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Defense Infrastructure: Inventory Control Point Consolidation Savings Would Be Substantial

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Report Type Reports and Testimonies
Report Date Aug. 13, 1997
Report No. NSIAD-97-157
Subject
Summary:

The Defense Department (DOD) used conservative assumptions and cost factors in estimating the savings from consolidating inventory control points under the Defense Logistics Agency. It projects cost savings of $2.2 billion to $3.8 billion over fiscal years 1998 to 2010. GAO believes that this approach is reasonable, given the sensitive nature of the issue, the limited amount of time to perform the review, and the data available. However, the projected cost savings would be at least $1.3 billion to $2.3 billion greater if DOD used base realignment and closure principles, such as estimating steady-state savings over a longer time period and using a present value analysis instead of a constant dollar analysis. The potential savings would likely be greater still if the analysis included (1) savings from all business process improvements related to the consolidation and (2) planned future improvements to DOD's existing material management information systems.

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