Lack of Full Disclosure of EF-111A Program Cost
PSAD-80-16: Published: Dec 4, 1979. Publicly Released: Nov 17, 1982.
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The Air Force is converting 42 F-111A aircraft into EF-111A tactical jamming systems, requiring the purchase of one modification kit for each aircraft. The Air Force planned to buy these kits over a 4-year period, starting with a contract for six kits in fiscal year (FY) 1979. Based on its budget request to buy one kit during FY 1980, the Air Force estimated a total program cost of $990.4 million. The Air Force also estimated that, if it bought six modification kits in FY 1980 instead of one, the total cost of the program would be reduced by $54.4 million. The House Armed Services Committee voted to authorize a six-kit buy for FY 1980 after receiving this information.
GAO stated that an analysis of the $54 million savings showed that about $41 million, or 76 percent, did not represent actual savings to the government but rather a transfer in costs from the EF-111A program to the replenishment spares program. Due to the change in the fiscal year buy quantity, the Air Force Systems Command would buy fewer initial spares than required, making the EF-111A program appear less costly. However, these spare parts would later be purchased by the Air Force Logistics Command as part of its replenishment spares program. Since the $41 million spare part cost to field and operate the EF-111A does not change, this amount should not be represented as a savings in program costs through more efficient buys. Air Force officials pointed out that their accounting system allows program costs allocated to initial spares to be transferred to the replenishment spares program. When this accounting change in cost allocations occurs, it is not uncommon for such reductions in initial spares cost to be reported as program savings. As a result of this practice, cost information was not fully and accurately disclosed to Congress and may affect the decision to be made concerning the number of kits to be procured for FY 1980.
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