GAO Cites Army's Sloppy Record Keeping

By ELISABETH GOODRIDGE, Associated Press Writer

Wed Dec 28, 2:52 PM ET

The Army can't account for $68 million in parts and tools shipped to contractors for repairs in 2004 because it doesn't demand receipts, congressional auditors said Wednesday.

"Although the (Defense Department) policy requires the military services to confirm receipt of all assets shipped to contractors, the Army is not consistently recording shipment receipts in its inventory management systems," the Government Accountability Office said in a 34-page report.

In earlier audits, the GAO found a similar lack of basic accounting oversight with Navy and Air Force parts and tool shipments.

Each year, the Army ships thousands of items, ranging from small tools to turbine engines, to private contractors for repair, alterations or modifications. Looking at data from two inventory control points, the GAO investigators said 15 percent — or $68 million — of the unclassified shipments they analyzed "could not be confirmed as being received."

The GAO said another $481.7 million in unclassified items shipped for repair — about 42 percent — couldn't be reconciled with shipping records. Discrepancies also were found in records for 37 percent, or about $8.1 million shipments, of classified parts and tools.

"These data show that the Army, on the basis of records receipts maintained in its inventory management systems, cannot confirm that a substantial portion of its inventory items shipped to repair contracts were in fact received," the audit said.

The GAO said the head of the Army's Material Command should look at providing contractors advance notice of shipments, require quarterly status reports and better document contractors' receipt of shipments.

Jack Bell, the deputy under secretary of defense for logistics and materiel readiness, agreed with the GAO recommendations in a Nov. 29 letter responding to a draft of the report. The Army had no immediate response Wednesday to the final report.

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The Government Accountability Office: http://www.gao.gov/