Commercial Practices: Opportunities Exist to Reduce Aircraft Engine Support Costs: Nsiad-91-240

Pursuant to a congressional request, GAO compared Department of Defense (DOD) logistics operations with similar commercial logistics practices, focusing on: (1) the Air Force's inventory and maintenance practices for the F-108 engine compared with those used by commercial airlines; and (2) commercial practices the Air Force could adopt to reduce its logistics costs for the F-108. GAO found that: (1) the Air Force bought millions of dollars of excess engines and spare parts for the F-108 engine, since it underestimated engine reliability, bought engines earlier than necessary to compensate for unforeseen problems, and failed to adjust engine purchases to match the slowed modification program; (2) commercial airlines estimate their requirements to more closely reflect actual experience and rely more heavily on the manufacturer for delivery of parts when needed; (3) commercial airlines kept inventory levels and costs for aircraft engines and parts low by purchasing whole engines for parts, relying on the manufacturer's parts distribution center, and selling excess parts on the secondary market; (4) since the Air Force decided to acquire its own maintenance capability for the F-108 engine due to the high priority of the aircraft's mission and the anticipated high maintenance during wartime instead of using preexisting commercial maintenance facilities, it purchased too much support equipment and prematurely activated F-108 maintenance facilities; (5) to reduce excess quantities of F-108 engines, the Air Force reduced requirements for the F-108 engine and some planned purchases; and (6) since submitting a $325-million budget request for KC-135 aircraft modification, the Air Force accelerated its installation schedule for the modification program and planned to use prior years' funding for other needs.