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Is there some reason we can't make the penalty of cost overruns that the contractor eats it, with the provision that the government is not allowed to change the
by ericd 9y ago
Is there some reason we can't make the penalty of cost overruns that the contractor eats it, with the provision that the government is not allowed to change the specs once committed, after a preliminary speccing phase where they work with a few bidders to see their proposals? I imagine that we'd start seeing much more realistic bids in a hurry, with potential overruns built into the bid.
- gozur88 9y agoPeriodically we try fixed price contracts and it never really works out. It's fine if you're ordering hammers or assault rifles - something that gets built all the time in quantity. But when you're building an aircraft carrier there are just too many unknowns, so you run into trouble in the very beginning when nobody wants to bid on it. Then if it looks like the overrun will be too large the contractor goes bankrupt and you end up with a half-finished ship and a gaping hole in the capability it was supposed to provide.