Campaign '08

McCain on cost-plus contracts

During Friday night’s presidential debate, Barack Obama made a passing reference to the Shenzhou 7 mission that was in progress at the time:

The third thing we have to do is we’ve got to make sure that we’re competing in education. We’ve got to invest in science and technology. China had a space launch and a space walk. We’ve got to make sure that our children are keeping pace in math and in science.

(One quibble: the spacewalk actually took place after the debate, not before it, as the comment suggests.) John McCain, though, a short time later, took aim at a bigger issue: the use of cost-plus contracts:

I think that we have to return — particularly in defense spending, which is the largest part of our appropriations — we have to do away with cost-plus contracts. We now have defense systems that the costs are completely out of control… So we need to have fixed-cost contracts.

The comment was made in regards to defense spending, but McCain’s disdain for such contracts would presumably extend to NASA as well. While this comment has raised a few eyebrows, it’s not that surprising: in his national security policy, McCain has a section devoted to “Smarter Defense Spending” that includes the following:

John McCain has worked aggressively to reform the defense budgeting process to ensure that America enjoys the best military at the best cost. This includes reforming defense procurement to ensure the faithful and efficient expenditure of taxpayer dollars that are made available for defense acquisition. Too often, parochial interests – rather than the national interest – have guided our spending decisions. John McCain supports significant reform in our defense acquisition process to ensure that dollars spent actually contribute to U.S. security.

That doesn’t specifically mention cost-plus contracts, but one can see how his opposition to cost-plus contracts fits into this philosophy. It’s also not surprising among those defense contractors who have done battle with McCain over the years in the Senate on these issues.

1 comment to McCain on cost-plus contracts

  • Taxpayers should not have to worry about whether their government is keeping an eye on how contractors are spending money. Fixed-price contracts give contractors the incentive to not mess up, to keep costs in-line, or loose their profit when they do go over budget. Cost-plus promotes unrealistic underbidding that only results in taxpayers being forced to pay for more than was originally contracted. I don’t know of one industry, certainly not the two I work in, that has cost-plus.

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