Army Acquisition

Oversight weaknesses have been a long-standing problem at the McDonnell Douglas Helicopter Company--the prime contractor for the Apache helicopter--and past efforts to correct them have fallen short. Problems with parts for the Apache have been due at least in part to McDonnell Douglas' inattention to the work of its subcontractors. For example, McDonnell Douglas provided inaccurate airframe drawings to one subcontractor and allowed it to produce at least 646 Apaches using these drawings. McDonnell Douglas is now instituting a new plan to overcome weaknesses in quality assurance, product definition, and program management identified by the Defense Department. The data needed to analyze the effectiveness of this corrective action, however, will be unavailable before July 1993. The steps that the military and McDonnell Douglas take to improve subcontractor oversight are particularly important because McDonnell Douglas will rely on subcontractors to do much of the work under its $5 billion Longbow Apache contract. Without adequate improvements in its subcontractor oversight, McDonnell Douglas' ability to deliver quality products under its Longbow contractor could be impaired.

GAO found that: (1) the Army's past efforts did not ensure that the contractor corrected its subcontractor oversight weaknesses; (2) the contractor implemented corrective action plans directed towards the symptoms rather than the systemic causes of the problems; (3) the Army did not use several available options to induce the contractor to correct its oversight problems; (4) the Army's actions, such as issuing major waivers and deviations to specifications and accepting nonconforming parts, gave tacit acceptance to poor contractor performance; (5) weak subcontractor oversight caused several helicopter parts problems; (6) although the contractor developed and implemented a corrective action plan, the Defense Logistics Agency (DLA) was unable to determine, due to insufficient data, whether it had improved subcontractor oversight; (7) DLA removed the contractor from its contractor improvement program because it was implementing a corrective action plan, but DLA will continue to monitor the contractor's progress; and (8) improved subcontractor oversight will have little impact on the Apache program since it is nearing completion, but its impact on the Longbow modification program could be significant.

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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