Accession Number:



Opportunities for Improving Army Oversight of Pension Plans at Government Owned, Contractor Operated Ammunition Plants

Descriptive Note:

[Technical Report, Study/Analysis]

Corporate Author:

United States General Accounting Office

Personal Author(s):

Report Date:


Pagination or Media Count:



The Army Armament Command manages a complex of 25 Government-owned, contractor-operated GOCO ammunition plants. The contractors are responsible for employing the work force and establishing wage rates, pension programs, and other fringe benefits. About 48 pension plans covered eligible employees at 21 GOCO ammunition plants there were no pension plans at the remaining 4 plants. The Governments share of pension plan contributions at all the plants since the plans began has exceeded 100 million. FindingsConclusions One of the primary causes of the Governments making excess contributions to contractors pension funds at GOCO plants has been the large reductions in employment levels before employees attained vested rights to pension benefits. These reductions resulted in abnormal termination gains representing excess credits due the Government. To avoid making excess contributions, the Army used a deferred funding procedure in some cases. Because this procedure is now considered inconsistent with the Employee Retirement Income Security Act of 1974, another funding technique is required. The use of unrealistic actuarial assumptions and other questionable pension plan practices by the contractors generally resulted in increased pension plan costs to the Government. There was no specific provision in the Armed Services Procurement Regulations on the use of actuarial assumptions except for dealing with abnormal terminations and valuation of pension fund assets.

Subject Categories:

  • Personnel Management and Labor Relations
  • Economics and Cost Analysis

Distribution Statement:

[A, Approved For Public Release]