Report on Potential Savings Through Procurement of Operating Supplies From General Services Administration Sources by Martin-Marietta Corporation Denver Division, Denver, Colorado

B-132992: Published: Feb 9, 1965. Publicly Released: Feb 9, 1965.

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The General Accounting Office, in connection with reviews of the utilization of General Services Administration (GSA) supply sources by defense contractors, has reviewed selected operating supply purchases by the Martin-Marietta Corporation, Denver Division, Denver, Colorado (Martin-Denver). The purpose of our review was to inquire into whether additional costs were being incurred and charged to the Government because GSA supply sources were not utilized in performance of Government contracts. Our review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), the Accounting and Auditing Act of 1950 (31 U.S.C. 67), and the authority of the Comptroller General to examine contractors' records, as set forth in 10 U.S.C. 2313(b). We reviewed the contractor's purchase orders covering about 18 percent of the cost of operating supplies charged to overhead accounts during the period 1960 through 1962, and we compared unit prices of the supplies with the prices of comparable items available from GSA supply sources during the same period We did not attempt to determine whether these operating supplies were procured at the best possible commercial prices, nor did we attempt to determine the necessity for and the reasonableness of the items and quantities procured. Also, we did not determine whether GSA had obtained the best possible prices for the Government for the type of supplies discussed in this report.

Our review of the procurement of operating supplies has disclosed that substantial savings can be achieved in Government costs under Air Force contracts through greater utilization of General Services Administration supply sources. Under current practices the contractor is purchasing operating supplies from commercial sources at higher than the prices of comparable items available to Government users through General Services Administration supply sources. During the 3-year period 1960 through 1962, Martin-Marietta's procurements through commercial sources, rather than through General Services Administration sources, resulted in additional costs to the Government of over $422,000 for selected items reviewed. The additional costs included in the contractor's total procurements of operating supplies, on the basis of the percentage disclosed by our review of the selected items, could amount to as much as $1.6 million during the 3-year period.

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