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Defense Acquisitions: Termination Costs are Generally Not a Compelling Reason to Continue Programs or Contracts That Otherwise Warrant Ending
Cristina Chaplain (au)
The nationís long-term fiscal imbalances will likely make the DoDís $1.6 trillion planned investment in new weapon systems unsustainable. Thus, it is critical that DoD retains the flexibility to end programs and contracts when necessary and appropriate. Defense stakeholders have sometimes expressed concerns that it will cost more to terminate a contract than to complete it. This report examines: (1) how expected contract termination costs and other factors affect DoD decisions on whether to end programs and contracts; (2) the circumstances under which it would cost more to terminate a contract for convenience than to complete it; and (3) the options DoD has for retaining value or reducing costs, when DoD ends programs or contracts. Charts and tables.
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