Army Procurement

Pursuant to a congressional request, GAO reviewed former employees' allegations regarding the spare parts pricing practices and the deliberate use of defective parts by the Army contractor responsible for the production of the Bradley Fighting Vehicle.

GAO found that: (1) the spare parts prices that the contractor developed and entered into the Army's Master Data File were often estimates that had little relationship to the parts' actual costs; (2) the Army used the contractor's cost and pricing data for negotiating prices; (3) the Defense Contract Administration Services (DCAS) or the Defense Contract Audit Agency reviewed the proposed prices; (4) although it did not review the reasonableness of the contractor's spare parts prices, GAO had previously identified significantly overstated prices in the Bradley contracts; (5) DCAS concluded that the contractor's automated system for tracking the disposition of nonconforming material used during Bradley production did not provide adequate controls to reduce the receipt of nonconforming materials from subcontractors; (6) there was no evidence that the contractor knowingly used problem parts during Bradley production; (7) DCAS was unaware of any further instances of unauthorized parts removal after the contractor's issuance of instructions prohibiting employees from removing parts from vehicles that had been logged in for government inspection and acceptance; and (8) the government's oversight of the contractor's quality assurance systems adequately provided for the identification and resolution of product quality problems.