Procurement

In response to a congressional request, GAO reviewed seven multiyear contract candidates proposed in the Department of Defense (DOD) 1988 through 1989 biennial budget to determine if they satisfied legislative criteria for multiyear procurement.

GAO found that: (1) DOD estimated that the costs for the seven contracts would total about $9.1 billion over 5 years, representing a projected savings of about $9.1 billion compared to procurement through a series of annual contracts; (2) since five of the seven contracts were for procurements under existing multiyear contracts, the savings projected from comparing multiyear and annual cost estimates were not firm; (3) proposed DOD budget plans for fiscal years 1990 through 1994 did not fully support the multiyear funding requirements in its 1988 budget, since they included two instances where the applicable military service proposed no funding for the systems, two instances of less-than-required funding, and one instance of a 1-year extension on a planned multiyear contract; (4) the services' lack of support for the multiyear candidates created uncertainity as to whether they would request enough funding to carry out the contracts; and (5) one candidate system would not complete major design stability tests until after award of the multiyear contract and obligation of the funds.