Assessment of Admiral Rickover's Recommendations To Improve Defense Procurement

PLRD-83-37: Published: Jan 27, 1983. Publicly Released: Jan 27, 1983.

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Pursuant to a congressional request, GAO reviewed recommendations by Admiral Hyman G. Rickover, USN, retired, to improve Department of Defense (DOD) operations.

Admiral Rickover's recommendations are in three areas: (1) the utilization of resources, (2) the conduct of procurements, and (3) the resolution of contractual conflicts. His recommendations for resource utilization cover three topics: avoiding hasty labor buildups in shipyards; restarting nuclear ship construction in a Navy-owned yard; and withdrawing financial support for industry-initiated research and development. The admiral believes that labor buildups in private shipyards were a cause of the large shipbuilding claims of the past decade. DOD agrees with the admiral's assessment and plans to contract only with those firms that have sufficient skilled labor. GAO stated that this approach was unreliable for two reasons: (1) disagreement over shipbuilding capacity, and (2) a frequent lack of alternative sources. GAO also disagreed with the admiral's conclusions regarding in-house construction and industry-initiated research and development. The principal theme in Admiral Rickover's recommendations for improving the conduct of procurement was that the Government should use more leverage and business judgment and be a more demanding customer in its dealings with contractors. GAO agreed with the thrust of the admiral's recommendations regarding procurement and stated that performance should be emphasized in awarding new contract work. With regard to contractual conflicts, GAO agreed with the admiral's assertion that a time limit on claims submission is necessary and that steps should be taken to facilitate prosecution of contractors when fraud is suspected.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should require the Secretary of Defense to develop a policy addressing work stoppage and related Government financing in situations where the present policy of termination and reprocurement is not feasible, and submit legislation if necessary.

  2. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should require the Secretary of Defense to develop a policy limiting the use of special incentive provisions by specifying the conditions under which they may be appropriate.

  3. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should encourage the Secretary of Defense to: (1) have high level DOD officials hold discussions with contractor officials prior to budget submission on important unresolved business issues relating to expected sole-source contracts for critical defense programs; and (2) specifically address important unresolved issues, especially on major shipbuilding contracts, as part of DOD prepared statements in testifying on the budget or in other communications with congressional committees when the Secretary deems appropriate.

  4. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should: (1) closely monitor the Navy's revised program and have an outside panel of experts later on independently assess overall DOD program effectiveness; and (2) include in DOD agreements which support contractor-initiated research and development activities a provision giving the Government free use of any inventions derived.

  5. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should monitor the effects of the current buildup through: (1) annual DOD assessments of existing nuclear industrial base capacity; and (2) actions needed to relieve the demand on and preserve the use of existing private yard capacity.

  6. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should either propose legislation amending the Armed Services Procurement Act or ask the Secretary of Defense to modify the Defense Acquisition Regulation authorizing the award of contracts to other than the low offeror when, in the judgment of the department head, these conditions exist: (1) the Government does not have adequate assurance that it can prevent the contractor suspected of underbidding from recovering at the Government's expense through contract changes or noncompetitive followon contracts; and (2) acceptance of another offer is more likely to result in a lower cost to the Government. If legislation is enacted, the department head should be required to justify any use of this authority through certification to Congress.

  7. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should obtain additional views on the appropriate time period and propose legislation which would: (1) prohibit payment of public funds for claims not submitted, documented, and certified within a specified time; and (2) require contractors to notify the Government promptly of actions or inactions which they feel constitute a change to the contract as well as provide a release from claims at prescribed intervals.

  8. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should require the Secretary of Defense to report to the appropriate congressional committees on the specific DOD changes which occur as a result of the recent efforts to increase use of prior performance in awarding contracts. The report should assess the effectiveness of those changes.

  9. Status: Closed - Not Implemented

    Comments: The Committee plans no action at this time.

    Matter: The House Committee on Appropriations, Subcommittee on Defense, should require DOD, as part of its annual report, to include an assessment of: (1) the extent of future buildup problems; and (2) the actions needed to best utilize existing nuclear industrial base capacity.

  10. Status: Closed - Not Implemented

    Comments: No action is planned at this time.

    Matter: Congress should consider requiring DOD to establish, in consultation with the Department of Justice, claims handling procedures and standards for the future that discourage false claims, make evaluation easier, and facilitate prosecution where fraud is suspected.

 

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