Potential Adverse Effects of Competitive Prototype Validation

This study seeks to determine if competitive prototype development under cost-plus incentive fee contracts might also include increased cost growth and gold plating potential. Interviews with procurement experts and project managers were conducted to determine if they felt there was basis for this concern what a project manager who finds himself in this situation, could do to keep gold plating and cost growth to a minimum and what is the best type of contract for the government to use in competitive prototype validation. Interviews confirmed that a cost incentive fee was ineffective in competitive prototype validation and that the competitive aspect of this situation could increase the potential for cost growth and gold plating. There is no one best type of contract for use in all competitive prototype development programs. This report contains a set of questions, the answers to which should help select the best contract type for a specific competitive prototype program. The key to whether or not competitive prototyping is a boon or a trap, or whether the design-to-cost concept will work in the future, is the governments demonstration, through its source selection decisions, that it truly considers development cost and design-to-cost efforts to be dominant criteria in source selection.