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FCW Insider: More reaction to McCain's stance on contracting

Based on the letters we have received, most readers believe Sen. John McCain was off target when he suggested the federal government could save money by banning the award of cost-plus contracts (see story). However, McCain clearly touched on a topic that is bigger than presidential politics.


The problem, readers say, is not with cost-plus contracting, and the solution is not fixed-price contracting. Instead, it's a lack of understanding about how to use or manage either type.


I published some excerpts from the first batch of letters yesterday. Here are some choice passages from the latest arrivals. You can read and comment on all the missives at our letters blog.


Let us know what you think by sending a letter to the editor or by posting a comment on this blog.


...People tend to forget that a cost overrun does not necessarily equal more profit for the contractor. The problem is lack of oversight and "scope creep" far more often than from the contractor's deliberate action to drive cost up...


...Fixed-price contracts are great when there are few if any unknowns. Nobody in their right mind would suggest or sign a fixed price contract when development of new capabilities/technologies/products is needed... 


...I can't tell you how many times the government has changed or added requirements, usually in the form of capabilities, mid stream. The government typically requests a Chevy in the beginning but will add enough bling to make it a Porsche, yet expect to pay the Chevy cost...


..The government frequently does not define its requirements, which brings significant risk to the effort. If the Government goes to only firm, fixed-price contracts, the contractors have no option but to bid high to cover their risk or to No Bid. You know what they say, "You get what you pay for"...


...We regularly see optimistic cost estimates, insufficient understanding of cost drivers and a poor linkage between the functional and technical aspects of a project and the cost. Cost realism must be improved. Functional and technical expertise and insight must exist and be leveraged for proper cost management...

Posted by John Stein Monroe on Oct 01, 2008 at 12:18 PM


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