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I think it may be seen as a feature not a bug when there is cost plus contracts and regulatory capture limits competition.
by newsclues 2y ago
I think it may be seen as a feature not a bug when there is cost plus contracts and regulatory capture limits competition.
- OldGuyInTheClub 2y agoI will agree that there is a lot of overhead per engineering hour in this market area. But, I also think there's a great deal of misunderstanding about how government contracting works. Cost-plus fixed fee means the fee is agreed upon at the outset. If you overrun you may get the cost of the extra work performed but you get no fee (profit) on it. When the corporation sees that dilution, there is usually hell to pay. If the government gets tired of the overruns, it can and does cancel the contract. There are different contract types with award fee and/or incentive fees each with its own peculiarities. The Federal Acquisition Regulations (FAR) make for interesting reading: https://www.acquisition.gov/far/part-16 https://www.acquisition.gov/far/part-16 " Part 16 - Types of Contracts"
- newsclues 2y agoThe government contracting scam is to agree to a set percentage of the total cost as profit, so the contractor has an incentive to increase the total cost in order to maximize the dollar amount of profit they can extract. And that’s without using subcontractors to transfer even more wealth. The business is: If profit is % of X Then maximum X