Impacts of the Budget Process on Component Multiyear Contracts
ARMY WAR COLL CARLISLE BARRACKS PA
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This document traces recent changes in the acquisition process as a result of the Carlucci initiatives of 1981. The component multiyear contract has become a standard procurement method used in most major weapons acquisitions. The component multiyear has advantages for both the government and industry. The government saves money by purchasing future requirements with present value dollars additionally, materials are purchased early in the contract and volume discounts and economic lot buys reduce the overall costs to the government. Industry benefits from the program stability which allows an orderly ramp or buildup and the advantage of larger, more economical purchases from vendor and subcontractors. The multiyear procurements MYP for the Bradley Fighting Vehicle System were examined. Four multiyears provided actual cost avoidance of 118.7 million with an additional 28.6 million still to be realized from a 1986-87 contract. MYPs save money, but they require a stable program to provide the maximum return. During the period of the MYPs, the Army POM created yearly fluctuations in the annual production totals for the Bradley. Over five years, there were five different production profiles. This makes it very difficult to maintain the program predictability required to take full advantage of a MYP. If the Army is going to reform its acquisition process, it must stabilize requirements and protect annual quantities during the POM process.
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