Is the cost-plus, hardware-era government acquisition system compatible with how software R&D actually works today?
5 recorded positions from 3 people, first said Sep 28, 2020. They do not agree — the readings below are what each one actually argued.
Also on the record
Shyam Sankar · Jan 17, 2024
The cost-plus model made sense when government did all the R&D but makes no sense now that the preponderance of R&D happens in the commercial world; the government should instead leverage Silicon Valley's high-risk, high-return approach
R&D has shifted from government in the 1950s-60s to the commercial sector, so the funding model built for the old world no longer fits
10:16 Cost plus model fit 1950s government rd but now most rd happens commercially so government should adopt vc style risk taking
Shyam Sankar · Jan 17, 2024
The second-order consequences of the cost-plus procurement system now dominate and produce a structural inability to innovate in government
Technology is supposed to make things cheaper, but that doesn't happen in government; where costs do fall it's only because government inherits tailwinds from commercial-market R&D
12:07 Cost pluss second order effects now dominate producing structural inability to innovate
Harry Stebbings · Jan 17, 2024
Governments have no structural incentive to cut costs because there is no profit motive rewarding it
An institution like the NHS gains nothing from getting rid of middle management
12:37 Absence of profit motive removes any incentive for government to cut costs
Shyam Sankar · Jan 17, 2024
The government acquisition system is built for hardware — R&D, then procurement, then sustainment with declining costs — and that lifecycle model is fundamentally incompatible with software
It was designed when government financed all R&D; software R&D costs only ever increase, and no investor expects a company like Microsoft to spend less on R&D over time
17:06 Hardware lifecycle acquisition model is incompatible with ever rising software rd costs
Palmer Luckey · Sep 28, 2020
The legacy defense primes' biggest mistake — visible in a few years, though the system works for them today — is drastically underinvesting in internal R&D, spending about 13% of revenue on IRAD versus 20-80% for modern tech companies
If taxpayers fund your R&D, production and deployment, you take on almost no risk and only ever build what the government and politicians already believe is possible.
14:12 Cost plus contracting removes incentive for prim
Your assistant can query this graph directly — 5 positions here, 19,646 across the corpus. Add 996.fm over MCP.