« Nuclear Weapons Lab Underestimates Risk of Radiation Leak, Study Finds | Main | Morning Smoke: Why Afghanistan Construction Costs So Much »

Jul 10, 2012



Both "Cost Plus Award Fee" and "Firm Fixed Price" contracts have the same problem. Both put the US taxpayer on the hook for product development. You don't buy a cell phone that way. I don't go to Apple and tell them I want a iPhone, give them the specifications I want it too meet and fund the development of the phone. That would cost billions of dollars and what recourse do I have if what they come up with is something I don't like? I have none, just like the US government has no recourse against contractors who do the same.

The government should pay for results, not for process. The cost of developing a prototype to the government's specifications should be the cost of selling to the government. Those costs should only be covered by the profit made on selling goods to the government and (in some cases) to the public. Anything that is needed by the government that needs to be developed with public funds should be developed by a not-for-profit agency of the government itself. Putting the US taxpayer on the hook for a for-profit company to develop goods for the govenrment to buy has repeatedly failed, is failing now, and will always fail. As noted in the article, the profit incentive on that way of doing business encourages failure.

The comments to this entry are closed.