Defense Logistics Agency Aviation Generally Purchased Sole-Source Spare Parts From the General Electric Company at Fair and Reasonable Prices, but Improvements Could Be Made (Redacted)

Objective

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).

Finding

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.

Recommendations

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.

Management Comments 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.