Acquisition Reform:

Efforts to Reduce the Cost to Manage and Oversee DOD Contracts

NSIAD-96-106: Published: Apr 18, 1996. Publicly Released: Apr 18, 1996.

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Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) attempts to address the impact of its acquisition regulations and oversight requirements that are cost drivers for DOD acquisitions. GAO limited its review to the top 10 cost drivers, which accounted for nearly 50 percent of the cost premium identified in a Coopers and Lybrand study.

GAO found that: (1) in response to the Coopers and Lybrand study, DOD established the Regulatory Cost Premium Working Group to coordinate DOD-wide efforts to address the cost drivers; (2) the working group is tracking many reforms initiated by DOD to reduce the cost of managing and overseeing DOD's contracts; (3) although DOD expects substantial savings from reforming its management and oversight requirements, the savings resulting from current DOD initiatives may be significantly less than the 18-percent cost premium identified by Coopers and Lybrand; (4) as of December 31, 1995, contractors seeking to address the cost drivers through DOD's Reducing Oversight Costs Reinvention Laboratory had identified actions that would achieve targeted savings totaling only about 1 percent; (5) DOD stated that the 1-percent cost savings reported by the reinvention laboratory is based on "work-in-progress" results and that it would be inappropriate to use these results to draw conclusions about DOD's ability to reduce the cost premium; and (6) DOD fully expects the savings from laboratory activities to exceed the level reported in December 1995.

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