Operation Desert Storm

In response to concerns about price gouging by contractors in the wake of the Persian Gulf war, GAO reviewed the unit prices associated with certain Defense Department purchases made to support Operations Desert Shield and Desert Storm. This report (1) compares wartime unit prices to peacetime unit prices for similar items to determine the extent that prices changed, (2) determines whether the war resulted in a pattern of higher prices that differed significantly from those seen during peacetime, and (3) reviews transactions involving large percentage increases in unit prices to ascertain the reasons for those increases.

GAO found that: (1) of the estimated $4.6 billion in Desert Storm purchases it evaluated, about $2.7 billion, or 60 percent, represented purchases that were within the range of lowest to highest peacetime unit prices for like items, about $1.4 billion, or 30 percent, represented purchases where unit prices were more than the highest peacetime price, and about $514 million, or 11 percent, represented purchases where unit prices were less than the lowest peacetime price; (2) most of the price increases were the result of the additional costs associated with rush deliveries of urgently needed items; and (3) the pattern of unit price increases and decreases during Desert Storm was similar to that of unit price changes during peacetime, and price changes often appeared to be more favorable to the government during Operation Desert Storm than during peacetime.