Accurate and Complete Subcontract Data Needed To Assess International Agreements on Defense Procurement

NSIAD-85-30: Published: Dec 13, 1984. Publicly Released: Dec 13, 1984.

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In response to a congressional request, GAO reported on improvements needed in the Department of Defense's (DOD) subcontract-level reporting system, a data collection system which requires prime contractors and subcontractors to report foreign-source purchases valued at more than $10,000.

The DOD international acquisitions staff has reported that, at present, one person works on the system as a collateral duty, and at least one full-time person is needed to properly operate the system. Furthermore, the use of computers would reduce the time needed to compile the information and the potential for error. GAO found that: (1) efforts to encourage compliance with the reporting system have not been fully successful; (2) because contractors have not submitted required reports, the validity of the data developed by the system may have been lessened; (3) the international acquisitions staff has not instituted a method for assessing compliance with the system; (4) the system's method for indicating whether a procurement is domestic or foreign-source can result in incomplete information; (5) by excluding contracts for commercial items, the reporting system overstates the U.S. trade surplus because it collects no information on a significant and growing category of procurements; and (6) many firms are not using the reporting form required by the system but are supplying the information through letters.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD assigned this responsibility to one staff person as a collateral duty. This individual initiated action on implementing two of the remaining recommendations and automated the data collection and analysis process.

    Recommendation: The Secretary of Defense should make available the required personnel to maintain and operate the subcontract-level reporting system consistent with DOD overall staffing needs and priorities.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD will not initiate a study to assess compliance until after completion of changes to the DOD FAR supplement. Staff intend to compare firms reporting under the subcontract system with those shown to have large contracts under the DD-350 system. Where a firm receiving a large contract has not reported under the subcontract system, DOD will contact it regarding the reporting requirements.

    Recommendation: The Secretary of Defense should revise the DOD supplement to the Federal Acquisition Regulation (FAR) and, when necessary, Form DD-2139 to institute a method for assessing compliance with the subcontract-level reporting system, such as a negative reporting requirement.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD revised the reporting regulations and the form to reflect this recommendation. The new form and regulations would require prime contractors to use country-of-origin to indicate foreign-source procurements.

    Recommendation: The Secretary of Defense should revise the DOD supplement to FAR and, when necessary, Form DD-2139 to require that the subcontract-level reporting system use country of origin rather than principal place of performance to indicate foreign-source procurements.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD has revised the reporting regulations and the form to reflect this recommendation. The new form and regulations would require prime contractors receiving contracts for commercial items to report on subcontracts meeting the threshold.

    Recommendation: The Secretary of Defense should revise the DOD supplement to FAR and, when necessary, Form DD-2139 to require that contractors receiving contracts for commercial items report on subcontracts meeting the value threshold for reporting, except procurements of ores, natural gas, utilities, petroleum products and crudes, timber, and subsistence items.

    Agency Affected: Department of Defense

 

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