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Stimulus spending and fixed-price contracts: Readers react

Numerous readers took issue with the news that the new stimulus legislation directs agencies to spend stimulus money through firm fixed-price contracts. Below you will find some excerpts of their comments. But the news also made me wonder: What about performance-based contracts? Or share-in-savings? Or has Congress given up on these?

Here is a link to the original story and the complete comments.

* Please note that the legislation quoted above states: To the maximum extent possible, contracts funded under this act shall be awarded as fixed-price contracts through the use of competitive procedures." This does not REQUIRE FFP, but strongly encourages it…

* My guess is that all of the potential "overpayment" on fixed-price contracts will be less than the overruns on cost plus contracts. I've seen way too many cost plus contracts go over budget without completing the work. Then the same contractor gets extended or gets a new contract to finish the work…

* This just illustrates the ignorance of the congress in the acquisition process … As a taxpayer and a former government employee I think it would be nice if lawmakers had a boot camp 101 they had to pass before being able to put their name on a ballot…

* …It is a common practice of the DOE, DOD, and sundry other government agencies to issue Time and Materials (T&M) contracts under the guise of Firm Fixed-Price (FFP). This is accomplished by various techniques, including a) making the labor hour unit cost "fixed-price," b) making the level of effort equivalent to the staffing level for a month or quarter rather than a legitimate fixed-price for a specific deliverable, c) permitting scope changes beyond the time limits imposed by the FAR, and other similar approaches that avoid the intent of a fixed-price procurement.

* I have used incentives on a few of my contracts to great advantage. A contractor can jerk you around and drag the work out until you are way past your deadline if you have no way to hold their feet to the fire. If you set it up so they get a smaller incentive for being early and a larger penalty for being late, keeping all the inspection criteria strong, you get excellent results quickly. The administration is making a big mistake on this one.

Posted by John Stein Monroe on Feb 18, 2009 at 12:14 PM


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