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Defense Logistics Agency Did Not Obtain Fair and Reasonable Prices From Meggitt Aircraft Braking Systems for Sole-Source Commercial Spare Parts (REDACTED)
OFFICE OF THE INSPECTOR GENERAL (DEPARTMENT OF DEFENSE) ARLINGTON VA
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Our objective was to determine whether the Defense Logistics Agency DLA purchased sole-source commercial spare parts from Meggitt Aircraft Braking Systems MABS Corporation at fair and reasonable prices. The DLA Aviation contracting officer did not obtain fair and reasonable prices for 51 of 54 statistically sampled sole-source commercial spare parts procured from the MABS companies. This occurred because the contracting officer did not conduct sufficient price analysis in accordance with federal and defense acquisition regulations. Specifically, the DLA Aviation contracting officer relied on previous over-inflated contract prices to determine the 2013 contract prices did not sufficiently analyze the commercial of a type parts to determine whether the sales of comparable parts supported the contract prices accepted excessive prices for new quantity ranges and did not compare commercial sales to Government sales to determine whether sales were sufficient to support commercial part prices. In addition, the contracting officer did not obtain cost data or perform a cost analysis on parts with prices that were not supported by the commercial sales data. The contracting officer also included language in a contract clause that limited DLA Aviation s ability to fully negotiate As a result, DLA potentially overpaid MABS companies approximately 8.5 of 17 million paid for 32 sole-source commercial spare parts reviewed. In addition, DLA may overpay as much as 70.5 million on 47 of 51 parts over the remaining term of the contract. When projected across the contract for all 5 years, DLA will overpay approximately 106.8 of 294.9 million see Appendix E.
APPROVED FOR PUBLIC RELEASE