Pentagon Remains Resistant to Multiyear Contracts

Posted April 8, 2015 at 5:00am

“The Pentagon is pushing back against congressional moves to ease requirements for multiyear weapons procurements,” reports Reuters , “saying it will continue to insist that such deals generate significant savings for the government before relinquishing yearly control.”  

“Even if Congress changes the law, U.S. Defense Undersecretary Frank Kendall said program managers would still need to show savings of ‘pretty darn close to 10 percent or better’ to get approval to sign a contract of up to five years.”  

“Arms manufacturers have long pressed the U.S. government to approve more multiyear agreements to ensure stability for suppliers and prime contractors while driving down costs. Defense officials set strict standards for such deals since the government can face steep termination fees if budget cuts or other factors force it to cancel orders after a signing a longer-term contract.”