GAO: DOD Prime Vendor Program Still A Problem

Fourteen years after the GAO identified Department of Defense (DOD) contract management as a "high risk" for abuse, the latest report says "it remains so today." GAO charges that DOD "does not provide adequate oversight over defense contracts." (pdf)

DOD, like many government agencies (including FEMA), relies on a "prime vendor" system (valued at $9 billion) to minimize on-site inventory. That's smart business. The problem comes when prime vendor prices escape scrutiny. That's wasted taxpayer money.

For example: the Defense Supply Center Philadelphia could not explain "why the price of an aircraft refrigerator increased from $13,825 in March 2002 to $32,642 in September 2004." Not only that, but on 24 September 2005, DOD paid two different prices for the same refrigerator -- $32,642 and $29,975! This lack of pricing review has been noted on GAO reviews since 2002. And yet it still happens.

The GAO finds problems; the agency says here's what we'll do to fix it; and then the next review shows ... no appreciable change. Why? Maybe it's because political apppointees run agencies frm the top -- they're here today, gone tomorrow. No worries about lost bonuses or promotions if the system remains broken.

See also: How Much Is A Billion, GAO: Defense Spends Billions on PR, Corporate Welfare, More Katrina: GAO Reports Fraud; Trailers Languish in Arkansas, GAO: IRS Procedures Threaten Taxpayer Confidentiality