What GAO found
Three Department of Defense (DOD) agencies, including the Defense Logistics Agency (DLA), use the Defense-Wide Working Capital Fund (DWWCF) to fund their operations, then deposit the proceeds from the sale of goods and of service to their clients in the fund. DOD received $ 500 million from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for the DWWCF to position the agency to respond to the 2019 Coronavirus Disease (COVID-19) pandemic. GAO found:
DOD actions helped keep DWWCF balances within target ranges. Several transactions increased DWWCF’s cash balances. In particular, the DWWCF received nearly $ 600 million in appropriation allocations from January 2020 to January 2021, including $ 500 million from the CARES Act. The DLA, which uses the DWWCF to fund operations, such as providing consumables and fuel to its military customers and other federal agencies, has also received $ 2 billion in advance billing from the Department of Health and Human Resources. Social Services (HHS) and Federal Emergency Management Agency (FEMA) from April 2020 to September 2020. DOD officials said they also took steps that had the effect of mitigating the measure. in which DWWCF cash balances exceeded targeted higher cash requirements. The DOD transferred $ 241 million to military services working capital and cut fuel prices by 20%, among other things. DLA officials said they expect the $ 3.6 billion cash balance to decline as prepurchased orders are filled and fuel prices recover.
DLA responded to increased demand for medical equipment during pandemic. From March 2020 to May 2021, the DLA executed approximately 31,000 contractual actions marked as COVID-19 related, resulting in contractual obligations of $ 3.67 billion. DLA officials said FEMA and HHS have become DLA’s biggest clients for COVID-19-related articles during the pandemic. COVID-related purchases included test kits, gloves, N95 respirators, hand sanitizers, surgical masks, ventilators and protective gowns, among others.
DLA did not plan for pandemic support, but did monitor performance and identify lessons learned. DLA officials told GAO they were not responsible for planning civilian agency support in a pandemic, and they had not developed plans to support other federal agencies during a pandemic before. the current pandemic. However, the DLA continued to monitor and measure the performance of its medical supply chain during the pandemic using previously established metrics, which showed that its performance declined during the pandemic. Officials at the DLA and its client agencies attributed the decrease to difficulties suppliers faced in meeting demand for medical equipment during the global pandemic.
DLA Increase in medical contracts and reduction of contracts in other areas. GAO’s analysis found that the DLA had committed $ 40.1 billion on contracts from March 2020 to February 2021, a decrease of more than $ 2.0 billion (4.8%) from the same 12 month period before the pandemic. DLA obligations increased in 64 of 134 product service groups, with the largest increases occurring in medical, dental and veterinary equipment and supplies; fire-fighting, rescue and safety equipment and environmental protection equipment and materials; and groups of laboratory instruments and equipment. DLA obligations declined in 69 of 134 product service groups, with the largest decreases occurring in the fuels, lubricants, oils and waxes and aerospace components and accessories product service groups.
Of the 11,832 DLA providers used during this period, GAO found that 6,208 (52.5%) DLA obligations had decreased, 4,960 (41.9%) had increased, and 664 (5, 6%) had not changed. DLA obligations related to suppliers providing medical, dental and veterinary equipment and supplies saw the largest increases, and obligations related to those providing fuels, lubricants, oils and waxes and those supplying aerospace components saw the largest decreases. more important. The decreases did not significantly change the proportion of DLA contractual obligations going to suppliers in three main socio-economic groups (disadvantaged small, female-owned and minority-owned).
Why GAO did this study
This report responds to a request from the House Armed Services Committee’s Preparedness Subcommittee that GAO review the DOD’s handling of the DWWCF cash balance and the DLA’s response to the COVID-19 pandemic, and it is part of GAO’s work in response to CARES. Act. This report provides information on: (1) actions taken by DOD from October 2018 to March 2021 to maintain DWWCF’s cash balance between its targeted upper and lower cash requirements; (2) the effects of the pandemic on DLA’s supply chain management business, including medical supplies, from March 2020; (3) planning DLA to support a pandemic event and monitoring its performance to meet customer needs from March 2020 to June 2021; and (4) changes in DLA contracting activity, by product type and individual vendor, from March 2019 to February 2020 and from March 2020 to February 2021. GAO reviewed cash balances and DWWCF budget estimates; DLA preparation reports and performance measures; and federal procurement data; and interviewed officials of DLA and its customers.
For more information, contact Elizabeth A. Field at (202) 512-2775 or [email protected]