An Analysis of Statutory Requirements from the 100th Congress on the Use of Fixed-Price Type Contracts for Weapon System Development
Abstract
This study analyzed the statutory requirements from the 100th Congress on the use of fixed-price type development contracts. The goal was to determine how the military departments should further implement these requirements. The study found a definite trend from more restrictive language to more flexible language in the legislative history of all four statutes. The purpose of the legislation was to enable Congress to choose the composition of military goods and services based on relative program and military merit within the budget limitations, rather than be restricted to an existing composition because of existing fixed-price contractual commitments. Congress wanted the Department of Defense acquisition community to use a development contract structure which provided for the range of cost outcomes from the unfolding of a dynamic task. The study concluded that further implementation should be limited to defining two key terms in the statutes. Realistic pricing is the analysis that determines the financial outcomes of future events and generates a distribution of these outcomes with the probability of each occurrence. An equitable and sensible allocation of risk assumes a narrow distribution of outcomes and puts the maximum government financial liability on this distribution to exceed a high percentage of the possible outcomes.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1989
- Accession Number
- ADA216421
Entities
People
- David M. Steenbarger
Organizations
- Air Force Institute of Technology