I think we can all agree there is a problem with the way DoD aquires digital assets, but this probably isn't the best way to go for risky/unkowable research. The key should be to not do far-out research inside operational programs (F-22, etc.). Version, take what is available at the time, integrate, move on to the next cycle. The proposal could work if the contract times we short, max a year, should be able to quanitify the risk for a short perios of time.
AIA Sounds Alarm Over Proposed DOD Contracting Legislation
Concerned over the possible ramifications of Senate defense authorization language that would require fixed-price contracts for most Defense Department development programs, the Aerospace Industries Association is urging Congress to explore other methods to control costs.
The Senate's fiscal 2007 defense authorization bill (S.2766) would mandate the used of fixed-price contracts for research and development (R&D) unless the secretary of defense determines that the program is too complex and risky.
Fixed-price government contracts place most of the risk in the lap of the contractor, and are more typically used for technically mature products. Such contracts rarely yield good results for industry working on development programs because such programs tend to run up costly changes during testing, AIA President John Douglass told reporters July 6. Cost-reimbursement or award fee contracts, which put more risk on the government side, are more traditional for developmental work.
The Senate most likely passed the authorization language out of a desire to control costs, Douglass said. However, "fixed-price contracting for development items has never proven to be acceptable," he said. "It didn't work for us when we tried it back in the mid 1980s. The Australians have tried it, the Brits have tried it, other countries have tried it, and everybody's given up on it... The costs go up just as much on a fixed-price contract."
Despite its current boom, the defense industry already has the lowest returns of any major manufacturing sector in the U.S., Douglass said. A mandate for fixed-price contracting on most development programs could push the industry's margins even lower. As a result, contractors might begin inflating their bids, wh
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