[ENCLOSURE (3)] NAVY POSITION STATEMENT ON Comptroller General of the United States Review of Noncompetitive Procurement of Aeronautical Replacement Spare Parts Within the Department of Defense (See Enclosure (2) for Significant Corrective Actions Although It is Agreed That Generally Competitive Procurement The Master or "Open" Form of Contract Has Significant Advantages and, in and of Itself, Does Not Bar Or Discourage Competitive The Navy Has Not Been the Victim of Profiteering or Price Gouging Under Its Noncompetitive Procurement of Spare Parts. IMPORTANT PRICING FEATURES OF ASO PRINCIPAL AERONAUTICAL NAVY POSITION ON GAO DRAFT REPORT TRANSMITTED APRIL 21, 1961, AND ENTITLED "REVIEW OF NONCOMPETITIVE PROCUREMENT OF AERONAUTICAL REPLACEMENT SPARE PARTS WITHIN THE DEPARTMENT OF DEFENSE", INCLUDING RELEVANT COMMENTS ARISING OUT OF HEBERT SUBCOMMITTEE HEARINGS ON THIS SUBJECT INTRODUCTION The procedure utilized in this response differs somewhat from the normal manner of responding to a GAO draft report. This has been occasioned by the fact that congressional hearings were held before the issuance of a final GAO Report which normally would have first been made after receipt of comments from the Department of Defense and the opportunity for any needed clarification and correction. The contents of the draft report were in effect revised and extended by the hearings, including the testimony of the Comptroller General, that of his supporting witnesses, and the further testimony adduced as the result of the extensive questioning of Department of Defense witnesses by the Sub committee members and counsel. For the above reasons, it has been considered appropriate to include in this single response comments on the information supplementing the draft report itself which, from a practical viewpoint, has been inseparably amalgamated with the draft report into a single overall general problem area which might appropriately be called "The Circumstances Concerning the Noncompetitive Procurement of Aeronautical Replacement Spare Parts and the Prospective Future Course of This Situation. " this problem area that this response is directed. A. It is to SUMMARY OF DRAFT REPORT, TESTIMONY, AND IMPLICATIONS THEREFROM. I. The Current GAO Draft Report The subject draft report brings to the attention of the Navy areas of deficiencies in the noncompetitive procurement of aeronautical replacement spare parts. are that 1. 2. 3. - the military services continue to buy the majority of aeronautical replacement spare parts from the there has been a substantial amount of unnecessary noncompetitive procurement of aeronautical replacement spare parts; contracting officers have made little effort to find or develop competitive sources of supply; the absence of competition has probably increased the generally noncompetitive procurement is more costly than competitive procurement. |