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B-159896 1 (1973-02-01)

handle is hein.gao/gaobablak0001 and id is 1 raw text is: 7'- i 9 c,4, ' uOt oHC).Jf-N f o N.e- LE r O-1- ITLI-,i S1A eL t that [h e D F>- L i V,. profI A tOl contract i! 0e-a cto he b r Iet 1i c te. of t: pro f its Oil tile contract. 0o c- baIft t he o v cr II e n t' renc .ot, - tion profit obje c' lye will be based, on the wiouit o 1 ri rxt capital expected to be emp OVLod. I hf otl:er hal i I I cot i to be based on estimated contract cos ts. this policy will be i;:;mpIe nted in t. as s . I lie f iI> phase is terr'ed a ''service test' and was sc,,duIei to 10:: January 1, 1973. DOD cons iders this phae to be a, cOant i taL tIol of policy developi.ient that began app:oxii,:itelv . year, a :o. During this test period, use of thie 'eturn on capital pot 1c'. will be optional by mutual agreemient of the cot ractor a. I the Gove rnmen t The oL.jectives of the service test are to al ,' tran- sition period for adjustment to the return on ineXSled cir'i ,,I I procedure and to develop a greater .nder'tn ; o, the proce- dcre'2s impact on negotiated profi ts. If the rosIlts u tre service test are favorable, it is intended that Oe .ec Id .-., final phase of the return on invested capita! pil icy iI ,i P implenented. At that timae thle policy :,ill bco.. , ..iai,;,iz t - ' all contracts meeting the applicabili tv criteria. , d.ae to manda tory use has not been established. As noted in your letter, ie have ,oelle ol rekord a ;I:-, , - ing the consideration of investcd ca; i a1 in n otiatin., pre,- its on t;overnrent controcts. A conclusion to this ec!ct Ins contained in our report a1 doeof-c', i;'dust r proCIt-, issued :>arch 17, 1971. Duin n, our proii t s tuith , and 1'01 t;1e last several months , .,e nave floIlo, ed DOWl'.; e. orts to dexeIop .ts nec, cont ract pro.i t policy and its metho.o1olo,y for i':!l e.: ntn- tioil. This monitorship has included .e\cra! discussions Ii t laga

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