By Allen Friar
Cost increases on major weapons system and service contracts have historically been a problem for the Department of Defense (DoD). Cost growth has occurred on all kinds of contracts and on both fixed price and cost reimbursement type contracts. Recent studies have shown that the most influential factors effecting cost growth have been decisions made by the Government, optimistic cost estimating and mistakes. The level of competition or type of contract has little if anything to do with cost growth on most Government contracts. This article analyzes the primary causes of cost growth on DoD contracts and concludes with a discussion of some of the recommendations for controlling cost growth including competition and selecting the appropriate contract type.