December 1, 2009  

No fix

TO THE PENTAGON for its new fixation on fixed-price contracts. DoD is quite right to focus on reining in preposterously out-of-control weapons programs that end up costing millions of dollars more than promised — often without delivering the goods. However, DoD must also accept its share of the blame for the budget blowouts, which in many cases are the result of the services piling on additional requirements after the contract is signed. The new and welcome fiscal frugalness can’t center on fixed price alone. It must also include fixed requirement. Lock in the cost, but also nail down the specification. Current case in point is the seemingly never-ending effort to get the Air Force a new tanker. The new draft request for proposals calls for a fixed-price contract on what will be an 18-year deal. Neither of the competing contractors is happy about that and with justification. Over such a long period, and with the Pentagon’s habit of changing the specifications, it could be corporate suicide to sign up for this deal.