Defense Contractor Restructuring Benefits to DOD and Contractors
Abstract
To encourage defense contractor consolidations, DOD announced in July 1993 that it would pay for restructuring costs on transferred flexibly priced contracts in certain circumstances. These circumstances were that (1) the restructuring costs were allowable under the Federal Acquisition Regulation and (2) a DOD contracting officer determined that the business combination was expected to result in overall reduced costs to DOD or preserve a critical defense capability. Concerns over the payment of restructuring costs led Congress in 1994 to pass section 818 of Public Law 103-337, requiring that certain conditions be met before DOD could reimburse defense contractors for restructuring related expenses. The legislation required that a senior DOD official certify that projections of restructuring savings were based on audited cost data and that the projected savings should result in overall reduced costs to DOD. The legislation also required the Secretary of Defense to report annually to Congress on DOD'S experience with defense contractor business combinations, including whether savings associated with each restructuring actually exceeded restructuring costs.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1998
- Accession Number
- ADA353549
Entities
Organizations
- United States Government Accountability Office