Military Aircraft:

C-17 Supplier Management Problems Are Not Related to Budget Reductions

NSIAD-92-207: Published: Aug 26, 1992. Publicly Released: Aug 26, 1992.

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GAO reviewed the: (1) impact of congressional reductions in the C-17 aircraft's fiscal year (FY) 1991 budget on the prime contractor's subcontractor base; and (2) Air Force's and contractor's actions to correct supplier management problems.

GAO found that: (1) reductions in the FY 1991 budget had little discernible effect on the subcontractor base, since only 6 of the 33 major suppliers reported any adverse effects, and none left the C-17 program; (2) six suppliers indicated that they had benefited from the budget reductions since the stretchout of their delivery schedules accommodated schedule slippages they had already experienced; (3) Air Force and contractor officials were not able to support their contention that the budget cut would damage the C-17 supplier base; (4) since June 1990, the contractor's actions to correct supplier management problems have resulted in some improvements, although progress has been slow and several areas remain that will require additional effort, including a number of overage, undefinitized contracts, inadequate cost and price analyses of purchase orders, and slow release of purchase orders to suppliers; and (5) contractor officials requested a review of their purchasing system to identify remaining weaknesses, and are currently analyzing the results.