Contracting

Pursuant to a congressional request, GAO reviewed the Air Force's recent contract award for lithium batteries for the Minuteman and Peacekeeper missile systems, focusing on whether: (1) the awardee had the proven facilities to produce the batteries; (2) the awardee underwent and passed qualification testing to become a second-source producer for the batteries; (3) the Air Force conducted an on-site inspection of the awardee's plant capability; and (4) the Air Force obtained information on the awardee prior to awarding the contract.

GAO noted that, from March 1978 to January 1984, the Air Force obtained lithium batteries from a single qualified supplier but, in January 1984, qualified another firm as a battery producer. GAO found that: (1) in June 1984, the Air Force awarded a contract to the second firm; (2) the awardee has or had Navy and Army contracts to produce lithium batteries; (3) the awardee produced batteries that exceeded the Air Force's requirement of 9,500 ampere-hours during qualification tests; (4) although the Air Force noted some deviation from specifications in the qualification test report, it believed that this would not affect the awardee's qualification as a second-source producer; (5) the Air Force will evaluate the awardee's capability to meet production requirements during first-article testing; (6) the awardee has not established its production line; (7) the Air Force visited the awardee's facility numerous times during the 1-year qualification period; and (7) the Air Force did not request the Defense Contract Audit Agency to evaluate the awardee's price proposal prior to contract award because it did not require such an evaluation.