Value of Warranties in Department of Defense (DOD) Acquisitions.

Abstract

Abstract : Warranties have been a point of considerable discussion, if not controversy, within the Department of Defense (DoD) acquisition community for over a decade. Use of warranties within defense procurements is not new. What changed was the requirement placed upon DoD by Congress that mandates their use in weapon system procurement. The primary points of contention with defense use of warranties, besides their mandatory use, is whether they are cost effective and practical for use in acquisition of weapon systems. Numerous studies and reports have been published questioning the benefit of weapon system warranties. For the most part, these documents have recommended repeal of the law requiring warranties. The General Accounting Office published a recent report supporting repeal, while citing weapon systems warranties as impractical and not cost effective, which resulted in the government receiving a financial return of approximately 5 cents on the dollar. Mandating warranties for defense acquisition has not been a success. Although warranties in the commercial marketplace have been beneficial, they are impractical and not cost effective for use in defense. It is time for Congress to repeal the warranty statute.