A survey of problems of economic efficiency in military procurement and contracting. The author makes some specific suggestions for improvements and discusses certain problems that require further study. Background material on contracts is presented. The increasing share of procurement represented by cost-plus-a-fixed-fee contracts is noted and a reclassification of contract types is proposed. The principal change suggested is the establishment of efficiency classes in incentive contracts so that a "hard" cost target can be set. Cost underruns could then more nearly represent truly efficient behavior and not simply be the result of poor cost estimating.
This report is part of the RAND Corporation research memorandum series. The Research Memorandum was a product of the RAND Corporation from 1948 to 1973 that represented working papers meant to report current results of RAND research to appropriate audiences.
Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.