Department of Defense guidance encourages the use of fixed-price-incentive (FPI) contracts to acquire major weapon systems, where appropriate.
These contracts can provide contractors with incentives to keep costs in check and stay on schedule.
The Government Accountability Office (GAO) 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.
GAO recommended that the DoD assess its use of these contracts.
Over the 10-year period from fiscal years 2010 through 2019, obligations on FPI contracts for major defense acquisition programs (MDAPs) grew to account for almost half of the $65 billion in obligations for fiscal year 2019.
See GAO’s full report on this topic at: https://www.gao.gov/products/GAO-21-181