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NSIAD-85-55 1 (1985-03-22)

handle is hein.gao/gaobabnpq0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 NATIONAL SECURITY AND MARCH 22,1985 INTERNATIONAL AFFAIRS DIVISION B-217670 The Honorable John F. Lehman 126496 The Secretary of the Navy Dear Mr. Secretary: Subject: The Navy Can Increase Cancellations Of Procurements For Unneeded Material (GAO/NSIAD-85-55) Our review of the Navy's procedures and practices for canceling procurements of unneeded material showed that cancellations can be increased, thereby reducing unnecessary procurement and inventory investment costs. Our review of can- cellations during May 1983, the most current month available at the start of our review, showed that potentially excess procure- ments identified by the inventory control points totaled $293 million. Our tests of possible termination actions for that month showed that less than one percent was actually canceled. Although we are not suggesting that all of the potentially excess procurements should be canceled, we believe cancellations can be much higher. The following are the principal reasons cancellations are not higher. --The inventory control points have established high dollar review thresholds. --The inventory control points apply protection levels to provide an added buffer against running out of stock. --Inventory managers do not always act on cancellation notices in a timely manner. --Management and supervisory attention over the cancellation process is limited. PROCEDURES FOR IDENTIFYING AND CANCELING EXCESS MATERIAL * The two Navy inventory control points--Aviation Supply Office (ASO) and Ships Parts Control Center (SPCC)--use the (943580)

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