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B-177734 1 (1973-11-27)

handle is hein.gao/gaobabkjk0001 and id is 1 raw text is: ftZORLIZU - AIL01 - Accounting Office excePt on the basis of specific approval . 1 , g2 by the Office of Congressional Relatons, a record of which Is kept by the Distribution Section, Publications Branch, OAS 0 S 1)/ COMPTROLLER GENERAL. OF THE UNITED STATES I o WASHINGTON. D.C. 2058 A jm B-177734 RELEASED 20 o '('/ The Honorable F. Edward Hebert NOV 2 7 1973 Chairman, Committee on Armed Services House of Representatives Dear Mr. Chairman: Our letter to you of March 21, 1973, discussed the various techniques the Department of Defense (DOD) used to finance its 7 -contracto r In that lotter, , Joscr L ,i e V)' e. I ric- tMgI included statistics on the amounts of unliquidated progress payments, advance payments, and guaranteed loans out- standing to DOD contractors. We also advised you that we were looking into the Government's contractor-finaningr.ctivities in greater depth and that we would provide you with a copy of our report. We have now completed our inquiries into the Government's contractor-financing activities and have concluded that the area does not at this time warrant further review and reporting since DOD has made changes to the Armed Services Procurement Reul t,on (ASPR) to correct certain inequities and abuses. Agency, contractor, and contractor trade association officials generally felt that the progress payment system was reasonable and had no significant suggestions for improvement. I We started the study as a broad survey of the Government's contractor-financing activities. We reviewed the amounts and types of financing provided to contractors and the types of procurements for which financing was provided. We obtained comments from agency, contractor, and contractor trade associa- tion officials and inquired into commercial and foreign govern- ment financing practices. The Government makes financing available to its contractors when the products or services purchased require substantial amounts of time and money for contract performance. Financing of some contractors is necessary because the investment re- quired for contract performance is beyond the credit available to the contractors from private sources. The Government's

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