Torpedo Procurement Issues Related to the Navy's MK-50 Torpedo Propulsion System

Substantial savings may be obtained if the Navy were to provide MK-50 torpedo boilers to prime contractors as GFE. Subsequently, the General Accounting Office was asked to examine the cost and merits of the Navy separately procuring MK-50 torpedo components, focusing on the following questions 1 Would the Navy save money by separately procuring the propulsion system or selected components of it and providing them to the prime contractor as GFE 2 If separate procurement of these components is a good idea, when should the Navy implement this procurement strategy and 3 Would providing components of the propulsion system to the contractor as GFE affect the prime contractors warranty During the review, GAO discussed the Navys planned dual source competition for the entire torpedo and the effect any changes to this strategy would have on program costs with officials from the Navy and Honeywell Also, to obtain a perspective on how different procurement strategies could affect program costs, GAO reviewed Navy data concerning the torpedo developmental phase and Navy and DOD policies relating to cost estimating. Although the Navy used MK-50 developmental costs to project production costs, it did not make a formal Should Cost Production Study, nor did it perform cost comparisons using separate component procurements. As a result, GAO could not verify the Navys projected production costs or its prediction that program costs would increase if propulsion components were provided as GFE. kr