Choice of Contract Type and Other Policy Initiatives for Reducing Contract Prices

Abstract

The Institute for Defense Analyses (IDA) performed analyses of contract type choice and other policy levers to reduce contract prices to the Department of Defense. The contract -type focus was on alternatives to Firm Fixed Price contracts, particularly Fixed-Price Incentive Firm contracts. IDA's analyses focused on three distinct but related subject areas: 1. Contract type choice and savings incentives in the serial production of a major defense acquisition program, 2. Incentives and other initiatives for reducing overhead (indirect) expenses, and 3. Issues associated with contracting for services including contract-type mixes and fee levels. The quantitative models employed assumed that contractors are motivated by value maximization. Given this and the incentives presented in different contracting scenarios, we conducted simulation experiments to gauge the sensitivities of outcomes to different assumptions. Empirical analyses focused on characterizing the choice of contract types and negotiated fees across goods and service categories.

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Document Details

Document Type
Technical Report
Publication Date
Sep 01, 2013
Accession Number
ADA594093

Entities

People

  • Bruce R. Harmon
  • Scot A. Arnold

Organizations

  • Institute for Defense Analyses

Tags

Communities of Interest

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

DTIC Thesaurus Topics

  • Aircrafts
  • Business Administration
  • Contractors
  • Contracts
  • Cost Reductions
  • Demography
  • Department Of Defense
  • Economics
  • Employment
  • Governments
  • Information Systems
  • Management Personnel
  • Manufacturing
  • Money
  • North America
  • Organizational Structure
  • Procurement

Readers

  • Computational Modeling and Simulation
  • Defense Acquisition Program Management
  • Defense Financial Management and Audit.