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GAO-03-590R 1 (2003-05-23)

handle is hein.gao/gaobaamfb0001 and id is 1 raw text is: I Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 May 23, 2003 The Honorable John Ensign Chairman The Honorable Daniel Akaka Ranking Minority Member Subcommittee on Readiness and Management Support Committee on Armed Services United States Senate Subject: Use of Value Engineering in Defense Acquisitions Value engineering (VE) is a recognized technique for reducing costs while maintaining or improving productivity and quality. DOD's VE program consists of both government- and contractor-developed cost-reduction projects designed to reduce a system's life-cycle costs. In response to your request, we agreed to provide information on (1) the role the VE program has played in supporting cost reduction in DOD weapons system programs and (2) the alternative measures program managers take to reduce costs and/or incentivize contractors. This letter transmits the information we presented to your staff at a briefing on February 27, 2003 (see encl. I). To complete our review, we identified the extent VE projects were being undertaken at several buying activities.' We also reviewed the relevant statute, regulations, and guidance and interviewed key DOD and contractor officials. We also made use of our work on commercial best practices that identified opportunities leading organizations use to reduce life-cycle costs. We did not rely on DOD reports of VE savings because the DOD inspector general had determined in earlier audits that the reports included savings from other, non-VE initiatives. To identify the measures program managers take to reduce costs, we reviewed the approaches taken on 11 weapons system programs. At the buying activities we covered, we selected programs for review that were in production and/or previously reported VE savings. We performed our work between August 2002 and March 2003 in accordance with generally accepted government auditing standards. 'These buying activities were the Army Aviation Missile Command, Army Tank and Automotive Command, Air Force Materiel Command, Space and Naval Warfare System Command, and Naval Sea Systems Command. They were selected to cover all services and a range of programs. GAO-03-590R Value Engineering

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