There is much to like about how the French do weapon systems acquisition, and we in the US need to pay more attention:
In the French [fixed-price] FP process, firms are required to make final bids on the delivery of finished systems and they must, at least in theory, accept all the risks associated with any cost overruns that occur. After signing an FP contract, the firms cannot plead ignorance with the Defense Ministry about the real costs of a project and request more money as compensation…
… the French have introduced a “responsibility principle” to FP contracting, meaning that those who are actually responsible for failing to meet contractual obligations, whether government or industry, must generally pay the costs. When firms are clearly responsible, they must take the charges against their profits. When the government is the cause of the contractual changes (for example, because it changes the parameters of the project) then the costs are usually deducted from the DGA’s procurement budget. Crucial to the operation of this responsibility principle, it must be emphasized, is a shared sense of “fairness” – that the correct party is in fact taking on the burdens of its cost overruns. In the United States today, the absence of trust between government and industry is a major barrier to the introduction of this type of informal contracting mechanism.
That was a short piece by Ethan Kapstein, Smart Defense Acquisition: Learning from French Procurement Reform. And here is another crucial part:
… under French law the Assembly can only vote up or down on the entire military budget – it cannot intervene in specific programs. It is worth contemplating whether the United States would get better procurement outcomes if a similar approach were adopted here.
Leave a Reply