JayUtah
Penultimate Amazing
Cost-plus contracts were common in Apollo and Shuttle eras. This made sense when you're doing something that has never been done before and you don't know how much it will cost or how long it will take. The government needs the expertise of the industry, but the industry has to answer to shareholders and won't take the contract if it means assuming all the risk of uncertainty. So it's a way to guarantee the contractor a profit no matter what the costs. That doesn't stop the government from imposing interim deadlines and reasonable cost controls. In fact, both the Apollo and Shuttle programs encountered cost and schedule overruns that led to hearings and contract reassignments (e.g., Bell losing its contract to Aerojet for the lunar module engines). Cost-plus contracts can include penalties for non-performance and incentives for meeting milestones.
Starliner is not a cost-plus contract. It's a fixed-price contract. That means of Boeing doesn't deliver, Boeing eats the cost. The SLS launch vehicle, however, is a cost-plus contract. And yes, the inspector-general of NASA is highly displeased at the SLS contracts for vast cost and schedule overruns. I'm not convinced that cost-plus funding was appropriate for SLS. The funding basis matters when the company is publicly owned versus privately owned. As a private company, SpaceX has a different risk model than Boeing, which is a publicly-held company whose executives have a fiduciary duty to third-party shareholders. But that doesn't excuse Boeing's ongoing and increasing ineptitude due to poor management.
No matter how you slice it, SpaceX has outperformed Boeing in crewed orbital flight. The funding model is part of the overall picture, but not an inevitable cause or shortcoming.
Starliner is not a cost-plus contract. It's a fixed-price contract. That means of Boeing doesn't deliver, Boeing eats the cost. The SLS launch vehicle, however, is a cost-plus contract. And yes, the inspector-general of NASA is highly displeased at the SLS contracts for vast cost and schedule overruns. I'm not convinced that cost-plus funding was appropriate for SLS. The funding basis matters when the company is publicly owned versus privately owned. As a private company, SpaceX has a different risk model than Boeing, which is a publicly-held company whose executives have a fiduciary duty to third-party shareholders. But that doesn't excuse Boeing's ongoing and increasing ineptitude due to poor management.
No matter how you slice it, SpaceX has outperformed Boeing in crewed orbital flight. The funding model is part of the overall picture, but not an inevitable cause or shortcoming.
