Monday, December 8, 2008

Inflated Military Contracts - Another Egregious Example

According to Strategy Page the defense department's contract with Lockheed Martin to build the F-22 fighter has a disturbing clause. If the military stops buying F-22s, we the taxpayers have to pay Lockheed Martin $147 million. Why would the government enter into such a contract in the first place? Apparently Congress wanted to "encourage building more F-22s."  So they decided to penalize the country if we changed our minds later about how many we needed.

Like most on the right, I favor a strong military and support spending on advanced weapon systems.  But that doesn't mean we need to be stupid and wasteful about it, as is all too often the case.

1 comment:

  1. This is a multi-billion dollar program. $147M is chickenfeed, less than the cost of a single A/C.

    The article can't be right, unless it meant to say $147M per aircraft and even then I doubt it.

    What is very strange about this claim is that a flat figure is contrary to standard termination for convenience defense contract clauses, where termination costs are put into a proposal to the contracting officer and then negotiated. I've never heard of a DoD contract that had a termination for convenience cost established in advance. It's contrary to basic federal procurement rules and practices. See this discussion.