Unintended Consequences of Advocating Use of Fixed-Price Contracts in Defense Acquisition Practice

Abstract

Frequent and substantial cost overruns in Major Defense Acquisition Programs (MDAP) have been criticized by the administration, lawmakers, and taxpayers. Critics often blame the dominant use of cost-plus contracts in the defense procurement system as the root cause of the inefficiency. In turn, a strong preference for fixed-price contracts as opposed to cost-plus contracts has been expressed on multiple occasions. In this research, we highlight the possible unintended consequences of advocating wider use of fixed-price contracts in Department of Defense (DoD) acquisitions. The implication of this study is that the mindset that fixed-price contracts are better than cost-plus contracts is misleading and can potentially do more harm than good in DoD major weapon system acquisition.

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Document Details

Document Type
Technical Report
Publication Date
Apr 30, 2011
Accession Number
ADA543885

Entities

People

  • Chong Wang
  • Joseph San Miguel

Organizations

  • Naval Postgraduate School

Tags

Communities of Interest

  • Energy and Power Technologies
  • Ground and Sea Platforms
  • Weapons Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Air Force
  • Business Administration
  • Contracts
  • Cost Overruns
  • Department Of Defense
  • Fixed Price Contracts
  • Government Procurement
  • Governments
  • Management Personnel
  • Market Economy
  • Military Acquisition
  • Organizational Structure
  • Procurement
  • Public Policy
  • Supply Chain Management
  • Weapon Systems

Readers

  • Defense Acquisition Program Management
  • Finite Element Method (FEM) for solving Partial Differential Equations (PDEs)
  • Military History of the United States in the 20th Century.