Opportunity for the Department of Defense To Save $1.6 Million on Contracts for Aircraft Logistics Support

PSAD-78-68: Published: Jan 18, 1978. Publicly Released: Jan 18, 1978.

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There is an opportunity to save about $1.6 million annually on logistics support contracts for the Air Force's commercially designed Boeing 737 and McDonnell Douglas DC-9 aircraft. Savings of about $640,000 annually have already been achieved on two contracts, but significant additional savings are possible.

The Air Force operates and maintains commercially designed Boeing 737 and McDonnell Douglas DC-9 aircraft and plans to purchase McDonnell Douglas DC-10 aircraft. Logistics support for the present fleet is provided through contracts with the aircraft manufacturers. In proposing the additional purchases, the Air Force testified that it was also considering obtaining the necessary logistics support for the new aircraft by contract. Review of the present logistics support contracts revealed costly provisions which should be avoided in future contracts. One support provision which exceeds demonstrated needs and normal commercial practice provides for payment of incentive fees for maintaining spare parts support at a much higher level than aircraft usage warrants. The second provides for three full-time field service representatives as technical advisors at each aircraft station--a support level far in excess of normal commercial practice. The recurring cost of these two provisions was about $2.3 million in fiscal year 1976 for the five contracts examined.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Secretary of the Air Force should remove the spare parts support incentive fee from remaining contracts as soon as possible and should reevaluate the need for the continued use of technical representatives before renewing this provision in the remaining contracts.

    Agency Affected:

 

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