Summary: Pursuant to a congressional request, GAO reviewed the: (1) accuracy of inventories at the Naval Supply Center in Norfolk, Virginia; and (2) management of these inventories by the Navy Ships Parts Control Center (SPCC).
GAO found that the Norfolk Center: (1) inconsistently implemented or misinterpreted Department of Defense (DOD) or Navy policies concerning physical inventories, adjustments, causative research, and reversals; (2) did not know if its inventory records accurately reflected the status of its on-hand inventories; (3) used inadequate and incomplete data to measure inventory accuracy, and subsequently overstated the amount of inventoried items and inventory accuracy; (4) postponed discrepancy adjustments pending completion of causative research; and (5) consistently exceeded the deadline for completing causative research. GAO also found that: (1) current policies concerning adjustment reversal and inclusion of unscheduled inventories in accuracy measures cause overstatement or understatement of inventory accuracy; (2) the Navy plans to implement the Statistical Accuracy Techniques and Measurements Analysis sampling and analysis tool to improve inventory accuracy; and (3) SPCC did not maintain adequate control over items sent to contractors or interservice maintenance facilities for repair. GAO believes that the Navy's reports of supply system accuracy are unreliable, since they are based on rates computed from questionable and inaccurate data.
