Friday, April 3, 2015

Inspector General Blasts "Spares" Buying Process

The DoD Inspector General (DoD-IG) issued a report late last month criticizing the Department for ineffectively managing its spare-parts inventories. The report itself has not been made public but a synopsis of the report is available on the IG's website.

Based on its audit, the DoD-IG found that DoD maintained excess inventories of $1 billion and did not effectively manage its spare-parts inventories because of the following:

  • DoD did not review other existing sources and enforce inventory reduction before it purchased spare parts from private sources.
  • DoD did not verify proper spare-part requirements were established for weapon systems.
  • DoD did not include essential inventory management metrics and use accurate metric data and calculations established in the contract requirements.
  • DoD did not provide sufficient oversight and enforce contract requirements.
  • DoD did not report the inventory on its annual financial statements.

There are myriad problems with spare parts inventories not only within the Government but in private industry as well. When spare-parts inventories are dispersed as they are within the DoD, the inefficiencies in managing them become magnified. Every deployment requires spare parts and the military cannot wait around for spare-parts to arrive from a centralized warehouse somewhere in the world. Also, once a unit has spare-parts, it is reluctant to share those with others, even though someone else might have a more pressing need.

DoD has undertaken new strategies to reduce spare-parts inventories. The Department, of course, issued an inventory management improvement plan. They also formed a working group to establish inventory management metrics. They issued new policies. And, they also "drafted" guidelines to manage and account for Government-owned spare-parts inventories controlled by contractors (lets blame the contractors, shall we?)

No one really expects these significantly improve spare-parts management. The DoD-IG, since 1999 has issued 36 reports related to spare-parts inventories. In 33 of those 36 reports, the DoD-IG reported the same finding; DoD did not effectively manage its spare-parts inventories. The correcting action plans were of the same ilk; issue a memo,

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