Procurement

In response to a congressional request, GAO reviewed the Department of Defense's (DOD) quality assurance activities to determine: (1) how much nonconforming materiel the DOD inventory contained; (2) how DOD used its quality deficiency reporting system to identify contractors that repetitively sold nonconforming materiel; and (3) if DOD took actions to stop purchasing from those contractors.

GAO found that: (1) neither DOD, the services, nor the Defense Logistics Agency (DLA) had enough data to reliably estimate the total amount or value of nonconforming materiel in their inventories; (2) DOD did not perform 100-percent receipt inspections; (3) DOD believed that the items in its inventory were of high quality; (4) DOD designed its quality deficiency reporting system to initiate corrective actions after it discovered nonconforming materiel; (5) the system was not always reliable because of a lack of DOD-wide data systems to track contractors' quality history or exchange information between the services' contracting activities; (6) DLA and the services maintained lists of problem contractors to aid in determining contractor responsibility at source selection, but not to exclude contractors from the procurement process; (7) DOD continued to procure from contractors with histories of quality problems because they were the only sources, DOD urgently needed the items, or the contractor made progress to improve poor performance; (8) although DOD regulations prohibited awards to contractors that provided nonconforming materiel, they did not intend to arbitrarily exclude all such contractors from government contracting; and (9) DOD intended to increase emphasis on quality in the early procurement stages and make quality an evaluation factor equal to cost and schedule.