Our objective was to determine whether
DoD wholesale managers were effectively
managing excess materiel. We focused on the
effectiveness of the Defense Logistics Agency’s
(DLA) Materiel Returns Program (MRP) at the
DLA did not effectively manage the MRP at the
wholesale level. Specifically, during FY 2013,
DLA rejected customer requests to return
materiel for 4,456 national item identification
numbers (NIIN), valued at $21.2 million, while
it procured the same items from contractors.
We statistically sampled 253 of the
4,456 NIINs. Of the 253, we focused on
172 processed by supply planners. In
summary, we agreed with supply planner
decisions not to accept customer return
requests for 17 NIINs valued at $417,987.
However, supply planners could not provide
adequate support for rejecting customer
return requests for 155 NIINs, valued at
$5.3 million. Supply planners rejected the
155 items for return because:
- DLA did not ensure MRP guidance included return procedures for materiel such as critical safety items, aviation life support equipment, and items that required first article testing;
- MRP training did not address how supply planners should evaluate and respond to customer return requests, and
- supply planners lacked confidence that the materiel offered for return would be returned timely or in serviceable condition.
As a result, DLA missed potential opportunities to satisfy
backorders and offset or delay procurements for a projected
2,824 NIINs valued at $9.3 million, and customers were
denied the opportunity to receive a credit for returning
their excess materiel.
In addition, DLA did not effectively manage the list of items
automatically excluded from return, referred to as the
auto-TC table, which included 111,709 NIINs. Specifically,
DLA officials could not explain why 34 of our 253 sample
items, with transactions valued at $3.5 million, were on the
auto-TC table. This occurred because DLA guidance did not
require that DLA personnel document their rationale for
items listed on the table or require management officials
to review and update the table on a periodic basis.
As a result, the auto-TC table may not have accurately
reflected current operational and program requirements.
Therefore, DLA did not have reasonable assurance that
the MRP maximized the use of excess DoD materiel, and
DLA may have missed additional opportunities to satisfy
backorders and offset or delay future procurements.
Among other recommendations, we recommend the Director,
DLA develop MRP guidance that includes return procedures
for all categories of materiel; develop mandatory initial and
periodic MRP-specific training that aligns with the guidance;
and develop guidance to require personnel to periodically
review and document their rationale for including items on
the auto-TC table.
Management Comments and Our Response
The Director, Defense Logistics Agency Logistics Operations,
responding for the Director, Defense Logistics Agency,
addressed all specifics of the recommendations, and no further
comments are required.