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B-125049 1 (1972-03-06)

handle is hein.gao/gaobaagod0001 and id is 1 raw text is: UNITED STATES GENERAL ACCO FICE WASHINGTON, D.C. 2 ') T be DEFENSE DIVISION Ell B-12.5049 MAR 6 19/2 IIIIMIIII 1 IIII lll ill! ll!! 111 I Dear Mr. Secretary: LM096647 We have completed our review of contract terminations in the Department of Defense. Our work was performed at various procure- iieht activities of the Army, Navy, and Air Force as well as at several regional offices of the Defense Contract Administration Services. The objectives of our review were to determine the causes of terminations, whether the terminations could have been prevented, and whether the type of termination action taken (default or convenience) best served the Government's interests under the circumstances. In fiscal year 1970, 7,366 military prime contracts were fully or partially terminated, continuing a progressive increase in the mmber of terminations which began in fiscal year 1967. The contract prices of items terminated also showed a substantial increase over prior periods. We selected 46 contracts for review but eliminated 13 of these contracts when we identified that the terminations resulted from changes in requirements. We concluded that in 19 of the remaining 33 contracts, which were either terminated or considered for termina- tion, the actions taken were appropriate. These terminations included 15 that were for convenience and four in which the contractor was held in default. Of the remaining 14 contracts, eight were terminated for conven- ience and three were terminated for default. The other three were considered for default terminations but were permitted to be completed after the Government concluded that termination offered no advantage. Unnecessary costs of about $6 million ($5.9 million for settlement and $122,000 for excess reprocurement costs) were incurred on nine of these 14 contracts. Following are some reasons for the incurrence of these unnecessary costs: a contractor's slow progress was not noted, problems regarding specifications were not resolved, delivery dates were not revised properly or newly established dates were unrealistic, unacceptable items were paid for, action to terminate a contractor for default was delayed, and the Government's legal position in regard BEST DOCUMNT TiAILA LE

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