Defense Acquisitions: Prices of Navy Aviation Spare Parts Have Increased

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Abstract

A letter report issued by the General Accounting Office with an abstract that begins "For some time, there has been concern over the increases in the prices of weapon systems spare parts and the adverse impact higher prices have had on military readiness. Prices for aviation spare parts managed by the Navy increased at an annual rate of 12 percent from 1994 to 1999. Several factors have contributed to price increases. First, the cost of repairing an item has generally gone up over time. Second, the surcharge that is charged to customers has also increased over time. The Navy has tried to alleviate customer concerns about high surcharge rates by moving certain overhead costs from the surcharge to repair costs. But this approach simply moved the overhead costs instead of reducing them. Still, the Navy understands the need to control spare parts prices and plans to further investigate the underlying causes of the increases."