The Senate Armed Services Committee is reviewing the Pentagon’s fiscal 2017 budget request, and one area where committee chairman John McCain is sure to focus is the Air Force’s B-21 bomber. The Air Force desperately needs a more survivable, maintainable bomber, but it has committed the classic error of giving winning contractor Northrop Grumman an open-ended commitment of funding for development. Senator McCain and his colleagues want to know why a program with stable requirements and mature technologies couldn’t be developed using a fixed-price contract where industry absorbs the cost of any failure to live up to its commitments. In fact, the Air Force was offered a fixed-price deal by Northrop’s competitor, Boeing. The service chose to go with the Northrop team and a “cost-plus” contract because Northrop’s very aggressive bid was just too good to pass up. Senator McCain is determined to compel a rethink before the inevitable cost overruns begin accumulating. I have written a commentary for Forbes here.
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