Defense Contractor Restructuring: DOD Risks Forfeiting Savings on Fixed-Price Contracts: NSIAD-98-162

July 1998
GAO Reports;7/17/1998, p1
Government Document
The National Defense Authorization Act for Fiscal Year 1995 required GAO to report periodically on the implementation of the Defense Department's (DOD) policy on defense contractor restructuring. This report focuses on DOD's use of contract price adjustment clauses, also called reopener clauses, which can be used to ensure that DOD receives its fair share of contractor restructuring savings on fixed-price contracts awarded to companies involved in a business combination between the time a combination is announced and the time the restructuring savings are reflected in the mechanism used for pricing contracts. GAO found the time it takes for restructuring savings to be included in DOD contract prices can be considerable. For the contractor business segments GAO examined, it took an average of about 21 months from the announcement of the acquisition or merger to the time that contractors reflect the restructuring savings in reduced overhead rates.


Related Articles

  • Depot Maintenance: Action Needed to Avoid Exceeding Ceiling on Contract Workloads: NSIAD-00-193. Warren, David R. // GAO Reports;8/24/2000, p1 

    Section 2466 of title 10, United States Code, stipulates that not more than 50 percent of funds made available in a fiscal year to a military or defense agency for depot-level maintenance and repair may be used for work done by private sector contractors. GAO reviewed Department of Defense (DOD)...

  • Contract Management: Selected DOD Consulting Services: NSIAD-00-183R.  // GAO Reports;6/23/2000, p1 

    Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) contract management, focusing on contracts for advisory and assistance services and other services. GAO noted that: (1) GAO reviewed 30 contracts associated with the largest fiscal year 1999 obligations for...

  • Defense Acquisitions: DOD Has Implemented Section 845 Recommendations but Reporting Can Be Enhanced: GAO-03-150.  // GAO Reports;10/9/2002, p1 

    In April 2000, GAO reported on the Department of Defense's (DOD) use of Section 845 agreements, also referred to as "other transactions" for prototype projects. These are transactions other than contracts, grants, or cooperative agreements that generally are not subject to federal laws and...

  • An Update on Performance-Based Payments. Sanders, Nicholas // Contract Management;May2006, Vol. 46 Issue 5, p12 

    The article discusses the use of performance-based payments (PBP) in defense contracts. It states that using PBP as a financing contract will benefit contractors and contracting officers because both parties can reduce non-value-added cost-based oversight. Actions were taken to impose the use of...

  • Military Housing: Privatization Off to a Slow Start and Continued Management Attention Needed: NSIAD-98-178.  // GAO Reports;7/17/1998, p1 

    The Defense Department (DOD) is counting on privatization to remedy the poor condition of military housing, but an initiative to encourage private sector financing, ownership, and maintenance of military housing is off to a slow start. Two years have passed since the new authorities were signed...

  • Foreign Military Sales: Changes Needed to Correct Weaknesses in End-Use Monitoring Program: NSIAD-00-208. Schinasi, Katherine V. // GAO Reports;8/24/2000, p1 

    This is the second in a series of reports on the foreign military sales program. GAO focuses on the Department of Defense's (DOD) implementation of end-use monitoring requirements of the Arms Export Control Act. GAO discusses DOD's efforts to (1) observe and report on defense articles and...

  • Budget Issues: Budgeting for Inflation in Civilian Agencies: AIMD-00-14.  // GAO Reports;10/1/1999, p1 

    In recent years, the Defense Department (DOD) has seen increases in purchasing power--called inflation dividends--that occur when inflation is lower than had been projected at the time funds were requested. DOD has used those savings to fund a larger program without requesting or receiving...

  • Contract Management: DOD Begins New Effort to Improve Reporting of Contract Service Costs: NSIAD-00-29.  // GAO Reports;10/13/1999, p1 

    Although the military is increasing its reliance on contractor support, long-standing concerns still exist about the accuracy and the reliability of its accounting for the costs of contract services, particularly advisory and assistance services. Congress has raised concerns that the absence of...

  • JIEDDO Scrambling For Cash Without Supplemental Funding. DiMascio, Jen // Defense Daily;11/20/2007, Vol. 236 Issue 36, p6 

    The article reports that the Joint Improvised Explosive Device Defeat Organization (JIEDDO) will have no more funding for new contracts and will only sustain current contracts and keep its headquarters staff and intelligence analysis operations running. For the year 2008, the allocated budget...


Read the Article


Sign out of this library

Other Topics