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My understanding was that this was a firm fixed price contract, not a cost contract. Boeing can't just cancel the contract once they are underwater, it would

My understanding was that this was a firm fixed price contract, not a cost contract. Boeing can't just cancel the contract once they are underwater, it would defeat the purpose of FFP which is to shift risk to the contractor. The government can and will demand specific performance. Usually with FFP the contractor will outline ALL assumptions made which the government will clarify and agree to. The contractor will price all of that out, apply a risk multiplier 1.5x - 2.0x and target a 30% margin on all of that. FFP contracts typically have the highest potential for profit vs. 'cost plus' contracts.

Nevermark 2y ago
NASA loses money and time waiting and helping Boeing to perform. And then they get minimal performance, given the program and company's now chronic underperformance. Meanwhile, SpaceX provides a solid tested path forward. Despite the single sourcing. I see a negotiated retreat, favorable to all parties. Likely in some incremental way to minimize attention and backlash. I.e. delay, study, delay, negotiate, delay, close up shop. Parterships operating under a legal gun don't really operate. And are not conducive to safety concerns.
- avmich 2y ago
  > Parterships operating under a legal gun don't really operate. It's business, nothing personal, right? Boeing can be welcome to bid on the next project - after siphoning and wasting lots of NASA's money on this one, and losing badly a solid chunk of its own because of internal problems. Why can't partnership continue? Nobody wants Boeing to go out of business, just to pay what they owe to taxpayers.
  - Nevermark 2y ago
    When a long term business partnership becomes unattractive for one side, the lack of win-win degrades the relationship for both parties. It causes conflict between mutually valid but now competing priorities (profitability vs. contracted deliverables), demoralization, delays for analysis and consensus building around unpleasant decisions, key people moving on to better contexts, etc. I am not talking about bad faith. The primal cause could be failure by one party. But it could also be a market change, critical supplier loss, or other unrecognized reality surfacing. If Boeing and NASA cut losses on Starliner, they could still work together in the future. Presumably, with both sides doing a better job of understanding their respective and joint risks. -- Never mistake a good partnership contract, with a good partnership. More than a good contract has to come together for the latter. And it is wise to have pre-settled terms for unwinding contracts at any time by either parties discretion, to reduce the time to correct a bad situation, and minimize the costs of mishaps and distractions for everyone.
- khaki54 2y ago
  It's possible Boeing may be forced to subcontract part of the work to SpaceX, but looking like they are trying to find a buyer for the JV itself which would relieve Boeing but saddle the buyer with the troubled contract
asadotzler 2y ago
Boeing can walk at any time. NASA cannot. Boeing has been paid for what they've delivered (plus some nice bribes to keep trying) and not for what they have not delivered so they an walk today if they want. NASA cannot walk though and would not.
- plopz 2y ago
  Has anyone done the analysis on looking at the checks NASA is writing compared to the total contract price to know how front-loaded or how much money is still remaining in the contract? That seems like the easiest way to figure out whether its worth it for them to continue or not.
- avmich 2y ago
  No, this doesn't seem the case here. The NASA's intent clearly was to get a spacecraft capable of flying to ISS. Where's that?
- anticensor 2y ago
  Boeing can walk away, but not without repercussions.

Nevermark 2y ago

NASA loses money and time waiting and helping Boeing to perform. And then they get minimal performance, given the program and company's now chronic underperformance. Meanwhile, SpaceX provides a solid tested path forward. Despite the single sourcing. I see a negotiated retreat, favorable to all parties. Likely in some incremental way to minimize attention and backlash. I.e. delay, study, delay, negotiate, delay, close up shop. Parterships operating under a legal gun don't really operate. And are not conducive to safety concerns.

avmich 2y ago
> Parterships operating under a legal gun don't really operate. It's business, nothing personal, right? Boeing can be welcome to bid on the next project - after siphoning and wasting lots of NASA's money on this one, and losing badly a solid chunk of its own because of internal problems. Why can't partnership continue? Nobody wants Boeing to go out of business, just to pay what they owe to taxpayers.
- Nevermark 2y ago
  When a long term business partnership becomes unattractive for one side, the lack of win-win degrades the relationship for both parties. It causes conflict between mutually valid but now competing priorities (profitability vs. contracted deliverables), demoralization, delays for analysis and consensus building around unpleasant decisions, key people moving on to better contexts, etc. I am not talking about bad faith. The primal cause could be failure by one party. But it could also be a market change, critical supplier loss, or other unrecognized reality surfacing. If Boeing and NASA cut losses on Starliner, they could still work together in the future. Presumably, with both sides doing a better job of understanding their respective and joint risks. -- Never mistake a good partnership contract, with a good partnership. More than a good contract has to come together for the latter. And it is wise to have pre-settled terms for unwinding contracts at any time by either parties discretion, to reduce the time to correct a bad situation, and minimize the costs of mishaps and distractions for everyone.
khaki54 2y ago
It's possible Boeing may be forced to subcontract part of the work to SpaceX, but looking like they are trying to find a buyer for the JV itself which would relieve Boeing but saddle the buyer with the troubled contract

asadotzler 2y ago

Boeing can walk at any time. NASA cannot. Boeing has been paid for what they've delivered (plus some nice bribes to keep trying) and not for what they have not delivered so they an walk today if they want. NASA cannot walk though and would not.

plopz 2y ago
Has anyone done the analysis on looking at the checks NASA is writing compared to the total contract price to know how front-loaded or how much money is still remaining in the contract? That seems like the easiest way to figure out whether its worth it for them to continue or not.
avmich 2y ago
No, this doesn't seem the case here. The NASA's intent clearly was to get a spacecraft capable of flying to ISS. Where's that?
anticensor 2y ago
Boeing can walk away, but not without repercussions.