Summary: Pursuant to a congressional request, GAO examined the Air Force's management of its excess retail inventory, focusing on whether the Air Force: (1) accurately and completely reported the inventory; (2) properly considered it in procurement decisions; and (3) used it to fill other retail activities' requisitions.
GAO found that: (1) between September 1987 and March 1990, inventories of consumable items and low-cost equipment that exceeded Air Force operating needs increased from $442 million to $927 million; (2) the Air Force accumulated about $1 billion in excess retail inventories due to limited visibility over retail excess by wholesale inventory managers and the Defense Program for the Redistribution of Assets (DEPRA); (3) limited visibility occurred because the Air Force does not require complete reporting of retail-level excess and allows retail activities to prematurely cancel reports of excess; (4) air logistics centers (ALC) did not always use reported excesses to fill backorders and DEPRA was not aware of many redistribution opportunities; (5) ALC issued redistribution orders to fill backorders in only about 21 percent of 244 excess reports; (6) the primary reasons for excess retail inventory included decreasing demands, customer turn-ins, requisitioning problems, inventory adjustments, and deletion of adjusted levels; and (7) the Air Force is studying inventory growth to develop strategies for reducing inventories, but it is not broad enough to identify specific corrective action.
