McCain would require fixed-price contracting

Republican presidential nominee Sen. John McCain said he would stop the government from entering into cost-plus contracts and require fixed-price contracts.

In a cost-plus contract, a vendor is paid for its total costs of doing the work plus an award fee if it meets specific performance objectives. In fixed-price contracts, vendors work for a fee agreed upon ahead of time, so their profit depends upon finishing the work in a reasonable time.

"We have to do away with cost-plus contracts," McCain said Sept. 26 during the first debate with Sen. Barack Obama, the Democratic presidential nominee, in Oxford, Miss.

McCain said the government has to get a hold on its spending "particularly in defense spending, which is the largest part of our appropriations." He said the Defense Department has systems whose costs are out of control.

"So we need to have fixed-cost contracts," he said. "We need very badly to understand that defense spending is very important and vital, particularly in the new challenges we face in the world, but we have to get a lot of the cost overruns under control."

House and Senate members have supported fixed-price contracts in recently passed legislation. Most recently, the fiscal 2009 National Defense Authorization Act (S. 3001), which both chambers have passed, includes provisions to change the Federal Acquisition Regulation guidance on tying award and incentive fees in contracts to actual contract performance.

During the debate, Obama didn't mention contracts specifically but said legislation he supported with Sen. Tom Coburn (R-Okla.) in 2006 that ultimately created the government Web site USASpending.gov makes information about agencies' contracts and spending online for public to see. It's a means of keeping the government's spending habits accountable, he said.

Matthew Weigelt writes for Federal Computer Week, an 1105 Government Information Group publication.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.