Defense Procurement

GAO reviewed the Air Force Logistics Command and Defense Logistics Agency programs for awarding contracts to vendors with superior quality and delivery histories, but not necessarily offering the lowest prices. This report addresses (1) the origins of these programs, whether they were started in response to evidence of significant quality problems in vendor performance, and what formal legal reviews were done on the programs; (2) the extent of their use and how much they increased prices; (3) the programs' competitive impact on small businesses; and (4) whether preexisting procurement practices could accomplish the same thing.

GAO found that: (1) AFLC and DLA initiated their quality vendor programs in response to a recommendation to emphasize past performance as a factor in contractor selection; (2) AFLC and DLA have made relatively few program awards to quality vendors and only a small portion of those involved price differentials; (3) DLA expects its quality vendor program to be replaced with a vendor rating system in calendar year 1993; (4) the quality vendor programs have not limited the ability of small businesses to compete for awards; (5) DLA and AFLC regulations require contracting officers to consider whether the low offerer is a new entrant to the marketplace prior to determining whether to award a contract to the low offerer or to a quality vendor at a higher price; and (6) AFLC and DLA quality vendor programs incorporate pre-existing procurement practices of using source selection factors other than price in making award decisions and making responsibility determinations before awarding contracts.