McCain’s contracting proposal makes no sense

September 28, 2008 by Dagpotter · Comment
Filed under: Congress, Contract Awards, Department of Defense, Federal Budget Process, S&T, development program, production program 

In the first Presidential Debate on Friday, Senator McCain restated one of his favorite reforms of government spending - require Firm Fixed Price (FFP) contracts for all work. Currently FFP contracts are used to buy hardware and services when the price and schedule are known. The contractor agrees to this as they will make profit on each unit sold. Cost Plus contracts are used for development or for things where the cost is not known. During World War II Cost Plus contracts were used almost exclusively and some abuse did occur. For R&D contracts it is hard to do a FFP as the total time and cost required to develop a system or new capability has often proved to be beyond the estimation capability of the best government or contractors can do. Senator McCain’s proposal will not work, as you will have a situation where no one will bid on the work as they know they won’t make any money on it.

See FCW.com for the story.

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Boeing’s role in defense aviation shrinks

April 9, 2008 by Dagpotter · 1 Comment
Filed under: Boeing, Military Aviation, commercial aviation, development program 

This good article in The Seattle Times summarizes how defense aviation is playing a less-and-less role in Boeing’s business. See the article here. It traces how from World War II on Boeing built large transports, tankers and bombers for the US Army Air Corps and Air Force. Now, with the loss of the KC-45 contract, they really are not doing any such business. They obviously rely primarily on their civil aircraft for the bulk of their earnings and profits. Boeing defense business is starting to be more and more in the area of engineering services and total program development and management. They were the Lead System Integrator (LSI) on what used to be called National Missile Defense (NMD) in the Nineties. They have also had similar roles in other major contracts.

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