Objective
The audit objective was to determine whether Defense Logistics Agency (DLA) personnel are adequately processing product quality deficiency reports and identifying the root cause for defective spare parts. This is the first in a series of audits on DLA processing product quality deficiency reports.
Finding
DLA Aviation quality assurance personnel conducted adequate investigations for product quality deficiency reports. However, they did not adequately process 21 of 52 that we non-statistically sampled and properly code them to reflect the root causes of the deficiencies determined by their investigations. This occurred because:
- quality assurance personnel lacked sufficient guidance to make appropriate coding decisions and did not have a complete understanding of how their coding actions impacted contractor’s quality ratings;
- supervisors failed to conduct adequate reviews of product quality deficiency report investigations; and
- the product quality deficiency report program lacked adequate oversight to improve operational effectiveness.
In addition, the cause codes assigned in deficiency reporting systems differed for 17 of the 52 sampled investigations and for a total of 1,921 of the 9,347 reports that the DLA Supply Chains closed between August 2013 and August 2014. The coding differed because of deficiencies in the processes Military Department screening points used to update information in the systems and outdated software code.
The inaccurate data limits the effectiveness of the DoD product quality deficiency report program and prevents meaningful analysis of the primary causes of spare-part quality deficiencies. In addition, the inaccurate data weakens DoD’s ability to hold contractors responsible for providing defective parts because contractor evaluation systems contain incomplete data. Ultimately, this increases the risk of DoD procuring nonconforming spare parts from contractors, which impacts warfighter readiness and safety.
Recommendations
We recommend that the Director, DLA, develop an action plan with milestones to improve product quality deficiency report processing. The plan should address the problems that this report identified and:
- update existing guidance on product quality deficiency report processing, coding decisions, and the associated supervisory reviews;
- develop procedures, controls, and associated metrics that evaluate deficiency reporting results to improve operational effectiveness; and
- require coordination with deficiency reporting system program offices on the sufficiency of planned corrective actions and establish procedures to ensure that codes are consistent between deficiency reporting systems.
Management Comments and Our Response
Comments from the Director, DLA Logistics Operations, did not address all specifics of one of the four recommendations, and further comments are required on Recommendation 1.c(2) by August 3 , 2015.
This report is a result of Project No. D2014-D000AG-0205.000.