Military Contracts Are An Easy Way Of Procuring Products/services

By Author: unknownmem
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The individual or organisation which is engaged in providing products/services to the department of defence is known as a defence contractor. The orders that are placed to them are known as defence contracts or military contracts. The products may include military vehicles, aircrafts, ships, weaponry and all types of electronic equipments. A wide range of services are provided by them – ranging from technical support to logistics to training, etc.

These individuals or organisations do not provide support to military operations directly. They can become target of attacks, if involved, directly in military operations, according to 1949 Geneva Convention.

Since military operations have become so varied and diversified, it is not possible for the department of defence to handle all the work. This happens due to the paucity of time, man power and resources. And this is where the defence contractors come in. Every year DOD contracts are given out to the best bidder for different products and services.

Since many operations are carried out in far flung corners of the world, it makes sense to give out contracts ...
... to the locals to avoid unnecessary expenditure. Over the last decade defence contracting has seen dramatic expansion, esp. in United States of America. Department of defence spends almost $316 billion on giving out contracts. Keeping in view the high value of transaction an agency is instituted to do the audits. This is the defence contract audit agency (DCAA).

This agency performs under the authority of secretary of defence comptroller, who gives directions and also controls it. There primary job is to perform the audits of all DOD contracts. They also provide service related to accounting and financial advisory pertaining to the contracts and subcontracts of all the defence components involved in the procurement process and the administration of the contracts.

The areas which come under the ambit of DCAA are negotiation of contracts, their administration and settlement. They also look into the details of subcontracts. This process of auditing of military contracts started some 60 years back. In the beginning, each branch of defence took care of its own contract audits and all the accounting and instructing that went with it. But there was no uniformity. A need for consistency in the handling and auditing of contracts was felt by both the government and the contractors. So in 1939, for the first time an attempt was made by the navy and air corps to perform audits jointly.

It was only in 1952 that the three services, together, issued a manual for contract audit. And it was only in 1965 that the defence contract audit agency (DCAA) came into being. This facilitated in doing the audits of the DOD contracts more effectively and efficiently. Military contracts help in reducing the pressure on the defence establishment and eases the process of procurement of goods and services – whether domestically or in any trouble torn part of the world. They offer immense support to the system.