Air Force Breakout Efforts Are Ineffective

PLRD-83-82: Published: Jun 1, 1983. Publicly Released: Jun 1, 1983.

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GAO reviewed the effectiveness of efforts at the Oklahoma City Air Logistics Center (OCALC) to implement the Air Force High Dollar Spare Parts Breakout Program.

GAO believes that the Air Force is not breaking out, for maximum practicable competition or direct purchase, the high dollar value spare parts supplied by a large prime contractor. GAO stated that breakout efforts have been limited because of lack of information regarding the actual manufacturers of the parts and uncertainty about the government's rights to use technical data prepared by a prime contractor. Further, GAO believes that, if the Air Force would develop better ways of identifying actual manufacturers, it could purchase directly from them. Specifically, GAO found that, although aircraft engine replenishment spare parts account for about 7.5 percent of the spare parts that OCALC buys from a prime contractor, they represent about 76.6 percent of the procurement dollars. Thus, by avoiding the prime contractor's markup and reducing production leadtime by direct purchase of a portion of these relatively few parts, OCALC could maximize savings.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Under the Pacer Price Program, procurement method codes for most items purchased currently or in the current or next fiscal year will be reviewed. The Air Force agreed that the program to identify actual manufacturers could be expanded. MIL-STD 7890 will require contractors to identify manufacturers.

    Recommendation: The Secretary of the Air Force should improve the effectiveness of the High Dollar Spare Parts Breakout Program by directing all appropriate Air Force units to rescreen all spare parts with procurement method codes of 3, 4, and 5, initially concentrating on procurements due to occur in the near future that come under the definition of the high dollar value replenishment spare parts in the breakout regulation, and establish procedures for identifying actual manufacturers of such parts scheduled for sole-source procurement from the prime contractor. Actual manufacturers, other than the prime contractor, should be contacted and a determination made as to their capabilities for supplying the parts direct to the Air Force.

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

  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 the Air Force should improve the effectiveness of the High Dollar Spare Parts Breakout Program by directing all appropriate Air Force units to include in all future aircraft engine contracts, or contracts for major components where high dollar value spare parts are likely to be purchased, a clause that requires: (1) the identification of part manufacturers and suppliers at the time of the initial acquisition; (2) notification of changes in manufacturers and suppliers during the life of the contract; and (3) if the prime contractor fails to make a good faith effort to meet these requirements, that any limited rights markings on technical data related to the parts may be cancelled or ignored by the contracting officer.

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

  3. 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 the Air Force should improve the effectiveness of the High Dollar Spare Parts Breakout Program by directing the Commanding Officer of OCALC to establish the identity of the actual manufacturer of an engineering critical high dollar value replenishment spare part. If there is doubt as to the propriety of the engineering critical designation, the Commanding Officer should ask the prime contractor to justify the designation. If the prime contractor refuses or fails to substantiate the claim, the Commanding Officer should initiate action to remove the restrictive markings.

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

 

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