Acquisition: Effect of the Raytheon Defense Business Acquisitions on Pension Plans and DoD-Funded Pension Assets

摘要

This report is a review of the effect of the Raytheon Company acquisitions of E-Systems, Inc., Texas Instruments Defense Systems and Electronics, and Hughes Defense Company on pension plans and DoD-funded pension assets. The acquisitions resulted in $6.9 billion of pension assets being transferred to the Raytheon Company. Adequate contractor records that would ensure the Government received proper credit for its share of contributed pension assets under several of the pension plans transferred to the Raytheon Company did not exist. The Government is at risk of either overpaying or not receiving proper credit for certain contributions made to the pension funds. The Defense Contract Management Agency (DCMA) should request that the Raytheon Company and Raytheon's certified public accounting firm correct their respective financial reports for the E-Systems Salaried Plan to report the unauthorized withdrawal of $7.9 million. The Defense Contract Audit Agency (DCAA) should also review and verify the E-Systems Supplemental Executive Retirement Plan asset balances and record the balances in the E-Systems permanent audit file; review and verify the Texas Instruments pension plan asset balances and record the balances in the Texas Instruments permanent audit file; determine the cost impact to the Government that Hughes caused by not properly segmenting the pension assets transferred as a result of the General Dynamics acquisition in 1992; determine the cost impact to the Government that Hughes caused by not properly segmenting the newly created Direct TV segment from the Government segments in 1994; and revise the pension audit guidance program to require that periodic reviews of Cost Accounting Standard 413.5O(c)(7) asset balances are performed.