Navy Aviation Spare Parts Billing Transaction Issues Page: 1 of 7
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AGAO
Accountability * Integrity * Reliability
United States General Accounting Office
Washington, DC 20548
January 11, 2001
The Honorable Richard Danzig
The Secretary of the Navy
Subject: Navy Aviation Spare Parts Billing Transaction Issues
Dear Mr. Secretary:
Earlier this year, we conducted a review of price trends for Navy aviation spare parts.'
During the course of the review, we compared the prices customers were billed to the prices
they should have paid according to the parts catalog maintained by the Naval Inventory
Control Point-Philadelphia. In doing so, we identified thousands of billing transactions
where the customers' price did not match the catalog price. Moreover, we found thousands
of additional transactions in which key information used to generate accurate customer bills
was missing. These findings suggest that the Navy may be incorrectly reporting its sales of
aviation spare parts. This letter discusses our findings in greater detail and provides
suggested actions the Navy can take to improve the accuracy of its billings.
Background
The Naval Inventory Control Point uses billing transaction information to report its annual
sales of spare parts.2 These sales are made either at the net or the standard price. Customers
pay the net price when they turn in a broken item to be repaired; otherwise they pay the
higher standard price. In fiscal year 1999, the average net price was $7,390 and the average
standard price was $29,888.
When customers order parts, they supply an advice code as part of the requisition process.
The Inventory Control Point uses this code to determine whether customers will be billed at
the net or standard price. The most common advice code, "5G," for example, indicates that
the customer will turn in a broken part, in which case a bill is generated at the net price. Over
90 percent of the time, customers turn in a broken part and pay the net price.
We obtained from the Naval Inventory Control Point billing transactions for aviation spare
parts covering fiscal years 1994 through 1999. These transactions, extracted from the Navy's
Billing History File, were segregated into two categories - net and standard sales - for each
1 Defense Acquisitions: Prices of Navy Aviation Spare Parts Have Increased (GAO-01-23, Nov. 6, 2000).
2 A transaction can be a bill or a bill reversal. The latter is used to correct billing errors.GAO-01-178R Navy Billing Issues
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United States. General Accounting Office. Navy Aviation Spare Parts Billing Transaction Issues, text, January 11, 2001; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302239/m1/1/: accessed April 23, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.