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Defense Restructuring Costs: Information Pertaining to Five Business Combinations

NSIAD-97-97 Published: Apr 01, 1997. Publicly Released: Apr 01, 1997.
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Highlights

Pursuant to a legislative requirement, GAO provided information on restructuring costs of defense contractors involved in business combinations since 1993, including: (1) specific costs associated with workforce reductions and the services provided to workers affected by business combinations; (2) other funds used to help laid-off workers find new employment; (3) why the effectiveness of restructuring costs used to assist laid-off workers in gaining new employment cannot be determined; and (4) the extent of savings achieved from the business combinations relative to restructuring costs paid by the Department of Defense (DOD).

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense Because direct federal grant funds can be substantial, as in the Hughes-General Dynamics and Martin Marietta-General Electric business combinations, the Secretary of Defense should obtain information about significant federal direct grants to defense contractors involved in business combinations and include this information in the DOD annual restructuring reports to the Congress. Such information could include the grants' dollar values, purposes, and periods of performance.
Closed – Implemented
DOD included data on grants awarded by DOL directly to defense contractors in DOD's November 1997 restructuring report to Congress. According to a DOD representative, DOL indicated that the grants data DOD included in its report constituted all of the grants provided by DOL directly to defense contractors involved in restructuring. Further, DOL officials indicated that DOL did not intend to award additional grants directly to other defense contractors. Consequently, DOD considers its actions to have fully complied with the recommendation.

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Topics

Aid for educationCorporate mergersDownsizingDefense cost controlDepartment of Defense contractorsDiscretionary grantsEmployment assistance programsFormula grantsProperty disposalReductions in forceSeverance pay