For the past 25 years, the Department of Defense (DOD) has used multiyear contracts to procure thousands of major weapon systems, investing about $10 billion annually in recent years. Multiyear procurement is a special authority to contract for up to 5 program years of requirements in one year. When used appropriately, multiyear contracting can save money compared to a series of annual contracts by allowing more economic procurement from suppliers and more efficient production. Multiyear contracting can also entail some risks of substantial losses if a program is reduced or a contract is cancelled early and can limit DOD's and the Congress' future budget flexibility. To identify multiyear candidates that demonstrate sufficient benefits and manageable risks, the law requires certain criteria be met before an agency can enter into a multiyear contract.
Summary results of GAO Study:
DOD does not have a formal mechanism for tracking multiyear results against original expectations and makes few efforts to validate whether actual savings were achieved by multiyear procurement. It does not maintain comprehensive central records and historical information that could be used to enhance oversight and knowledge about multiyear performance to inform and improve future multiyear procurement (MYP) candidates. DOD and defense research centers officials said it is difficult to assess results because of the lack of historical information on multiyear contracts, comparable annual costs, and the dynamic acquisition environment. Despite these limitations, our case studies indicate that evaluating the actual results from multiyear contracting provide valuable information regarding the veracity of original estimates in the justification packages, the impacts on costs and risks from internal and external events, and lessons learned that can be used to improve future MYP candidates and savings opportunities.
