Defense Industry Restructuring: Updated Cost and Savings Information.
Abstract
In July 1993, DOD changed a long-standing practice and permitted defense contractors to charge restructuring costs to transferred flexibly priced contracts, provided (1) the restructuring costs were allowable under the Federal Acquisition Regulation and (2) a DOD contracting officer determined the business combination would result in overall reduced costs to DOD or preserve a critical defense capability. Concerns over the payment of such costs led Congress to pass legislation requiring that certain conditions be met before DOD reimbursed defense contractors for restructuring-related expenses. The legislation required, in part, that a senior DOD official certify that projections of restructuring savings are based on audited cost data; DOD'S share of projected savings exceeds allowed costs; and the Secretary of Defense reports to Congress On DOD'S experience with defense contractor business combinations, including whether savings associated with each restructuring actually exceed restructuring costs. The Secretary of Defense is currently required by 10 U.S.C. 2325 to determine in writing that the savings will be at least twice the amount of allowed costs or that projected savings will exceed costs allowed and that the combination will result in the preservation of a critical capability.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 01, 1998
- Accession Number
- ADA342554
Entities
Organizations
- United States Government Accountability Office