Army Inventory: Changes to Stock Funding Reparables Would Save Operations and Maintenance Funds
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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In October 1990, the Army began procuring its reparables at the wholesale level with stock funds, and in April 1992, Army units were required to use OM funds to purchase items. The Armys switch to SFDLR helped reduce demands for reparable items about 55 percent-from 8.3 billion in fiscal year 1991 to 3.7 billion at the end of fiscal year 1993. The decreased demands enabled the wholesale system to reduce its procurement of reparables about 75 percent, from 1.8 billion to 443 million during the same period. The SFDLR implementation plan intended that on an aggregate basis by material category, units would receive the same credit for items turned in to the retail stock fund that was granted by the wholesale stock fund to the retail stock fund. However, the Armys credit policy has enabled units to increase their OM buying power. At the same time that units have increased their OM funds, Army units at the installation level are spending OM funds to repair items that are in long supply at the wholesale level. From an individual units perspective, they can repair the item cheaper than procuring the item from the wholesale system. However, from an Army-wide perspective, the use of OM resources for this purpose does not make good business sense. The Army is testing, or plans to test, certain initiatives to address these problems.
- Economics and Cost Analysis
- Logistics, Military Facilities and Supplies