New GAO Report on Fixed-Price Incentive Contracts
According to the GAO, “Department of Defense guidance encourages the use of fixed-price-incentive contracts to acquire major weapon systems, where appropriate. These contracts can provide contractors with incentives to keep costs in check and stay on schedule.
We found that the DOD's use of these contracts has increased since 2010; they accounted for about half of all DOD obligations for its major weapon systems in 2019. But the DOD has not assessed whether using these contracts has actually kept costs and schedules in line.
The GAO went on to recommend that the DOD assess its use of these contracts, saying in their report that “The Secretary of Defense should conduct an assessment of DOD's use of FPI contracts for MDAPs, including the extent to which share lines and other contract elements contributed to achieving desired cost and schedule performance outcomes.”