Summary: In response to congressional requests, GAO provided: (1) an overview of the problems surrounding replenishment spare parts procurement; and (2) an update of the status of some of the Department of Defense's (DOD) corrective actions.
Before DOD initiated corrective action in 1983, it was paying unnecessarily high prices for spare parts because of inadequate price analysis on procurements with severe price growth. DOD may encounter problems in designing and implementing initiatives that will correct the problem, be cost-effective, and provide a permanent solution. The Army, Navy, Air Force, and Defense Logistics Agency (DLA) now have programs consisting of a large number of costly and wide-ranging initiatives which address: (1) spare parts pricing; (2) the requirements determination process; (3) funding; (4) technical data rights; and (5) personnel. GAO found that: (1) progress in carrying out the initiatives varies among the services and DLA; (2) DOD is making progress and applying the resources that Congress authorized to address the problem; and (3) it is too soon to make an overall assessment. GAO also found that the procurement activities it visited had instituted corrective actions such as: (1) requiring ascending levels of approval for procurement actions in cases where price increases are over 10 percent within 12 months; (2) providing video tapes of spare parts being procured so buyers and contracting officers can see what they are buying; (3) identifying repetitive sole-source procurements to determine if the parts can be procured competitively; (4) developing a method for forecasting procurement quantities over longer time periods; and (5) challenging contractors' proprietary rights claims.
