Review of the Procurement of Late-Model, Light Passenger Automobiles Used by the Department of Defense and the Military Services

Published by the Government Accountability Office on 1971-01-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             COMPTROLLER     GENERAL     OF   THE      UNITED   STATES
                                           WASHINGTON,    D.C.      20548

                                                                                         I11111111       Ill11

          B-131418                                               Janus.ry a,         1971

     1    Dear   Mr. Chairman:

                  As requested in your letter    of August 3, 1970, the General Accounting
     t     Office has reviewed the procurement of late-model,       light passenger auto-
 I       [mobiles    used by the Department of Defense and the military     services,         \I-
           and has examined the maintenance and repair records for a number of these
A+         vehicles.    The purpose   of the review was to detemline whether the Govern-
           ment's statutory    dollar ceiling  on the prices of these vehicles,     currently
           $1,650 for a sedan and $1,950 for a station wagon, is too low and is result-
           ing in the purchase of vehicles which are not suitable for the tasks
           required of them and require inordinately      high maintenance and repair costs
           to keep them in operating condition.

                 Our findings   indicated that acceptable vehicles could be obtained
          within the statutory      ceiling and that the statutory     ceiling   is not resulting
          in the purchase of vehicles which are incurring         excessive maintenance and
          repair costs.      Our review of maintenance and repair records showed a
          specific   maintenance problem existed regarding the clutches used in many
          of the vehicles,     but we found that overall repair and maintenance costs
          were not excessive in relation      to available  statistics      on automobile main-
          tenance costs.

                 We also found that the statutory    ceiling   has made it very difficult
          for the Department of Defense to obtain the type of automobiles most desired
          by the military    services, that is, full-size     automobiles with s-cylinder
          engines and automatic transmissions.       The majority   of the vehicles pur-
          chased in fiscal    years 1969 and 1970 were full-size      automobiles,     but they
          generally were equipped with 6-cylinder       engines and standard transmissions.
          Automobiles so equipped are not only low in the military          services'    order
          of preference but also there is little      demand for them by the general
          public.    Thus the automobiles purchased were virtually       military     models.

                 Furthermore, the statutory    ceilin F; has discouraged competitive    bidding
          by the major automobile manufacturers.         In fiscal  year 1969, nearly all the
          light passenger autor.:obiles purchased for the Department of Defense
          were provided by American Motors Corporation,which         was virtually   the only   “-                     ’
          interested    bidder.  In fiscal   year 1970, bids were received on only one-third
          of the defense requirement.       The reqaining two-thirds    had to be obtained by                              .:

                The most frequcntl, 17expressed complaints about these automobiles
          were that the 6-cylinder    engines were not powerful enough and tile auto-
          mobiles with standard transmissions    required  frequat  clutch replacements.
.   .

        These complaints may be reduced under Public Law 91-423, which was enacted
        on September 26, 1970, during our review.       This law amends 31 U.S.C. 638a(c)
        by authorizing   the Administrator    of General Services--who purchases auto-
        mobiles for the Department of Defense--to determine "the systems and equip-
        ment which *** are customarily     incorporated  into a standard passenger motor
        vehicle completely equipped for ordinary operation."         Such systems and
        equipment are included within the statutory maximum price limitation        for
        passenger motor vehicles.      The law further authorizes the Administrator     to
        purchase "additional    syst~ls or equipment" when he finds it appropriate.
        Such additional   items would not be considered in determining whether the .
        cost is within the price limitation.

              Details   of our findings      are presented   below.


                Since July 1968 the General Services Administration           has been respon-
        sible for procuring sedans and station wagons for the Department of Defense.
        The procurement of 1969 model sedans and station wagons for the military
        services was made under a $1,500 statutory        price limitation        for a sedan'
        and a $1,950 limitation      for a station wagon. When the procurement for that
        year was in process, American Motors Corporation requested, and received,
        a small business set-aside which provided it with the right to furnish
        approximately     50 percent of the required vehicles.         The price of these
        vehicles was to be identical      to the price of the other 50 percent of the
        requirement that was advertised competitively.          However, except for a bid
        by Chrysler Corporation on 16 compact-model automobiles,             American Motors
        Corporation was the only bidder on the competitive           portion of the solic-
        itation;     but American Motors Corporation did not submit a bid on the total
        requirement.      The General Services Administration     readvertised        the portion
        of the requirement on which no bids were receive&and               American Motors
        Corporation again submitted the only bid.         Thus, except for the 16 compact
        sedans provided by Chrysler Corporation,       all 1969 light passenger sedans
        and station wagons purchased for the Department of Defense were furnished
        by American Motors Corporation.        A summary of the sizes of the vehicles
        purchased from American Motors Corporation and the methods of procurement

              Method of                                         Total                 Station
                      --           Vehicle     size          .-(_notea)-   Sedans
                                                                            ----       wagons

              Advertised           Full-size                  2,224          1,577     647
              Advertised           Compact--size                  54             54      --
              Set-aside            Full-size                  1,926          1,691     235
              Readvertised         Intermediate-size          L.2227        .!&A       2i.

                                                              .5’731        TLC!2

              aAll vehicles were equipped with 6-cylinder
               engines and manual transmissions.

                                                                                         -_   2-
           All of the services listed full-size    vehicles with S-cylinder        engines
    as their first   choice, and all but the Air Force indicated a preference for
    automatic transmissions:     However, because of the statutory       limitations,
    the General Services Administration      could obtain only full-size       automobiles
    wirh 6-cylinder    engines and manual transmissions    for the advertised and
    set-aside portions of the procurement and intermediate-size          vehicles with
    6-cylinder   engines and manual transmissions    for the readvertised        portion.

           The statutory    limitation    on a sedan was raised to $1,650 for the 1476
    procurement; however, the General Services Administration            again was unable
    to obtain competition        on the advertised solicitation    and received bids on
    less than one-third of the requirement.          Except for a bid on 30 sedans by
    General Motors Corporation,        the Ford Notor Company was the only bidder,
    offering    its Falcon model which had been changed from a compact to an
    intermediate-size     model in January 1976. The remainder of the Department
    of Defense's 1970 requirement for sedans and station wagons was obtained
    through negotiation.         A number of minor requirements contained in the
    specifications     for the advertised contracts had to be eliminated        in the
    negotiations     so that the automobiles could be purchased within the statu-
    tory limitation.      The following     chart shows the vehicles obtained and
    their source:

                                                                     Advertised -.--     segotiated
                                                                           General             American
    @tomobile         characteristics                   Total
                                                        .--.      Ford
                                                                  --       Motors -
                                                                           ..--         Ford -Motors

    Full-size,        8-cylinder,       automatic         191       166a      --         --                 25a
    Full-size,        6-cylinder,       automatic   (                         --         --          (     863a
                                                   912               --                              (      49
    Full-size,    8-cylinder,     manual            33                 3a     30         --                 --
    Full-size,    6-cylinder,     manual        2,361                --       --         --              2,361
    Intermediate,     8-cylinder,    autontatic     --               --       --         --                 --
    Intermediate,     &cylinder,
       automatic                                                         a
                                              (3,051            :1,1,:         --      l,S75                --
    Intermediate,     6-cylinder,    manual           6                  6a    --         --                --
    Compact, &cylinder,        manual           --    6                       --       --                --   6

             Totals                                     g60
                                                        I_       1 351
                                                                ---L-          30
                                                                              --       1,875             3,304

        Station   wagons

          Our analysis of the 1969-, and 1970-model procurements indicated          that
    the statutory   ceiling  had greatly restricted    competitive   bidding among the
    automobile manufacturers.     We discussed the effects of the statutory         ceiling
    with representatives    of the three largest automobile manufacturers        (General                         b34d
3   Motors, Ford, and Chrysler Corporation).        The manufacturers*    representatives
    stated that the ceiling    would have to be eliminated or raised to obtain
    competition   on future procurements of sedans and station wagons.


       We found that the automobiles equipped with 6-cylinder      engines and
manual transmissions   which were purchased by the Government were not repre-
sentative of the standard commercial vehicles usually sold by automobile
manufacturers to the general public.     Statistics    which we obtained from the
three largest automobile manufacturers named in the preceding paragraph
show that their standard commercial models are almost always equipped with
both automatic tranmissions    and V-S engines.     Over 98 percent of the full-
size sedans produced in 1970 were equipped with automatic transmissions          and
96 percent had a-cylinder    engines.  Over 95 percent of the 1970 intermediate-
size sedans were equipped with automatic transmissions,       and 85 percent had
S-cylinder    engines.

       Because of the statutory ceiling,    virtually    all of the sedans and
station wagons purchased for the military        services in 1969 were equipped
with 6-cylinder   engines and manual transmissions.         Over half of the 1970
sedans had automatic transmissions;      however, almost all had 6-cylinder
engines.    Thus, the vehicles purchased for use by the Department of Def'ense
are somewhat special vehicles and are not typical         of the majority  of vehicles
sold to the general public.

        We visited  motor pools at the Pentagon, Fort Belvoir,     the Washington
Navy Yard, and Andrews and Rolling Air Force Bases. Discussions with
military    motor pool personnel indicated that the major repair problem
which the military      services have encountered involved the clutches on
vehicles with manual transmissions.       L?e also received complaints that
the 6-cylinder     vehicles are underpowered, especially    the nine-passenger
station wagons.

      We verified,     through an examination of a sample of maintenance and
repair records, that frequent clutch replacements had been made. However,
in attempting      to determine whether the late-model vehicles had incurred
Inordinately    high maintenance and repair costs, we found that in the
Washington area cumulative maintenance and repair data was available        only
at Andrews and Bolling Air Force Eases. Accordingly,        we limited our
inquiry on maintenance and repair costs to these two bases.

      Having obtained cumulative maintenance and repair costs for 1367,
1968, and 1969 sedans and station wagons from Andrews and Bolling Air
Force Bases,l we compared these costs against data shoal in a 1970 Depart-
ment of Transportation  study entitled  "Cost of Operating an Automobile."
This study provides, among other things, estimates of tF,e rxintcnance     and
repair costs per mile which could be expected for an automobile driven by
a reasonably prudent man.

 Meaningful   data on 1070 models was not    available.
      The following chart shows that the maintenance and repair costs
reported for the 1967-, 1968-, and 1969-model vehicles at Andrews and Bolling
Air Force Bases were not substantially    different from the costs cited in
the Department of Transportation   study.

                  Average cumulative            Average costs
                   maintenance and           based on Department
Model               repair costs per          of Transportation
year            vehicle aJ motor pool--     -----SE!!-                  Djfference

1969                     $110                            $ 91               $19

1968                      313                             262                    51

1967                      707                             731               (22)

The costs reported for the 1968 and 1969 vehicles were somewhat greater
than the costs indicated by the study, but this may be attributable  to/the
type of usage vehicles generally receive in motor pools.

       We noted that clutch replacement problems, which accounted for a large
portion of the maintenance and repair costs for motor pool vehicles,     were
being corrected by the installation    of a heavy- duty clutch to prevent recur-
rences.    Replacements of defective clutches wer? paid for by the manufacturers.

      Our review did not indicat e that the statutory      limitation     has pre-
vented the Department of Defense from obtaining serviceable           automobiles or
has resulted in inordinately    high maintenance and repair costs.          Rowever, it
appears that the statutory   limitation   has restricted     competition,    resulting
in the purchase of vehicles that are not typical        of those being purchased
by the general public.

        With regard to complaints received by the House Armed Services
Committee, and reiterated     by motor pool personnel, we believe most of these
complaints are directly    related to the fact that recent procurements of
military    vehicles have generally been for vehicles equipped with 6-cylinder
engines and manual transmissions,     which are harder to drive and lack power
when fully loaded.

     The recent passage of Public Law 91--423-.-which permits the Administrator
of the General Services Administration   to purchase additional  systems or
equipment when appropriate--may   help to reduce the complaints against mili-
tary vehicles purchased under future procurements.

     We plan to make no-further  distribution of this letter unless copies
are specifically  requested and then we shall make distribution  only after
your agreement has been obtained or public announcement has been made by
you concerning the contents of the letter.

     If we can be of further   service   in this    matter,   please advi.           us.

                                                   Comptroller  General
                                                   of the United States

The Honorable
Chairman, Committee on Armed Services     _
House of Representatives


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