Report | Nov. 8, 2012

Deliveries and Payments for the Defense Advanced GPS Receivers Met Contract Terms, but Property Accountability Needed Improvements

DODIG-2013-018

What We Did

We determined whether deliveries and payments for the Defense Advanced Global Positioning System (GPS) Receiver (DAGR) contract FA8807-09-C-0002 were made in accordance with contractual agreements and applicable criteria.

What We Found

Rockwell Collins, Inc. (RCI), delivered DAGRs in accordance with contract terms and the Defense Finance and Accounting Service (DFAS) correctly paid $27.1 million in DAGR contract transactions we reviewed. As a result, the Military Departments received the DAGRs needed to meet mission requirements. However, personnel in the acquisition and logistics offices in each Military Department did not properly account for 75,727 DAGRs, valued at $114.8 million, that were stored in an RCI warehouse. Those responsible for the DAGR inventory inappropriately relied on the RCI inventory system. Additionally, a discrepancy of approximately 72,550 DAGRs existed between the number of DAGRs delivered by RCI and the total number of DAGRs reported by the Military Departments as deployed or stored outside RCI’s customer-owned property system. This occurred because acquisition and logistics personnel did not maintain appropriate accountability records.

Each Military Department must properly manage its DAGR inventory to provide optimal support to the warfighter. In addition, the DoD accountability records must be easily retrievable and reconcilable to the number produced. Furthermore, the procurement contracting officer (PCO), Air Force, Space and Missile Systems Center, Global Positioning Systems Directorate, inappropriately authorized $102.4 million in performance-based payments (PBPs) on the DAGR contract. The contract did not meet Federal Acquisition Regulation requirements that would justify authorization of PBPs. The PCO used performance-based financing on this contract because the previous contract contained PBPs and because of the increased DoD emphasis on the use of this type of financing for fixed-price contracts. The use of PBPs cost the Military Departments $49,788 in processing fees and created an unnecessary administrative burden. What We Recommend

The Military Departments should:

  • record all DAGRs in Government property systems, and  
  • initiate a complete inventory reconciliation.

In addition, the Chief of Contracts, U.S. Air Force, Space and Missile Systems Center, Global Positioning Systems Directorate, should provide PCOs with training on when and how to use PBPs.  

Management Comments and Our Response

Comments received were responsive to the recommendations; however, the Commander, Air Force Materiel Command, Logistics Readiness Division, did not respond to Recommendations B.1, B.2.a, and B.2.b. Additional comments are requested.