DoD Implements Initiative For Cost Effectiveness Of Contract Requirements

The Department of Defense (DoD) is implementing a new initiative aimed at developing more cost-effective contract requirements for major system acquisitions.

This initiative will address a number of problems inherent in present practices that can result in excessive contractual requirements early in weapon system development.

This initiative was developed in conjunction with the military services under the DoD Acquisition Improvement Program (Initiative No. 14), and will specify "results required" rather than "how to" procedures in requests for proposals and contracts. Detailed specifications and standards will be used only for guidance during the early phases of development, and selectively included in contract requirements for full-scale development and production. The recommended actions also place limits on incorporating contract requirements through referencing in certain specifications and standards.

Cost/benefit analysis will be central to decisions on application of contract requirements.

With the implementation of the initiative, industry will be given a greater opportunity to recommend the most cost-effective application of detailed specifications, standards, and other contract requirements.

Final decision-making authority, however, will be retained by the government program manager.

Emphasis will be given to assuring development of a complete and definitive production design data specification while providing flexibility to use contractor ingenuity and experience to arrive at cost-effective designs.

As directed in a Deputy Secretary of Defense memorandum dated January 11, 1984, each military department is required to identify four major system development programs for initial implementation of these concepts. Within six months, the military departments will provide plans to expand application of these concepts to all new major system acquisitions.

Maritime Reporter Magazine, page 18,  Apr 1984

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