Assessment of DOD's Multiyear Contract Candidates

NSIAD-89-224BR: Published: Sep 5, 1989. Publicly Released: Sep 5, 1989.

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Pursuant to a congressional request, GAO reviewed eight multiyear contracts in the Department of Defense's (DOD) fiscal years 1990 through 1991 biennial budget, focusing on whether they satisfied the legislative criteria for multiyear contract approval.

GAO found that: (1) seven of the eight systems did not clearly meet one or more of the legislative criteria; (2) DOD estimated that it would require about $18.7 billion in then-year dollars to complete the planned multiyear procurements and would save about $2.1 billion compared to annual contract estimates, but requested $957.1 million more in advance funding than estimates required; (3) four of the systems' savings projections were unrealistic because of questionable assumptions; (4) DOD significantly reduced the procurement quantities for the F/A-18 aircraft program over the next 5 years, the Air Force cut the Maverick missile program by about 37,000 missiles and $4.42 million over 5 years, and the Navy had not committed to the quantities in the multiyear contract justification package; (5) the Army's Palletized Load System was a new program with no procurement history; and (6) the concurrent development and production schedule for planned modifications to the M1 Tank and the E-2C aircraft created uncertainty about the systems' design stability during the proposed multiyear contract period.

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