The Department of Defense Has Not Minimized the Amount of Equipment It Provides to Contractors

GAO reviewed the extent to which the Department of Defense (DOD) implemented government policies relating to the way defense contractors acquire, use, retain, and dispose of government equipment. GAO found that: (1) as of September 1984, over $8.4 billion worth of government equipment was in the possession of defense contractors; (2) DOD has no central accountability or visibility over how much government-furnished equipment (GFE) is acquired annually, how it is being used, or how much is being discarded; (3) DOD has not minimized the amount of equipment it provides to contractors because vague federal regulations allow it to provide any equipment it wants, contractors lack incentives for furnishing their own equipment, sales of government-owned plants and equipment have been limited, and inadequate acquisition guidelines; (4) overall government policies which call for maximum reliance on contractors to furnish all equipment have not been effectively implemented; (5) since DOD does not have a management information system which identifies the quantity of equipment provided to contractors, it is impossible to determine whether the amount of GFE has increased or decreased; (6) quantities of GFE at contractor locations were either in excess of what was required for active contracts or were being used very little; and (7) contractor and defense officials do not adequately evaluate the continued need for particular types of equipment or take timely action to dispose of excess GFE. GAO also found that the Navy has recognized that large cost reductions are possible if contractors are required to provide their own equipment and, in the instances where it has applied this policy, it has avoided potential costs amounting to hundreds of millions of dollars.