Consumable Item Transfer, Phase 2, Cash Imbalance Issue
Abstract
We are providing this report for your information and use. The Deputy Secretary of Defense directed the transfer of the management of consumable items to the Defense Logistics Agency (DLA) in July 1990. The transfer was separated into two phases. The consumable item transfer (CIT), Phase I, completed in November 1995, included routine, less complex spare parts. CIT, phase II, began in January 1996. It includes items classified as design unstable, have unique end item and critical applications, or require intensive management. In phase II, approximately 148,000 items are scheduled to be transferred by October 1997. However, the Military Departments have threatened to stop the phase II transfer unless DLA agrees to compensate the Military Departments' Supply Management business areas of their Defense Business Operations Fund (DBOF) $540.5 million for the estimated lost sales revenue from phase II items. As a result of the Military Departments' concern over lost revenues from CIT, phase II, the Under Secretary of Defense (Comptroller), Deputy Comptroller (Program and Budget), issued Program Budget Decision No. 425, which showed the potential cash impacts, estimated by the Military Departments, for their Supply Management business areas of the DBOF to be $146.4 million for FY 1996 and $394.1 million for FY 1997. Because the Military Departments' estimates appeared high and varied significantly among the Military Departments, the Deputy Comptroller requested the Inspector General, DoD, to audit the cash impact, the causes for the impact, and the estimated amounts by fiscal year on the Military Departments' Supply Management business areas of the DBOF that may have been caused by CIT, phase II.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 05, 1997
- Accession Number
- ADA369490
Entities
Organizations
- Office of the Inspector General, U.S. Department of Defense