The contractor must provide the government with a restructuring proposal that provides the basis for a contracting officer’s determination of whether the project is expected to result in reduced costs on contracts.  Each proposal must include a detailed breakdown of costs by element and project, showing the related estimated restructuring costs and cost reductions on contracts.  Each project must have a mutually agreed to cost ceiling that may be revised in a subsequent proposal. Examples of potential restructuring projects include outsourcing to low cost facilities or consolidating purchasing for all operations. As a condition of acceptance of a restructuring proposal the contractor must immediately adjust its forward pricing rates to reflect the impact of the restructuring costs and expected cost reductions. When an agency imposes a “net savings” requirement like DOD does the contractor must submit data specifying (1) restructuring costs by period (2) restructuring savings by period and (3) methods by which the costs will be allocated.

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