Procurement:

Defense Logistics Agency Implementation of the Spare Parts Initiatives

NSIAD-87-143: Published: Jun 1, 1987. Publicly Released: Jul 2, 1987.

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In response to a congressional request, GAO assessed the Defense Logistics Agency's (DLA) progress in implementing the spare parts initiatives at the Defense Electronics Supply Center (DESC), specifically: (1) price increases; (2) the adequacy of the price analysis procurement officials performed; (3) personnel changes resulting from the initiatives; and (4) DESC difficulties in maintaining a trained and experienced contracting work force.

GAO compared the prices on 107,333 procurements totalling $507.9 million during the year ended March 1, 1985, and found that: (1) 8 percent of the procurements experienced price increases of 25 percent or more; and (2) 65 percent had either no price change or a price decrease. GAO also found that DESC: (1) bought in larger quantities, increased the use of competition, changed its employee performance evaluation factors, and provided internal government price estimates; (2) performed inadequate price analyses in 46.7 of the procurements it sampled with 25-percent price increases and in 28 percent of the procurements with no price change; and (3) did not consolidate purchase requests, resulting in unnecessary duplication of contract awards, increased administrative costs, and uneconomical purchase quantities. DESC indicated that the major obstacle to continued improvement in price analysis under the initiatives was its inability to retain experienced, well-trained buyers. GAO believes that this could slow or reduce the improvements necessary to the success of the initiatives.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Modification of the automated system at all supply centers to ensure consolidated procurement occurs when appropriate. The modification will be phased. The prototype system has been successfully implemented at one supply center. Full implementation has been completed.

    Recommendation: The Director, DLA, should require the Commander, DESC, to take the necessary action to ensure consolidation of purchase requests when appropriate. The need for such action at other DLA centers should also be assessed, and if necessary, a system established to ensure consolidation is considered during price analysis.

    Agency Affected: Department of Defense: Defense Logistics Agency

 

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