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Government Equipment: Defense Should Further Reduce the Amount It Furnishes to Contractors

NSIAD-86-109 Published: Jun 19, 1986. Publicly Released: Jun 19, 1986.
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Highlights

GAO studied the progress the Department of Defense (DOD) has made in implementing its policy of minimizing the amount of government-furnished equipment (GFE) it provides to contractors.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct the Defense Acquisition Regulatory Council to take steps to amend the DOD FAR Supplement to allow the military services and defense agencies to provide general purpose equipment to contractors only under highly unusual circumstances which are clearly defined, adequately controlled, and properly justified.
Closed – Implemented
DOD issued a new policy on government property in the possession of defense contractors on November 25, 1986. The services initiated actions to implement this new policy document.
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct the Army, Navy, and Air Force to develop specific guidelines for program managers and local contracting officials to use in determining when, and under what conditions, the government can provide general purpose equipment to service contractors.
Closed – Implemented
The November 25, 1986, DOD property policy memorandum provides interim guidance and directs the services to provide for more specific guidelines in the future.
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct the three services to: (1) identify general-purpose plant equipment acquired by contractors under other than facilities contracts; and (2) determine and recoup any improper profits or fees that were added as a result of such acquisitions.
Closed – Implemented
The services have long-range plans to implement this recommendation. Final action is expected to be completed between March 1988 for the Air Force, and October 1992 for the Army.
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct the Army and the Navy to undertake comprehensive reviews of their GOCO plants to determine which ones could be sold, and then to consummate such sales.
Closed – Implemented
All of the services initiated actions to identify and dispose of GOCO excess to government ownership needs.
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct the three services and the Defense Logistics Agency to assign a high priority to overseeing property management systems at contractor locations, with special emphasis on: (1) ensuring that equipment acquisitions are authorized by the contract and made through normal government procurement channels whenever possible; (2) making periodic, detailed assessments of what GFE is needed to accomplish defense work; and (3) ensuring that action is taken to declare unneeded equipment excess to agency needs and dispose of it in a timely manner.
Closed – Implemented
The new OSD property policy memo requires service actions to prevent unnecessary property rollovers and ensure review of excess GFE to ensure its timely disposition.
Department of Defense In order to effectively implement the government's policy for minimizing the amount of GFE in the hands of contractors and realize the benefits of placing increased reliance on contractor-owned equipment, the Secretary of Defense should develop a strategy for reducing GFE. As a part of this strategy, the Secretary of Defense should direct OSD to establish an adequately staffed central office for government-furnished property, including GFE. This central office should have, at a minimum, information on the quantity and value of GFE acquired annually by each service, how it is being used, and how much is being discarded. In support of OSD, each service secretary should designate a focal point responsible for the overall management of government-furnished property within the service.
Closed – Implemented
OSD initiated action to obtain and include the recommended information in its report of DOD property in the custody of contractors. The new DOD property policy requires the services to identify focal points and current and projected property administration staffing levels.

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Topics

Defense cost controlDefense procurementGOCOGovernment owned equipmentProcurement regulationsProperty disposalFederal acquisition regulationsMilitary forcesGovernment procurementGovernment owned contractor operated facilities