Procurement

In response to a congressional request, GAO analyzed the nine multiyear procurement candidates the Department of Defense (DOD) proposed in its fiscal year 1988 budget request to determine if they met legislative criteria.

GAO noted that most DOD program offices: (1) estimated contract costs based on limited data and little or no formal cost information from contractors; (2) assumed that multiyear procurement would save money; and (3) made limited attempts to determine specifically how and to what extent multiyear contracting could reduce costs. GAO found that: (1) two of the nine candidates proposed for multiyear procurement generally met the criteria; and (2) there were areas of increased risk in the remaining seven candidates that Congress should weigh against potential savings in determining whether it should grant multiyear procurement authority for them. GAO believes, in view of the high level of uncertainty associated with many of the estimates in the budget justification materials, Congress should carefully examine the negotiated prices and the validity of expected savings.