Department of Defense Small Purchases
PSAD-79-81: Published: May 7, 1979. Publicly Released: May 17, 1979.
- Full Report:
Purchases made by the Department of Defense (DOD) were examined with particular emphasis on contracts awarded by the Defense Logistics Agency (DLA) to the Cardwell Condenser Corporation.
The services and DLA are generally following prescribed procurement procedures to insure that prices are reasonable in awarding small purchases. No consistent pattern of overpricing was found on contracts awarded to Cardwell. However, there is a need to correct minor deficiencies. Problems exist with documentation. Price reasonableness on competitive purchases was often based on previous buys. Normally, buyers did not adequately document the basis for determining price reasonableness. Buyers generally did not update source data in the central files when they identified errors. Purchases were sometimes not recorded in the automated system. In a few instances, this resulted in the payment of excessive prices because the buyer did not know of the previous buy at a lower price. Reference data in central files or on bidders' lists were often inaccurate, as were standard prices. If accurate, these prices could be valuable in gaging the reasonableness of bids received. Available sources were not always solicited. These sources would have provided the items at lower prices.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of Defense should insure that: files are clearly documented to show the basis on which the price paid was determined to be reasonable; suppliers are removed from source lists when it is found they are no longer a supplier for the particular item or are unwilling to quote prices on small purchases; buyers do not rely on previous buys to the same source to justify new sole-source prices; standard prices are based on current and accurate data so that more reliance can be placed on these prices; and reference files are properly annotated when a supplier has a minimum billing policy.