Re:Nelson testifies cost-plus contracts have been a “plague”...
by dotnet00 on Wednesday May 04, 2022 @04:16PM
(#31265283)
But isn't accounting for risks and having contingencies to minimize their impact part of good engineering practice? Eg. when designing a new rocket, you know that the engines might have issues causing delays, you can't predict exactly what issues but you can estimate how much extra money and time you could lose there.
For instance, as part of their filing for the HLS competition, SpaceX supposedly had around ~400 pages just discussing cryogenic propellant storage and transfer, along with the associated risks and how they would mitigate them.
It's also a bit of a stretch to say NASA isn't taking on risk in fixed price, as they're still paying large sums of money for each agreed upon milestone. The point is that the risk needs to be shared. Cost+ takes away pretty much all of the risk for the company, taking away their incentive to do their best (especially considering that until SpaceX came around and blew the doors open for smaller companies, there were only a handful of competitors who were all basically the same culture wise).
For instance, as part of their filing for the HLS competition, SpaceX supposedly had around ~400 pages just discussing cryogenic propellant storage and transfer, along with the associated risks and how they would mitigate them.
It's also a bit of a stretch to say NASA isn't taking on risk in fixed price, as they're still paying large sums of money for each agreed upon milestone. The point is that the risk needs to be shared. Cost+ takes away pretty much all of the risk for the company, taking away their incentive to do their best (especially considering that until SpaceX came around and blew the doors open for smaller companies, there were only a handful of competitors who were all basically the same culture wise).