Procurement:

DOD Efforts Relating to Nondevelopmental Items

NSIAD-89-51: Published: Feb 7, 1989. Publicly Released: Feb 7, 1989.

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Pursuant to a legislative requirement, GAO evaluated the Department of Defense's (DOD) efforts to ensure that it fulfilled its supply requirements through procurement of nondevelopmental items (NDI) to the maximum practicable extent.

GAO found that: (1) DOD was reviewing and revising its directive on commercial acquisition to promote NDI acquisition and to authorize publication of an NDI manual, but delayed issuance of the directive and manual because Office of the Secretary of Defense (OSD) personnel had not devoted enough time to NDI-related efforts; (2) the draft directive and manual, as well as a draft pamphlet on market analysis, were informative and would be useful to DOD personnel; (3) DOD did not have data to show how much or what kinds of NDI it procured or whether such procurements had increased; (4) although DOD provided NDI training for program managers, contracting officials, and other personnel, the training was limited in terms of lecture time devoted to NDI and the number of personnel trained; and (5) industry officials expressed concern that competitive purchases of commercial items by the government could later unfairly cause contractors to lose exemptions from cost or pricing data requirements based on established catalog or market prices. GAO reviewed other claimed impediments to DOD procurement of NDI, including: (1) short-sighted policies and practices regarding government rights to technical data; (2) inappropriate and inconsistent use of various contract provisions; and (3) inappropriate use of military specifications.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has issued the pamphlet on market analysis. DOD Directive 5000.37 was cancelled and DOD policy on NDI acquisition has been included in newly revised DOD Directive 5000.1 and DOD Instruction 5000.2. The NDI manual was published in the fall of 1990.

    Recommendation: The Secretary of Defense should take actions to ensure that the revised DOD Directive 5000.37, the proposed pamphlet on market analysis, and additional uniform guidance on NDI acquisition policy and procedures, such as the draft DOD NDI manual, are appropriately reviewed, issued, and distributed as soon as possible.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: An April 1993 OSD memo established a system for collecting information on the progress of the three military services and the Defense Logistics Agency in acquiring commercial items and other NDI. Baseline data are being collected. In addition, OSD is now collecting data on the number of Milspecs converted to commercial types of descriptions.

    Recommendation: The Secretary of Defense should take actions to ensure that data are collected to measure and report on the nature and trends of NDI procurement. Decisions regarding the type and extent of data to be collected should be based on the associated costs and benefits to be derived.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD established appropriate training plans for personnel in all phases of the acquisition process. DOD developed a 2-day course for spec writers, contract personnel, and logisticians. Four pilot offerings were held in 1990 and 19 additional course offerings were held through May 1991 and 1992. OSD says the results have benefitted NDI buying.

    Recommendation: The Secretary of Defense should take actions to ensure that sufficient training is provided to acquisition personnel so that commercial products and other NDI are procured to the maximum practicable extent. As a first step for accomplishing this, DOD should assess its current NDI-related training efforts.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: Procurement reform legislation incorporates this recommendation. The Federal Acquisition Streamlining Act of 1994, section 1202, addresses the issue of federal acquisition regulation changes relating to exemptions from cost or pricing data requirements based on established catalog or market prices.

    Recommendation: The Secretary of Defense should take actions to ensure that a Defense Acquisition Regulatory Council (DARC) case is established to determine if a regulatory change is needed relating to exemptions from cost or pricing data requirements based on established catalog or market prices. That is, DARC should examine whether changes to the regulations are needed to ensure that contractors do not face possible loss of such exemptions only because the amount of previous sales of the same type of items to the government based on adequate price competition exceeds established regulatory thresholds.

    Agency Affected: Department of Defense

 

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