Download or read book Recent Changes in the Defense Department s Profit Policy intended Results Not Achieved written by United States. General Accounting Office and published by . This book was released on 1979 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Review of the Defense Department s Profit Policy for Noncompetitive Contracts written by United States. Congress. House. Committee on Government Operations. Legislation and National Security Subcommittee and published by . This book was released on 1987 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Defense Department Profit and Contract Finance Policies and Their Effects on Contract and Contractor Performance written by and published by . This book was released on 2008 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Defense Department, through the military services, buys equipment and services for which no open market exists. In negotiating the contracts for these acquisitions, the government has policy guidelines to aid the contracting officer in developing a reasonable amount of profit to pay the contractor. The goal of profit policy is a contract price that reimburses the contractor for its costs, provides the necessary incentives to yield beneficial performance, and to provide the contractor with sufficient risk reward. The effect of profit policy on contractor profits is inextricably linked to the type of contract financing policy the government uses in an acquisition. The authors examine the effectiveness of these two policy tools, profit and contract financing, on achieving contract outcomes and contractor financial performance. They also look at how these policies are implemented by the Defense Department. Their methodologies include analyses of profit target setting and actual contract results data in addition to discounted cash flow modeling to value a contract or contract stream to an investor. This study as a whole is concerned with two questions about profit policy. First, in what ways does profit policy provide incentives or disincentives with respect to cost growth, schedule slips, and the performance features of a system eventually provided to the Department of Defense? Specifically, the authors are interested in whether or not profit policy can be reliably manipulated to encourage desirable outcomes on particular contracts. Second, does profit policy provide defense contractors with a profit that is large enough to retain these firms in the defense industry? Each of these questions presents several distinct issues which IDA approached using different methods and data.
Download or read book Contract Management written by United States. General Accounting Office and published by . This book was released on 2001 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Department of Defense Contract Profit Policy written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 1979 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Cost Accounting Standard 414 written by United States. General Accounting Office and published by . This book was released on 1987 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Government Contracting written by and published by . This book was released on 1987 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Problems with the New Department of Defense Profit Policy written by Robert J. Blair and published by . This book was released on 1976 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt: The goal of DoD profit policy is to pay the contractor a fair profit for work performed on contract. Fair profit is interpreted as rewarding the contractor for risk assumed and facilities provided, while recognizing outstanding performance and encouraging efficiency. This goal is not always attainable. Two major forces that impact on DoD procurement most heavily are the political environment (e.g. pressures from Congress, defense industry groups and the taxpayer), and the contracting environment, (e.g. laws and regulations associated with purchasing military hardware). This study seeks to identify potential problem areas that may hinder successful implementation of the new DoD profit policy. It identifies problems related to: allocation of facilities capital to a contract; computation of the prenegotiation profit objective for facilities investment; inclusion of facilities capital cost of money as an allowable cost; and application of the productivity reward.
Download or read book Government Contracting written by United States. General Accounting Office and published by . This book was released on 1987 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: GAO proposed legislation to study the profitability of government contractors and: (1) require major government contractors to annually report financial results to an official designated by the President; (2) define criteria for determining which companies will be subject to reporting requirements; and (3) create a Department of Defense (DOD) Profit Reporting Program. GAO believes the program should require: (1) a consistent methodology to evaluate profitability; (2) a means to establish the reliability of contractor-furnished data; and (3) mandatory contractor participation. GAO found that contractors and agencies remain opposed to the program because they believe that: (1) DOD ad hoc studies of contractor profitability would be adequate; (2) the costs of the study would outweigh the benefits; and (3) the government could not adequately protect proprietary information.
Download or read book Management of the Department of Defense Cost accounting standards written by United States. Congress. Senate. Committee on Governmental Affairs and published by . This book was released on 1983 with total page 212 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Department of Defense Contract Profit Policy written by EE. UU. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 1979 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Profit Regulation of Defense Contractors and Prizes for Innovation written by William Paul Rogerson and published by . This book was released on 1992 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: The defense sector is subject to a form of cost-based economic regulation, just as public utilities are. A set of regulations determines the price that defense contractors will receive for their products. This report describes and empirically investigates an extremely simple theory that captures an important aspect of the regulatory problem in defense contracting. The theory describes a critical difference between the regulatory problems in defense and public utilities and suggests why therefore different rules and institutions might be appropriate in each case. It also identifies several implications regarding the structuring of an optimal regulatory policy and sheds light on current policy debates over Department of Defense policy. The author empirically verifies that the incentives posited by the theory exist and are large. The theory is that profit regulation of defense contractors is structured (and necessarily must be structured) so that firms generating valuable new innovations will receive large rewards or prizes. The author attempts to establish the theoretical link between prizes and innovation and then to show that price levels induced by the current rules are large enough to make a theoretical analysis of the role of these prizes important.
Download or read book Current Government Profit and Cost Policies and Their Adverse Impact on Defense Contractors written by William J Healey (Jr) and published by . This book was released on 1987 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This factual review and commentary first discusses the following profit and cost policies and related developments which, although not necessarily purporting to be all inclusive on the issue, are illustrative of the problem: (1) The Defense Financial and Investment Review (DFAIR); (2) The resulting DOD profit policy regulations; (3) The General Accounting Office reaction to DOD's profit policy; (4) Reductions in progress payments; (5) Limitations on government reimbursement for contractor acquisition of special tooling and special test equipment; (6) Use of firm fixed-price contracting for development work; (7) Forcing contractors to pay up-front development costs; (8) Tightening of the contract cost principles generally; (9) Limitations on contractor employee compensation (both executive compensation and employee salaries and wages); (10) Government demands for a share of pension fund assets on termination of an overfunded defined benefit pension plan; (11) Overhead cost certification requirements; (12) Overhead cost controls; and (13) Spare parts refund policy.
Download or read book National Defense written by U S Government Accountability Office (G and published by BiblioGov. This book was released on 2013-07 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: As the result of a study on the profitability of defense contractors, a profit and pricing policy for most negotiated production-type contracts became effective on October 1, 1976. To encourage greater investment, the Department of Defense (DOD) allowed the imputed cost of capital for facility investment on most negotiated defense contracts and recognized the level of facility investment in establishing a profit objective for use in negotiating a profit rate with contractors. Contractors did not respond positively to attempts by DOD to encourage greater investments in new or upgraded plants and equipment which would lower production costs, since limited emphasis was given to facilities investment in establishing the government's prenegotiation profit objectives. The new policy provided that only 10 percent of the government's profit objectives would be based on the level of the contractors' investments in plant and equipment. Unfortunately, the new profit policy did not encourage contractors to increase their investments in cost reducing facilities, but resulted instead in the negotiation of higher profit rates on an overall basis.
Download or read book Government Contracting written by U S Government Accountability Office (G and published by BiblioGov. This book was released on 2013-06 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt: In response to a congressional request, GAO evaluated the Department of Defense's (DOD) Defense Financial and Investment Review (DFAIR) to determine its adequacy, the validity of its findings, and the appropriateness of its recommendations. GAO found that: (1) DFAIR determined that contract pricing, financing, and profit policies were related and should be examined on an integrated basis; (2) the profitability of defense businesses was comparable to commercial businesses from 1970 to 1980 and from 1983 to the present; (3) although DOD reported that a 1980 change in its profit policy resulted in an unintended 0.5- to 1-percent increase in profit objectives, GAO believes that the increase was larger than 1 percent; (4) DFAIR recommended changes to the weighted guidelines to do away with the unintended increase, but profits would have actually increased 25 percent if DOD had implemented all of the recommendations; (5) achieving comparability between defense and commercial businesses will require more than a 1-percent reduction in profit objectives because actual defense business profits have been substantially greater than those DFAIR calculated; and (6) the recently established DOD interim profit policy, based on DFAIR data and analysis, will not achieve the appropriate profit reductions because it uses as a baseline the flawed data analyses contained in DFAIR.
Download or read book Government Contracting written by United States. General Accounting Office and published by . This book was released on 1987 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Contract Management DOD s Profit Policy Provision to Stimulate Innovation Needs Clarification written by and published by . This book was released on 2001 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In negotiating profit on contracts, the Department of Defense (DOD) requires contracting officers to set negotiating objectives by relying on guidelines contained in defense regulations. Congress mandated in the National Defense Authorization Act for Fiscal Year 2000 (P.L. 106-65, Oct. 5, 1999) that DOD review its profit guidelines and consider whether modifying those guidelines would provide an increased incentive for contractors to develop and produce complex and innovative new technologies for weapon systems. After completing its review, DOD issued a final rule in December 2000 that added a technology incentive to its guidelines for setting profit objectives on negotiated defense contracts. At your request, we reviewed DOD's change to its profit policy to determine whether the new policy is (1) likely to achieve its intended objective of stimulating increased innovation and (2) consistent with its revised policies for acquiring weapon systems.
