Air Force Procurement:

More B-1B Spares Should Have Been Bought Directly From Manufacturers

NSIAD-88-13: Published: Nov 18, 1987. Publicly Released: Dec 7, 1987.

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Pursuant to a congressional request, GAO examined the extent to which the Air Force broke out B-1B bomber spare parts for procurement directly from the manufacturers to avoid costs of overhead and profits incurred on parts bought from prime contractors.

GAO found that: (1) of 34 spares included in the Air Force Logistics Command's (AFLC) Expanded Advanced Buy (EAB) acquisition concept, 25 qualified for direct purchase; (2) the Air Force did not purchase any of the 34 items directly from the manufacturers; (3) potential price reductions resulting from breakout actions ranged from 36 to 62 percent at the Oklahoma City Air Logistics Center; (4) the Air Force did not take advantage of opportunities to buy initial and replenishment spares directly from the manufacturers; (5) breakout required additional administrative lead time and paperwork; (6) pressure to have spare parts available by the initial operational capability (IOC) date affected B-1B breakout efforts; (7) the Oklahoma City Air Logistics Center continued to purchase items from prime contractors after breakout; and (8) AFLC issued a policy directive on provisioned-items orders prohibiting abusive and improper use of such orders.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: AFLC emphasized the need to follow procedures designed to effect spares breakout by publishing AFLC Regulation 800-9.

    Recommendation: To maximize the breakout of spare parts during initial provisioning of future systems, the Secretary of the Air Force should direct the Commander, AFLC, to emphasize the need to identify manufacturers of spares items, evaluate such items for breakout, and establish contracts to purchase the items directly from manufacturers as early as possible in the provisioning process, even for programs such as EAB.

    Agency Affected: Department of Defense: Department of the Air Force

  2. Status: Closed - Implemented

    Comments: AFLC published AFLC Regulation 800-9, setting forth appropriate procedures to be followed in evaluating opportunities for spares breakout.

    Recommendation: To maximize the breakout of spare parts during initial provisioning of future systems, the Secretary of the Air Force should direct the Commander, AFLC, to ensure that the avoidance of administrative lead time and paperwork involved in breaking out spares items is not routinely used as justification for avoiding procurement from spares manufacturers.

    Agency Affected: Department of Defense: Department of the Air Force

  3. Status: Closed - Implemented

    Comments: The Department of Defense (DOD) informed GAO that Air Force breakout procedures require an evaluation of whether splitting contracts for initial spares will result in savings.

    Recommendation: To maximize the breakout of spare parts during initial provisioning of future systems, the Secretary of the Air Force should direct the Commander, AFLC, to require air logistics centers to recognize that all initially provisioned spares may not be needed by a weapon system's IOC and to take full advantage of cost-effective opportunities to break out procurement of spares quantities needed for base activations that occur subsequent to IOC.

    Agency Affected: Department of Defense: Department of the Air Force

  4. Status: Closed - Implemented

    Comments: DOD informed GAO that the Air Force will make use of provisional item orders to buy items identified for breakout and a special interest item during Inspector General inspections, management effectiveness inspections, and staff assistance visits.

    Recommendation: The Secretary of the Air Force should direct the Commander, AFLC, to closely monitor Oklahoma City and other air logistics centers' compliance with AFLC policy against using provisioned-items orders to avoid breaking out spares that have been approved for purchase directly from the manufacturers.

    Agency Affected: Department of Defense: Department of the Air Force

 

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