The system  incorporates four components: a strategic plan with goals and objectives;  a balanced scorecard, with strategies and performance measures; a  business plan containing initiatives; and a review and analysis process  that assesses performance. Of the 97 DLA initiatives contained in DLA’s Strategic Management System,  DLA identified 18 that are aimed specifically at mitigating spare parts  shortages and 6 that are aimed at improving DLA’s internal logistics  operating systems and processes that may improve logistics support to  customers and thus help reduce critical readiness-degrading spare part  shortages affecting the military forces. Such improvements are likely, in part, because  some of the 24 initiatives address recurring causes for the shortages. However, some of these  initiatives are not expected to be fully implemented until 2007. A Separate DOD-Directed Aviation Investment Initiative Has Significantly Increased Availability of Some Critical Aviation Parts, but Others Remain in Short Supply

A separate DOD-directed, $500 million aviation investment initiative— although not included in DLA’s business plan—has significantly improved  the availability of many critical aviation spare parts and most likely supply  readiness. During its first 3 fiscal years, 2000-2002, the initiative, called the  Aviation Investment Strategy, significantly improved critical aviation parts. Shortages, however, will continue, in part, because the 85-percent  aggregate goal does not reveal that while 47 percent of the critical aviation  spare parts were raised to this level, many—5,414 (53 percent) as of the  end of fiscal year 2002—are below the goal. Without such a waiver, these spare parts could continually be  below DLA’s availability goal, adversely affect readiness, and increase  DLA backorders. DLA Can Estimate the Impact of Additional Investment on Supply Availability, Which Contributes to Supply Readiness

DLA can estimate that added investment in safety level inventories of  critical readiness-related spare parts will increase parts availability and  will likely improve supply readiness of the military services. Several parts even exceeded  3 years. Such waivers  would allow DLA to buy sufficient critical spare parts that affect  readiness of service weapon systems to attain an 85-percent minimum  availability goal;  change the agency’s current aggregate 85-percent supply availability  goal for critical spare parts that affect readiness, to a minimum 85- percent supply availability goal for each critical spare part, and because  of the long lead times in acquiring certain critical parts, establish annual  performance targets for achieving the 85-percent minimum goal; and  prioritize funding as necessary to achieve the annual performance  targets and ultimately the 85-percent minimum supply availability goal. For example, after 3 years of focused investment to increase the  availability of over 10,000 critical aviation parts, 53 percent were not  available at the 85-percent aggregate goal and over half of these parts were  available below 35 percent of the time. We  assessed the adequacy of DLA’s strategic planning by comparing DLA  planning to the requirements outlined in the Government Performance and  Results Act of 1993 to determine if DLA’s planning contained key  management attributes that are necessary to reduce spare parts shortages. Comments from the Department of Defense

Schematic of Defense Logistics Agency Strategic Management System

Description of DLA Initiatives Aimed at Mitigating Spare Parts Shortages

DLA identified 18 strategic initiatives in varying stages of implementation  in its Strategic Management System that are aimed at mitigating  shortages of spare parts, including critical ones.
Why GAO Did This Study

DOD's management, funding, and reporting of spending for spare parts programs have been a focus of GAO high risk reports for over a decade. They noted that spare parts shortages adversely affect military operations and readiness. Despite funding of about $1.9 billion over fiscal years 1999-2002 to increase availability of spare parts, managing to mitigate shortages still challenges the Defense Logistics Agency (DLA). GAO examined if (1) DLA's strategic planning addresses mitigating critical spare parts shortages that affect readiness, (2) strategic initiatives will likely mitigate these shortages, (3) a DOD-directed initiative has improved availability of critical aviation parts, and (4) DLA can identify the impact of added investment on parts availability.

What GAO Found

DLA's Strategic Management System, meant to transform its 2002-2007 logistics operations, addresses the mitigation of readiness-affecting shortages of critical spare parts. The system includes a strategic plan with goals, strategies, and objectives; a balanced scorecard to monitor progress; and a business plan that contains 97 initiatives. Of these initiatives, DLA identified 24 as linked to spare parts shortages. The DLA strategic system incorporates attributes of strategic planning outlined in the Government Performance and Results Act of 1993. The 24 initiatives, if fully implemented, could help mitigate critical spare parts shortages and improve supply readiness because, in part, they address causes for the shortages. Of the 24 DLA-identified initiatives, 18 should improve availability of parts identified by the services as critical to readiness; and 6 should indirectly improve parts availability through modernized logistics systems and business processes. A $500-million DOD-directed aviation investment initiative, not part of DLA's strategic system, increased critical parts availability and likely supply readiness. It improved the aggregate, or total average, availability of three critical groups of DLA-managed parts in the first 3 fiscal years--2000-2002--of the 4-year initiative. However, DLA's aggregate 85-percent goal does not clearly reveal that many parts are still far below 85 percent. For example, at the end of fiscal year 2002, of the 10,291 critical aviation parts selected for investment, about 4,900 met or exceeded the aggregate measure, but over 5,400 did not. Of these, about 2,900 parts were available under 35 percent of the time. A DOD regulation, since revised to allow waivers, caused 3,342 parts to be below the 85-percent availability goal. DLA can estimate the impact of increased funding on supply availability. Investment costs, however, will be significant--DLA estimated $748 million to obtain an 85-percent minimum availability of the 219,071 most critical parts. Also, necessary inventory levels may take years to build, and increases in unit readiness are not assured because supply is only one readiness factor.