Army Acquisition:

Effective Subcontractor Oversight Needed Before Longbow Apache Production

NSIAD-93-108: Published: Feb 22, 1993. Publicly Released: Apr 1, 1993.

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Thomas J. Schulz
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Pursuant to a congressional request, GAO reviewed the Army's oversight of the prime contractor for the Apache helicopter and its oversight of subcontractors working on the helicopter's component parts, focusing on: (1) Army efforts to have the contractor correct weaknesses in subcontractor oversight; (2) parts problems due to weak subcontractor oversight; and (3) the implications of the latest efforts on the Apache and Longbow programs.

GAO found that: (1) the Army's past efforts did not ensure that the contractor corrected its subcontractor oversight weaknesses; (2) the contractor implemented corrective action plans directed towards the symptoms rather than the systemic causes of the problems; (3) the Army did not use several available options to induce the contractor to correct its oversight problems; (4) the Army's actions, such as issuing major waivers and deviations to specifications and accepting nonconforming parts, gave tacit acceptance to poor contractor performance; (5) weak subcontractor oversight caused several helicopter parts problems; (6) although the contractor developed and implemented a corrective action plan, the Defense Logistics Agency (DLA) was unable to determine, due to insufficient data, whether it had improved subcontractor oversight; (7) DLA removed the contractor from its contractor improvement program because it was implementing a corrective action plan, but DLA will continue to monitor the contractor's progress; and (8) improved subcontractor oversight will have little impact on the Apache program since it is nearing completion, but its impact on the Longbow modification program could be significant.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Director, DLA, has certified that subcontractor oversight at McDonnell Douglas Helicopter Company has improved to an acceptable level.

    Recommendation: The Secretary of Defense should not commit production funds for the Longbow Apache modification program until the Director, DLA, determines, through analyses of health indicators, that the McDonnell Douglas Helicopter Company's oversight of subcontractors is adequate to ensure satisfactory performance.

    Agency Affected: Department of Defense


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