Internal Controls:

Air Force Can Improve Controls Over Contractor Access to DOD Supply System

NSIAD-88-99: Published: Mar 18, 1988. Publicly Released: Apr 25, 1988.

Additional Materials:

Contact:

Donna M. Heivilin
(202) 512-8430
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO examined the Air Force's policies, procedures, and practices for providing and controlling government-furnished materiel (GFM) to Department of Defense (DOD) contractors, focusing on the Air Force's: (1) compliance with requirements to justify and document decisions to provide GFM; (2) management controls for validating and approving contractors' GFM requests; and (3) oversight of contractor maintenance of GFM.

GAO found that the Air Force: (1) violated the existing Federal Acquisition Regulation (FAR) and DOD and Air Force policies by routinely providing GFM to contractors without adequate evaluation or justification; (2) provided GFM even when materials were commercially available at lower prices; (3) did not properly implement an Air Force Logistics Command (AFLC) regulation requiring identification of specific parts and quantities contractors needed; (4) established management control activities (MCA) to control GFM requisitions on the wholesale, but not retail, level; (5) cited accuracy problems in its D034A Special Support Stock Control and Distribution System and its D049 database, both intended to track contractors' requisitions for and receipt of GFM; (6) improperly allowed contractors direct access to supply sources or used military codes instead of the contractors' DOD Activity Address Codes to requisition supplies; (7) was unable to verify the amount of GFM contractors received or maintained, since government property administrators did not provide appropriate oversight, such as verification of contractors' receipt records or annual property surveys; and (8) has implemented some controls to correct internal problems, but still does not have independent means to identify the amount of GFM contractors have, the amount provided annually, and the amount of excess GFM.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Air Force Automated Data Routing System (M024) was programmed to prevent contractor initiated requisitions from bypassing special support stock control and distribution system (D034A) edits. Those requisitions not passing the edits will be rejected to the initiator.

    Recommendation: The Secretary of the Air Force should direct that all contractor requisitions be identified and assigned the required contractor DODAAC.

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

  2. Status: Closed - Implemented

    Comments: The required policy guidance was issued on December 1, 1988.

    Recommendation: The Secretary of the Air Force should direct that contracts providing for GFM at the retail level list the parts contractors are authorized to obtain whenever it is feasible to do so.

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

  3. Status: Closed - Implemented

    Comments: The Air Force has started assigning special codes to contractors that support base operations and maintenance service contracts. AFLC is now programming its computers so the change can be incorporated in the stock control and distribution system.

    Recommendation: The Secretary of the Air Force should direct that procedures similar to those performed by MCA at the wholesale level be adopted at the retail level as soon as possible to review and validate all retail-level contractor requisitions before they are sent to the source of supply.

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

  4. Status: Closed - Implemented

    Comments: AFLC has taken actions to continually update and keep the D049 system file maintained.

    Recommendation: The Secretary of the Air Force should direct that AFLC improve the D049 database to generate stock numbers and quantities required for the D034A Special Support Stock Control and Distribution System to make it more accurate and complete.

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

  5. Status: Closed - Implemented

    Comments: Edits have been devised to ensure that contractors receive only items they are authorized. Refinements have been made to the system to edit requisitions by stock number and quantity authorized.

    Recommendation: The Secretary of the Air Force should direct that MCA or their equivalents receive and validate all wholesale-level contractor requisitions before they are sent to the source of supply to be filled.

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

  6. Status: Closed - Implemented

    Comments: Management improvement of GFP, including GFM, is a major ongoing initiative within DOD. The DOD Inspector General is tracking progress made on each of the initiatives.

    Recommendation: The Secretary of the Air Force should direct all Air Force commands and activities to enforce compliance with existing FAR and DOD and Air Force policies regarding GFM which, among other things, require that decisions to allow contractors to obtain GFM be justified in advance, in writing, and be adequately documented to demonstrate that they are in the government's best interest from a cost-effectiveness or other critical standpoint.

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

  7. Status: Closed - Implemented

    Comments: The Air Force agreed and issued policy guidance which reemphasizes the need for adequate annual property surveys.

    Recommendation: The Secretary of the Air Force should direct that government property administrators conduct adequate annual surveys of the contractors' property control systems.

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

 

Explore the full database of GAO's Open Recommendations »

Sep 29, 2016

Sep 28, 2016

Sep 27, 2016

Sep 26, 2016

Sep 23, 2016

Sep 21, 2016

Sep 7, 2016

Aug 30, 2016

Looking for more? Browse all our products here