Accession Number:

ADA496548

Title:

DOD's Industrial Modernization Incentive Program (IMIP)

Descriptive Note:

Journal article

Corporate Author:

DEFENSE INST OF SECURITY ASSISTANCE MANAGEMENT WRIGHT-PATTERSON AFB OH

Personal Author(s):

Report Date:

1986-01-01

Pagination or Media Count:

7.0

Abstract:

The Department of Defenses DoDs Industrial Modernization Incentive Program IMIP is designed to encourage increased contractor investment in efficient production equipment and processes as well as management and other software systems that will result in higher contractor productivity and reduced weapon system acquisition costs. Program objectives also include improving product quality, shortening lead time, reducing life cycle costs, and increasing surge and mobilization capabilities. The two primary incentives used are as follows 1 payments based on cost reductions and avoidances, and 2 government investment protection guarantees if affected weapon programs are terminated prematurely. IMIP addresses two DOD acquisition conditions which are cited as inhibitors to contractor investments in modern plant equipment. These conditions are directly basing profit on costs incurred, and the instability of weapon system programs and the uncertainty of incremental annual buys of weapon systems. DoD officials believe contractors are reluctant to make investments in expensive equipment when profits may be reduced. Uncertainty that a reasonable return on investment can be generated if a weapon systems procurement is reduced or terminated also slows investments. In November 1982, the Deputy Secretary of Defense approved a test of the IMIP based on recommendations from DoDs Tri-Service Committee for Improving Industrial Productivity. The purpose of the test was to determine the appropriateness of various approaches to accomplish program objectives. The charter authorizing the test established a steering group composed of officials from the services, the Defense Logistics Agency, and the Office of the Secretary of Defense OSD. The steering group was responsible for monitoring the conduct and results of the test program and evaluating the success of the various incentives and the overall program.

Subject Categories:

  • Administration and Management
  • Economics and Cost Analysis
  • Manufacturing and Industrial Engineering and Control of Production Systems
  • Logistics, Military Facilities and Supplies

Distribution Statement:

APPROVED FOR PUBLIC RELEASE