Summary: GAO reviewed the Department of Defense's (DOD) administration of its warranty program for 48 weapons system contracts, focusing on the extent to which the military services: (1) had effective warranty administration systems; and (2) performed DOD- and service-required cost-effectiveness analyses.
GAO found that: (1) DOD delegated responsibility for warranty administration to the military services, which have not fully established effective warranty administration and evaluation systems; (2) DOD did not actively oversee the services' progress in establishing effective warranty administration systems, and functioned in a reactive mode to deal with issues raised by audit groups and other interested organizations; (3) the Navy issued several general instructions and regulations for warranty administration, but did not provide detailed implementing directives, define roles and responsibilities, or establish overall procedures and controls; (4) the Air Force issued June 1988 guidance defining administrative procedures and responsibilities and estimated that it would implement an automated warranty tracking and management system by November 1991; (5) the Army was experiencing difficulties in implementing its defined warranty administration responsibilities and procedures; (6) the services' procurement activities either did not perform the required cost-effectiveness analyses or performed analyses that did not adequately support conclusions that warranties were cost-effective, resulting in the activities not considering waivers for warranties that were not cost-effective; and (7) the procurement activities did not perform post-warranty evaluations to determine the warranties' benefits, and lacked the information necessary to ensure that warranties were cost-effectively accomplishing their purposes.
