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Title: Unintended Consequences of Advocating Use of Fixed-Price Contracts in Defense Acquisition Practice
Authors: Chong Wang
Joseph San Miguel
Keywords: MDAP
Cost Plus Contracts
Defense Procurement System
Fixed Price Contracts
Issue Date: 30-Apr-2011
Publisher: Acquisition Research Program
Citation: Published--Unlimited Distribution
Series/Report no.: Fixed-price
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: Acquisition Management / NPS Faculty Research
Appears in Collections:Annual Acquisition Research Symposium Proceedings & Presentations

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