Challenges to Reducing Government Equipment in Contractors' Plants

LCD-77-417: Published: Sep 15, 1977. Publicly Released: Sep 15, 1977.

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In March 1970, the Department of Defense (DOD) announced a 5-year program to generally phase out the use of in-place government-owned facilities in the possession of contractors. Although progress has been made, more could be done to phase out this equipment through determined and sustained efforts by DOD and the military services.

Uncertainties about the authority to dispose of government equipment by negotiated sale to contractors and past lack of incentives for contractors to invest in capital equipment have detracted from the phaseout program's success. As of June 30, 1976, contractors at government-owned and contractor-operated plants had 12 percent less government-owned industrial and other plant equipment than the $4.5 billion in their possession 5 years earlier.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Secretary of Defense should: obtain visibility of other plant equipment furnished to contractors by maintaining central records on such equipment; put more emphasis on identifying both industrial and other plant equipment essential to supporting either current procurements or wartime production and emphasize removing unneeded equipment; revise DOD procedures to guarantee that all plant equipment needed during wartime is identified and included in plant equipment packages set up to meet wartime requirements; and reassess the DOD position on authorizing the use of government-owned equipment for commercial work and require that the contractor maintain records for use of government-owned equipment on commercial work. Congress should clarify the authority of Government Services Administration to negotiate sales of government-owned equipment to the holding contractors.


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