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.

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