Analysis of Benefits Realized from Multiyear Contracting for the Black Hawk Helicopter.
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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In 1982, the Congress authorized a 950 million 3-year multiyear contract for 294 Black Hawk helicopters. The Army estimated that such an arrangement would save about 8.1 million, or 7.9 percent, compared with three successive annual contracts for the same number of helicopters. GAOs analysis indicated an estimated budgetary savings to the Army of 73.9 million, with a net discounted savings to the government of about 36.6 million, or about 4.6 percent. GAOs estimate of net savings takes into account the cost of providing funds earlier under the multiyear contract. In addition, revenue to the U.S. Treasury may be reduced because of the tax implications of a multiyear contract. Neither the Army nor the contractor had evidence that the Black Hawk multiyear contract significantly enhanced the defense industrial base, another anticipated benefit of multiyear contracting.
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