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Highlights

The primary source of improved national productivity has traditionally been new and technologically advanced capital equipment. Recognizing this, the Department of Defense (DOD) established a number of programs in the 1970's to simplify the procurement of productivity enhancing capital equipment. One such program entailed the establishment by Congress of special funds for buying equipment that would pay for itself in 2 years through cost savings. Now called the Productivity Enhancing Incentive Fund (PEIF), the program was reviewed by GAO in 1978. Concurrently, Congress temporarily stopped funding the program because of its concern over circumvention of the normal budget process. In the 1978 report, GAO supported the PEIF concept and recommended its reestablishment, while simultaneously pointing out program deficiencies. As a result, Congress reinstituted the program in 1979.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Air Force 1. The Secretaries of the Air Force and Army should take action to enhance the program's credibility by (1) establishing a system of independent, onsite postaudits to validate savings achieved; and (2) submitting, as part of the budget process, the required reports on where savings have been realized and applied.
Closed
GAO has no information on the actions taken in response to this recommendation.
Department of the Army 2. The Secretaries of the Air Force and Army should take action to enhance the program's credibility by (1) establishing a system of independent, onsite postaudits to validate savings achieved; and (2) submitting, as part of the budget process, the required reports on where savings have been realized and applied.
Closed
GAO has no information on the actions taken in response to this recommendation.
Department of the Navy 3. The Secretary of the Navy should request no additional funding for the PEIF program until an action plan for improving program management is developed and then reviewed and approved by the Secretary of Defense.
Closed
GAO has no information on the actions taken in response to this recommendation.
Department of Defense 4. The Secretary of Defense should require the Director of the Defense Productivity Program Office to evaluate the relative merits of all capital investment incentive programs for which it has responsibility to determine whether or not resources needed to ensure proper program implementation and guidance can be made available to the PEIF program. If needed resources cannot be found with the Defense Productivity Program Office, the Secretary should consider other alternatives such as reallocating resources from other programs, hiring additional personnel, or terminating the PEIF program.
Closed
GAO has no information on the actions taken in response to this recommendation.

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