Navy Logistics Strategic Plans Do Not Specifically Focus on Mitigating Spare Parts Shortages

The Navy’s servicewide strategic plans do not specifically address means  to mitigate critical spare parts shortages. In fiscal year 2001, the Navy published a servicewide strategic plan—the  High Yield Logistics Transformation Plan—that identified initiatives  undertaken by its major support commands to improve the service’s  logistics overall and to address objectives listed in DOD’s Fiscal Year 2000  Logistics Strategic Plan. While some of these initiatives  have improved the overall supply availability and reliability of some spare  parts, we cannot measure their potential for mitigating critical parts  shortages and their impact on weapon system readiness because they  were not designed to specifically address this problem. Performance Based Logistics Contracts Have Improved Availability of Spare Parts

Performance based logistics contracts have generally improved supply  support to the fleet, but the Navy does not assess the extent to which  better supply availability mitigates critical spare parts shortages or  enhances the fleet’s combat readiness. However, the Navy  has yet to establish such a plan. Impact of Additional Spare Parts Funding on Supply Availability and Readiness Estimated but Not Reported

The Navy has analyzed how additional wholesale supply funding would  affect the availability of spare parts as well as equipment readiness rates,  and has determined that an additional investment of $1.2 billion would be  necessary to support readiness objectives established by the Chief of  Naval Operations. However, the Navy did not ask for this funding as part  of its fiscal year 2004 budget request, nor did its budget estimates link  planned spending to individual weapon system readiness, as  recommended by the Office of the Secretary of Defense in an August 2002  study. DOD has an 85 percent supply availability goal, which means that 85  percent of the requisitions sent to wholesale supply system managers can  be immediately filled from on-hand inventories. Navy supply system  models are focused on achieving this goal in the aggregate. However, the  Navy’s overall wholesale supply system performance has fallen short of  expectations in each of the last 3 fiscal years for both aviation- and ship- related repairable spare parts. Supply availability ranged between  approximately 69 percent and 71 percent for aviation-related items, and  between 79 percent and 84 percent for ship-related parts. Recommendations

We recommend that the Secretary of Defense direct the Secretary of the  Navy    develop a framework for mitigating critical spare parts shortages that  includes long-term goals; measurable, outcome-related objectives;  implementation goals; and performance measures as a part of either  the Navy Sea Enterprise strategy or the Naval Supply Systems  Command Strategic Plan, which will provide a basis for management to  assess the extent to which ongoing and planned initiatives will  contribute to the mitigation of critical spare parts shortages, and  implement the Office of the Secretary of Defense’s recommendation to  report, as part of budget requests, the impact of funding on individual  weapon system readiness with a specific milestone for completion. To determine the likelihood that key supply system initiatives will mitigate  critical spare parts shortages and improve weapon system readiness, we  obtained and analyzed service documentation on six of the initiatives that  Navy officials believe are key to the future economy and efficiency of the  service’s supply operations.
Why GAO Did This Study

Since 1990, GAO has identified DOD inventory management as high risk because of long-standing management weaknesses. In fiscal years 2001 and 2002, Congress provided the Navy with more than $8 billion in operations and maintenance funds to purchase spare parts in support of the service's operations. Nevertheless, spare parts availability has fallen short of the Navy's goals in recent years. GAO examined the extent to which Navy strategic plans address mitigation of critical spare parts shortages, the likelihood that key supply system improvement initiatives will help mitigate spare parts shortages and enhance readiness, and the Navy's ability to identify the impact on readiness of increased spare parts investments.

What GAO Found

The Navy's servicewide strategic plan does not specifically address means to mitigate critical spare parts shortages. Its 2001 plan contained strategic goals, objectives, and performance measures, but the service did not use it to systematically manage implementation of logistics reform initiatives. The Navy is developing a new logistics strategic plan, but this document has not yet been published. Consequently, the service presently lacks an effective top-level plan that integrates a specific focus on mitigating spare parts shortages into its logistics transformation initiatives. Without such a plan, the Navy lacks guidance necessary to ensure its logistics initiatives mitigate critical spare parts shortages. GAO examined six of the key initiatives that the Navy has undertaken to improve the economy and efficiency of its supply system. While some of these initiatives have increased availability of select spare parts, GAO cannot determine their potential to mitigate critical spare parts shortages because they were not designed specifically to remedy this problem. For example, the Performance Based Logistics initiative aims to improve supply support at equal or lower cost by outsourcing a broad range of services. Though the initiative has increased availability of certain items, GAO could not measure the extent to which Performance Based Logistics contracts have mitigated critical spare parts shortages. The Navy has determined that an additional investment of $1.2 billion would be necessary to achieve supply availability levels that support the service's readiness objectives. However, the Navy did not ask for this funding in its fiscal year 2004 budget request, nor did it report linkages between resource levels and readiness rates for individual weapon systems, as recommended by the Office of the Secretary of Defense in 2002. The Navy did provide aggregate readiness data to the Office of the Secretary of Defense, but officials stated that they lacked information technology necessary to link readiness rates by weapon system to budget categories. DOD has an 85 percent supply availability goal, which means that 85 percent of the requisitions sent to wholesale supply system managers can be immediately filled from on-hand inventories. Navy supply system models are focused on achieving this goal in the aggregate. However, the Navy's overall wholesale supply system performance has fallen short of expectations in each of the last 3 fiscal years for both aviation- and ship-related repairable spare parts. Supply availability ranged between approximately 69 percent and 71 percent for aviation-related items, and between 79 percent and 84 percent for ship-related parts.