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.