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GAO-07-396R 1 (2007-02-26)

handle is hein.gao/gaocrptauwl0001 and id is 1 raw text is: Accounab lty * Integrity * RelIabIity United States Government Accountability Office Washington, DC 20548 February 26, 2007 The Honorable Carl Levin Chairman The Honorable John McCain Ranking Minority Member Committee on Armed Services United States Senate The Honorable Ike Skelton Chairman The Honorable Duncan L. Hunter Ranking Minority Member Committee on Armed Services House of Representatives Subject: Defense Management: DLA Has Made Progress in Improving Prime Vendor Program, but Has Not Yet Completed All Corrective Actions The Department of Defense (DOD) operates a worldwide supply system, with the vast majority of the items being managed by the Defense Logistics Agency (DLA).' Media reports in October 2005 raised concerns about the use of the prime vendor concept and the prices that DLA was paying for items acquired through a prime vendor, and the House Armed Services Committee held a hearing on the matter on November 9, 2005.2 As a result of the hearing, DLA officials recognized the need to improve management oversight and internal controls over the program, and they proposed a series of corrective actions. Under the prime vendor concept, DOD relies on a distributor of a commercial product line, who provides that product line and incidental services to customers in an assigned region or area of responsibility. Products or services are to be delivered within a specified period of time after order placement. The prime vendor provides the product either at the cost paid to obtain it or at a price agreed upon in advance 'DLA is DOD's largest combat support agency, providing worldwide logistics support in both peacetime and wartime to the military services as well as several civilian agencies and foreign countries. 2The prime vendor program uses a contractual arrangement with one or more commercial vendors to supply a wide range of commercial off-the-shelf material directly to military customers on a just-in- time basis. GAO-07-396R Defense Management

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