Spare Parts Pricing:

Inappropriate Use of Rate Agreements

NSIAD-86-18: Published: Jan 13, 1986. Publicly Released: Jan 13, 1986.

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In response to a congressional request, GAO reviewed spare parts pricing at selected locations to determine if the Department of Defense spare parts initiatives were being followed.

GAO found that: (1) buyers and contracting officers at the San Antonio Air Logistics Center were using rate agreements as a justification for accepting proposed prices without performing adequate price analyses in 13.6 percent of the procurements reviewed; (2) of the 21 contracts reviewed in depth, 2 were overpriced and 1 was being locally manufactured at a significantly lower cost; (3) in each of these cases, the buyer relied on the rate agreements to determine whether the proposed prices were fair and reasonable; (4) three procurements should not have been made; (5) the Air Force has been paying $16,400 for link assemblies that should cost less than $4,000, $317.79 for pan toilets which should cost about $97.94, and $239.79 for pan assemblies that can be manufactured locally for about $160; and (6) the Air Force purchased two panel assemblies although two panels had been in an Air Force warehouse since 1973, and the old panels could easily have been repaired.

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