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NSIAD-84-90 1 (1984-04-13)

handle is hein.gao/gaobabnie0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION B-214856 123909 APRIL 13, 1984 The Honorable J. James Exon United States Senate Dear Senator Exon: Subject: Prices Paid for Supply Items Purchased by Contractors that Operate and Maintain Tankers for the U.S. Navy's Military Sealift Command (GAO/NSIAD-84-90) In response to your March 21, 1983, request, we made a limited review of the procedures the U.S. Navy's Military Sea- lift Command (MSC) uses to reimburse two contractors for main- taining and operating 18 tanker ships. You asked us to make the review because you had received information alleging that MSC was being overbilled by as much as 115 percent for maintenance and repair items for these tankers. You also asked that our investigation cover whether the contractors purchased items com- petitively and used small businesses, how MSC administered the contracts to assure only needed items were bought and delivered to the ships, and the rationale and economies for different support arrangements. During and at the conclusion of our review, we briefed your Office on the progress and results of our limited work. We agreed that because our work did not support the allegation, further investigation by us would not be productive. Accord- ingly, as also agreed, we have summarized our results in this report. On the basis of our limited work, we did not find instances of overpricing or purchases of unneeded items. This does not mean, however, that the person who informed you of overpricing did not actually observe that condition. Because that person could not identify specific transactions to trace, we made a judgment sample of invoices to test MSC's invoice review proce- dures and the contractors' buying practices. MSC officials told us that their review procedures provide reasonable assurance that inefficient or wasteful methods are not being used by con- tractors. For example, an engineering specialist reviews all contractors' reimbursement invoices and verifies prices and need for unfamiliar items on a spot-check basis. Also, the two con- tractors provided us with reasonable explanations for their noncompetitive purchases. (942266)

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