Contract Financing: DOD Should Comprehensively Assess How Its Policies Affect the Defense Industry
Abstract
Each year, DOD provides contractors with billions of dollars in contract financing on fixed-price contracts for major weapons systems and other long term efforts. Contract financing helps contractors manage expenses until they begin delivering the contracted items to DOD. Contract financing can take several forms, including progress payments based on the cost incurred by the contractor, and performance-based payments, in which the government pays the contractor an agreed-to amount for achieving certain milestones. DOD last performed a comprehensive assessment of its contract financing polices in 1985. The Conference Report accompanying the Fiscal Year 2019 National Defense and Authorization Act included a provision for GAO to analyze the level of financing currently provided to contractors, among other things. This report (1) describes changes in DOD contract financing policy since 1985 and (2) assesses the extent to which DOD has analyzed the effect of its contract financing policies on the defense industry. GAO assessed relevant legislation and DOD regulations; obtained data on DODs use of progress and performance-based payments from fiscal years 2010 through 2018; and interviewed cognizant DOD and industry officials.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 2019
- Accession Number
- AD1153106
Entities
People
- Timothy J. Dinapoli
Organizations
- United States Government Accountability Office