Summary: Since 1989, when it began initial provisioning for the C-17 aircraft program, the Air Force has often ordered spare parts prematurely. As of July 1993, the Air Force had $111.2 million worth of C-17 spare parts on order. In GAO's view, all of these spare parts were ordered prematurely because existing inventories could have met the Air Force's needs. These premature procurements were made under a Defense Department (DOD) policy that called for maximizing procurement of support items for the provisioning period. Premature ordering occurred because the Air Force used inaccurate and outdated information to determine how many spare parts to buy and when to buy them, bought more spare parts than computed stockage levels justified, and failed to follow regulations governing the initial provisioning process. DOD recently revised its guidance to stress the need to limit the initial procurement of spare parts, thereby minimizing costs. As of July 1993, the Air Force had already canceled nearly $40 million of the $111.2 million worth of C-17 parts on order. Although the prime contractor has not determined the cancellation costs for canceled actions, one subcontractor estimated cancellation costs of about $88,000 on $2.9 million worth of parts that were canceled.
