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Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused t
by Dove 9y ago
Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused that they have been made mandatory for a public buying healthcare.
- alexanderstears 9y agoCost-plus contracts are common in the defense industry: https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/... you'll be darkly amused to note that the F-22 wasn't very cost-plus intensive and the F-35 is completely cost-plus. Also note that the F-22 seems to be a more effective weapons platform and at the end of the program, many people thought that we could just kill the F-35 program, fill up our airforce with F-22s and save money.
- Dove 9y agoYeah, cost plus a fixed fee or an award fee are common. But cost plus percentage is illegal, I believe. While cost plus fixed doesn't encourage the contractor to look for ways to be more efficient, it doesn't reward him for being wasteful, either. But cost plus percentage actually rewards a contractor for wasting money! That's why it's illegal.