Contractor perspective of multiyear contracting for major system acquisitions

Abstract

Multiyear contracting has largely fallen out of favor due to an inability to quantify savings, Congressional reluctance to commit appropriations for greater than one year and the restrictive nature of cancellation ceilings. Previous studies of multiyear contracting have concentrated on advantages to the Government and neglected the needs and motivation of industry. This study examines the perspective of prime contractors awarded a major system multiyear contract from 1985 to 1991. A survey was conducted to obtain the contractor perspective, counterbalanced with responses from the Government program offices which administered the contracts. This study concluded that: contractors desire a greater say in what programs are selected for multiyear; successful programs, as often as not, still contain an element of instability; contractors believe compensation for risk undertaken is not entirely adequate; and savings from multiyear are potentially greater but still derived entirely from economic order quantity purchases.