Deputy Defense Secretary Bill Lynn said April 15 that the Pentagon’s dalliance with fixed-price contracts in the 1980s was “a disaster.” Speaking at an Aerospace Industries Association event in the Capitol Building, Lynn said the current Pentagon leadership understands that fixed-price contracts will not work “if you’re inventing something,” but will be applied judiciously and selectively on those programs where the technology is well understood and costs can be estimated with high confidence. Lynn acknowledged that some in industry and Congress have warned about the use of fixed-price deals as a recipe for failure, but he said, “We shouldn’t over-learn the lessons of the ‘80s.” The practice will work in certain cases, he insisted. Still, a broad review of “incentives” is underway to see if there are better ways of making procurement deals on elaborate programs.
The Space Development Agency says it’s on track to issue its next batch of missile warning and tracking satellite contracts this month after those awards were delayed by the Pentagon’s decision to divert funds from the agency to pay troops during this fall’s prolonged government shutdown.
