Review of Selected Defense Logistics Agency Procurement Practices

In response to a congressional request, GAO reviewed small business organizations' allegations that the Defense Logistics Agency acted improperly by: (1) purchasing items noncompetitively; and (2) not having the technical data available to allow small businesses to compete for its contracts. The allegations mainly concerned the transfer of consumable items from the services to the Defense Construction Supply Center (DCSC) and the Defense Industrial Supply Center (DISC).

GAO found that DCSC and DISC had changed the procurement method codes of a small percentage of items from competitive to noncompetitive; however, the changes were justified and had little effect on previous suppliers. At these two centers, small businesses have received over 50 percent of the contracting money and over 65 percent of the procurement awards annually since fiscal year 1980. GAO found that DCSC and DISC did not have complete technical data packages, which provide information necessary for a contractor to produce items, including those items which had been transferred to DCSC and DISC. According to DCSC and DISC officials, those technical data were unavailable, incomplete, or proprietary. DCSC and DISC try to obtain and develop technical data and to encourage potential contractors to develop and submit technical data for review. While the absence of technical data inhibits competition, it may not be economical to develop such data for items seldom purchased or whose annual cost is very little. Both centers have given priority to obtaining technical data for items bought frequently and in significant annual dollar amounts.