United States General Accounting Office

GAO Report to Congressional Committees

July 1998 DEFENSE

CONTRACTOR

RESTRUCTURING

DOD Risks Forfeiting

Savings on Fixed-Price

Contracts

GAO/NSIAD-98-162

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-277897 

July 17, 1998

The Honorable Strom Thurmond

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on National Security

House of Representatives

Section 818 of the National Defense Authorization Act for Fiscal Year 1995

(P.L. 103-337) requires us to report periodically to the Congress on the

implementation of the Department of Defense’s (DOD) policy on defense

contractor restructuring. We have issued three reports pursuant to this

legislative requirement.1

 This report focuses on DOD’s use of contract price

adjustment clauses, also called reopener clauses, which can be used to

ensure that DOD receives its fair share of contractor restructuring savings

on fixed-price contracts awarded to companies involved in a business

combination between the time a combination is announced and the time

that restructuring savings are reflected in the mechanism used for pricing

contracts.2

 Specifically, we discuss (1) DOD’s limited use of reopener

clauses for these contracts and (2) the potential benefits of using reopener

clauses in future business combinations.

Background As a result of the significant decline in defense expenditures since the late

1980s, defense contractors have been consolidating and restructuring their

operations to increase efficiencies and become more competitive in the

defense marketplace. Many of the consolidation and restructuring

activities resulted from defense contractor acquisitions and mergers. In

July 1993, the Under Secretary of Defense for Acquisition concluded that it

was in the government’s best interest to encourage defense contractors to

consolidate and restructure their operations, which was expected to

reduce costs to DOD. To achieve that goal, the Under Secretary stated that

1

See Related GAO Products for these and other reports on defense contractor restructuring issues.

2

See appendix I for examples of restructuring savings reopener clauses.

Page 1 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

DOD would pay restructuring costs on contracts transferred as part of a

merger or acquisition if the business combination was expected to result

in overall reduced costs for DOD or preserve a critical capability that might

otherwise be lost.

Due to concerns about DOD paying defense contractors to restructure their

operations after a business combination, the Congress enacted section 818

of Public Law 103-337 in October 1994. This legislation prohibited payment

of any restructuring costs until a senior DOD official certified that

projections of restructuring savings from the business combination were

based on audited cost data and should result in overall reduced costs to

DOD. In the conference report on this legislation, the conferees stated that

contracting officers and auditors should understand that they have no

obligation to pay restructuring costs in the absence of detailed evidence of

the benefit to the government. DOD codifies federal acquisition policy in its

Defense Federal Acquisition Regulation Supplement (DFARS).

The Congress further limited DOD’s authority for paying restructuring costs

in section 8115 of the DOD Appropriations Act for Fiscal Year 1997. That

legislation prohibited payment of these costs for business combinations

occurring after September 30, 1996, unless (1) restructuring savings for

DOD were projected to exceed allowed costs by a factor of at least two to

one or (2) the projected savings to DOD were to exceed the costs allowed

and the Secretary of Defense determined that the business combination

would result in the preservation of a critical capability. The Secretary of

Defense is currently required by 10 U.S.C. 2325 to determine in writing that

the projected savings will be at least twice the amount of allowed costs or

that the savings will exceed costs allowed and that the combination will

result in the preservation of a critical capability.3

DOD projects that its share of restructuring savings will amount to 

$4.1 billion and that its share of the restructuring costs will amount to

$856 million, which represent a net savings of $3.3 billion.4

 Restructuring

savings come from both direct and indirect costs. Direct costs are

identified specifically for each contract. Indirect costs, on the other hand,

represent the general operation of the business. Indirect costs are often

referred to as overhead costs and include expenses that benefit all

contracts at a particular business segment, such as maintenance, plant

3

National Defense Authorization Act for Fiscal Year 1998, Public Law 105-85, November 18, 1997.

4

These figures include the six certified combinations as well as one combination that is not subject to

the certification requirement but is included in DOD’s reports to the Congress on defense industry

restructuring.

Page 2 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

security, and legal and accounting expenses. The contractor recovers

these overhead costs through forward pricing rates, which are rates

negotiated between the government and the contractor to use in pricing

future contracts. When restructuring activities reduce indirect costs, DOD

realizes the savings through lower overhead charges to its contracts.

Results in Brief The time it takes for restructuring savings to be included in DOD contract

prices can be considerable. For the contractor business segments we

examined, it took an average of about 21 months from the announcement

of the acquisition or merger to the time that contractors reflect the

restructuring savings in reduced overhead rates. During this period, DOD

awarded over 600 fixed-price contracts or contract modifications worth

about $3.9 billion. However, despite repeated recommendations from the

Defense Contract Audit Agency and Defense Contract Management

Command, contracting officers rarely included reopener clauses for

savings in fixed-price contracts awarded during this period. With reopener

clauses, contract prices that were negotiated before savings were included

in overhead rates used to price DOD contracts could be adjusted downward

once savings were determined, thereby reducing contract costs. Without

reopener clauses, DOD cannot recoup its share of restructuring savings.

DOD contracting officers cited various reasons for not using reopener

clauses. These reasons included the desire to have contracts with no loose

ends and concerns that the use of the clauses would cause an excessive

administrative burden in renegotiating contract price adjustments.

Another factor that appeared to influence the use of reopener clauses is

the level of contractor resistance. Also, one contractor commented that

such a clause was not required by current DOD regulations.

The use of reopener clauses can result in substantial savings to DOD. In one

case in which a reopener clause was exercised, the contract price was

reduced by almost 4 percent, or about $1.8 million. Unless DOD takes steps

to include reopener clauses in its fixed-price contracts with companies

forming business combinations, it risks losing further substantial savings

resulting from contractor restructuring.

Reopener Clauses for

Savings Have Been

Rarely Used

The Defense Contract Audit Agency (DCAA) and the Defense Contract

Management Command (DCMC) have repeatedly recommended that

contracting officers use reopener clauses for savings when negotiating

fixed-price contracts with business combinations. Despite billions of

Page 3 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

dollars in contracts awarded between the announcement of the acquisition

or merger and the time that contractors reflect the restructuring savings in

reduced overhead, reopener clauses for savings have rarely been used. In

fact, the business segments we reviewed identified only 12 instances in

which reopener clauses were included in contracts. One of those reopener

clauses has been successfully exercised, resulting in $1.8 million in

recouped restructuring savings, or about 4 percent of the contract price.

DOD Awarded Billions to

Business Combinations

The time between the announcement of a business combination and the

point at which restructuring savings are reflected in reduced contract

prices to DOD can be considerable. For the contractor business segments

we reviewed, the time ranged from 11 months to 3 years and averaged

almost 21 months. During this period, DOD continued to negotiate

noncompetitive fixed-price contracts with the contractors involved in

business combinations. DOD awarded the contractor business segments we

reviewed over 600 noncompetitive fixed-price contracts worth about

$3.9 billion.

In those contract awards we reviewed, uncertainty over the impact of

restructuring on overhead rates was frequently discussed during

negotiations and, as a result, some overhead rates fluctuated significantly.

For example, records of one negotiation stated that the buyer received

new overhead rates about every 45 days. Records from another

negotiation stated that the contractor had used five different sets of rates

to develop its proposal. In addition, some contractors were involved in

more than one business combination. For example, one contractor was

involved in four business combinations between November 1992 and

April 1996. In some cases, contractors had merged or acquired again

before overhead rates could be updated to include savings from the prior

combination, which started the whole process over as restructuring costs

and savings were calculated for the new combination.

In this fluid and uncertain environment, fixed-price contracts would

normally be risky for both the buyer and the seller because such contracts,

once awarded, cannot be repriced. This risk is particularly significant for

DOD because restructuring savings are expected to significantly exceed

restructuring costs and are more difficult to estimate than restructuring

costs.

DOD addressed the contractors’ risk by allowing restructuring costs to be

included in their overhead rates before certification, provided that the

Page 4 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

contract include a downward reopener clause to remove restructuring

costs if the combination was not certified. However, DOD does not require

reopener clauses to ensure that it receives its appropriate share of

restructuring savings. Rather, DOD leaves the use of such clauses to the

discretion of the contracting officer.

Reopener Clauses for

Savings Are Frequently

Recommended but Rarely

Used

DCAA and DCMC have repeatedly cautioned buying commands and

contracting officers to protect the government’s interest when negotiating

fixed-price contracts with companies involved in business combinations,

often recommending the use of downward reopener clauses to ensure that

the government can claim its share of restructuring savings. In some cases,

DCAA provided examples of reopener clauses that could be used.

Although DCAA and DCMC can recommend reopener clauses for savings, the

contracting officers ultimately decide whether to use them. Contractors

identified only 12 instances in which contracting officers included

reopener clauses in fixed-price contracts with the business segments we

reviewed. DOD awarded these contractors over 600 noncompetitive

fixed-price contract actions worth about $3.9 billion between the time the

combination was announced and the time that restructuring savings were

reflected in overhead rates. Six of these awards with reopener clauses—all

at the same business segment—have a combined value of less than

$12 million; DOD awarded that business segment 142 noncompetitive

fixed-price actions worth almost $873 million during this period.

Contracting officers and negotiation records cited various reasons for not

using reopener clauses, including the preference to have contracts without

loose ends and concerns about the administrative burden of reopening a

contract. Another factor that appears to influence the use of reopener

clauses is contractor resistance. In one Navy buying command, where

reopener clauses for savings were generally not used, we found three

instances in which the clauses were considered but not used partly due to

contractor resistance. For example, in the case of a $116 million award for

electronic test equipment, the contracting officer said that the contractor

was not receptive to a reopener clause and was even less receptive to

another proposal that the Navy not pay restructuring costs or pay reduced

restructuring costs instead of including a reopener clause.

The Navy also considered reopener clauses in a $63 million aircraft retrofit

contract and an initial $123 million aircraft production contract.5

 These

5

The final award for this contract after negotiation was $511 million.

Page 5 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

contracts were awarded in June and December 1994, respectively, with

performance through 1997 and 1998. This business combination had been

announced in March 1994, but there was no restructuring proposal or

restructuring agreement with the government until 1996. For the two

business segments affected by these contracts, the savings were not

reflected in overhead rates until September 1995 and March 1996.

According to the Navy lead negotiator, the contractor did not believe that

there would be any restructuring savings during the contract performance

periods and was not receptive to downward reopener clauses.

Some contracting officers and negotiation records also state that reopener

clauses were not used because of the administrative burden of reopening a

contract. When a reopener clause is exercised, the contractor submits a

repricing proposal to the buyer that meets the criteria established in the

clause. This proposal is then audited by DCAA and negotiated with the

contractor.

One contract that contained a reopener clause, a $49 million foreign

military sales award, has been repriced. That contract, awarded in

April 1995, was modified in September 1997 to include $1.8 million in

recouped restructuring savings, or about 4 percent of the total contract

price. According to the contracting officer and price analyst, an

administrative burden was associated with reopening the contract, but

these officials did not believe that the burden was unreasonable or

excessive, particularly in light of the return. The officials also said that the

interpretation of the reopener clause language was never in dispute; the

contractor knew that it had to provide a repricing proposal that was

auditable and separated restructuring savings from any other changes to

the contract.

DOD Is Still at Risk

for Lost Savings From

Future Business

Combinations

More recently, contracting officers appear to be recognizing the benefits of

reopener clauses, and their use seems to be increasing. However, the use

of these clauses is still limited. Unless DOD takes steps to include reopener

clauses in its noncompetitive fixed-price contracts for companies forming

business combinations, it risks losing further substantial savings resulting

from contractor restructuring.

With recent business combinations, contracting officers appear to be using

reopener clauses more often than in the past. For example, reopener

clauses for savings were not included in any DOD awards made to one

business segment while it was undergoing restructuring during 1994 and

Page 6 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

early 1995. However, that business segment subsequently identified 14

contracts awarded by DOD that included reopener clauses for savings.

These reopener clauses related to additional acquisitions after the initial

business combination. In addition, a Navy contract awarded to that

contractor in September 1997 included a reopener clause for savings in

connection with a restructuring project remaining from the initial

combination.

Some DOD buying commands have also expressed more interest in

reopener clauses. At one Navy command, a proposed reopener clause was

disseminated to staff from the Office of the Assistant Secretary of the

Navy. Contracting officers at that command said that the use of reopener

clauses for savings is being stressed by the head of contracts and, as a

result, reopener clauses have begun to appear in awards. One contracting

officer cited the increasing number of mergers as part of the reason for

this increased interest. Other buying offices have also acknowledged that

reopener clauses can be a useful tool to protect the government’s interest.

While some DOD buyers have shown more interest in the use of reopener

clauses for savings, some new business combinations emphatically oppose

their use. Several DOD buying commands expressed interest in using

reopener clauses for savings in awards to a contractor involved in two

business combinations formed during 1997. In August 1997, a senior DCMC

executive provided a recommended reopener clause to contract

administrators at the affected business segments, who forwarded the

language to DOD buying commands. The contractor, however, informed

DCMC and DOD buyers that it would not accept the proposed reopener

clause because current DOD regulations do not require it. The contractor

stated that, under those regulations, a downward reopener clause is only

required to remove restructuring costs if restructuring savings are not

certified by DOD. However, DOD officials noted that the regulations are

flexible and that contracting officers are permitted to add reopener

clauses in addition to the one required by regulations.

Conclusions and

Recommendation

DOD auditors and contract administrators have repeatedly recommended

to DOD buyers that reopener clauses for savings be used in pricing

contracts with companies involved in business combinations. However,

contracting officers have generally declined to use the clauses for a variety

of reasons, including the desire to have contracts without loose ends and

to avoid the burden of reopening them. Contractors may also use the lack

of DOD policy requiring the use of reopener clauses as a bargaining tool in

Page 7 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

negotiations with DOD contracting officers. Recent attempts to use

reopener clauses appear to have increased. However, some new business

combinations actively oppose their use and refuse to accept them. In one

instance, the contractor cited the absence of a DOD requirement as support

for its position. Thus, DOD faces a challenge in negotiating timely contracts

while protecting the government’s interests, and it remains at risk for lost

savings as defense industry consolidation continues.

We believe that the contracting officers’ negotiation position would be

strengthened and they would be more likely to use reopener clauses if

there were a DOD policy requiring their use. Therefore, we recommend that

the Secretary of Defense revise DFARS to require that contracting officers

(1) include reopener clauses for savings in noncompetitive fixed-price

contracts negotiated before the benefits of restructuring savings are

reflected in reduced overhead rates used to price contracts or (2) provide

a written justification in the negotiation records as to why a reopener

clause is not needed.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD partially concurred with our

recommendation. DOD agrees that the use of reopener clauses will ensure

that it receives its share of restructuring savings on non-competitive

fixed-price contracts awarded to defense contractors involved in business

combinations. However, DOD does not believe that the mandatory use of

reopener clauses in all noncompetitive fixed-price contracts is

appropriate. DOD stated that contracting officers must use their

professional judgment on a case-by-case basis to decide when a reopener

clause is warranted. DOD said it would revise DFARS to require that

contracting officers consider using a reopener clause in noncompetitive

fixed-price contracts. While we believe DOD’s commitment to revise DFARS

is a step in the right direction, it does not, in our view, go far enough.

Because the evidence indicates that few contracting officers are using

reopener clauses, in spite of continuing recommendations to do so, we

believe that DOD should (1) require contracting officers to use reopener

clauses or (2) clearly document in the contract file their reasons for not

using them. Implementing this recommendation would more clearly

convey DOD’s support of reopener clauses, while still providing contracting

officers with the flexibility to not use them, when justified. In this regard, a

number of business combinations are pending and others are likely as the

defense industry continues to respond to reduced defense spending. If

reopener clauses continue to be excluded from the majority of contracts

awarded to business combinations, DOD will not receive its share of

Page 8 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

restructuring savings. At a minimum, regardless of how DOD revises DFARS,

it should require that any decision not to use a reopener clause be clearly

justified in the contract file.

In addition, DOD commented that our description of DOD’s procedures used

to price restructuring costs and savings into new contracts is incomplete

and gives the erroneous impression that restructuring savings are not

included. DOD maintains that its regulations ensure that restructuring costs

and savings are priced into new contracts as quickly as possible. Even

though DOD contracting officers may be adjusting forward pricing rates

(the mechanism used to price new contracts) as quickly as possible, our

work shows it is taking an average of 21 months from the announcement

of an acquisition or merger to the time that contractors reflect the

restructuring savings in reduced overhead rates. During that time, DOD

continued to negotiate and award substantial amounts of new contracts.

DOD’s comments appear in appendix II.

Scope and

Methodology

To obtain background and program history information, we reviewed the

pertinent legislation and legislative history dealing with defense contractor

restructuring costs and DOD savings, including committee reports and

hearings regarding restructuring. We also reviewed DOD regulations related

to restructuring; DCAA and DCMC guidance and analyses regarding

restructuring savings; and reports and analyses on restructuring by the DOD

Inspector General, the Office of Management and Budget’s Cost

Accounting Standards Board, the Congressional Research Service, and us.

For our review, we included all the business combinations that had been

certified by the Under Secretary of Defense for Acquisition and

Technology as of September 30, 1997: United Defense Limited Partnership,

Martin Marietta-General Electric Aerospace, Northrop-Grumman-Vought,

Martin Marietta-General Dynamics Space Systems, Lockheed-Martin

Marietta, and Hughes-CAE-Link. For all business combinations except

Northrop-Grumman-Vought, we reviewed specific business segments. For

Northrop-Grumman-Vought, we reviewed the largest restructuring project,

which was the consolidation of corporate headquarters. We obtained

information from buyers representing all the services: the U.S. Army

Aviation and Missile Command, the U.S. Army Tank Automotive

Command, the Air Force Materiel Command’s Aeronautical Systems

Center, the Naval Sea Systems Command, and the Naval Air Systems

Command.

Page 9 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

We reviewed selected contracts for the buyers and business combinations

in our review to determine whether DOD auditors and price analysts are

recommending, and DOD procuring contracting officers are using, reopener

clauses for restructuring savings in noncompetitive fixed-price contracts.

We used the DOD Individual Contracting Action Report (DD350) database

to identify such fixed-price actions. We used this primary source data for

our analyses because it is the official record of all DOD contract actions

over $25,000. We did not validate or verify this data, but we cross-checked

it with buying offices when possible. In some cases, the buyers told us that

the DD350 data was the only complete data they had.

From the DD350 database, we obtained data for all contracts of

$20 million or more that DOD awarded to the business combinations in our

review. For Hughes-CAE-Link, we dropped this threshold to all contracts

of $5 million or more because of the company’s smaller business base

(training systems rather than weapon systems). According to the DD350

database, 625 fixed-price actions totaling about $3.9 billion were awarded

to the business segments in our review during the relevant periods. The

buyers included in our review accounted for about 38 percent of these

actions and 40 percent of the dollar amount, or 239 actions totaling over

$1.5 billion.

For contract actions, we reviewed negotiation memorandums, portions of

the contract awards, DCAA audit reports, and DCMC price analyses. We

spoke with DOD contracting officers, other DOD procurement officials, DCAA

auditors, and DCMC price analysts. We reviewed guidance and other

directives provided to contracting officers by DOD buying commands. In

addition, we obtained and reviewed all restructuring-related price

adjustment clauses included in contracts with the business segments in

our review, as identified by DOD analysts and contractor officials. For those

contracts for which price adjustment clauses for savings were included,

we determined whether the clauses had been exercised and what the

result had been. To do this, we spoke with responsible officials and

reviewed contract data and buying office guidance.

We conducted our work from August 1997 to April 1998 in accordance

with generally accepted government auditing standards.

Page 10 GAO/NSIAD-98-162 Defense Contractor Restructuring
B-277897 

We are sending copies of this report to the Secretary of Defense; the

Commander, DCMC; the Director, DCAA; and appropriate congressional

committees. Copies will also be made available to others on request.

Please contact me at (202) 512-4841 if you or your staff have any questions

concerning this report. Major contributors to this report are

Charles W. Thompson, Maria Storts, and George C. Burdette.

David E. Cooper

Associate Director

Defense Acquisitions Issues

Page 11 GAO/NSIAD-98-162 Defense Contractor Restructuring
Contents

Letter 1

Appendix I 

Examples of

Restructuring Savings

Reopener Clauses

14

Appendix II 

Comments From the

Department of

Defense

15

Related GAO Products 20

Abbreviations

DCAA Defense Contract Audit Agency

DCE Defense Corporate Executive

DCMC Defense Contract Management Command

DFARS Defense Federal Acquisition Regulation Supplement

DOD Department of Defense

Page 12 GAO/NSIAD-98-162 Defense Contractor Restructuring
Page 13 GAO/NSIAD-98-162 Defense Contractor Restructuring
Appendix I 

Examples of Restructuring Savings

Reopener Clauses

The following reopener clauses for restructuring savings have been

included in Department of Defense (DOD) awards to business

combinations. Some of these awards were made to business combinations

that have occurred since the six combinations included in our review.

“[Contractor] agrees to modify the subject contract to address any cost savings derived

from [the contractor’s acquisition of another contractor]. Any cost adjustments will be

made on a downward adjustment basis only.”

“. . . Within the contractually required period of performance of this contract, [the

contractor] anticipates the negotiation of the external restructuring proposal which may

impact [the Forward Pricing Rate Proposal] which formed the basis of the negotiated price

on this contract. Both parties agree to recalculate the negotiated price on a downward only

basis based on the results of the negotiation of the external restructuring proposal. This

contract price adjustment, if required, will be executed within 90 days of DOD approval of

the external restructuring agreement . . .”

“. . . At the time of negotiations for [this contract, the contractor] and the Government did

not have a negotiated forward pricing rate agreement on indirect rates. A mutual

agreement has been formed where the contract effort may be billed with the rates as given

in this contract until a negotiated Forward Pricing Rate Agreement is available with the

indirect rates. At that time, negotiations will reopen to finalize agreement on indirect rates,

. . . all of which will be subject to downward only adjustment from the date of contract

award . . .”

“. . . The Government and the contractor acknowledge that under Public Law 103-337, in

order for the Government to allow the restructuring costs, such costs must result in an

overall net savings to the Government. The Government and the contractor agree that,

following [Under Secretary of Defense (Acquisition and Technology)] certification, and the

following subsequent approval of the Forward Pricing Rates which include the [business

combination’s] restructuring impact, a net downward only price adjustment shall be

effected . . .”

“The parties hereto acknowledge that [the contractor has formed a business combination]

and plans to submit a restructuring proposal to the Defense Corporate Executive (DCE). All

parties also acknowledge that this contract has been negotiated without consideration of

the costing rate impact resulting from the submittal of the restructuring proposal and

therefore any cost impact resulting from the final negotiation of the restructuring proposal

shall be downward only. After review and verification of the impact with the DCE, [the

contractor] and the Government agree to modify the contract price accordingly.”

Page 14 GAO/NSIAD-98-162 Defense Contractor Restructuring
Appendix II 

Comments From the Department of Defense

Page 15 GAO/NSIAD-98-162 Defense Contractor Restructuring
Appendix II 

Comments From the Department of Defense

Now on pp 6-7.

Page 16 GAO/NSIAD-98-162 Defense Contractor Restructuring
Appendix II 

Comments From the Department of Defense

Now on p. 8.

Page 17 GAO/NSIAD-98-162 Defense Contractor Restructuring
Page 18 GAO/NSIAD-98-162 Defense Contractor Restructuring
Page 19 GAO/NSIAD-98-162 Defense Contractor Restructuring
Related GAO Products

Defense Industry Restructuring: Updated Cost and Savings Information

(GAO/NSIAD-98-156, Apr. 30, 1998).

Defense Industry Restructuring: Clarification of Cost and Savings Issues

(GAO/NSIAD-97-186R, June 17, 1997).

Defense Industry Restructuring: Cost and Savings Issues (GAO/T-NSIAD-97-141,

Apr. 15, 1997).

Defense Restructuring Costs: Information Pertaining to Five Business

Combinations (GAO/NSIAD-97-97, Apr. 1, 1997).

Defense Restructuring Costs: Projected and Actual Savings From Martin

Marietta Acquisition of GE Aerospace (GAO/NSIAD-96-191, Sept. 5, 1996).

Defense Contractor Restructuring: First Application of Cost and Savings

Regulations (GAO/NSIAD-96-80, Apr. 10, 1996).

Defense Restructuring Costs: Payment Regulations Are Inconsistent With

Legislation (GAO/NSIAD-95-106, Aug. 10, 1995).

Overhead Costs: Defense Industry Initiatives to Control Overhead Rates

(GAO/NSIAD-95-115, May 3, 1995).

Defense Industry Consolidation: Issues Related to Acquisition and Merger

Restructuring Costs (GAO/T-NSIAD-94-247, July 28, 1994).

(707295) Page 20 GAO/NSIAD-98-162 Defense Contractor Restructuring
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100