United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office National Security and International Affairs Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1994-04-15 monographic deposited born digital GA 1.13:NSIAD-94-141 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-94-141 P0b002ee180395d28 f:ns94141 DGPO 2010-08-12 2011-03-24 GAOREPORTS-NSIAD-94-141 machine generated eng fdlp REPORT GAOREPORTS-NSIAD-94-141 NSIAD-94-141 Defense contracts Military aircraft Cost overruns Department of Defense contractors Contractor performance Claims settlement Delivery terms Defense contingency planning Contract administration Cost effectiveness analysis C-17 Aircraft C-5B Aircraft Letter Report NSIAD The recent settlement between the Pentagon and McDonnell Douglas on the troubled C-17 transport plane is not a good deal for the government, which will have to waive all potential financial claims against the aircraft maker, lower the C-17's performance standards, and pay more for fewer aircraft. To acquire 120 aircraft will now cost an estimated $43 billion--$1.3 billion more than the Pentagon's last estimate to acquire 210 aircraft. In an effort to overcome the contentious relationship between the government and the contractor, the government has agreed to waive all of its potential claims arising from the contractor's failure to meet the original contract specifications and delivery schedule, without establishing the value of those claims. The government also agreed to resolve filed and unfiled contractors' claims by adding $237 million to the contract price. Department of Defense (DOD) officials acknowledge that the claims were never subjected to a full legal or price analysis. At the same time, McDonnell Douglas' out-of-pocket expenses are hundreds of millions of dollars less than the agreement implies. GAO urges DOD to determine immediately the minimum number of C-17s needed and pursue a strategy to acquire alternative wide-body aircraft that can meet its needs. DOD, in deciding whether to continue the program, also needs to establish specific cost-schedule and performance criteria to evaluate improvement in the contract's performance. GAO summarized this report in testimony before Congress; see: Military Airlift: The C-17 Program Update and Proposed Settlement, by Frank C. Conahan, Assistant Comptroller General for National Security and International Affairs, before the Subcommittee on Regional Defense and Contingency Forces, Senate Committee on Armed Services. GAO/T-NSIAD-94-166, Apr. 19, 1994 (44 pages); and Military Airlift: The C-17 Proposed Settlement and Program Update, by Frank C. Conahan, Assistant Comptroller General for National Security and International Affairs, before the Subcommittee on Military Acquisition, House Committee on Armed Services. GAO/T-NSIAD-94-172, Apr. 28, 1994 (43 pages). https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-94-141/html/GAOREPORTS-NSIAD-94-141.htm GAO/NSIAD-94-141 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-94-141 Letter Report GAO/NSIAD-94-141; Military Airlift: C-17 Settlement Is Not a Good Deal; Defense contracts Military aircraft Cost overruns Department of Defense contractors Contractor performance Claims settlement Delivery terms Defense contingency planning Contract administration Cost effectiveness analysis C-17 Aircraft C-5B Aircraft