Improving Productivity and Reducing Cost through Capital Investment Incentives.

Abstract

Sagging productivity and productive capacity are contributing to cost increases and are jeopardizing the capability of the defense industrial base to meet defense requirements. The Department of Defense recognizes that contractor investment in plant modernization could result in increased productivity and cost reduction. The Weighted Guidelines Technique (WGL) for profit determination has been revised to consider profit on capital, and a number of other acquisition techniques and contract provisions are available for use as motivators for contractor capital investments. The objectives of this study were to determine (1) the relationship between capital investment expenditure levels and productivity; (2) which conditions, if any, preclude WGL's from being a sufficient motivator; (3) the current use and success of multi-year procurement, award fee, value engineering, and special termination buy back provisions as motivators for capital investment; and to recommend alternative strategies and tactics which may be capable of stimulating contractor investment.

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Document Details

Document Type
Technical Report
Publication Date
Dec 01, 1980
Accession Number
ADA094681

Entities

People

  • Duane D. Knittle
  • Wayne V. Zabel

Tags

Communities of Interest

  • Biomedical
  • Human Systems
  • Weapons Technologies

DTIC Thesaurus Topics

  • Army Procurement
  • Business Administration
  • Capital Investments
  • Commerce
  • Contractors
  • Contracts
  • Cost Reductions
  • Department Of Defense
  • Economic Policy
  • Employment
  • Governments
  • Investments
  • Logistics Management
  • Management Personnel
  • Military Acquisition
  • Money
  • Organizational Structure

Readers

  • Economics
  • Government Contracting/Procurement.