The Navy Can Reduce the Cost of Ship Construction if It Enforces Provisions of the Contract Escalation Clause

Abstract

We have reviewed procedures and practices Navy shipbuilding contractors use to compute material escalation costs on fixed price incentive contracts which contain the cost index material escalation clause. The objective of this review was to determine if Navy contractors are computing escalation costs as specified in the contract clause. The Navy includes in fixed-price-type contracts provisions which protect shipbuilders from inflation by making escalation payments relating to cost increases beyond the shipbuilders' or the Navy's control. This protection is especially needed in shipbuilding contracts because of the length of time involved in constructing a ship.

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Document Details

Document Type
Technical Report
Publication Date
Aug 24, 1981
Accession Number
AD1174620

Entities

People

  • Donald J. Horan

Organizations

  • United States Government Accountability Office

Tags

Communities of Interest

  • Ground and Sea Platforms

DTIC Thesaurus Topics

  • Business Administration
  • Computations
  • Contractors
  • Contracts
  • Corporations
  • Governments
  • Incentive Contracts
  • Management Personnel
  • Materials
  • Motivation
  • Personnel Management
  • Shipbuilding
  • Shipyards

Readers

  • Government Contracting/Procurement.
  • Naval Architecture and Marine Engineering.