Federal contracting has been in the news some lately. Back during the first debate, Sen. McCain called for the elimination of cost-plus contracting because he thought it encouraged contractors to waste money. Cost-plus contracting, if not paired with proper incentives, doesn’t give much reason to save money. However, when you’re talking about R&D contracts, cost-plus can be the way to go because you might not have a firm idea of the difficulty of the project. However, as this two-pager shows, cost-plus is showing up in a lot of service contracts as well.
In other contracting news, just this morning the Carol D. Leonnig of the WPost published an article finding $5 billion dollars of contracts for supposedly being implemented by small businesses instead being held by the big boys. Some further research found that more than $600 million dollars explicitly set aside for small businesses apparently went to large companies.
The larger problem in contracting is pretty straight forward: there’s an imbalance between the burgeoning hundreds of billions the government pays to contractors and the relatively small contract management work force.
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