Location
Cocoa Beach, FL
Start Date
7-3-1966 8:00 AM
Description
During the past three years there has been a concentrated effort by the Government to shift from Cost-Plus-Fixed Fee Contracts to Incentive Contracts. The basic purpose of this shift is to put more of the burden of financial risk on the contractor and to reward contractors who successful ly perform on their contracts with higher profits.
Another trend is developingof combining R & D, Production and Logistics Support into a single contract based upon Air Force Secretary Charles "Total Package Concept '.
Since the purpose of these changes is to shift more risks from the Government to the Contractor, the tendency is often to select the type of contract whereby the contractor assumes the maximum risk. This of course is the Fixed Price Contract. However, due to the nature of the circumstances surrounding the procurement, the Fixed Price Contract may not be the most appropriate nor in the best interests of the Government.
The purpose of this Article is to describe a type of Contract for use when it is desired to combine R & D and Production in a single contract. In designing this contract, it is a goal to reduce or eliminate problems which have caused concern to the Government and still not go to the extreme and require the contractor to assume more risk than sound business judgment would dictate.
Combining R&D and Follow-on Production in a Single Contract
Cocoa Beach, FL
During the past three years there has been a concentrated effort by the Government to shift from Cost-Plus-Fixed Fee Contracts to Incentive Contracts. The basic purpose of this shift is to put more of the burden of financial risk on the contractor and to reward contractors who successful ly perform on their contracts with higher profits.
Another trend is developingof combining R & D, Production and Logistics Support into a single contract based upon Air Force Secretary Charles "Total Package Concept '.
Since the purpose of these changes is to shift more risks from the Government to the Contractor, the tendency is often to select the type of contract whereby the contractor assumes the maximum risk. This of course is the Fixed Price Contract. However, due to the nature of the circumstances surrounding the procurement, the Fixed Price Contract may not be the most appropriate nor in the best interests of the Government.
The purpose of this Article is to describe a type of Contract for use when it is desired to combine R & D and Production in a single contract. In designing this contract, it is a goal to reduce or eliminate problems which have caused concern to the Government and still not go to the extreme and require the contractor to assume more risk than sound business judgment would dictate.
