A New Approach to the Pricing of Major Weapons Systems.
Abstract
This report explores the potential for developing new approaches for the pricing of major weapon systems which may motivate contractors to invest in productivity-enhancing technologies and capital equipment. The report concludes that there is no modification to a pricing format which in an of itself will motivate capital expenditures other than the direct payment of these expenses by the government. The complexity of the capital budgeting decision is discussed as is the motivation for making or postponing investments inn new technologies or capital equipment. A review of the post-'Profit '76' literature is included in those sections detailing the inability of increased profits to stimulate capital investments and the deviation between the DOD's perception of factors which motivate industry behavior and industry's view of these motivating factors. A section is devoted to the problem of basing profits on underlying cost. The report points out that there is no market-based mechanism for established profits on negotiated contracts that does not depend on an administrative judgement and decision.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1984
- Accession Number
- ADA145454
Entities
People
- D. B. Goodman
- E. M. Kaitz