Summary: GAO reviewed the Army's requirements determination system to determine whether the requirements were based on valid data and needs. In view of the Administration's plan to increase Defense spending and the expectation that the services will receive full funding in fiscal year 1982, it is imperative that such funds be applied where they are most needed.
GAO found that the Missile Command's requirements computations for August 1980 were overstated by approximately $12.6 million for certain items and understated by about $400,000 for other items because requirements computations were based on inaccurate delivery, administrative, and production leadtimes. In addition, leadtime requirements were overstated because of the method used to determine requirements for first article testing. The Missile Command overstated its August 1980 requirements because of excessive delivery leadtimes and deviated from prescribed Army procedures for forecasting production leadtimes. Requirements for first article testing were overstated because unnecessary leadtime for items with a first article test requirement were included. The Missile Command used a standard procurement leadtime for one-third of its items in a buy position during August 1980. The standard leadtime was larger than what it would have been if the leadtimes had been based on actual experience. The Missile Command needs to improve its criteria for determining what a representative buy is, redefine its criteria for computing production leadtime, and ensure that its data are valid.
