DOD Releases Defense Contract Finance Study
The Department of Defense has released the findings of its Defense Contract Finance Study, an effort to comprehensively assess the effect that DOD contract financing and profit policies have on the defense industry. Initiated in late 2019 at the recommendation of the Government Accountability Office (GAO), the study examined financial health, financing regulations, insight into the commercial marketplace, and impacts to subcontractors, including small businesses, over a 20-year timeframe.
“A financially healthy and robust industrial base is foundational to our ability to deliver the capabilities our warfighters need at speed and scale,” said Dr. William LaPlante, Under Secretary of Defense for Acquisition and Sustainment. “As the first time the Department has comprehensively assessed contract financing in over 35 years, I look forward to acting upon the study’s recommendations to attract new entrants to the defense marketplace at all levels of the supply chain while maintaining the financial health of our existing partners.”
Three universities and a federally funded research and development center conducted the study’s major analyses. The Department also gathered public feedback from industry associations and small and large businesses, and conducted two studies of its own. DoD integrated key findings from these studies, conducted further analysis based on those findings, and produced the final report.
“The Defense Contract Finance Study was a significant undertaking, and I applaud the work of our Defense Pricing and Contracting (DPC) team in bringing this report to fruition,” DPC Principal Director John Tenaglia added. “The Department remains committed to maximizing the value of our acquisitions, ensuring fair and reasonable pricing through contracting excellence. The findings of this study will directly inform our efforts for years to come.”
The full report is available here: www.acq.osd.mil/asda/dpc/pcf/finance-study.html.