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Defense Acquisitions: Prices of Navy Aviation Spare Parts Have Increased

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This is the third in a series of reports responding to a request that the General Accounting Office GAO review allegations of significant price increases in Department of Defense weapon system spare parts. In particular, some military services have raised concerns about increases in the prices of spare parts and the adverse impact escalating prices have had on the readiness of military forces. In response to these concerns, it was requested that GAO examine trends in the prices of aviation parts managed by the Navy to 1 determine whether prices were increasing over time and 2 identify the reasons for the price increases. In addition, GAO examined the effect such price changes were having on customers. This report focuses specifically on reparable spare parts the Navy and the Marine Corps use to maintain their aircraft and helicopters. These parts are aircraft components that can be economically repaired when they fail to perform properly. Spare parts are repaired at either military depots or contractor facilities. Over 90 percent of the time when requisitioning parts, customers turn in an item that is broken, but that can be repaired, to the defense logistics system. In 1999, customers spent about 1.7 billion on these types of requisitions. Navy spare parts are managed under the Navy Working Capital Fund. This is a revolving fund that relies on revenues generated from parts and services sold to customers to finance subsequent operations. It is expected to generate sufficient revenue to cover the full costs of operations and operate on a break-even basis over time-that is, not to make a profit or incur a loss. Customers or parts from the Navys supply system and pay the working capital fund from their appropriations.

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  • Economics and Cost Analysis
  • Logistics, Military Facilities and Supplies

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