Defense Acquisitions: Status of Defense Logistics Agency's Efforts to Address Spare Part Price Increases

The Department of Defense (DOD) has experienced significant increases in the prices it pays for consumable spare parts, which are "consumed" when used or discarded when worn out because they cannot be cost effectively repaired. The Defense Logistics Agency (DLA) manages four million consumable spare parts or 93 percent of all consumable spare parts used by the military services. DOD is required to perform price trend analyses on some categories of commercial spare parts, address unreasonable price escalation, and report the results to Congress for three consecutive years beginning in April 2000. DLA has completed two price trend analyses for DOD. In addition to the price trend analyses, DLA also did a procurement management review in fiscal year 2000 to assess the overall risk of spare parts overpricing. The agency also has three information technology initiatives underway to determine price reasonableness for DLA customers and buyers. These efforts are in various stages of completion, and it is too early to assess their results.