An Examination of Recent Defense Contract Outcomes in the Incentive Environment
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING
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The thesis presents an empirical evaluation of the outcomes of a large number of recently completed defense contracts. Profit outcomes and cost growth resulting from changes in the scope of the contract and from overrun underrun are examined for incentive and fixed fee contracts. Incentive features such as share ratios and multiple incentives are investigated to determine their effect on contract outcomes. Linear regression and analysis of variance techniques are used to analyze the outcomes of 2683 Army, Navy, and Air Force contracts. The types of contracts included in the data sample are fixed-price incentive, cost-plus-incentive-fee, and cost-plus-a-fixed-fee contracts. An examination of multiple incentive contracts indicates how contracts with performance incentives, as well as cost incentives, tend to earn performance incentives, regardless of the contract cost outcome.
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