DOCUMENT ESUME

02618 - [A1572681]

Air Force Continues to Repair Parts When Serviceable Parts AreAvailable. LCD-77-202; B-133019. Jne 7, 1977. 22 pp. + 2appendices (4 pp.).

Report to the Congre-s; by Elmer B. Staats, Comptroller General.

Issue Area: Facilities and Material Management: Supply andMaintenance Operations Reporting Systems (703).

Contact: Claims Div.Budget Function: National Defense: Department of Defense -

Military (except procurement contracts) (051); NationalDefense: Department of Defense - Procurement Contracts(058)

Organi7aticn Concerned: Department of the Air Force; Departmentof Defense.

Congressional Relevance: House Committee on Armed Services;Senate Cmmittee on Armed Services; Congress.

Authority: Air Force Logistics C mmand Manual 57-3.

The Air Force unnecessarily spends millions of dollarsto repair parts when more han sufficient quantities ofserviceable parts are available to meet current needs.Findings/Conclusions: The Air Force has not and will not makeeffective use of available serviceable quantities untilsubstantial changes are initiated because the mechanized systemdoes not notify maintenance personnel of the quantitiecavailable to preclude repairs; Air Force personnel are notfamiliar with the objectives and procedures for using routedrepair replacement uantity assets; and, although aware thatunneeded repairs are occurring, the Air Force has not institutedmanagement action to make sure that replacement quantities areused to preclude repairs. Neither material management normaintenance activity officials want to take responsibility forthis last action. Recommendations: The Secretary of Defenseshould direct the Secretary of the Air Force to initiatemanagement action to establish procedures and systems that willperiodically identify all assets to be repaired at the depotmaintenance level and match these records with the quantity ofserviceable replacement parts that can be used to precluderepair; to change regulations to clearly delineateresponsibilities for assuring the use of serviceable replacementassets to preclude repairs made by maintenance activities andcontractors; and to train material management and maintenancepersonnel on the system's use and the concept of utilizingavailable serviceable assets rather than repairing unserviceableassets. (Author/SC)

REPORT TO THE CONGRESS

BY THE COMPTROLLER GENERAL2 A no s; fl A- OF THE UNITED STATES

Air Force Continues ToRepair Parts WhenServiceable PartsAre AvailableDepartment of Defense

Unnecessarily, the Air Force spends millionsof dollars to repair parts when more than suf-ficient quantities of serviceable parts are avail-able to meet current needs.

The Air Force needs a system that will identi-fy and match availabie serviceable parts withparts scheduled for repair, and needs tc delin-eate responsibilities to make sure such a sys-tem is used and personne! are trained to useit. The Air Force plans several procedural anddata system changes to alleviate the probler,;.

LCD-77-202 JUNE 7, 1977

COMPTROLLER GENERAL OF THE UNITED STATES

WASHINGTON. D.C. a2041

B-133019

To the President of the Senate and theSpeaker of the House of Representatives

This report shows that the Air Force unnecessarily spendsmillions of dollars to repair parts when more than sufficientquantities of serviceable parts are available to meet currentneeds.

Since similar problems have been identified in earlierreports, we made this review to determine whether the AirForce was taking full advantage of opportunities to substituteavailable replacement parts for planned repair work; the AirForce was not.

This review was made pursuant to the Budget and Account-ing Act, 1921 (31 U.S.C. 53), and the Accounting and AuditingAct of 1950 (31 U.S.C. 67).

Copies of this report are being sent to the Director,Office of Management and Budget; the Secretary of Defense;and the Secretary of the Air Force.

Comptroller Generalof the United States

COMPTROLLER GENERAL'S AIR FORCE CONTINUES TOREPORT TO THE CONGRESS REPAIR PARTS WHEN SERVICEABLEPARTS ARE AVAILABLEDepartment of Defense

DIGEST

The Air Force continues to repair parts whenmore serviceable parts are available thanare currently needed. By using availableserviceable parts, the Air Force could savemillions of dollars in repair costs or makeavailable thousands of labor hours for otheLrepair work which might otherwise go undone.(See p. 6.)

This problem is not new. GAO reported in1964, and the Air Force Audit Agency reportedin 1973, 1974, and 1975, that availableserviceable parts were not used because asatisfactory system had not been developedto identify and match available serviceableparts with parts to be repaired. In eachinstance the Air Force agreed that un-warranted repairs were made, but effectiveremedial action did not follow. (Seep. 6.)

The problem worsened when the Air orceeliminated a maintenance control systemin January 1976 which matched availableserviceable parts with certain plannedrepair actions on the same item. Althoughthis system was not complete because itdid not identify all planned repairs,eliminating it left the Air Force withouta system for matching available service-able parts with any parts planned for repair.(See p. 10.)

There were other contributing causes. AirForce personnel responsible for managingreplacement parts and parts repair scheduleswere not always familiar with objectivesand procedures for using available service-able replacement parts. Also, managementdid not give adequate attention to establish-ing effective procedures to make sure thatreplacements were used to preclude repairs.(See p. 10.)

i LCD-77-202T r Shet. Upon removal, the reportovr d ate should be noted hereon.

The Air Force should:

--Establish procedures and systems thatwill periodically identify all assetssubject to repair and atch these rcordswith the serviceable replacements.

-- Change regulations to cearly delineateresponsibilities for making sure that re-placfcment parts are used. This shouldpreclude repairs by maintenance activitiesand contractors.

--Traini material management and maintenancepersonnel to use the system. (See p. LY.)

Commenting on GAO's report, the Departmentof Defense stated that the Air Force plansseveral procedural and data system changeswhich should alleviate deficiencies citedin this report. For example, the AirForce will stop routinely repairing sub-assemblies. Instead, unserviceable sub-assemblies will be turned in to supplyactivities and serviceable assets will beissued to maintenance activities throughnormal supply channels. Turning in un-serviceable subassemblies will provideconsumption data on depot repairs whichare not currently available, and willallow computation of depot repair require-ments. (See p. 19.)

If properly carried out, the plannedchanges should reduce unwarranted repairs.GAO plans to monitor their effectiveness.

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Contents

Page

DIGEST i

CHAPTER

1 INTRODUCTION

2 DECIDING TO REPLACE OR REPAIR PARTS 2Identification of replacement items 3Identification of items to berepaired 4

3 SERVICEABLE REPLACEMENT PARTS NOT EDEFFECTIVELY 6Opportunities for savings 7Why replacement quantities are not

used 10

4 AIR FORCE AUDIT FOUND SIMILAR PROBLEMS 16

5 CCNCLUSIONS, RECOMMENDATIONS, AGENCYCOMIMENTS, AND OUR EVALUATIONS 18

Conclusions 18Recommendations 19Agency comments and our evaluations 19

6 SCOPE OF REVIEW 21

APPENDIX

I DOD comments 23

II Principal officials responsible foradministering activities discussed inthis report 25

ABBREVIATIONS

DOD Department of Defense

GAO General Accounting Office

CHAPTER 1

INTRODUCTION

The Air Force Logistics Command at Dayton, Ohio, provideslogistics support and services for Air Force organizations.Its main functions are to develop procedures and furnish policyguidance to five air logistics centers located at Ogden, Utah;Oklahoma City, Oklahoma; Sacramento, California; San Antonio,Texas; and Warner Robins, Georgia.

In addition to performing routine maintenance work, theAir Force periodically inspects and repairs its weapon systemsand support equipment to keep them in serviceable condition.T:e more comprehensive inspection and repair work = ~ doneeither by maintenance activities at the five air logisticscenters or by contractors. These repair activities inspectthe items received, and repair or replace worn, breken, ormissing parts. Missing or condemned parts are routinelyreplaced, while necessar, repairs are made to other parts.The repair and overhaul work is directed by the materialmanagement activities at the air logistics centers. Thesemanagement activities also manage the serviceable spareparts replacerient inventory

Air Force Logistics Command Manual 57-3 states that oneobjective of the repair program is to preclude parts re-pair when serviceable parts in excess of a 12-month supplyare available. In many cases the onhand balances of serv-iceable parts are in a long-supply or excess status with noforeseeable requirement. In these situations, the decisionto replace rather than repair can save repair labor and putonhand serviceable parts to good use. Saved labor hours atAir Force maintenance activities can be eliminated or re-directed to work that might otherwise go undone. Saved laborhours on contract repairs can reduce contract cost.

Our review's objective was to determine whether theAir Force was taking full advantage of opportunities to sub-stitute available replacement parts for planned repair work.

CHAPTER 2

DECIDING TO REPLACE OR REPAIR PARTS

The material management activity advises the maintenanceactivity on the types and quantities of end items to be re-paired. However, the material management activity does notdirect the repair of the end item's component parts; tisdecision is left to the maintenance activity. Generallll,the maintenance activity disassembles the end item, inspectsthe component parts, and determines which parts can be re-paired. Those parts which cannot be repaired are condemnedand replaced with new parts requisitioned from the materialmanagement activity. Those parts that can be repaired areprocessed through maintenance repair lines and used in re-assembling the repaired end itent.

Generally, it is more economical to repair parts thanto buy new parts. However, purchase of new parts is un-necessary when available serviceable parts exceed foreseeableneeds. When this occurs a decision must be made on whetherit is more cost effective to replace or repair. Certain in-formation must be available to make this decision:

-- The types and quantities of serviceable parts availablefor use.

-- The types and quantities of parts planned for repair.

Once identified, available serviceable parts must bematched against parts scheduled for repair. After identify-ing matched parts, management would be able to determine ifit is more cost effective to replace or repair unserviceableitems. Some factors to be considered .Le:

--Cost of repair.

-- Quantity of replacement assets available.

-- Cost of supplying serviceable assets to the repairline.

-- Cost of returning unserviceable parts to supply ware-houses.

-- Cost of interrupting repair lines.

-- Number of hours needed for other repair work that isnot available.

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-- Number of serviceable parts currently or anticipatedto be in excess and subject to disposal.

After determining the quantities of serviceable partson hand that can be used, the rderly substitution of service-able parts for planned repair work should be scheduled, andthe consequent savings in labcor hours rescheduled for otherneeded repair work. For planned contracc repairs, the cor-tractor should be notified that replacement parts are avail-able, thus avoiding contract repair costs.

IDENTIFICATICN OF REPLACEMENT ITEMS

Available replacement items are identified by the Re-coverable Consumption Item Requirements System (DO 41)--amechanized information gathe ng system used by the materialmanagement activity at each r logistics center to make man-agement decisions. The syste-m rmanages over 138,000 separaterecoverable consumption items, with serviceable and unserv-iceable balances valued at about $7 billion.

Once each quarter the system computes each item's re-quirement over the next 4-1/2 yars and applies serviceableand unserviceable parts on hand against the computed require-ment. If there is a shortage of serviceable parts, the systemidentifies the need for repairing unserviceable parts or pur-chasing new parts. If enough serviceable parts are availableto fulfill item requirements, the system forecasts the avail-able serviceable quantities that can be used as replacementparts instead of repairing like parts removed from higherassemblies during overhaul. For each item, the system com-putes the serviceable quantity not needed for the next 12-month requirement. The 12-month period for current needsis intended to assure that enough parts are available duringthe period to cover the administrative, production, and sup-ply lead times needed to obtain additional serviceable parts.

The computed quantity of parts not needed for the next12 months is called the routed repair replacement quantityand can be used until exhausted to avoid future repairs ofthe item. The DO 41 system, however, does not contain inputinformation on component items of higher assemblies scheduledfor repair. Consequently, the system is not capable ofidentifying and matching available serviceable parts withplanned parts repairs.

For the first quarter of fiscal year 1976, the DO 41system identified about 25,500 items as having serviceablereplacement quantities available for use. In total over

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1.7 million serviceable parts were available, valued at about$618 million. The table below shows replacement items databy air logistics center:

Serviceable Replacement Item DataFirst Qu..ter FY 976

TotalTotal number serviceable

Air logistics of items with quantitycenters a RRRQ (note a) available Total value

San Antonio 6,167 521,519 $124,080,286Oklahoma City 3,522 758,865 119,572,682Warner Robins 6,684 151,347 244,967,647Sacramento 6,143 72,857 70,097,142Ogden 2,957 235,430 59,224,774

Total 25,473 1,740,018 $617,942,531

a/RRRQ--route¢ repair replacement quantity.

While none of the serviceable quantities computed asavailable should be needed in the next 12 months, many alsohave no foreseeable need after 4-1/2 years of requirementshave been satisfied. Inventory quantities beyond the 4-1/2year requirement are categorized as long-supply. The totalvalue of long-supply serviceable assets at June 30, 1975, was$786 million. Parts in long supply may either be retained ininventory to meet contingency requirements or disposed of ifdetermined to be in excess. By using these serviceable partsfor replacement instead of repairing like unserviceable parts,current repair costs are deferred. Where large serviceablequantities are available, repair costs may be deferred indef-initely.

IDENTIFICATION OF ITEMSTO BE REPAIRED

Until January 1976 the Air Force had another informationsystem within the maintenance activities, called the RoutedItem Control System (G004R), which identified items routedfor repair. The maintenance activities defined a routed itemas one which was sent from a primary repair shop to a secondaryshop for repair and then returned to the primary shop for in-stallation on higher assemblies being repaired there. TheRouted Item Control System did not identify component itemsrepaired in the same shop that their next higher assembly wasrepaired in. Since component items frequently were repaired

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in the same shop as their next higher assembly, a substantialnumber of repairs were not identified in the Routed Item Con-trol System.

One of the purposes of the G004R system was to reducemaintenance operating costs and provide for more effectiveutilization of maintenance resources by replacing parts,rather than repairing them, when such serviceable parts inexcess of a 12-month supply were available. The routed re-pair replacement quantities computed in the DO 41 requirementssystem were matched against items scheduled for routed repairand identified in the G004R Routed Item Control System. Whenan item match occurred, the serviceable quantity was identifiedfor use instead of repairing the unserviceable item. Service-able replacement quantities could be used until exhausted(down to a 12-month supply), at which time item repair resumed.Resources saved by using serviceable quantities instead of re-pairing items would be available for work that might otherwisego undone.

In January 1976 the Routed Item Control System was term-inated at the direction of the Air Force Logistics Command.This action eliminated the capability to systematically matchavailable replacement quantities with repair actions. Commandofficials said the system was terminated because it was noteffective. One shortcoming was that the system used nationalstock numbers, whereas maintenance personnel used part numbers.

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CHAPTER 3

SERVICEABLE REPLACEMENT PARTS NOT USED EFFECTIVELY

In some cases the Air Force repaired parts when morethan sufficient quantities of like serviceable parts wereavailable to meet the Air Force's current needs. In manycases the onhand balances of serviceable parts were in along-supply or excess position. By using available service-able replacement parts, the Air Force could save millions ofdollars in repair costs or make available thousands of laborhours for other needed repair work.

We believe the unnecessary repairs resulted because:

-- The Air Force does not have an effective system foridentifying and matching available serviceable partswith parts scheduled for repair.

--Air Force personnel responsible for managing replace-ment parts and repair schedules were not always familiarwith the objectives and procedures for using availableserviceable parts.

-- Adequate management attention has not been devoted todeveloping effective procedures and clearly delineatingresponsibilities for making sure that serviceable re-placement quantities are properly identified and usedin place of repair work.

Unnecessary repairs are a longstanding problem. In ourreport to the Congress, dated July 27, 1964 (B-133019), wereported that the San Antonio center repaired spare partsand components although sufficient serviceable items wereavailable to meet current or long-range needs. The Air ForceAudit Agency in 973, 1974. and 1975 reported that the prob-lem had not been solved. In each instance the Air Force agreedthat unwarranted repairs had taken place, but effective re-medial action has not ensued.

To the contrary, the problem was worsened by the elimina-tion of the maintenance control system used to match avaii-able serviceable parts with planned repair actions on thesame item. Although this system was not complete because itdid not identify all planned repairs, its elimination leftthe Air Force :,ithout a system for matching available serv-iceable parts with any planned repair actions.

6

The shortage of maintenance resources (a shortfall ofabout 3.1 million labor hours valued at $99 million wasexpected) makes it important that available replacementparts (about $618 million of serviceable parts) be usedproperly and unwarranted repairs avoided.

OPPORTUNITIES FOR SAVINGS

We selected for review 379 serviceable parts shown byAir Force requirements determinations on July 1, 1975; to beirn excess of a 12-month supply, and thus available for useas replacement parts.

The Air Force incurred unnecessary repair costs duringfiscal year 1975 by repairing 116 of these items when service-able quantities in excess of 1 year's estimated requirementswere available in the supply system. About 10,000 labor hourscosting about $184,000 were used to repair the 33,660 unitsinvolved.

The potential for future savings was even greater. Weestimate that future use of the available quantities of 199of the 379 replacement items selected by us could save theAir Force about $761,000 in repair costs or make about 41,000labor hours available for other needed repair work. In somecases, available replacement quantities were sufficient topreclude items repair for several years at the 1975 repairlevel.

The remaining 180 selected items either had no recordedrepair in fiscal year 1975 or were repaired at an activity notincluded in the review. Although use of available quantitiesof these items could also avoid future repairs, no savingswere estimated because needed data such as repair actions andrepair costs were unavailable.

The results of the sele-ted items review are summarizedbelow:

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Air Ntmber of Item repair Potential savingslogistics items activity FY 1975 Laborcenters selected No repairs Repairs hours Dollars

San ntonio 188 108 80 28,376 549,765Oklanoma

City 99 60 39 3,577 69,177Warner

Robins 92 12 80 9,008 142,000

Total 379 180 199 40,961 760,942

Potential future savings were derived by multiplyingeach item unit repair cost for 1975 by the quantity of avail-able replacement units. The Air Force uses a standard costsystem; therefore, repairs for the same item generally produceuniform costs. Unit repair costs were computed by multiplyingthe number of standard direct labor hours required to repairone unit of an item times the standard labor hour sales rate.The labor hour sales rate includes a charge for direct labor,labor overhead, other overhead, and general and administrativeexpense. The labor hur rate does not include a charge formaterial. The repair costs cited are only for work accom-plished in the unit's repair and do not include work accom-plished on the next higher assembly, such as disassembly, in-spection, and final assembly.

Estimated savings of $761,000 are for less than 1 percentof the 25,500 items with serviceable quantities available foruse for the first quarter of fiscal year 1976. The estimatedsavings cannot be projected to the universe because the itemswe selected for review were items with high dollar value and/or large amounts of serviceable quantities available for-use,and may not be representative of the remaining items in theuniverse. The estimate shows, however, that significantsavings could be realized.

We know of no realistic method for placing a dollar valueon the total potential savings through avoided repair costsbecause two principal e imating factors, (1) planned repairactions and (2) repair costs,- are not readily available forall items. Also, these factors may vary greatly in the future.For example, recent changes in the national economy, flyinghour programs, and overhaul programs have reduced the numberof repai: actions and increased repair costs and availableserviceable quantities. Repair costs have increased 36 per-cent since 1971.

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The serviceable replacement quantities currently avail-able include many long-supply and excess parts. Their usefor replacement in lieu of repair offers a highly significantpotential tc avoid parts repair costs and would not requirepurchases of replacement stocks. The Air Force does notsummarize the total routed repair replacement quantity valuesby year as it does the long-supply values. However, thegrowth of serviceable long-supply assets from about $393 mil-lion in 1971 to about $786 million in 1975 is indicative ofthe growth in routed repair replacement quantities.

The current shortage of maintenance resources makes itimportant that resources be used properly and unwarrantedrepairs avoided. The Logistics Command estimated that 46million direct labor hours costing $1.2 billion would beneeded by its maintenance activities during fiscal year 1976.Furthermore, in October 1975 it was expected that 3.1 millionneeded labor hours costing $99 million would not be available.The use of routed repair replacement quantities instead ,repairing parts could substantially reduce the number of laborhours needed but not available.

For example, the San Antonio center reported in November1975 that its engine overhaul program lacked 27,627 labor hoursto fulfill its repair requirement for fiscal year 1976. Wefound that about 13,000 labor hours could be made availablein fiscal year 1976 by using available serviceable quantitiesinstead of repairing selected items on the TF-39 and T-56engines. his represents about 48 percent of the re;,ortedlabor hour deficit foi the entire fiscal year 1976 engine over-haul program.

Neither maintenance activities nor commercial contractorswere making extensive use of available serviceable quantitieswhen repairing major components or end items.

For example, during overhaul of TF-39 engines at theSan Antonio maintenance activity in fiscal year 1975, rotorblades were repaired rather than replaced. The repair recordsshow that about 2,000 direct labor hours were used to repairan estimated 6,600 TF-39 rotor blades (National Stock Number2840-00-109-8552PS). At the same time, requirement recordsshowed that sufficient quantities of serviceable rotor bladeswere available to preclude all fiscal year 1975 repairs. Atthe beginning of fiscal year 1976, the requirements recordsshowed that there were 14,687 serviceable rotor blades avail-ble for use. About 10,000 serviceable blades were in long-supply. If repair requirements continued at the fiscal year.975 level, there were enough rotor blades to preclude repairsfor over 2 years with a labor savings of about 4,400 hours.

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In another instance, an estimated 78 waveguide horns(part of an antenna used on the MA-1 weapons control system)were repaired at the Warner Robins maintenance activity dur-ing fiscal year 1975. The waveguide horns (National StockNumber 1270-00-083-7910) were repaired in conjunction withantenna repairs and each horn required 2.2 hours to repair.The requirements record showed that 40 serviceable waveguidehorns were available as alternatives to repairing parts. Ifthe replacement quantity of 40 horns had been used, about88 labor hours could have been saved and redirected to otherwork.

In another instance, an engine overhaul contractor hadnot been notified of serviceable quantities available forparts he might repair during overhaul. The contractor hadoverhaul contracts for the R-4360 and R-2800 engines managedby the San Antonio center and the J57-55 engine managed bythe Oklahoma City center.

For the San Antonio contracts, the requirements recordsshowed the serviceable quantities for 210 items valued atabout $15.9 million were available as alternatives to repair-ing parts. Most of these quantities were in long supply. Wheninformed of this savings opportunity, the San Antonio centeragreed that using available serviceable quantities instead ofrepairing parts could defer repair costs. This center, afteranalyzing overhaul and requirements ata, identified $5.3 mil-lion worth of serviceable parts for use by the contractor asGovernment-furnished materials in lieu of scheduled repairwork. The remaining serviceable parts were not offered to thecontractor because they were not needed to meet programed over-haul requirements. Earlier identification would have enabledthe contractor to also use the remaining $10.6 million ofavailable parts.

For the Oklahoma City contract, the requirements recordsshowed that serviceable quantities of 30 items valued at about$1 million were available as alternatives to repairing parts.Personnel at the Oklaho.aa City center stated that use of avail-able replacements could be included in new contracts, butdecided against any action on the current contract because itwas nearing completion and only a relatively small number ofitems could be used.

WHY REPLACEMENT QUANTITIES ARE NOT USED

The Air Force recognizes the advantage of using availablereplacement quantities rather than repairing items, but hasnot developed effective procedures for identifying all

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replacement opportunities and changing its normal repairpractice to take advantage of these opportunities. The moreimportant underlying problems nvolve identifying repair ac-tions, training personnel, and providing sufficient managementattention.

Incomplete identificationof repair actions

In many cases, maintenance personnel at the centers werenot aware that replacement quantities were available to pre-clude repairs. This happened because the Routed Item ControlSystem did not identify all items being repaired. This systemidentified only those items routed from one shop to another,and not items repaired in the same shop that their next higherassembly was repaired in. During our review, the LgisticsCommand eliminated the Routed Item Control System so that evena partial identification system no longer exists.

The identification problem under the Routed Item ControlSystem occurred because there were two conflicting definitionsof routed items. Air Force Logistics Command Manual 57-3 de-fines job-routed repair as components repaired simultaneouslywith their next higher assembly. Conversely, the maintenancemanual (Air Force Logistics Command Manual 66-I) definesrouted items as those removed from the next higher assemblyand sent to another shop for repair. This definition excludesthose component items repaired simultaneously with the nexthigher assem.ly in the same shop.

Under the Routed Item Control System, the restrictivemaintenance definition limited management visibility of re-pair actions below major assembly level. The T-56 engine, forexample, contains 379 ecoverable items which may be repairedduring overhaul, but only 83 were identified in the RoutedItem Control System as items being repaired. The remaining296 items were not routed and consequently not identifiea inthe routed-item plan. As a result there ws no ready manage-ment visibility of repair of these 296 items nor any opportunityfor the items to be systematically matched with availablereplacement quantities in the DO 41 Recoverable ConsumptionItem Requirements System.

The identification problem is best ilustrated by whathappens when repairs occur in the same shop. For example, afourth stage turbine wheel (National Stock Number 2840-00-400-876RW) and its next hither assembly, a turbine rotor, wererepaired in the same shop as the T-56 engine. Since the tur-bine wheel was not routed to another shop for repair it was

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not identified in the control system; thus, only '-he shoprepairing it knew how often it was repaired. Duzing fiscalyear 1975, the maintenance shop expended 278 labor hours torepair 68 turbine wheels.

At the same time, the item manager responsible for man-aging the serviceable inventory of turbine wheels was report-ing sufficient assets to preclude all repairs. The controlsystem did not match this data with the repair action becausethe shop repair data was not entered into the control system.Thus, management was not aware of the opportunity to saverepair costs of as much as $5,600 and make 278 labor hoursavailable for other work. At the end of the repair period,81 serviceable turbine wheels were reported in long supply.

Although the Routed Item Control System did not identifyall items being repaired, replacement quantities for routeditems were included and being used in some cases to precluderepair. However, since the Logistics Command eliminated thedata available on the limited number of routed items containedin the Routed Item Control System, opportunities to system-atically match available serviceable parts with planned re-pairs, and thus avoid costly repairs of like items, have beenlost.

Personnel not rained well in managementof replacement quantities

Quantities of each item available for use as replacementsin lieu of repairing unserviceable items are identified andreported to item managers through the DO 4i Recoverable Con-sumption Item Requirements System. This data is computed andreported each quarter. Item managers at each center areresponsible for understanding, monitoring, and making properuse of information on the requirement computations and other.eports from the DO 41 system. Item managers, we found, werenot always familiar with the meaning and use of routed repairreplacement quantities.

At the San Antonio Air Logistics Center, only 3 of 30item managers interviewed could explain what routed repairreplacement quantity represented on their requirement compu-tations. At the Warner Robins Air Logistics Center, we askedfour item managers, who managed 38 of the items reviewied, ifthey notified the maintenance activity of the routed repairreplacement quantity's availability. None did. In addition,two told us that they do not know which items within a next-higher assembly are being repaired. Tne other two said thatthey were not aware of any regulation which requires them tonotify maintenance.

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This lack of understanding that the routed repair replace-ment quantity is available for replacement use in lieu ofrepairing the part has caused some item managers to rejectmaintenance requisitions submitted for serviceable parts tureplace items normally repaired. For example, the mainten-ance activity at the San Antonio center requisitioned serv-iceable multiple switch (Nationa' Stock umber 2835-00-101-9870) in May 1975 to t used instead of repairing the switchduring overhaul of a gas turbine engine. The switch was routedfor repair, and was identified by the Routed Item ControlSystem as having a serviceable replacement quantity availableto preclude repair; however, the item manager responsiblefor managing the switch directed that the requisition not befilled since it was normal practice for maintenance to repairthe switch rather than replace it.

At the Warner Robins Air Logistics Center, we interviewed24 maintenance personnel responsible for planning and schedulingworkloads f items reviewed and asked them why the items wererepaired rather than replaced with available serviceable as-sets. Maintenance planners and schedulers said that componentsof higher assemblies were normally repaired unless there werepeculiar problems such as repair parts shortages, condemnedcomponents, or components missing when the higher assemblywas received. One scheduler said that he might replace acomponent part rather than repair it if the component parthad to be routed to another shop for repair. These inter-views, Eve believe, indicated that maintenance personnel wereunaware that Air Force policy requires the use of availableserviceable replacement parts in lieu of repairing like un-serviceable parts.

The most frequent explanation for repairing parts insteadof using available serviceable parts was that maintenance pro-cedures or labor standards provide for repair, not replace-ment, of unserviceable components during overhaul.

Adequate management attentionnot provided

Sufficient management attention has not been devoted todeveloping effective procedures and clearly delineatingreponsibilities or making sure that serviceable replacementquantities are properly identified and used instead of repair-ing parts. Personnel in both maintenance and material man-agement are involved in the repair or replace cecision, butthe responsibilies of these organizations and the personnelinvolved are not well defined. Air Force Logistics CommandManual 57-3 states that available replacement quantities will

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be used to preclude job-routed repairs, but does not assignresponsibility for initiating action. The manual also doesnot contain definitive procedural criteria and instructionson the purpose and use of replacement quantities when therepair or overhaul work is performed by a contractor.

In October 1974, the Air Force Audit Agency reportedthat available replacement quantities were not being used atthe San Antonio center to preclude repair. Center managementultimately agreed there was a problem with information ex-changed between the material management and maintenanceorganizations, but believed it was a systems roblem thatcould not be corrected locally and the prob ; ,-as submittedto the Air Force Logistics Command for resol on. In theinterim, Air Force Audit reported the same problem at othercenters. In an apparent attempt to alleviate the problem,the Logistics Command, in February 1975, directed all centersto use the Routed Item Control System to matc.i repair actionswith available replacement quantities. In May 1975 Air ForceAudit summarized its findings at all centers nd generallyconcluded that the command action was responsive to itsfindings. While command action reemphasized the need to usereplacement quantities, it did not correct the problem ofbeing unable to match available replacement quantities withnonrouted repair actions.

The centers terminated the Routed Item Control Systemat the direction of the Logistics Command in January 1976.This action negated the partial solution provided by the AirForce Logistics Command in February 1975 to Air Force AuditAgency findings.

When questioned by Oklahoma City center personnel abouteliminating the matching capability, the Logistics Commandstaff was not aware of the problem created by the loss ofthe Routed Item Control System.

In discussions with Air Force Logistics Command personnelin March 1976, we wer-- told a new system was being plannedto replace the Routed Item Control System. However, we wereinformed that the new system would not have a program toprovide maintenance activities ith data on aailable replace-ment quantities for all items repaired.

In October 1976, we again discussed this problem withAir Force Logistics Command personnel. They advised us thatthe material management activity would be assigned responsi-bility for developing corrective action, including systemchanges. They agreed with our findings but believed that

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cost effectiveness should be considered in the repair/replacedecision on a case by case basis. While we agree with thecost effectiveness application, the Air Force does not havethe basic information necessary to make individual repair/replace decisions.

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CHAPTER 4

AIR FORCE AUDIT FOUND SIMILAR PROBLEMS

During 1973, 1974, and 1975 the Air Force Audit Agencyissued sx reports on the use of serviceable replacement partsinstead of making repairs. Each report addressed the issueof unserviceable units being repaired when serviceable unitswere available and should have been used. The following, ex-tracted from the audit reports, illustrates the conditionsfound:

-- Aircraft spares were being repaired in the depotmaintenance activity while serviceable quantities ofthe same items, valued at $112,000, were availablefor issue from the depot supply activity.

-- The requirements system identified as of March 31,1974, over $12 million of recoverable, serviceable,long-supply assets applicable to the T-56, TF-39,and J-79 engines. The same items were being re-paired by Air Force maintenance activities duringengine overhaul and component repair.

-- Over $200,000 of serviceable -79 blades were identifiedfor disposal while like blades were undergoing repairby the depot maintenance activity.

--Quantities of assets for 13 of 30 line items reviewedwere repaired at a cost of $61,353 when serviceablelong-supply assets were available and could have beenused to satisfy these requirements.

The reasons identified by Air Force Audit for not usingserviceable replacement parts in lieu of repair were:

-- The Routed Item Control System was not being used asa management tool, maintenance personnel were notfamiliar with the system, and some items were notproperly identified in the system.

-- The unwarranted repair of engine components was causedby a lack of effective procedures to provide for in--terchange of asset information between the materialmanagement and the maintenance activities.

--There was a lack of command emphasis on the value ofthe Routed Item Control System as a management tool.

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Recommendations made to the Logistics Command in thesummary audit report were:

-- Establish procedures to assure interchange andutilization of asset data between repair and supplyfunctions.

--Fully implement the policy of utilizing availableserviceable long-supply assets in depot maintenanceto preclude unnecessary repair.

-- Require the complete and timely file maintenance oflogistics requirement data systems to enhance themanagement of the aircraft spares inventory.

In response to the audit findings and recommendations,the Logistics Command, in February 1975, directed the centersto use the Routed Item Control System. In evaluating audit find-ings and possible solutions, the Logistics Command recognizeddifficulties with the mechanized exchange of data betweenmaterial managers and maintenance managers. The Command dis-cussed possible solutions to the exchange problem but proposedno specific solution when responding to the audit agency. TheAir Force Audit Agency considered command action as responsiveto the recommendations, but deferred final audit evaluationuntil specific solutions to the data exchange problem weredeveloped. As of October 1976 no specific solutions had eendeveloped and, as noted previously, te Routed Item ControlSystem has been terminated.

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CHAPTER 5

CONCLUSIONS, RECOMMENDATIONS, AGENCY COMMENTS,

AND OUR EVALUATIONS

CONCLUSIONS

Although reported by GAO as early as 1964 and by theAir Force Audit Agency in 1973, 1974, and 1975, the Air Forcecontinues to repair units when serviceable units beyond im-mediate or foreseeable needs are available and should be usedto avoid repair costs. Ironically, while the Air Force wascontinuing unwarranted repairs, it was estimating that upto $99 million of fiscal year 1976 repair requirements wouldnot be fulfilled ecause sufficient depot maintenance re-sources were not available.

The Air Force has not and will not make effective useof available serviceable quantities until substantial changesare initiated because:

--The mechanized system does not notify maintenancepersonnel of the quantities available to precluderepairs.

--Air Force personnel are not familiar with the objec-tives and procedures for using routed repair replace-ment quantity assets.

-- Although aware that unneeded repairs are occurringthe Air Force has not instituted management action tomake sure replacement quantities are used to precluuarepairs. Neither material management nor maintenanceactivity officials want to take responsibility forthis action.

We believe that significant avings are possible ifrouted repair replacement quantity assets are effectivelyand efficiently used to preclude repairs. Additionally, themaintenance resources freed could be eliminated or redirectedtowards reducing the backlog of unfilled repair requirements.Inasmuch as over 12 years have elapsed since we first reportedon the problem, it is obvious that the Air Force must takemore vigorous action than it has in the past to bring aboutimprovements.

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RECOMMENDATIONS

We recommend that the Secretary of Defense direct theSecretary of the Air Force to initiate management action to.

-- Establish procedures and systems that (1) will period-ically identify all assets to be repaired at the depotmaintenance level and (2) match these records with thequantity of serviceable replacement parts that can beused to preclude repair.

-- Change regulations to clearly delineate responsibili-ties for assuring the use of serviceable replacementassets to preclude repairs made by maintenance activi-ties and contractors.

--Train material management and maintenance personnelon the system's use and the concept of utilizingavailable serviceable assets rather than repairingunserviceable assets.

AGENCY COMMENTS AND OUR EVALUATIONS

We furnished a preliminary draft of this report to theDepartment of Defense (DOD) for review. Their comments areincluded as appendix I.

DOD stated that the primary problem appeared to be in-adequate procedures and systems to make sure that total assetvisibility is maintained during the depot maintenance processin order to utilize available serviceable assets to precludeunnecessary repairs. According to DOD, the Air Force plansseveral procedural and data system changes which shouldalleviate the deficiencies cited in this report.

These changes include implementation of an interim main-tenance uniform cost accounting system at the Sacramento AirLogistics Center designed to determine comparative costs ofrepairing component subassemblies versus removing and replac-ing subassembliec so that cost effectiveness decisions can bemade. Concurrent with implementation of the interim systemthe practice of routinely repairing subassemblies will bediscontinued. Unserviceable subassemblies will be turnedin to supply activities and erviceable assets will be issuedto maintenance activities through normal supply channels.

The Air Force believes that turning unserviceable sub-assemblies in to supply will provide consumption data ondepot repairs which are not currently available to the DO 41

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Recoverable Consumption Item Requirements System. This willallow the DO 41 system to compute repair requirements fordepot-generated subassemblies.

The above changes, properly carried out, should reduceunwarranted repairs. This will be particularly true afterprocedures are debugged during the pilot program at Sacramentoand expanded to cover depot maintenance activities at theo:her air logistics centers and at contractors.

DOD did not specifically state whether it planned toapply the new procedures to contractor work; we believe theprocedures can and should be. Even recognizing that the Govern-ment does not have the same flexibility with contractors thatit has inhouse, and that contractor work involves additionaleconomic considerations (such as tasks already negotiatedin ongoing contracts). potential savings from the new pro-cedures makes their application to contractors desirable.

DOD did not comment on our recommendations for delineat-ing responsibilities and training personnel. Our subsequentreview of the new procedures makes it clear that the materialmanagement activity has primary responsibility. These proce-dures should give them the asset visibility necessary to fullycarry out that responsibility.

We believe, however, that to maximize benefits from thenew procedures, both material management and maintenance per-sonnel must be made aware of their responsibilities and mustbe adequately trained in the new procedures. In view of thelongstanding nature of the problem cited in this report itis obvious that continued management attention is needed tomake sure available serviceable assets are used to precluderepairs.

DOD stated that it and the Air Force would make followupreviews of the effectiveness of the changes in the managementof reparable subassemblies. We believe that delineation ofresponsibilities and adequacy of training also should becovered in the reviews. We plan to monitor the effectivenessof the new procedures.

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CHAPTER 6

SCOPE OF REVIEW

We evaluated the procedures and practices followed inmaking the replace or repair decisions. We also reviewedselected items to determine if available replacement quanti-ties were being used to save maintenance resources. Fromcomputer records kept t the five air logistics centers, weprepared a special computer listing of items having a routedrepair replacement quantity as of June 30, 1975. These re-placement quantities were available for use in lieu of re-pairing like items during the first quarter of fiscal year1976 (July 1, 1975, to Sept. 30, 1975). The listing, bynational stock number, showed the quantity and value of re-placement parts and identified the next higher assembly and/or weapon system which used the parts.

From this listing we selected for review items relatingto three engines undergoing overhaul by contractors. We alsoselected for review items both managed and repaired inhouseat three air logistics centers. Items managed and repairedat San Antonio, Texas; Oklahoma City, Oklahoma; and WarnerRobins, Georgia; were chosen. Selected items' relationshipto higher assemblies and/or weapon systems is set out in thefollowing table:

Air logistics centersWeapon systems/ San Oklahoma Warnerhigher assemblies Antonio City Robins Total

C-5A 35 - - 35B-52 - 34 - 34TF-39 engine 38 - - 38T-56 engine 15 - - 15TF-30-3 engine - 35 - 35TF-33-3 engine - 30 - 30Automatic test

equip. 56 - - 56MISTR items

(note a) - 92 92Misc. compon-

ente 44 - - 44

Total 188 99 92 379

a/Management of Items Subject to Repairs (MISTR)--Representscomponent parts of various systems that are repaired inde-pendently of the using system and returned to using organiza-tions or stock.

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Our review was conducted at headquarters, Air ForceLogistics Command, Wright-Patterson Air Force Base, Dayton,Ohio; and three of its five air logistics centers locatedin San Antonio, Texas; Warner Robins, Georgia; and OklahomaCity, Oklahoma. We examined pertinent regulations, manuals,records, and suppozting documentation pertaining to themanagement and repair of selected items. Information wasalso obtained through discussions with various operatingpersonnel and responsible officials.

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APPENDIX I APPENDIX I

AMlSTANT UEITARY OF _iliWArnaN "N, & mM

SR 4 & R W7

Mr. F. J. Sha erDirector, Logistics and

Couunicat.one DivisionGeneral Accmunting OfficeWashington, D. C. 0548

Dear Mr. Shafer:

This is in reply to your letter to the Secretary of Defense regardingyour Draft Report dated Decembar 9, 1976, subject: "Air Force Continuesto Repair Patts When Serviceable Parts Are Available," OSD Case #4489,CAO code number 943016.

The findings contained in your Draft Report indicate that the Air Forcecould achieve substantial savings in repair costs or that thousandsif labor anhours could be reallocated to needed repair requirements.As your Draft Report states, the proble, of unwarranted repairs has beenpreviously discussed in several General Accounting Office and Air ForceAudit Agency reports. The primary problem appears to be that the AirForce has not had adequate procedures and ystems to insure that sufficienttotal asset visibility is maintained during the depot maintenance processin order to utilize available serviceable assets to preclude unnecessaryrepairs. The Air Force plans to iplenment several procedural and datasystem changes which should alleviate the deficiencies cited in yourDraft Report. A description of the specific changes being implementedby the Air Frce is enclosed herewith.

Follow-up reviews of the effectiveness of the aforementioned changesin the anagement of reparable subaeeeblies will be made by the AirForce and this Office.

The opportunity to conment on this report in draft form is appreciated.

Sincerely,

Enclosure g 1As Stated .LF . " IE

Acting .. t ...-' of Defense . 4o.JTDo(lanstlaiaAns and Loglstico)

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APPENDIX I APPENDIX I

PItCPOSED AIR FORCE CORRECTIVE ACTIONS RELATING TO GAO DRAFTRLRl. "AIR FORCE CONTINUES TO REPAIR PARTS WHEN SERVICEABLE

PARTS ARE AVAILABLE" (OSD CASE 4489)

An interim maintenance Uniform Cost Accounting system is scheduled forfull implementation at the Sacramento Air Logistics Center onApril 1, 1977. It is being designed to determine comparative costs of"job-routing" versus "remove and replace" so thit cost effectivenessdecisions can be made.* Concurrent with the implementation of theinterim Cost Accounting System, the practice of routine job routing ofinvestment item subassemblies will be discontinued. Unserviceablesubessemblies will be turned into supply and serviceable assets will beissued to maintenance through normal supply channels. This new procedureshould improve asset visibility and help eliminate unwarranted repairs.An exception will be made for those subassemb]ies in short supply whichwill automatically be inducted into existing hanagement of Items Subjectto Repair (MISTR) job order requirements.

Turning unserviceable sbassemblies in t supply instead of job-routingthem will provide consumption data on dpot repairs which are not currentlyavailable to the D041 computational sysLem. This will allow the D041system to compute repair requirements for depot generated subassembliesas is presently done for field generated turn-ins. Repair requirementsfor those depot generated subassemblies, job-routed at present, will beseparately negotiated with an organic or contract maintenance activityusing the MISTR system. The MISTR system reassesses quantities ofserviceable assets available every two weeks. If serviceable assetsexceed 90 days supply, requirements may be renegotiated downvard.

*Note: Job Routing refers to the procedure whereby component subassembliesare concurrently repaired at the same maintenance facility that isoverhauling the end item.

Enclosure

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APPENDIX II APPENDIX II

PRINCIPAL OFFICIALS

RESPONSIBILE FOR ADMINISTERING

ACTIVITIES DISCUSSED IN THIS REPORT

Tenure of officeFrom, To

DEPARTMENT OF DEFENSE

SECRETARY OF DEFENSE:Harold Brown Jan. 1977 PresentDonald H. Rumsfeld Nov. 1975 Jan. 1977James R. Schlesinger July 1973 Nov. 1975

DEPUTY SECRETARY OF DEFENSE:Charles W. Duncan, Jr. Jan. 1977 PresentWilliam P. Clements, Jr. Jan. 1973 Jan. 1977

ASSISTANT SECRETARY OF DEFENSE(MANPOWER, RESERVE AFFAIRS, ANDLOGISTICS):

John P. White May 1977 PresentDale R. Babione (acting) Jan. 1977 May 1977Frank A. Shrontz Feb. 1976 Jan. 1977John J. Bennett (acting) Mar. 1975 Feb. 1976Arthur I. Mendolia June 1973 Mar. 1975

DEPARTMENT OF THE AIR FORCE

SECRETARY OF THE AIR FORCE:John Stetson Apr. 1977 PresentThomas C Reed Jan. 1976 Apr. 1977James W. Plummer (acting) Nov. 1975 Jan. 1976John L. McLucas July 1373 Nov. 1975

UNDER SECRETARY OF THE AIR FORCE:John Martin (acting) Nov. 1976 PresentJames W. Plummer Dec. 1973 Nov. 1976

25

APPENDIX II APPENDIX II

Tenure of officeFrom To

ASSISTANT SECk Y OF THE AIRFORCE (INSTALL-.IONS ANDLOGISrICS':

Richard J. Keegan (acting) Feb. 1977 PresentJ. Gordon Knapp Mar. 1976 Jan. 1977Frank A. Shrontz Oct. 1973 Feb. 1976

26