Analysis of Warranty Cost Methodologies.
Abstract
Warranty/guarantee provisions have been used in military production contracts for a number of years on a very selective basis. With the passage of Section 794 of the Department of Defense Appropriation Act of 1984, it is expected that the use of such provisions will increase significantly. The Act requires warranties for all fixed-price production weapon system procurements unless DoD approves a waiver and advises the Congressional Armed Services and Appropriations Committees. One of the questions that has repeatedly arisen in the Navy about Section 794 is the potential impact of warranties on the cost of Navy programs. The Naval Material Command Cost Analysis Division (MAT-01F4) has taken the lead in the preparation of warranty cost-estimation procedural guides for Navy programs. The guides are to include effective warranty cost-estimation methodologies for determining if a proposed warranty price is fair and reasonable. In concert with MAT-01F4, the Navy Office of Acquisition Research, Defense Systems Management College, is conducting research and development on warranty cost-estimation methodologies. This report presents the results of a study that investigated, reviewed, and analyzed methodologies for estimating the cost of warranty provisions that meet the intent of Section 794. The study provides a basis for establishing uniform procedures for estimating the direct cost or price of warranties/guarantees for a Navy weapon system procurements.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1985
- Accession Number
- ADA153729
Entities
People
- E. E. Ayers
- H. S. Balaban
- K. B. Tom
Organizations
- ARINC