Procurement:

Navy Implementation of the Spare Parts Initiatives

NSIAD-87-149: Published: Jun 1, 1987. Publicly Released: Jul 2, 1987.

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In response to a congressional request, GAO presented the results of its follow-up review on spare parts procurement, focusing on activities at the Navy's Ships Parts Control Center (SPCC) and Aviation Supply Office (ASO).

GAO found that: (1) 10.7 percent of 34,440 SPCC procurements had price increases of 25 percent or more, while 59.6 percent had either no price change or a price decrease; (2) 7 percent of 11,840 ASO procurements had price increases of 25 percent or more, while 58 percent had either no price change or a price decrease; (3) SPCC personnel performed inadequate price analyses on 16.3 percent of the sampled procurements with price increases of 25 percent or more; (4) ASO personnel inadequately analyzed one in four sampled procurements with price increases of 25 percent or more and 24 percent of the sampled procurements with no price change; and (5) ASO procurement officials did not take advantage of opportunities to consolidate purchase requests. GAO noted that the Secretary of Defense's initiatives for improving spare parts procurement seemed to positively affect the sampled procurements, since: (1) SPCC increased the proportion of procurements involving larger quantities, thereby avoiding frequent buys of small quantities; and (2) SPCC and ASO revised their personnel evaluation systems for contracting personnel and established systems to reward persons achieving significant cost reductions. GAO also noted that: (1) in April 1986, the Navy began to include a voluntary spare parts refund clause in contracts awarded through noncompetitive procedures and later modified the clause to provide a contractual basis for voluntary refund action; and (2) the Navy should not rescind its policy until the Department of Defense issues a departmentwide policy on such refunds.

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