General Discussion > Space Policy Discussion

Why do contractors make so much money but aren't responsible when things go wrong?

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Star One:
Spinning out of the JWST thread just how are companies like NG seemingly able to walk away from a mess like this with their pockets still stuffed with public money but seemingly with minimum comeback. Especially here when the IRB have stated they cost US taxpayers one billion dollars through their actions?

JH:
oligopoly
/ˌləˈɡpəlē/
noun
a state of limited competition, in which a market is shared by a small number of producers or sellers.

ulm_atms:
I am of the feeling that as long as the money is going where Congress wants it to go, they don't care where the blame is...which is why no one is responsible.  This goes for LOTS of government programs. (SLS, F-35, etc...).

If the government actually wanted companies on the line for mistakes...they would issue contracts that actually do that.

SWGlassPit:

--- Quote from: ulm_atms on 07/02/2018 08:54 PM ---If the government actually wanted companies on the line for mistakes...they would issue contracts that actually do that.

--- End quote ---

There's a limit to which the government can do that before the contractor backs out of negotiations, leaving the government with no one.

Coastal Ron:
I've worked for big government contractors, so I've seen the good and bad. Here is my personal perpective.

There are two "forces" at work here:

1. NASA wants someone to build something that has never been built, and is a technological marvel.

2. Northrop Grumman is a very mature company with lots of engineering experience, and a need to make a profit.

So right away when you look at the motivations involved you can see that there is a bias toward spending a lot of money on the government's part, and for a willingness to take on expensive work of any kind on the part of Northrop Grumman.

Now to be fair, you could have honest people involved on both sides and still have cost overruns on a program like the JWST. So let's not automatically assume that there is greed or ineptitude at work.

But this is why you need well trained NASA program managers, and executives running NASA that understand how to manage large, complex programs. For instance, the designers of the JWST will always be biased towards spending money on optimal solutions, because it's not their money. And Northrop Grumman knows from decades of government contracting experience that it's more profitable if they take on more expensive work since they get a percentage of that work as profit.

Which is why many people have said (including me) that there isn't enough fear of failure at NASA from a program standpoint - that many think cost overruns will not lead to program cancellations. And even if they did they would not have their careers dinged by the failures, so where is the downside?

So what is the solution? Good program oversight by management, and members of Congress that are willing to every once in a while cancel a program when it gets too far out of budget. Because without consequences, no one will ever take responsibility.

My $0.02

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