Value Engineering Should Be Improved as Part of the Defense Department's Approach to Reducing Acquisition Cost

AFMD-83-78: Published: Sep 27, 1983. Publicly Released: Sep 27, 1983.

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In response to a congressional request, GAO provided an update to a prior report to determine how the Department of Defense (DOD) has improved the contractor component of its value engineering program.

GAO found that DOD recently increased management attention to value engineering. In fiscal year (FY) 1982, through Defense contractor activity under the program, DOD reported savings of almost $145 million. Despite this increase, DOD was still more than $300 million short of its FY 1982 savings goal, and most major weapon systems did not report any value engineering savings. GAO found that the Army and the Air Force have improved their program guidance, increased value engineering training, sponsored conferences for contractors, and pursued other alternatives for encouraging contractor involvement. However, no system exists within DOD to ensure that value engineering activity is sufficiently monitored at a high level. GAO found that the Navy has not established value engineering savings goals at the command or field activity level, issued sufficient program guidance, or provided sufficient training. The Navy has achieved the lowest level of results both in reported savings and in the number of major weapon systems with active value engineering programs because of the Navy's poor performance under the contractor component of the value engineering program. Finally, GAO found that some contractors or subcontractors do not understand the value engineering program, or they do not believe that the change proposals they submit will receive fair and expeditious treatment.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should take management action on the contractor component of the value engineering program by increasing high level visibility and support for the program at the DOD level and within the military services by: (1) integrating value engineering information into appropriate management information systems; and (2) ensuring that value engineering achievements by DOD personnel are appropriately recognized.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should take management action on the contractor component of the value engineering program by encouraging greater defense contractor and subcontractor participation by ensuring their awareness of, and confidence in, the DOD value engineering program through increased use of correspondence, conferences, and training opportunities.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should take management action on the contractor component of the value engineering program by requiring the Secretary of the Navy to develop an action plan to improve the contractor component of the Navy value engineering program. The plan should, at a minimum, address the need for value engineering change proposal savings goals, improved program guidance, more value engineering training, additional full-time value engineering personnel, and other specific actions to improve the receptivity of Navy personnel to value engineering change proposals submitted by defense contractors.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should have the existing reporting system revised to require that savings be reported at the time actual contract price reductions are made, rather than on the basis of estimates made when value engineering change proposals are approved.

    Agency Affected: Department of Defense

 

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