DOD Guidance on the Combined Procurement Procedure Needs Provisions for Audit Verification

GAO reviewed existing and proposed Department of Defense (DOD) guidance, DOD and contractor audit reports, and Navy and contractor procurement records on the use of the combined procurement procedure to order spare parts and production components for weapon systems to determine whether DOD guidance was adequate to ensure that savings from the procedure were being realized.

GAO noted that DOD drafted an instruction on the procurement procedure which: (1) made it mandatory that the combined procurement procedure be considered in acquiring spare parts and production components; (2) expressed a preference for acquiring spare parts directly from subcontractors because of the expectation of prime contractor surcharges; and (3) required that prime contractors furnish DOD with information on the timing of its orders for production components. GAO found that: (1) the Navy did not have a systematic approach for verifying that the manufacturers actually were combining orders for pricing purposes; (2) the benefits of the combined procurement procedure would be enhanced if audit verification requirements were added to the proposed DOD instruction; and (3) DOD procurement offices must furnish the Defense Contract Audit Agency (DCAA) with information on the numbers, dates, and quantities of all the orders to be combined, rather than just information on the DOD order being audited.

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