CONTRACT 

FINANCING

DOD Should 

Comprehensively 

Assess How Its 

Policies Affect the 

Defense Industry

Report to Congressional Committees

June 2019

GAO-19-406

United States Government Accountability Office
______________________________________ United States Government Accountability Office

June 2019

CONTRACT FINANCING

DOD Should Comprehensively Assess How Its 

Policies Affect the Defense Industry

What GAO Found

Congress and the Department of Defense (DOD) have changed the contract 

financing legislative and regulatory framework since DOD last performed a 

comprehensive assessment, including eliminating a requirement that contracting 

officers justify a need for contract financing and establishing a preference for

performance-based payments. However, Defense Contract Management Agency 

data indicates that the amount of performance-based payments it administered

fell from 2010 to 2016 (see figure).

Defense Contract Management Agency Progress and Performance-Based Payments Data, 

Fiscal Years 2010 through 2018 (in fiscal year 2018 dollars)

DOD officials acknowledged that DOD has not comprehensively analyzed how its 

policies affect the defense industry since 1985. Industry and economic 

conditions, however, have since changed, including lower interest rates and the 

emergence of contractors who do not typically work with DOD. In August 2018, 

DOD proposed introducing performance-based elements into its process for 

setting progress payment rates. DOD officials stated that since the proposed rule 

focused on incentivizing contractors’ performance, they did not assess how it 

would affect defense contractor profitability or whether other financing or profit 

policies changes would be needed. DOD withdrew the proposed rule in October 

2018. GAO’s Standards for Internal Control in the Federal Government call for 

organizations to monitor the effectiveness of their policies on a recurring basis. In 

December 2018, DOD officials acknowledged the need to do so. Until DOD

conducts a comprehensive assessment and ensures they are done on a 

recurring basis, it will not be in a position to understand whether current or future 

contract financing policies are achieving their intended objectives.

Why GAO Did This Study

Each year, DOD provides contractors 

with billions of dollars in contract 

financing on fixed-price contracts for 

major weapons systems and other longterm efforts. Contract financing helps 

contractors manage expenses until they 

begin delivering the contracted items to 

DOD. Contract financing can take 

several forms, including

• progress payments based on the cost 

incurred by the contractor, and

• performance-based payments, in 

which the government pays the 

contractor an agreed-to amount for 

achieving certain milestones.

DOD last performed a comprehensive 

assessment of its contract financing 

polices in 1985.

The Conference Report accompanying 

the Fiscal Year 2019 National Defense 

and Auhorization Act included a 

provision for GAO to analyze the level of 

financing currently provided to 

contractors, among other things. This 

report (1) describes changes in DOD 

contract financing policy since 1985 and 

(2) assesses the extent to which DOD 

has analyzed the effect of its contract 

financing policies on the defense 

industry. GAO assessed relevant

legislation and DOD regulations; 

obtained data on DOD’s use of progress 

and performance-based payments from 

fiscal years 2010 through 2018; and 

interviewed cognizant DOD and industry

officials. 

What GAO Recommends

GAO recommends that DOD ensure it 

conducts a comprehensive assessment 

of the effect that its contract financing 

and profit policies have on the defense 

industry and update that assessment on 

a recurring basis. DOD concurred with 

the recommendation.

View GAO-19-406. For more information, 

contact Timothy J. DiNapoli at (202) 512-3665 or 

dinapolit@gao.gov

Highlights of GAO-19-406, a report to 

congressional committees
Page i GAO-19-406 Contract Financing

Letter 1

Background 3

Changes to the Legislative and Regulatory Framework Governing 

Contract Financing since 1985 9

DOD Has Not Comprehensively Assessed the Impact of Its 

Contract Financing and Profit Policy on the Defense Industry 

Since 1985 17

Conclusions 22

Recommendation for Executive Action 23

Agency Comments and Our Evaluation 23

Appendix I Comments from the Department of Defense 25

Appendix II Legal Chronology of Select Contract Financing Changes 26

Appendix III GAO Contacts and Staff Acknowledgments 27

Tables

Table 1: Department of Defense (DOD) Contract Financing 

Payment Types and Conditions for Use 5

Table 2: August 2018 Proposed Rule Criteria for Progress 

Payment Rate 16

Table 3: Changes in Customary Progress Payment Rates since 

1985 18

Table 4: Legal Chronology of Select Contract Financing Changes 26

Figures

Figure 1: How Progress Payment Rate Impacts Contractor Profit 

and Internal Rate of Return under a Hypothetical, 40-

month, Fixed Price Contract 7

Figure 2: Timeline of Contract Financing Changes 10

Figure 3: Defense Contract Management Agency Progress and 

Performance-Based Payments Data, Fiscal Years 2010 

through 2018 (fiscal year 2018 dollars) 15

Contents
Page ii GAO-19-406 Contract Financing

Figure 4: Number of Undefinitized Contract Actions and Unpriced 

Change Orders Reported by the Department of Defense 

between March 2014 and September 2018 20

Figure 5: Changes in Short-Term Interest Rates and Inflation 

since 1980 21

Abbreviations

DCMA Defense Contract Management Agency

DFAIR Defense Financial and Investment Review

DFARS Defense Federal Acquisition Regulation

Supplement

DFAS Defense Finance and Accounting Service

DOD Department of Defense

DPC Office of Defense Pricing and Contracting

FAR Federal Acquisition Regulation

FASA Federal Acquisition Streamlining Act

IRR Internal rate of return

MOCAS Mechanization of Contract Administration Services

UCA Undefinitized Contract Action

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Page 1 GAO-19-406 Contract Financing

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Washington, DC 20548

June 27, 2019

Congressional Committees

Contract financing provides contractors with billions of dollars in financing 

payments on contracts for major weapon systems and other products that 

may take years to produce. In the absence of such payments, contractors 

would need to borrow funds from commercial sources or use their own 

funds to pay for the costs to produce these systems. As early as the 

1950s, the Department of Defense (DOD) recognized benefits in 

providing contract financing. Contract financing can take several forms, 

including

• progress payments based on the cost incurred by the contractor and

• performance-based payments, in which the government pays the 

contractor an agreed-to amount for achieving certain contractual 

milestones.1

DOD last performed a comprehensive assessment of its contract 

financing polices in 1985. This study, called the Defense Financial and 

Investment Review (DFAIR), assessed DOD’s contract pricing, financing, 

and profit policies in effect at that time. The review assessed the impact 

of contract financing on the cost of weapon systems and the health and 

profitability of the defense industry, among other things.2 More recently, 

several defense industry associations expressed concerns about DOD’s 

current contract financing policies including the impact these policies had 

on the defense industry. DOD has stated that a healthy defense industrial 

base supports economic prosperity and global competitiveness, and arms 

the military with capabilities to defend the nation.

The Conference Report accompanying the John S. McCain National 

Defense Authorization Act for Fiscal Year 2019 contained a provision for 

GAO to analyze the level of financing currently provided to contractors 

 1

For purposes of this report, we use the term “contract financing” to refer to progress and 

performance-based contract financing payments. See Federal Acquisition Regulation 

(FAR) Subparts 32.5 (Progress Payments Based on Costs) and 32.10 (PerformanceBased Payments). Unless stated otherwise, all references to “progress payments” in this 

report refer to “customary progress payments.”

2

Department of Defense, Defense Financial and Investment Review, (Washington, D.C.: 

June 1985).

Letter
Page 2 GAO-19-406 Contract Financing

among other things. This report (1) describes the changes in DOD 

contract financing policy since 1985 and (2) assesses the extent to which 

DOD has analyzed the effect of current contract financing policies on the 

defense industry.

To describe the changes in DOD contract financing policy since 1985, we 

reviewed relevant changes to legislation, the Federal Acquisition 

Regulation (FAR), the Defense Federal Acquisition Regulations 

Supplement (DFARS), and DOD guidance governing contract financing. 

We assessed DOD contract financing policies to determine the rationale 

behind these changes. We also interviewed officials from the Defense 

Contract Management Agency (DCMA), Under Secretary of Defense 

(Comptroller), and Defense Finance and Accounting Service (DFAS). We 

analyzed progress and performance-based payment data provided by 

DCMA from DOD’s Mechanization of Contract Administration Services

(MOCAS), the system of record for processing contract financing 

payments for DCMA administered contracts.

3 We used these data to 

determine how much DOD made in contract financing payments between 

fiscal years 2010 and 2018, the types of contractors that received these 

payments, and how the mix of performance-based and progress 

payments changed as policies changed. We adjusted the numbers for 

inflation, using the fiscal year 2018 Gross Domestic Product Price Index. 

We determined these data to be reliable for purposes of our objectives by 

interviewing DCMA officials who maintain the MOCAS system and

reviewing documentation provided by DCMA.

To assess the extent to which DOD has analyzed the effect of its contract 

financing policies on the defense industry, we assessed prior and current 

DOD studies on contract financing. Specifically, we assessed DOD’s 

1985 DFAIR study, studies prepared by the Institute for Defense 

Analyses and RAND, and DOD regulations and supplementary 

information related to DOD contract financing policies. We also 

interviewed representatives within the Office of Defense Pricing and 

Contracting (DPC) about the department’s approach to assessing the 

effect of contract financing policy on contractor profitability and 

operations. We also obtained views on DOD’s current contract financing 

policy from industry groups including associations that publicly 

 3

MOCAS is the payment system of record for contracts delegated to DCMA. According to 

DCMA officials, MOCAS does not contain contract finance payment data for contracts not 

delegated to DCMA for administration, such as construction contractors and Navy 

shipbuilding contracts. 
Page 3 GAO-19-406 Contract Financing

commented on DOD’s August 2018 proposed rule on contract financing. 

These groups included the Aerospace Industries Association, National 

Defense Industrial Association, and the Professional Services Council.

We also met with Financial Executives International. We also reviewed 

our prior work on contract financing, profit, and profitability.4 Specifically, 

we assessed DOD’s studies and policies against our Standards for 

Internal Controls in the Federal Government to determine the extent to 

which DOD was conducting ongoing monitoring and assessments of its 

contract financing policies.5

We conducted this performance audit from August 2018 to June 2019 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

DOD has long recognized that the contracts for items like weapon 

systems are capital intensive in nature and take a long time to produce. 

Contract financing assists the defense contractor in managing expenses, 

such as material, labor, and overhead. In such cases, DOD can agree to 

help finance these expenses as the work progresses through various 

types of contract financing payments, including progress payments and 

performance-based payments.

6

• Progress payments based on cost are determined as a percentage 

of the costs incurred by the contractor as work progresses. Currently, 

DOD pays 80 percent of incurred costs of large business concerns 

 4

See, for example, GAO, Defense Industry Profit Study, B-159896 (Washington, D.C.: 

March 17, 1971); Recent Changes in the Defense Department’s Profit Policy – Intended 

Results Not Achieved, PSAD-79-38 (Washington, D.C.: March 8, 1979); and Government 

Contracting: Assessment of the Study of Defense Contractor Profitability, 

GAO/NSAID-87-50 (Washington, D.C.: Dec. 23, 1986).

5

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: Sept. 10, 2014).

6

Other types of contract financing include progress payments based on percentage or 

stage of completion; advance payments; and unusual forms of contract financing. These 

latter two financing approaches are lower in order of preference in the FAR. 

Background
Page 4 GAO-19-406 Contract Financing

and 90 percent of incurred costs of small business concerns.7 To 

receive progress payments on the basis of cost, contractors are 

required to have an accounting system and controls that are adequate 

for proper administration of progress payments. The cognizant 

contract administration office is to maintain surveillance of the 

contractor’s accounting system as appropriate, and the Defense 

Contract Audit Agency is to audit the accounting system.8 DOD 

provides contract financing on fixed-price type contracts for noncommercial items.

• Performance-based payments enable the contractor to be paid for 

achieving certain contractual milestones, such as delivery of a major 

subcontracted component. DOD can pay up to 90 percent of either 

the contract’s price or the price of a deliverable item using 

performance-based payments. DOD’s performance-based payments

guide states that these payments should not be structured such that 

they amount to advance payments, which in general terms are 

payments made before work is complete on a contract regardless of 

what performance milestones are met.9 Unlike progress payments, 

however, performance-based payments do not require that the 

contractor have an adequate accounting system.

Lastly, contract financing can also be used when the terms and conditions 

of a contract are not yet “definitized,” a term that generally means

finalized. These actions, which are termed undefinitized contract actions 

(UCAs) at DOD, are to be used only when the negotiation of a definitive 

contract action is not possible in sufficient time to meet DOD’s 

requirements and the department’s interest demands that the contractor 

be given a binding commitment so that contract performance can begin 

immediately.10 The government may incur unnecessary costs if 

 7

In this report we refer to “small business concern” as “small business” and “other than 

small business concern” as “large business.” See FAR § 2.101. DOD’s progress payment 

rate for small businesses is 5% higher than the rate in the FAR. See FAR § 32.501-1.

8

For more information on contractor business systems, see GAO, Contractor Business 

Systems: DOD Needs Better Information to Monitor and Assess Review Process, 

GAO-19-212 (Washington, D.C.: Feb. 7, 2019). 

9

Department of Defense, Defense Procurement and Acquisition Policy, PerformanceBased Payments Guide (2014).

10See FAR § 16.603 and DFARS §§ 216.603, 217.7400. Undefinitized contract action 

means any contract action including letter contracts, orders under basic ordering 

agreements, and provisioned item orders for which the contract terms, specifications, or 

price are not agreed upon before performance is begun under the action.
Page 5 GAO-19-406 Contract Financing

requirements change before the contract is definitized. Defense 

acquisition regulations generally require UCAs to be definitized within 180 

days of the UCA date or before more than 50 percent of the estimated 

contract price is obligated, whichever occurs first.11 During this period, 

progress payments are limited to 80 percent of work accomplished. 

DOD’s 2014 performance-based payments guide recommends that a 

UCA be awarded using progress payments first; performance-based 

payments should then be considered during the definitization process.

Table 1 summarizes the conditions and rates applicable to progress 

payments based on costs and performance-based payments.

Table 1: Department of Defense (DOD) Contract Financing Payment Types and Conditions for Usea

Type of Financing Conditions for Use

Progress payments 

based on costb

• Contractor needs to have an adequate cost accounting system

• Used on fixed-price contracts and suitable for use on undefinitized contract actions (UCAs) 

• Contract must be valued at $2.5 million or more for other than small business concerns

• Used by DOD to finance a certain percentage of a contractor’s work-in-process on fixed-price contracts 

through reimbursements of allowable costs incurred

• Made at not greater than the current progress payment rate based on contractor cost incurred for work 

completed. Currently, the progress payment rate is set at 80 percent of total costs of performing 

contract for other than small businesses and 90 percent of costs for small businesses.

Performance-based 

payments

• Contractor does not need an adequate cost accounting system

• Used on fixed-price contracts; not typically provided on UCAs

• Contract must be valued at $2.5 million or more for other than small business concerns

• May be made on the basis of performance measured by objective, quantifiable methods, 

accomplishment of defined events, or other quantifiable measures of results

• Can be made on whole contract or deliverable item basis

• Cannot exceed 90 percent of contract or deliverable item price

• Paid no more frequently than monthly

• Must not be structured in such a way as to become the equivalent of advance payments

Source: GAO analysis of Federal Acquisition Regulation and Defense Federal Acquisition Regulations Supplement, and associated guidance. | GAO-19-406

a

See Appendix II for the legal citations used to developed this table.

b

In this table “progress payments” refer to “customary progress payments.”

Several offices and agencies within DOD have a role in managing 

contract financing.

 11See DFARS §217.7404-3. For additional information on UCAs, see GAO, Defense 

Contracting: Observations on Air Force Use of Undefinitized Contract Actions, 

GAO-15-496R, (Washington, D.C.: May 18, 2015). 
Page 6 GAO-19-406 Contract Financing

• The office of DPC, within DOD’s Office of the Under Secretary of 

Defense for Acquisition and Sustainment, is responsible for all pricing, 

contracting, and procurement policy matters. This office formulates 

and oversees DOD-wide pricing policies and strategies supporting the 

procurement of major defense programs, including programs that use

progress and performance-based payments.

• DCMA and other contract administration offices monitor contractors’

performance and management systems to ensure that cost, product, 

and performance are in compliance with the contract terms. DCMA 

generally maintains contract financing payment data for DOD 

progress and performance-based payments for contracts DCMA 

administers. Within DCMA, the Cost and Pricing Center supports 

DOD-wide analysis of contract data to support DOD-wide decision 

making, among other things.

Contract financing has an impact on the price of negotiated contracts and, 

more generally, on the health and profitability of the defense contractor. 

On negotiated contracts, DOD requires contracting officers to use 

weighted guidelines, a structured approach used to develop profit 

objectives for individual defense contracts. DOD implements its profit 

policy through the weighted guidelines. As part of their efforts to 

determine the government’s negotiating position, including how much 

profit the contractor should receive under the contract, contracting officers 

are to consider various factors, including the degree to which the 

government is providing contract financing.12 Assuming other factors are 

held constant, the weighted guidelines suggest that the negotiated profit 

rate of a fixed-price defense contract might be 1 to 2 percentage points 

lower when the government provides contract financing. The contracting 

officer may vary the amount to consider other risk elements when 

establishing the government’s negotiating position.

DOD-provided contract financing can also provide contractors higher 

rates of return on the amount of corporate funds contractors invest on that 

same contract. One measure of this benefit is “internal rate of return”

 12Whether the government is providing contract financing is considered under one of the 

four profit factors covered by the weighted guidelines, namely the contract type risk. The 

other three profit factors that are to be considered include performance risk, facilities 

capital employed and cost efficiency. The facilities capital employed factor focuses on 

encouraging and rewarding capital investment in facilities that benefit DOD. When added 

together, these four profit factors can help develop the government’s negotiation position. 

See DFARS § 215.404-71. 

Relationship of Contract 

Financing to Contract 

Profit and Contractor 

Profitability
Page 7 GAO-19-406 Contract Financing

(IRR), a tool that can be used to assess the impact of contract financing 

on overall contractor profitability. DOD’s 2001 Incentives Guidebook 

notes that IRR is one of the basic tools used by industry to determine 

where to invest its funds and assess the risks and potential rewards 

involved in contracting with the government or commercial entities.13 IRR 

is a measure that integrates both the contractor’s investment to produce 

the product and the profit earned on that product. In contrast to contracts 

in which the contractors must either self-finance or borrow from 

commercial lenders, when contractors receive financing on a contract 

from the government the contractor’s IRR can be significantly higher. 

Figure 1 provides a hypothetical example of how changes in the progress 

payment rate on a 40-month, fixed-priced contract affects the expected 

contract profit rate and the contractor’s IRR.

Figure 1: How Progress Payment Rate Impacts Contractor Profit and Internal Rate 

of Return under a Hypothetical, 40-month, Fixed Price Contract

 13Department of Defense, Office of the Under Secretary of Defense for Acquisition and 

Technology memorandum, Incentive Strategies for Defense Acquisitions (Washington, 

D.C.: Jan. 5, 2001).
Page 8 GAO-19-406 Contract Financing

As illustrated above, providing contract financing (in this case, progress 

payments) has a significant impact on the contractor’s IRR and a lesser 

impact on the actual profit that DOD expects the contractor to make. For 

example, if DOD provided no contract financing, the weighted guidelines 

would suggest a profit rate on this hypothetical contract of 13.8 percent, 

which would provide an internal rate of return to the contractor of 7.5 

percent. If DOD provided progress payments at the customary rate of 80 

percent, the weighted guidelines would suggest a profit rate on this 

hypothetical contract of 10.4 percent, or 3.4 percentage points lower than 

if no financing was provided. However, even though the contractor’s 

expected profit is lower, the IRR for the contract would increase to 30.9 

percent, or a little more than four times what would be realized if the 

contractor had to finance the effort on its own.

Several studies conducted by DOD, nonprofit organizations and GAO 

have assessed the impact of contract financing on contract profit or 

contractor profitability. These studies have generally found that, 

depending on the measure used, the defense industry generates high 

returns on investment. For example,

• In 1976, DOD’s Profit ‘76 study examined earnings’ relationship to 

capital investment and increased productivity.14 The Profit ‘76 study 

group concluded that government contractors were able to maintain 

higher profits by keeping investment low partly because DOD did not 

have profit policies in place to encourage investment in items such as 

facilities. As a result of the Profit ‘76 study, DOD made a number of 

changes to its profit policy to encourage corporate investment in 

facilities, among other things.

• In 1991, GAO suggested that using return on assets to measure 

profitability of defense contractors is beneficial because it recognizes 

how government financing can affect contractors’ levels of 

profitability.15

• In 2008, the Institute for Defense Analyses reported that defense 

contractors generated high returns with low operating margins, in part 

 14Department of Defense, Profit ‘76, Report of the Profit Study Group. (Washington, D.C.: 

Dec. 7, 1976).

15GAO, Government Contracting: Using Cost of Capital to Assess Profitability, 

GAO/NSIAD-91-163 (Washington, D.C.: Aug. 16, 1991).

Prior Studies of Contract 

Financing and Contract 

Profitability
Page 9 GAO-19-406 Contract Financing

because government-provided contract financing helped fund the 

contractors’ long, asset-intensive product cycles.16

According to DPC officials, however, the most comprehensive study of 

contract financing and profit policies was conducted by the DFAIR 

commission in 1985. We discuss this study in more detail below.

Since the DFAIR commission issued its report in 1985, Congress and 

DOD have made a number of changes to the statutory and regulatory 

framework intended to (1) reduce the administrative burden associated 

with contract financing and (2) encourage the use of performance-based 

payments (see figure 2). Our review found that DOD paid less in 

performance-based payments after making some changes to contract 

financing policies, but started increasing these payments again in 2016.

 16Institute of Defense Analyses, Can Profit Policy and Contract Incentives Improve 

Defense Contract Outcomes? (Alexandria, VA: October 2008).

Changes to the 

Legislative and 

Regulatory 

Framework 

Governing Contract 

Financing since 1985
Page 10 GAO-19-406 Contract Financing 

Figure 2: Timeline of Contract Financing Changes 

Note: See Appendix II for the legal citations consulted in preparing this timeline. 

 
Page 11 GAO-19-406 Contract Financing

According to DPC officials, the most comprehensive study of contract 

financing and profit policies was conducted by the DFAIR commission in 

1985. The DFAIR commission assessed, among other issues,

• whether DOD contract financing policies were equitable in maintaining 

the defense industrial base and cost-effective for DOD,

• the effectiveness of DOD contract financing policies as a means of 

encouraging contractor cost efficiencies,

• the profitability of defense work and its reasonableness in comparison 

with the profitability of the non-defense sector, and

• the interrelationship of DOD’s contract finance and profit policies.

In evaluating contractor financing costs, DFAIR developed a model of a 

typical contract to use in calculating contractors’ contract financing costs, 

the amount of interest a contractor would have to pay if it were required to 

bear all those costs, and the effect of payment delays on contractor 

financing costs.

The DFAIR commission reached a number of conclusions about DOD’s 

contract financing and profit policy in effect at that time. The study 

concluded that:

• The progress payment rate was appropriate for the time period 

studied but should be revised based on changes in short-term interest 

rates.

• DOD’s profit policy as reflected in the weighted guidelines at the time 

of the study did not explicitly take into account the cost of working 

capital (the difference between a contractor’s assets and liabilities).

• The profitability of individual defense contracts the commission 

reviewed had been consistently lower than the profit levels reported to 

have been negotiated by government contracting officers.

• DOD’s profit policy needed to be simplified and better integrated with 

contract financing policy.

The study also concluded that there was a need to make DOD contract 

financing more responsive to economic conditions and that profit policy, 

contract financing, and contractor investment are related. We agreed with 

the conclusion that profit policy, contract financing, and contractor 

investment are related. We also highlighted the need for recurring DOD 

DFAIR Commission’s 1985 

Study Considered to Be 

the Last Comprehensive 

Study of DOD’s Contract 

Financing and Profit 

Policies
Page 12 GAO-19-406 Contract Financing

contract profitability studies using a generally accepted methodology in 

our 1986 report.17

Our work found that since the DFAIR study was issued, DOD made 

several changes to reduce the administrative burden associated with 

contract financing requirements. These changes included

• Elimination of flexible progress payments (1999) – DOD 

introduced flexible progress payments in 1981 as a new approach to 

contract financing. Under flexible progress payments, DOD 

contracting officers were to use the DOD Cash Flow Computer Model 

to develop an applicable progress payment rate for that contract. 

Under this approach, DOD specified the minimum percentage the 

contractor was required to invest and DOD would provide the 

remainder. The amount of contractor investment required by DOD 

varied from 5 to 25 percent, depending upon the year. Flexible

progress payments were not allowed on contracts issued after 

November 11, 1993; the references were eliminated completely from 

the DFARS in 1999.

• Elimination of “paid cost rule” (2000) – The paid cost rule required 

large businesses to pay subcontractors before billing the government 

for payment. After DOD eliminated this rule in March 2000, large 

businesses were generally able to include subcontract costs incurred 

but not yet actually paid on progress payment requests to the 

government.

• Elimination of “financial need requirement” (2016) – Since 2000, 

one of the ways contractors could receive progress or performancebased payments under the FAR was on the basis of financial need or 

the unavailability of private financing.18 In that regard, an April 2013 

DOD Inspector General report found that contracting personnel did 

not properly negotiate and verify contractors’ need for contract 

financing before authorizing performance-based payments.19 The 

Inspector General recommended that contracting personnel 

determine whether private financing is available to a contractor before 

 17GAO/NSIAD-87-50.

1865 Fed. Reg. 16276-01 (Mar. 27, 2000) (FAR § 32.104).

19DOD Office of Inspector General, Award and Administration of Performance-Based 

Payments in DOD Contracts, DODIG-2013-063 (Alexandria, VA.: April 2013). 

DOD Efforts to Reduce the

Administrative Costs
Page 13 GAO-19-406 Contract Financing

authorizing performance-based payments. While DOD concurred with 

the recommendation, it subsequently amended the DFARS in 2016 to 

eliminate the requirement for DOD personnel to justify the use of

contract financing for certain fixed-price contracts. In doing so, DOD 

stated it was in DOD’s best interests.

Congress enacted the Federal Acquisition Streamlining Act (FASA) in 

1994 to provide the executive branch with requirements to improve the 

process for acquiring goods and services. FASA, among other things, 

established performance-based payments “wherever practicable” as a 

form of contract financing.20 In 1995, the FAR Council amended the FAR 

to enable the use of performance-based payments up to a maximum 

amount of 90 percent of the contract’s price. In 2000, DOD issued a rule 

amending the DFARS to emphasize that performance-based payments 

were the preferred method of financing. The rule required contracting 

officers to consider and deem performance-based payments 

impracticable before deciding to provide progress payments. This rule 

was part of a larger effort by DOD to make contract financing procedures 

easier to understand and to simplify related provisions. DOD 

subsequently issued a user’s guide in 2001 to help its contracting 

personnel and contractors in using performance-based payments.

Despite the provisions to encourage the use of performance-based 

payments when appropriate, DOD subsequently initiated departmentspecific actions that, according to industry officials, decreased the 

frequency with which they received performance-based payments on 

defense contracts. For example, the Under Secretary of Defense for 

Acquisition, Technology and Logistics’ September 2010 Better Buying 

Power memorandum instructed contracting officers to use progress 

payments as the basis for price negotiations.21 After the contractor and 

DOD contracting officer agreed on price using progress payments, 

contractors could propose using an alternate financing arrangement, 

 20Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355, § 2051 (Oct. 13, 

1994). FASA is codified in various sections of Title 10 of the U.S. Code for military 

agencies and Title 41 of the U.S. Code for civilian agencies. 

21The National Defense Authorization Act for Fiscal Year 2017 eliminated the position of 

Under Secretary of Defense (Acquisition, Technology, and Logistics). In its place the act 

created the positions of the Under Secretary of Defense (Acquisition and Sustainment) 

and the Under Secretary of Defense (Research and Engineering). This change was 

effective February 1, 2018. See National Defense Authorization Act for Fiscal Year 2017, 

Pub. L. No. 114-328, § 133b (Dec. 23, 2016); 10 U.S.C. § 133b (effective Feb. 1, 2018).

Efforts to Encourage the 

Use of PerformanceBased Payments
Page 14 GAO-19-406 Contract Financing

including performance-based payments.22 The memorandum indicated 

that the rationale for this change was to provide increased incentives for 

contractor performance. In April 2011, the Director of Defense

Procurement and Acquisition Policy (now known as DPC) issued a 

memorandum that focused on the “practicality” of performance-based 

payments, stating they “are not practical for use on all fixed-price 

contracts and require considerable effort between the contractor and 

Government.” The memorandum noted that if contractors wanted to use 

performance-based payments, then the contractor should submit a 

proposed schedule to include all performance-based payment events, 

completion criteria, and event values, along with the contractor’s 

expected expenditure profile.

To implement its April 2011 performance-based payment policy, DOD 

issued a proposed rule to amend the DFARS in January 2012. This rule 

was finalized in March 2014.23 The 2014 version of the DOD 

performance-based payments user’s guide noted that performance-based 

payments are the preferred method only when they are deemed practical 

by the contracting officer. However, industry officials told us that they 

frequently cannot reach agreement with DOD regarding performance 

milestones, and therefore agree to the use of progress payments instead.

The impact of DOD’s changes on the relative use of progress versus 

performance-based payments is uncertain. Between fiscal years 2010 

and 2018, DCMA data indicates that DOD provided between $36 billion 

and $49 billion a year in contract financing on contracts DCMA 

administered. We found that nearly 98 percent of those contract financing 

payments were paid to medium and large defense contractors. We also 

found that the amount DOD paid out in performance-based payments on 

those contracts fell between 2010 and 2016 before increasing in 2017. In 

December 2016, Congress enacted Section 831 of the Fiscal Year 2017 

NDAA to establish performance-based payments as the preferred type of 

contract financing for DOD in statute.24 Section 831 also directed the 

Secretary of Defense to ensure that nontraditional defense contractors 

and other private sector companies are eligible for performance-based 

 22Better Buying Power was an initiative by DOD to improve the way the department does 

business, which, among other things, made progress payments the basis for contract 

price negotiations. 

23See DFARS § 232.1004 (effective Mar. 31, 2014).

24See Pub. L. No. 114-328, § 831 (2016). 
Page 15 GAO-19-406 Contract Financing

payments, in line with best commercial practices. Figure 3 shows the 

differences in DOD’s progress and performance-based payments 

between fiscal years 2010 and 2018 for contracts administered by DCMA.

Figure 3: Defense Contract Management Agency Progress and Performance-Based 

Payments Data, Fiscal Years 2010 through 2018 (fiscal year 2018 dollars)

In August 2018, DOD introduced a proposed rule that was intended to 

use contract financing rates to help incentivize contractor performance 

and to implement Section 831. The proposed rule would have set a base 

progress payment rate for large businesses (specifically, for other than 

small businesses) at 50 percent and small businesses at 90 percent. At 

the same time, however, the proposed rule provided opportunities to 

increase the rate if the contractor achieved certain enterprise-wide 

priorities such as meeting contract delivery dates. The proposed rule also 

eliminated some of the administrative requirements associated with 

performance-based payments to encourage their use. According to DPC 

officials, the rates would be subject to an annual adjustment based on the 

performance criteria provided in the rule. Table 2 summarizes key 

aspects of the proposed rule.
Page 16 GAO-19-406 Contract Financing

Table 2: August 2018 Proposed Rule Criteria for Progress Payment Rate

Criteria

Other than small 

businesses

Small

businesses

Base progress payment ratea 50 percent 90 percent

Additional criteria for increasing progress payment rate

Met the contract delivery dates at least 95 percent of the time during the preceding 

government fiscal year (October 1 through September 30)

10 percent 2 percent 

Does not have open level III or IV corrective action requestsb 10 percent 2 percent

All applicable contractor business systems are acceptable, without significant 

deficiencies

10 percent 1 percent

At least 95 percent of the time during the preceding government fiscal year, when 

responding to solicitations that required submission of certified cost or pricing data, 

met the due date in the request for proposal and complied with the proposal 

adequacy checklist 

7.5 percent Not applicable

Has met its small business subcontracting goals during the preceding government 

fiscal year

5 percent Not applicable

Has provided subcontracting opportunities for AbilityOnec 2.5 percent Not applicable

Maximum achievable progress payment rate 95 percent 95 percent

Source: GAO analysis of DOD’s proposed rule | GAO-19-406

a

In cases where the contractor or any principal had been convicted of or had a civil judgment 

rendered against it for fraud or criminal offense in the previous fiscal year in connection with 

obtaining, attempting to obtain, or performing a public contract or subcontract, the applicable rate 

would have been reduced to 25 percent.

b

A corrective action request is sent to a supplier when an item or process does not conform to the 

contract terms and a remedy is required. Level III calls attention to serious contract nonconformity. 

Level IV is issued when a Level III has not been effective or the contractual nonconformity is so 

serious that it warrants contractual remedies such as suspension of progress payments or product 

acceptance activities.

c

The AbilityOne program is among the nation’s largest sources of employment for people who are 

blind or have significant disabilities.

DOD officials acknowledged that if implemented, contractors would 

initially receive a lower level of contract financing, but believe with 

improvements in their overall performance contractors would eventually 

receive much higher levels of financing than currently provided.

Industry officials voiced a number of concerns about the proposed rule at 

the January and February 2019 public meetings held after the rule was 

proposed, as well as in our interviews with them. For example, these 

officials noted that the proposed rule would change the intent of contract 

financing from a means of assisting contractors to help meet short-term 

expenses to a mechanism for ensuring compliance with contract terms 

and conditions on an enterprise-wide basis. Industry officials said they 

believe compliance with contract terms and conditions should be 
Page 17 GAO-19-406 Contract Financing

addressed on a contract-by-contract basis. Further, industry officials 

stated that the changes suggested in the proposed rule could negatively 

impact the health, competitiveness, and resiliency of the defense 

industrial base and introduce significant uncertainty as to how much 

contract financing DOD would provide. Additionally, industry officials 

noted that the rule did not contain specific implementation details in such 

areas as whether the incentives would be applied on an enterprise-wide 

basis and how to ensure the data were reliable. DOD withdrew this rule in 

October 2018, citing the need to conduct additional outreach with industry 

regarding contract financing methods.

Subsequently, DPC held three public meetings in January and February 

2019 to obtain public comments on revising policies and procedures for 

contract financing, performance incentives, and associated regulations 

prior to proposing a new rule. DPC provided no timeframes for doing so. 

DOD officials issued the proposed rule in April 2019 to implement Section 

831’s statutory preference for performance-based payments for public 

comment. The proposed rule notes that performance-based payments 

are the preferred method of contract financing at DOD whenever 

practicable. The period for public comments ends on July 1, 2019. DOD 

officials indicated that they hope to issue a final rule in early 2020.25

DOD has not conducted a comprehensive assessment of the impact of its 

contract financing and profit policies on the defense industry since the 

DFAIR study was completed in 1985. In the intervening time, there have 

been significant changes in the composition of the defense industry, 

business practices, and economic conditions. In December 2018, DPC 

officials acknowledged the need to assess contract financing policies 

against market and economic conditions on an ongoing basis and 

determine the effect these policies have on the defense industry, but did 

not provide a timeframe for doing so.

DOD officials acknowledged that the department has not done a 

comprehensive assessment of how its contract financing policies affect 

the defense industry since the DFAIR study was issued in 1985. DOD 

had previously stated its intent to do such an assessment on a regular 

 25See 84 Fed. Reg. 18221 (Apr. 30, 2019).

DOD Has Not 

Comprehensively 

Assessed the Impact 

of Its Contract 

Financing and Profit 

Policy on the Defense 

Industry Since 1985

Defense Industry and 

Market Conditions Have 

Changed since 1985
Page 18 GAO-19-406 Contract Financing

basis. Specifically, in 1991 DOD noted that it would issue progress 

payment rates each February.26 DOD also noted that it would use the 

methodology from the DFAIR study to determine the progress payment 

rate based on short-term commercial interest rates. However, DOD 

removed the DFARS provision related to flexible progress payments in 

1999.

Overall, we found that DOD has adjusted the progress payment rate five 

times since the DFAIR study was completed, but only adjusted the 

progress payment rate twice since 1991 when DOD indicated its intent to 

assess the rate annually. DOD last changed the progress payment rate in 

2001 (see table 3). 

Table 3: Changes in Customary Progress Payment Rates since 1985

Source: GAO analysis of DOD regulations. | GAO-19-406

a

The rate for small disadvantaged businesses is 95 percent.

Since the DFAIR study was conducted and DOD last assessed progress 

payment rates, DOD and industry officials noted that the composition of 

the defense industry has changed, as we have noted in our prior work. 

For example, in 1997, we reported that the end of the Cold War and the 

subsequent declines in DOD budgets resulted in, among other changes, 

 26DOD amended the DFARS to continue the use of flexible progress payments in 1991 

and revise the customary uniform progress payment rate for contracts awarded on or after 

July 1, 1991, to 85 percent for large businesses, 90 percent for small businesses, and 95 

percent for small disadvantaged businesses.

Progress Payment Rate

Date Rate Was Changed

Other than Small 

Business

Small 

Businesses

May 1, 1985 80 percent 90 percent

November 5, 1987 75 percent 80 percent

October 1, 1988 80 percent 85 percent

July 1, 1991 85 percent 90 percenta

November 11, 1993 75 percent 90 percent

October 1, 2001 80 percent 90 percent
Page 19 GAO-19-406 Contract Financing

a reduction in the number of defense contractors through various mergers 

and acquisitions.27

In our current work, DPC officials pointed to a changing proportion of 

subcontractors relative to prime contractors. Industry officials also 

identified the emergence of contractors who do not typically work with 

DOD and technology companies into the defense sector as an issue that 

should be considered when looking at contract financing and profit 

policies. According to industry officials, the industrial base has moved 

away from heavy industrial manufacturing toward technology and more 

sophisticated industry partners, including contractors who do not typically 

work with DOD. These officials noted that these contractors may not be 

eligible for contract financing because they may not have an approved 

cost accounting system needed to receive progress payments. In that 

regard, in July 2017, we reported that one company conducted a study 

that determined it would take at least 15 to18 months and millions to 

establish a government-unique cost accounting system.28 Industry 

officials also noted that the emergence of high-technology companies 

may pose a challenge to traditional defense contractors in terms of 

attracting financing and investment from commercial and private investors 

at competitive rates.

Industry officials also identified changing business practices, including the 

increased use of UCAs, which affect their ability to use performancebased payments. Industry officials stated that it is more difficult to 

negotiate performance-based payments on UCAs, noting that DOD’s 

guidance suggests that performance-based payments should not be 

provided for UCAs until definitization occurs. Our review of DOD’s semiannual reports to Congress on the use of UCAs found that the number of 

UCAs and unpriced change orders reported by DOD has varied between 

March 2014 and September 2018 (see figure 4).29

 27GAO, Defense Industry: Trends in DOD Spending, Industrial Productivity and 

Competition, GAO/PEMD-97-3 (Washington, D.C.: January 31, 1997).

28For additional information, see GAO, Military Acquisitions: DOD Is Taking Steps to 

Address Challenges Faced by Certain Companies, GAO-17-644 (Washington, D.C: July 

20, 2017). 

29An unpriced change order is a unilateral, within scope order on which the parties have 

not yet reached agreement on an equitable adjustment. According to DOD officials, it 

includes change orders, administrative changes, funding modifications, or any other 

contract modifications that are within the scope and under the terms of the contract, for 

example engineering change proposals, and value engineering change proposals. 
Page 20 GAO-19-406 Contract Financing

Figure 4: Number of Undefinitized Contract Actions and Unpriced Change Orders 

Reported by the Department of Defense between March 2014 and September 2018

DOD reported that the total not-to-exceed dollar value of all UCAs and 

unpriced change orders was approximately $76 billion as of September 

2018.

Finally, market and economic conditions have changed since the DFAIR 

study. For example, at the time of the DFAIR study, short-term interest 

rates were around 8 percent, whereas the short-term interest rate in 2018 

was 2 percent. Figure 5 shows the changes in short-term interest rates 

and inflation since 1980.
Page 21 GAO-19-406 Contract Financing

Figure 5: Changes in Short-Term Interest Rates and Inflation since 1980

Industry officials noted, however, that a comprehensive economic 

assessment of defense industry returns and the cost of contract financing 

policies should be conducted. For example, they noted that a reduction to 

progress payment rates in times of higher interest rates would increase 

their cost of working on complex contracts. Industry officials 

acknowledged that while interest rates have been low, they anticipate 

rates increasing in the near future.

DPC officials acknowledged that DOD’s August 2018 proposed rule did 

not assess the proposed rule’s impact on the health and profitability of the 

defense industry. DPC officials noted that since the proposed rule was 

focused on incentivizing contractor performance, DOD’s supporting 

analysis did not include an assessment of how the proposed rule would 

impact the overall profitability of defense contractors (such as assessing 

the impacts to a contractor’s internal rate of return) or of the profitability of 

defense work relative to non-defense industry opportunities. Rather, 

DOD’s analysis estimated the total financial impact the rule would have 

on large and small contractors primarily based on interest costs.

DOD’s August 2018 

Proposed Rule Did Not 

Consider Impact on the 

Defense Industry
Page 22 GAO-19-406 Contract Financing 

Further, DOD stated in its supplementary material that it did not consider 

the extent to which the contract profit policy (in the form of weighted 

guidelines) would need to be adjusted given the proposed rule changes. 

DPC officials explained that changes to the weighted guidelines would 

need to consider how such changes would support the intent of providing 

higher rates of contract financing for higher levels of contractor 

performance. If DOD were to only propose a change to the progress 

payment rate, DPC officials acknowledged that such an assessment 

should consider what changes, if any, would need to be made to the 

weighted guidelines. DPC officials said they conducted an informal 

analysis that assessed contractor profitability, but this analysis was not 

made publicly available. 

In December 2018, DPC officials acknowledged the need to assess 

contract financing policies against market conditions on an ongoing basis 

and determine the effect these policies have on the defense industry. 

GAO’s Standards for Internal Control in the Federal Government call for 

monitoring the effectiveness of systems and policies throughout an 

organization on a recurring basis.30 Until DOD conducts a comprehensive 

assessment and updates that assessment on a recurring basis, it will not 

be in a position to understand whether current or future contract financing 

policies are achieving their intended objectives. 

DOD and industry officials have acknowledged that the defense industry, 

economic and market conditions, legislative and regulatory requirements, 

and business practices have all changed since the issuance of the DFAIR 

study in 1985. Despite this recognition, DOD has not conducted a 

comprehensive assessment of how its contract financing policies affect 

the defense industry in more than 30 years. Without assessing the 

collective impact of these changes, DOD may be assuming too much 

financial risk or providing contractors with levels of working capital that 

are not commensurate with what is needed to help finance long-term 

projects, and affecting its ability to attract new entrants into the defense 

market. That assessment, however, should not be a one-time effort. A 

prior DOD study, our work, and the department have acknowledged the 

need to do so on a regular and recurring basis. Without a comprehensive 

and systemic assessment, conducted on a recurring basis, of DOD’s 

contract financing policy’s effect on the defense industry, DOD will not be 

 

30GAO-14-704G. 

Conclusions 
Page 23 GAO-19-406 Contract Financing

in a position to understand whether current or future policies are 

achieving their intended objectives.

We recommend that the Acting Secretary of Defense direct the Under 

Secretary for Acquisition and Sustainment to ensure it conducts a 

comprehensive assessment of the effect that its contract financing and 

profit policies have on the defense industry and update that assessment 

on a recurring basis. (Recommendation 1)

We provided a draft of this report to DOD for review and comment. DOD 

provided written comments, which are reprinted in appendix I, and 

concurred with our recommendation. In concurring with our 

recommendation, DOD stated it would seek fiscal year 2020 funds to 

contract a study on DOD contract financing policies and their effect on the 

defense industry. DOD also provided technical comments, which we 

incorporated as appropriate.

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

the Principal Acting Director, Defense Pricing and Contracting; the 

Director, Defense Contract Management and Agency; the Director, Office 

of Management and Budget; the Administrator for Federal Procurement 

Policy, and appropriate congressional committees. In addition, the report 

will be available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-3665 or dinapolit@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix III.

Timothy J. DiNapoli

Director, Contracting and National Security Acquisitions

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
Page 24 GAO-19-406 Contract Financing

List of Congressional Committees

The Honorable James M. Inhofe

Chairman

The Honorable Jack Reed

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard Shelby

Chairman

The Honorable Richard Durbin

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Adam Smith

Chairman

The Honorable Mac Thornberry

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Peter Visclosky

Chairman

The Honorable Ken Calvert

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Comments from the Department of 

Defense

Page 25 GAO-19-406 Contract Financing

Appendix I: Comments from the Department 

of Defense
Appendix II: Legal Chronology of Select 

Contract Financing Changes

Page 26 GAO-19-406 Contract Financing

Table 4: Legal Chronology of Select Contract Financing Changes

Year Authority Action

1981 47 Fed. Reg. 9399 (effective Oct. 30, 1981). Flexible progress payments introduced in defense acquisition 

regulations.

1985 50 Fed. Reg. 18666 (effective May 1, 1985). Customary progress payment rate reduced to 80 percent for other 

than small businesses in the Defense Federal Acquisition Regulation 

Supplement (DFARS).

1987 53 Fed. Reg. 38185 (effective Nov. 5, 1987). Customary progress payment rate reduced to 75 percent for other 

than small businesses in the DFARS.

1988 53 Fed. Reg. 35511 (effective Oct. 1, 1988). Customary progress payment rate increased to 80 percent for other 

than small businesses in the DFARS.

1991 56 Fed. Reg. 31341 (effective July 1, 1991). Customary progress payment rate increased to 85 percent for other 

than small businesses in the DFARS.

1993 58 Fed. Reg. 62045 (effective Nov. 11, 1993). Customary progress payment rate reduced to 75 percent for other 

than small businesses and flexible progress payments precluded 

from use on contracts issued on or after effective date in the DFARS.

1994 Federal Acquisition Streamlining Act, Pub. L. No. 

103-355, §§ 2001, 2051 (Oct. 13, 1994).

Established performance-based payments as a contract financing 

method.

1995 60 Fed. Reg. 49707 (effective Oct. 1, 1995). Implemented performance-based payments in the FAR at a rate of 

90 percent.

1999 64 Fed. Reg. 8731 (effective Feb. 23, 1999). Elimination of flexible progress payment references from the DFARS.

2000 65 Fed. Reg. 16276 (effective Mar. 27, 2000). “Paid cost rule” eliminated, threshold for customary progress and 

performance-based payments increased to $2 million for other than 

small businesses, and performance-based payments emphasized to 

be the preferred form of contract financing in the FAR.

2001 66 Fed. Reg. 49864 (effective Oct. 1, 2001). Customary progress payment rate increased to 80 percent for other

than small businesses in the DFARS.

2006 71 Fed. Reg. 57363 (effective Sep. 28, 2006). Threshold for customary progress and performance-based payments 

increased to $2.5 million for other than small businesses in the FAR.

2014 79 Fed. Reg. 17931 (effective Mar. 31, 2014). Customary progress payments made the basis for price in contract 

negotiations, prior to negotiation on the use of performance-based 

payments in the DFARS. 

2016 81 Fed. Reg. 93841 (effective Dec. 22, 2016). Justification for financing for certain fixed-price contracts removed 

from DFARS.

2016 National Defense Authorization Act for Fiscal Year 

2017, Pub. L. No. 114-328, § 831 (Dec. 23, 2016). 

Established a preference for performance-based payments for DOD 

in statute.

2018 83 Fed. Reg. 42831 (Aug. 24, 2018). Proposed rule implementing Section 831 of Pub. L. No. 114-328 

(Preference for Performance-Based Payments), and proposing 

additional changes that would use contract financing rates to help 

incentivize contractor performance.

2018 83 Fed. Reg. 50052 (Oct. 4, 2018) Proposed rule implementing Section 831 and proposing additional 

changes withdrawn.

Source: GAO review of select regulations and statutes. | GAO-19-406

Appendix II: Legal Chronology of Select 

Contract Financing Changes
Appendix III: GAO Contacts and Staff 

Acknowledgments

Page 27 GAO-19-406 Contract Financing

Timothy J. DiNapoli, (202) 512-3665, or dinapolit@gao.gov

In addition to the contact named above, Bruce H. Thomas, Assistant 

Director; Lorraine Ettaro, Elizabeth Field, Gina Flacco, Stephanie 

Gustafson, Kristen Kociolek, John Lopez, Beth Reed Fritts, Miranda 

Riemer, Anne Stevens, Megan Stewart, Anne Louise Taylor, Alyssa Weir, 

Robin Wilson, and Alex Winograd made key contributions to this report.

Appendix III: GAO Contacts and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgements

(102990)
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