Cost Allocation and Overpricing of Spare Parts.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF SYSTEMS AND LOGISTICS
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The thesis objective was to determine if it is feasible to treat spare parts in lieu of contracts as cost objectives in government spare parts contracts. A survey instrument was constructed to help answer the research question. Survey was administered to contractor representatives of 12 major defense companies. The analysis revealed that 5 defense contractors are presently treating spare parts as cost objectives and using a type of spare parts as cost objectives and using a type of spare parts accounting system as described in the survey instrument. The other 7 contractor respondents who do not treat spare parts as cost objectives were not favorable to this accounting treatment. Also within this group, most anticipated significant increases in accumulating contract costs in order to treat spare parts as cost objectives. The anticipated cost impact was less severe in estimating contract costs. The results of this exploratory research based on the limited data from a small number of large defense contractors supports the conclusion that treating spare parts as cost objectives is feasible for some companies. However, more detailed research is required to fully assess the impact and practicality of treating spare parts as cost objectives.
- Economics and Cost Analysis