Defense Inventory:

Actions Needed to Evaluate Supply Purchase Options for Facilities Maintenance

NSIAD-00-194: Published: Aug 23, 2000. Publicly Released: Aug 23, 2000.

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GAO provided information on the Department of Defense's (DOD) efforts to implement the maintenance, repair, and operations prime vendor program, focusing on: (1) how much the program is being used and how selected installations are using the program; and (2) whether DOD has a mechanism for evaluating the program's effectiveness relative to other procurement alternatives and for identifying and addressing implementation obstacles.

GAO noted that: (1) DOD has begun implementing the Defense Logistics Agency's (DLA) maintenance, repair, and operations prime vendor program, but in fiscal year (FY) 1999, it covered only a small portion of business operations; (2) DLA has awarded prime vendor contracts to support military installations nationwide and at some overseas locations, and over 100 customers placed orders with these vendors in FY 1999; (3) these orders represented about $59 million, or less than 10 percent of the estimated $670 million DOD spent on facility maintenance supplies during that year; (4) use of the program varied widely among the installations; (5) at 7 of the 11 installations GAO examined, base personnel ordered, on average, about 55 percent of facilities maintenance supplies from the prime vendor during FY 1999; (6) of the other four installations, three did not use the program in FY 1999 and one could not quantify the extent to which the prime vendor was used; (7) DOD does not have a mechanism to evaluate the extent to which the prime vendor program has been used to streamline logistics operations or increase overall logistics system effectiveness; (8) in addition, DOD has not determined how the program should be used in conjunction with the other procurement methods to provide installations with the most efficient and effective supply system; (9) furthermore, DLA and the military departments have encountered significant issues while implementing the program that should be addressed for the program to operate as intended; (10) for example, at some installations, ineffective working relationships among DLA, the prime vendors, and the installations have limited the program's use; and (11) another issue raised by installation officials was that the prime vendors' prices for facilities maintenance supplies were often higher than the price the installation would pay if the items were purchased directly from a local merchant.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In responding to this recommendation, the Defense Logistics Agency has indicated that its primary program evaluation method is through baseline studies performed prior to implementing the facilities maintenance prime vendor program at military installations. Additionally, DLA states that periodic assessment of program metrics and in-process program reviews are used to evaluate contractor performance. However, GAO previously noted in the report that these efforts, which were already in place at the time of GAO's review, do not provide adequate management information for the Department to evaluate the prime vendor program's effectiveness or determine how the program should be used in conjunction with other procurement programs. DLA also stated that implementation obstacles have been identified, and, to overcome these obstacles, marketing efforts have been designed to build customer confidence in the program. As part of the marketing effort, in December 2000, DLA provided a briefing document on the facilities maintenance prime vendor program to Logistics Reform Senior Steering Group members. However, GAO has no indication of the degree to which this group has taken steps to overcome the identified implementation obstacles. No further action has been taken on this recommendation.

    Recommendation: To assist military installations in choosing the most efficient and effective methods of obtaining facilities maintenance supplies, the Secretary of Defense should direct the Director, Defense Logistics Agency, and the secretary of each military department to undertake a cooperative effort to determine how the prime vendor program best fits within DOD's operations in conjunction with other procurement methods, particularly the government purchase card. This effort should include developing a mechanism to monitor and measure the cost and benefits of using the facilities maintenance prime vendor program when compared to other procurement methods and to identify implementation obstacles as they are encountered at each military installation.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: At time of the last update, September 2002, DLA stated that due to lack of interest by the Military Departments the analysis model had not been completed as expected. DLA planned to work with a contractor to develop an analysis model and provide the model to the Military Departments to use. DLA's expected completion date was November 2002. In March 2003, DLA stated that development of a model to compare the Maintenance, Repair, and Operations program with other procure methods was not considered feasible. The response from the military services regarding their potential use of such a model was limited and the costs to develop the model were prohibitive (in excess of $300,000). Consequently, DLA does not intend to take further action and considered this recommendation closed.

    Recommendation: To assist military installations in choosing the most efficient and effective methods of obtaining facilities maintenance supplies, the Secretary of Defense should direct the Director, Defense Logistics Agency, and the secretary of each military department to undertake a cooperative effort to determine how the prime vendor program best fits within DOD's operations in conjunction with other procurement methods, particularly the government purchase card. This effort should include establishing an analysis model that considers the estimated total cost, product quality, and customer satisfaction and that installation commanders can use to determine the appropriate mix of prime vendor, purchase card, and other procurement methods for procuring facilities maintenance supplies at each.

    Agency Affected: Department of Defense

 

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