Impact Assistance for Capital Expenses Related to the Safeguard Antiballistic Missile System

An advance decision was requested regarding payment of impact assistance funds to a company which alleged that it no longer had a way to recoup its capital expenditures after the Safeguard Antiballistic Missile System was dismantled. The company is entitled to the assistance since the expenditures are not otherwise recoverable and are a direct result of establishment of Safeguard, and the company would sustain an unfair and excessive financial burden without assistance. GAO differed with the Defense Contract Audit Agency regarding the amount of eligible capital expenses as follows: interest on loans used for construction is allowable, employees' termination pay is not allowable, and otherwise allowable amounts should not be reduced by present value analysis. Repayment from user fees should be deducted from eligible expenditures. An amount payable to the company should be withheld until a pending government claim under a contract with the company is resolved.