The use of incentive contracting in aircraft procurement.

• Main Author: Redden, Edward G.
• Other Authors: Business Administration and Economics
• Language: en_US
• Published: Monterey, California: U.S. Naval Postgraduate School 2012
• Online Access: http://hdl.handle.net/10945/13342

The largest program in the Navy budget is procurement and one of the largest appropriations within this program is aircraft procurement . Because it does represent such a substantial portion of the budget, aircraft procurement is potentially one of the most important areas for improving cost effectiveness in the Navy. One important available instrument for increasing this cost effectiveness, by increasing efficiency in aircraft procurement, is the incentive type contract. The value of the incentive type contract lies in its ability to compensate for the lack of economic market conditions associated with aircraft procurement. The Navy's use of incentive contracts since 1951 and the resultant opinions and actions of the Navy, government legislative agencies, and the aircraft industry are presented. These actions and opinions are discussed and recommendations for more effective employment of contractual incentives are offered.