External Restructuring Activities
Contents |
External Restructuring Activities
(2) “External restructuring activities[1]” means restructuring activities occurring after a business combination that affect the operations of companies not previously under common ownership or control.
They do not include restructuring activities occurring after a business combination that affect the operations of only one of the companies not previously under common ownership or control, or, when there has been no business combination, restructuring activities undertaken within one company.
External restructuring activities are a direct outgrowth of a business combination. They normally will be initiated within 3 years of the business combination.
GAO Report - NSIAD-95-106[2]
Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) regulations regarding payments for contractors' business restructuring costs, focusing on whether the regulations:
- (1) are consistent with the Defense Authorization Act for Fiscal Year 1995 and other applicable procurement laws and regulations; and
- (2) ensure that restructuring costs are paid only when in the best interests of the United States.
GAO found that:
- (1) the DOD regulations do not comply with the authorization act's requirements because they do not require that all restructuring costs meet the certification requirements;
- (2) DOD makes a distinction in the types of restructuring activities and excludes so-called internal activity costs from the certification requirements;
- (3) internal activity costs are excluded from the act's certification requirements even if they are associated with the business combination;
- (4) the act does not distinguish between restructuring activities that are the result of the business combination;
- (5) DOD cannot ensure that payment of these restructuring costs are in the nation's best interest;
- (6) the regulations do not require contractor cost and savings data needed for DOD annual congressional reports to ensure that overall savings are obtained; and
- (7) DOD plans to pay restructuring costs up to the amount of the projected savings from the business restructuring, which will result in negligible savings to DOD.
File:GAO - External Restructuring Cost Report.pdf
Related Pages
References
- ↑ DFARS 231.205-70 - External Restructuring Costs. January 2014, http://www.acq.osd.mil/dpap/dars/pgi/pgi_htm/PGI231_2.htm
- ↑ http://www.gao.gov/products/NSIAD-95-106, as of October 2014
