The Army's Award of a Contract for Power Supply Units Under the Authority of 10 U.S.C. 2304(a)(16)

In response to a congressional request, GAO examined the price differential between establishing another source and using an existing source to produce power supply units for conventional ammunition.

GAO found that, under existing legislation or regulation, there is no cost limit or ceiling for the establishment of a second source to provide power supply units for mobilization base purposes. Legislation authorizes the Armed Services Secretaries to negotiate purchases and contracts if they determine that it is in the interest of national defense to have other sources available for furnishing property or services in case of a national emergency. Further, decisions of the Comptroller General have recognized that the exercise of this authority may sometimes require payment of a premium and that this action was contemplated by Congress. GAO noted that the Armament Material Readiness Command, acting on the recommendation of an Army survey of the secondary sources' readiness posture, awarded the firm a contract to correct apparent defects in the mobilization program. GAO stated that the Army's rationale for the award was improvement in the mobilization base.