Letter: McCain proposal a red herring
Regarding "McCain wants to end cost-plus contracting
Eliminating cost contracts would eventually increase Pentagon costs. Under fixed price contracts, the supplier assumes the majority risk and would therefore increase its price to cover contingencies and maintain its profit margin. Under fixed price contracts, the government would have less visibility into contractor proposed pricing structures, particularly if it is a competitive bid.
For research and development efforts, the government, and ultimately the tax payer, would lose out financially (and possibly in quality and integrity of design and product) if contractors are faced with making choices between costs to develop and/or produce a superior product, and preserving profit.
There are many other mechanisms and strategies which can be used to control costs on cost-type contracts without eliminating one of the best contract vehicles for state-of-the-art technology development. This proposal by McCain is a red herring thrown out during the presidential debate to catch the ear of a public not familiar with the intricacies of government contracting.
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