April 25, 2013 —
We evaluated High Mobility Multipurpose Wheeled Vehicle (HMMWV) repair parts supply chain management at Red River Army Depot. Specifically, we reviewed Defense Logistics Agency (DLA) inventory levels, DLA annual customer demand, and the depot consumption of HMMWV repair parts to determine whether the supply chain was cost-effective.
DLA Land and Maritime did not cost-effectively manage 118 HMMWV repair parts valued at $11.1 million while purchasing these parts from AM General, LLC for $17.6 million. This occurred because DLA Land and Maritime officials did not review DLA-owned inventory at key contract decision points to maximize use of its own stock. As a result, we identified $9.7 million of excess inventory that could be used for HMMWV maintenance requirements. Thus, DLA missed an opportunity to improve DoD cash flow by drawing down DLA-owned inventory before using commercial support. Furthermore, DLA incurred costs to maintain this excess inventory.
The Director, DLA, should issue guidance to require periodic inventory reviews of DLA-owned inventory used in performance-based logistics agreements at award of each contract, issuance of modifications that add new program requirements, and exercise of option years.
Also, the Director, DLA, should direct the Commander, DLA Land and Maritime, to:
- perform periodic inventory reviews of DLA-owned HMMWV repair parts on the Integrated Logistics Partnership contract,
- develop a drawdown plan for the excess inventory identified and incorporate the plan into the final option year of the Integrated Logistics Partnership contract and any future HMMWV support contracts at Army maintenance depots, and
- provide all HMMWV repair part consumption data to supply planners.
Comments from the Deputy Director, DLA Logistics Operations, were responsive and met the intent of our recommendations. No additional comments are required. DLA stated that it would:
- issue guidance to maximize use of inventory for performance-based logistics agreements,
- implement quarterly reviews for DLA-managed over procured items on the Integrated Logistics Partnership contract,
- develop a drawdown plan for excess, and
- provide consumption data to supply planners for the contract.
This report is a result of Project No. D2012-D000JA-0102.000.