Improving Productivity and Reducing Cost through Capital Investment Incentives.
ARMY PROCUREMENT RESEARCH OFFICE FORT LEE VA
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Sagging productivity and productive capacity are contributing to cost increases and are jeopardizing the capability of the defense industrial base to meet defense requirements. The Department of Defense recognizes that contractor investment in plant modernization could result in increased productivity and cost reduction. The Weighted Guidelines Technique WGL for profit determination has been revised to consider profit on capital, and a number of other acquisition techniques and contract provisions are available for use as motivators for contractor capital investments. The objectives of this study were to determine 1 the relationship between capital investment expenditure levels and productivity 2 which conditions, if any, preclude WGLs from being a sufficient motivator 3 the current use and success of multi-year procurement, award fee, value engineering, and special termination buy back provisions as motivators for capital investment and to recommend alternative strategies and tactics which may be capable of stimulating contractor investment.
- Administration and Management
- Economics and Cost Analysis
- Logistics, Military Facilities and Supplies