Procurement:

DOD Can Use Economic Production Data More Effectively

NSIAD-86-37: Published: Jan 28, 1986. Publicly Released: Jan 28, 1986.

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GAO reviewed the Department of Defense's (DOD) development and use of economic production rate (EPR) information for major weapon systems to assess the level of production, which results in the most effective and efficient use of existing manufacturing plants and facilities.

GAO noted that EPR data are one of several important factors to be considered in making major system procurement decisions, because the comparison of weapon systems unit costs at various alternative production levels provides data which help promote more efficient defense procurement. GAO found that: (1) the military services are inconsistently reporting production data because DOD has neither clearly defined what data should be reported nor established formal, written criteria for selecting weapon systems to include in the reporting process; (2) DOD does not routinely require the services to develop and provide, as part of the budgetary process, unit cost data at various production levels; (3) when the services have reported data for a specific purpose, they have done so inconsistently and on a limited basis; (4) inconsistently developed data limit program comparisons and funding trade-offs; and (5) while some progress has been made, many of the 50 monitored systems were below the minimum EPR in either fiscal year (FY) 1984 or FY 1985.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has clarified reporting requirements to include cost information.

    Recommendation: The Secretary of Defense should specifically define what EPR information the military services are to report, including defined unit cost data for the budget year at the planned buy and minimum and maximum EPR.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD has defined criteria for selecting weapons systems to be included in the reporting process.

    Recommendation: The Secretary of Defense should establish formal, written criteria for periodically reviewing and selecting weapon systems to be included in the EPR reporting process.

    Agency Affected: Department of Defense

 

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