DOD buys hand tools for a wide range of maintenance and repair activities that include maintaining everything from facilities and vehicles to aircraft and ships. DOD buys tools either from GSA or by local purchase. DOD regulations state that use of established supply sources, such as GSA, should be maximized. If the supply system cannot be used, local purchases may be considered if they are in the best interest of the government in terms of the combination of quality, timeliness, and cost. DOD aircraft maintenance units use silhouetted tool boxes and displays, which contain shadow drawings of the tools, to control tools at the user level and prevent foreign object damage to aircraft resulting from tools left in or on an aircraft during maintenance. Generally, the tool box or kit has a foam insert in each drawer that is cut and shaped to the size of the tools to facilitate the physical inventories taken at the time a mechanic checks out and returns the tool box to the tool room (see fig. 1.) Other military units, such as artillery and transportation units, use tool boxes that do not maintain the tools as neatly and are less easily inventoried. Executive agencies are required to establish and maintain systems of internal controls that provide reasonable assurance that resource use is consistent with applicable laws, regulations, and policies; resources are safeguarded to prevent waste, loss, and misuse; transactions and other events are adequately documented and fairly disclosed; and resources are accounted for. With regard to hand tools, basic internal controls should include prior authorization of specific tool purchases by an individual knowledgeable of a unit's tool needs; independent checks to ensure that tool purchases are properly received; and accurate inventory records to reflect tool receipts, issues, and on-hand quantities. DOD has not issued guidance establishing controls over hand tools at the user level. DOD does have overall guidance for the physical security of government property located at military installations, but the guidance does not contain specific procedures for controlling tool purchases, inventories, and related receipts and issues. The military services also have not provided adequate guidance to installations and operating units. Other than requiring periodic physical inventories, the guidance does not provide specific controls over hand tools. The Air Force has recognized the need for better guidance and, in November 1993, established an Air Force Tool Committee to develop new guidance for use Air Force-wide. Although guidance on tool purchases and inventories is lacking, the military services have issued guidance to prevent foreign object damage to aircraft from tools left on or in aircraft during maintenance. Air Force mechanics are required to sign out for tool kits or individual tools, and an inventory of the tools is performed. After the work is completed, the mechanics return the tools, and the contents again are inventoried to ensure that none are left in the aircraft. The Navy and the Marine Corps use a similar system to prevent foreign object damage. DOD has insufficient cost data at the headquarters, command, and installation levels to identify and track hand tool purchases, inventory levels, and losses. Also, because the military services consider hand tools to be expendable items representing small dollar values, losses that are identified by operating units often are not reported to investigative organizations and higher commands. DOD headquarters does not maintain cost information reflecting hand tool purchases, inventory levels, and losses. DOD does report information on losses of all government property annually to the Congress, but DOD officials told us that the reported information includes very limited data on hand tools because such losses often get little visibility and generally do not meet the minimum reporting threshold of $1,000 per incident. Representatives at the headquarters of all of the military services and the commands we visited also told us that they do not receive or maintain information that reflects hand tool purchases, inventory levels, or losses. The representatives stated that they do not manage down to that level and that such information only would be available at the installation level. However, we visited Fort Bragg, Oceana Naval Air Station, Langley Air Force Base, and Camp Lejeune Marine Corps Base and found that data were very limited at the installation and operating unit levels. At our request, certain units compiled data on the amount of recent tool purchases. For example, one unit at the Oceana Naval Air Station was able to provide lists of individual tool purchases for 20 months that totaled $25,844. However, most of the installations and units visited did not know the value of the tool inventories and could not provide complete data on tool purchases. For example, units at Camp Lejeune had data reflecting the number and types of tools owned but did not know the value of the tool inventories. Agents at the security investigating organization of each installation told us that they maintain a log of all investigations of suspected stolen government property but do not report such losses to anyone. The logs, which are used to monitor trends in thefts and other crimes, include very little information on tool losses. Reports prepared to document losses of government property and provide the basis for an investigation of the reasons for the losses generally were not prepared for tools due to the small dollar values involved. At Langley Air Force Base, for example, these reports had not included any hand tools for the past 2 years. The absence of adequate management guidance has contributed to a general lack of basic internal controls at individual installations and operating units. We identified weaknesses in basic internal controls at each of the four installations and eight operating units we visited. These weaknesses related to purchase authorizations and inventory record-keeping. All units we visited required prior authorization for specific tool purchases except for the two units at Langley Air Force Base. Instead, personnel used a blanket authorization from the unit that was entered into the base service store's computer system. One squadron we visited authorized six persons to buy tools at the base service store, and the other, smaller unit we visited authorized two persons to buy tools. Some of the personnel authorized to purchase tools also were responsible for establishing the tool requirements for the unit. Further, unit personnel not involved in the purchases did not routinely check to see that the unit actually received the tools. Without these controls, there was no assurance that the purchases were necessary or that the unit received the tools. At all units we visited, either inventory records were inaccurate or no records were available that could be used to identify and track hand tool purchases and related receipts, issues, and on-hand quantities. The only records the Army units we visited at Fort Bragg could provide were (1) copies of a register showing a list of all items purchased by the units, including hand tools, and (2) hand receipts showing the authorized and on-hand quantities of tools in tool rooms, trailers, and boxes that were assigned to specific individuals in the units. No inventory records were available to show tool receipts and issues or the disposition of the purchases. The Air Force units we visited at Langley Air Force Base did not have records showing receipts and issues. They only had computer-generated lists of the current inventory of tools in each tool box or tool room drawer. Some of these lists were not dated and did not accurately reflect the total number of tool boxes on hand. For example, one unit's undated documentation stated that six avionics tool boxes with 65 tools in each box were on hand. However, our physical inspection disclosed that 10 tool boxes were on hand. The Marine Corps units we visited at Camp Lejeune did not have inventory records showing tool purchases and related receipts and issues. Both units had stock lists of tools in each tool box. One unit also had hand receipts for spare tools in the tool room, and the other unit had inventory cards for the spare tools. One Navy unit at Oceana Naval Air Station had established an automated system for monitoring on-hand quantities of tools in its tool room and tool kits. However, this system did not reflect tool receipts and issues. The other Oceana unit had set up a manual inventory record system about 6 months prior to our visit to get better control over purchases, receipts, issues, and inventory levels for the tool room. However, we found that the records were not accurate. For example, some tool purchases were not entered on the inventory record cards before they were issued to users. In June 1994, the squadron commander revised the unit's procedures to tighten the controls over tool purchases and inventories. We made several physical counts at each operating unit we visited to test the accuracy of the records that were available. We found inaccuracies at each unit, with discrepancy rates of up to 68 percent. In total, the records for 99 of 515 tools in the tool rooms (19 percent) were inaccurate, and the records for 173 of 2,700 tools in the tool boxes (6 percent) were inaccurate. For example, the inventory records at one unit indicated that nine diagonal cut pliers were on hand, but our physical count showed that six pliers actually were on hand. We requested the results of physical inventories by the military services and found that they often were not documented. Personnel in the Air Force and Navy units and one of the Marine Corps units stated that they conducted physical inventories but did not maintain documentation of the results of these inventories. Personnel in the Army units and one of the Marine Corps units told us that they conducted the required periodic physical inventories and that the results were reflected on hand receipts. We reviewed the documents and noted that some missing tools had been identified. DOD has provided only limited oversight to determine how effectively installations and operating units control tool purchases and inventories since the last comprehensive DOD Inspector General review of this area was performed over 10 years ago. This review identified a need for better procedures and controls. No comprehensive reviews have been made since that time, and audit efforts have been limited to local reviews at individual installations. During recent years, the Army and Navy audit agencies have done only one or two local audits while the Air Force audit agency has performed 35 local audits since 1989. The audits identified problems with the controls over hand tools. Routine inspections and surveys by command level management and inspector general staff also generally do not include an evaluation of tool procedures and controls. For example, an inspector general representative of the Air Force's Air Combat Command told us that the inspector general's policy is not to perform compliance type inspections and reviews and that the staff did not have any knowledge of the adequacy of hand tool controls. We did find that the Marine Corps' Field Supply and Maintenance Analysis Office performs periodic inspections at units, which include tool controls. The inspections disclosed deficiencies in these controls during the past 3 years relating to the lack of inventory records, absence of physical inventories, and accumulation of excess tools. We recommend that the Secretary of Defense take the following actions to ensure that hand tool purchases and inventories are adequately controlled: Require that the military services and major commands provide guidance to installations and operating units specifying the needed internal controls over hand tools. These controls should include requirements for prior authorization of tool purchases and maintenance of accurate inventory records that reflect tool receipts, issues, and quantities on hand. Require that inspector general and internal audit staffs incorporate controls over hand tools into the periodic inspections that are performed at installations and operating units. We are not recommending that DOD and the military services obtain and report overall cost information on tool purchases, inventory levels, and losses. If military units put adequate internal controls in place, including accurate inventory records, such information should be readily available at the installation and unit levels. DOD agreed that, to varying degrees, the military services' policies and procedures governing the purchase and accountability of hand tools are inadequate (see app. II). DOD also agreed that internal controls should be reviewed by the services and strengthened as necessary. By March 31, 1995, DOD expects to issue a memorandum to the military services directing that closer scrutiny be paid to hand tool accountability and that regulations, policies, and procedures governing hand tool purchases be strengthened. The memorandum also will direct that each military service secretary advise their inspector general and internal audit staffs to incorporate control of hand tools in periodic inspections at installations and operating units. Although generally agreeing with our report, DOD did question some aspects. DOD believes that our findings were insufficient to indicate a systemic problem with inadequate inventory accountability and record-keeping. DOD also believes that our findings reflect a problem with implementation of existing guidance and that no additional guidance is needed for existing hand tool inventories. Because our review was limited to four installations and eight operating units, we cannot state unequivocally that our findings indicate a systemic problem. However, we did identify problems at each location visited, which would indicate to us that similar problems may exist elsewhere. With regard to the adequacy of guidance, we continue to believe that additional guidance is needed. Personnel at the units visited consistently stated that one of the reasons for the problems we noted was the lack of guidance specifying the internal controls needed for receipts, issues, and inventories at the operating units. Furthermore, individual services, such as the Air Force, acknowledge the need for better guidance. We are sending copies of this report to the Chairmen and Ranking Minority Members, House and Senate Committees on Appropriations, Senate Committees on Armed Services and on Governmental Affairs, and House Committee on Government Reform and Oversight; the Secretaries of Defense, the Army, the Navy, and the Air Force; and the Director, Office of Management and Budget. Please contact me at (202) 512-5140 if you have any questions. The major contributors to this report are listed in appendix III. We reviewed the Department of Defense's (DOD) and the military services' policies and procedures for controlling hand tools. We discussed program operations, guidance, and oversight with officials at the headquarters of DOD and each of the military services and obtained overall program data when available. We also visited the General Services Administration to discuss its functions as federal manager for hand tools and to obtain available information on tool sales to DOD. We visited one installation in each of the military services--Langley Air Force Base, Virginia; Oceana Naval Air Station, Virginia Beach, Virginia; Fort Bragg, Fayetteville, North Carolina; and Camp Lejeune Marine Corps Base, Jacksonville, North Carolina--to review controls over hand tools. At each installation, we (1) requested overall information on hand tool purchases, inventories, and losses and (2) visited two operating units to evaluate internal controls over hand tools. We visited the following units at each installation: Langley Air Force Base 94th Fighter Squadron, 1st Fighter Wing 72nd Helicopter Squadron, 1st Fighter Wing Oceana Naval Air Station Aircraft Intermediate Maintenance Department Fighter Squadron VF-41, Fighter Wing, U. S. Atlantic Fleet Fort Bragg 2nd Battalion, 504th Parachute Infantry Regiment, 82nd Airborne Division 546th Transportation Company, 189th Maintenance Battalion, 1st Corps Support Command Camp Lejeune Marine Corps Base 1st Battalion, 10th Artillery Regiment, 2nd Marine Division 464th Helicopter Squadron, 29th Marine Air Group, 2nd Marine Aircraft Wing At each unit, we (1) discussed internal controls with unit personnel, (2) reviewed available documents related to tool purchases and inventories, and (3) made physical counts to test the accuracy of inventory records. We also contacted the major command responsible for each installation visited and obtained overall information related to hand tools. As part of our evaluation of management oversight, we contacted inspector general offices, military audit services, and investigative organizations to discuss their oversight of hand tool controls and review audit, inspection, and investigative reports. We performed our review between February and October 1994 in accordance with generally accepted government auditing standards. Larry Peacock, Evaluator-in-Charge Linda Koetter, Evaluator Dawn Godfrey, Evaluator The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. 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Summary:
Pursuant to a congressional request, GAO reviewed the military services' controls over hand tools, focusing on: (1) whether the services' policies and procedures for preventing the loss or unnecessary purchase of hand tools are adequate; (2) whether information is available on the costs associated with missing, lost, and stolen hand tools; and (3) the extent to which military installations control hand tool inventories and review their hand tool controls. GAO found that: (1) it cannot determine the extent to which DOD purchases unnecessary hand tools because DOD does not maintain cost data or track tool purchases and inventory levels; (2) DOD and the military services have not provided sufficient guidance and oversight to ensure that hand tools are adequately safeguarded and controlled at military installations; (3) military units do not have adequate internal controls or records to properly account for tool purchases and manage inventories; (4) many military units permitted personnel to purchase tools without prior authorization, could not identify tool purchases and trace them to inventory records, and had discrepancies between available inventory records and actual tool quantities; (5) Air Force operating units purchased many new warranted tools that were unnecessary and made local purchases even though the tools were available through normal DOD supply channels; and (6) in response to a GAO recommendation, the Air Force advised its major commands to comply with established acquisition policies and procedures.