I was NOT directly involved in F-35, so I can't speak to the exact amount of sleaze that occurred with the prime contractor.

I'd love to see a real competition! (new contractors, new ideas, new teams, new airframe ideas). And two engines, yeesh.

Anyways, cost plus is great at moving risk to the government. FFP is at the other end of the spectrum, moving all risk to the contractor.

[Unnecessary edit: I'm a fan of the textron scorpion-as a light attack fighter we could modify]

This is why R&D projects can't be treated in the same way as delivery of well understood tech that simply needs to be mass produced well and efficiently.

Of course, the contractors probably skim a little bit off the top of the 20 million back to themselves. They might for example bill for machine team on the CNC or charge $200/hr per an employee and only pay $60 (note that they have expenses for training, downtime, office space, equipment and management which that 200/hour needs to account for so the employee isn't getting screwed that badly.

Less moral contractors might build projects which intentionally fail but meet the specifications so that the gov't needs to execute a change order at which point they would get additional fee as part of the change order, however with the DOD you can get your company put on a blacklist which will mean you cannot win any more DOD contracts. But I have heard of a California construction company doing that repeatedly over the course of 30 years successfully. In the dod world, most companies try to propose improvements to the original contract. Typically they will have yearly goals associated with submitting and winning change orders as its an easier source of revenue than bidding and winning new contracts which typically have a 30% win rate.

I agree with your overall opinion but I do think the govt has a lot of residual risk in cost-plus. When a contractor is incentivized to cut corners, the mitigation is govt oversight. Meaning the contractor can keep cutting corners until caught. Since the govt ultimately owns these systems they can be left holding the bag (particularly when requirement specs are weak)

I ran across an interesting one earlier, understanding Maslow's Needs by negative example: We usually say that, when someone has food and shelter and safety, when they have friends and feel a sense of belonging, they can pursue higher stuff. And we know at some level that if someone is starving, they will do anything to find food -- civilized behavior goes out the window in that mode. But we forget that if someone has no friends and doesn't feel a sense of belonging, they will also stop at nothing to rectify THAT.

Suddenly so much conspiracy stuff makes sense.

Those are usually called “hygiene factors” in the literature.

"Hygiene" for the record has nothing to do with deodorant, at least not per se, but instead the willingness to remove negative traits. However, just because you remove negative traits doesn't mean you have any positives. Just cuz you took a shower this morning, wear clean clothes, and trim your fingernails doesn't mean you're not an asshole, and that we should friends with you.

Same deal with jobs, cultures, etc. The work may be risky and dangerous, but if there are enough positives to outweigh those negatives, people might stick around. But even if you strip out the negatives, people will eventually float away from jobs that aren't fulfilling or that don't offer any positives.

https://www.talyarkoni.org/blog/2018/10/02/no-its-not-the-in...

There’s a distinction to be made between excusing bad behavior, but rather they explaining it. The article seems focused on the former, I’m more interested in the latter.

There are intrinsic and extrinsic incentives. I think the important part not touched upon is that for those actors extrinsically motivated (e.g., status, money, etc.) the system incentive will influence behavior much more than those more affected by intrinsic motivations.

The article is right that extrinsic motivations don’t excuse immoral behavior but when morals are lacking external controls are still needed. Developing the right extrinsic incentives provides guardrails for those who tend to lack intrinsic motivation that align. The article seems to think the solution is to “just act morally” which works at the individual level but that’s not really a policy at a system level (especially once we acknowledge everyone doesn’t share the same goals/motivations/morals)

I.e. if you aren't willing to stand up in court and talk about why Tootie is better than Tito, despite Tito being 10% cheaper, you better be selecting Tito or looking for another job.

https://blog.theodorewatson.com/understanding-the-federal-go...

I’ve found people are very risk adverse in this regard and would prefer to select the lowest bid instead of potentially defending their decision during a protest.

select the best solution to meet your needs, mostly irregardless of cost, but be sure you can articulate why you are buying from A.

I.e. You can pick whatever vendor you want, provided you are happy to stand up, under oath, in court and talk about WHY you selected vendor A over vendors B, C and D.

So far so I have no experience in court defending our choices.

Does anyone have any views on what constitutes canonical reading on incentives? Some of the classic game theory works? Would love to hear opinions on this.

In fact, I will go a step further - most incentives are chosen by well meaning people. There is neither malice nor incompetence going on. What happens is that every incentive can be perverted, and will be perverted over time. Over time, then that incentive, that was once chosen with good intentions, becomes perverse.

[1]https://en.wikipedia.org/wiki/Goodhart%27s_law

> When a measure becomes a target, it ceases to be a good measure.

In my experience, it might actually be a useful approximation of reality.

Take the requirements for example. If they aren’t airtight, you’ll get into a wordsmithing scenario where the contractor claims they met the requirement and it becomes a game where the team with the best lawyer wins. Write the requirements too explicitly and contractors will push back saying “tell us what you want, not how we’re supposed to do it.”

A somewhat silly example is if you specify you want unit testing on all safety critical code paths a contractor may claim they define running a compiler as “unit testing”. A contracting officer may not be technically savvy enough to push back and when the subject matter experts try to leave negative contract comments (that get reviewed when awarding future contracts) they get scrubbed because its not worth the fight in the eyes of the contracting officer.

Unfortunately, just saying “do good work” just doesn’t...work

With DoD you have to add in various accountability steps, political footballs, public opinion, etc.

If you've spent time around the DC area you'd be shocked at the number of adverts for things like the F-22 that you see. One time I took the metro from NoVA to MD, with a stop off downtown, and counted at least 6. They're not just bringing lawyers and playing contractor games, they're aggressively marketing to everyone.

Those kinds of purchases being swayed by subway ads... I really hope it's a joke.

The F-20 may have been the last time an aircraft company ever pitched an airplane developed on the company's money. Despite being highly praised by all who flew it (including Chuck Yeager), it's ugly demise at the hands of politics (it was less than half the price of the F-16) was an example to all to never do this again...

The problem with massive development efforts like this is that there aren't a lot of competitors. In this particular field, there are two, and not really even quite two exactly.

Lockheed, Boeing, Northrup, etc...