Retention of Unneeded Government-Owned Special Tooling by Contractors Causes Unnecessary Costs

PLRD-82-6: Published: Oct 7, 1981. Publicly Released: Oct 7, 1981.

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GAO reviewed the management of Government-owned special tooling, which includes such things as jigs, dies, fixtures, and other equipment whose use is limited to the production of a particular item, in the possession of selected Air Force and Navy aircraft production contractors.

GAO found that the Department of Defense (DOD) is incurring unnecessary costs because contractors are being allowed to retain unneeded tooling. Aircraft production contractors are storing and controlling hundreds of millions of dollars of Government-owned special tooling. For contracts relating to five out-of-production aircraft reviewed, GAO estimated that contractors are incurring costs of about $800,000 a year for the storage and control of unneeded tooling. A substantial portion of these costs is being paid by DOD. The Air Force and Navy have more than 280 contracts or agreements under which contractors are holding special tooling.

Recommendations 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 Secretary of Defense should direct the Army to review the adequacy of its screening procedures and controls, and if similar weaknesses are identified, take appropriate corrective action.

    Agency Affected: Department of Defense

  2. 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 Secretary of Defense should direct the Air Force and the Navy to implement improved procedures and controls to ensure that: (1) special tooling is screened before or soon after completion of original production contracts and follow-on contracts to promptly identify and dispose of tooling not needed for future production; and (2) needs are periodically reassessed for post-production special tooling which contractors have been previously instructed to retain.

    Agency Affected: Department of Defense

 

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