Letter: Cost-plus contracts have a role

Regarding '"McCain wants to end cost-plus contracting"

Although the military services, Department of Homeland Security and NASA have used cost reimburseable contracts to excess, doing away with them altogether is paramount to throwing out the baby with the bath water!

Defense contractors have found through the past 20 years that they either have to have a cost plus or an over-funded firm-fixed price (FFP) contract vehicle for research and development of uniquely military devices, equipment and vehicles. Under FFP, 100 percent of the risk is borne by the contractor. If they have underestimated the task, they bite the bullet; if they have over estimated the task they reap the benefits.

With research and development jobs no one knows exactly what one might run into, making cost-plus contracts a preferable type. Otherwise so much cost has to be built into an FFP to mitigate risk, the cost of development may become prohibitive.

Bill Hemphill
Siemens Building Technologies

What do you think? Paste a comment in the box below (registration required), or send your comment to [email protected] (subject line: Blog comment) and we'll post it.

Featured

  • Social Media
    Editorial credit: pcruciatti / Shutterstock.com

    They took all the tweets and put 'em in a tweet museum

    Twitter cancelled @realdonaldtrump, but the National Archives will bring presidential tweets back via the Trump library website.

  • Workforce
    Avril Haines testifies SSCI Jan. 19, 2021

    Haines looks to restore IC workforce morale

    If confirmed, Avril Haines says that one of her top priorities as the Director of National Intelligence will be "institutional" issues, like renewing public trust in the intelligence community and improving workforce morale.

Stay Connected