Department of Government Efficiency - DOGE

#26
#26
Grand Vol said:
Move ALL government contracts to fixed price awards. The largest government contractors hate fixed price contracts which means that's probably the way we should go.

If you can't build it at what you said you could, you give up the right to finish the project and must turn over all work or fund it from internal means.

That would help make the bidding process more accurate and fair.
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That simply won’t work for high risk development projects. You will either get no bids on the project or government will end up way overpaying because the contractors will want to mitigate risk. Things like a new stealth fighter with advanced technologies will have to be cost plus and shared risk.

I would agree on production or level of effort type contracts could move to fixed price and be better for the taxpayer.
 
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#29
#29
It's another in a long line of shams. Musk and Vivek "finish" their "review" and make "recommendations" to a GOP controlled Congress just in time for the mid terms. All they'll come up with is the stuff already out there, add in some anti-DEI crap, and nothing changes except we go up another meter on the MAGA outrage machine.
 
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#30
#30
rjd970 said:
That simply won’t work for high risk development projects. You will either get no bids on the project or government will end up way overpaying because the contractors will want to mitigate risk. Things like a new stealth fighter with advanced technologies will have to be cost plus and shared risk.

I would agree on production or level of effort type contracts could move to fixed price and be better for the taxpayer.
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But the problem is now companies like Boeing, Lockheed, Raytheon, etc low bid on cost plus knowing full well they are going to use the "plus" feature.

Starliner is a prime example of how fixed cost contracts work for the American people. There is no way on this Earth a company like Boeing with nearly 70 years of spaceflight experience couldn't design and build a spacecraft for well under $6 billion.

I get risky R&D type things, but those should be the extreme exceptions rather than the norm. Honestly, I'd prefer companies overbid knowing that will be the true cost rather than coming back every year with their hands out.
 
#31
#31
Grand Vol said:
But the problem is now companies like Boeing, Lockheed, Raytheon, etc low bid on cost plus knowing full well they are going to use the "plus" feature.

Starliner is a prime example of how fixed cost contracts work for the American people. There is no way on this Earth a company like Boeing with nearly 70 years of spaceflight experience couldn't design and build a spacecraft for well under $6 billion.

I get risky R&D type things, but those should be the extreme exceptions rather than the norm. Honestly, I'd prefer companies overbid knowing that will be the true cost rather than coming back every year with their hands out.
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Right but there is incentive to not plus the cost because they take a hit on Wall Street with degraded return on sales (unless they get extra fee with the plus cost, but that can be precluded in the contract).

The other bad side for fixed cost for the government side is the terms and conditions of the contract will be tight, and lawyers will get involved on any disagreement on the deliverables, resulting in additional legal fees and may end up costing more because the cost will be added anyway if the government loses.

My point is cost plus with shared risk makes sense in some cases. But your point of more fixed price contracts for easily estimated projects is valid, like I said, production and straight labor like should be fixed price and are better for the taxpayer.

Also, overbidding will never work because the government will go with the lowest bidder anyway. Part of the problem is the government creates this situation. They go with the lowest bidder and companies bid low and use the plus up and the government never penalizes them or says you can’t bid on anymore of these projects. They just keep going with the most attractive offer every time, not the most realistic.
 
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#32
#32
lawgator1 said:
It's another in a long line of shams. Musk and Vivek "finish" their "review" and make "recommendations" to a GOP controlled Congress just in time for the mid terms. All they'll come up with is the stuff already out there, add in some anti-DEI crap, and nothing changes except we go up another meter on the MAGA outrage machine.
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#36
#36
rjd970 said:
That simply won’t work for high risk development projects. You will either get no bids on the project or government will end up way overpaying because the contractors will want to mitigate risk. Things like a new stealth fighter with advanced technologies will have to be cost plus and shared risk.

I would agree on production or level of effort type contracts could move to fixed price and be better for the taxpayer.
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We are already seeing production and depot maintenance contracts largely move to fixed price. But yeah anything TRL5 or below is going to have to be cost plus in order to attract the capable suppliers.
 
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#37
#37
NorthDallas40 said:
We are already seeing production and depot maintenance contracts largely move to fixed price. But yeah anything TRL5 or below is going to have to be cost plus in order to attract the capable suppliers.
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Yeah I think like you I’m a taxpayer but I also work for a defense contractor, so I can see both sides.

The government is largely to blame for the situation because they are creating an environment where the cheapest deal wins, not the best deal. Cost plus with no fee extensions can be a good deal for the taxpayer, but the contractor is always going to want fee on the extra cost so as not to degrade the ROS. It’s just the free market game we play.
 
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#38
#38
rjd970 said:
Yeah I think like you I’m a taxpayer but I also work for a defense contractor, so I can see both sides.

The government is largely to blame for the situation because they are creating an environment where the cheapest deal wins, not the best deal. Cost plus with no fee extensions can be a good deal for the taxpayer, but the contractor is always going to want fee on the extra cost so as not to degrade the ROS. It’s just the free market game we play.
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Yep. Retired contractor but still work part time. I’ve seen the process first hand for 35+ years and the big contractors know exactly how to game the system and then pile on the costs later. I can remember multiple times seeing the first ECP approved before the first production unit was delivered. Sometimes it made sense. Sometimes it was just giving them what they asked for and not what they wanted at the initial contract award.
 
#40
#40
NorthDallas40 said:
Yep. Retired contractor but still work part time. I’ve seen the process first hand for 35+ years and the big contractors know exactly how to game the system and then pile on the costs later. I can remember multiple times seeing the first ECP approved before the first production unit was delivered. Sometimes it made sense. Sometimes it was just giving them what they asked for and not what they wanted at the initial contract award.
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Exactly. The MO for defense contractors these days are to bid low and win, then ECP the government to death during execution. Putting in an honest bid just doesn’t work anymore.
 
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#41
#41
rjd970 said:
Exactly. The MO for defense contractors these days are to bid low and win, then ECP the government to death during execution. Putting in an honest bid just doesn’t work anymore.
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Yep it’s the game they (the government) set up and frankly it’s the government’s fault for the outcome. It isn’t the contractor’s fault that they are better at playing the government’s game than the government is.
 
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#43
#43
NorthDallas40 said:
Yep it’s the game they (the government) set up and frankly it’s the government’s fault for the outcome. It isn’t the contractor’s fault that they are better at playing the government’s game than the government is.
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100%
 
#47
#47
rjd970 said:
Exactly. The MO for defense contractors these days are to bid low and win, then ECP the government to death during execution. Putting in an honest bid just doesn’t work anymore.
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That's the point I was trying to make. Honest bidding is a thing of the past except for rare occasions (like SpaceX for example). But I feel even they are making a lot more profit than they let on even if it's way under the competition.
 
#48
#48
BernardKingGOAT said:
🤭
That's your example?

Wow
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She a billionaire who is in a position to influence government decisions to make money on her investments..is that what your concern with musk is. A conflict of interest?? Would you prefer Faucci or any members of the FDA that serve on the boards for pharmaceuticals??
 
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