DOD Procurement:

Multiyear and Annual Contract Costs

NSIAD-88-5: Published: Oct 30, 1987. Publicly Released: Dec 1, 1987.

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Pursuant to a congressional request, GAO: (1) reviewed several Department of Defense (DOD) multiyear procurement programs; and (2) compared the unit prices in multiyear contracts with those in prior annual contracts to determine whether savings resulted from multiyear contracting.

GAO found that: (1) although factors such as quantity and schedule changes, engineering or design differences, and differences in the competitive environment made comparisons inconclusive, in most cases, unit prices were lower for multiyear contracts than for prior annual contracts; (2) multiyear unit prices ranged from 26.5 to 0.2 percent lower than the prior-year annual contract prices for eight contracts and from 10.3 to 2.4 percent higher for three contracts; and (3) the average unit price for multiyear contracts was 7.8 percent lower than that of the prior-year annual contract and 9.9 percent lower than that of the average of the two prior-year annual contracts.

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