Army Acquisition:

Decision to Buy Test Equipment Not Adequately Justified

NSIAD-92-206: Published: Apr 30, 1992. Publicly Released: May 15, 1992.

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Henry L. Hinton, Jr
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Pursuant to a congressional request, GAO examined the 1989 and 1992 cost and operational effectiveness analyses for intermediate forward test equipment (IFTE) to determine whether they were valid to support the IFTE procurement decision.

GAO found that: (1) the cost and operational effectiveness analyses used to support a decision to buy IFTE were incomplete and included inaccurate information; (2) the 1989 analysis did not compare IFTE to feasible alternatives that may have been more cost-effective; (3) because of the high cost of contractor maintenance for the systems that do not have automatic test equipment, the Army considered the IFTE alternative more cost-effective; (4) the 1990 cost-benefit analysis did not demonstrate the cost-benefit advantage of IFTE electro-optical augmentation over the continued use of existing electro-optical test equipment or electro-optical augmentation of existing equipment; (5) in the 1989 analysis, the requirements for the number of Base Shop Test Facilities were less than what the Army needed to support its fielded and anticipated weapon systems and the Army further understated requirements because it based the work-load analysis on a peacetime operating demand level; (6) the Army inappropriately estimated the useful life of existing automatic test equipment when making cost comparisons; and (7) the Army overstated the Contact Test Set's cost-effectiveness because of inaccurate cost-saving estimates claimed for the Contact Test Set no-evidence-of-failure rate reductions.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Senate Appropriations Subcommittee on Defense is working with the Army to reduce the planned procurement of 241 Base Shop test facilities as a result of GAO work. In a June 1992 letter, the Chairman of the Subcommittee directed the Army to not proceed to full scale production for test equipment until the useful life of existing equipment was achieved.

    Recommendation: The Secretary of the Army should delay full-rate production until the cost-effectiveness of IFTE over other alternatives has been appropriately demonstrated.

    Agency Affected: Department of Defense: Department of the Army


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