Navy spends $7.5B on unneeded parts
WASHINGTON — Navy planners spend about $7.5 billion on unneeded equipment and parts each year and racks up millions more in storage costs for the excess inventory, according to a Government Accountability Office report released Wednesday.
The investigation, which tracked Navy inventory from 2004 to 2007, blames management mistakes for the accumulation of spare parts "sufficient to satisfy several years, or even decades, of anticipated supply needs."
Defense Department officials acknowledged the service needs to better manage supply controls, but in a letter to the GAO, Defense Department logistics manager Jack Bell said he believed only 10 percent of the parts identified in the report are actual excess inventory.
The rest, he said, comply with two-year budgeting procedures and needed parts reserves.
Still, the report identifies numerous outdated or unnecessary items in the Navy’s storage facilities, and says the service could do a better job cutting costs by anticipating needs better.
For example, investigators found 13,852 fan blades for F-18 fighters — valued at $3.6 million — that are no longer used in repairs for the aircraft. Similarly, the Navy still holds a number of 17-year-old sonar sets and 20-year-old electronic modules for obsolete combat systems.
Storage of the extra parts costs the DOD another $18 million a year, the report said. Total, the Navy holds nearly $19 billion in spare parts in equipment in reserve each year.
The GAO recommends the service develop better forecasting procedures, noting that officials have not made improvements in recent years to track demand for parts.
Without those changes, the report said, "the Navy will likely continue to purchase and retain items that it does not need and then spend additional resources to handle and store these items."
In a response to the report, Defense officials said Navy Supply Systems Command has set targets for late 2009 and early 2010 to improve tracking, ordering and management of the spare parts.
The study was done at the request of Sen. Bernie Sanders, I-Vt., and Rep. Solomon Ortiz, D-Texas. On Wednesday, Sanders criticized the Navy for the findings.
"At a time when the nation has a $10.6 trillion debt, we simply cannot afford the continuing uncontrollable waste across the federal agencies," he said in a statement.