Contract Management: Pilot Program Needed to Improve DoD Identification of Warranty Claims

摘要

Section 391 of the Fiscal Year 1998 National Defense Authorization Act (P. L. 10585) authorized the Secretary of Defense to carry out a pilot program to use commercial sources to improve the collection of Department of Defense (DOD) claims under aircraft engine warranties. The act required that, if established, the pilot program, and program contracts, terminate on September 30, 1999. However, on October 5, 1999, section 382 of the National Defense Authorization Act for Fiscal Year 2000 (P.L. 106-65) extended the termination date of the pilot program until September 30, 2000. Although authorized, neither act requires a pilot program. The legislation directs us to review the results of the pilot program. Since DOD has not yet initiated a pilot program, we are providing this interim report that (1) identifies the benefits obtained by some private sector users of aircraft engine warranty services and (2) assesses the efforts DOD has made to evaluate the feasibility of establishing a pilot program. Generally, a warranty requires that a manufacturer repair or replace defective goods covered by the warranty without cost to the purchaser or pay the purchaser's costs of correcting a defect. Defects or deficiencies may be caused by poor design, faulty manufacturing processes, or the use of materials that do not meet contract specifications.