The Navy Should Improve Its Management of Defective Government-Furnished Materials

GAO reviewed the Navy's practice of providing government-furnished material (GFM) to contractors for use in the construction, overhaul, and repair of its ships, airplanes, and missiles.

The Navy spends millions of dollars each year to repair or replace materials which are found to be defective after contractors receive them. However, neither GAO nor the Navy know how much is being spent to replace or repair defective GFM because the reporting systems which the Navy has established to identify these costs are not working. The Navy's failure to identify the magnitude of defective GFM and its associated costs for replacement or repair has precluded management from having the oversight needed to take effective action to correct the problems. The Navy has no central point of control or accountability over defective GFM. Instead, Navy management is fragmented among the various commands which develop their own reporting systems. Such systems are not monitored to ensure consistency and needed interface. All of the systems reviewed were experiencing problems with underreporting of defective GFM and the submission of inaccurate data in their quality deficiency reporting (QDR) system reports. The data developed, which indicated vendors who habitually provided defective items, were not being used effectively to encourage those vendors to correct the deficiencies or to avert additional purchasing from the vendors. In addition, the Navy was not taking action to make the vendors financially responsible for the poor quality of products provided as GFM.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John Landicho Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-6504