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Unintended Consequences of Advocating Use of Fixed-Price Contracts in Defense Acquisition Practice

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Author
Wang, Chong
Miguel, Joseph San
Date
2011-04-30
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Abstract
Frequent and substantial cost overruns in Major Defense Acquisition Programs (MDAP) have been criticized by the administration, lawmakers, and taxpayers. Critics often blame the dominant use of cost-plus contracts in the defense procurement system as the root cause of the inefficiency. In turn, a strong preference for fixed-price contracts as opposed to cost-plus contracts has been expressed on multiple occasions. In this research, we highlight the possible unintended consequences of advocating wider use of fixed-price contracts in Department of Defense (DoD) acquisitions. The implication of this study is that the mindset that fixed-price contracts are better than cost-plus contracts is misleading and can potentially do more harm than good in DoD major weapon system acquisition.
Description
Proceedings Paper (for Acquisition Research Program)
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
URI
https://hdl.handle.net/10945/33623
NPS Report Number
NPS-AM-11-C8P05R01-031
Collections
  • Acquisition Management (NPS-AM)
  • All Technical Reports Collection
  • Faculty and Researchers' Publications

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