Defense Procurement

DOD Should Assess Cost Impact of Contractor Teaming Arrangements Gao ID: NSIAD-92-15 April 2, 1992

GAO reviewed the use of teaming arrangements among defense contractors in the development phase of four major weapon systems. Primarily because of reductions in the planned production quantities or program termination, three of the four programs did not achieve their original purpose of evolving into two equally qualified sources that could compete for future production contracts for the entire system. The teaming arrangements GAO reviewed contained provisions that could adversely affect future production costs.

GAO found that: (1) despite initial plans for dual-source competition, LH and V-22 Program plans were changed to a joint production arrangement because planned production quantities were insufficient to justify the increased costs associated with dual production lines; (2) changes were made later to the LH Program so that team members could jointly manufacture the production aircraft instead of each member independently manufacturing the complete, identical production aircraft in direct competition with its former team member; (3) joint production was considered for the A-12 Program, but would not have been economically justified for the expected number of production aircraft before the program was terminated in January 1991; (4) only the AAWS-M Program remained structured to establish dual-source competition between the team members for a share of the production contracts, but the written agreement for the AAWS-M Program includes a provision that could have adverse effects on future production contract costs; and (5) if the government had pursued a dual-source contracting strategy for the production of the LH, V-22, and A-12, provisions in the written agreements between team members would also have had an adverse effect on future production contract costs.

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.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.