The Department budgets billions of dollars each year to purchase and repair spare parts and has established various programs to help ensure product quality throughout the acquisition and repair processes. According to Navy and Defense Logistics Agency quality assurance officials, although it is normal in manufacturing processes that some deficient parts will be delivered to the end users, the rate of deficiencies is to be managed and controlled to acceptable levels. In fact, according to these officials, spare parts quality is of greater importance in today’s environment of increased deployments, extended preventive maintenance cycles, and just-in-time deliveries of parts. A Defense Logistics Agency joint-service directive for quality deficiency reporting regulates Department activities. The directive establishes a Department-wide system for the military services and other activities to report, investigate, and correct the causes of individual problems and identify trends and recurring deficiencies. The system is to be used to document the quality of spare parts delivered for use in the maintenance and repair processes and is the key program for documenting quality deficiency data Navy-wide. When deficient parts are delivered and are detected by end users, such as military supply or maintenance personnel, these users are required to report the details of the deficiencies under a uniform set of guidelines. Each military service and agency manages its own quality deficiency reporting program. The Navy’s Product Quality Deficiency Reporting Program is designed to document and report unsatisfactory material, initiate corrective action to fix or replace deficient items, grant credit or compensation for items, and take actions to prevent recurrence. The program applies to all Navy activities. Navy activities report quality deficiency data both internally and to a broader program, known as the Product Data Reporting and Evaluation Program, where it is managed as one of several databases. This broader program is a Navy-wide automated system for collecting data on the quality of material and products furnished by contractors. The quality deficiency report is also one of several records used in the Navy’s Red/Yellow/Green Program, another Product Data Reporting and Evaluation Program application used to reduce the risk of receiving nonconforming products and late shipments. The Assistant Secretary of the Navy for Research, Development, and Acquisition has program authority and sets policy, and the Naval Sea Systems Command administers the Product Quality Deficiency Reporting Program. Navy program executive officers, program managers, and commanders of the naval systems commands are to process quality deficiency reports for their systems and equipment in accordance with instructions and to ensure people are properly trained in reporting deficiencies. Quality deficiency reporting data are generally sent to a screening point, such as the Navy’s Inventory Control Point, for review and forwarding to an appropriate item manager or action point to determine the causes and who is responsible for the deficiencies. Once a determination is made and final disposition occurs, the quality deficiency reporting database is to be updated to reflect the results. The Navy’s Product Quality Deficiency Reporting Program has been largely ineffective in gathering the data needed for analyses so that Navy managers can accurately report on and correct deficiencies in the quality of spare parts being provided to end users, including maintenance personnel in field activities. Specifically, the program data were incomplete and of limited value because they were underreported, did not include information on parts that failed prematurely, and omitted key data on the causes of failures. To a large extent, the program’s ineffectiveness can be attributed to limited training and incentives to report deficiencies, lack of management emphasis, and competing priorities for the staff resources needed to carry out the program. In addition, a contributing cause of the program’s ineffectiveness may be a lack of Navy-wide visibility into program results. Many deficiencies in the quality of new and rebuilt parts occur that have not been reported to the program. As a result, program data are unreliable and can be misleading in determining the significance of deficient parts and conducting trend analyses. Using information gathered under the program, the Navy produces an annual report summarizing quality deficiency data, such as the number of deficiency reports, the value of deficient material, and related information on new and reworked material, including rebuilt parts. Data system managers said this report is the most comprehensive attempt to collect and analyze Navy-wide quality deficiency data. The May 2000 report showed that during calendar years 1997-99 the number of deficiency reports averaged about 6,500 per year, representing all parts that were reported as deficient at the time of installation by the Naval Sea Systems Command, the Naval Air Systems Command, and the Naval Supply Systems Command. Each report identified one or more deficient parts to be evaluated for possible quality problems. During our visits to a number of ship and aircraft maintenance and operating units, we were told that not all deficiencies on parts that failed at the time of installation were reported, and we found that the estimated extent of underreporting varied. For example, one ship maintenance unit that handled munitions systems reported most deficiencies. However, an aircraft squadron commander said his unit documented quality deficiency problems and knew of the reporting requirements, but the unit rarely reported these problems to the quality deficiency program because there was no incentive to do so. In addition, Navy supervisor of shipbuilding officials at one facility told us that the full-time position dedicated to quality deficiency reporting had been eliminated and the work was reassigned to another staff member as a collateral duty. As a result, the number of quality deficiency reports dropped from about 200 each year in calendar years 1997 and 1998 to 34 in calendar year 2000. Also, Navy officials said several major Navy program offices have their own internal systems for handling parts quality deficiencies and do not share this information with the Navy’s quality deficiency reporting program. While these examples are not intended to reflect the experience of all Navy units, they indicate how the data gathered by the program can vary among units based on factors other than the actual numbers of quality deficiencies encountered by maintenance personnel. Various unit commanders indicated that their efforts to report spare parts quality deficiencies were limited because accurate and complete data needed for the reporting process were not available on the failed parts and increased resources would be needed to make meaningful improvements in the availability of these data. Due to the underreporting, the interpretation of program data can be misleading. For example, in a March 2001 two-page report to the Congress on how the Department planned to improve its quality assurance program, the Principal Deputy Under Secretary of Defense, Acquisition, Technology, and Logistics stated that the Department used product quality deficiency reports as a key method to measure the quality of the products it purchased. The Department stated that it had no evidence of a systemic quality problem and that a decreasing number of investigated quality deficiency reports recorded in recent years may indicate that product quality is getting better. However, after we discussed our findings with the Department about the underreporting of quality deficiencies in the Navy, the Department stated in its report that if user feedback is not input into the system and investigated, due to reduced staffing, this metric fails to be a valid measure. According to Navy and Defense Logistics Agency quality assurance officials, the trend in the number of deficiencies reported may reflect the level of resources dedicated to filling out and analyzing deficiency reports rather than the actual number of deficiencies found by maintenance personnel. The Navy does not attempt to use the Product Quality Deficiency Reporting Program to collect a major category of quality deficiencies— those involving parts that failed prematurely, that is, after some operation but before the end of their expected design life. Premature failure data are important to determine if there are problems with particular parts or suppliers of parts. Consequently, not knowing the full extent of deficiencies can prevent meaningful analyses of quality problems on a systemwide basis. Under the May 1997 joint-service directive on quality deficiency reporting, the Navy could capture data on premature equipment failures, including parts, as part of its program, as the Army, the Air Force, and the Marine Corps agreed to do. Although the joint-service directive states that it is applicable to a broad range of deficiencies, including premature failures, the Navy did not agree to this application. It has instead used deficiency reporting to identify mainly new or newly reworked parts that fail, as specified in a 1993 version of the joint-service directive. Navy quality assurance officials said the program was limited to capturing data on those parts because some type of warranty might be involved or they might obtain replacement parts or reimbursements from the suppliers. However, after we discussed this issue with Assistant Secretary of the Navy, Research, Development, and Acquisition officials, they said that premature failures should be included in the Navy program. They said that in April 2001 they approved the Navy’s use of a new draft version of the joint-service directive that includes the requirement to report premature failures as quality deficiencies. While the Navy has not captured data on premature parts failures under the Product Quality Deficiency Reporting Program, Naval Air Systems Command officials said they have attempted to identify these deficiencies through their Engineering Investigation Request Program. However, they said that resource shortages have limited this program mainly to the analysis of mission-critical and safety-of-life requests for engineering investigations, and that as a result, many premature parts failure requests were not analyzed. Without validation and analysis of the causes of these failures, managers are not in a position to take corrective or preventive action. Furthermore, Naval Air Systems Command-wide data on engineering investigation requests were not available, and reports have not been combined with quality deficiency reports to provide managers with a systemwide view of spare parts problems. According to Navy and Defense Logistics Agency quality assurance officials, premature parts failures are an important aspect of quality, and without this data the Navy is not in a position to completely identify its problems with parts and suppliers. Premature parts failures could indicate problems in design, manufacture, or installation that, if not corrected, could lead to unanticipated parts shortages and increased costs. Quality deficiency reporting data that were collected under the program have been of limited value because they frequently lacked key information on the causes of the parts failures and identification of whom was responsible. Navy and Defense Logistics Agency quality assurance officials said that identifying whether a contractor is responsible for deficiencies is important for obtaining credits or refunds and preventing recurring problems.