Government Contracting: Using Cost of Capital to Assess Profitability

Abstract

The Department of Defense's (DOD) policies must provide adequate support for the long-term needs of the defense industrial base. Traditionally, the financial impact of U.S. government policies on defense contractor profitability has been measured by comparing defense contractor's profitability with that of various groupings of non-defense durable goods manufacturers. Defense contractors have objected to this comparison, arguing that it does not accurately accommodate the differing levels of risk. The Co-Chair of the Congressional Military Reform Caucus asked GAO to (1) evaluate the effectiveness of the government's current method of assessing contractor's profitability levels and (2) identify other methods that might better identify appropriate levels of defense contractor's profitability. The Congress has required DOD to report annually on the financial health of the defense industrial base.

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Document Details

Document Type
Technical Report
Publication Date
Aug 01, 1991
Accession Number
ADA239776

Entities

Organizations

  • United States Government Accountability Office

Tags

Communities of Interest

  • Biomedical

DTIC Thesaurus Topics

  • Accounting
  • Congress
  • Contractors
  • Contracts
  • Corporations
  • Defense Industry
  • Department Of Defense
  • Governments
  • House Of Representatives
  • Investments
  • Law
  • Money
  • National Security
  • Procurement
  • Risk
  • Standards
  • Trade Associations

Readers

  • Computational Modeling and Simulation
  • Industrial Economics
  • Public Financial Management and Budgeting