The allowability of restructuring costs associated with a business combination has received considerable attention from Congress. "Restrucuring costs" is the term applied to costs incurred as the result of nonroutine, nonrecurreing or extraordinary events (as opposed to normal efficiency and productivity enhancing acts) that include personnel relocations, severance pay, early retirement incentives, retraining, facility closings, lease terminations and system conversions. Most of the Defense Authorization acts since 1995 allow contractors to charge these costs to their contacts provided contractors can demonstrate in a proposal that it will achieve a two-for-one savings in the future..

The Overhead Center is stressing two "lessons learned". First, ACOs should be seeking revised forward pricing proposals with these restructuring proposals so that the projected savings can be visible in its pricing. Secondly, the Overhead Center is in the forefront of efforts to have ACO recommend to buying activities to use a "reopener" clause in firm, fixed price contacts awarded during the period between the approval of a business combination and the time the contractor’s forward pricing rates are adjusted to reflect the estimated savings.

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