Report | Sept. 29, 2014

Army Needs to Improve the Reliability of the Spare Parts Forecasts It Submits to the Defense Logistics Agency

DODIG-2014-124

Objective

We determined whether the Army is reasonably forecasting Special Program Requirements for spare parts ordered from the Defense Logistics Agency.

Finding

Army Life Cycle Management Commands did not provide the Defense Logistics Agency with reliable forecasts of spare parts needed to support planned depot maintenance projects. Army depots did not order $142.7 million of the $226.4 million parts forecast for FY 2013. For other parts, depot requirements exceeded forecasts by $83.7 million. This occurred because Army policy and controls did not ensure Army Life Cycle Management Command and depot personnel:

  • properly updated spare parts usage rates,
  • correctly coded projects to select the appropriate list of required parts,
  • properly coded specific spare parts to prevent erroneous forecasting, and
  • maintained adequate supporting documentation and compared past forecasts to actual orders.

Unreliable Army spare parts forecasts cause the Defense Logistics Agency to either buy too many parts and incur unnecessary inventory costs or to buy too few parts, which negatively affects depot operations and warfighter readiness. The Army forecast $705.3 million in spare parts requirements for FYs 2014 through 2016. Unless the Army improves its forecasts, it will continue to negatively impact the Defense Logistics Agency’s purchase decisions, stock levels, and readiness.

Recommendation

We recommend that the Secretary of the Army develop Army-wide policy and establish controls on monitoring and updating depot overhaul factors consistently.

We recommend that the Commander, Army Materiel Command, develop a plan of action with milestones to improve the accuracy of the Army Life Cycle Management Commands’ forecasts to the Defense Logistics Agency. The plan should address the problems this audit identified, to include:

  • establishing procedures and controls to make sure that Life Cycle Management Command personnel use the correct parts lists for spare parts forecasting,
  • establishing procedures and controls to ensure that depot personnel properly code spare parts to avoid generating erroneous forecasts to the Defense Logistics Agency and also correct existing erroneous forecasts, and
  • developing a methodology for Life Cycle Management Command personnel to compare depot orders with associated special program requirements in order to ensure the reasonableness of spare parts forecasts.

Management Comments and Our Response

Comments from the Chief of Supply, Department of the Army, and the Executive Deputy to the Commanding General, Army Materiel Command, addressed the recommendations and no further comments are required.

This report is a result of Project No. D2013-D000AG-0231.000.