Accession Number : AD0765443

Title :   Contract Cost Growth in Major Army Programs,

Corporate Author : ARMY PROCUREMENT RESEARCH OFFICE FORT LEE VA

Personal Author(s) : Launer,Robert L. ; Candy,Harold F. ; Carter,Shirley H.

Report Date : MAY 1973

Pagination or Media Count : 88

Abstract : The report is the third serial report in the ongoing Cost Growth study by the Army Procurement Research Office. A random sample of 300 Army contracts, each definitized at $500,000 or more, was examined in detail against the framework of the cost growth categories defined in a DOD memorandum dated 5 August 1970, entitled 'Cost Growth Definitions.' The sample contracts exhibited a cost growth from $1.408 billion to $2.135 billion or about 52% over the sample definitized price. The development stage of the typical life cycle exhibited by far the most pronounced tendency toward cost increases. Furthermore quantity increases accounted for almost 60% of all the cost growth while engineering changes accounted for only 15% of the cost growth. Firm fixed price contracts were examined for the first time in the Cost Growth study. These contracts suffered a net 53% cost growth - almost identical to the entire sample cost growth. Finally, it was found that those definitive contracts which superseded letter contracts grew only about one half as much as those contracts which did not supersede letter contracts. (Author)

Descriptors :   (*ARMY PROCUREMENT, CONTRACTS), (*CONTRACTS, COSTS), RESEARCH MANAGEMENT, LOGISTICS, PRODUCTION CONTROL, QUALITY CONTROL, VALUE ENGINEERING, SAMPLING, UNCERTAINTY

Subject Categories : Administration and Management
      Logistics, Military Facilities and Supplies

Distribution Statement : APPROVED FOR PUBLIC RELEASE