Acquisition Reform:

Military-Commercial Pilot Program Offers Benefits but Faces Challenges

NSIAD-96-53: Published: Jun 28, 1996. Publicly Released: Jun 28, 1996.

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GAO provided information on the Department of Defense's (DOD) Military Products from Commercial Lines Pilot Program, focusing on the: (1) program's potential for achieving benefits sought from acquisition reform; and (2) barriers to achieving these benefits.

GAO found that: (1) the pilot program has demonstrated that redesigning military components for commercial production appears technically feasible; (2) pilot program officials believe that if the use of commercial practices and policies is permitted, military production costs could be reduced by an average of 40 percent and the Air Force's requirements for the F-22 could be met; (3) other expected benefits from the pilot program include accelerated assembly, a more technically advanced and lighter weight product, and valuable lessons learned for future large electronic procurements; (4) for the pilot program to be successful and to encourage commercial participation, significant differences in commercial and military business practices have to be overcome; (5) although the pilot program has been successful in identifying government-unique requirements that present barriers to the most efficient use of commercial production lines, acquisition reform measures have not removed these barriers; (6) DOD must also overcome an acquisition culture that has historically resisted change and does not provide sufficient incentives for acquiring products from commercial producers; and (7) unless waivers are granted for many of the defense-unique requirements or workarounds, the pilot program will be limited in demonstrating that military items can be produced commercially at substantially lower prices.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Subsequent to publication of the report, the Air Force reversed an earlier decision and has determined that the part is a commercial component. As such, the Air Force is released from many of the barriers commonly cited that hamper government procurement from commercial suppliers.

    Recommendation: The Air Force, in consultation with TRW, should identify those government-unique requirements that prevent the pilot from demonstrating that military items can be produced at equal or better quality on commercial production lines at substantially lower prices and then seek Secretary of Defense waivers.

    Agency Affected: Department of Defense: Department of the Air Force

  2. Status: Closed - Implemented

    Comments: DOD's Deputy Under Secretary of Defense concurred with the recommendation and agreed to implement it. The pilot contract was then revised to allow the pilot to proceed by procuring the pilot components as commercial items. This action meets the recommendation. An accomplishment report documents this conclusion.

    Recommendation: The Secretary of Defense should move quickly to waive those requirements within his authority that pilot officials believe impede the successful completion of the pilot.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD has opted to grant waivers and deviations and will not seek designation as a pilot program.

    Recommendation: Where necessary, the Secretary of Defense should seek legislative relief from those impediments he cannot waive. For example, the Secretary could request approval for the TRW pilot to proceed as part of the DOD Defense Acquisition Pilot Program.

    Agency Affected: Department of Defense


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