In recent years, the U.S. government has often negotiated cost-plus contracts (CPC) with defense firms developing new weapons systems. Under a CPC, the government reimburses the contractor for the total costs it incurs. Frequently, the result is cost overruns in development. Why might this occur? How might an alternative contract structure remedy this problem? Could this contract solution cause a new problem?

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The Answer of In recent years, the U.S. government has often negotiated cost-plus contracts (CPC) with defense firms developing new weapons systems. Under a CPC, the government reimburses the contractor for the total costs it incurs. Frequently, the result is cost overruns in development. Why might this occur? How might an alternative contract structure remedy this problem? Could this contract solution cause a new problem?

In Recent Years, the U