Defense Acquisitions:

Price Trends for Defense Logistics Agency's Weapon System Parts

GAO-01-22: Published: Nov 3, 2000. Publicly Released: Nov 3, 2000.

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Some military commands are raising concerns about price increases for weapon system parts. The Defense Logistics Agency (DLA) provides these parts and related services to the military, Department of Defense agencies, and other government entities. GAO found that the majority of DLA's weapon system spare parts experienced a relatively low annual price change--less than 5 percent--from 1989 through 1998. However, the prices for some parts are increasing. Most of the extreme price increases are due to inaccurate price estimates, outdated prices, or changes in quantities purchased. This could affect some military units' ability to buy needed spare parts.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD established a working group with membership representing the Office of the Secretary of Defense, military departments, and the Defense Logistics Agency. The working group has prepared a report that addresses the recommendation.

    Recommendation: The Secretary of Defense should determine why initial provisioning price estimates differ significantly from the price the DLA pays upon procuring the item and how to include more accurate initial provisioning estimates in DOD's pricing catalog.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD established a working group with membership representing the Office of the Secretary of Defense, military departments, and the Defense Logistics Agency. The working group has prepared a report that addresses the recommendation.

    Recommendation: The Secretary of Defense should determine a cost-effective method of adjusting catalog prices to account for inflation for items that DLA has not procured in many years.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD established a working group with membership representing the Office of the Secretary of Defense, military departments, and the Defense Logistics Agency. The working group has prepared a report that addresses the recommendation.

    Recommendation: The Secretary of Defense should determine whether the estimated and outdated prices can be cost-effectively identified as such in the catalog so that customers will be aware that the prices may be incorrect. One way to make these determinations is to establish a task force with membership representing the Office of the Secretary of Defense, the military services, and DLA. The task force could report its findings to the Secretary of Defense.

    Agency Affected: Department of Defense

 

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