Heading to an Era of Fixed-Price Contracts?:

The Senate has included a provision in its version of the 2007 defense authorization bill that would proscribe DOD to rewrite its acquisition regulations to include a “preference” on the use of fixed-price type contracts for system development and demonstration—in effect putting the burden to maintain cost upon contractors. The prime mover behind this change is Sen. John McCain, who will ascend to the chair for the Armed Services Committee should Republicans retain a majority in Congress. Defense analyst Loren Thompson of the Lexington Institute writes that McCain is driven to this approach out of “concern” that the defense is headed into a “contraction.”