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Not all defense contractors use cost-plus contracts

• Jtsummers 3y ago
  I have, unfortunately, seen this behavior and outcome with many types of government contracts, not just cost-plus. One of the worst had the contractor so deeply embedded in a program office the IG got involved as they were receiving incentive payments despite failing to meet contract requirements (despite several government people losing their positions, the contract was not lost even though fraud had almost certainly occurred). There are certainly some contractors who aren't as deep into the grifting, and a small handful who really are sincere, earnest, and successful, but they're a rare breed. The big contractors (Raytheon, LM, NG, Boeing) keep eating up the little ones, and the outcome is about what you'd expect from these conglomerates.
  • sjburt 3y ago
    I had an employer that would do 10% margin on cost plus. Fixed price they would shoot for 300% or 400%, and if they were getting close to losing money they would start begging for more before delivery. They only time they really lost money is when they were trying to get into a new line of business and wanted to build heritage. If they ever needed to compete on price, they just wouldn’t. Usually their competitors wouldn’t either, there were only a few.