Letter: McCain off-base about cost-plus contracts
A reader writes that what can help is to "define the requirement and pay attention to the contractor's performance."
Regarding: "McCain wants to end cost-plus contracting" You know it's time to retire when you see the same solution to a problem that you remember seeing earlier in your career.
Back in the mid-80's Washington was up in arms over spiraling (out of control?) program costs. Their solution was to outlaw cost-plus contracts and require only fixed-price contracts. Didn't work then and won't work now because the type of contract (pricing agreement) is NOT the problem. Contract pricing is a function of the customer's ability to define the requirement. This ability to define the requirement directly establishes the contractor's ability to project the risk of performance under the contract.
The less we (the government) are able to define the requirement the more risk the contrator assumes with respect to performance. More risk = more profit. Another element of cost control is the degree of contract oversite on the part of the government. We have to keep an eye on the contractor and track [its] progress. These are the current (and ongoing) problems with government contracts. We have to define the requirement and pay attention to the contractor's performance. We don't have enough competent people to do this. Just changing the manner of contract pricing won't solve the problem.
Michael McManus
USAF
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