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Name:
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MrHodja
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Subject:
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The Latest "Good News"
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Date:
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3/4/2009 3:54:14 PM
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Another victim of the Obama assault: Cost Plus Contracts.
While there may be abuses of cost-plus contracts, those abuses occur mostly when the Government customers allow them to happen by simply not paying attention to what their contractor is doing and charging, or by throwing money at the contracts with no real idea as to how it might be used. We in the contracting world are not perfect, and I am sure there have been bad actors, but the broad brush applied to cost plus contracts is deceitful.
I work for a Defense Contractor, and do my work on an Indefinite Quantity/Indefinite Delivery, cost plus fixed fee contract with the Navy. The umbrella contract was awarded with a set time limit and a set ceiling, and as individual tasks arise we negotiate a Delivery Order for each task with our Government customers. As with the umbrella contract, the DO has a ceiling and the only thing we get paid for is the hours we work, the materials we buy, and the other direct costs such as travel and per diem - with the DO ceiling being the most we can be paid without compelling reason to increase that ceiling.
The work I do is in the area known as Information Assurance - computer security and network security in plain terms - and there are so many variables in what we do that writing a set of specifications that could be responsibly bid against as firm fixed price is nearly impossible. Problem is when we bid a delivery order we don't know what we don't know - and under the present system if the job turns out to be bigger than we and the Government rep thought -and we both agree - we can negotiate an increase in the DO ceiling. And, if it turns out to be less of a job that we thought, the rest of the DO ceiling is not charged and that money is available for the Government to use on other tasks.
So what will probably happen if we are forced into fixed price contracts is that the process of getting on contract will be significantly longer than it is now (a lot more definition of exactly what is required, when, and how - things that are very difficult to determine in our business), and I will have to build in a significant amount of management reserve to guard against the unknowns. So the process will end up costing the Government more and take longer to get anything done. Exactly counter to the impression the Big O wants to leave with the American public.
If I were to be building refrigerators it would be different - easy to spec and much easier to price and control costs. But, in the IA world, very little is known about a job when one first starts it, and to be frank the Government customer often doesn't know exactly what the job will entail either, just that it needs to get started. Many times our original DO is a best guess as to cost, and the real cost doesn't emerge until later in the task.
One other thing -- Obama wants to pull back a lot of what we do and have "Govvies" do it instead. More big overnment. I can tell you, and my Government customers will tell you as well, that doing so will increase cost and decrease quality and timeliness. Contractors do it faster and often better than the Government.
When I went through my Air Force Basic Communications Officer course in 1967 one of my first civilian instructors informed us of the Civil Service Rocket - saying that it won't work because you can't fire it. Now I know that statement will probably get the Hound to howling, and I have known many fine, hard working Govvies over the years. But I have also seen many, many examples of laziness, ignorance, inefficiency and sick, sick organizations. In the contractor world laziness, inefficiency, and non-productiveness is rewarded with a pink slip, not a continuing paycheck.
Now that my break is over I must get back to, as Obama would have you believe, $crewing the public.
Nasreddin Hodja
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