Contract Management: The Air Force Should Improve How It Purchases AWACS Spare Parts
GAO-05-169
Published: Feb 15, 2005. Publicly Released: Feb 15, 2005.
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Highlights
Over the past several years, the Air Force has negotiated and awarded more than $23 million in contracts to the Boeing Corporation for the purchase of certain spare parts for its Airborne Warning and Control System (AWACS) aircraft. Since they first became operational in March 1977, AWACS aircraft have provided U.S. and allied defense forces with the ability to detect, identify, and track airborne threats. In March 2003, GAO received allegations that the Air Force was overpaying Boeing for AWACS spare parts. This report provides the findings of GAO's review into these allegations. Specifically, GAO identified spare parts price increases and determined whether the Air Force obtained and evaluated sufficient information to ensure the prices were fair and reasonable. GAO also determined the extent to which competition was used to purchase the spare parts.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve purchasing of AWACS spare parts, the Secretary of Defense should direct the Secretary of the Air Force to ensure that contracting officers obtain and evaluate available information, including analyses provided by DCAA and DCMA, and other data needed to negotiate fair and reasonable prices. |
Closed – Implemented
In March 2005, the Director, Defense Procurement and Acquisition Policy (Acquisition, Technology, and Logistics), OSD, issued a memorandum to the Deputy Assistant Secretary for Contracting (SAF/AQ) that concurred with the recommendation and directed that contracting officers be reminded of the pricing requirements. In April 2005, the Deputy Assistant Secretary for Contracting issued a memorandum to all Air Force major commands, field operating activities, and direct reporting units to emphasize the requirement to obtain and evaluate information to support determination of fair and reasonable prices for all negotiated acquisitions. The memorandum provided the types of information needed to support proposed prices as well as guidance on specific issues such as acquiring commercial goods and services.
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| Department of Defense | To improve purchasing of AWACS spare parts, the Secretary of Defense should direct the Secretary of the Air Force to develop a strategy that promotes competition, where practicable, in the purchase of AWACS spare parts. |
Closed – Implemented
In March 2005, the Director, Defense Procurement and Acquisition Policy (Acquisition, Technology, and Logistics), OSD, issued a memorandum to the Deputy Assistant Secretary for Contracting (SAF/AQ) that concurred with the recommendation and directed development of a strategy that promotes competition, including the development of alternate sources, in the purchase of AWACS spare parts. In April 2005, the Deputy Assistant Secretary for Contracting developed a strategy to promote competition, where practicable, in the purchase of AWACS spare parts. For example, the Air Force has initiated the acquisition of engineering services to accelerate the availability of complete technical data to support full and open competition. Also, the Air Force will review drawings, and challenge proprietary markings where necessary, to ensure the maximum opportunity for competition. In addition, the Air Force said it is committed to increasing competitive opportunities for follow-on spare parts when a business analysis supports such an approach and competition for future spares will be fully addressed in acquisition planning.
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| Department of Defense | To improve purchasing of AWACS spare parts, the Secretary of Defense should direct the Secretary of the Air Force to clarify the Air Force's access to AWACS drawings and technical data including the Air Force's and Boeing's rights to the data. |
Closed – Implemented
In March 2005, the Director, Defense Procurement and Acquisition Policy (Acquisition, Technology, and Logistics), OSD, issued a memorandum to the Deputy Assistant Secretary for Contracting (SAF/AQ) that concurred with the recommendation and directed a detailed clarification explaining the Air Force's access to AWACS drawings and technical data. In response, in April 2005, the Deputy Assistant Secretary for Contracting provided clarification concerning the Air Force's access rights. In general, the access rights vary depending on whether or not the parts are unique to the AWACS E-3 aircraft. On AWACS-unique parts, government engineers assert that the government is entitled to unlimited data rights, but Boeing claims the data as intellectual property and proprietary. The Deputy Assistant Secretary for Contracting stated that issues regarding data rights will be resolved through the process prescribe in the Defense Federal Acquisition Regulation Supplement (DFARS 227).
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Topics
Air Force procurementAircraft componentsCompetitive procurementEquipment contractsOverpaymentsPrices and pricingSpare partsU.S. Air ForceMilitary forcesAircraft acquisition program