relevant information from our recently issued reports.
To determine the reasons for these part shortages, we visited the air logistics centers at Tinker Air Force Base (E-3), Oklahoma City, Oklahoma; Warner-Robins Air Force Base (C-5), Robins, Georgia; Kelly Air Force Base (F-100-220 aircraft engine), San Antonio, Texas; and the Defense Supply Center Richmond, Richmond, Virginia. To identify specific reasons, we discussed the specific parts shortages with those who manage these items at these locations. We also reviewed our related work on Air Force and Department of Defense inventory management practices to identify systemic management problems that are contributing to spare parts shortage.
To determine what overall actions are planned or under way to address overall spare parts shortages for Air Force aircraft and the management framework for implementing the overall initiatives, we visited the Air Force headquarters, the Joint Chiefs of Staff Logistics Directorate, and the Office of the Secretary of Defense, located in the Washington, D.C. area; the Defense Logistics Agency located at Fort Belvoir, Virginia, and the Defense Supply Center located in Richmond, Virginia; the Air Force Materiel Command, Dayton, Ohio; and the air logistics centers at Tinker Air Force Base, Oklahoma (E-3), Warner-Robins Air Force Base, Georgia (C-5), and Kelly Air Force Base, Texas (F-100-220). We discussed with officials at each of these locations Air Force initiatives regarding spare parts, their progress and results to date, the planned completion dates for some initiatives, and additional steps needed to address spare parts shortages. We also compared the reasons for the shortages we found with the overall initiatives under way or planned to determine if there were any areas that were not being addressed. We did not review these plans or the specific initiatives.
Our review was performed from February 2000 to April 2001 in accordance with generally accepted government auditing standards.
We are sending copies of this report to the Secretary of Defense; the Secretary of the Air Force; the Director, Office of Management and Budget; and the Director, Defense Logistics Agency. We will also make copies available to others upon request.
Please contact me at (202) 512-8412 if you or your staff have any questions regarding this report. Key contributors to this report were Lawson Gist Jr., John Beauchamp, Willie Cheely Jr., and Nancy Ragsdale.
section_title: Appendix I: Management Weaknesses Have Contributed to Spare Parts Shortages
paragraphs: Our high-risk reports over the past several years have noted that Department of Defense inventory and financial management weaknesses have contributed to parts not being available when needed.
In January 2001, we reported on Department of Defense management challenges and noted it has had serious weaknesses in its management of logistics functions and, in particular, inventory management. Although not specifically identified with the systems we reviewed, these management weaknesses directly or indirectly contribute to the shortages of spare parts the Air Force is facing, as the following examples show.
We reported in January 2001 that nearly half of the Department’s inventory exceeded war reserve or current operating requirements and that the Department had inventory on order that would not have been ordered based on current requirements.  Purchasing items that exceed requirements use funds that could be used to purchase needed parts.
We reported in April 1999 that because the Air Force had reduced the supply activity group’s budget by $948 million between fiscal year 1997 and 1999 to reflect efficiency goals and because these goals were not achieved, fewer items than projected were available for sale to customers. As a result, military units had funds to purchase spare parts, but the supply group did not always have sufficient funds to buy new spare parts or pay for repair of broken parts that customers needed.
We also reported that because of poor management practices, over $2 billion worth of spare parts in the Air Force’s “suspended inventory category,” which cannot be issued because of questionable condition, was not reviewed for years.  As a result, the Air Force is vulnerable to incurring unnecessary repair and storage costs and reducing its readiness. Better management of these parts could increase the number of spare parts available.
In addition, the Department of Defense’s long-standing financial management problems may also contribute to the Air Force’s spare parts shortages. As we recently reported, existing weaknesses in inventory accountability information can affect supply responsiveness. Lacking reliable information, the Department of Defense has little assurance that all items purchased are received and properly recorded. The weaknesses increase the risk that responsible inventory item managers may request funds to obtain additional, unnecessary items that may be on hand but not reported.
section_title: Appendix II: E-3, C-5, and F-100-220 Engine Parts and Part Function
subsections: section_title: Spare part C-5 tension regulator F-100-220 machine bolt F-100-220 metallic seal F-100-220 blade lock retainer E-3 hydraulic valve C-5 aircraft turbine C-5 visor seal assembly F-100-220 dual ignition exciter F-100-220 augmentor nozzles F-100-220 augmentor fuel control C-5 skid detector F-100-220 augmentor duct Houses augmentor section of engine F-100-220 engine core E-3 generator E-3 receiver transmitter E-3 vaneaxial fan E-3 control indicator F-100-220 straight pin
section_title: Appendix III: Spare Parts Reviewed and Reasons for Shortage
subsections: section_title: Spare part E-3 aircraft Rotodome door actuator Floating deck pulser High voltage regulator Low chain klystron power amplifier Component reliability Door Aircraft door Landing gear door
paragraphs: Parts production problem, contracting issue Changes in location of repair Changes in location of repair Actual demands were greater than anticipated and parts production problem Actual demands were greater than anticipated Actual demands were greater than anticipated and other—repair facility capacity/priority and incomplete technical order Parts production problem and component reliability Other-repair facility capacity/priority and test equipment software problem Actual demands were greater than anticipated Parts production problems and contracting issues Changes in location of repairs, actual demands were greater than anticipated, and parts production problems Actual demands were greater than anticipated Other—shipping time Actual demands were greater than anticipated and other—repair facility capacity/priority Actual demands were greater than anticipated Changes in location of repairs Other – shipping time Other—no spares purchased for modifications Changes in location of repairs and other—repair facility capacity/priority Contracting issues and other—incomplete technical data for modification Changes in location of repairs and actual demands exceeded anticipated Actual demands were greater than anticipated Actual demands were greater than anticipated and other—suitable substitute not linked to master Changes in location of repairs Reason for shortage Component reliability Component reliability Parts production problem Changes in location of repairs Changes in location of repairs and parts production problems Actual demands were greater than anticipated Changes in location of repairs and parts production problems Contracting issue and parts production problem Actual demands were greater than anticipated Component reliability Changes in location of repairs Actual demands were greater than anticipated Actual demands were greater than anticipated and parts production problems Component reliability Reason for shortage Component reliability and parts production problem Changes in location of repairs Changes in location of repairs and component reliability Component reliability, contracting issue, and parts production problem Changes in location of repairs and parts production problem Actual demands were greater than anticipated Component reliability and parts production problems Changes in location of repairs Contracting issues Component reliability Parts production problem Parts production problem Actual demands were greater than anticipated Actual demands were greater than anticipated Contracting issue and parts production problem Reason for shortage Contracting issue Contracting issue Actual demands were greater than anticipated and parts production problem Actual demands were greater than anticipated Actual demands were greater than anticipated Actual demands were greater than anticipated Component reliability Component reliability Component reliability and other—information system problem Actual demands were greater than anticipated Changes in location of repairs Component reliability and other—information system problem Changes in location of repairs Changes in location of repairs and other—information system problem Component reliability Changes in location of repairs and demands were not anticipated Actual demands were greater than anticipated Changes in location of repairs and demands were not anticipated Changes in location of repairs Changes in location of repairs Contracting issue The spare parts with the same name have different stock numbers.
section_title: Appendix IV: Air Force Deputy Chief of Staff, Installations and Logistics, Directorate of Supply, Spare Parts Initiatives
subsections: section_title: Initiative Implement spares requirements review board Use “total cost of goods” vs. “total cost of goods sold” in budget estimates Change point-of-sale policy Use actual pipeline times instead of goals in requirements computation Enhance process for determining aircraft goals Review retention policy
section_title: Appendix V: Comments From the Department of Defense
section_title: Related GAO Products
paragraphs: Defense Inventory: Opportunities Exist to Expand the Use of Defense Logistics Agency Best Practices (NSIAD-00-30, Jan. 26, 2000).
Air Force Depot Maintenance: Analysis of Its Financial Operations (AIMD/NSIAD-00-38, Dec. 10, 1999).
Defense Inventory: Improvements Needed to Prevent Excess Purchases by the Air Force (NSIAD-00-5, Nov. 1, 1999).
Air Force Depot Maintenance: Management Changes Would Improve Implementation of Reform Initiatives (NSIAD-99-63, June 25, 1999).
Department of Defense: Status of Financial Management Weaknesses and Actions Needed to Correct Continuing Challenges (T-AIMD/NSIAD-99-171, May 4, 1999).
Defense Inventory: Status of Inventory and Purchases and Their Relationship to Current Needs (NSIAD-99-60, Apr. 16, 1999).
Defense Inventory: DOD Could Improve Total Asset Visibility Initiative With Results Act Framework (NSIAD-99-40, Apr. 12, 1999).
High Risk Series: An Update (GAO/HR-99-1, Jan 1999).
Air Force Supply: Management Analysis of Activity Group’s Financial Reports, Prices, and Cash Management (AIMD/NSIAD-98-118, June 8, 1998).
Defense Depot Maintenance: Use of Public-Private Partnering Arrangements (NSIAD-98-91, May 7, 1998).
Defense Inventory: Management of Surplus Usable Aircraft Parts Can Be Improved (NSIAD-98-7, Oct. 2, 1997).