GAO: Navy Hoarding!

The condition can be debilitating. Ruinous. In what could be termed a severe case of hoarding, the Government Accountability Office has found that the Navy keeps $7.5 billion in unneeded spare parts above its $18.7 billion secondary inventory.

But how accurate is this study? Where does the Navy store so much gear? Those $7.5 big ones could buy at least 10 littoral combat ships. Cha-ching.

Since 1990 the GAO has pegged the Defense Department’s inventory management as a “high-risk” area. For this latest study, the GAO poured over Navy inventories from fiscal 2004 through 2007. The Navy’s path to the poor house seemed no surprise (at least on paper) to the GAO sleuths who have been in these troubled waters before. According to the GAO polling, Navy managers frequently explained that the excesses were due to changes in demand. The GAO debunked Navy reasoning and found a service deficient in planning as well as management.

While these findings may be accurate, it seems the GAO did not physically verify even a sampling of items. Oddly, it went off information obtained from the Navy managers running the systems it was investigating.

The GAO found that many of the excess items would satisfy requirements for years to come. Nearly one third was obsolete or unserviceable and would never be used according to the report. That much gear may only exist on paper.

Typically items, like the GAO’s example of $3.6 million worth of 13,852 fan blades showing zero demand would be dropped by the Navy and shipped out. If they had become as “loss,” the blades would be handled as such during and inventory. Those blades may be long gone but may continue to live on paper. The managers may be as bad as the GAO says, but they’re not schlepping 13,852 fan blades. (Nor are they counting them.)

Earlier studies (dating back to 1973!) have found weaknesses in the Navy’s inventory practices. Past corrective actions recommended by the GAO have not been implemented.

This time around, the GAO has recommended “that the Navy strengthen inventory management by incorporating cost-efficiency metrics and goals, evaluating and improving demand forecasting procedures, revising inventory management practices to better accommodate demand fluctuations, and enhancing oversight though the chief and deputy chief management officers.” That’s it? To carry an excess of more than $7 billion suggests additional issues like demand overrides and end-user hoarding, for example.

The GAO concluded: “Strengthening the Navy’s inventory management—while maintaining high levels of supply availability and meeting warfighter needs—could reduce support costs and free up funds for other needs.”

True, but maybe not for the reasons the GAO cites.

Vermont Independent Sen. Bernie Sanders had asked GAO to look into this matter. He praises the report, probably because it turned up exactly what he had hoped.

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