Publication:
Using the Steel Vessel Material-cost Index to Mitigate Shipbuilder Risk

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Authors
Keating, Edward G.
Murphy, Robert
Schank, John F.
Birkler, John
Subjects
Fixed-price
Fixed-price Shipbuilding Contract, Fixed-price, Incentive-fee Shipbuilding Contract, Labor-cost Index, Material-cost Index
Advisors
Date of Issue
2008-04-01
Date
01-Apr-08
Publisher
Language
Abstract
This paper describes how the US Navy structures fixed-price and fixed-price, incentive-fee shipbuilding contracts and how labor- and material-cost indexes can mitigate shipbuilder risk in either type of contract. The Navy frequently uses the Steel Vessel material-cost index, a Bureau of Labor Statistics-derived cost index based on the mix of materials in a typical commercial cargo ship constructed in the 1950s. The Steel Vessel Index has excessive weighting on iron and steel, thereby providing shipbuilders with a mismatch between their actual and the Index-assumed material-cost structure. We recommend the Navy use a material-cost index with more up-to-date weightings.
Type
Technical Report
Description
Proceedings Paper (for Acquisition Research Program)
Department
Acquisition Management
Other Research Faculty
Identifiers
NPS Report Number
NPS-AM-08-039
Sponsors
Naval Postgraduate School Acquisition Research Program
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Rights