Internal Controls

Air Force Can Improve Controls Over Contractor Access to DOD Supply System Gao ID: NSIAD-88-99 March 18, 1988

Pursuant to a congressional request, GAO examined the Air Force's policies, procedures, and practices for providing and controlling government-furnished materiel (GFM) to Department of Defense (DOD) contractors, focusing on the Air Force's: (1) compliance with requirements to justify and document decisions to provide GFM; (2) management controls for validating and approving contractors' GFM requests; and (3) oversight of contractor maintenance of GFM.

GAO found that the Air Force: (1) violated the existing Federal Acquisition Regulation (FAR) and DOD and Air Force policies by routinely providing GFM to contractors without adequate evaluation or justification; (2) provided GFM even when materials were commercially available at lower prices; (3) did not properly implement an Air Force Logistics Command (AFLC) regulation requiring identification of specific parts and quantities contractors needed; (4) established management control activities (MCA) to control GFM requisitions on the wholesale, but not retail, level; (5) cited accuracy problems in its D034A Special Support Stock Control and Distribution System and its D049 database, both intended to track contractors' requisitions for and receipt of GFM; (6) improperly allowed contractors direct access to supply sources or used military codes instead of the contractors' DOD Activity Address Codes to requisition supplies; (7) was unable to verify the amount of GFM contractors received or maintained, since government property administrators did not provide appropriate oversight, such as verification of contractors' receipt records or annual property surveys; and (8) has implemented some controls to correct internal problems, but still does not have independent means to identify the amount of GFM contractors have, the amount provided annually, and the amount of excess GFM.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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