Navy Contracting

In response to a congressional request, GAO reviewed the Navy's contract for maintenance services on the T-34C and T-44A aircrafts. GAO evaluated the Navy's contracting methods and the results of the change from a sole-source negotiated contract to a fixed-price, competitive bid contract, including: (1) Navy procurement procedures; (2) the total cost of maintenance before and after competition; (3) reliability of the aircraft fleet and quality of maintenance before and after competition; and (4) lessons that the Navy learned from the competition that it might use to improve future maintenance contract decisions.

GAO found that: (1) in the two-step, sealed-bid procedure the Navy used, step one involved requesting technical proposals from offerers while step two involved the evaluation of the offerers' qualifications based on their technical proposals and solicited sealed bids; (2) it was not able to determine whether the Navy reduced its maintenance costs by going from a sole-source to a competitive fixed-price contract; (3) the Navy estimated its net contract cost for fiscal year 1986 at $25.6 million; (4) the awardee requested another contract payment of $9.8 million to pay for material and support items that were not included in the solicitation; (5) although readiness levels for the aircraft dropped from 85 percent under the sole-source contract to 43 percent for the T-34C and 50 percent for the T-44A, they improved a year later to 68 and 55 percent; and (6) reduced readiness levels resulted partially from contractor transition problems. GAO also found that Navy officials could improve the process by: (1) providing bidders with adequate specifications on the maintenance support required to reduce the number of contract amendments to be noncompetitively negotiated; (2) providing clearer and more timely responses to questions on the contract requirements to reduce the number of subsequent contract changes; and (3) allowing more time between solicitation and contract award to accomplish these tasks.