Summary: Material management practices at naval shipyards have improved since GAO's last review in 1985, but further improvements are possible. The shipyards' material requirements determination process still is not working as intended. As a result, shipyards ordered more material than was needed to repair ships and the shipyards had unused material on hand after the repairs were completed. The quantity of unused material exceeded the Navy goal and had to be written off as a loss when it was unneeded elsewhere. In fiscal years 1991 through 1993, the shipyards wrote off $88 million in losses for unused material, including $56 million in items sent to disposal. Excess material orders resulted from several factors, including the lack of analysis into reasons for unused material and the absence of historical material usage data to help determine requirements. Also, because adequate management controls were not in place, the shipyards maintained inventories of material that went unrecorded on official inventory records, issued more shop store material than was needed for repairs, and did not ensure compliance with policies to eliminate excess inventories and protect material from loss.
