Department of the Navy: Breakdown of In-Transit Inventory Process Leaves It Vulnerable to Fraud
Abstract
NAVSUP administers the Navy supply system and provides in-transit inventory management policies and procedures. NAVSUP, through its NAVICP, initiates purchases and directs inventory movement for its customers. Such inventory includes classified and sensitive items, such as aircraft guided-missile launchers, military night-vision devices, and communications equipment. Until the inventory reaches its intended destination and is reported as received, NAVICP refers to it as in transit. The recipient of the inventory is responsible for notifying NAVICP that it has been received. Such notification is an internal control designed to account for all in-transit assets. If within 45 days of shipment NAVICP has not been notified that a shipment has arrived, it is required to follow up with the intended recipient. The rationale behind this procedure is that until receipt of the inventory is confirmed, the exact status of the shipment is uncertain and therefore vulnerable to fraud, waste, and abuse. Navy policy stipulates that delinquent shipments should be written off as inventory losses if their receipts remain unconfirmed after 6 or ii months, depending on their value. The Navy reported that between October 1995 and September 1998, it wrote off, as lost in transit, inventory valued at over $3 billion. Implementing inventory control is a shared responsibility of NAVICP and shipping and receiving facilities, which include the Defense Logistics Agency and Navy-managed facilities and repair facilities.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 01, 2000
- Accession Number
- ADA375345
Entities
Organizations
- United States Government Accountability Office