Commercial Spare Parts Purchased on a Corporate Contract.
Abstract
This report is one in a series and is a follow-on to previous audits involving commercial pricing of spare parts The first two reports covered Defense Hotline cases involving commercial pricing of spare parts The first report discussed an allegation that the Defense Logistics Agency (DLA) paid a contractor significantly higher catalog prices for commercial items than the cost-based prices previously paid for the items The second report discussed an allegation that DLA was procuring commercial and noncommercial items from another contractor on a sole-source basis. The sole-source prices were significantly higher than the competitive prices previously paid by DoD for the items. Since both allegations were substantiated, we conducted this audit to determine if DLA paid higher than fair and reasonable prices to other contractors. During FYs 1996 and 1997, DLA issued delivery orders totaling $25,389,275 to Allied Signal Incorporated (Allied) on corporate contract SP0500-96-D-9502 (the contract). We reviewed a total of 408 orders valued at $20,521,536. The DLA supply centers used the contract to purchase spare parts that were commercial catalog items which included gearshafts, wheels, nuts, bearings, seals, filters, and valves DoD buying offices also used eight additional contracts to procure items from Allied during FYs 1996 and 1997, however, none of the items purchased on those contracts were commercial items Audit Objectives. The primary audit objective was to determine whether commercial catalog prices paid by DoD to Allied were fair and reasonable when compared with previous noncommercial prices for the same items Audit Results. For the commercial purchases we reviewed, DLA supply centers paid Allied prices that were higher than fair and reasonable in FYs 1996 and 1997 when compared to the noncommercial prices paid to Allied in previous years. We determined that DLA paid a 54.5 percent premium for commercial parts from Allied.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 13, 1999
- Accession Number
- ADA367656
Entities
People
- Henry F. Kleinknecht
- Keith A. Yancey
- Paul J. Granetto
- Shawn L. James
- Terry L. Mckinney
Organizations
- Office of the Inspector General, U.S. Department of Defense