Sullivan says the cost-plus deal in Massachusetts failed to create incentives to hold Bechtel and PB accountable for cost overruns.
And spending will be managed through fixed-price contracts instead of the "cost-plus" deals that helped to inflate the price of the shuttle.It sounds sensible, in theory.
But in the department's annual assessment of its own competence as a buyer, published last month, it noted that the alternative, fixed-price contracts, has not always proved better: indeed, contractors sometimes end up with profit margins "spectacularly" higher than in cost-plus deals.
It's worked out so well that today only 20% of Rockwell's defense contracts are cost-plus deals.
Speed is also a factor: Cost-plus deals diminish negotiating time once the contractor's fee has been set.
Most cost-plus deals stipulate a certain amount for the jobs performed, which may include equipment, labor, transportation, legal costs, clerical support and so on all under the very general category of "overhead".
This is a cost-plus-incentive-fee deal.
Many of the contracts were like TeamQualtec's cost-plus deals in which TeamQualtec's cost-plus their outlays (mostly labor) plus a fee that ranges from 3% to 10%, dealsding on howhichl they perform.
In that climate of uncertainty the U.S. Agency for International Development opted for a cost-plus, fixed-fee deal a contract often used by governments to exert some control over costs and give the contractor incentive to engage in open-ended work.
A Home Office spokesperson told VICE: "UK Visas and Immigration fees are based on an estimated cost of dealing with an individual application plus a contribution to the costs of operating the overall border, immigration and citizenship system".
