SBA's Breakout Efforts Increase Competitive Procurements at Air Logistics Centers

PLRD-82-104: Published: Aug 2, 1982. Publicly Released: Aug 2, 1982.

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Pursuant to a congressional request, GAO reviewed: (1) areas within the Department of Defense acquisition system where the breakout technique could be used more effectively; and (2) efforts by the Small Business Administration's (SBA) breakout Procurement Center Representatives (PCR) in seeking new competitive contracting opportunities.

Component breakout occurs when a component which was used in the manufacture, modification, or repair of an end product and which was provided initially under a prime contract is later purchased by the Government through either competition or direct purchase from the manufacturer. SBA offices at the four air logistics centers (ALC) which GAO reviewed reported almost 300 breakout actions and associated savings of more than $7 million during fiscal years 1980 and 1981. However, GAO questioned the methodology and rationale SBA used to estimate some of these savings. The SBA guidelines for computing savings were not always followed and did not always provide clear and complete guidance on performing the computations. Many of the constraints which have hampered the ALC breakout efforts have also hampered the SBA breakout efforts. SBA breakout efforts have contributed significantly to the Air Force breakout program by developing valuable information for improving the procurement procedures for many spare parts. GAO stated that the breakout program is most effective when needed technical data are obtained as part of the initial procurement package. Despite the lack of technical data, SBA breakout efforts have resulted in savings that are large relative to program costs. SBA may be saving the Government more money than its reports indicate, since breakout specialists are unable to identify savings in subsequent purchases of some items. Time and staff limitations prevent SBA personnel from pursuing many procurements with breakout potential.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of SBA should, to strengthen SBA breakout efforts and to increase its ability to identify the actual manufacturers of parts which are now supplied by prime contractors: (1) assign additional resources to the breakout efforts at ALC's; consider assigning breakout PCR specialists to other Defense procurement centers; and (2) clarify and expand current guidelines for calculating savings to overcome estimating problems identified by GAO.

    Agency Affected: Small Business Administration


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