AIA Offers R&D Initiatives to Defense Department
September 18, 2002
The Aerospace Industries Association, Washington, D.C., is asking the Defense Department (DoD) to improve research and development (R&D) contract policies with high technology companies. The association said it is concerned that profits on large, high-technology R&D contracts are low and that companies with the most contracts have lower returns than firms with fewer contracts, which doesn't support a primary DoD goal of balancing its portfolio of programs to offset low-margin R&D contracts with higher margin production contracts. Initiatives recommended by AIA include: continued emphasis on providing necessary funding for R&D contracts without contractor cost subsidization, specified base and award fees in requests for competitive proposals and no contractor fee-sharing in competition, routinely provided base fees, increased sizes of base and award fees, carried over unearned award fees as incentives for future performance, minimized use of profit take-back penalties, eliminated routine fee withholds for permitted shared savings for contractor-initiated cost efficiencies on existing cost-reimbursable contracts, and eliminated requires for fixed-price production options before the start of major system design.