Book Description

GAO studied the progress the Department of Defense (DOD) has made in implementing its policy of minimizing the amount of government-furnished equipment (GFE) it provides to contractors. GAO found that at the end of fiscal year 1984, contractors had over $8.4 billion of GFE in their possession, but noted that its estimate might not be accurate because DOD and the services did not know how much GFE contractors had acquired, discarded, or transferred. GAO also found that DOD has not minimized the amount of GFE it provides because: (1) applicable portions of the Federal Acquisition Regulation (FAR) and the DOD FAR Supplement are too broad; (2) contractors generally lack incentives to furnish their own equipment; and (3) DOD and the services have provided insufficient guidance to program managers and procurement officials on the appropriate uses of GFE. In addition, GAO found that: (1) a substantial portion of GFE is located at government-owned, contractor-operated (GOCO) plants which DOD and the services have not attempted to sell; (2) DOD has not sold some GFE because it is uncertain about its legal authority to sell excess equipment directly to contractors; (3) DOD does not adequately oversee contractors' acquisition, retention, and disposal of GFE; (4) some contractors ignore established controls over GFE, with DOD concurrence; (5) contractors frequently acquire GFE from commercial sources, without checking government inventories; (6) contractors frequently fail to dispose of excess equipment or properly document GFE transfers; and (7) DOD is developing a database for property managers to monitor GFE.