Defense Industry Consolidation: Issues Related to Acquisition and Merger Restructuring Costs

GAO discussed defense industry consolidation, focusing on the: (1) allowability of acquisition and restructuring costs; and (2) impact on Department of Defense (DOD) contracts. GAO noted that: (1) because DOD has yet to adequately define restructuring costs, the potential exists for disagreement over allowability of specific costs and possibly unfair and inconsistent treatment of such costs by contractors and DOD; (2) it is unknown what amount of restructuring costs can be charged against defense contracts under the new policy; (3) restructuring costs will likely place further pressure on DOD procurement budgets; and (4) DOD has many concerns about implementing its restructuring cost policy because it has limited experience and little available information.