DoD Budget Cuts Aimed at Avoiding Termination Fees

February 21, 2012

The Defense Department carefully selected the programs it wants to cancel in fiscal 2013 to avoid termination fee negotiations that have plagued the Pentagon in prior years.

In some cases, DoD will simply let existing production contracts expire and take delivery of new aircraft, only to turn around and park them in the desert, just to avoid the headache of stopping these efforts midstream.

"These select number of program kills are really things that ... appear to have been very carefully thought out to have the minimum quantity of termination liability associated with them to begin with," said Jim McAleese, who runs McAleese & Associates, a Virginia-based consulting firm. 

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