Second GAO Report on Need for Better Control Over Government-Furnished Material Provided to Defense Overhaul and Repair Contractors

PSAD-76-78: Published: Mar 8, 1976. Publicly Released: Mar 8, 1976.

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Air Force overhaul and repair contractors are given about $200 million of government material every year. The Air Force, however, does not have the necessary records to hold the contractors accountable for this material.

As long ago as 1970, GAO recommended improvements in the management of government materials given to contractors. The military services agreed and said corrective action was being taken. An internal Department of Defense (DOD) audit report, February 1974, stated little, if any, management attention was being paid to the control of government-furnished material in contractors' plants. One case involved an apparent misuse of government-furnished material valued at about $2.5 million. Good business practice dictates that when custody of property is transferred from one supplier to another, an audit trail of what was transferred must be kept by the supplier to provide accountability. Accountability for government-furnished material within the Air Force includes such weaknesses as incomplete estimates of materials to be used, limited knowledge of materials ordered and received by contractors, and inadequate checks of whether materials are used for proper purposes.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: To insure the success of its efforts to improve the accountability for Government-furnished material DOD should instruct the task force to: (1) develop procedures within the Air Force accounting system that establish an audit trail; (2) design better consumption data to improve the evaluation of contractors' reported usage of Government material; (3) provide this information to property administrators so differences between the Government and contractors' records can be pinpointed; and (4) provide guidance to property administrators on the need for increased surveillance when the contractor is doing commercial and Government work at the same location.

    Agency Affected:


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