Skip to main content

Defense Industry Restructuring: Updated Cost and Savings Information

NSIAD-98-156 Published: Apr 30, 1998. Publicly Released: Apr 30, 1998.
Jump To:
Skip to Highlights

Highlights

Pursuant to a legislative requirement, GAO provided information on restructuring costs of defense contractors involved in business combinations since 1993, focusing on the: (1) specific costs associated with workforce reductions; (2) services provided to workers affected by business combinations; (3) savings reached from the business combinations relative to the restructuring costs paid by the Department of Defense (DOD); and (4) budgetary implications of reported restructuring savings.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Defense Contract Management Command The Secretary of Defense should direct the Director, Defense Contract Audit Agency (DCAA), to clarify DCAA's guidance on evaluating restructuring savings. In particular, the guidance should discuss how to evaluate proposed savings based on activities that were ongoing or planned prior to restructuring or that could have been achieved absent restructuring, such as those achievable by management improvements.
Closed – Not Implemented
DOD disagreed on the need to clarify its guidance on evaluating restructuring savings, noting that existing DCAA guidance is adequate to meet the legislative requirement that anticipated savings exceed projected costs. Based on a follow-up inquiry, DOD informed GAO that it planned no action on the recommendation.

Full Report

Office of Public Affairs

Topics

Weapons systemsCorporate mergersDefense budgetsDefense cost controlDefense economic analysisDefense procurementDepartment of Defense contractorsEmployment assistance programsStaff utilizationReductions in forceSeverance pay