July 24, 2015 —
Our audit objective was to determine
whether the Defense Logistics Agency (DLA)
Aviation was purchasing sole-source spare
parts at fair and reasonable prices from the
General Electric Company (GE).
The DLA Aviation contracting officer
generally purchased sole-source spare parts
from GE at fair and reasonable prices for
the nonstatistical sample of sole-source
spare parts reviewed, valued at $23 million
of the $104 million sole-source spare parts
purchased. However, the contracting officer
did not adequately support the commercial
item determinations for sole-source spare
parts procured from GE. This occurred
because the contracting officer did not:
- validate the prior commercial item determinations; and
- maintain the documentation for the prior determinations.
As a result, the contracting officer may not
obtain the appropriate cost or pricing data
required to develop an effective bargaining
position during future negotiations.
The Director, DLA, should require DLA Aviation contracting
officers to perform market research to validate that prior
commercial item determinations are appropriate before they
award future contracts. The Director should also require
contracting officers to retain documentation of the market
research and rationale in the contract file that support
commercial item determinations.
and Our Response
Comments from the Director, DLA Acquisition, responding
for the Director, DLA, addressed all specifics of the
recommendations, and no further comments are required.
This report is a result of Project No. D2015-D000AT-0064.000.